[{"data":1,"prerenderedAt":524},["ShallowReactive",2],{"document-rollover-agreement-values-shares-with-election-clause-D911":3},{"document":4,"label":21,"preview":11,"thumb":22,"thumb600":23,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":24,"breadcrumb":28,"related":34,"customDescModule":179,"customdescription":6,"mdFm":180,"mdProseHtml":523},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":15,"keywords":20},"ROLLOVER AGREEMENT This Rollover Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Vendor\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [SECOND PARTY NAME] (the \"Purchaser\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS the Vendor represents that there are [NUMBER] Class A common shares issued and outstanding in the capital stock of [COMPANY NAME] (the \"Corporation\"), a corporation incorporated under the [YOUR COUNTRY LAW] of the Province of [STATE/PROVINCE], and that the Vendor is the owner of [NUMBER] Class A common shares of the Corporation (the \"Shares\"), representing [PERCENTAGE %] percent) of the issued and outstanding shares of the Corporation; WHEREAS [COMPANY NAME], have determined that the fair market value of the Shares is [AMOUNT] or [AMOUNT] per Class A common share; WHEREAS the Shares have an aggregate stated capital of [AMOUNT]; WHEREAS the authorized share capital of the Purchaser consists of an unlimited number of Class A common shares, Class B common shares, Class A preferred shares, Class B preferred shares, Class C preferred shares and Class D preferred shares, of which the sole issued and outstanding shares are held as follows: [INDIVIDUAL NAME] ﷓ [NUMBER] Class A common shares [INDIVIDUAL NAME], as nominee for [INDIVIDUAL NAME] ﷓ [NUMBER] Class A common shares [INDIVIDUAL NAME], as nominee for [INDIVIDUAL NAME] - [NUMBER] Class A common shares WHEREAS the Purchaser desires to purchase and the Vendor desires to sell the Shares; NOW THEREFORE, IT IS AGREED AS FOLLOWS: SHARES SOLD AND PURCHASE PRICE Subject to the terms and conditions set forth in this Agreement, the Vendor hereby sells the Shares to the Purchaser, hereto present and accepting, and delivers to the Purchaser certificates representing the Shares duly endorsed to the Purchaser for transfer. The aggregate purchase price for the Shares is [AMOUNT], which based on the aforementioned evaluation, the parties consider to be the fair market value of the Shares (the \"Purchase Price\") payable as set forth at Article [NUMBER] hereof. PAYMENT OF THE PURCHASE PRICE The Vendor acknowledges that he has received certificates representing [NUMBER] Class C preferred shares of the Purchaser (the \"[COMPANY NAME] Shares\") in full payment of the Purchase Price. The parties hereto determine that the [COMPANY NAME] Shares have a fair market value of and are, in all circumstances of the transaction, the fair equivalent of a consideration payable in cash of [AMOUNT] or [AMOUNT] for each of the [COMPANY NAME] Shares issued and allotted hereunder. VENDOR'S REPRESENTATIONS AND WARRANTIES The Vendor represents and warrants to the Purchaser that: the Corporation is incorporated under the [YOUR COUNTRY LAW] of the Province of [STATE/PROVINCE] and is duly organized and validly existing thereunder; the Shares are owned by the Vendor by good and marketable title; the Shares have been duly issued and are outstanding as fully paid and non-assessable shares; the Vendor is a resident of [COUNTRY] for the purposes of the Income Tax Act ([COUNTRY]) (the \"Federal Act\"); the Vendor is a corporation incorporated under the [YOUR COUNTRY LAW] of the Province of [STATE/PROVINCE] and is duly organized and validly existing thereunder; all necessary corporate action and proceedings have been taken by the Vendor to permit the execution of this Agreement; no approval or consent of any public or private authority is required to enter into this Agreement or to consummate the transaction provided for herein; the sale and delivery of the Shares as provided for in this Agreement shall not conflict with or result in or cause the occurrence of an event or condition which, immediately or after notice or lapse of time or both, constitutes a breach of or default under the articles or by-laws of the Vendor or the Corporation or under any agreement, instrument, order, judgment or decree to which the Vendor or the Corporation is subject; and this Agreement constitutes a valid and binding obligation of the Vendor enforceable against the Vendor in accordance with its terms, provided that enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar [YOUR COUNTRY LAW] generally affecting enforceability of creditors' rights. PURCHASER'S REPRESENTATIONS AND WARRANTIES The Purchaser represents and warrants to the Vendor that: the Purchaser is a corporation incorporated under the [YOUR COUNTRY LAW] of [COUNTRY] and is duly organized and validly existing thereunder; all necessary corporate action and proceedings have been taken to permit the execution of this Agreement; no approval or consent of any public or private authority is required to enter into this Agreement or to consummate the transaction provided for herein; the aforementioned actions do not conflict with or result in or cause the occurrence of an event or condition which, immediately or after notice or lapse of time or both constitutes a breach of or default under the articles or by-laws of the Purchaser or under any agreement, instrument, order, judgment or decree to which the Purchaser is subject; the [COMPANY NAME] Shares have been validly allotted and issued and are registered in the name of the Vendor; the Purchaser is a taxable [COUNTRY] corporation within the meaning of the [YOUR COUNTRY] Federal Act and the Taxation Act ([STATE/PROVINCE]) (the \"[STATE/PROVINCE] Act\"); and this Agreement constitutes a valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, provided that enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar [YOUR COUNTRY LAW] generally affecting enforceability of creditors' rights. STATED CAPITAL ACCOUNT AND PRICE ADJUSTMENT CLAUSE",null,"Rollover Agreement Values Shares with Election Clause","5",69,"doc","https://templates.business-in-a-box.com/imgs/1000px/rollover-agreement_values-shares-with-election-clause-D911.png","https://templates.business-in-a-box.com/imgs/250px/911.