My jurisdiction is: New York
Back in 2003 I brought on a business partner for my very young business. As part of the deal I gave him 50% of the Common Stock. At the time, we signed a "Shareholders Agreement". At the beginning of 2008 we each gave 5% of our shares (10% total) to a 3rd person as a retention incentive and granted him a seat on the Board of Directors.
The Shareholders agreement statd the following:
AGREEMENT made Jan 1st, 2003 by and among Mr. X and Mr. Y (the "Shareholders") and Z, Inc. (the "Corporation").
and
3. Control. So long as the Shareholders are the only shareholders of the corporation, they shall vote their shares to provide for the following:
(a) The Board of Directors of the Corporation shall consist of two members.
(b) Each of the Shareholders shall be elected as a member of the Corporation's Board of Directors.
(c) Each of the Shareholders shall be employed by the Corporation with such duties and at such salaries as the Board of Directors may determine.
It is my interpretation that Section 3 (above) is now void becasue Mr. X and Mr. Y are no longer the only shareholders. Furthermore, we've acknowledged that we understand this when we added the third board position.
Am I correct in my interpretation?
Mr. X
Back in 2003 I brought on a business partner for my very young business. As part of the deal I gave him 50% of the Common Stock. At the time, we signed a "Shareholders Agreement". At the beginning of 2008 we each gave 5% of our shares (10% total) to a 3rd person as a retention incentive and granted him a seat on the Board of Directors.
The Shareholders agreement statd the following:
AGREEMENT made Jan 1st, 2003 by and among Mr. X and Mr. Y (the "Shareholders") and Z, Inc. (the "Corporation").
and
3. Control. So long as the Shareholders are the only shareholders of the corporation, they shall vote their shares to provide for the following:
(a) The Board of Directors of the Corporation shall consist of two members.
(b) Each of the Shareholders shall be elected as a member of the Corporation's Board of Directors.
(c) Each of the Shareholders shall be employed by the Corporation with such duties and at such salaries as the Board of Directors may determine.
It is my interpretation that Section 3 (above) is now void becasue Mr. X and Mr. Y are no longer the only shareholders. Furthermore, we've acknowledged that we understand this when we added the third board position.
Am I correct in my interpretation?
Mr. X
