Buy Sell Agreement - Download Free Template

BUY-SELL AGREEMENT

This Buy-Sell Agreement (this "Agreement") is made and effective this [Date],

BETWEEN: [COMPANY NAME], a corporation organized and existing under the laws of [STATE/PROVINCE], with its head office located at:

[YOUR COMPLETE ADDRESS]

AND: Each of the Parties listed below (each a “Shareholder” and collectively, the “Shareholders”).

The Shareholders desire to promote and protect their mutual interests and the interests of the Company. Therefore, the parties hereby agree as follows:

ARTICLE I

PARTIES AND PURPOSE

PARTIES

The Shareholders own all the outstanding shares (the “Shares”) of the [COMPANY NAME] in the amount outlined below.

At this time, each Shareholder’s interest in the Company is as follows:

__________________ owns _________________ %

While this agreement is in effect, no Shareholder shall have any right to assign, encumber or dispose of his interest in the Company except as provided herein.

PURPOSE

The purpose of this Agreement is to protect the Corporation's management and control from persons not acceptable to all Shareholders. The other purpose is to provide a ready market in the event of the death, disability, or lifetime transfer of Shares by a Shareholder.

To this end, the Shareholders have entered into this agreement to:

Restrict the transfer or sale of the

by the Shareholders;

Ensure any sale of the

is in the accordance with established procedures

;

Provide stability and continuity in the management of the Company

;

Maintain ownership or control of the Company

ARTICLE II

SALES TRANSFER

RESTRICTION ON SHARE

No Shareholder (or any party acting on behalf of a Shareholder) may sell or transfer its Shares, whether owned or subsequently acquired, except in accordance with the provisions of this Agreement or with the written consent of the Company and all other Shareholders.

Any attempt to sell or transfer Shares (or an interest in Shares) that contravenes the terms of this agreement is null and void and is not binding on or recognized by the Company or the Shareholders.

Definition of

ale or

ransfer

. The

term

"sale or transfer" includes any sale, pledge, encumbrance, gift, bequest, or other transfer of any

s, whether or not the transfer would be made

for value, or

to another

hareholder

, or

voluntarily or involuntarily or by operation of law, or

during his lifetime or upon his death

Exception

. A sale or transfer of a Shareholder's

hares to a trust that is wholly revocable by that Shareholder and for which that Shareholder is the sole trustee is not a prohibited sale or transfer. However, any subsequent attempted sale or transfer by the trustee of such trust shall be subject to all of the terms of this Agreement with the Shareholder (and not the trust) deemed as the

Shareholder

of such

hares.

Legend on

hare

ertificates

. Each share certificate whether presently owned or subsequently acquired, shall have the following statement conspicuously printed on its face: "The transfer, sale, assignment of the

hares represented by this certificate is restricted by a Buy-Sell Agreement among all the Shareholders and the Corporation dated

[SPECIFY]

. A copy of the Buy-Sell Agreement is available for inspection during normal business hours at the principal office of the Corporation. All the terms and provisions of the Buy-Sell Agreement are incorporated by this reference and made a part of this certificate."

ARTICLE III

VOLUNTARY TRANSFER

ERMITTED SALE OR TRANSFER DURING LIFETIME

Any Shareholder wishing to sell or transfer its Shares must first notify each of the other Shareholders in writing. Such Shareholder (a "Seller") will be deemed to have offered to sell its Shares (the "Offering Shares") to other Shareholders. The notice must indicate the name of the party (the "third party purchaser") to whom the seller wishes to sell or transfer the offered Shares and the terms of the proposed sale or transfer.

First

ption to

ther

Shareholder

Each of the other

hareholders will have thirty (30) days from the effective date of the notice to choose to purchase the Offered Shares in proportion to their respective ownership of all outstanding

hares (excluding the Offered Shares) or in such other proportion as the other

Shareholder

s may agree. During this 30-day period, the other

hareholders must collectively agree to purchase all or none of the Offered Shares. If the other Shareholders exercise their call option, they must acquire the Offering Shares on the same terms

as those set out in the proposed notice of sale or transfer. These conditions will be supplemented, as necessary, by the payment conditions described in Article

below.