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#911.xml",{"title":6,"description":6},[16,19],{"label":17,"url":18},"Legal Agreements","/templates/business-legal-agreements/",{"label":17,"url":18},"rollover agreement values shares with election clause","Rollover Agreement Values Shares with Election Clause Template","https://templates.business-in-a-box.com/imgs/400px/911.png","https://templates.business-in-a-box.com/imgs/600px/911.png",[25,16,19],{"label":26,"url":27},"Templates","/templates/",[29,30,31],{"label":26,"url":27},{"label":17,"url":18},{"label":32,"url":33},"Equity & Mergers","/templates/equity-and-mergers/",[35,39,43,47,51,55,59,63,67,71,75,79,83,102,117,131,146,165],{"label":36,"url":37,"thumb":38,"extension":10},"Rollover Agreement Values Shares with Adjustment Clause","/template/rollover-agreement-values-shares-with-adjustment-clause-D910","https://templates.business-in-a-box.com/imgs/250px/910.png",{"label":40,"url":41,"thumb":42,"extension":10},"Rollover Agreement Values Assets with Surplus Account","/template/rollover-agreement-values-assets-with-surplus-account-D909","https://templates.business-in-a-box.com/imgs/250px/909.png",{"label":44,"url":45,"thumb":46,"extension":10},"Agreement for the Subscription of Shares","/template/agreement-for-the-subscription-of-shares-D317","https://templates.business-in-a-box.com/imgs/250px/317.png",{"label":48,"url":49,"thumb":50,"extension":10},"Exchange of Shares Agreement","/template/exchange-of-shares-agreement-D330","https://templates.business-in-a-box.com/imgs/250px/330.png",{"label":52,"url":53,"thumb":54,"extension":10},"Sale of Shares Agreement","/template/sale-of-shares-agreement-D340","https://templates.business-in-a-box.com/imgs/250px/340.png",{"label":56,"url":57,"thumb":58,"extension":10},"Agreement for Redemption of Preferred Shares","/template/agreement-for-redemption-of-preferred-shares-D316","https://templates.business-in-a-box.com/imgs/250px/316.png",{"label":60,"url":61,"thumb":62,"extension":10},"Agreement of Purchase and Sale of Shares","/template/agreement-of-purchase-and-sale-of-shares-D322","https://templates.business-in-a-box.com/imgs/250px/322.png",{"label":64,"url":65,"thumb":66,"extension":10},"Offer to Purchase Shares Agreement","/template/offer-to-purchase-shares-agreement-D334","https://templates.business-in-a-box.com/imgs/250px/334.png",{"label":68,"url":69,"thumb":70,"extension":10},"Shares Transfer Agreement Short","/template/shares-transfer-agreement-short-D346","https://templates.business-in-a-box.com/imgs/250px/346.png",{"label":72,"url":73,"thumb":74,"extension":10},"Rollover Agreement Many Value Provision Options","/template/rollover-agreement-many-value-provision-options-D908","https://templates.business-in-a-box.com/imgs/250px/908.png",{"label":76,"url":77,"thumb":78,"extension":10},"Agreement of Purchase and Sale of Shares by Shareholder","/template/agreement-of-purchase-and-sale-of-shares-by-shareholder-D321","https://templates.business-in-a-box.com/imgs/250px/321.png",{"label":80,"url":81,"thumb":82,"extension":10},"Agreement of Purchase and Sale of Shares 2","/template/agreement-of-purchase-and-sale-of-shares-2-D320","https://templates.business-in-a-box.com/imgs/250px/320.png",{"description":84,"descriptionCustom":6,"label":85,"pages":86,"size":87,"extension":10,"preview":88,"thumb":89,"svgFrame":90,"seoMetadata":91,"parents":93,"keywords":100,"url":101},"PREFERRED STOCK PURCHASE AGREEMENT This Preferred Stock Purchase Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Company\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE] with its head office located at: [YOUR COMPLETE ADDRESS] AND: [SECOND PARTY NAME] (the \"Purchaser\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, the Company has authorized the sale and issuance of an aggregate of [TOTAL SHARES] shares of its Series A Preferred Stock (the \"Shares\"); WHEREAS, the Purchaser desires to purchase the Shares on the terms and conditions set forth herein; WHEREAS, the Company desires to issue and sell the Shares to the Purchaser on the terms and conditions set forth herein. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: AGREEMENT TO SELL AND PURCHASE Authorization of Shares: The Company has authorized (a) the sale and issuance to the Purchaser of the Shares and (b) the issuance of such shares of Common Stock to be issued upon conversion of the Shares (the \"Conversion Shares\"). The Shares and the Conversion Shares have the rights, preferences, privileges and restrictions set forth in the Amended and Restated Certificate of Incorporation of the Company, in the form attached hereto as Exhibit B (the \"Restated Charter\"). Sale and Purchase: Subject to the terms and conditions hereof, at the Closing (as hereinafter defined), the Company hereby agrees to issue and sell to each Purchaser, and each Purchaser agrees to purchase from the Company, severally and not jointly, the number of Shares set forth opposite such Purchaser's name on Exhibit A, at a purchase price of $ [______________] per Share. CLOSING, DELIVERY AND PAYMENT Closing: The closing of the sale and purchase of the Shares under this Agreement (the \"Closing\") shall take place at [TIME] a.m./ p.m. on [DATE], at the offices of [OFFICE/COMPANY NAME] in [CITY] or at such other time or place as the Company and the Purchaser may mutually agree. (Such date is hereinafter referred to as the \"Closing Date.\") Delivery: At the Closing, subject to the terms and conditions hereof, the Company will deliver to each Purchaser a certificate representing the number of Shares to be purchased at the Closing by such Purchaser, against payment of the purchase price therefor by check, wire transfer made payable to the order of the Company, cancellation or conversion of indebtedness or any combination of the foregoing. If payment by a Purchaser is made, in whole or in part, by cancellation or conversion of indebtedness, then such Purchaser shall surrender to the Company for cancellation or conversion at the Closing any evidence of such indebtedness or shall execute an instrument of cancellation or conversion in form and substance acceptable to the Company. In addition, the Company at the Closing shall deliver to any Purchaser choosing to pay any part of the purchase price of the Series A Preferred Stock by cancellation or conversion of indebtedness a check in the amount of any interest on such indebtedness through the Closing not being converted. REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth on a Schedule of Exceptions delivered by the Company to the Purchaser at the Closing, the Company hereby represents and warrants to the Purchaser as of the date of this Agreement as set forth below. Organization, Good Standing and Qualification: The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of [STATE/PROVINCE]. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement and the Investor Rights Agreement in the form attached hereto as Exhibit C (the \"Investor Rights Agreement\"), the Co-Sale Agreement in the form attached hereto as Exhibit D (the \"Co-Sale Agreement\"), the Voting Agreement in the form attached hereto as Exhibit E (the \"Voting Agreement\") and the Management Rights Letter in the form attached hereto as Exhibit F (collectively, the \"Related Agreements\"), to issue and sell the Shares and the Conversion Shares, and to carry out the provisions of this Agreement, the Related Agreements and the Restated Charter and to carry on its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. Subsidiaries: The Company does not own or control any equity security or other interest of any other corporation, partnership, limited liability company or other business entity. The Company is not a participant in any joint venture, partnership, limited liability company or similar arrangement. Since its inception, the Company has not consolidated or merged with, acquired all or substantially all of the assets of, or acquired the stock of or any interest in any corporation, partnership, limited liability company or other business entity. Capitalization; Voting Rights: The authorized capital stock of the Company, immediately prior to the Closing, consists of (i) [________________] Shares of Common Stock, [____________________] Shares of which are issued and outstanding, and (ii) [____________________] Shares