Stockholders Agreement
(Pro-Minority Investor)

Summary

This template is a stockholders agreement (pro-minority investor) for use in a transaction involving investments by private equity sponsors in a portfolio company. The template assumes that there are two classes of initial stockholders (controlling investor and minority investor). This template includes practical guidance, drafting notes, and alternate and optional clauses. This template includes provisions to enable future additions of employees as parties. It is likely that additional stockholders, such as investors or senior management, may negotiate different rights. Any amendments to this agreement to add additional stockholders should specify whether such investors will have the rights of the majority investor or the rights of the minority investor. If there is no single investor holding a substantial majority, the rights of the majority investor in this template will likely be inapplicable. As an alternative, the rights may be made exercisable only by two or more investors owning a majority of the securities acting in concert. This template does not attempt to provide a comprehensive guide to the innumerable legal and structural issues that a practitioner may encounter in any specific transaction. It includes a number of provisions that would be deemed to be favorable to the minority investor. For additional information, see Minority Securityholder Rights Protections, Stockholders' Agreement (Portfolio Company, Pro-Buyer) (DE), and Stockholders' Agreement (Stock-for-Stock Merger, Acquiring Company). For a full listing of related stockholders' agreement content, see Stockholders' Agreement Resource Kit.