Buy-Sell Agreement
This buy-sell agreement (“Agreement”), effective as of [date], is entered into by [name of limited liability company], a Texas limited liability company (“Company”), and the undersigned Members (individually, “Member,” and collectively, “Members”) and is joined in by Members’ spouses (“Spouse” or “Spouses”).
WITNESSETH
WHEREAS, the Company and Members desire to enter into this Agreement for the purposes of limiting the manner and terms by which all units (“Unit” or “Units”) of the Company now and hereafter owned by Members, as well as any interest of Spouses in any such Units, may be transferred and disposed of (both voluntarily and by operation of law) and of providing certain buy-sell rights in favor of the Company and Members;
THEREFORE, for the consideration set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
Article 1
Definitions
Unless otherwise defined in this Agreement or its recitals, the following terms have the following meanings:
1.1“Agreement” means this Agreement and all of its amendments.
1.2“Board” means the board of managers of the Company.
1.3“Insolvency Event” means (a) the filing of a petition in bankruptcy, receivership, or other proceeding for the discharge or reorganization of indebtedness by a Member, whether under federal or state law; (b) the sufferance by a Member of an involuntary petition of bankruptcy, receivership, or other proceeding for the discharge or reorganization of indebtedness that is not dismissed within thirty days of its filing; or (c) the admission or adjudication of a Member as insolvent.
1.4“Installment Alternative” means the payment for the exercise of a buy-sell option or obligation under this Agreement in the form of a combination of cash and promissory note of the purchaser. To qualify as valid consideration, payment in the form of the Installment Alternative shall meet the following standards: (a) the cash portion of the total purchase price shall be no less than 20 percent, and (b) the promissory note shall (i) be in the principal amount of the balance of the total purchase price; (ii) bear interest at the Prime Rate plus two percentage points, adjusted quarterly on January 1, April 1, July 1, and October 1, but never exceeding 8 percent from the date of issuance; (iii) not have a maturity greater than five years from the date of issuance; (iv) call for equal installments of principal to be paid monthly, such that the principal balance will be amortized and paid in full on the maturity date (no balloon payments permitted); (v) require that all accrued interest be paid in full on each date that an installment of principal is due; (vi) be secured by a pledge of the Units being purchased; (vii) be full recourse against the maker (who shall also be the purchaser); (viii) contain standard provisions regarding default, acceleration, foreclosure, and collection remedies; and (ix) be subordinate to the Company’s prime lender at the time the note is entered into.
1.5“Member” means each undersigned holder of Units and, unless the context clearly indicates otherwise, shall also refer to and incorporate by reference each Member’s Spouse for the purpose of binding the Spousal Interest in the Units.
1.6“Other Members” means, at any time, all undersigned holders of Units other than the Member whose Units are subject to an event discussed in articles 2 and 3 below.
1.7“Personal Representative” means the executor, administrator, guardian, or conservator of the estate of a deceased or incapacitated Member or Spouse.
1.8“Prime Rate” means, for any date on which a promissory note is delivered as partial consideration for a purchaser electing the Installment Alternative, the prime rate as is reported on that effective date by the Wall Street Journal or, if the Wall Street Journal ceases to publish the prime rate on a daily basis, any other nationally recognized daily business publication then publishing the yields of U.S. Treasury bills.
1.9“Pro Rata” means the number of Units owned by any specific Member divided by the total number of Units owned by Other Members.
1.10“Spousal Interest” means any interest in the Units owned or claimed by a Spouse pursuant to community property laws, gift, inheritance, partition, or otherwise.
1.11“Spouse” means the spouse of a Member.
1.12“Transfer Notice” means the notice referred to in section 2.2 below.
1.13“Units” means all Units now owned or hereafter acquired (whether directly or indirectly and whether owned in record name or beneficially) by each Member. Attached at Exhibit A hereto and incorporated herein is the ownership of Units at the time of execution of this Agreement. Unless the context clearly indicates otherwise, the term “Units” shall also refer to and incorporate by reference the Spousal Interest.
1.14“Value” shall be the fair market value of the Company as agreed on by the parties as periodically advised by their certified public accounting firm or other outside independent business valuation professionals or, if the parties cannot agree, the value determined by the appraisal procedures set forth in section 3.3 below. Notwithstanding the foregoing, in no event shall the value be less than the value of insurance, if any, owned by the Company on the life of a deceased Member whose Units are the subject of purchase under this Agreement.
