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 Tennessee Buy Sell or Stock Purchase Agreement between individual members covering membership units in a Limited Liability Company (LLC) is a legally binding contract that outlines the terms and conditions of buying and selling ownership interests in an LLC. This agreement is specifically designed for individuals who are members of an LLC based in Tennessee. One option to fund the purchase outlined in this agreement is through life insurance. This means that the agreement allows the use of life insurance policies as a means to finance the purchase of membership units in the LLC. If a member passes away, the life insurance proceeds can be used to fund the purchase of their ownership interest in the remaining members, ensuring a smooth transition of ownership. There may be different types of Tennessee Buy Sell or Stock Purchase Agreements between individual members Covering Membership Units in an LLC with an Option to Fund the Purchase through Life Insurance. Some key variations may include: 1. Cross-Purchase Agreement: In a cross-purchase agreement, each member agrees to purchase the ownership interest of a deceased member individually. Each member takes out a life insurance policy on the other members, and in the event of a member's death, the insurance proceeds are used to buy their interest from their estate. 2. Entity Purchase Agreement: In this type of agreement, the LLC itself agrees to purchase the ownership interest of a deceased member. The LLC takes out life insurance policies on each member, and upon a member's death, the LLC uses the insurance proceeds to buy their interest from their estate. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and entity purchase agreements. In this scenario, some members individually agree to purchase the interest of a deceased member, while the LLC itself also agrees to buy the interest. The decision on which method to use can be based on factors such as the number of members and their financial capabilities. It is essential for members of an LLC in Tennessee to have a well-drafted Buy Sell or Stock Purchase Agreement that covers membership units. By including an option to fund the purchase through life insurance, members can ensure a seamless transition of ownership in the event of a member's death, minimizing disruptions to the business operations. Seek legal advice to customize the agreement based on the specific needs and circumstances of the LLC.A Tennessee Buy Sell or Stock Purchase Agreement between individual members covering membership units in a Limited Liability Company (LLC) is a legally binding contract that outlines the terms and conditions of buying and selling ownership interests in an LLC. This agreement is specifically designed for individuals who are members of an LLC based in Tennessee. One option to fund the purchase outlined in this agreement is through life insurance. This means that the agreement allows the use of life insurance policies as a means to finance the purchase of membership units in the LLC. If a member passes away, the life insurance proceeds can be used to fund the purchase of their ownership interest in the remaining members, ensuring a smooth transition of ownership. There may be different types of Tennessee Buy Sell or Stock Purchase Agreements between individual members Covering Membership Units in an LLC with an Option to Fund the Purchase through Life Insurance. Some key variations may include: 1. Cross-Purchase Agreement: In a cross-purchase agreement, each member agrees to purchase the ownership interest of a deceased member individually. Each member takes out a life insurance policy on the other members, and in the event of a member's death, the insurance proceeds are used to buy their interest from their estate. 2. Entity Purchase Agreement: In this type of agreement, the LLC itself agrees to purchase the ownership interest of a deceased member. The LLC takes out life insurance policies on each member, and upon a member's death, the LLC uses the insurance proceeds to buy their interest from their estate. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and entity purchase agreements. In this scenario, some members individually agree to purchase the interest of a deceased member, while the LLC itself also agrees to buy the interest. The decision on which method to use can be based on factors such as the number of members and their financial capabilities. It is essential for members of an LLC in Tennessee to have a well-drafted Buy Sell or Stock Purchase Agreement that covers membership units. By including an option to fund the purchase through life insurance, members can ensure a seamless transition of ownership in the event of a member's death, minimizing disruptions to the business operations. Seek legal advice to customize the agreement based on the specific needs and circumstances of the LLC.
