Some cross-purchase agreements use a dollar amount to calculate the buy-out price, while others use a formula. A valuation of the interest that is the subject of the agreement should be made periodically.
A Cross-Purchase Agreement among Shareholders of Close Corporation with Purchase by Surviving Shareholders of Interest of Withdrawing or Deceased Shareholder -- Purchase Price Based on Book Value is an arrangement between the shareholders of a close corporation wherein the surviving shareholders agree to purchase the interests of any withdrawing or deceased shareholder at a purchase price based on the book value of the corporation. This type of agreement is typically used when a shareholder dies, retires, or otherwise withdraws from the corporation. The main types of Cross-Purchase Agreement among Shareholders of Close Corporation with Purchase by Surviving Shareholders of Interest of Withdrawing or Deceased Shareholder -- Purchase Price Based on Book Value are: 1. Buy-Sell Agreements: A buy-sell agreement is a contract between the shareholders of a close corporation that establishes the conditions under which a shareholder's interest may be purchased by the surviving shareholders. This type of agreement typically includes provisions regarding the purchase price, who will purchase the shares, and how the purchase will be financed. 2. Redemption Agreements: A redemption agreement is a contract between the shareholders of a close corporation that establishes the conditions under which a shareholder's interest may be purchased by the corporation itself. This type of agreement typically includes provisions regarding the purchase price, who will purchase the shares, and how the purchase will be financed. 3. Cross-Purchase Agreements: A cross-purchase agreement is an agreement between the shareholders of a close corporation that establishes the conditions under which a shareholder's interest may be purchased by any other surviving shareholder. This type of agreement typically includes provisions regarding the purchase price, which shareholders will purchase the shares, and how the purchase will be financed.