Notwithstanding the foregoing, in the event of a sale of the Company, whether by sale of a majority of the outstanding membership interests or sale of substantially all of the assets of the business, within twelve months of the death or disability of a Member as defined in sections 3.1(b) and (c) below (“Look Back Period”), there will be a deemed look back or earn-out provision pursuant to which the Value paid during the Look Back Period pursuant to section 3.1(b) below shall be adjusted (“Adjustment”) in accordance with this provision. The Adjustment will be equal to the amount determined by multiplying Deceased Member’s ownership percentage of the total outstanding membership interests of the Company by the net proceeds from any such sale transaction (less reasonable selling expenses incurred by the Company) added to the net insurance proceeds received by the Company and paid to Deceased Member’s estate pursuant to the foregoing paragraph, if any. Any amount from this calculation that is greater than the amounts otherwise advanced or paid to Deceased Member’s estate, pursuant to the procedures set forth in section 3.1 of this Agreement, shall be deemed an earn-out and be paid by the Company or the surviving Member as a final payment for the purchase of the Units pursuant to this Agreement. In no event shall the Adjustment provided for in this paragraph be effected to cause Deceased Member’s estate to receive less than what was previously received pursuant to section 3.1(b) below.
Article 2
Restrictions on Transfer of Units
2.1Restrictions on Transfer of Units. A Member shall not sell, assign, transfer, pledge, encumber, subject to lien, or otherwise dispose of any Units except in accordance with this Agreement. Each Member understands that the Company may refuse to transfer the Units when the transfer would not be in compliance with the terms of this Agreement and that any attempted disposition of any Units in violation of this Agreement shall be null and void and of no force and effect.
2.2Preferential Right of Purchase. If a Member desires to sell, transfer, assign, hypothecate, pledge, subject to lien, encumber, or otherwise dispose of any Units, or any right or interest therein, whether voluntarily or by operation of law or by gift or otherwise, the Member shall give written notice (“Transfer Notice”) of that desire to the Company and the Members not selling (“Other Members”) at least thirty days before such disposition stating the following:
a.the nature of the proposed transfers (e.g., sale, gift, pledge, lien, encumbrance, transfer by operation of law) and the number of Units affected;
b.the name, address, telephone number, Social Security or federal tax identification number of the proposed purchaser, creditor, lienholder, donee, or other transferee;
c.the economic terms of the proposed transfer or other disposition, including, without limitation, the amount of the per-Unit purchase price, whether cash, indebtedness, or other property; the amount of any loan and the interest and repayment terms; and whether the Units will be pledged or serve as collateral for the loan;
d.the date the proposed transfer is expected to occur; and
e.any special arrangements between the disposing Member and the proposed transferee, such as options, buy-back rights, voting arrangements, and all other contractual arrangements.
The Company and the Other Members shall have the option to purchase no less than all of the Units that the Member proposes to sell at the purchase price and on the terms set forth in the Transfer Notice, and if that option is exercised by the Company or the Other Members, the disposing Member shall be obligated and bound to sell the Units to the Company or the Other Members on those terms. As between the Company and the Other Members who have a right to purchase the Units, the Company shall have the first and prior right to purchase all or any portion of the Units, and the Other Members shall have the right to purchase no less than all of the remaining Units not purchased by the Company on a Pro Rata basis or as the Other Members may otherwise agree among themselves. Notice of exercise or nonexercise of the option granted pursuant to this section 2.2 shall be given to the disposing Member within thirty days of the date on which written notice from the Company was obtained by the disposing Member in accordance with this section 2.2. If and to the extent that the Company and the Other Members do not purchase all Units, the disposing Member may dispose of the Units but only to the transferee and on the terms described in the Transfer Notice.
