In the absence of a valid restriction, a member in an LLC may transfer his/her interest in the LLC (usually expressed in membership units ) to anyone. Restrictions on the transfer of membership units are valid if they are not unreasonable. This form provides that the LLC has the right to purchase a members membership units upon his death. The LLC can fund this transaction through a life insurance policy on the members life with the proceeds going to the LLC. The proceeds will then be used to buy the deceased members membership units.
A restriction on the right to transfer membership units is not effective against a purchaser of the unit unless the purchaser knows of the restriction. Such a restriction can be conspicuously noted on the membership certificates.
This form is set up as a Buy Sell Agreement between the LLC and a key member. It applies in the case of the death, disability, retirement or offer of member to sell his membership units during his lifetime.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
Illinois Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company (LLC) is a legally binding document that outlines the terms and conditions of a transaction involving the buying, selling, or stock purchase of membership units in an LLC. This agreement provides clarity and protection for individual members and helps maintain the stability and continuity of the company. The agreement typically includes various clauses related to the purchase price, payment terms, valuation methods, restrictions on transferability, rights and obligations of the parties involved, as well as the option to fund the purchase through life insurance. The option to fund the purchase through life insurance is an attractive feature for many individuals as it allows them to ensure funds are readily available in the event of a member's death. Different types of Illinois Buy Sell or Stock Purchase Agreements covering membership units in an LLC may include: 1. Cross-Purchase Agreement: In this type of agreement, each individual member agrees to purchase the membership units of a deceased or departing member. Each member would acquire a proportionate share of the membership units based on their ownership percentage. 2. Redemption Agreement: This agreement allows the LLC itself to repurchase the membership units of a deceased or departing member. The LLC uses its own funds, or in this case, life insurance proceeds, to buy back the membership units. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and redemption agreements. It gives the surviving or continuing members the first option to purchase the membership units, and if they decline, the LLC has the option to buy back the units. 4. Wait-and-See Agreement: This agreement allows the surviving or continuing members to delay the decision of purchasing the membership units until a triggering event occurs, such as the death or departure of a member. This type of agreement offers flexibility and allows the parties to reassess their options when the event happens. 5. Corporate Stock Purchase Agreement: This agreement applies when an LLC has been converted into a corporation, and the membership units are transformed into corporate shares. The agreement would then be structured as a stock purchase agreement instead of a membership unit purchase agreement. In summary, an Illinois Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in an LLC with an Option to Fund the Purchase through Life Insurance is a crucial document for protecting the interests of individual members within an LLC. By including relevant and comprehensive clauses, the agreement ensures a smooth transition of membership units while providing financial security through the option to fund the purchase through life insurance.Illinois Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company (LLC) is a legally binding document that outlines the terms and conditions of a transaction involving the buying, selling, or stock purchase of membership units in an LLC. This agreement provides clarity and protection for individual members and helps maintain the stability and continuity of the company. The agreement typically includes various clauses related to the purchase price, payment terms, valuation methods, restrictions on transferability, rights and obligations of the parties involved, as well as the option to fund the purchase through life insurance. The option to fund the purchase through life insurance is an attractive feature for many individuals as it allows them to ensure funds are readily available in the event of a member's death. Different types of Illinois Buy Sell or Stock Purchase Agreements covering membership units in an LLC may include: 1. Cross-Purchase Agreement: In this type of agreement, each individual member agrees to purchase the membership units of a deceased or departing member. Each member would acquire a proportionate share of the membership units based on their ownership percentage. 2. Redemption Agreement: This agreement allows the LLC itself to repurchase the membership units of a deceased or departing member. The LLC uses its own funds, or in this case, life insurance proceeds, to buy back the membership units. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and redemption agreements. It gives the surviving or continuing members the first option to purchase the membership units, and if they decline, the LLC has the option to buy back the units. 4. Wait-and-See Agreement: This agreement allows the surviving or continuing members to delay the decision of purchasing the membership units until a triggering event occurs, such as the death or departure of a member. This type of agreement offers flexibility and allows the parties to reassess their options when the event happens. 5. Corporate Stock Purchase Agreement: This agreement applies when an LLC has been converted into a corporation, and the membership units are transformed into corporate shares. The agreement would then be structured as a stock purchase agreement instead of a membership unit purchase agreement. In summary, an Illinois Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in an LLC with an Option to Fund the Purchase through Life Insurance is a crucial document for protecting the interests of individual members within an LLC. By including relevant and comprehensive clauses, the agreement ensures a smooth transition of membership units while providing financial security through the option to fund the purchase through life insurance.
