A buy-sell agreement is essential when there is more than one owner in a business. Such an Agreement Form specifies what will happen to the share of a co-owner in case he expires, voluntarily leaves the company, or is forced to withdraw. The primary purpose of such a contract is to make sure that ownership and operations stay within the existent management of the company.
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 shareholder
Number of shares
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
If you do not have a buy-sell agreement in place under any of the preceding circumstances, then your business could be subject to a partition by sale. This means that a court may order the dismantling and selling of components of the company to provide the financial value that a new owner is entitled to. Alternatively, a court could decide to grant ownership to a new person under one of the aforementioned circumstances, granting that new person the same decision-making ability as the existing partners.
If a company’s owners disagree, without a contract to ensure that the company shares are appropriately sold and valued, one shareholder might sell shares to a competing entity or a party not approved by the other shareholders.
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.
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.
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.”
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
Any permitted transferee will hold the Shares subject to the provisions of this Agreement.
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 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.
(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)
The types of permitted transfers will vary from business to business, but the goal is to assure the shareholders that if a transfer of equity occurs, it will not destabilize 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.