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This agreement covers how and when an owner in a partnership can sell shares and at what price. The buy-sell agreement should specify triggers, such as retirement, death, divorce, or bankruptcy, which will set the agreement in motion. This form provides standard clauses found in similar agreements, such as a mandatory arbitration provision, but can be customized to fit the needs of the drafting parties. This document is extremely useful to an enterprise with multiple owners.
This agreement covers how and when an owner in a partnership can sell shares and at what price. The buy-sell agreement should specify triggers, such as retirement, death, divorce, or bankruptcy, which will set the agreement in motion. This form provides standard clauses found in similar agreements, such as a mandatory arbitration provision, but can be customized to fit the needs of the drafting parties. This document is extremely useful to an enterprise with multiple owners. Buy-Sell Agreement of a Partnership with Purchase to be made on Death, Retirement or Withdrawal of Partner Agreement made this the (date), by and among (Name of Partner Alpha), of (street address, city, state, zip code), hereinafter called Partner Alpha, (Name of Partner Beta) of (street address, city, state, zip code), hereinafter called Partner Beta; and (Name of Partner Gamma), of (street address, city, state, zip code), hereinafter called Partner Gamma, said Partners being partners in the practice of public accounting at (street address, city, state, zip code), under the firm name of (state firm’s name); Whereas, the interest of each Partner in the Partnership is set forth in Exhibit A attached hereto and made a part hereof; and Whereas, the purpose of this Agreement is to provide, in the case of the death or the retirement or withdrawal of a Partner for some other reason, for the purchase by the other Partners of that Partner's interest in the assets of the Partnership and to provide for the continuation of the Partnership; and Now, therefore, for and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the parties agree as follows: 1. Retirement of Partner. A. If a Partner desires to retire from the Partnership, the Partner shall give written notice of that intention to the other Partners. A Partner may retire from active participation in the Partnership business without written permission by the remaining Partners on any date subsequent to the Partner's attaining (designated retirement age) years of age, or if all the Partners agree, at an earlier date. The other Partners shall, within (number) days after receipt of notice of an intended retirement, purchase the interest of the retiring Partner in the Partnership. The purchase shall be on a pro-rata basis with respect to the Partnership interest of the retiring Partner that the remaining Partners shall purchase. B. The retiring Partner shall refrain from entering into competition with the purchasing Partners in connection with the Partnership business for a period of (number) years within the area in which the Partnership shall at the time of purchase actually be doing business. 2. Death of Partner. On the death of a Partner the Partner's Partnership interest shall be sold by the estate of the deceased Partner, and the other Partners shall each purchase the Partner's pro-rata share (based on their respective interests in the Partnership immediately prior to the Partner's death) of the Decedent's interest in the Partnership. 3. Withdrawal from the Partnership. If a Partner desires to withdraw from the Partnership other than by retiring as provided in Section 1, the Partner shall give written notice of that intention to the other Partners. The other Partners shall within a period of (number) days after receipt of such notice have the right to purchase the interest of the withdrawing Partner. Such options shall be on a pro-rata basis both as to the entire © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2 holdings of the withdrawing Partner, and as to any part of the Partner's interest with respect to which one or more of the remaining Partners shall not exercise the option. On the failure to timely exercise this right of purchase of the withdrawing Partner's interest, this Agreement shall terminate as to that interest. 4. Purchase Price. The price for the purchase under Sections 1, 2, or 3 shall be that fraction of the value of the Partnership which corresponds to the proportionate interest of the selling Partner in the Partnership after deduction of any indebtedness to the Partnership. The current respective interests of the Partners in the Partnership practice shall be entered from time to time on the attached Schedule A. 5. Value of Practice. The value of the practice shall consist of the sum of the following: A. The net worth of the Partnership consisting of the depreciated value of tangible assets plus cash on hand and on deposit, exclusive of reserves for withholding taxes and the like, and necessarily also exclusive of any funds held in trust, on the (number) day of the month preceding the death or notice of retirement, withdrawal, or liquidation, as the case may be. B. A fixed sum to be entered on the attached Schedule A, and adjusted from time to time by mutual consent of the Partners, which sum shall represent the liquidation value of all services performed by the Partnership but not yet paid for. C. A fixed sum to be entered on the attached Schedule A, and adjusted from time to time by mutual consent of the Partners, which sum shall represent the liquidated value of the goodwill and all other intangible assets of the Partnership. 6. Re-determination of Values. A. The Partnership shall re-determine the values set forth in Section 6 within (number) days following the end of each calendar year or more often if the parties so desire, such re-determined values to be endorsed on the attached Schedule A, as specified in Section 6. If the Partners fail to make such a re-determination of values for a particular year, the last previously stipulated value shall control, except that if the Partners fail to make the redetermination within (number) months immediately preceding the death of a Partner, then the value shall be agreed on by the personal representative of the deceased Partner on the one hand and the surviving Partners on behalf of the Partnership on the other hand. B. If the personal representative of the deceased Partner and the surviving Partners do not agree to a valuation within (number) days after the death of the Partner, the value of the deceased Partner's interest shall be determined by arbitration as set forth in Paragraph 13 below. 7. Payments upon Continuation. On the retirement or death of a Partner pursuant to Section 1 or 2, the remaining Partners shall continue the Partnership and shall make guaranteed payments to the decedent's estate or retiring Partner. The first such payment © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 3 shall represent payments for the capital assets and the later payments for the balance. 8. Assumption of Partnership Liability. The remaining Partners shall assume all liabilities of the prior Partnership and shall indemnify the retiring Partner or the estate of a deceased Partner, as the case may be, from all claims against the prior Partnership except for those arising out of professional acts of the retiring or deceased Partner individually. 9. Bill of Sale. The executor or administrator of the estate of a deceased Partner shall execute a Bill of Sale of the deceased Partner's interest in the Partnership to the Partnership and a waiver of any right of accounting on the part of the surviving Partners. 10. Conveyance of Interest. On the tender of the first payment of the purchase price of a deceased, retiring, or withdrawing Partner's interest in the Partnership, the representative of the estate of the deceased Partner or the retiring or withdrawing Partner shall execute the necessary documents to affect a conveyance of the deceased, retiring, or withdrawing Partner's interest to the other Partners. Once this has been accomplished, the estate of the deceased Partner or the retiring Partner shall have no further right or interest in the Partnership, but only a debt due from the Partnership as provided in Section 8. A Partner withdrawing under the provisions of Section 3 shall have no further interest. 11. Insurance on Partner’s Lives. A. In order to have sufficient cash available for the described purchase or for any other purposes consonant with this Agreement, the Partnership shall maintain insurance on the lives of each Partner in companies and in the amount indicated on the attached Schedule B. Each Partner agrees to cooperate with the others and execute any forms necessary to secure the insurance to facilitate this Agreement to buy and sell. B. Changes in the insurance will be noted on the Schedule as made. Each applying Partner shall be designated as the owner and the beneficiary of insurance issued on the Partner's application. Each Partner agrees to exercise no insurance contract right or option without first giving written notice to the other Partners at least (number) days in advance of the contemplated action. 12. Mandatory Arbitration. Notwithstanding the foregoing, and anything herein to the contrary, any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. 13. Non-dissolution of Partnership. The Partnership shall not be dissolved by the death, retirement, or withdrawal of a Partner. 14. Termination of Agreement. This Agreement shall terminate completely on the happening of any of the following: © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 4 A. The death of all Partners simultaneously or within (number) days; B. The consensual dissolution of the Partnership; C. The bankruptcy of any Partner; or D. The bankruptcy, receivership or dissolution of the Partnership. 15. Amendment or Termination of Agreement. Ex
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