Article 3
Buy-Sell Agreement
3.1Buy-Sell Agreement. The occurrence of any of the events relating to the Member or Spouse specified in subsections (a) through (f) of this section 3.1 shall give rise to the rights and obligations set forth in, and will be governed by, the provisions of this article 3. Any amounts paid to a Member pursuant to the terms of this section 3.1 shall be net of any amounts owed by the Member to the Company.
a.Insolvency Event. If the Member or Spouse (collectively, the “Insolvent Member”) shall become subject to an Insolvency Event, the Company and the Other Members shall have the exclusive right and option to purchase all or any number of the Units at the purchase price and on the terms specified in section 3.2 below, and the Insolvent Member (or the trustee, receiver, or other fiduciary, as the case may be) shall be obligated and bound to sell all Units to the Company and the Other Members on those terms. As between the Company and the Other Members who have a right to purchase the Units, the Company shall have the first and prior right to purchase all or any portion of the Units, and the Other Members shall have the right to purchase all or any portion of the remaining Units not purchased by the Company on a Pro Rata basis or as the Other Members may otherwise agree among themselves. Notice of the exercise or nonexercise of the option granted pursuant to this section 3.1(a) shall be given to the Insolvent Member within ninety days of the date on which the Company obtains knowledge of the Insolvency Event. If and to the extent that the Company and the Other Members do not purchase all Units, the estate or fiduciary of the Insolvent Member may dispose of the Units as ordered or permitted by the court, provided, however, that any transfer of the Units to a subsequent transferee shall not be valid until the transferee and any spouse of the transferee execute and become a party to this Agreement.
b.Death of Member. Upon the death of a Member (“Deceased Member”), Deceased Member’s personal representatives, the identity of which shall be determined by the Board in good faith (“Deceased Member’s Representatives”), shall give notice of the death (“Death Notice”) to the remaining Members within sixty days following the death of Deceased Member. If Deceased Member’s Representatives fail to provide the Death Notice within sixty days of death of Deceased Member, the Death Notice shall be deemed given to and received by the Company on the latter of fifteen days after the death of Deceased Member or sixty days after the Company has actual knowledge of the death of Deceased Member. Upon actual or constructive receipt of the Death Notice by the remaining Members, the Company shall be deemed to have been granted an option to purchase all of the interest in the Company of Deceased Member (“Deceased Member’s Units”) for the price and on the terms specified in section 3.2 below. Within thirty days after its receipt of the Death Notice, if any, the Company shall notify Deceased Member’s Representatives of that portion of Deceased Member’s Units that the Company desires to purchase, provided, however, that the Company must purchase not less than all of Deceased Member’s Units. If the Company does not elect to purchase all of Deceased Member’s Units, Deceased Member’s Units may pass in accordance with Deceased Member’s estate plan or according to the laws of intestacy.
c.Disability of Member. A “Permanent Disability” means a disability that prohibits a person from being able to be in the employment of the Company for at least one year in the role or position previously occupied. Upon the Permanent Disability of a Member (“Incapacitated Member”), the Incapacitated Member’s personal representatives (“Incapacitated Member’s Representatives”) shall give notice of the disability (“Incapacity Notice”) to the Board within twenty days following the determination of Permanent Disability at the end of one year of being unable to be in the employment of the Company. The Incapacitated Member’s Representatives, by giving the Incapacity Notice, shall be deemed to have granted to the Company an option to purchase all of the interest in the Company of the Incapacitated Member (“Incapacity Units”) for the price and on the terms specified in section 3.2 below. Within thirty days after its receipt of the Incapacity Notice, the Board shall notify the Incapacitated Member’s Representatives of that portion of the Incapacity Units that the Company desires to purchase. The Company will have the right to purchase all or any portion of the Incapacity Units. To the extent not otherwise fully covered by disability insurance, the Company will pay to the Incapacitated Member in accordance with the Company’s normal payroll practices, the base monthly salary of the Incapacitated Member for the first year during which the Incapacitated Member is not able to work in the employment of the Company.
d.Termination of Employment. If the employment of a Member is terminated or the Member voluntarily leaves the employment of the Company for any reason other than death or Permanent Disability, that termination shall create in the Company an option (“Continuing Purchase Option”) to purchase any portion, and the terminated Member will have the obligation to sell up to the entire amount, of the Member’s Units (including any Units the Member transferred to any affiliate, family member, trust, or other entity as permitted by this Agreement). This Continuing Purchase Option shall commence on the date of the termination of the Member’s status as an employee and shall continue for five years after the date of termination or until the renewal of that status or employment, whichever occurs first.
