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Buy-Sell Agreement Template

Prepared for:

[Client.FirstName][Client.LastName]

[Client.Company]

Created by:

[Sender.FirstName][Sender.LastName]

[Sender.Company]

State of:

This Buy-Sell Agreement (“Agreement”) is made as of this (insert date) (the “Effective Date”), by and among (Company.Name), a (Company.State) corporation located at [Company.StreetAddress], [Company.City], [Company.State][Company.PostalCode] (“Company”), [MajorityShareholder.FirstName][MajorityShareholder.LastName], and (fill in names of all minority shareholders).

Majority and Minority Shareholders will hereinafter be collectively referred to as the “Shareholders.”
The Shareholders own all of the outstanding shares of the Corporation as follows:

Name of ShareholderNumber of Shares

Purpose

The Shareholders have entered into this Agreement to (Check all that apply)

☐ Restrict the disposition of stock by Shareholders

☐ Ensure any sale of stock is in accordance with established procedures

☐ Provide stability and continuity in the management and policies of the Company

☐ Maintain ownership or control of the Company

☐ Create a market for Shareholders to sell stock

☐ Determine how the stock will be transferred in the event of a death, disability, or other involuntary transfer of Shares

☐ Establish an accepted purchase price for the stock

☐ Other:

Transfer restriction

1. Restriction on transfer

Except as permitted in this Agreement, the parties will not sell, transfer, pledge, assign, hypothecate, encumber or alienate (each a “Transfer”) any of the shares other than according to the terms of this Agreement. Any Transfer not in accordance with this Agreement will be void.

1.2 Agreement available for inspection

An original copy of this Agreement duly executed by the Corporation and by the Shareholders will be delivered to the Secretary of the Corporation, to be maintained by them at the principal executive office of the Corporation, and made available for inspection by any person requesting it.

2. Certificates (check one)

☐ Not applicable.

☐ The Shareholders agree, immediately upon execution of this Agreement, to present the certificates representing the shares of stock in the Corporation presently owned or hereafter acquired by them to the Secretary of the Corporation and cause the Secretary of the Corporation to stamp on the certificate in a prominent manner the following legend:

“The shares represented by this certificate are subject to certain restrictions contained in a Buy-Sell Agreement among the Company and the Shareholders. A copy of the Buy-Sell Agreement is on file at the principal office of the Company.”

Voluntary transfers

1. Permitted transfers (check one)

☐ The Shareholders will NOT be allowed to Transfer any Shares except as provided in this
Agreement.

☐ The Shareholders will be entitled to Transfer Shares: (Check all that apply)

☐ Transfers to other shareholders

☐ Transfers to a revocable trust

☐ Transfers to the shareholder’s immediate family

☐ Other:

Any permitted transferee will hold the Shares subject to the provisions of this Agreement.

2. Notice of transfer

In the event a Shareholder wishes to sell any Shares (the “Offering Shareholder”), the Shareholder will provide a written notice to (Check one)

☐ The other Shareholders (the “Remaining Shareholders”)

☐ The other Shareholders (the “Remaining Shareholders”) first and then the Company

☐ The Company

☐ The Company first and then the other Shareholders (the “Remaining Shareholders”) of its intention to sell the Shares (a “Notice of Transfer”).

A Notice of Transfer will specify the following:
The name and address of the purchaser (the “Third Party Purchaser”)
The number of shares being sold (the “Offered Shares”)
The price per share
The payment and other terms of the proposed sale.

3. Transfer of shares (check one)

☐ (Select if written notice is provided to the Remaining Shareholders only)

Shares at the price and in accordance to the terms in the Notice to Transfer in proportion to their respective ownership interests of the outstanding Shares. If any Remaining Shareholder fails to give timely notice or declines to purchase their proportionate share, the other Remaining Shareholders will have the option to purchase the Offered Shares, in proportion to their respective ownership interests of the outstanding Shares. If the Remaining Shareholders elect to purchase less than all of the Offered Shares, the Offering Shareholder may sell (Check one)

☐ the Offered Shares to the Third Party Purchaser at the price and in accordance to the terms in the Notice to Transfer

☐ any Offered Shares not purchased by the Remaining Shareholders to the Third Party Purchaser at the price and in accordance to the terms in the Notice to Transfer.