Notice of

roposed

ale.

Any Shareholder wishing to sell his/her Shares shall provide a Notice of Proposed Sale. The notice must specify:

the name and address of each proposed transferee

;

the number of

or the interest in

to be transferred

;

the price per

hare

;

the terms of the proposed sale, assignment, or transfer

Permitted

ale or

ransfer to

hird

arty

urchaser

When

the other Shareholders do not exercise their right to purchase all the Shares offered within the 30-day period, the seller may then conclude the sale or transfer to the third-party purchaser. However, the sale or transfer must be made on the same terms and conditions as those set out in the notice to other Shareholders. In addition, the third-party buyer must agree in writing to be bound by the terms of this contract before or at the time of the sale or transfer. If the sale or transfer to the

third-party

acquirer is not completed within sixty (60) days of the expiry of the other Shareholder's 30-day option period, then the authorization to sell or transfer under this agreement shall be deemed to have been withdrawn as if no sale or transfer had been considered and no notice given.

ARTICLE IV

INVOLUNTARY TRANSFER

NVOLUNTARY LIFETIME SALE OR TRANSFER

Any Shareholder who holds information that could reasonably be expected to result in an involuntary lifetime sale of his or her Shares and any person or entity that has acquired or may acquire an interest in such Shares must promptly notify each of the other Shareholders in writing. The notice must describe the nature and details of the involuntary lifetime sale and must indicate the name of the party (the "third party transferee"). The Shareholder will be deemed to have offered to sell its Shares (the "Offering Shares") to other Shareholders.

The following events shall each constitute an “Involuntary” transfer event:

the death of a Shareholder;

the t

otal mental or physical disability of a Shareholder;

the termination of a Shareholder’s employment with

[COMPANY NAME]

; and

the bankruptcy or insolvency of a Shareholder.

First

ption to

ther

Shareholder

Each of the other Shareholders will have thirty (30) days from the effective date of this notice to elect to purchase the Offered Shares in proportion to their respective ownership of all outstanding Shares (excluding the Offered Shares) or in such other proportion as the other Shareholders may agree. If the other Shareholders exercise their option to purchase some or all of the offered Shares, they must then acquire these Shares at the purchase price and on the payment, terms described in Articles

and

below.

Permitted

ale or

ransfer to

hird

arty

ransferee

. If the other

Shareholders

do not validly exercise their option to buy all of the Offered

s within the 30-day period, then any remaining Offered

may be transferred to the

hird-

arty

ransferee. However, the transfer must be made on the same terms and conditions as those contained in the notice to the other

Shareholders

. Further, the

hird-

arty

ransferee must agree in writing to be bound by the terms of this Agreement before or at the time of the transfer. If the transfer to the

hird

-p

arty

ransferee is not completed within sixty (60) days after the expiration of the other

Shareholders

' 30-day option period, then the authorization under this Agreement for such transfer shall be deemed withdrawn as if no such transfer had been contemplated and no notice had been given.

DEATH OF A

SHAREHOLDER

Upon the death of a Shareholder, his Personal representative (see definition below) shall immediately be deemed to have offered to sell to the other Shareholders all Shares of the deceased Shareholder (the "Offered Shares") at the purchase price and under the payment terms described in Articles VI and VII below. Each of these other Shareholders will accept this offer and agree to purchase these offered Shares in proportion to their respective ownership of all outstanding Shares (excluding the offered Shares) or in such other proportion as the other Shareholders may agree. The transfer of the Shares will be deemed to take effect at the close of business on the date of the Shareholder's death. The other Shareholders and the Personal representative shall promptly do whatever is necessary to cause such a transfer in accordance with this Agreement.