e.Divorce of Member and Spouse. If a Member or Spouse files a petition for divorce or institutes any other legal proceeding to terminate their marriage, the following procedures shall apply:
i.that Member (“Divorced Member”) and Spouse shall include the Divorced Member’s interest and the Spousal Interest in the Units on their inventories of marital and separate assets at a value not in excess of the purchase price determined under section 3.2 below, and
ii.the Divorced Member shall negotiate and seek, and Spouse agrees to accept, an order for the division of marital and separate property such that the Divorced Member receives the entire Spousal Interest in the Units in exchange for awarding to Spouse other marital and separate assets in which the Divorced Member has an interest that have a value approximately equal to the Spousal Interest (as valued under paragraph 3.1(e)(i) above). If the court in the proceeding enters any order or decree awarding any Units or interest to Spouse, the Divorced Member and Spouse shall each notify the Board and the Other Members in writing of the award (“Divorce Notice”). If the Divorced Member and Spouse fail to provide the Divorce Notice within twenty days of the date the divorce or annulment becomes effective, the Divorce Notice shall be deemed given to and received by the Board on the latter of twenty days after the date the divorce or annulment becomes effective or fifteen days after the Board has actual knowledge of the date the divorce or annulment becomes effective. For a period of ninety days after actual or constructive receipt of the Divorce Notice, the Divorced Member, the Company, and the Other Members shall have the exclusive right and option to purchase all or any portion of the Units awarded to Spouse at the purchase price and on the terms specified in section 3.2 below. Between the Divorced Member, the Company, and the Other Members who have a right to purchase the Units, the Divorced Member, then the Company, shall have the first and prior right to purchase all or any portion of the Units, and the Other Members shall have the right to purchase all or any portion of the remaining Units not purchased by the Divorced Member or the Company on a Pro Rata basis or as the Other Members may otherwise agree among themselves. If and to the extent that the Divorced Member, the Company, and the Other Members do not purchase all Units awarded to Spouse, Spouse may lawfully dispose of the Units, provided, however, that any disposition of the Units to any subsequent transferee shall not be valid until the transferee and any spouse of the transferee execute and become a party to this Agreement. The Divorced Member and Spouse each agree that the Company may intervene in their divorce proceeding without their objection to enforce the Company’s and Other Members’ rights under this section 3.1(e).
f.Death of Spouse. Spouse agrees to bequeath by will Spouse’s entire Spousal Interest to Member. This agreement is made with Spouse’s full knowledge, is made for good and valuable consideration, and constitutes a covenant binding on Spouse’s estate, Personal Representative, heirs, and beneficiaries. If Spouse dies and does not leave a valid will admitted to probate bequeathing the entire Spousal Interest to Member, or if any will contest is filed by any person challenging the validity of the bequest of the Spousal Interest to Member, Member and Spouse’s Personal Representative shall each notify the Board of the event. For a period of ninety days following the date of the later to occur of (i) the qualification of Spouse’s Personal Representative, (ii) the entry of the order of the probate court concluding that Spouse’s will does not bequeath the entire Spousal Interest to Member, and (iii) the filing of a will contest suit, Member shall have the exclusive right and option to purchase all or any portion of the Spousal Interest in the Units at the purchase price and on the terms specified in section 3.2 below. If and to the extent that Member does not or cannot purchase the entire Spousal Interest in the Units pursuant to the foregoing provision within ninety days, the Company and the Other Members shall have the exclusive right and option, beginning on the first day after expiration of that ninety-day period and ending one year after the entry of a final order by the probate court disposing of the Spousal Interest in the Units, to purchase all or any portion of the Units not purchased by or awarded to Member at the purchase price and on the terms specified in section 3.2 below. Between the Company and the Other Members, the Company shall have the first and prior right to purchase all or any portion of the Spousal Interest in the Units, and the Other Members shall have the right to purchase all or any portion of the remaining Spousal Interest in the Units not purchased by the Company on a Pro Rata basis or as the Other Members may otherwise agree among themselves. If and to the extent that the Company and the Other Members do not purchase all Units, the holder of the Units may lawfully dispose of the Units, provided, however, that any disposition of the Units to any subsequent transferee shall not be valid until the transferee and any spouse of the transferee execute and become a party to this Agreement. Each Member and Spouse agree that the Company may intervene in any probate proceeding or will contest applicable to Spouse’s estate without their objections for the purpose of enforcing the Company’s and the Other Members’ rights under this subsection 3.1(f).
