Buy-Sell Agreement
Buy-Sell Agreement
Buy-Sell Agreement
BUY-SELL AGREEMENT THIS BUY-SELL AGREEMENT (Buy-Sell Agreement) entered into and effective as of the date signed by all parties hereto by and between the following parties: ______________having his, her or its physical place of business (If an entity) or residence (if an individual without a business address) at STREET ADDRESS, CITY, STATE, ZIP; and ______________having his, her or its physical place of business (If an entity) or residence (if an individual without a business address) STREET ADDRESS, CITY, STATE, ZIP. ________________ and __________________are holders of shares of stock in NAME OF BUSINESS ENTITY (the Company) and are sometimes collectively referred hereinafter as the Parties, and individually as a Party. WHEREAS NAME OF BUSINESS is duly incorporated pursuant to the laws of the state of ________________ and has an authorized capital consisting of ________ shares (the Stock) of which _________shares are currently issued and outstanding; WHEREAS each of the Parties presently owns the following shares of Company: Shareholders ____________ ____________ Shares _____ _____
AND WHEREAS the Company and the Parties desire to enter into this Buy-Sell Agreement which sets out the limitations for the transfer of the shares, the disposition of the Shares upon a Shareholders death, and certain other matters. NOW, THEREFORE in consideration of the foregoing and of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows: RESTRICTIONS No Shareholder of the Company shall transfer, sell, assign, pledge or hypothecate his/her/its Shares to any other party, whether now owned or hereafter acquired, except as permitted by and in accordance with this Buy-Sell Agreement. A Shareholder of Company may transfer his/her/its Shares to a grantor trust for his/her/its benefit. By Companys execution of this Buy-Sell Agreement, Company hereby agrees that it shall not transfer any of the Shares on the books of Company, unless such transfer of Shares is permitted by the terms of
this Buy-Sell Agreement and shall not issue any Shares of Company except in accordance with this BuySell Agreement. RIGHT OF FIRST REFUSAL Any Shareholder who desires to sell all or any of his/her/its Shares shall give notice of such proposed sale (the "Notice") to Company and to the other Shareholders and shall set out in the Notice the number and class of his/her/its Shares that he/she/it desires to sell (the "Offered Shares") and the terms upon which and the price at which he/she/it desires to sell the Offered Shares (the "Purchase Price"). Upon the Notice being given, the other Shareholders shall have the right to purchase all, but not less than all, of the Offered Shares for the Purchase Price. The other Shareholders shall be entitled to purchase the Offered Shares pro rata based upon the number of Shares beneficially owned by the Shareholder or to purchase in such other proportion as the other Shareholders may agree in writing. Within ten (10) business days of having been given the Notice, each Shareholder who desires to purchase all of the Offered Shares that he/she/it is entitled to purchase shall give notice of such to the offering Shareholder, to Company and to the other Shareholders. If any Shareholder does not give such notice, the Offered Shares that he/she/it had been entitled to purchase (the "Rejected Shares") may instead be purchased by the Shareholders who did give such notice, pro rata based upon the number of Shares beneficially owned by such Shareholders as between themselves or in such other proportion as such Shareholders may agree in writing within three (3) business days of the expiration of the business day period specified in the first sentence of this paragraph. Each Shareholder who desires to purchase all of the Rejected Shares that he/she/it is entitled to purchase in accordance with the provisions of this paragraph shall give an additional notice to the Shareholder, to Company and to the other Shareholders in writing within five (5) business days of the expiration of the business day period specified in the first sentence of this paragraph. If any Shareholder entitled to give the said additional notice does not do so, the Rejected Shares that he/she/it had been entitled to purchase may instead be purchased by the Shareholders who did give such notice, and so on from time to time until the Shareholders are willing to purchase all of the Offered Shares or until they are not willing to purchase any more. If the Shareholders are willing to purchase all, but not less than all, of the Offered Shares, the transaction of purchase and sale shall be completed in accordance with the terms set out in the Notice. If the Shareholder defaults in transferring the Offered Shares to the Shareholders in accordance with the terms set out in the Notice, the Secretary of Company or any other authorized officer, is authorized and directed to receive the purchase money and to thereupon cause the names of the Shareholders to be entered in the registers of Company as the holders of the Shares purchasable by them. Said purchase money shall be held in trust by Company on behalf of the Shareholder and not commingled with Companys assets, except that any interest thereon shall be for the account of Company. The receipt by the Secretary or any other authorized officer of Company of the purchase money shall be a good discharge to the Shareholders and, after their names have been entered in the registers of Company, the validity of the proceedings shall not be subject to question by any person. On such registration, the Shareholder shall cease to have any right to or in respect of the Offered Shares except the right to receive, without interest, the purchase price received by the Secretary, or any other authorized officer of Company. If the Shareholders do not give notice in accordance with the provisions of paragraph 0 that they are willing to purchase all of the Offered Shares, the rights of the Shareholders, subject as hereinafter
