Cross-option agreement

Published by a ��˾��ҹ�� Corporate expert

Precedents

Cross-option agreement

Published by a ��˾��ҹ�� Corporate expert

Precedents

This Agreement is made on [insert day and month] 20[insert year]

Parties

1
[Insert name of shareholder] of [insert address];

2
[Insert name of shareholder] of [insert address];

3
[Insert name of shareholder] of [insert address]; and

4
[Insert name of shareholder] of [insert address];

(each a party and together, the parties).

background:

1. (A)
  Together, the parties are the legal and beneficial owners of the entire Issued share capital of the Company (as defined below).
1. (B)
  Each Shareholder (as defined below) has agreed to make provision for the transfer of the legal and beneficial ownership of their shares in the Company in the event of their death on the terms of this agreement.

The parties agree:

1. 1
  Definitions and interpretation
  1. 1.1
    In this agreement:
    Business Day
    1. •
      means a day, other than a Saturday, Sunday or public holiday, on which clearing banks are open for non-automated commercial business in the City of London;
    Call Option
    1. •
      means an option granted pursuant to clause 2.1.1;
    Call Option Period
    1. •
      has the meaning given to it in clause 3.1;
    Company
    1. •
      means [insert name] Limited, a private company

Jurisdiction(s):

United Kingdom

Key definition:

Cross-option agreement definition

What does Cross-option agreement mean?

An agreement entered into by the shareholders of a company, under which each shareholder grants to the other shareholders put and call options over their shares which are exercisable on death (ie under the call option, the remaining shareholders have the right (but not the obligation) to purchase the deceased shareholder's shares from its personal representatives; and under the put option, the deceased shareholder's personal representatives have the right (but not the obligation) to require the remaining shareholders to purchase the deceased shareholder's shares). Each shareholder takes out a term assurance policy under which any amount which becomes payable is held on trust by the continuing shareholders to pay for the deceased's shares. Such a policy should be entered into by each shareholder and written under trust, with their fellow shareholders as beneficiaries.

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