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.
The Travis Texas 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 legally binding document that outlines the terms and conditions of buying or selling membership units in an LLC. This type of agreement is crucial for protecting the interests and investments of individual members within the company. Key provisions: 1. Ownership and Membership Units: The agreement clearly establishes the ownership structure of the LLC and defines the membership units that can be bought or sold. It specifies the number of units, their value, and any restrictions on the transfer of units. 2. Purchase Price Determination: The agreement outlines the method used to determine the purchase price of the membership units. This can be based on a predetermined formula, independent valuation, or mutual agreement between the parties involved. 3. Purchase and Sale Process: The agreement sets out the procedures and timelines for buying or selling membership units. It includes details regarding the notification process, negotiation period, and acceptance of offers. 4. Funding Options: One unique feature of this agreement is the option to fund the purchase through life insurance. It allows the purchasing member to obtain life insurance policies on the other members, ensuring that sufficient funds are available to buy their membership units in the event of death or disability. 5. Life Insurance Policy: This section specifies the requirements for the life insurance policy, including coverage amount, beneficiary designation, and premium payment responsibility. It clarifies that the policy proceeds will be used to fund the purchase of the deceased or disabled member's membership units. Types of Travis Texas Buy Sell or Stock Purchase Agreement: 1. Triggering Events: This type of agreement specifically addresses triggering events such as death, disability, retirement, or voluntary withdrawal from the LLC. It determines the actions to be taken in each specific scenario and how the purchase will be funded through life insurance. 2. Cross-Purchase: In a cross-purchase agreement, each individual member agrees to buy the membership units of other members in the event of their death or disability. Life insurance policies are taken out on each member to provide the necessary funds for the purchases. 3. Entity Redemption: In an entity redemption agreement, the LLC itself is responsible for buying back the membership units of a deceased or disabled member. The LLC obtains life insurance policies on the members to fund the purchase. The Travis Texas Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company with an Option to Fund the Purchase through Life Insurance is a crucial document that ensures the smooth transfer of ownership within an LLC while providing financial security for all individual members.The Travis Texas 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 legally binding document that outlines the terms and conditions of buying or selling membership units in an LLC. This type of agreement is crucial for protecting the interests and investments of individual members within the company. Key provisions: 1. Ownership and Membership Units: The agreement clearly establishes the ownership structure of the LLC and defines the membership units that can be bought or sold. It specifies the number of units, their value, and any restrictions on the transfer of units. 2. Purchase Price Determination: The agreement outlines the method used to determine the purchase price of the membership units. This can be based on a predetermined formula, independent valuation, or mutual agreement between the parties involved. 3. Purchase and Sale Process: The agreement sets out the procedures and timelines for buying or selling membership units. It includes details regarding the notification process, negotiation period, and acceptance of offers. 4. Funding Options: One unique feature of this agreement is the option to fund the purchase through life insurance. It allows the purchasing member to obtain life insurance policies on the other members, ensuring that sufficient funds are available to buy their membership units in the event of death or disability. 5. Life Insurance Policy: This section specifies the requirements for the life insurance policy, including coverage amount, beneficiary designation, and premium payment responsibility. It clarifies that the policy proceeds will be used to fund the purchase of the deceased or disabled member's membership units. Types of Travis Texas Buy Sell or Stock Purchase Agreement: 1. Triggering Events: This type of agreement specifically addresses triggering events such as death, disability, retirement, or voluntary withdrawal from the LLC. It determines the actions to be taken in each specific scenario and how the purchase will be funded through life insurance. 2. Cross-Purchase: In a cross-purchase agreement, each individual member agrees to buy the membership units of other members in the event of their death or disability. Life insurance policies are taken out on each member to provide the necessary funds for the purchases. 3. Entity Redemption: In an entity redemption agreement, the LLC itself is responsible for buying back the membership units of a deceased or disabled member. The LLC obtains life insurance policies on the members to fund the purchase. The Travis Texas Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company with an Option to Fund the Purchase through Life Insurance is a crucial document that ensures the smooth transfer of ownership within an LLC while providing financial security for all individual members.