provided, to purchase the Offered Shares shall forthwith cease and the Shareholder may sell the Offered Shares to any person (New Buyer) within thirty (30) days after the expiration of the period specified in paragraph 0 with regard to the right to purchase Rejected Shares, for a price not less than the Purchase Price and on other terms no more favorable than those set forth in the Notice. Prior to the close of the transaction, the New Buyer shall agree to be bound by this Buy-Sell Agreement and to become a party hereto in place of the Shareholder with respect to the Offered Shares. If the Offered Shares are not sold within such thirty (30) day period on such terms, the rights of the Shareholders pursuant to this Article 0 shall again take effect and so on from time to time. DEATH OR INCAPACITY OF SHAREHOLDER In the event that any Shareholder dies, or shall be adjudged mentally incompetent and shall have a legal representative appointed to administer his/her/its affairs, Company may at its option redeem or purchase for cancellation within sixty (60) days of becoming aware of the date of death or such judgment all of that Shareholders shares. The Shares of any class registered in the name of such Shareholder may be redeemed or purchased at their fair market value at such date, provided that Company's rights may only be exercised by written notice delivered to the appropriate party within sixty (60) calendar days of becoming aware of the date of death or judgment. In the event of such notice Company shall redeem or purchase, and the legal representative shall sell all of such Shares on the date specified in writing by Company in its notice. If the notice fails to specify a date, the purchase and sale shall be completed on the sixtieth (60th) calendar day of becoming aware of the date of death or such judgment, as the case may be. The purchase price for such Shares shall be paid in full by cash or by certified check or bank draft at the time of closing, or, if Company so elects, shall be payable by cash or on such other terms as the Parties may agree. The Board of Directors shall determine at its sole discretion whether and upon what terms to purchase contracts of life insurance insuring the lives of the Shareholders, or one or more of them, for the purpose of providing funds for the purchase of their Shares in accordance with this Article 0. If Company exercises its option to purchase the Shares of a Shareholder who has died, then any proceeds so obtained by Company from such life insurance contracts upon the death of such Shareholder shall be used by Company to purchase, in whole or in part as such proceeds may be available, the Shares owned by such Shareholder and any balance of such proceeds shall be retained for the sole benefit of Company. In the event that there are no life insurance proceeds payable to Company upon the death of any Shareholder, Company may, at its sole option, elect to assign to the remaining Shareholders its option to purchase the Shares registered in the name of such Shareholder upon the same terms and conditions as specified in paragraphs 0 and 0 hereof. If one or more of the remaining Shareholders wish to exercise the option to purchase so assigned to the remaining Shareholders, such Shares shall be purchased by such Shareholders in such proportions as they shall in their sole discretion determine. BANKRUPTCY OR OTHER INVOLUNTARY TRANSFER In the event of the bankruptcy of any Shareholder or of the transfer, voluntary or involuntary, by any Shareholder of any of his Shares to any creditor in total or partial satisfaction of any debt, obligation,
judgment or other liability (any trustee or receiver of such Shareholder's assets or any such creditor being herein called the "involuntary transferee", the bankrupt Shareholder or the Shareholder whose interest passes to the involuntary transferee being herein called the "debtor party"), Company shall have the option to purchase all but not less than all of the Shares of the debtor party by giving written notice of its election to purchase the same within one-hundred and twenty (120) days after such bankruptcy shall have been adjudicated or such transfer shall have occurred at a price equal to the greater of the fair market value of such Shares, or such minimum percentage of the fair market value of such Shares as may and subsequently is approved by any Court with competent jurisdiction, if any such judicial approval is required. The purchase price for the Shares of the debtor party shall be paid within thirty (30) days after the delivery of notice pursuant to paragraph 0 hereof by Company. Upon receipt of such consideration, the involuntary transferee shall execute and deliver whatever instruments of conveyance, assignment and release shall be necessary to carry out such sale and if he/she/it shall fail or refuse to do so, the Secretary or any other duly appointed officer of Company is irrevocably constituted and appointed the attorney of the debtor party to