Buyback clause: Copy, customize, and use instantly
Introduction
A buyback clause outlines the terms and conditions under which a company or other parties involved may repurchase or buy back shares or assets from another party. This clause typically addresses the price, timing, and process for such a transaction, ensuring clarity and security for all parties involved.
Below are templates for buyback clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard buyback clause
This version covers the basic buyback provisions.
The [Company] shall have the option to buy back shares from the [Investor] at a price equal to the fair market value of the shares, as determined by an independent appraiser, at any time during the term of this Agreement, subject to the terms and conditions outlined herein.
Buyback clause with fixed price
This version includes a fixed buyback price.
The [Company] agrees to repurchase shares from the [Investor] at a fixed price of [$X] per share at the [Company]’s discretion, payable within [X] days of the [Investor]’s request to sell the shares back to the [Company].
Buyback clause with right of first refusal
This version grants a right of first refusal.
If the [Investor] desires to sell their shares, the [Company] shall have the right of first refusal to purchase those shares on the same terms offered to any third party, subject to the conditions outlined in this Agreement.
Buyback clause with trigger events
This version specifies trigger events for buyback.
The [Company] shall have the right to buy back shares from the [Investor] upon the occurrence of the following events: [list of events], with the buyback price to be determined based on the terms set forth herein.
Buyback clause with installment payments
This version includes installment payments.
The [Company] agrees to repurchase shares from the [Investor] in [X] equal installments, with the first installment due within [X] days of the buyback notice, and subsequent payments due [monthly/quarterly] thereafter.
Buyback clause with price adjustment based on market conditions
This version adjusts the buyback price based on market conditions.
The buyback price for shares repurchased under this Agreement shall be adjusted based on the average market price of the shares over the [X]-month period preceding the buyback request, subject to a minimum of [$X] per share.
Buyback clause with restriction on buyback during certain periods
This version restricts buybacks during certain periods.
The [Company] shall not repurchase any shares under this Agreement during any period in which the [Company] is in possession of material non-public information or during the [X] month period following the completion of an offering.
Buyback clause with board approval required
This version requires board approval for buybacks.
Any repurchase of shares from the [Investor] under this Agreement shall be subject to the prior written approval of the [Company]’s Board of Directors, which approval shall not be unreasonably withheld.
Buyback clause with fair value determination
This version includes fair value determination.
The buyback price of the shares shall be determined based on the fair market value of the shares as of the date of the buyback request, as determined by an independent appraiser agreed upon by both parties.
Buyback clause with right to buy back on change of control
This version includes buyback rights on change of control.
In the event of a change of control of the [Company], the [Company] shall have the right to buy back the shares held by the [Investor] at a price equal to the fair market value of the shares, as determined by an independent appraiser.
Buyback clause with limited time for buyback
This version includes a limited time for buyback.
The [Company] shall have the right to buy back shares from the [Investor] within [X] years of the issuance of the shares. After this period, the [Company] shall have no obligation to repurchase the shares.
Buyback clause with buyback upon termination
This version allows buyback upon termination.
Upon the termination of this Agreement, the [Company] shall have the right to buy back any outstanding shares from the [Investor] at a price equal to the fair market value at the time of termination, as determined by an independent appraiser.
Buyback clause with buyback upon breach of agreement
This version allows buyback upon breach.
In the event of a material breach of this Agreement by the [Investor], the [Company] shall have the right to buy back all shares held by the [Investor] at a price equal to the purchase price paid for such shares, minus any damages incurred by the [Company] as a result of the breach.
Buyback clause with redemption option for preferred stockholders
This version includes a redemption option for preferred stockholders.
Preferred stockholders shall have the option to request the buyback of their shares at any time after [X] years from the issuance date, at a price equal to the liquidation preference or the fair market value, whichever is higher.
Buyback clause with pro-rata buyback
This version allows a pro-rata buyback.
