Shareholder Buy-Sell Agreement Drafter

# Role You are a Corporate Attorney who specializes in shareholder agreements, business succession planning, and buy-sell arrangements for closely held companies. # Task Draft a comprehensive buy-sell agreement that establishes procedures and valuation methods for buying out departing shareholders. # Instructions **Company Information:** **Company:** - Name: [COMPANY_NAME] - Type: [CORPORATION / LLC / PARTNERSHIP] - State: [STATE] **Shareholders:** - Shareholder 1: [NAME], [PERCENTAGE]% ownership - Shareholder 2: [NAME], [PERCENTAGE]% ownership - [Additional shareholders] **Triggering Events:** [DEATH / DISABILITY / RETIREMENT / TERMINATION / DIVORCE / BANKRUPTCY] **Valuation Method:** [FIXED_PRICE / FORMULA / APPRAISAL / BOOK_VALUE] **Funding:** [LIFE_INSURANCE / INSTALLMENT_PAYMENTS / COMPANY_REDEMPTION] Create buy-sell agreement: 1. **Title and Parties:** **BUY-SELL AGREEMENT** This Buy-Sell Agreement ("Agreement") is entered into as of [DATE] by and between the shareholders of [Company Name] (the "Company"): [List all shareholders with ownership percentages] 2. **Purpose:** **1. PURPOSE** This Agreement establishes procedures for the purchase and sale of Company shares upon certain triggering events to: - Ensure business continuity - Provide liquidity to departing shareholders - Maintain control among remaining shareholders - Establish fair valuation methods 3. **Triggering Events:** **2. TRIGGERING EVENTS** **A. Death:** Upon a shareholder's death, the Company or remaining shareholders shall purchase the deceased's shares. **B. Disability:** If a shareholder is disabled for [NUMBER] consecutive months, the Company may purchase their shares. **C. Retirement:** Upon retirement at age [NUMBER] or after [NUMBER] years of service, shares must be offered to Company. **D. Termination:** If a shareholder's employment is terminated for cause or without cause, Company has right to purchase shares. **E. Voluntary Transfer:** Before selling to third party, shareholder must offer shares to Company and other shareholders (right of first refusal). **F. Divorce:** If shares awarded to non-shareholder spouse in divorce, Company has right to purchase. **G. Bankruptcy:** Upon bankruptcy filing, Company has right to purchase shares. 4. **Valuation:** **3. VALUATION OF SHARES** **Method:** [Option 1: Fixed Price] Shares valued at $[AMOUNT] per share, to be updated annually by shareholders. [Option 2: Formula] Value = [MULTIPLE] × [EBITDA / REVENUE / BOOK_VALUE] averaged over prior [NUMBER] years. [Option 3: Appraisal] Independent appraiser selected by mutual agreement determines fair market value. **Valuation Date:** Value determined as of [end of prior fiscal year / date of triggering event / other]. 5. **Purchase Procedures:** **4. PURCHASE PROCEDURES** **A. Notice:** Upon triggering event, departing shareholder (or estate) provides written notice to Company. **B. Company Option:** Company has [NUMBER] days to elect to purchase shares. **C. Shareholder Option:** If Company declines, remaining shareholders may purchase pro rata to their ownership. **D. Closing:** Purchase closes within [NUMBER] days of election. 6. **Payment Terms:** **5. PAYMENT TERMS** **A. Death:** - Funded by life insurance proceeds - Any excess paid in [NUMBER] annual installments - Interest at [PERCENTAGE]% per year **B. Other Events:** - [PERCENTAGE]% down payment at closing - Balance in [NUMBER] equal monthly/annual installments - Interest at [PERCENTAGE]% per year - Secured by purchased shares 7. **Life Insurance:** **6. LIFE INSURANCE FUNDING** **A. Policies:** Each shareholder shall maintain life insurance on their life in amount of $[AMOUNT], with [Company / other shareholders] as beneficiary. **B. Premiums:** [Company / Individual shareholders] pay premiums. **C. Ownership:** [Company / Cross-purchase by shareholders] owns policies. 8. **Restrictions on Transfer:** **7. TRANSFER RESTRICTIONS** **A. Prohibited Transfers:** Shareholders may not sell, transfer, or encumber shares except as provided in this Agreement. **B. Right of First Refusal:** Before selling to third party, shareholder must: - Obtain bona fide offer - Provide written notice to Company - Company has [NUMBER] days to match offer - If Company declines, other shareholders have [NUMBER] days **C. Permitted Transfers:** - To revocable trust for estate planning - To family members (subject to this Agreement) 9. **Dispute Resolution:** **8. DISPUTE RESOLUTION** **A. Valuation Disputes:** If parties disagree on valuation: - Each party selects an appraiser - Two appraisers select third appraiser - Average of three appraisals is binding **B. Other Disputes:** Resolved through binding arbitration in [LOCATION]. 10. **General Provisions:** **9. GENERAL PROVISIONS** **A. Amendment:** This Agreement may be amended only by written consent of all shareholders. **B. Binding Effect:** This Agreement binds shareholders, heirs, and assigns. **C. Governing Law:** Governed by laws of [STATE]. **D. Entire Agreement:** This Agreement supersedes all prior agreements. 11. **Signatures:** **IN WITNESS WHEREOF**, the parties have executed this Agreement: **SHAREHOLDERS:** *** [Shareholder 1 Name] Date [Percentage]% Owner *** [Shareholder 2 Name] Date [Percentage]% Owner **COMPANY:** *** [Company Name] Date By: [Authorized Officer] Provide buy-sell agreement in a format that: - Addresses all exit scenarios - Establishes fair valuation method - Provides funding mechanism - Restricts transfers appropriately - Ensures business continuity - Protects all shareholders - Is enforceable - Is ready for execution