Personal representative

A Seller's "Personal

epresentative" includes any director, personal representative, executor or trustee who has legal responsibility to manage and dispose of the Seller's Shares. It also includes any person who succeeds in interest to such Shares, if no such fiduciary has control over such Shares

TERMINATION OF EMPLOYMENT

If a Shareholder employed [COMPANY NAME] (an "Employee-Shareholder") ceases to be an employee of [COMPANY NAME] because the Employee-Shareholder is a Disabled Employee (see paragraph 3.c below), or for any other reason, then such Shareholder shall be deemed to have offered to sell all of its Shares (the "Offering Shares") to Other Shareholders for the purchase price and payment terms described in Articles VI and VII below. This offer will be deemed to have been made on the date on which the Employee-Shareholder ceased to be an employee of the [COMPANY NAME]. This provision does not apply in the event of early retirement or death of the Employee-Shareholder, as explained below.

Early Retirement

If the Employee-Shareholder voluntarily retires before

[SPECIFY AGE]

, or if the Employee-Shareholder has not given at least five (5) years' written notice to

[COMPANY NAME]

of his intention to terminate his employment, the purchase price shall be reduced by

[SPECIFY NUMBER]

% of the amount otherwise determined in Article V

below.

Death of the

Employee-Shareholder

. If the

Employee-Shareholder

ceases to be an employee

[COMPANY NAME]

because of death, the provisions of

Article

(

) shall govern.

Disabled Employee

. An

Employee-Shareholder

is a "Disabled Employee" when such person is

by a legal judgment of incapacity, or

eligible for disability benefits of more than 50% under a group or individual disability insurance policy (as confirmed by an insurance company), or

unable to perform substantially all of his or her usual duties for a period of time that can reasonably be expected to last at least 180 consecutive days, as determined by a medical examiner, to which the Employee

Shareholder hereby consents to an examination.

Other

Shareholders

Must Buy

. Each other

Shareholder

shall agree to buy all of the Offered

s of the selling

Employee-Shareholder

in proportion to his or her respective ownership of all outstanding

s (excluding the Offered

), or in such other proportion upon which the Other

Shareholder

s may agree.

ARTICLE V

LIFE INSURANCE

REQUIRED POLICIES

Each Shareholder will apply for, own, and be the beneficiary of one or more life insurance policies, one policy on the life of each other Shareholder.

Each policy shall have death proceeds payable in an amount calculated to fully pay for such beneficiary-Shareholder's pro rata share of the insured-Shareholder's Shares at the purchase price, as if the insured-Shareholder died,

Each Shareholder will take any actions required to maintain in force all of the insurance policies that he or she is required to maintain under this Article and will not cancel them or allow them to lapse without the prior written consent of each other Shareholders.

The Shareholder may, from time to time, procure additional policies on the Shareholder’ lives to effectuate this agreement. It may also release policies from the agreement; increase, decrease or make other changes in existing policies; or substitute other life insurance policies on the same life or lives for any policies subject to this agreement. The Shareholders hereby agree to do all things necessary to enable the Company to obtain additional insurance on their lives or make changes in existing policies.

ADDITIONAL POLICIES

Each Shareholder may acquire any additional policies of life insurance that he or she reasonably deems appropriate to carry out this Agreement. Each insured Shareholder will cooperate fully in any such acquisitions, including submitting to any physical examinations and providing any medical information required by the insurance company.

PREMIUM

Each Shareholder will pay every premium on any life insurance policies that he or she is required to maintain under this Article. Further, each Shareholder will give each other Shareholder proof of such payment within [SPECIFY NUMBER] days after the date the premium was due. If any Shareholder fails to provide such proof, any other Shareholder may pay the premium and be reimbursed for his or her payment by the Shareholder who failed to provide such proof. All dividends on such policies shall be applied to the payment of premiums.

ARTICLE VI

PURCHASE PRICE

The "Purchase Price" shall be determined in accordance with the provisions of this Article VI, and the payment terms are set forth in Article VII.