of Preferred Stock, all of which are designated Series A Preferred Stock, none of which are issued and outstanding. Under the Company's [YEAR] Equity Incentive Plan (the \"Plan\"), (i) no shares have been issued pursuant to restricted stock purchase agreements and/or the exercise of outstanding options, (ii) no options have been granted and are currently outstanding and (iii) [_______________________________] shares of Common Stock remain available for future issuance to officers, directors, employees and consultants of the Company. The Company has not made any representations regarding equity incentives to any officer, employee, director or consultant that are inconsistent with the Share amounts and terms set forth in the Company's board minutes. Other than the Shares reserved for issuance under the Plan and except as may be granted pursuant to this Agreement and the Related Agreements, there are no outstanding options, warrants, rights (including conversion or pre-emptive rights and rights of first refusal), proxy or stockholder agreements or agreements of any kind for the purchase or acquisition from the Company of any of its securities. All issued and outstanding Shares of the Company's Common Stock [and Preferred Stock] (i) have been duly authorized and validly issued and are fully paid and non-assessable, (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities; and (iii) with respect to Common Stock only, are subject to a right of first refusal in favour of the Company upon transfer. The rights, preferences, privileges, and restrictions of the Shares are as stated in the Restated Charter. Each outstanding series of Preferred Stock is convertible into Common Stock on a one-for-one basis as of the date hereof, and the consummation of the transactions contemplated hereunder will not result in any anti-dilution adjustment or other similar adjustment to the outstanding Shares of Preferred Stock. The Conversion Shares have been duly and validly reserved for issuance","Preferred Stock Purchase Agreement","20",513,"https://templates.business-in-a-box.com/imgs/1000px/preferred-stock-purchase-agreement-D12854.png","https://templates.business-in-a-box.com/imgs/250px/12854.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12854.xml",{"title":92,"description":6},"preferred stock purchase agreement",[94,97],{"label":95,"url":96},"Finance & Accounting","finance-accounting",{"label":98,"url":99},"Shareholders & Investors","shareholders-investors","share purchase agreement","/template/share-purchase-agreement-D12854",{"description":103,"descriptionCustom":6,"label":104,"pages":105,"size":87,"extension":10,"preview":106,"thumb":107,"svgFrame":108,"seoMetadata":109,"parents":111,"keywords":115,"url":116},"[DATE] [CONTACT NAME] [ADDRESS] [ADDRESS 2] [CITY, STATE/PROVINCE] [ZIP/POSTAL CODE] SUBJECT: LETTER OF INTENT-ACQUISITION OF BUSINESS Dear [CONTACT NAME]: This letter (\"Letter of Intent\") sets forth the basic preliminary terms between the Buyer or his nominee and yourselves regarding the purchase of the [SPECIFY] business (the \"Business\") carried on by yourselves. Except as specifically set forth herein, this Letter of Intent shall not constitute an agreement between the parties and no agreement shall be deemed to exist until execution of a definitive purchase agreement. It is proposed that Buyer will acquire certain assets of the Business which Buyer believes to be necessary to the future of the Business, including the warehouse in [CITY/STATE] in which [COMPANY NAME] the Company has invested [AMOUNT] in cash and which has been financed by a mortgage loan of approximately [AMOUNT] granted by the [SPECIFY COMPANY] [CITY/STATE]. Buyer understands that the said warehouse has no other charges or liabilities affecting it other than the said mortgage loan. Buyer may either purchase the warehouse outright or enter into a lease-purchase or instalment transfer of ownership which is satisfactory to both parties. The gross purchase price for the said warehouse will be [AMOUNT]. Buyer may purchase or lease barrels and other equipment currently owned by the Company which are necessary to operate the Business, on a cash or instalment basis agreeable to both parties. The specific assets to be purchased and the amounts to be paid by Buyer in connection with this transaction remain to be negotiated by the parties. This Letter of Intent also evidences the intentions of the parties with respect to the following agreements: Buyer will enter into a [NUMBER]-year employment agreement with [COMPANY NAME], providing for the Company will be responsible for the purchase of [SPECIFY] for Buyer. The agreement will contain the customary terms and conditions found in employment agreements in similar transactions and will provide for the usual non-competition and non-solicitation covenants to be entered into by the Company in favour of Buyer. It is expressly understood that if the contemplated transaction is consummated, the aggregate amount of commission paid or payable to yourselves (net of reasonable expenses acceptable to Buyer) in respect of all purchases of [SPECIFY] made through you from the date of this Letter of Intent to the date of closing, with the exception of commissions earned on the [NUMBER] truckloads of [SPECIFY] to be delivered to Buyer during the week of [DATE] to [DATE], will be applied against remuneration payable to the Company in the first year of his employment agreement. If the contemplated transaction is not consummated, all such commissions paid or payable will be treated as commissions. Buyer will enter into a [NUMBER]-year employment agreement with [EMPLOYEE NAME], providing for the payment of a gross base salary of [ANNUAL SALARY] per year, to be paid weekly, subject to annual review. [EMPLOYEE NAME] will be President of the Business and the employment agreement will provide for health benefits, automobile, expenses and bonus arrangements","Letter of Intent_Acquisition of Business","3","https://templates.business-in-a-box.com/imgs/1000px/letter-of-intent_acquisition-of-business-D5197.png","https://templates.business-in-a-box.com/imgs/250px/5197.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#5197.xml",{"title":110,"description":6},"letter of intent_acquisition of business",[112,114],{"label":17,"url":113},"business-legal-agreements",{"label":17,"url":113},"letter intent_acquisition business","/template/letter-of-intent_acquisition-of-business-D5197",{"description":118,"descriptionCustom":6,"label":119,"pages":105,"size":87,"extension":10,"preview":120,"thumb":121,"svgFrame":122,"seoMetadata":123,"parents":125,"keywords":124,"url":130},"NON-DISCLOSURE AGREEMENT (NDA) This Non-Disclosure Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Disclosing Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [RECEIVING PARTY NAME] (the \"Receiving Party\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Receiving Party has been or will be engaged in the performance of work on [DESCRIBE]; and in connection therewith will be given access to certain confidential and proprietary information; and WHEREAS, Receiving Party and Disclosing Party wish to evidence by this Agreement the manner in which said confidential and proprietary material will be treated. NOW, THEREFORE, it is agreed as follows: NON-DISCLOSURE OF CONFIDENTIAL INFORMATION Both Parties understand and agree that each Party may have access to the confidential information of the other party. For the purposes of this Agreement, \"Confidential Information\" means proprietary and confidential information about the Disclosing Party's (or it's suppliers') business or activities. Such information includes all business, financial, technical, and other information marked or designated by such Party as \"confidential\" or \"proprietary.