{"id":11229,"date":"2018-11-12T07:59:53","date_gmt":"2018-11-12T14:59:53","guid":{"rendered":"https:\/\/www.keytlaw.com\/azllclaw\/?page_id=11229"},"modified":"2018-11-12T08:01:10","modified_gmt":"2018-11-12T15:01:10","slug":"triggering-events","status":"publish","type":"page","link":"https:\/\/www.keytlaw.com\/azllclaw\/triggering-events\/","title":{"rendered":"Buy Sell Agreement Triggering Events"},"content":{"rendered":"

by Richard Keyt<\/a> and Richard C. Keyt<\/a>, Arizona LLC attorneys who have formed 10,000+ Arizona LLCs and have 406 five-star reviews on Google, Facebook & Birdeye<\/a><\/p>\n

Below is my list of possible events called triggering events that you can include or exclude from your Buy Sell Agreement when you hire me to prepare the agreement.\u00a0 When a triggering event occurs it starts an optional or mandatory buy out of the member who suffers a triggering event.<\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t
Triggering Event<\/center><\/th>
Purpose<\/center><\/th>\n<\/tr>\n<\/thead>\n
1. Any event the members desire<\/td>A Buy Sell Agreement can include any triggering events that are important to the members. For example, the members could agree that if the New York Yankees win the World Series, member 1 must sell to member 2 for $100.<\/td>\n<\/tr>\n
2. Operating Agreement default<\/td>If a member defaults under the Operating Agreement signed by all of the members the LLC has an option to buy out the defaulting member.<\/td>\n<\/tr>\n
3. Member fails to contribute money or property<\/td>This provision encourages a member to satisfy the member's obligation in a written document to pay money or assign property to the company because if the member fails to satisfy that obligation the LLC will have an option to buy out the defaulting member.<\/td>\n<\/tr>\n
4. Death of a member<\/td>The LLC or surviving members have an option to purchase the interest of a deceased member. The Buy Sell Agreement can also require the LLC to buy-out a deceased member. These types of buy outs can be funded with life insure on the lives of members.<\/td>\n<\/tr>\n
5. Member is convicted of a felony<\/td>Many LLC members do not want to have another member who has been convicted of a felony.<\/td>\n<\/tr>\n
6. Divorce of a member<\/td>Prevents the wrong spouse from acquiring an interest in the LLC if two members own their interest as community property and they get divorced and the wrong spouse becomes the sole owner of all or a portion of the membership interest.<\/td>\n<\/tr>\n
7. Member files for bankruptcy<\/td>If a member loses the member's interest in the LLC because of filing for bankruptcy, the company and other members should be able to buy the interest from the creditor who acquires it out of the bankruptcy.<\/td>\n<\/tr>\n
8. Member transfers all or part of the member's membership interest without the approval of the other members<\/td>The Buy Sell Agreement provides that a member may not transfer or encumber all or any interest in the member's interest in the company without the approval of the members and compliance with the terms and conditions of the Operating Agreement and\/or the Buy Sell Agreement. If a member violates the no transfer\/encumbrance provisions, the LLC should have an option to acquire the interest of the defaulting member, perhaps at an amount less than the fair market value of the interest.<\/td>\n<\/tr>\n
9. Termination of employment of a member<\/td>Applies only to a member who is employed full time by the LLC. Especially important when the employee is a minority member and should only own an interest while employed.<\/td>\n<\/tr>\n
10. Member loses his or her professional license<\/td>Commonly used for LLC's that are owned by members who must be licensed in a particular area. For example, the Buy Sell Agreement of an LLC owned by physicians might give the LLC and other members an option to acquire the interest of a physician\/member who loses his or her license to practice medicine.<\/td>\n<\/tr>\n
11. Majority member sells membership interest<\/td>\"Drag Along\" provision: Majority member has the option to require minority members to sell their interests in the LLC if the majority member sells. The sale of the minority members' interests are on the same terms and conditions as the sale of the majority member's interest.<\/td>\n<\/tr>\n
12. Majority member sells membership interest<\/td>\"Tag Along\" provision: Minority members have the option to require the majority member to include the sale of the minority members' interests in the LLC if the majority member intends to sell. The sale of the minority members' interests must be on the same terms and conditions as the sale of the majority member's interest.<\/td>\n<\/tr>\n
13. Member is disabled<\/td>Used to acquire the interest of a member who become permanently disabled and unable to provide needed services for the LLC.<\/td>\n<\/tr>\n
14. Member retires<\/td>Members sometimes want to retire, but without a Buy Sell Agreement that provides for a retirement purchase, it probably will not happen.<\/td>\n<\/tr>\n
15. Member is incompetent<\/td>Applies if a member loses his or her mental capacity and a court appoints a conservator to manage the members financial affair.<\/td>\n<\/tr>\n
16. Member files a false document with the ACC<\/td>If a member causes a false document to be filed with the Arizona Corporation Commission it is a triggering event that can cause a buy out,<\/td>\n<\/tr>\n
17. Member causes somebody to be added or removed from the LLC's bank account<\/td>If a member causes a signer to be added or removed on the company's bank account without the approval of the members per the operating agreement it is a triggering event that can cause a buy out.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

Hire the Keyts to Prepare a Buy Sell Agreement for Your Arizona LLC<\/strong><\/h2>\r\n

We prepare Buy Sell Agreements custom drafted specifically to meet the desires of the members of Arizona LLCs.\u00a0 Our Buy Sell Agreement is the end result of Richard Keyt preparing this type of business agreement many times since practicing law in Arizona since 1980.<\/p>\r\nWe have two prices for our custom drafted Buy Sell Agreement.\u00a0 The prices are:\r\n