Cross Purchase Agreement

• Category: Corporations - Cross Purchase
• State: Multi-State
• Control #: US-0922BG
• Format: Word; Rich Text

Description Agreement Purchase

A cross-purchase agreement sets forth how ownership in a business transfers if the owner dies, retires or becomes disabled. The parties to a cross-purchase agreement always include a seller and a buyer. Cross-purchase agreements aim to ensure that sellers (or their beneficiaries) receive and buyers pay a fair price for their interests. 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 Stockholders of a Close Corporation --Purchase by Surviving Stockholders of Interest of Withdrawing or Deceased Stockholder is a contract between two or more shareholders of a closely held corporation. It is used to regulate the transfer of the stock of a deceased shareholder or withdrawing shareholder to the surviving shareholders, or to a third-party purchaser. The agreement usually provides that the surviving shareholders have the right of first refusal to purchase the shares of the deceased or withdrawing shareholder. It contains provisions for the purchase price, payment terms, and other relevant conditions. The two main types of Cross-Purchase Agreement among Stockholders of Close Corporation --Purchase by Surviving Stockholders of Interest of Withdrawing or Deceased Stockholder are: 1. “Buy-Sell Agreement— – This agreement requires the surviving shareholders to purchase the stock of the deceased or withdrawing shareholder at a fixed value, often established by the agreement itself. The agreement may provide that the purchase price will be adjusted in the event of future changes in the value of the corporation. 2. “Shotgun Buy-Sell Agreement— – This agreement requires the deceased or withdrawing shareholder to make an offer to sell their interest in the corporation at a certain price. The surviving shareholders are then given the option to either buy the interest at that price, or to make a counteroffer. The deceased or withdrawing shareholder must then choose the offer they prefer.

A Cross-Purchase Agreement among Stockholders of a Close Corporation --Purchase by Surviving Stockholders of Interest of Withdrawing or Deceased Stockholder is a contract between two or more shareholders of a closely held corporation. It is used to regulate the transfer of the stock of a deceased shareholder or withdrawing shareholder to the surviving shareholders, or to a third-party purchaser. The agreement usually provides that the surviving shareholders have the right of first refusal to purchase the shares of the deceased or withdrawing shareholder. It contains provisions for the purchase price, payment terms, and other relevant conditions. The two main types of Cross-Purchase Agreement among Stockholders of Close Corporation --Purchase by Surviving Stockholders of Interest of Withdrawing or Deceased Stockholder are: 1. “Buy-Sell Agreement— – This agreement requires the surviving shareholders to purchase the stock of the deceased or withdrawing shareholder at a fixed value, often established by the agreement itself. The agreement may provide that the purchase price will be adjusted in the event of future changes in the value of the corporation. 2. “Shotgun Buy-Sell Agreement— – This agreement requires the deceased or withdrawing shareholder to make an offer to sell their interest in the corporation at a certain price. The surviving shareholders are then given the option to either buy the interest at that price, or to make a counteroffer. The deceased or withdrawing shareholder must then choose the offer they prefer.