\" Confidential Information also includes information which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential. For the purposes of this Agreement, Confidential Information does not include: Information that is currently in the public domain or that enters the public domain after the signing of this Agreement. Information a Party lawfully receives from a third Party without restriction on disclosure and without breach of a non-disclosure obligation. Information that the Receiving Party knew prior to receiving any Confidential Information from the Disclosing Party. Information that the Receiving Party independently develops without reliance on any Confidential Information from the Disclosing Party. Each Party agrees that it will not disclose to any third Party or use any Confidential Information disclosed to it by the other Party except when expressly permitted in writing by the other Party. Each Party also agrees that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control. TERM The term of this Agreement is [number] of [years/months] from the date of execution by both Parties. TITLE The Receiving Party agrees that all Confidential Information furnished by the Disclosing Party shall remain the sole property of the Disclosing Party. DISCLAIMER","Non Disclosure Agreement Nda","https://templates.business-in-a-box.com/imgs/1000px/non-disclosure-agreement-nda-D12692.png","https://templates.business-in-a-box.com/imgs/250px/12692.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12692.xml",{"title":124,"description":6},"non disclosure agreement nda",[126,127],{"label":17,"url":113},{"label":128,"url":129},"Confidentiality Agreements","confidentiality-agreement","/template/non-disclosure-agreement-nda-D12692",{"description":132,"descriptionCustom":6,"label":133,"pages":105,"size":134,"extension":10,"preview":135,"thumb":136,"svgFrame":137,"seoMetadata":138,"parents":139,"keywords":144,"url":145},"TERM SHEET Issue: [Venture Capital FIRM] (\"VC\") and/or any member of its corporate group (\"the VC Group\") will purchase up to [AMOUNT] Series A Convertible Preferred Stock (\"Series A\") newly issued by [YOUR COMPANY NAME] (the \"Company\") at a price per share of [PRICE] (the \"Purchase Price\"). In addition, other investors shall purchase at least [AMOUNT] but not more than [AMOUNT] of newly issued Series A at the Purchase Price. The shares of Series A will be convertible at any time at the option of the holder into common shares of the Company (\"Common Stock\") on a one-for-one basis, adjusted for future share splits. The Purchase Price equates to a pre-money valuation of [VALUATION]. The calculation is based on [NUMBER] fully diluted shares of Common Stock. If the number of shares issued, or stock awards/options authorized increases before the closing the price per share for Series A Convertible Preferred Stock shall be reduced so that the pre-money valuation is unchanged. The Series A Convertible Preferred Stock shall be referred to herein as the \"Preferred Stock.\" Dividend: The Preferred Stock is entitled to an annual [AMOUNT] per share dividend, payable when and if declared by the Board of Directors, but prior to any payment on Common Stock; dividends are not cumulative. Liquidation Preference: The Series A will have a liquidation preference so that proceeds on a merger, sale or liquidation (including non-cumulative dividends) will first be paid to the Series A and will include a [%] per annum compounding guaranteed return calculated on the total amount invested. Upon completion of an additional round of funding of at least [AMOUNT] the compounding guaranteed return feature will expire. The liquidation preference will cease to operate if the proceeds due to Series A, on a merger, sale or liquidation on an as-converted basis, exceed the proceeds that would be due under the liquidation preference. Use of Proceeds: The funds raised by Series A will be used principally for general working capital purposes. Voting Rights: The holders of the Series A shall have the right to vote with the Common Stock on an as-if-converted basis. Redemption: If not previously converted, the Series A is to be redeemed in three equal successive annual installments beginning [DATE]. Redemption will be at the purchase price plus a [%] per annum cumulative guaranteed return. Pre-emptive Rights: Holders of the Preferred Stock will be granted rights to participate in future equity financings of the Company based upon their pro-rata, as-if-converted, ownership of the Company. Automatic Conversion: The Preferred Stock shall be automatically converted into Common Stock at the then applicable conversion rate (1:1 assuming no share splits) in the event of an underwritten public offering of shares of the Company at a total offering of not less than [AMOUNT] and at a per share public offering price of not less than three times the Series A purchase price per share, adjusted for splits. Anti-Dilution: Series A shall have weighted average anti-dilution, based on a weighted average formula to be agreed, for all securities purchased as part of this transaction (excluding shares, options and warrants issued for management incentive and small issues for strategic purposes of under [NUMBER] shares). Management Options: Simultaneously with this transaction, one million new shares shall expand the Company's management incentive stock option pool - bringing the total number of shares issued and stock incentives (awards and options) authorized to [NUMBER OF SHARES]. Rights of First Offer; Tag-Along: The Company and the Investors will have a right of first refusal with respect to any employee's shares proposed to be resold. Alternatively, the Investors will have the right to participate in the sale of any such shares to a third party (co-sale rights), which rights will terminate upon a public offering. Information Rights: Monthly actual vs. plan and prior year. Annual budget [NUMBER] days before beginning of fiscal year","Term Sheet",42,"https://templates.business-in-a-box.com/imgs/1000px/term-sheet-D473.png","https://templates.business-in-a-box.com/imgs/250px/473.