Cross-Purchase Sample Clauses
A Cross Purchase clause establishes a mechanism by which the owners or shareholders of a business agree to buy each other's ownership interests in the event of a triggering event, such as death, disability, or retirement. Typically, each owner takes out a life insurance policy on the other owners, and upon a triggering event, the surviving owners use the insurance proceeds to purchase the departing owner's share. This arrangement ensures a smooth transfer of ownership, maintains business continuity, and provides liquidity to the departing owner's estate or beneficiaries, thereby preventing outside parties from acquiring an interest in the business.
Cross-Purchase. On the day after the Closing, pursuant to the Cross Purchase Agreement, PDC shall sell to Buyer and Buyer shall purchase from PDC the Cross Purchase Class B Units and, in exchange therefor, Buyer shall (a) enter into that certain Tax Receivable Agreement, in the form attached to the Cross Purchase Agreement, by and between Buyer and PDC (the “Tax Receivable Agreement”), (b) issue to PDC 481,601.2 shares of Series A voting preferred stock of Buyer, par value $0.0001 per share, with such terms and conditions as set forth in the Certificate of Designation (such series, the “Buyer Series A Voting Preferred Stock”) and (c) issue to PDC, to the extent it becomes due and payable in accordance with the Cross Purchase Agreement, the Contingency Consideration (as defined in the Cross Purchase Agreement). Pursuant to this Agreement, immediately upon receipt of the Cross Purchase Class B Units, Buyer shall surrender such Cross Purchase Class B Units to the Company for cancellation and, upon receipt thereof, the Company shall issue to Buyer the Cross Purchase Class A Units.
Cross-Purchase. This type of agreement involves the business owners entering into an agreement among themselves in which the remaining owners may buy the interest of the departing owner. The agreement may also define the percentage interest each remaining owner can purchase.
Cross-Purchase. In a Cross-Purchase structure, each remaining owner of a business has the right or obligation to purchase the departing owner‟s interest. This method addresses many of the disadvantages of the Redemption structure such as giving the acquiring owners additional basis for the purchase of the departing owner‟s interest. There are disadvantages to a Cross-Purchase structure, though. The planning is generally more complicated, especially if there are more than a few owners. If insurance will be used to fund buyouts, then more insurance policies must be purchased than in the Redemption arrangement. If the owners of a business differ significantly in age or insurability, there can be inequality in expense between high and lower risk owners. In a Redemption structure, some of these complexities don‟t exist. The good news is, there are planning solutions to most of these potential disadvantages, but the bad news is, the solutions can further increase the complexity of a Cross-Purchase structure. The real question is often whether the tax benefits justify some increased cost and complexity up front.
Cross-Purchase. Nothing in this Agreement imposes any obligation on the Company to employ any Owner. 6.
Cross-Purchase. A cross-purchase agreement is an agreement among the stockholders only; the corporation does not need to be a party to the agreement (but is, in most cases). In a cross-purchase agreement, the remain- ing (or surviving) stockholder(s) effect the purchase of the withdrawing or deceased stockholder’s shares themselves, and each purchasing stockholder will use his or her own funds to satisfy this purchase obligation. In an insured cross-purchase arrangement, each stockholder will be the owner and beneficiary of an insurance policy on the lives of the other stockholders; the policies are described as being cross- owned. As discussed in Chapter Five, unless a split-dollar or loan arrangement is used to allow the corporation to bear all of (or at least a substantial part of) the insurance premiums, each stockholder will pay the premiums on the insurance he or she owns on the lives of the other stockholder(s) out of his or her after-tax funds.