g.Sale to Other Members. At any time after this Agreement’s effective date, any Member holding at least 15 percent of the Units held by all Members (“Offering Member”) may offer to the other Members (“Offeree Members”) a cash price for no less than all of the Offeree Members’ Interests (“Subject Units”) on the following terms and conditions:
i.The Offering Member will make a written offer (“Offer”) to acquire the Subject Units.
ii.The Offeree Members will have thirty days from the date of receipt of the Offer to reject or accept the Offer on the terms offered by the Offering Member. Acceptance of the Offer must be in writing and received by the Offering Member before the expiration of the thirty-day period. Any failure to respond within the period will be deemed a rejection of the Offer.
iii.If the Offeree Members reject or are deemed to reject the Offer, the Offeree Members will purchase all of the Offering Member’s Interest on the same terms as contained in the Offer.
The closing of the purchase shall be held at the time and place specified in the Offer within sixty days after the date of the Offer. No Offer shall include a minority discount or control premium.
3.2Purchase Price and Terms. The purchase price per Unit for any Units to be sold pursuant to sections 3.1(a) through (f) of this Agreement shall be the value of the Company as a whole divided by the number of Units outstanding as of the same date the value is determined without regard to the number of Units to be sold. The date of determination of the purchase price under the different sections of this Agreement, unless set forth in those sections, shall be:
a.Preferential Right of Purchase (Section 2.2): the last date on which the Company and all Other Members receive the Transfer Notice.
b.Insolvency Event (Section 3.1(a)): the last day of the calendar month following the date on which the Insolvency Event occurs.
c.Death of Member (Section 3.1(b)): as of the closest calendar month immediately preceding Member’s death.
d.Disability of Member (Section 3.1(c)): the last day of the calendar month following the date of the Incapacity Notice.
e.Termination of Employment (Section 3.1(d)): the last day of the calendar month following the date on which Member’s employment with the Company is terminated.
f.Divorce of Member and Spouse (Section 3.1(e)): the last day of the calendar month following the date of initial filing of the divorce petition or other legal proceeding seeking dissolution or termination of the marriage.
g.Death of Spouse (Section 3.1(f)): the last day of the calendar month following the date of death of Spouse.
All notices of exercise of buy-sell options shall be in writing and shall be effective when delivered in accordance with the procedures set forth in section 4.9 of this Agreement. The notices shall state the number of Units being purchased, the determination of the purchase price in accordance with this Agreement, the names and addresses of the purchasers, and whether the purchase price will be paid in cash or using the Installment Alternative. The closing of the purchase and sale of a buy-sell option or obligation shall occur within ten days from the date of exercise of a buy-sell right and shall be held at the principal business office of the Company in [county] County, Texas, or at another time and place in the state of Texas mutually agreeable to the purchasers and seller. At the closing, the purchasers shall deliver cash (which shall be in the form of a cashier’s check or wire transfer of immediately available funds) or the Installment Alternative. Member, Spouse, or the Personal Representative, as the case may be, shall deliver all certificates evidencing ownership of the Units or the Spousal Interest in the Units, duly endorsed or with a transfer power duly executed and attached.
3.3Appraisal
a.General. If the Company or one or more Members (collectively, the “Purchasing Member”) elect to purchase the Units of another Member (“Disposing Member”) pursuant to any provision for which the Value is to determine the purchase price, and a dispute arises between the Purchasing Member and the Disposing Member over the Value of the Units to be purchased pursuant to the applicable section (“Subject Units”), or if a dispute arises over the fair market value of any nonmonetary consideration (“Nonmonetary Consideration”) to be received, the Value shall be determined by the appraisal procedures set forth in this section 3.3.
