Fill and Sign the Llc Buy Sell Agreement Sample Everything You Need to Know Form

Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company (LLC) with an Option to Fund the Purchase through Life Insurance Agreement made on the _____ day of ______________, 20______, by and between __________________________________ (Name of Limited Liability Company), a limited liability company organized and existing under the laws of the state of ________________, with its principal office located at _____________________________________________________ ____________________________ (street address, city, state, zip code) , referred to herein as LLC , Member Alpha of _______________________________________________________ __________________ (street address, city, county, state, zip code) , hereinafter called Member Alpha , and Member Beta of _______________________________________________ ____________________________ (street address, city, county, state, zip code) , hereinafter called Member Beta. The LLC, Member Alpha and Member Beta are jointly referred to as the Parties. WHEREAS, the LLC was created and exists under the laws of the State of __________________ (Name of State), with its principal place of business at ______________ _________________________________________ (street address, city, and county); WHEREAS, Member Alpha owns _______ (number) membership units, hereinafter called Units in the LLC; and WHEREAS, Member Beta owns ______ (number) Units in the LLC; and WHEREAS, the parties to this Agreement believe it is to their mutual best interests to provide for continuity and harmony in the management and policies of the LLC; and WHEREAS, therefore, it is their mutual purpose (i) to provide for the purchase by the LLC of Member’s Units should the Member desire to dispose of any of such Units in the LLC during his lifetime or should he terminate employment with the LLC during his lifetime, and (ii) to set forth the terms and conditions under which the above and foregoing may be accomplished. NOW, THEREFORE, in consideration of their mutual agreements and covenants contained herein and for other valuable consideration, receipt of which is hereby acknowledged, it is mutually agreed by and between the parties to this Agreement as follows: I. Restriction on Transfer of Membership Units. Neither Member shall not sell, assign, transfer, pledge, or dispose of his Units in the LLC by operation of law or otherwise except as provided below. II. Purchase of Membership Units at Death of Member. A. Purchase of Units. Upon the death of a Member, the estate of the deceased Member shall sell and the LLC shall purchase all of the deceased Member’s Units in the LLC, now owned or hereafter acquired. B. Purchase Price at the Death of Member. The purchase price to be paid for the Units of the deceased Member shall be [Insert here either the purchase price per Unit or the formula method by which such a purchase price shall be determined. If a fixed purchase price per Unit is provided, additional provisions should be inserted providing for an annual re-valuation of the purchase price, which re-valuation should be set forth in Exhibit A to the agreement.] __________________________________________. C. Notwithstanding the foregoing, however, the purchase price to be paid for the Units of said deceased Member shall be adjusted as set forth in Section D of this Paragraph II of this Agreement. The purchase price of the Units shall be determined by the accounting firm for the LLC, using the accounting principles generally applied to the LLC, and said determination by the LLC’s accounting firm shall be final and conclusive upon all parties to this Agreement. D. Insurance on the Member’s Life. At the time of execution of this Agreement, the LLC is the owner and beneficiary of certain life insurance policies described in Exhibit A attached hereto, insuring the life of the Member. In the event of the death of Member, the face value of the insurance policies shall be paid to the estate of the deceased Member in full or partial payment of the purchase as soon after receipt by the LLC of the face value of the insurance policies (as is reasonably practicable). In the event that any action, omission, or misstatement on the part of a deceased Member results in the nonpayment by the insurance carrier of all or part of the face value of the insurance policies described in Exhibit A to this Agreement, then and in such events the purchase price set forth in Section B of this Paragraph II of the Agreement shall be reduced by a like amount and the LLC shall have no liability to the deceased Member’s estate for that portion of the face value of the insurance policies which is not paid by the insurance carrier. The LLC agrees to pay premiums on the insurance policies listed in Exhibit A to this Agreement and shall give proof of payment of premiums to the Member whenever he requests. If a premium is not paid within 10 days after its due date, the insured Member shall have the right to pay such premium and be reimbursed therefore by the LLC. The LLC shall have the right to purchase additional insurance on the life of the Member. Such additional insurance shall be listed in Exhibit A to this Agreement, along with any substitution or withdrawal of life insurance policies subject to this Agreement. In the event that the Member decides to purchase additional life insurance on Member, the Member hereby agrees to cooperate fully by performing all of the requirements of the life insurer which are necessary conditions precedent to the issuance of life insurance policies. The LLC shall be the sole owner of the policies issued to it and it may apply any dividends toward the payment of premiums. E. Payment of Balance