☐ (Select if written notice is provided to the Remaining Shareholders first and then the Company)

For (insert number) days after receipt of a Notice to Transfer, the Remaining Shareholders will have the option to purchase the Offered Shares at the price and in accordance to the terms in the Notice to Transfer in proportion to their respective ownership interests of the outstanding Shares. If any Remaining Shareholder fails to give timely notice or declines to purchase their proportionate share, the other Remaining Shareholders will have the option to buy the Offered Shares, in proportion to their respective ownership interests of the outstanding Shares.

At the end of the (insert number)-day option period, the Remaining Shareholders will notify the Company of the number of Offered Shares they intend to purchase. For (insert number) days after receipt of such notification, the Company will have the option to buy any Offered Shares not being purchased by the Remaining Shareholders at the price and per the terms in the Notice to Transfer. If the Remaining Shareholders or the Company elect to purchase less than all of the Offered Shares, the Offering Shareholder may sell (Check one)

☐ the Offered Shares to the Third Party Purchaser at the price and per the terms in the Notice to Transfer

☐ any Offered Shares not purchased by the Remaining Shareholders or the Company to the Third Party Purchaser at the price and in accordance to the terms in the Notice to Transfer.

☐ (Select if written notice is provided to the Company only)

For (insert number) days after receipt of a Notice to Transfer, the Company will have the option to purchase the Offered Shares at the price and per the terms in the Notice to Transfer. If the Company elects to purchase less than all of the Offered Shares, the Offering Shareholder may sell (Check one)

☐ the Offered Shares to the Third Party Purchaser at the price and per the terms in the Notice to Transfer

☐ any Offered Shares not purchased by the Company to the Third Party Purchaser at the price and in accordance to the terms in the Notice to Transfer.

☐ (Select if written notice is provided to the Company first and then the Remaining Shareholders)

For (insert number) days after receipt of a Notice to Transfer, the Company will have the option to purchase the Offered Shares at the price and per the terms in the Notice to Transfer. At the end of the (insert number)-day option period, if the Company has elected to purchase less than all Offered Shares, it will notify the Remaining Shareholders of the number of Offered Shares still available for purchase.

For (insert number) days after receipt of such notification, the Remaining Shareholders will have the option to purchase any Offered Shares not being purchased by the Company at the price and in accordance to the terms in the Notice to Transfer in proportion to their respective ownership interests of the outstanding Shares. If the Company or the Remaining Shareholders elect to purchase less than all of the Offered Shares, the Offering Shareholder may sell (Check one)

☐ the Offered Shares to the Third Party Purchaser at the price and per the terms in the Notice to Transfer

☐ any Offered Shares not purchased by the Company or the Remaining Shareholders to the Third Party Purchaser at the price and in accordance to the terms in the Notice to Transfer.

4. Duties of transferees

Unless otherwise provided in this Agreement, as a condition to any Transfer, each Third Party Purchaser and any other purchaser or subsequent transferee must agree to be bound by the terms of this Agreement.

Adoption Agreement (Check one)
☐ Not applicable.
☐ Each Third Party Purchaser and any other purchaser or subsequent transferee will become a party to this Agreement by executing the Adoption Agreement attached hereto as Annex A.

Involuntary transfers

1. Involuntary transfers

The following events will each constitute an “Involuntary Transfer Event,” and the affected Shareholder will be referred to as the “Withdrawing Shareholder” and the remaining Shareholders will be referred to as the “Non-Withdrawing Shareholders”:

  1. the death of a Shareholder;
  2. the total mental or physical disability of a Shareholder;
  3. the termination of a Shareholder’s employment with the Company; and
  4. the bankruptcy or insolvency of a Shareholder.

2. Sale of shares

Upon the occurrence of any of the events specified in Paragraph 1, the Withdrawing Shareholder or the personal representative of the Withdrawing Shareholder will notify the Company of the Involuntary Transfer Event.

