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Provide a template for a Buy-Sell Agreement.
Buy-Sell Agreement Template
Introduction
A Buy-Sell Agreement is a legally binding document that outlines the terms and conditions under which a business owner’s share of a business may be reassigned if that owner dies or otherwise leaves the business. This agreement is crucial for ensuring the smooth transition of ownership and protecting the interests of all parties involved. Below is a comprehensive template for a Buy-Sell Agreement tailored to meet Kenyan legal standards.
Table of Contents
Introduction
Definitions
Purpose of the Agreement
Purchase and Sale of Shares
Triggering Events
Purchase Price
Payment Terms
Valuation of Shares
Rights and Obligations of Parties
Confidentiality
Dispute Resolution
Governing Law
Miscellaneous Provisions
Signatures
1. Introduction
This Buy-Sell Agreement (the "Agreement") is made and entered into as of [Date], by and between [Company Name], a company incorporated under the laws of Kenya, with its principal office located at [Company Address] (the "Company"), and the undersigned shareholders of the Company (each a "Shareholder" and collectively the "Shareholders").
2. Definitions
For the purposes of this Agreement, the following terms shall have the meanings set forth below:
"Shares": The shares of stock of the Company owned by the Shareholders.
"Triggering Event": Any event that triggers the buy-sell provisions of this Agreement, including but not limited to death, disability, retirement, or voluntary or involuntary termination of a Shareholder.
"Purchase Price": The price at which the Shares will be bought and sold under this Agreement.
3. Purpose of the Agreement
The purpose of this Agreement is to provide for the purchase and sale of Shares in the event of a Triggering Event, thereby ensuring the continuity of the Company and protecting the interests of the remaining Shareholders.
4. Purchase and Sale of Shares
4.1 Triggering Events
The following events shall constitute Triggering Events under this Agreement:
Death of a Shareholder
Permanent disability of a Shareholder
Retirement of a Shareholder
Voluntary termination of a Shareholder
Involuntary termination of a Shareholder
4.2 Purchase Price
The Purchase Price for the Shares shall be determined as follows:
The fair market value of the Shares as determined by an independent appraiser agreed upon by the Shareholders.
The Purchase Price shall be adjusted for any outstanding debts or obligations of the Shareholder to the Company.
4.3 Payment Terms
The Purchase Price shall be paid as follows:
[Percentage]% of the Purchase Price shall be paid in cash at the closing of the sale.
The remaining [Percentage]% shall be paid in equal monthly installments over a period of [Number] months, with interest at a rate of [Interest Rate]% per annum.
5. Valuation of Shares
The fair market value of the Shares shall be determined by an independent appraiser selected by mutual agreement of the Shareholders. The appraiser's determination shall be final and binding on all parties.
6. Rights and Obligations of Parties
6.1 Rights of the Company
The Company shall have the first right of refusal to purchase the Shares in the event of a Triggering Event.
6.2 Obligations of the Shareholders
Each Shareholder agrees to sell their Shares in accordance with the terms of this Agreement upon the occurrence of a Triggering Event.
7. Confidentiality
All parties agree to keep the terms of this Agreement and any information related to the valuation of the Shares confidential, except as required by law.
8. Dispute Resolution
Any disputes arising out of or in connection with this Agreement shall be resolved through mediation. If mediation fails, the dispute shall be submitted to arbitration in accordance with the rules of the Chartered Institute of Arbitrators, Kenya Branch.
9. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of Kenya.
10. Miscellaneous Provisions
10.1 Entire Agreement
This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter hereof.
10.2 Amendments
This Agreement may be amended only by a written agreement signed by all parties.
10.3 Severability
If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.
11. Signatures
IN WITNESS WHEREOF, the parties hereto have executed this Buy-Sell Agreement as of the day and year first above written.
Company: [Company Name]
By: ___________________________
Name: [Authorized Signatory]
Title: [Title]
Date: [Date]
Shareholders:
Name: [Shareholder 1 Name]
Date: [Date]
Name: [Shareholder 2 Name]
Date: [Date]
Name: [Shareholder 3 Name]
Date: [Date]
TLDR
A Buy-Sell Agreement is a legal document that outlines the terms for the transfer of business shares in the event of a triggering event such as death, disability, or retirement. This template provides a comprehensive structure for such an agreement, ensuring the protection of all parties involved.
Conclusion
A well-drafted Buy-Sell Agreement is essential for the smooth transition of business ownership and the protection of shareholders' interests. This template serves as a guide to creating a legally binding agreement that meets Kenyan legal standards.
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