of Purchase Price. In the event that the amount of insurance proceeds listed in Exhibit A to this Agreement as applied toward the purchase price of a deceased Member’s Units in the LLC shall exceed said purchase price as determined in Section B of Paragraph II of this Agreement, then the excess insurance proceeds shall be distributed to the deceased Member’s estate as an additional death benefit from the LLC, payable to the estate of the deceased Member in equal consecutive monthly installments over a period of months, with the first installment due on the first day of the month beginning no later than _______ (number) days from the date of death. Said excess purchase price shall be evidenced by an installment note, bearing interest at _____ %. The note shall provide for prepayment at any time without prepayment penalty. III. Purchase of Membership Units During Lifetime of Selling Member A. Purchase of Membership Units of Member While in the Employ of the LLC. In the event that a Member (the Selling Member) desires to sell, assign, transfer, pledge, or dispose of any Unit in the LLC owned by him at a time when the Selling Member is in the employ of the LLC, he shall first offer in writing to sell all of his Units in the LLC to the LLC. The written offer by the Selling Member shall state the name of any other intended transferee (the Intended Transferee) and the terms and conditions of the intended transfer, including the proposed purchase price. At any time during the period of Thirty (30) days beginning with the day on which such written offer is received, the LLC may purchase all of the Units of such Member at a purchase price equal to the lesser of (i) the price offered by the Intended Transferee or (ii) the price determined in accordance with Section C of Paragraph III of this Agreement. Any shares not purchased by the LLC within Thirty (30) days after receipt of such offer in writing shall be offered in writing at the same price to the other Members, each of whom shall have the right to purchase such portion of the remaining Units offered for sale as the number of Units owned by him at such date shall bear to the total number of Units owned by all of the other Members excluding the Selling Member. If any of the Members elect to purchase less than his pro rata proportion of the offered Units, or elect to purchase none at all, then the purchasing Members shall have the right to purchase the Units which the Member declines to purchase in such proportion as the number of Units purchased by each Member exercising his right to purchase bears to the total number of Units purchased by all Members exercising their right to purchase. If the LLC or the remaining Members do not purchase all of the Units owned by the Selling Member in the LLC within 60 days of the initial receipt of the offer to sell by the LLC, the Selling Member may sell the Units to the Intended Transferee, but only on the same terms and conditions, including the same purchase price, as set forth in the written offer. If the sale to the Intended Transferee is not completed within 120 days of the initial receipt of the offer to sell by the LLC, the right of the Selling Member to sell his Units to the Intended Transferee shall terminate and such Selling Member must again comply with the requirements of this Section A in order to sell or otherwise transfer his Units hereunder. B. Purchase of Units of Member While Not in the Employ of the LLC. In the event that a Member’s employment with the LLC is terminated prior to his Retirement (as such term is defined in Section D of Paragraph III of this Agreement) or his Total Disability (as such term is defined in Section B of Paragraph IV of this Agreement) the terminated Member shall sell and the LLC shall purchase all, but not less than all, of his Units in the LLC at a price determined in accordance with Section C of Paragraph III of this Agreement. C. Purchase Price During Lifetime Sale. 1.The purchase price to be paid for the Units of the Member who desires to sell his Units during his lifetime pursuant to the terms of Section A or Section B of Paragraph III of this Agreement shall be [Insert here either the purchase price per Unit or the formula method at which such a purchase price shall be determined. If a fixed purchase price per Unit is provided, additional provisions should be inserted providing for an annual re-valuation of the purchase price, which re-valuation should be set forth in Exhibit B to the Agreement.] __________________________________________________. 2. The purchase price of the Units as set forth in this Section shall be determined by the accounting firm for the LLC, using the accounting principles generally applied to the LLC, and said determination by the LLC’s accounting firm shall be final and conclusive upon all parties to this Agreement. D. Purchase and Purchase Price of Units of Member at or Following Retirement. 1.In the event that a Member’s employment with the LLC is terminated due to his Retirement, as such term is defined below, (and at such time or at any time thereafter the retired Member desires to sell, assign, transfer, pledge, or dispose of any Unit in the LLC owned by him), such retired Member shall sell and the LLC shall purchase all of his Units in the LLC at a price determined in accordance with this Section. The purchase price to be paid for the Units of a retired Member pursuant to the terms of this Section shall be [Insert here either the purchase price per Unit or the formula method at which such a purchase price shall be determined. If a fixed purchase price per Unit is provided, additional provisions should be inserted providing for an annual re-valuation of the purchase price, which re-valuation should be set forth in Exhibit B to the Agreement.] ___________________________________________________ . 