Upon receipt of such notice: (Check one)

☐ The Majority Shareholder will have the option to purchase all or any portion of the shares of stock of the Deceased, Disabled, or Terminated Minority Shareholder on the terms and conditions hereinafter set forth. If the Majority Shareholder declines to exercise their option to purchase the stock, in whole or in part, the Company will purchase all Shares. The Company will redeem or purchase for cancellation all of the Shares owned by the Withdrawing Shareholder within (insert number) days from receipt of the notice.

☐ The Company will purchase all Shares. The Company will redeem or purchase for cancellation all of the Shares owned by the Withdrawing Shareholder within (insert number) days from receipt of the notice.

☐ The Company will purchase Shares first and then the Non-Withdrawing Shareholders. The Company, at its discretion, will redeem or purchase for cancellation the Shares owned by the Withdrawing Shareholder within (insert number) days from receipt of the notice. In the event the Company redeems or purchases less than all of the Shares owned by the Withdrawing Shareholder, the Company will notify the Non-Withdrawing Shareholders of the number of unpurchased Shares remaining. The Non-Withdrawing Shareholders will purchase the remaining Shares on a pro-rata basis within (insert number) days from receipt of the notice.

☐ The Non-Withdrawing Shareholders will purchase all Shares. The Company will notify the Non-Withdrawing Shareholders of the Involuntary Transfer Event and the number of Shares owned by the Withdrawing Shareholder. The Non-Withdrawing Shareholders will purchase all of the Shares owned by the Withdrawing Shareholder on a pro-rata basis within (insert number) days from receipt of the notice.

☐ The Non-Withdrawing Shareholders will purchase Shares first and then the Company. The Company will notify the Non-Withdrawing Shareholders of the Involuntary Transfer Event and the number of Shares owned by the Withdrawing Shareholder. The Non-Withdrawing Shareholders will, at their discretion, purchase the Shares owned by the Withdrawing Shareholder on a pro-rata basis within (insert number) days from receipt of the notice. If the Non-Withdrawing Shareholders purchase less than all of the Shares owned by the Withdrawing Shareholder, the Company will purchase the remaining Shares within (insert number) days from receipt of the notice.

Valuation of shares

1. Purchase price

The purchase price per share to be paid for any Transfer of Shares due to an Involuntary Transfer Event (the “Purchase Price”) will be: (Check one)

☐ $ (insert number) per share.

☐ The book value per share of the Shares. The book value of the Shares will be determined by the Company’s regular independent certified public account. If the Company does not have a regular independent certified public account, the Company will select an independent certified public accountant. The book value will be calculated in accordance with generally accepted accounting principles.

☐ The fair market value per share of the Shares. The fair market value of the Shares will be set and agreed upon by the Company and the Shareholders within (insert number) days after an event requiring a determination of the purchase price of the Shares. If the parties cannot agree on a fair market value, the fair market value will be set by a mutually agreed upon qualified independent appraiser. If the parties cannot agree upon an independent appraiser in good faith, the independent appraiser will be chosen by a court of competent jurisdiction.

☐ Determined by an agreed-upon appraiser. Within (insert number) days after an event requiring a determination of the purchase price of the Shares, the Company and the Shareholders will select a mutually agreed upon qualified appraiser to appraise the value of the Company and set a purchase price.

☐ Other:

2. Other provisions

(Insert any additional information here)

Payment of valuation to disabled minority shareholders

If a Minority Shareholder becomes physically or mentally disabled, as defined by this Agreement, the Purchasers will pay them twenty-five percent (25%) of the total purchase price in cash. The payment must be complete within thirty (30) days of the first anniversary of the disabling event. The purchasers will pay the balance of the purchase price in sixty (60) equal monthly installments. These payments will begin on the first day of the calendar month immediately following the down payment. Payments will be secured by a pledge of stock.

General provision

Insufficient corporate funds

If the Corporation does not have a sufficient source of funds from which it may lawfully purchase the Deceased, Disabled, or Terminated Shareholder’s shares of stock, the Deceased, Disabled, or Terminated Shareholder or his legal representative and the other Shareholders will promptly take measures to vote their respective holdings of stock and to take such steps as may be appropriate or necessary to enable the Corporation to lawfully purchase and pay for all of the Deceased, Disabled, or Terminated Shareholder’s shares of stock.