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#473.xml",{"title":6,"description":6},[140,141],{"label":95,"url":96},{"label":142,"url":143},"Raising Capital","raising-capital","term sheet","/template/term-sheet-D473",{"description":147,"descriptionCustom":6,"label":148,"pages":149,"size":150,"extension":10,"preview":151,"thumb":152,"svgFrame":153,"seoMetadata":154,"parents":155,"keywords":163,"url":164},"EMPLOYMENT AGREEMENT FOR AN EXECUTIVE This Employment Agreement for an Executive (the \"Agreement\") is made and effective this [Date], BETWEEN: [EXECUTIVE NAME] (the \"Executive\"), an individual with his main address at: AND: [COMPANY NAME] (the \"Company\"), an entity organized and existing under the laws of the [STATE/PROVINCE], with its head office located at: Recitals In consideration of the covenants and agreements herein contained and the moneys to be paid hereunder, the Company hereby employs the Executive and the Executive hereby agrees to perform services as an Executive of the Company, upon the following terms and conditions: TERM The Company hereby employs Executive to serve as [position] and to serve in such additional or different position or positions as the Company may determine in its sole discretion. The term of employment shall be for a period of [NUMBER] years (\"Employment Period\") to commence on [DATE], unless earlier terminated as set forth herein. The effective date of this Agreement shall be the date first set forth above, and it shall continue in effect until the earlier of: The effective date of any subsequent employment agreement between the Company and the Executive; The effective date of any termination of employment as provided elsewhere herein; or [NUMBER] year(s) from the effective date hereof, provided, that this Employment Agreement shall automatically renew for successive periods of [NUMBER] years each unless either party gives written notice to other that it does not wish to automatically renew this Agreement, which written notice must be received by the other party no less than [NUMBER] days and no more than [NUMBER] days prior to the expiration of the applicable term. Duties and Responsibilities Executive will be reporting to [IDENTIFY]. Within the limitations established by the By-laws of the Company, the Executive shall have each and all of the duties and responsibilities of that position and such other or different duties on behalf of the Company, as may be assigned from time to time by [identify what person or body may assign additional responsibilities]. Location The initial principal location at which Executive shall perform services for the Company shall be [location]. Acceptance of Employment Executive accepts employment with the Company upon the terms set forth above and agrees to devote all Executive's time, energy and ability to the interests of the Company, and to perform Executive's duties in an efficient, trustworthy and business-like manner. Devotion of Time to Employment The Executive shall devote the Executive's best efforts and substantially all of the Executive's working time to performing the duties on behalf of the Company. The Executive shall provide services during the normal business hours of the Company as determined by the Company. Reasonable amounts of time may be allotted to personal or outside business, charitable and professional activities and shall not constitute a violation of this Agreement provided such activities do not materially interfere with the services required to be rendered hereunder. QUALIFICATIONS The Executive shall, as a condition of this Agreement, satisfy all of the qualification that are reasonably and in good faith established by the Board of Directors. Compensation Base Salary Executive shall be paid a base salary (\"Base Salary\") at the annual rate of [salary], payable in bi-weekly installments consistent with Company's payroll practices. The annual Base Salary shall be reviewed on or before [DATE] of each year, unless Executive's employment hereunder shall have been terminated earlier pursuant to this Agreement, starting on [agreed upon date] by the Board of Directors of the Company to determine if such Base Salary should be increased for the following year in recognition of services to the Company. In consideration of the services under this Agreement, Executive shall be paid the aggregate of basic compensation, bonus and benefits as hereinafter set forth. Payment Payment of all compensation to Executive hereunder shall be made in accordance with the relevant Company policies in effect from time to time, including normal payroll practices. Bonus From time to time, the Company may pay to Executive a bonus out of net revenues of the Company. Payment of any bonus compensation shall be at the sole discretion of the Board of Directors or the Executive committee of the Board of Directors and the Executive shall have no entitlement to such amount absent a decision by the Company as aforesaid to make such bonus compensation. Executive shall also be entitled to a bonus determined as follows: [DESCRIBE] Benefits The Company shall provide Executive with such benefits as are provided to other senior management Of the Company. Benefits shall include at a minimum (i) paid vacation of [NUMBER] days per year, at such times as approved by the Board of Directors, (ii) health insurance coverage under the same terms as offered to other Executives of the Company, (iii) retirement and profit sharing programs as offered to other Executives of the Company, (iv) paid holidays as per the Company's policies, and (v) such other benefits and perquisites as are approved by the Board of Directors. The Company has the right to modify conditions of participation, terminate any benefit, or change insurance plans and other providers of such benefits in its sole discretion. The Executive shall be reimbursed for out of pocket expenses that are pre-approved by the Company, subject to the Company's policies and procedures therefore, and only for such items that are a necessary and integral part of the Executive's job functions. NonDeductible Compensation In the event a deduction shall be disallowed by the Internal Revenue Service or a court of competent jurisdiction for federal income tax purposes for all or any part of the payment made to Executive by the Company or any other shareholder or Executive of the Company, shall be required by the Internal Revenue Service to pay a deficiency on account of such disallowance, then Executive shall repay to the Company or such other individual required to make such payment, an amount equal to the tax imposed on the disallowed portion of such payment, plus any and all interest and penalties paid with respect thereto. The Company or other party required to make payment shall not be required to defend any proposed disallowance or other action by the Internal Revenue Service or any other state, federal, or local taxing authorities. Withholding All sums payable to Executive under this Agreement will be reduced by all federal, state, local, and other withholdings and similar taxes and payments required by applicable law. Other Employment Benefits Business Expenses Upon submission of itemized expense statements in the manner specified by the Company, Executive shall be entitled to reimbursement for reasonable travel and other reasonable business expenses duly incurred by Executive in the performance of his duties under this Agreement. Benefit Plans Executive shall be entitled to participate in the Company's medical and dental plans, life and disability insurance plans and retirement plans pursuant to their terms and conditions. Executive shall be entitled to participate in any other benefit plan offered by the Company to its Executives during the term of this Agreement (other than stock option or stock incentive plans, which are governed by Section 3(d) below). Nothing in this Agreement shall preclude the Company or any affiliate of the Company from terminating or amending any Executive benefit plan or program from time to time. Vacation Executive shall be entitled to [agreed upon number of time] weeks of vacation each year of full employment, exclusive of legal holidays, as long as the scheduling of Executive's vacation does not interfere with the Company's normal business operations.","Employment Agreement Executive","12",97,"https://templates.business-in-a-box.com/imgs/1000px/employment-agreement_executive-D543.png","https://templates.business-in-a-box.com/imgs/250px/543.