2. The purchase price of the Units as set forth in this Section shall be determined by the accounting firm for the LLC, using the accounting principles generally applied to the LLC, and said determination by the LLC’s accounting firm shall be final and conclusive upon all parties to this Agreement. For purposes of this Section, the term Retirement shall mean the termination of the Member’s employment with the LLC on or after said Member’s having reached the age of ______ (e.g., 70) and with the then present intention on the part of the retired Member neither to seek employment either with another employer nor to become self-employed and provide services or products similar in nature as those provided by the LLC. Whether or not a Member’s termination of employment is on account of his Retirement (and, therefore, whether or not said Member is entitled to the benefits of this Section of the Agreement) shall be made at the time of termination of employment. E. Installment Purchase of Units. In the event of a sale of Units during the Selling Member’s lifetime, _____percent of the purchase price shall be paid on the date falling ______ (number) days after the close of the LLC’s fiscal year in which the Member terminates employment or the written offer to sell or written notice of sale is first received by the LLC. The balance of the purchase price shall be evidenced by an installment note executed by the LLC, the purchasing Members, or both, providing for ________ equal consecutive monthly installments, with the first installment due on the first day of the month following the initial percent payment, said note to bear interest at _______%. The note shall provide for prepayment at any time without prepayment penalty. F. Purchase of Life Insurance. In the event of a sale of Units during the Selling Member’s lifetime, or if this Agreement terminates before the death of a Member, then such Member shall have the right to purchase the policy or policies on his life owned by the LLC by paying an amount in cash equal to the cash surrender value as of the date of transfer, less any existing indebtedness charged against the policy or policies. This right shall lapse if not exercised within 30 days after such sale or termination. IV. Purchase of Units in the Event of Disability A. Purchase of Units in the Event of Disability. In the event that anytime from and after the end of six months of continuous Total Disability, as defined in Section D of Paragraph IV of this Agreement, a disabled Member desires to sell, assign, transfer, pledge, or dispose of any Unit in the LLC owned by him, he shall sell and the LLC shall purchase all, but not less than all, of the Units of the disabled Member in the LLC at a price determined in accordance with Section B of Paragraph IV of this Agreement. The provisions of Sections E and F of Paragraph III shall apply in the event of a sale of Units under this Paragraph IV. B. Purchase Price in the Event of Disability. The purchase price to be paid for the Units following six months of continuous Total Disability, shall be [Insert here either the purchase price per Unit or the formula method at which such a purchase price shall be determined. If a fixed purchase price per Unit is provided, additional provisions should be inserted providing for an annual re-valuation of the purchase price, which re-valuation should be set forth in Exhibit B to the Agreement.] _________________________. C. The purchase price of the Units as set forth in this Section shall be determined by the accounting firm for the LLC using the accounting principles generally applied to the LLC, and said determination by the LLC’s accounting firm shall be final and conclusive upon all parties to this Agreement. D. Definition of Total Disability. Total Disability shall have the same meaning as the term Totally Disabled (or any term of like import) has under any policy or plan of group disability insurance insuring the disabled Member pursuant to a plan of insurance carried by the LLC. In the event that a disabled Member is not covered by any such plan of group disability insurance, then and in such event Total Disability shall mean a physical or mental condition of the Member resulting from bodily injury, disease, or mental disorder which renders him incapable of continuing his usual and customary employment with the LLC. In the event that the preceding sentence shall apply, the disability of a Member shall be determined by a licensed physician chosen by the LLC. In the event that the disabled Member shall disagree with the findings of the licensed physician chosen by the LLC, the disabled Member shall have the right to choose a second licensed physician and the licensed physician so chosen, together with the licensed physician chosen by the LLC, shall agree upon a third licensed physician, and the decision of a majority of said three licensed physicians shall be binding upon the LLC and the Member. V. Endorsement on Membership Unit Certificates The following endorsement shall be printed on each membership unit certificate subject to this Agreement: Transfer is subject to the terms and provisions of a Membership Unit Purchase Agreement on file with the Members of this LLC. VI. Execution of Instruments to Effect the Terms of this Agreement The Selling Member or the legal representative of a deceased or disabled Member shall make, execute, and deliver any documents necessary to carry out the provisions of this Agreement. This Agreement shall be binding upon the LLC, the Member, their heirs, legal representatives, successors, and assigns. It is hereby agreed by the parties hereto