In the event that the [Company] elects to buy back shares from the [Investor], the buyback shall be made on a pro-rata basis, with the [Investor] receiving the same proportional amount of shares as other stockholders.
Buyback clause with buyback for tax reasons
This version allows buyback for tax reasons.
The [Company] may repurchase shares from the [Investor] if necessary to comply with tax laws or to address any tax consequences related to changes in the [Company]’s structure or operations.
Buyback clause with buyback in connection with employee stock options
This version ties the buyback to employee stock options.
The [Company] shall have the right to repurchase shares from the [Investor] in order to facilitate the issuance of employee stock options or stock grants, at a price equal to the fair market value of the shares.
Buyback clause with buyback in case of personal bankruptcy
This version allows buyback in case of bankruptcy.
If the [Investor] files for bankruptcy or becomes insolvent, the [Company] shall have the right to repurchase all shares owned by the [Investor] at a price determined by the Board of Directors, but not exceeding the price at which the shares were originally issued.
Buyback clause with installment buyback at discount
This version allows installment buyback at a discount.
The [Company] may repurchase shares from the [Investor] in installments, with each installment priced at [X]% below the fair market value of the shares at the time of repurchase, subject to a maximum total buyback amount.
Buyback clause with buyback in case of death of shareholder
This version addresses buyback in case of death.
In the event of the death of the [Investor], the [Company] shall have the right to repurchase all outstanding shares from the deceased’s estate at a price equal to the fair market value of the shares as of the date of death.
Buyback clause with buyback in case of resignation of key personnel
This version includes buyback in case of resignation.
If the [Investor] is a key personnel member of the [Company] and resigns from their position, the [Company] shall have the right to buy back their shares at a price determined by the Board of Directors.
Buyback clause with buyback upon breach of confidentiality
This version allows buyback upon breach of confidentiality.
If the [Investor] breaches the confidentiality provisions of this Agreement, the [Company] shall have the right to buy back all shares held by the [Investor] at the original purchase price.
Buyback clause with no buyback during the lock-up period
This version restricts buyback during the lock-up period.
The [Company] shall not repurchase any shares from the [Investor] during the lock-up period of [X] years from the issuance date, unless a change of control occurs, or in other exceptional circumstances as agreed by both parties.
Buyback clause with buyback if the company goes public
This version ties the buyback to a public offering.
In the event that the [Company] goes public, the [Investor] shall have the right to sell back shares to the [Company] at the public offering price for a period of [X] days following the IPO.
Buyback clause with equal buyback rights for stockholders
This version includes equal rights for stockholders.
If the [Company] elects to repurchase shares from any stockholder, the [Company] must offer the same buyback terms to all stockholders who hold the same class of shares, ensuring that all stockholders are treated equally.
Buyback clause with automatic buyback on failure to meet performance targets
This version includes automatic buyback.
If the [Investor] or the [Company] fails to meet certain performance targets specified in this Agreement, the [Company] shall have the automatic right to buy back shares from the [Investor] at a price equal to the original investment amount.
Buyback clause with buyback for breach of non-compete
This version allows buyback for breach of non-compete.
If the [Investor] breaches any non-compete provision of this Agreement, the [Company] may repurchase all or a portion of the shares held by the [Investor] at the fair market value.
Buyback clause with buyback rights after a specified period
This version allows buyback after a set period.
After [X] years from the issuance of the common stock, the [Company] shall have the right to repurchase any or all of the shares held by the [Investor] at a price equal to the fair market value as of the repurchase date.
Buyback clause with buyback as part of an exit strategy
This version includes buyback as part of an exit strategy.
The [Company] agrees to implement a buyback program as part of an exit strategy, where stockholders can sell their shares back to the [Company] during a pre-defined exit event, such as a merger or IPO.
Buyback clause with buyback for compliance with securities regulations
This version includes compliance with regulations.
The [Company] may repurchase shares from the [Investor] to comply with securities regulations, including regulations regarding the ownership structure of the [Company] as required by applicable securities laws.
