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.
A Massachusetts 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 provides a detailed framework for the transfer of membership units in an LLC between individual members. This agreement is specifically designed for Massachusetts jurisdiction and includes provisions for funding the purchase using life insurance. Keywords: Massachusetts, Buy Sell Agreement, Stock Purchase Agreement, Individual Members, Membership Units, Limited Liability Company, LLC, Life Insurance, Funding Option. Types of Massachusetts Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company — LL— - with an Option to Fund the Purchase through Life Insurance: 1. Entity-Level Stock Purchase Agreement: This type of agreement is used when individual members intend to purchase membership units from the LLC itself, where the LLC acts as a seller and the individual members act as buyers. The agreement lays out the terms of the sale, including the purchase price, payment terms, and conditions for transfer of ownership. The option to fund the purchase through life insurance is included as a financing alternative. 2. Cross-Purchase Agreement: In a cross-purchase agreement, individual members of the LLC agree to buy the membership units from each other in the event of a triggering event such as death or disability. Each member gets an option to purchase the membership units of the departing member, and the purchase price can be funded through life insurance policies held on the lives of the members involved. 3. Stock Redemption Agreement: This agreement allows the LLC itself to redeem the membership units of a departing member. The LLC uses its own funds or borrowed money to buy back the units, and the life insurance option can be utilized as an alternative method of financing this purchase. The agreement outlines the terms and conditions of the redemption, including the valuation of the membership units and the payment schedule. 4. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and stock redemption agreements. It allows individual members to have the option to purchase the membership units of the departing member, while also giving the LLC the possibility of redeeming those units. The life insurance funding option can be used by either the individual members or the LLC, depending on who exercises their purchase rights. By utilizing a Massachusetts 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, the members of the LLC can ensure a smooth and structured transfer of ownership, while also utilizing life insurance as a funding mechanism if desired. This agreement offers protection to both the departing member and the remaining members by providing a predetermined mechanism for the sale and transfer of membership units.
