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 Washington 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 is a legal document that outlines the terms and conditions for buying and selling membership units in an LLC in the state of Washington. This agreement allows individual members to protect their interests and ensure a smooth transition of ownership. Key features of a Washington Buy-Sell or Stock Purchase Agreement include: 1. Membership Units and Valuation: The agreement defines the membership units being bought or sold and establishes a fair valuation method to determine the price. This could be based on market value, appraised value, or a predetermined formula. 2. Triggering Events: The agreement identifies several triggering events that may warrant a buy-sell transaction, such as the death, disability, retirement, or voluntary withdrawal of a member. These events act as a catalyst for the sale or purchase of membership units. 3. Purchase Options: The agreement provides options for both the selling member and remaining members to engage in the purchase. This can include a mandatory purchase where the remaining members are obligated to buy the selling member's units or a right of first refusal where the remaining members have the option to purchase the units before it can be offered to external parties. 4. Funding the Purchase: One unique aspect of this agreement is the option to fund the purchase through life insurance. Members can take out life insurance policies on one another, with the proceeds used to buy the deceased member's membership units. This ensures that funds are readily available and relieves the financial burden on the remaining members. 5. Terms and Conditions: The agreement includes various terms and conditions regarding payment terms, dispute resolution, transfer restrictions, non-compete clauses, and confidentiality provisions. These provisions protect the interests of all parties involved and create a clear understanding of their rights and obligations. Different types of Washington Buy-Sell or Stock Purchase Agreements may vary based on the specific requirements of the LLC and its members. Some variations include: 1. Cross-Purchase Agreement: In this agreement, each member individually agrees to buy the membership units of another member. This is suitable for smaller LCS with a limited number of members. 2. Entity-Purchase Agreement: Here, the LLC itself agrees to purchase the membership units of a member. The LLC is the buyer, and the remaining members collectively contribute funds from their own resources or insurance policies to facilitate the purchase. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and entity-purchase agreements. The decision on who purchases the units can be customized based on the triggering event or the preferences of the involved members. In conclusion, a Washington 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 legally binding document that facilitates the smooth transfer of ownership and ensures financial security for all parties involved. It comes in various forms to suit the specific needs and preferences of the LLC members.A Washington 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 is a legal document that outlines the terms and conditions for buying and selling membership units in an LLC in the state of Washington. This agreement allows individual members to protect their interests and ensure a smooth transition of ownership. Key features of a Washington Buy-Sell or Stock Purchase Agreement include: 1. Membership Units and Valuation: The agreement defines the membership units being bought or sold and establishes a fair valuation method to determine the price. This could be based on market value, appraised value, or a predetermined formula. 2. Triggering Events: The agreement identifies several triggering events that may warrant a buy-sell transaction, such as the death, disability, retirement, or voluntary withdrawal of a member. These events act as a catalyst for the sale or purchase of membership units. 3. Purchase Options: The agreement provides options for both the selling member and remaining members to engage in the purchase. This can include a mandatory purchase where the remaining members are obligated to buy the selling member's units or a right of first refusal where the remaining members have the option to purchase the units before it can be offered to external parties. 4. Funding the Purchase: One unique aspect of this agreement is the option to fund the purchase through life insurance. Members can take out life insurance policies on one another, with the proceeds used to buy the deceased member's membership units. This ensures that funds are readily available and relieves the financial burden on the remaining members. 5. Terms and Conditions: The agreement includes various terms and conditions regarding payment terms, dispute resolution, transfer restrictions, non-compete clauses, and confidentiality provisions. These provisions protect the interests of all parties involved and create a clear understanding of their rights and obligations. Different types of Washington Buy-Sell or Stock Purchase Agreements may vary based on the specific requirements of the LLC and its members. Some variations include: 1. Cross-Purchase Agreement: In this agreement, each member individually agrees to buy the membership units of another member. This is suitable for smaller LCS with a limited number of members. 2. Entity-Purchase Agreement: Here, the LLC itself agrees to purchase the membership units of a member. The LLC is the buyer, and the remaining members collectively contribute funds from their own resources or insurance policies to facilitate the purchase. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and entity-purchase agreements. The decision on who purchases the units can be customized based on the triggering event or the preferences of the involved members. In conclusion, a Washington 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 legally binding document that facilitates the smooth transfer of ownership and ensures financial security for all parties involved. It comes in various forms to suit the specific needs and preferences of the LLC members.