b.Selection of Appraisers. If the Disposing Member and the Purchasing Member cannot agree on the value of the Subject Units or any Nonmonetary Consideration, either the Purchasing Member or the Disposing Member may, by delivering a written notice to the other (“Appraisal Notice”) within five days following the date on which the Subject Units become eligible for sale, invoke the provisions of this section to determine the value of the Subject Units or the Nonmonetary Consideration, as the case may be. The Members requesting an appraisal pursuant to this section (collectively, the “Submitting Member”) shall, in the Appraisal Notice to the other Members (collectively, the “Receiving Member”) state that the Submitting Member elects to have the value of the Subject Units or the Nonmonetary Consideration, as the case may be, determined by the appraisal procedures set forth herein and the name of its appraiser. Within five days after its receipt of the notice from the Submitting Member, the Receiving Member shall notify the Submitting Member of the name of its appraiser. Upon appointment, the two appraisers shall be sworn to determine the value of the Subject Units or the Nonmonetary Consideration, as the case may be, faithfully, fairly, and within thirty days of the appointment of the second appraiser. The two appraisers shall afford the Submitting Member and the Receiving Member the right to submit evidence for that value and shall, as promptly as practicable, make their determinations in writing and give notice thereof to the Submitting Member and the Receiving Member. If the higher of the two appraisals determined by the two appraisers exceeds the lower appraisal by less than 10 percent, the average of the two shall be controlling and binding on the Submitting Member and the Receiving Member. If the higher of the two appraisals exceeds the lower appraisal by more than 10 percent, the appraisers, within ten days after both of the appraisers have made their determinations, shall appoint in writing a third appraiser and give written notice of the appointment to the Submitting Member and the Receiving Member. If the two appraisers fail to appoint or agree on a third appraiser within the ten-day period, the Submitting Member and the Receiving Member shall select and agree on a third appraiser within a further period of ten days. If no third appraiser is appointed or agreed on within the allotted time, either party may apply to the appropriate court of the state of Texas to appoint the appraiser. The third appraiser shall be sworn to determine faithfully and fully, and independently of the first two appraisals, the value of the Subject Units or the Nonmonetary Consideration, as the case may be. The third appraiser’s determination of value shall be controlling unless it is higher than the higher or lower than the lower determination of value of the original two appraisers, in which case the previous high or low determination, respectively, shall be controlling and binding on the Purchasing Member and the Disposing Member. The decision of the appraisers pursuant to this section shall be final and binding on the Purchasing Member and the Disposing Member and shall be specifically enforceable in a court having jurisdiction.
c.Appointment of Appraisers. If (i) the Receiving Member fails to appoint an appraiser within five days after its receipt of the notice from the Submitting Member setting forth the name of its appraiser, or (ii) a third appraiser is not appointed as provided above, or (iii) any person appointed as an appraiser by or on behalf of either the Submitting Member or the Receiving Member dies, fails to act, resigns, or becomes disqualified, and the party by or on behalf of whom the appraiser was appointed fails to appoint a substitute appraiser within five days after being requested to do so by the other party, the appraiser in question shall be appointed by the appropriate court of the state of Texas, upon application of either the Submitting Member or the Receiving Member.
d.Costs of Appraisal. Each party shall bear and pay the cost of the appraiser appointed by or for that party, and the cost of the third appraiser shall be borne and paid equally by the Submitting Member and the Receiving Member. All appraisal proceedings shall be held in [county] County, Texas. The Submitting Member and the Receiving Member shall be given reasonable advance notice of the time and place of any appraisal proceedings, and both the Purchasing Member and the Disposing Member shall have the right to be present, heard, and represented by counsel. The appraisers shall not have the power to add to, subtract from, or otherwise change the terms and provisions of this Agreement, and their determination shall be consistent and in accordance with the terms and provisions of this Agreement. The appraisers shall give prompt notice of their decision to the Submitting Member and the Receiving Member.
Article 4
Miscellaneous
4.1Binding Effect. This Agreement shall be binding on and inure to the benefit of the undersigned parties and their respective heirs, personal representatives, successors, and assigns, provided that the rights of Member and Spouse under this Agreement may not be assigned without the consent of the Company and Member, and any assignment in violation of this section 4.1 shall be null and void and of no force or effect. The Company’s rights and obligations under this Agreement are assignable.