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#543.xml",{"title":6,"description":6},[156,159,162],{"label":157,"url":158},"Human Resources","human-resources",{"label":160,"url":161},"Hire an Employee","hire-employee",{"label":17,"url":113},"employment agreement executive","/template/employment-agreement-executive-D543",{"description":166,"descriptionCustom":6,"label":167,"pages":168,"size":169,"extension":10,"preview":170,"thumb":171,"svgFrame":172,"seoMetadata":173,"parents":174,"keywords":177,"url":178},"NON-COMPETE AGREEMENT This Non-Compete Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: FIRST PARTY NAME] (the \"First Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [COMPANY NAME] (the \"Second Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] FOR GOOD CONSIDERATION, the receipt of which is hereby acknowledged, the undersigned First party agrees not to compete with Second party, or its successors or assigns.","General Non-Compete Agreement","1",30,"https://templates.business-in-a-box.com/imgs/1000px/general-non-compete-agreement-D882.png","https://templates.business-in-a-box.com/imgs/250px/882.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#882.xml",{"title":6,"description":6},[175,176],{"label":17,"url":113},{"label":17,"url":113},"general non compete agreement","/template/general-non-compete-agreement-D882",false,{"seo":181,"reviewer":192,"legal_disclaimer":196,"quick_facts":197,"at_a_glance":199,"personas":203,"variants":228,"glossary":257,"clauses":291,"how_to_fill":342,"common_mistakes":383,"faqs":408,"industries":436,"comparisons":453,"diy_vs_lawyer":465,"jurisdictions":478,"related_template_ids_curated":499,"schema":511,"classification":512},{"meta_title":182,"meta_description":183,"primary_keyword":20,"secondary_keywords":184},"Rollover Agreement Values Shares With Election Clause Template (Free Word)","Free rollover agreement template with share valuation and election clause. Used in M&A transactions to defer tax on rolled equity. Used in 190+ countries. Free Word and PDF download.",[185,186,187,188,189,190,191],"equity rollover agreement","share rollover agreement m&a","tax rollover election clause","rollover agreement word template","equity rollover m&a template","rollover agreement free download","share valuation rollover agreement",{"name":193,"credential":194,"reviewed_date":195},"Bruno Goulet","CEO, Business in a Box","2026-05-02",true,{"difficulty":198,"legal_review_recommended":196,"signature_required":196,"notarization_required":179},"advanced",{"what_it_is":200,"when_you_need_it":201,"whats_inside":202},"A Rollover Agreement Values Shares With Election Clause is a legally binding contract used in mergers and acquisitions that governs how a selling shareholder exchanges a portion of their existing equity for equity in the acquiring or surviving entity, rather than receiving the full consideration in cash. The share valuation provisions set the price at which rolled shares are credited against total deal consideration, while the election clause gives each qualifying shareholder a formal mechanism to elect whether — and in what amount — to participate in the rollover. This free Word download is structured for immediate editing and export as PDF.\n","Use it when closing a private-equity-backed acquisition, management buyout, or recapitalization where selling shareholders are offered the option to retain equity in the go-forward business. It is particularly critical when the parties need a documented, IRS-compliant or CRA-compliant basis for deferring capital gains on the rolled portion of consideration.\n","Share valuation methodology and agreed per-share price, election mechanics and deadline, rollover percentage caps, representations and warranties of the rolling shareholder, tax treatment provisions, restrictive covenants, governance rights in the acquiring entity, and conditions to closing.\n",[204,208,212,216,220,224],{"title":205,"use_case":206,"icon_asset_id":207},"Private equity sponsors","Documenting management rollover terms as part of a leveraged buyout closing","persona-private-equity",{"title":209,"use_case":210,"icon_asset_id":211},"Selling shareholders and founders","Formally electing to roll a portion of sale proceeds into the new entity rather than cashing out entirely","persona-startup-founder",{"title":213,"use_case":214,"icon_asset_id":215},"M&A attorneys","Drafting or reviewing the rollover mechanics that sit alongside the main purchase agreement","persona-ma-attorney",{"title":217,"use_case":218,"icon_asset_id":219},"Corporate development executives","Structuring rollover terms to retain key seller management teams post-acquisition","persona-corp-dev",{"title":221,"use_case":222,"icon_asset_id":223},"Tax advisors and CPAs","Confirming that election clause language satisfies applicable tax-deferral requirements before execution","persona-tax-advisor",{"title":225,"use_case":226,"icon_asset_id":227},"Management buyout participants","Rolling existing company shares into a newly formed acquisition vehicle alongside a financial sponsor","persona-operations-director",[229,233,237,241,245,249,253],{"situation":230,"recommended_template":231,"slug":232},"Management team rolling equity in a private equity buyout","Rollover Agreement Values Shares With Election Clause","rollover-agreement-values-shares-with-election-clause-D911",{"situation":234,"recommended_template":235,"slug":236},"Straightforward equity contribution with no cash election component","Equity Contribution Agreement","shared-equity-agreement-D12875",{"situation":238,"recommended_template":239,"slug":240},"Shareholder exchanging shares in a statutory merger or amalgamation","Share Exchange Agreement","exchange-of-shares-agreement-D330",{"situation":242,"recommended_template":243,"slug":244},"Seller reinvesting proceeds through a subscription rather than a rollover","Subscription Agreement","subscription-agreement-D12537",{"situation":246,"recommended_template":247,"slug":248},"Co-investor entering the acquiring entity alongside the sponsor","Co-Investment Agreement","investment-agreement-D12831",{"situation":250,"recommended_template":251,"slug":252},"Rolled shares subject to continued vesting and forfeiture terms","Restricted Stock Agreement","restricted-stock-purchase-agreement-D12855",{"situation":254,"recommended_template":255,"slug":256},"Full sale of shares with no rollover component","Share Purchase Agreement","share-purchase-agreement-D12854",[258,261,264,267,270,273,276,279,282,285,288],{"term":259,"definition":260},"Rollover Equity","The portion of a selling shareholder's deal consideration that is exchanged for equity in the acquiring or surviving entity instead of being paid out in cash.",{"term":262,"definition":263},"Election Clause","A contractual provision that gives each eligible shareholder a formal, time-bound process to indicate their choice of how