effect such execution. Company may, at its sole option, elect to assign to the remaining Shareholders its option to purchase the Shares from the involuntary transferee upon the same terms and conditions as specified in paragraphs 0 and 0 hereof. If one or more of the remaining Shareholders wish to exercise the option to purchase so assigned to the remaining Shareholders, such Shares shall be purchased by such Shareholders in such proportion as they shall in their sole discretion determine. GENERAL PROVISIONS REGARDING PURCHASE AND SALE In the event of the sale by any Shareholder or his/her/its legal representative (collectively, the "Selling Shareholder") of his/her/its Shares pursuant to the provisions of this Buy-Sell Agreement: If the Shares to be sold are all of the Shares then held by the Selling Shareholder, Company shall use its best efforts to obtain a release from the Selling Shareholder from any guarantees and covenants which he/she/it has given on behalf of Company and shall indemnify the Selling Shareholder with respect to any claims for which such a release cannot be obtained; If the Shares to be sold are all of the Shares then held by the Selling Shareholder, the Selling Shareholder shall deliver a release from any and all claims which he/she/it may have against Company or the remaining Shareholders; Certificates representing the Shares to be sold shall be delivered to the purchaser duly endorsed in blank for transfer, and the Selling Shareholder shall also deliver to the purchaser original executed copies of all documents as may be required to effect the transfer including, without limitation, succession duty releases, letters of probate and declarations of transmission, and shall deliver to Company a certified check representing payment in full of all amounts owed by the Selling Shareholder to Company, all against delivery to the Selling Shareholder of the checks described in sub-paragraph 0 hereof; Such sale shall be on terms whereby the Selling Shareholder warrants that:
He/she/it has good marketable title to the Shares to be sold free from any option or refusal right, voting trust, pledge, hypothecation, mortgage, lien, charge, encumbrance, security interest or other right or interest of any other person other than by or pursuant to this Buy-Sell Agreement; and He/she/it has full power and authority to complete, and is otherwise fully entitled to complete, the sale; and The purchaser shall deliver to the Selling Shareholder by cash, certified check or bank draft the purchase price and Company shall deliver to the Selling Shareholder a certified check for all amounts owing by Company to the Selling Shareholder. In no event shall any purchaser be entitled to or obliged to purchase a fraction of a share. In order to eliminate fractions, the Secretary or any other duly authorized officer of Company shall make such minimum alterations to the number of Shares agreed to be purchased as may be required to eliminate such fractions and his decision shall be final and binding upon all Parties. In the event that a Selling Shareholder shall fail to comply with the provisions of sub-paragraph 0 hereof, and all conditions of such paragraph to be met by the purchaser and the remaining Shareholders shall have been met, the Selling Shareholder hereby irrevocably appoints the Secretary or any other authorized officer of Company his/her/its attorney to effect the transfer of the Shares to be sold on the books of Company. MANDATORY SALE In the event that a bona fide offer to purchase shares is received by any Shareholder from a third party dealing at arm's length with all Shareholders, which offer is for payment at least one hundred fifty percent (150%) greater than the fair market value of the Shares of Company and is conditional upon the acquisition by that third party of all of the issued and outstanding Shares upon the same terms and conditions and which offer the holders of at least sixty percent (60%) of the then issued and outstanding Shares desire to accept, and such purchase offer results in payment to be made, subject to a different written agreement among the Parties, the amount specified shall be paid at the time of the closing in cash (or its equivalent), in full, then each Shareholder shall be obliged to accept such offer and shall forthwith take all such actions and execute all such further Buy-Sell Agreement or instruments as may be necessary or in the opinion of the attorneys for Company, acting reasonably, desirable in order to complete the purchase and sale resulting from the acceptance of that offer. VALUATION For the purposes of any transaction of purchase and sale contemplated herein and expressed to occur at fair market value, the Parties to such transaction shall, within ten (10) calendar days of the events giving rise to the transaction but in any event prior to the date set for the closing of the subject transaction, make their joint determination of the fair market value of the Shares which are the subject of the transaction. This valuation shall be based on the most current financial information for Company, the contracts entered into by Company, the markets and marketability of Company as a whole and any other factors relevant to such valuation. In the event that the Parties to the subject transaction are able to make such a joint determination, then such value shall be binding upon them for the purposes of that transaction only and shall have no bearing on any other transaction or upon any other Parties hereto.