PURCHASE PRICE SET BY APPRAISAL

The purchase price of the Shares subject to this Agreement shall be the value of the Shares set by appraisal. Often, this value is also called the book value. The book value must be calculated in accordance with generally accepted accounting principles. The appraiser must be a certified public accountant ("CPA")

However, in the event of death of a Shareholder, the purchase price shall be no less than the value of the Shares as finally determined for federal estate tax purposes.

SELECTION OF APPRAISER

Within [SPECIFY NUMBER] days after an event requiring the determination of purchase price, the Company and the selling Shareholder shall mutually select a qualified appraiser to appraise the Company and set a value on its stock.

ARTICLE VII

PAYMENT TERM

TYPE OF PAYMENT

In the event of the death of a Shareholder, payment for the cost of his or her Shares, purchased and transferred, will first come from the proceeds of the amount payable under any life insurance policy on the lives of [COMPANY NAME] Shareholders.

To the extent that there is no life insurance policy or if the life insurance proceeds are less than the purchase price, the remaining amount is payable in cash.

However, at the other Shareholder's option, the balance may be paid in [SPECIFY FIGURE] equal monthly instalments of principal and interest. These payments will begin on the closing date and will include interest compounded annually at the prime rate indicated on the website of the Central Bank of [COUNTRY], on the closing date.

Each other Shareholder shall deliver to the Seller a negotiable promissory note as proof of such debt. This note will allow the other Shareholder to prepay all or part of the principal balance of the note at any time, without penalty or premium.

Payments are first charged to interest.

CLOSING

The purchase of the Offered Shares will take place at a closing at the Company's primary place of business or at any other place and time to which the parties agree. In the case of the death or voluntary retirement of the Seller, the closing shall be held 180 days after the date of the Shareholder's death or the effective date of retirement.

Certificates

. At the closing,

the selling

Shareholder

or withdrawing

Shareholder

shall deliver the certificates representing the Shares being transferred, properly endorsed for transfer or accompanied by an assignment agreement to the transferee.

Power of Attorney

Each Shareholder hereby appoints the Company, through its Secretary, as its agent and mandatary responsible for executing and delivering all documents necessary for the transfer of its Shares, if such selling Shareholder is not present at the closing.

This power of attorney carries interest and will not terminate in the event of the disability or death of the Shareholder and will continue for as long as this Agreement is in effect.

ARTICLE VIII

TERMINATION

This agreement will terminate in the even one of the following occurs:

Written consent of a majority of the Shareholders

Death or incapacity of all the Shareholders

Bankruptcy, receivership or dissolution of the Company

ARTICLE IX

MISCELLANEOUS

MENDMENTS

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

NOTICES

Any notice or other communication given or made to any party under this Agreement shall 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.

BINDING EFFECT

. This Agreement is binding on and enforceable by and against the parties, their successors, legal representatives, and assigns

ASSIGNMENT

. No party hereto shall have the right to assign it’s right or delegate it’s duties hereunder without the written consent of the other parties, which consent shall not unreasonably

withhold

GOVERNING LAW

. The terms of this Agreement shall be governed by and construed in accordance with the laws of the state of

[SPECIFY]

, not including its conflicts of law provisions.

DISPUTE

. Any dispute arising from this Agreement shall be resolved in the courts of the state of

[SPECIFY]

WAIVER

Any party's failure to insist on compliance or enforcement of any provision of this Agreement shall not affect its validity or enforceability or constitute a waiver of future enforcement of that provision or of any other provision of this Agreement.

EFFECTIVENESS

. This Agreement shall become effective when signed by all of the Shareholders

IN WITNESS WHEREOF, the parties have indicated their acceptance of the terms of this Agreement by the latest of the signatures set forth below, effective on the Effective Date.

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

[SHAREHOLDER A] [SHAREHOLDER B]

Authorized Signature Authorized Signature

Print Name and Title Print Name and Title

[SHAREHOLDER C] [SHAREHOLDER D]

Authorized Signature Authorized Signature

Print Name and Title Print Name and Title

Buy Sell Agreement - Download Free Template Buy Sell Agreement - Download Free Template

Buy Sell Agreement - Download Free Template