much — if any — of their consideration to roll into the new entity.",{"term":265,"definition":266},"Per-Share Rollover Value","The agreed price per share used to calculate how many new equity units a rolling shareholder receives in exchange for their existing shares.",{"term":268,"definition":269},"Implied Enterprise Value","The total value attributed to the target company in the transaction, used as the anchor for calculating per-share rollover value.",{"term":271,"definition":272},"Tax Deferral","The postponement of a capital gains tax liability on the rolled portion of equity to a future taxable event, such as a subsequent sale of the new entity.",{"term":274,"definition":275},"IRC Section 721","The US Internal Revenue Code provision that generally allows a tax-free contribution of property — including equity — to a partnership in exchange for a partnership interest.",{"term":277,"definition":278},"IRC Section 351","The US Internal Revenue Code provision that permits a tax-free transfer of property to a corporation in exchange for stock, subject to an 80% control requirement.",{"term":280,"definition":281},"Rollover Cap","The maximum percentage or dollar amount of deal consideration that any shareholder — or all shareholders in aggregate — may elect to roll rather than receive in cash.",{"term":283,"definition":284},"Representations and Warranties","Factual statements made by the rolling shareholder about ownership, title, absence of liens, and authority to enter the agreement, on which the acquirer relies at closing.",{"term":286,"definition":287},"Conditions to Closing","Specific prerequisites — such as receipt of regulatory approvals or satisfaction of a minimum cash election threshold — that must be met before the rollover becomes effective.",{"term":289,"definition":290},"Tag-Along Right","A governance right allowing a minority rolling shareholder to sell their new equity on the same terms as the majority sponsor in any future exit transaction.",[292,297,302,307,312,317,322,327,332,337],{"name":293,"plain_english":294,"sample_language":295,"common_mistake":296},"Recitals and defined terms","Sets out the background of the transaction — acquirer, target, purchase agreement reference — and defines the specific terms used throughout the rollover agreement.","WHEREAS, [ACQUIRER NAME] ('Buyer') is acquiring all outstanding equity interests of [TARGET COMPANY NAME] ('Company') pursuant to that certain Purchase Agreement dated [DATE]; and WHEREAS, the Rolling Shareholder desires to contribute [NUMBER] shares ('Rollover Shares') in exchange for equity in [NEWCO NAME].","Failing to cross-reference the defined terms in the main purchase agreement, creating inconsistent definitions that can invalidate the rollover mechanics on a technicality.",{"name":298,"plain_english":299,"sample_language":300,"common_mistake":301},"Share valuation and per-share rollover price","Establishes the methodology used to calculate the value of each existing share being rolled — typically derived from the total enterprise value minus net debt, divided by fully diluted share count.","The per-share value of each Rollover Share shall be [$ AMOUNT PER SHARE], calculated as ([TOTAL EQUITY VALUE] divided by [FULLY DILUTED SHARE COUNT]) as of [VALUATION DATE], as set forth in Schedule A.","Using a different share count basis (basic vs. fully diluted) in the rollover agreement than in the purchase agreement — this creates a per-share price discrepancy that can trigger renegotiation or disputes at closing.",{"name":303,"plain_english":304,"sample_language":305,"common_mistake":306},"Election clause and election deadline","Gives each eligible shareholder a formal window in which to submit an election form specifying how much of their consideration to roll, with a fixed deadline after which no election may be made or changed.","Each Eligible Shareholder may elect to roll up to [X]% of their Total Consideration by completing and delivering the Election Form attached as Exhibit A no later than [DATE] at [TIME] [TIME ZONE] ('Election Deadline'). Elections are irrevocable after the Election Deadline.","Setting the election deadline after the anticipated closing date. A post-close election creates tax and title complications because the transfer of consideration may have already occurred.",{"name":308,"plain_english":309,"sample_language":310,"common_mistake":311},"Rollover cap and minimum threshold","States the maximum aggregate rollover amount the acquirer will accept from all rolling shareholders combined, and any minimum amount required for the rollover structure to proceed.","The aggregate Rollover Consideration shall not exceed $[MAXIMUM AMOUNT] ('Rollover Cap'). If valid elections result in aggregate rollover elections exceeding the Rollover Cap, each electing shareholder's rollover amount shall be reduced pro rata.","Omitting a pro rata reduction mechanism when the cap is exceeded — without one, the acquirer must either accept over-subscription or unwind elections after the deadline.",{"name":313,"plain_english":314,"sample_language":315,"common_mistake":316},"Representations and warranties of the rolling shareholder","The rolling shareholder confirms they own the rollover shares free and clear of liens, have authority to enter the agreement, and are an accredited investor or its equivalent under applicable securities law.","Rolling Shareholder represents and warrants that: (a) Rolling Shareholder has good and marketable title to the Rollover Shares, free and clear of all liens; (b) Rolling Shareholder has full legal capacity and authority to execute this Agreement; (c) Rolling Shareholder qualifies as an 'accredited investor' as defined under Rule 501 of Regulation D.","Omitting the accredited investor representation. Issuing new equity in a private company to non-accredited investors triggers federal and state securities law filing requirements that can delay or prevent closing.",{"name":318,"plain_english":319,"sample_language":320,"common_mistake":321},"Tax treatment and election mechanics","Specifies the intended tax treatment of the rollover — whether as a Section 721 contribution, a Section 351 exchange, or another structure — and the parties' obligations to file consistent tax returns and make any required elections.","The parties intend that the contribution of Rollover Shares in exchange for [PARTNERSHIP INTERESTS / NEWCO SHARES] shall qualify as a non-recognition transaction under Section [721 / 351] of the Internal Revenue Code. Each party agrees to file all tax returns consistent with this treatment and not to take any position inconsistent herewith without prior written consent.","Using Section 721 partnership contribution language when the new entity is actually a corporation — the wrong code section voids the intended tax deferral and creates an immediate taxable event.",{"name":323,"plain_english":324,"sample_language":325,"common_mistake":326},"Governance rights in the acquiring entity","Describes the rights the rolling shareholder receives in the new entity — board observer rights, voting rights, information rights, and tag-along or drag-along provisions.","In consideration of the Rollover Contribution, Rolling Shareholder shall receive [CLASS / TYPE] equity interests in [NEWCO NAME] representing [X]% of the fully diluted capitalization, subject