If the Parties to the subject transaction are unable to make a joint determination of the fair market value of the Shares subject to the transaction within the time so provided in paragraph 0 hereof, an independent business valuator to be agreed upon by the Parties to the subject transaction shall determine the fair market value of all of the issued and outstanding Shares in the capital of Company as at the last day of the month in which the event giving rise to the transaction of purchase and sale occurs. If the Parties to the transaction fail to choose an independent business valuator within thirty (30) days following the said event, then such business valuator shall be chosen by a Judge of the applicable jurisdiction upon the application of either of the Parties to the transaction. The determination of the fair market value of all of the issued and outstanding Shares in the capital of Company made by the independent business valuator shall, for the purposes of this Buy-Sell Agreement, be binding and effective upon the Parties to the subject transaction only and shall not be binding on any other transaction or upon any other Parties hereto. In arriving at such valuation, the valuator shall take into account and apply generally accepted accounting and valuation principles. The valuator shall value Company as a going concern but shall not apply any discount or premium for a minority or majority interest, as the case may be, and shall not include as an asset of Company the proceeds of any insurance policies payable on the death of a Shareholder. Additionally, if the event in question is the death of a Shareholder, the valuator shall not have regard to the occurrence of the death of the deceased or the imminent possibility thereof. The valuation arrived at by the valuator, made as an expert and not as umpire or arbitrator, shall be final and binding and no appeal shall lie therefrom. The Parties to any transaction of purchase and sale shall be individually responsible for their own legal fees incurred but shall be jointly responsible for all costs associated with the calculation of fair market value by the independent business valuator. INDEPENDENT LEGAL ADVICE Each of the Shareholders hereby acknowledges that, prior to executing this Buy-Sell Agreement, they have been advised to and have had the opportunity to obtain independent legal advice and that: they have in fact obtained independent legal advice signed by their attorney and attached hereto as Schedule "A", that all the statements made in said letter are true and correct, that none of the other Parties hereto, or any of their employees, agents or officers have used any compulsion or made any threat or exercised any undue influence to induce them to take the action mentioned in said letter and that their attorney, the writer of said letter, in advising them as stated therein, was consulted by them as their personal attorney and in their interests only; or upon consideration and of their own free will and volition they have determined that they do not require independent legal advice, that they understand fully the nature and consequences of executing this Buy-Sell Agreement and that none of the other Parties hereto, or any of their employees, agents or officers have used any compulsion or made any threat or exercised any undue influence to induce them to execute this Buy-Sell Agreement and by virtue of the fact that any Shareholder shall not have obtained and attached hereto a letter of independent legal advice, such Shareholder shall be conclusively deemed to be in Buy-Sell Agreement with and bound by this sub-paragraph.
