Buy-Sell Agreement - Template, Sample Form to Complete Pro · US-law

BUY-SELL AGREEMENT

This Buy-Sell Agreement (this "Agreement") is made and entered into as of ________ (the "Effective Date"), by and among the following parties:

________, a corporation organized and existing under the laws of the State of ________ (the "Company"), having its principal place of business at:

________
Email: ________

and the following individuals or entities holding an ownership interest in the Company, hereinafter referred to collectively as the "Owners" and individually as an "Owner":

________, residing/located at ________, holding ________ Ownership Units

________, residing/located at ________, holding ________ Ownership Units

The Company and the Owners shall each be referred to individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Owners each own shares of capital stock in the Company (the "Ownership Units");

WHEREAS, the Owners collectively wish to ensure the orderly and continued ownership and management of the Company and to provide for the disposition of Ownership Units upon the occurrence of certain events;

WHEREAS, the Owners wish to protect their respective Ownership Units and the interests of the Company; and

WHEREAS, the Parties desire to establish the terms and conditions governing the sale and transfer of Ownership Units;

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

SALE & TRANSFER RULES

Article 1 — DEFINITIONS

1.1 Sale. A "Sale" means any exchange of Ownership Units for money or other valuable consideration, between a current Owner and any other person or entity. For purposes of this Agreement, Sales of Ownership Units include those transfers made voluntarily or involuntarily, for value, at any time either during or after the lifetime of the Owner.

1.2 Transfer. A "Transfer" means any exchange, conveyance, or disposition of Ownership Units, whether or not made for value. Sales constitute Transfers hereunder, but Transfers may also include the gifting of Ownership Units, or any disposition by trust, assignment, bequest, pledge, encumbrance, or any other attempted change of ownership at any time. Transfers may be made voluntarily or involuntarily.

1.3 Fair Market Value. "Fair Market Value" means the value of the Ownership Units determined in accordance with Article 8 of this Agreement.

Article 2 — AGREEMENT CONTROLS

2.1 Any and all Sales or Transfers of Ownership Units by any Owner are subject to the terms and conditions of this Agreement. Ownership Units currently owned or hereafter acquired may only be sold or transferred in accordance with this Agreement or with the ________ written consent of the non-selling or non-transferring Owners.

2.2 Any Sale or Transfer made in contravention of this Agreement shall be null and void and of no force or effect. The Company shall not recognize, record, or give effect to any such Sale or Transfer, and any purported transferee shall acquire no rights with respect to the Ownership Units.

Article 3 — RIGHT OF FIRST REFUSAL ON VOLUNTARY LIFETIME SALE OR TRANSFER

3.1 Should any Owner desire to sell or transfer any or all of their Ownership Units during their lifetime to any person or entity (a "Proposed Transfer"), such Owner (the "Offering Owner") shall first deliver written notice to the Company and the remaining Owners stating the number of Ownership Units offered, the proposed price and terms, and the identity of the proposed transferee.

3.2 The remaining Owners shall have ________ days from receipt of such notice to elect to purchase all (but not less than all) of the offered Ownership Units at the price and on the terms set forth in the notice (or, if the Proposed Transfer is for no value or for value less than Fair Market Value, at the purchase price determined under Article 8). The remaining Owners may purchase such Ownership Units in proportion to their respective ownership percentages, equally, or in such other proportions as they may agree.

3.3 If the remaining Owners do not elect to purchase all of the offered Ownership Units within the period set forth above, the Offering Owner may complete the Proposed Transfer to the identified transferee, provided that such transfer is completed within ________ days at a price and on terms no more favorable to the transferee than those set forth in the notice, and provided further that the transferee executes a written agreement to be bound by this Agreement.

Article 4 — INVOLUNTARY LIFETIME SALE OR TRANSFER

4.1 An Owner shall be subject to mandatory offer and involuntary sale or transfer of Ownership Units during their lifetime upon the occurrence of any of the following:

a. The Owner is adjudicated incompetent by a court of competent jurisdiction;

b. A guardian or conservator is appointed for the Owner;

c. The Owner's Ownership Units become subject to a trustee or receiver in connection with the Owner's bankruptcy or insolvency;

d. The Owner's Ownership Units are subject to division with the Owner's former spouse during or upon the completion of a divorce or dissolution proceeding;

e. The Owner pledged the Ownership Units as collateral for any loan and subsequently defaulted thereon; or

f. Any other reason or circumstance in which the Owner involuntarily loses or is at risk of losing ownership of their Ownership Units.

4.2 The Owner subject to such involuntary disposition shall notify the Company and the other Owners immediately, but in no event later than three (3) days after receiving notice of the involuntary disposition. Such notice shall state the purchase price of the Ownership Units as determined under Article 8.

4.3 From the date of such notice, the remaining Owners shall have ten (10) business days within which to purchase the affected Ownership Units at the purchase price determined under Article 8. The remaining Owners shall purchase such Ownership Units and may do so in proportion to their respective ownership percentages, equally, or in such other proportions as they may agree.