Voting and dividend rights

The Purchasers of a Deceased, Disabled, or Terminated Shareholder’s shares of stock will be entitled to vote as many shares as each is obligated to purchase. Until full payment of the purchase price is made, all dividends and distributions on the stock will be applied toward the purchase price as a prepayment on the balance due. All such payments will be applied first to the principal then to unpaid interest.

Common disaster provision

In the event of the simultaneous deaths of all of the Shareholders, or in the event of the deaths of all of the Shareholders within thirty (30) days after the death of the first Shareholder to die, the estate of each Shareholder will own their respective shares of the Corporation, and the proceeds of insurance owned by them, free of the terms of this Agreement.

Specific performance

The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties will be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

Liability of insurers

No insurance company that has issued or will issue a policy or policies subject to this Agreement will be under any obligation concerning the performance of this Agreement’s terms and conditions. Any such company will be bound only by the terms of the policy or policies which it has issued or will hereafter issue and will have no liability except as set forth in its policies.

No insurance company that has issued or will issue a policy or policies subject to this Agreement will be under any obligation concerning the performance of this Agreement’s terms and conditions. Any such company will be bound only by the terms of the policy or policies which it has issued or will hereafter issue and will have no liability except as set forth in its policies.

Payment & transfer of shares

1. Payment

The Purchase Price for the Transfer of any Shares due to the death of a Shareholder will be payable out of the proceeds of any life insurance policy required to be carried on the life of the Withdrawing Shareholder by the Shareholders or the Company. To the extent there is no life insurance policy, or the life insurance proceeds are less than the Purchase Price, the remaining amount will be payable by: (Check one)

☐ Cash
☐ A negotiable promissory note
☐ (insert number) equal installment payments

All other payments will be payable by: (Check one)

☐ Cash
☐ A negotiable promissory note
☐ (insert number) equal installment payments

2. Transfer of title

The Selling Shareholder or Withdrawing Shareholder will deliver the certificates representing the Shares being transferred, properly endorsed for transfer, or accompanied by an assignment agreement to the transferee.

3. Life insurance (check one)

☐ Not applicable.
☐ The Company will carry a life insurance policy on the life of each Shareholder. The Company will be responsible for all premiums and costs related to such a life insurance policy. Each life insurance policy will carry a minimum payout of at least $(insert number).
☐ Each Shareholder will carry a life insurance policy on the life of the Shareholder. Each Shareholder will be responsible for all premiums and costs related to such a life insurance policy. Each life insurance policy will carry a minimum payout of at least $(insert number).

Term & termination

1. Term

This Agreement will be effective and binding upon the parties as of the Effective Date.

2. Termination

This Agreement will terminate in the event one of the following occurs:
(Check all that apply)

☐ Written consent of a majority of the Shareholders
☐ Death or incapacity of all of the Shareholders
☐ Bankruptcy, receivership, or dissolution of the Company
☐ A single Shareholder becoming the owner of all of the Shares
☐ Other:

Miscellaneous

1. Amendments

This Agreement may be amended or modified only by a written agreement signed by all of the parties.

2. Notices

Any notice or other communication given or made to any party under this Agreement will be in writing and delivered by hand, sent by overnight courier service, or sent by certified or registered mail, return receipt requested, to the Company at the address stated above and to the Shareholders at the address in the Company’s records.

3. No Waiver

No party will be deemed to have waived any provision of this Agreement or the exercise of any rights held under this Agreement unless such waiver is made expressly and in writing. A waiver by any party of a breach or violation of any provision of this Agreement will not constitute a waiver of any other subsequent breach or violation.

4. Assignment

No party hereto will have the right to assign their rights or delegate their duties hereunder without the written consent of the other parties, whose consent will not be unreasonably withheld.

5. Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable in whole or in part, the remaining provisions will not be affected and will continue to be valid, legal, and enforceable as though the invalid, illegal, or unenforceable parts had not been included in this Agreement.