TERM The term of this Buy-Sell Agreement shall commence on the date hereof and continue in full force and effect until there is only one holder of Shares of record or until terminated by all of the holders of all of the then issued and outstanding Shares. WRITTEN NOTIFICATION Notices given as described herein shall be deemed, for the purposes of this Agreement, to be written notice and is effective upon acknowledgement of receipt. When sent by e-mail using software that provides un-modifiable proof (a) that the message was sent, (b) that the message was delivered to the recipients e-mail inbox, and (c) of the time and date the message was delivered to the recipient along with a verifiable electronic record of the exact content of the message sent, notice is effective on receipt so long as the recipient has acknowledged receipt (for purposes of this section an automatically generated receipt confirmation does *not* qualify as acknowledgement of receipt). Undeliverable Notice. Any correctly addressed notice that is identified as undeliverable or that fails in its transmission due to no fault of the sender will be deemed effective as of the date of notification of the delivery failure if a copy of the Notification of Transmission Failure and a duplicate copy of the notice are promptly sent via personal delivery, certified mail or overnight delivery to the intended recipients business address. CONFIDENTIALITY The Parties have entered into a binding confidentiality or non-disclosure agreement. SUCCESSORS IN INTEREST This Agreement shall be binding upon and inure to the benefit of the Parties and their successors in interest. ASSIGNMENT Except for assignment to a collection agency or attorneys for the purpose of collecting past-due monies owed hereunder, no Party (Assignor) may assign or otherwise transfer its rights or obligations under this Agreement to a third party (Assignee), unless it is assigning all (but not less than all) of its rights and obligations hereunder as a result and subject to the prior written consent of the other Party (NonAssigning Party), which consent shall not be unreasonably withheld or delayed. Notwithstanding the immediately preceding sub-section a, any Party may assign or otherwise transfer all (but not less than all) of its rights and obligations under this Agreement, to (i) an affiliate or (ii) to a successor-in-interest as assignee, in the event of a merger or acquisition in which the successor acquires all or substantially all of the Assignors business assets, without the prior written consent of the NonAssigning Party, provided that: Assignor gives the Non-Assigning Party at least fifteen (15) days prior written notice of such impending assignment, which shall identify the Assignee and intended effective date of the assignment (Notice of Assignment); and
the Non-Assigning Party has thirty (30) days after such Notice given, within which to give written notice to the Assignor or Assignee of its decision to terminate, and to terminate, the Agreement at will (except for those provisions that survive termination) and without liability therefor (Notice of Termination), effective on the date said Notice of Termination is given. Any attempt to assign this Agreement or any of the rights or obligations hereunder in violation of this Section shall be null and void and, at the Non-Assigning Partys election, grounds for the immediate termination of this Agreement for cause. AMENDMENTS & MODIFICATIONS Any amendments or modifications to this Agreement are ineffective unless in writing and signed by both parties by pen on paper. VENUE The venue for any action or claim at law or in equity hereunder shall be exclusively in and with a court having jurisdiction over ______ County, ___________, if disputes are to be resolved in Court, if at all, as set out elsewhere herein, or if arbitration or mediation is to occur, if at all, as set out elsewhere herein, that shall be in the same location, and the Parties irrevocably consent to the exclusive personal jurisdiction of such federal or state courts or arbitrators. (If this Agreement is silent regarding resolution of disputes other than by a court of law or equity of competent jurisdiction then the first resort will be to a court of competent jurisdiction.) The Parties further agree and hereby consent to, and waive all defences of lack of personal jurisdiction and forum non conveniens with respect to, venue and jurisdiction in Marin County, California. Notwithstanding anything to the contrary any party may seek preliminary or permanent injunctive relief or restraining order arising out of or related to this Agreement from any court of competent jurisdiction, which rights and remedies shall be cumulative and in addition to any other rights or remedies at law or in equity to which any Party may be entitled. DISPUTE RESOLUTION Any disputes between the Parties under this Agreement shall be resolved by submission to binding Arbitration. The prevailing Party in the arbitration shall be awarded its expenses related to the arbitration proceeding, including reasonable attorneys fees and costs. INTEGRATION CLAUSE This Agreement, with its attachments, if any, constitutes the final, complete and exclusive statement of the terms of the agreement between the Parties pertaining to the subject matter of this Agreement and contains the entire agreement between the Parties, and this Agreement supersedes any prior or contemporaneous written or oral agreements or understandings between the parties. No Party has been induced to enter into this Agreement by, nor is any Party relying on, any representation or warranty outside those expressly set forth in this Agreement. SEVERABILITY PROVISION If any term or provision of this Agreement is held by a court or an arbitrator of competent jurisdiction to be unlawful, invalid or unenforceable, in whole or in part, the validity and enforceability of the remaining provisions, or portions of them, will not be affected and this Agreement, including all of the