Article 5 — TERMINATION OF EMPLOYMENT

5.1 If an Owner holds Ownership Units by virtue of employment with the Company, and such Owner's employment is terminated for any reason, the terminated Owner shall be deemed to have offered all of their Ownership Units for sale to the remaining Owners as of the date of termination, at the purchase price determined under Article 8.

5.2 The remaining Owners shall purchase the Ownership Units of the terminated Owner and may do so in proportion to their respective ownership percentages, equally, or in such other proportions as they may agree.

Article 6 — RETIREMENT

6.1 If an Owner holds Ownership Units by virtue of employment with the Company and such Owner retires, the retiring Owner shall be deemed to have offered all of their Ownership Units for sale to the remaining Owners upon giving notice of retirement, at the purchase price determined under Article 8.

6.2 The remaining Owners shall purchase the Ownership Units of the retiring Owner and may do so in proportion to their respective ownership percentages, equally, or in such other proportions as they may agree.

6.3 If the retiring Owner retires before reaching the age of ________, a price adjustment shall apply, and the purchase price of the Ownership Units shall be discounted by ________% (________ percent).

6.4 A retiring Owner shall provide not less than ________ advance written notice of retirement. If such notice is not provided, the purchase price of the Ownership Units shall be discounted by ________% (________ percent).

Article 7 — DEATH OF AN OWNER

7.1 Upon the death of an Owner, the deceased Owner's estate, executor, administrator, or personal representative shall be deemed to have offered the deceased Owner's Ownership Units for sale, at the purchase price determined under Article 8.

7.2 The remaining Owners shall purchase such Ownership Units and may do so in proportion to their respective ownership percentages, equally, or in such other proportions as they may agree, subject to the application of insurance proceeds as provided in Articles 10 and 11.

PURCHASE PRICE

Article 8 — PURCHASE PRICE DETERMINATION

8.1 The purchase price for any Ownership Units offered for sale shall be determined by the Fair Market Value of such Ownership Units as of the last day of the fiscal year immediately preceding the Sale or Transfer.

8.2 The current agreed Fair Market Value of the Company is $________ (________). The Fair Market Value of each Ownership Unit shall be derived from this value, allocated proportionally according to the total number of Ownership Units issued and outstanding at the relevant time.

8.3 If the Parties have not established a current Fair Market Value within the preceding twelve (12) months, or if any Party disputes the value, the Fair Market Value shall be determined by an independent appraiser jointly selected by the Parties. If the Parties cannot agree on a single appraiser, each side shall select one appraiser, and those two appraisers shall jointly select a third; the Fair Market Value shall be the average of the two closest appraisals. The cost of such appraisal shall be borne ________.

Article 9 — ADJUSTMENTS

9.1 The Fair Market Value of the Company may be adjusted annually and as otherwise needed, upon the unanimous vote of all Owners. Any adjustment to the Fair Market Value shall be recorded in a written addendum to this Agreement and executed by each of the Owners.

OWNERS

Article 10 — LIFE INSURANCE

10.1 Each Owner shall apply for, own, and maintain life insurance policies on the lives of the other Owners. The Owner owning each policy shall be the named beneficiary thereof. The proceeds of each such policy in the event of an Owner's death shall be in an amount not less than that required for the policy owner to purchase the deceased Owner's Ownership Units.

10.2 Each Owner shall maintain such policies in full force and effect, pay all premiums when due, and keep all documentation current and active. The Company may, at its election, require periodic evidence of the maintenance of such policies.

Article 11 — USE OF INSURANCE PROCEEDS

11.1 In the event of the death of an Owner, the proceeds of any life insurance policy maintained pursuant to this Agreement shall be applied first toward the purchase of the deceased Owner's Ownership Units in accordance with this Agreement. The owner of the applicable policy shall use such proceeds to purchase the deceased Owner's Ownership Units from the deceased Owner's estate at the purchase price determined under Article 8.

11.2 If the proceeds of any such policy exceed the purchase price of the deceased Owner's Ownership Units, the excess shall be retained by the owner of the policy. If the proceeds are insufficient to cover the full purchase price, the purchasing Owner shall pay the remaining balance in accordance with the payment terms of this Agreement.

Article 12 — PAYMENT TERMS

12.1 The purchase price for any Ownership Units purchased pursuant to this Agreement shall be paid in full at closing, unless the purchasing Owners and the selling Owner (or the selling Owner's estate or representatives) agree otherwise in writing.

12.2 In the event the parties agree to installment payments, the purchasing Owner shall execute a promissory note for the unpaid balance. Any such promissory note shall bear interest at a rate of not less than ________% (________ percent) per annum (in no event less than the applicable federal rate then in effect under Section 1274(d) of the Internal Revenue Code), shall be payable over a period not exceeding ________, and may be secured by the Ownership Units being purchased. The terms of any installment payment, including the interest rate, the payment schedule, and any security, shall be set forth in writing and signed by the parties.

Article 13 — CLOSING

13.1 Owners selling their Ownership Units to other Owners or to third parties may determine the details of the closing, including date, time, and place, at their discretion. For any repurchase of Ownership Units by the Company, the closing shall take place at the principal offices of the Company set forth above.