6. Binding effect

This Agreement will be binding upon and inure to the benefit of the parties and their respective legal representatives, heirs, administrators, executors, successors, and permitted assigns.

7. Headings

The section headings herein are for reference purposes only and will not otherwise affect the meaning, construction, or interpretation of any provision in this Agreement.

8. Governing law

The terms of this Agreement will be governed by and construed in accordance with the laws of the State of [Company.State], not including its conflicts of law provisions.

9. Disputes

Any dispute arising from this Agreement will be resolved through:

☐ Court litigation. Disputes will be resolved in the courts of the State of [Company.State].
(Check if applicable, strike out if not)

☐ If either party brings legal action to enforce their rights under this Agreement, the prevailing party will be entitled to recover from the other party their expenses (including reasonable attorneys’ fees and costs) incurred in connection with the action and any appeal.

☐ Binding arbitration. Binding arbitration will be conducted in accordance with the rules of the American Arbitration Association.

☐ Mediation.

☐ Mediation, then binding arbitration. If the dispute cannot be resolved through mediation, then the dispute will be resolved through binding arbitration conducted in accordance with the rules of the American Arbitration Association.

10. Counterparts

This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together, will constitute one and the same document.

11. Entire agreement

This Agreement contains the entire understanding between the parties and supersedes and cancels all parties’ prior agreements, whether oral or written, with respect to such subject matter.

12. Miscellaneous

(insert any additional information here)

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]

Shareholders

[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]
[Client.Company]
Signature
MM/DD/YYYY
[Client.FirstName][Client.LastName]
[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]
[Client.Company]
Signature
MM/DD/YYYY
[Client.FirstName][Client.LastName]

Consent of spouses

I acknowledge that I have read the preceding Buy and Sell Agreement and that I know its contents. I am aware that by its provisions my spouse is to sell off all of their shares of the Corporation (including my community property interest therein) upon an occurrence of any event specified therein. I hereby consent to such sale, approve of the provisions of said Buy and Sell Agreement, and agree that I will not bequeath said shares or any of them or any interest in them by my Will if I predecease my spouse. I direct that the residuary clause in my Will not be deemed to apply to my community interest in such shares.

[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]
[Client.Company]
Signature
MM/DD/YYYY
[Client.FirstName][Client.LastName]

[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]
[Client.Company]
Signature
MM/DD/YYYY
[Client.FirstName][Client.LastName]
[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]

Annex A – adoption agreement

This Adoption Agreement (this “Agreement”) is executed as of this (insert date) day of (insert month), (insert year) by the undersigned (the “Transferee”) pursuant to the Buy-Sell Agreement dated as of (insert date} (the “Buy-Sell Agreement”) by and between (Company) (the “Company”) and the Shareholders listed in Schedule A thereto.

WHEREAS, the Transferee is hereby acquiring certain shares of the Company (the “Shares”) which are restricted by and subject to the terms and conditions of the Buy-Sell Agreement; and

WHEREAS, the Transferee has received and reviewed a complete copy of the Buy-Sell Agreement.

NOW THEREFORE, as partial consideration for transfer of such Shares, the Transferee hereby agrees as follows:

1. Agreement

The Transferee hereby agrees that upon the execution of this Agreement, the Transferee will become a party to the Buy-Sell Agreement, and will be fully bound by and subject to the terms and conditions of the Buy-Sell Agreement as though an original party thereto.

2. Notices

Any notice required pursuant to the Buy-Sell Agreement will be delivered to the Transferee at the following address:

[Transferee.FirstName][Transferee.LastName]

[Transferee.StreetAddress], [Transferee.City], [Transferee.State][Transferee.PostalCode]

3. Governing law

The terms of this Agreement will be governed by and construed in accordance with the laws of the State of [Transferee.State], not including its conflicts of law provisions.

IN WITNESS WHEREOF, the Transferee has executed this Agreement as of the date first written above.

[Sender.Company]
Signature
MM/DD/YYYY
[Sender.FirstName][Sender.LastName]

Buy-Sell Agreement Template

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