Buyback clause with price adjustment based on asset value
This version adjusts the buyback price based on asset value.
The buyback price for shares repurchased under this Agreement shall be adjusted based on the net asset value of the [Company], calculated by an independent appraiser, on the date of repurchase.
Buyback clause with buyback upon default
This version includes buyback upon default.
If the [Investor] defaults on any obligations under this Agreement, the [Company] shall have the right to buy back all or part of the shares held by the [Investor] at the original purchase price.
Buyback clause with installment buybacks based on company performance
This version includes performance-based installment buybacks.
The [Company] shall repurchase shares from the [Investor] in equal installments over [X] years, with the buyback price adjusted based on the [Company]'s annual performance metrics, as agreed by both parties.
Buyback clause with a fixed timeline for repurchase
This version sets a fixed timeline for repurchase.
The [Company] agrees to buy back the shares from the [Investor] at any time within [X] years of issuance, at a price based on the fair market value at the time of repurchase.
Buyback clause with buyback in case of regulatory changes
This version includes buyback due to regulatory changes.
If there are significant changes in government regulations that negatively affect the [Company]'s ability to operate or the value of its shares, the [Company] has the right to repurchase shares from the [Investor] at a price determined by an independent valuation.
Buyback clause with buyback if key person leaves
This version includes buyback if key personnel leave.
In the event that any key personnel, including executives or directors, who were part of the [Investor]'s team, leave the [Company], the [Company] shall have the right to repurchase the shares held by the [Investor].
Buyback clause with buyback upon breach of fiduciary duty
This version allows buyback for breach of fiduciary duty.
If the [Investor] is found to have breached any fiduciary duty owed to the [Company], the [Company] shall have the right to repurchase their shares at the fair market value, as determined by an independent appraiser.
Buyback clause with buyback based on shareholding percentage
This version ties buyback to shareholding percentage.
The [Company] shall have the right to repurchase a percentage of the shares from the [Investor] equivalent to the percentage of shares held by the [Investor] relative to the total shares outstanding, subject to the terms of this Agreement.
Buyback clause with buyback if IPO fails
This version includes buyback if IPO fails.
If the [Company] does not complete an IPO within [X] years from the execution of this Agreement, the [Company] shall have the right to repurchase all outstanding shares held by the [Investor] at the original issue price.
Buyback clause with buyback option upon employee departure
This version includes buyback upon employee departure.
If an employee who owns common stock leaves the [Company], the [Company] shall have the option to repurchase the shares from the departing employee at a price determined by the Board of Directors.
Buyback clause with repurchase option for shareholders' shares
This version includes a repurchase option for shareholders.
The [Company] may repurchase shares from any stockholder at the market price, subject to the approval of the majority of the Board of Directors, and in compliance with the terms of this Agreement.
Buyback clause with fair value assessment upon stockholder exit
This version includes fair value assessment for stockholder exit.
Upon the exit of a stockholder, whether voluntary or involuntary, the [Company] shall repurchase the stockholder’s shares at a price based on the fair market value as determined by an independent third-party valuation.
Buyback clause with annual repurchase option
This version includes an annual repurchase option.
The [Company] shall have the option to repurchase up to [X]% of the outstanding shares of common stock on an annual basis, at a price equal to the fair market value of the shares as of the repurchase date.
Buyback clause with buyback as part of business restructuring
This version ties buyback to business restructuring.
In the event of a significant business restructuring or strategic shift by the [Company], the [Company] shall have the right to repurchase shares from the [Investor] at a price determined by the restructuring terms.
Buyback clause with buyback at a premium
This version includes buyback at a premium.
In the event of a repurchase, the [Company] agrees to repurchase the shares from the [Investor] at a premium of [X]% above the fair market value, as determined by an independent appraiser.
Buyback clause with buyback rights tied to debt financing
This version includes buyback rights linked to debt financing.
If the [Company] raises debt financing or secures a loan of over [$X], the [Investor] shall have the right to sell, and the [Company] shall have the obligation to repurchase, the shares owned by the [Investor] at a price equal to the amount invested.
