Shareholder’s Divorce Clause Samples
The Shareholder’s Divorce clause outlines the procedures and consequences that apply when a shareholder undergoes a divorce. Typically, this clause requires the shareholder to notify the company if their shares may be subject to division or transfer due to divorce proceedings, and may grant the company or other shareholders a right of first refusal to purchase those shares before they are transferred to a non-shareholder ex-spouse. The core function of this clause is to prevent unwanted third parties from acquiring shares through divorce settlements, thereby maintaining control and stability within the existing shareholder group.
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Shareholder’s Divorce. In the event of the divorce, dissolution, separate maintenance or the entry of a decree of separation (each, a “Divorce Action”) between a Shareholder and a Shareholder’s former spouse (“Former Spouse”), the Parties agree that (a) any instrument or agreement relating to the Divorce Action shall include provisions whereby such Shareholder, without regard to fault in such Divorce Action, shall purchase from his Former Spouse within twenty (20) days after the finalization of the Divorce Action, and (b) such Former Spouse shall sell any and all Shares and GWO Interests that may be awarded to or otherwise be owned or controlled by such Former Spouse, as a result of such Divorce Action or otherwise (including any and all rights, titles and interests therein) to the Shareholder. The purchase price for each Share and the GWO Interests sold or purchased pursuant to this Section 9(c) shall be the Purchase Price.