13.2 Closings shall be held within thirty (30) days of any decision to purchase, whether by the Company, the Owners, or third parties. For Sales or Transfers between Owners or between Owners and third parties, the Company shall be notified of such transaction not later than fifteen (15) days prior to closing.

Article 14 — OWNERSHIP UNIT DOCUMENTS

14.1 At closing, the purchaser of the Ownership Units shall receive from the seller fully executed and endorsed certificates, instruments, or other documentation evidencing ownership of the Ownership Units, together with such stock powers and other documents reasonably necessary to effect the transfer. Such documentation shall be free and clear of all liens, encumbrances, and adverse claims.

Article 15 — POWER OF ATTORNEY

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GENERAL PROVISIONS

Article 16 — TERMINATION

16.1 This Agreement shall terminate upon the dissolution or bankruptcy of the Company. The Owners may also vote to terminate this Agreement, provided that the affirmative vote of holders of at least ________% (________ percent) of the Company's outstanding Ownership Units is obtained.

16.2 Notwithstanding the foregoing, the Owners may not vote to terminate this Agreement after any proposed Sale or Transfer of Ownership Units has commenced but not yet closed.

Article 17 — DISPUTE RESOLUTION; ARBITRATION

17.1 Any dispute, claim, or controversy arising out of or relating to this Agreement, or the breach, termination, enforcement, interpretation, or validity thereof, shall be resolved by binding arbitration before a single arbitrator administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules then in effect. The arbitration shall be conducted in ________.

17.2 The award of the arbitrator shall be final and binding upon the Parties, and judgment upon the award may be entered in any court of competent jurisdiction. This arbitration provision is made pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

17.3 The prevailing Party shall be entitled to recover its reasonable costs and attorneys' fees incurred in connection with the arbitration. Notwithstanding the foregoing, any Party may seek injunctive or other equitable relief, including specific performance, from a court of competent jurisdiction to preserve the status quo or prevent irreparable harm pending arbitration.

Article 18 — MISCELLANEOUS

a. LANGUAGE. All communications made pursuant to this Agreement shall be in the English language.

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c. AMENDMENT. This Agreement may be amended only by the affirmative vote of holders of at least ________% (________ percent) of the Company's outstanding Ownership Units, evidenced by a written instrument signed by such Owners. The Owners may not vote to amend this Agreement after any proposed Sale or Transfer of Ownership Units has commenced but not yet closed.

d. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the Parties regarding the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral.

e. BINDING EFFECT. This Agreement is binding upon and inures to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators, legal representatives, and any new Owner who may purchase or be transferred Ownership Units.

f. GOVERNING LAW; JURISDICTION; VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of ________, where the Company filed its formation documents, without regard to its conflict of laws principles. Subject to Article 17, the Parties consent to the exclusive jurisdiction and venue of the state and federal courts located in ________.

g. SEVERABILITY. If any provision or part of a provision of this Agreement is held invalid or unenforceable by a court or arbitrator of competent jurisdiction, the remaining provisions shall be enforced to the maximum extent permitted by law, and this Agreement shall otherwise continue in full force and effect.

h. NO WAIVER. The failure of any Party to enforce any provision of this Agreement shall not constitute a waiver of any future enforcement of that provision or of any other provision. Waiver of any provision shall not constitute a waiver of any other provision.

i. SPECIFIC PERFORMANCE. Each Owner acknowledges that any breach of this Agreement, including any attempted Sale or Transfer in violation of its terms, would cause irreparable harm to the Company and the other Owners for which monetary damages would be inadequate. Accordingly, the Parties agree that specific performance and other equitable relief may be awarded by a court of competent jurisdiction or arbitrator, without the necessity of posting a bond.

j. SPOUSAL CONSENT. The spouse of each Owner, although not a party to this Agreement, shall execute the spousal consent attached hereto to signify that such spouse has read and agreed to all of the terms of this Agreement, including all provisions applicable to the Sale and Transfer of Ownership Units, and to subordinate any community property, marital, or other interest such spouse may have in the Ownership Units to the terms of this Agreement.

k. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Electronic signatures shall have the same force and effect as original signatures.

l. HEADINGS. Headings of articles and subsections are for convenience and organization only and shall not affect the meaning or interpretation of any provision of this Agreement.

EXECUTION

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

COMPANY:

________

By: _____________________________

Name: ________

Title: ________

Date: ________

OWNERS:

________

Signature: _____________________________

Date: ________

________

Signature: _____________________________

Date: ________

SPOUSAL CONSENT

The undersigned, being the spouse of an Owner named above, acknowledges that I have read and understand the foregoing Agreement, agree to be bound by its terms to the extent applicable to any community property, marital, or other interest I may have in the Ownership Units, and consent to the Sale and Transfer provisions set forth herein.

Spouse of ________

Signature: _____________________________

Printed Name: ________

Date: ________

Spouse of ________

Signature: _____________________________

Printed Name: ________

Date: ________