4.2Validity. If any provisions in this Agreement are held to be invalid, determine to result in the Company's loss of its election under subchapter S of the Internal Revenue Code (“S Election”), or against public policy, the remaining provisions shall not be affected. In such event, the parties to this Agreement shall negotiate in good faith to modify this Agreement to effect the original intent of the parties as closely as possible regarding those provisions that were held to be invalid, result in the Company’s loss of its S Election, or against public policy.
4.3Titles and Headings. Titles and headings to sections in this Agreement are for the purpose of reference only and shall in no way limit, define, or otherwise affect those provisions.
4.4Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Texas, without regard to its conflict-of-laws principles.
4.5Spouse’s Community Interest. The Spouse of each Member hereby joins in the execution of this Agreement to evidence Spouse’s knowledge of its existence and content; to acknowledge that this Agreement is fair, equitable, and in their best interests; to bind the Spousal Interest, if any, and the heirs, beneficiaries, administrators, executors, legal representatives, and assigns of Spouse to the Agreement; and to evidence that the community interest of Spouse, if any, in and to any of the Units is covered by and embraced by the terms and provisions of this Agreement in all respects. Spouse further specifically designates Member as manager of all Spousal Interest in the Units (other than interests evidenced by a Units certificate solely in the name of Spouse and owned by Spouse as a Member of the Company) and agrees that Member shall have the sole right to exercise the rights, powers, and privileges granted under this Agreement relating to all Units and the entire Spousal Interest. Spouse acknowledges that Spouse has been advised by the Company and Member to engage separate legal counsel to review this Agreement on Spouse's behalf, that Spouse has been adequately advised about the legal ramifications and effects of entering into this Agreement, and that Spouse is doing so with full knowledge and of Spouse’s own free will and volition.
4.6Joinder of Future Spouses. Each Member agrees, promptly upon Member’s marriage or remarriage, to use Member’s best efforts to have the spouse of that marriage or remarriage execute a counterpart of this Agreement to evidence the spouse’s intent to be bound by it.
4.7Entire Agreement; Amendment. This Agreement constitutes the entire agreement among the parties concerning its subject matter. Except as expressly provided herein, this Agreement may be amended only upon the written consent of the Company and a three-quarter vote of Members.
4.8Termination. This Agreement shall terminate upon the first to occur of the following events:
a.written agreement of the Company and all Members or
b.bankruptcy, receivership, dissolution, or cessation of the Company to do business.
4.9Notices. All notices and other communications required or permitted under this Agreement shall be in writing and mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or messenger, including Federal Express or similar courier services, addressed (a) if to Member, at Member’s address set forth below, or at another address Member furnished to the Company and all Other Members; (b) if to the Company, to [name of limited liability company], Attn: President, or at another address the Company furnished to Member; and (c) if to Spouse, at Spouse’s address set forth below until Spouse delivers a written change of address notice to all Members, the Company, and each of the Other Members. Each notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally or, if sent by mail or courier, at the earlier of its receipt or three business days after deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and mailed as above.
4.10Dispute Resolution. Any dispute arising out of or relating to this Agreement or its breach, termination, or validity shall be finally settled by binding arbitration conducted expeditiously in accordance with the Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association as in effect from time to time, and judgment on the award rendered by the arbitrators may be entered by any court having jurisdiction. The arbitration shall be held in [county] County, Texas. Notwithstanding anything to the contrary contained herein, the provisions of this section 4.10 shall not apply to any equitable remedies to which the Company or Member may be entitled under this Agreement.
4.11Endorsement of Units Certificates. Any certificates of Units of the Company now owned or that may be acquired by Members shall be endorsed on the back as follows:
By agreement among the Company and its Members, restrictions have been placed on the transfer of the Units represented by this certificate. A copy of the Agreement, which contains a full statement of the restrictions, is on file at the Company’s principal place of business and its registered office.
The certificates shall be endorsed on the front as follows:
See restrictions on transfer hereof on reverse side.
IN WITNESS WHEREOF, this Agreement has been executed effective as of the date first set forth above.
Company:
[Name of limited liability company], a Texas limited liability company
By:
[Name], [title]
Spouse:
By:
[Name of spouse], spouse of [name of member]
[Address, city, state]
Member:
By:
[Name of member]
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Repeat as necessary. |
Exhibit A
to
Buy-Sell Agreement
for
[Name of limited liability company]
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Members |
Units |
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Total Units |
[number] |