Buyback clause with buyback tied to product launch success
This version ties buyback to product launch success.
If the [Company] fails to achieve certain key milestones tied to the success of its product launch, the [Investor] shall have the right to sell, and the [Company] shall have the obligation to repurchase, the shares held by the [Investor] at a predetermined price.
Buyback clause with restriction on buyback if not profitable
This version restricts buybacks if not profitable.
The [Company] shall not repurchase shares from any stockholder if the [Company] has not achieved profitability in the previous fiscal year or does not expect to achieve profitability in the current fiscal year.
Buyback clause with buyback following default by affiliate
This version includes buyback for affiliate default.
If an affiliate of the [Investor] defaults on any obligations owed to the [Company], the [Company] shall have the right to buy back any shares held by the [Investor] at the original purchase price.
Buyback clause with right to repurchase in event of death
This version includes buyback in case of death.
In the event of the death of a stockholder, the [Company] shall have the right to repurchase the shares held by the deceased stockholder's estate at the fair market value of the shares.
Buyback clause with buyback at market value
This version ties the buyback price to market value.
The [Company] shall repurchase shares from the [Investor] at the market price as of the date of repurchase, as determined by the last closing price on the relevant exchange.
Buyback clause with buyback in case of regulatory requirements
This version includes buyback in case of regulatory requirements.
The [Company] shall repurchase shares from the [Investor] if required by any regulatory body, government entity, or stock exchange to comply with applicable securities regulations.
Buyback clause with buyback upon breach of intellectual property rights
This version allows buyback for IP rights breach.
If the [Investor] breaches any provision regarding the ownership or licensing of intellectual property, the [Company] shall have the right to repurchase the shares held by the [Investor] at a price equal to the original purchase price.
Buyback clause with buyback rights in the event of voluntary sale
This version includes buyback rights in voluntary sale.
If the [Investor] voluntarily chooses to sell their shares, the [Company] shall have the first right to repurchase the shares at the sale price, subject to the terms of this Agreement.
Buyback clause with buyback following bankruptcy filing
This version allows buyback following bankruptcy.
If the [Investor] or the [Company] files for bankruptcy, the other party shall have the right to repurchase the shares at a price determined by the bankruptcy court or an independent appraiser.
Buyback clause with buyback upon loss of key assets
This version includes buyback upon loss of assets.
In the event that the [Company] loses key assets, including intellectual property or trademarks critical to its business operations, the [Investor] shall have the right to sell, and the [Company] shall have the obligation to repurchase, the shares held by the [Investor].
Buyback clause with buyback upon failure to meet agreed milestones
This version includes buyback upon milestone failure.
If the [Company] fails to meet key performance milestones as outlined in this Agreement, the [Investor] shall have the right to sell, and the [Company] shall have the obligation to repurchase, the shares owned by the [Investor].
Buyback clause with buyback in case of adverse legal action
This version includes buyback for legal action.
If the [Company] faces adverse legal action or regulatory scrutiny that could materially affect its business, the [Investor] may request the [Company] to repurchase shares at a price determined by the last known market value.
Buyback clause with obligation to offer buyback in case of stockholder dispute
This version includes a buyback obligation in case of a dispute.
In the event of a dispute between stockholders that negatively impacts the operations of the [Company], the [Company] shall have the obligation to buy back shares from the stockholders involved in the dispute at a price determined by an independent appraiser.
Buyback clause with buyback upon shareholder resignation
This version includes buyback in case of resignation.
If any shareholder resigns from their role or position within the [Company], the [Company] shall have the right to repurchase their shares at a price equal to the fair market value.
Buyback clause with buyback upon loss of key customer
This version allows buyback if a key customer is lost.
In the event that the [Company] loses a key customer, the [Investor] shall have the right to request the [Company] to repurchase their shares at a price determined by the Board of Directors, based on the financial impact of losing the customer.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.