that the LLC shall not merge or consolidate with any other limited liability company or corporation, except and unless such successor limited liability company or corporation shall agree to the terms and conditions of this Agreement. VII. Termination of the AgreementThis Agreement shall terminate upon the occurrence of any of the following events: 1.The bankruptcy, receivership or dissolution of the LLC; or 2. Written agreement of the Members and the LLC. No modification, termination, or waiver shall be valid unless in writing and signed by the parties sought to be charged thereunder; or 3. Death or termination of employment of all of the Members simultaneously, or within a period of 30 days. VIII. LLC Restrictions on Purchase of Membership Units If the LLC is unable to make any purchase required of it hereunder because of the provisions of the applicable statutes or of its operating agreement or bylaws, the LLC agrees to take such action as may be necessary to permit it to make such purchase. IX. Notice All notices, including offers and acceptances, shall be deemed to have been given if delivered or mailed, by certified or registered mail, to all parties entitled thereto at their addresses as contained in the records of the LLC. The date of such delivery, or the date of mailing by certified or registered mail, shall be the date of such notice for purposes of this Agreement. X. Prior Agreements This Buy Sell Agreement shall supersede and replace all prior buy sell or membership unit purchase agreements executed by any or all of the Members or the LLC regarding the Membership Units in the LLC. Any such previously executed agreements shall have no effect upon the execution of this Agreement. XI. Governing Law This Agreement shall be governed by the laws of the State of ______________. XII. Severability The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. XIII. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. XIV. Attorney’s Fees In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees. XV. Mandatory ArbitrationAny dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. XVI. Entire Agreement This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. XVII. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. XVIII. Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. XIX. Compliance with Laws In performing under this Agreement, all applicable governmental laws, regulations, orders, and other rules of duly-constituted authority will be followed and complied with in all respects by both parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the____ day of ______________, 20____. _________________________ __________________________ (Signature of Member Alpha) (Signature of Member Beta) _________________________ __________________________ (Printed Name of Member Alpha) (Printed Name of Member Beta) ________________________________________ (Name of Limited Liability Company) By: __________________________ (Signature of Member Alpha) ___________________________ (Signature of Member Beta) Attach Exhibits (Acknowledgment form may vary by state) State of _____________________ County of ___________________ Personally appeared before me, the undersigned authority in and for the said County and State, on this ______________ (date), within my jurisdiction, the within-named __________________________________ (Name of Member Alpha) , who acknowledged that he executed the above and foregoing instrument. ________________________________ NOTARY PUBLIC My Commission Expires: ___________________ State of _____________________ County of __________________ Personally appeared before me, the undersigned authority in and for the said County and State, on this __________________ (date), within my jurisdiction, the within-named __________________________ (Name of Member Beta) , who acknowledged that he executed the above and foregoing instrument. ________________________________ NOTARY PUBLIC My Commission Expires: ____________________ State of _____________________ County of __________________ Personally appeared before me, the undersigned authority in and for the said county and state, on this ___ day of __________________, 20____, within my jurisdiction, the within named _________________________ (Name of Member Alpha) and, _____________________ (Name of Member Beta) who each acknowledged that they constitute all of the members of the ______________________ ______________________ (Name of Limited Liability Company) , a ________________ (name of state) LLC, and that for and on behalf of the said LLC, and as its act and deed they executed the above and foregoing instrument, after first having been duly authorized by said LLC so to do. ________________________________ NOTARY PUBLIC My Commission Expires: ____________________ Exhibit A to Buy Sell Agreement The following policies of life insurance are owned by and insure the life of Member Alpha for the purpose of this Agreement: Issuer: Policy Number: Restricted Face Amount1 ___________________________ ___________________ ___________________________ ___________________ The following policies of life insurance are owned by and insure the life of Member Beta for the purpose of this Agreement: Issuer: Policy Number: Restricted Face Amount ___________________________ ___________________ ___________________________ ___________________ Exhibit B to Buy Sell Agreement (Exhibit B should set forth the re-valuation procedures for setting a fixed purchase price for shares at death of a Member. See Paragraph II, Section B, Paragraph III, Section C, Paragraph III, Section D, and Paragraph IV, Section A). 1 Portion of the Face Amount of the Policy which Is Restricted for Payment Pursuant to Section C of Paragraph II of this Agreement