remaining terms and provisions, will remain in full force and effect as if such unlawful, invalid or unenforceable term had never been included. WAIVER No failure on the part of any Party to this Agreement to exercise any power reserved to it by this Agreement or to insist on strict compliance with any obligation or condition under this Agreement will be considered to be a waiver of its rights under this Agreement or its right to exercise any right or to insist on compliance with that obligation or condition in the future. NECESSARY ACTS & FURTHER ASSURANCES The parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement. FORCE MAJEURE Neither Party shall be liable in damages or have the right to terminate this Agreement for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its control including, but not limited to acts of nature or God, government restrictions (including the denial or cancellation of any export or other necessary license), wars, insurrections and/or any other cause beyond the reasonable control of the Party whose performance is affected. ATTORNEYS FEES In any litigation, arbitration, or other proceeding by which one Party either seeks to enforce its rights under this Agreement (whether in contract, tort, or both) or seeks a declaration of any rights or obligations under this Agreement, the prevailing Party will be awarded reasonable attorney fees, together with any costs and expenses, incurred to resolve the dispute and to enforce the final judgment. If either Party commences an action without first participating in mediation, or refuses a request to mediate, that Party is not entitled to any award of attorney fees, even if that Party would otherwise be entitled to such an award. HEADINGS The section headings used in this Agreement are intended principally for convenience and are not to be used by themselves in interpreting this Agreement or in determining any of the rights or obligations of the parties to this Agreement. LEGAL RIGHT Each of the Parties covenants and warrants that it has the unlimited legal right to enter into this Agreement and to perform in accordance with the Agreements terms without violating the rights of others or any applicable law and that it has not and shall not become a party to any other agreement of any kind which conflicts with this Agreement. The Parties agree that each shall indemnify and hold harmless the other from any and all damages, claims and expenses arising out of or resulting from any claim that this Agreement violates any such other agreements. Notwithstanding any other provisions or
terms of this Agreement, breach of this covenant and warranty shall operate to terminate this Agreement automatically without notice and to terminate all obligations of the non-breaching Party to further perform any duties under this Agreement, including payment of any amounts which remain unpaid to the breaching Party at the time of such breach. However, such termination does not relieve the breaching Party of its duties to complete performance of any obligations due and owing at the time of breach. COUNTING DAYS Days are to be counted by excluding the first day and including the last day, unless the last day is a Saturday, a Sunday, or a legal holiday, and then it is to be excluded. Any act required by this Agreement to be performed by a certain day is timely performed if completed before 5:00 p.m. local time on that date. If the day for performance of any obligation under this Agreement is a Saturday, a Sunday, or a legal holiday, then the time for performance of that obligation is extended to 5:00 p.m. local time on the first following day that is not a Saturday, Sunday, or legal holiday. EXECUTION IN COUNTERPARTS The Parties may execute this Agreement in one or more counterparts, and each fully executed counterpart shall be deemed an original, all of which taken together shall constitute one and the same agreement. FACSIMILE OR PRINTED ELECTRONIC COPIES Facsimile or printed electronic copies shall be deemed as originals. APPLICABILITY OF AGREEMENT The provisions of this Agreement extend to the employees and officers of the Parties, and to contractors within their control. The Parties agree to provide the requisite internal security to protect the dissemination of information regarding the subject matter of this Agreement within their respective organizations to abide by the confidentiality provisions contained herein. UNDERSTANDING By signing below, each of the undersigned hereby declares that the terms of this Agreement have been completely read and are fully understood and voluntarily accepted for the purpose of accomplishing the purpose of this Agreement. AUTHORITY TO EXECUTE Each of the signatories below hereby assure, represent and confirm under penalty of perjury that he or she is an authorized signatory on behalf of their respective Party as identified below and has full right, power and authority to execute this Agreement and bind such Party to the terms and covenants of this Agreement and to promise performance of the actions contemplated hereby. IN WITNESS WHEREOF the Parties have duly executed this Buy-Sell Agreement as of the day and year first written.
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