to the terms of the Shareholders Agreement dated [DATE], including tag-along rights as set forth in Section [X] thereof.","Granting governance rights in the rollover agreement without ensuring they are consistent with the new entity's governing documents — conflicting provisions in the shareholders agreement override or nullify rollover agreement promises.",{"name":328,"plain_english":329,"sample_language":330,"common_mistake":331},"Restrictive covenants","Post-closing obligations on the rolling shareholder — typically non-compete, non-solicit, and lock-up restrictions on the new equity — that run for defined periods to protect the acquirer's investment.","For a period of [X] years following the Closing Date, Rolling Shareholder shall not, directly or indirectly, engage in any Competing Business within [GEOGRAPHIC AREA]. Rolling Shareholder agrees not to transfer, sell, or encumber the Rollover Equity for a period of [X] months following Closing ('Lock-Up Period').","Including a non-compete with no geographic or industry limit. Courts in most jurisdictions will either strike down the entire clause or blue-pencil it in a way that is less favorable to the acquirer than a narrowly drafted restriction.",{"name":333,"plain_english":334,"sample_language":335,"common_mistake":336},"Conditions to effectiveness","Lists the conditions that must be satisfied before the rollover is legally effective — primarily that the main transaction closes, minimum elections are received, and all regulatory approvals are obtained.","This Agreement shall become effective and binding only upon: (a) the simultaneous closing of the transactions contemplated by the Purchase Agreement; (b) receipt of valid elections representing no less than $[MINIMUM AMOUNT] in aggregate rollover consideration; and (c) receipt of all required regulatory approvals.","Failing to link the rollover agreement's effectiveness to the closing of the main purchase agreement. If the main deal falls through, an unconditionally effective rollover agreement can leave parties with residual obligations and disputed equity positions.",{"name":338,"plain_english":339,"sample_language":340,"common_mistake":341},"Governing law and dispute resolution","Specifies which jurisdiction's law governs the agreement and the mechanism for resolving disputes — typically arbitration for confidentiality or Delaware courts for US private equity transactions.","This Agreement shall be governed by and construed in accordance with the laws of the State of [DELAWARE / OTHER], without regard to conflict of laws principles. Any dispute shall be resolved by binding arbitration in [CITY] under the rules of [AAA / JAMS], except that either party may seek injunctive relief in a court of competent jurisdiction.","Selecting a governing law state that is inconsistent with the governing law of the main purchase agreement. Inconsistent governing law creates conflicting interpretation risk, particularly on cross-referenced defined terms.",[343,348,353,358,363,368,373,378],{"step":344,"title":345,"description":346,"tip":347},1,"Identify all parties and link to the main purchase agreement","Enter the full legal names of the acquirer, the target company, and each rolling shareholder. Include a direct cross-reference to the purchase agreement by date and title in the recitals.","If there are multiple rolling shareholders, consider attaching a Schedule of Rolling Shareholders rather than naming each in the body — this simplifies execution logistics.",{"step":349,"title":350,"description":351,"tip":352},2,"Calculate and document the per-share rollover value","Derive the per-share value from the agreed enterprise value minus net debt, divided by the fully diluted share count as defined in the purchase agreement. Attach the calculation as Schedule A.","Confirm that the share count basis (basic, treasury-method, or fully diluted) matches exactly what is used in the purchase agreement purchase price calculation to avoid a per-share discrepancy.",{"step":354,"title":355,"description":356,"tip":357},3,"Set the election deadline and prepare the election form","Choose an election deadline that is at least 5 business days before the anticipated closing date and attach a completed election form as Exhibit A. Make the election irrevocable after the deadline.","Send the election form with a clear cover letter explaining the tax implications of electing versus not electing — shareholders who do not understand the choice often miss the deadline.",{"step":359,"title":360,"description":361,"tip":362},4,"Define the rollover cap and pro rata reduction mechanics","State the maximum aggregate rollover amount in dollars and include a pro rata reduction formula in case total elections exceed the cap. Specify who performs the calculation and by what date.","Set the cap at the amount your tax counsel has confirmed is consistent with the intended non-recognition structure — exceeding it may push the transaction outside safe-harbor thresholds.",{"step":364,"title":365,"description":366,"tip":367},5,"Confirm the tax code section and file consistent elections","Work with tax counsel to confirm whether the rollover qualifies under IRC Section 721 (partnership), Section 351 (corporation), or an equivalent non-US provision. Enter the correct code section and include a mutual covenant to file consistent tax returns.","If the new entity is a partnership, confirm whether the contribution triggers the disguised sale rules under IRC Section 707(a)(2)(B) — this is a common oversight that converts the deferral into immediate income.",{"step":369,"title":370,"description":371,"tip":372},6,"Define the governance rights and attach the shareholders agreement","Specify the class and percentage of new equity the rolling shareholder receives, then ensure those rights are mirrored in the new entity's shareholders or operating agreement. Attach that agreement or a form of it as an exhibit.","Do not grant board seats or observer rights in the rollover agreement without confirming the new entity's charter documents accommodate them — a conflicting charter provision will control.",{"step":374,"title":375,"description":376,"tip":377},7,"Draft the restrictive covenants with appropriate scope","Set the non-compete duration and geography proportionate to the shareholder's role and the business's actual competitive footprint. Include a separate lock-up period for the new equity.","California-based rolling shareholders are subject to California's near-total ban on non-compete clauses — include a jurisdiction-specific carve-out to avoid voiding the entire covenant.",{"step":379,"title":380,"description":381,"tip":382},8,"Execute before or simultaneously with the main transaction closing","Arrange for all parties to sign the rollover agreement at or immediately before the main purchase agreement closing. Stagger execution so the rollover takes effect simultaneously with the transfer of consideration.","Use a single closing checklist that tracks both the main purchase agreement and the rollover agreement signature pages — missed signatures on the rollover are a common last-minute closing delay.",[384,388,392,396,400,404],{"mistake":385,"why_it_matters":386,"fix":387},"Mismatching the share valuation basis with the purchase agreement","If the rollover agreement uses a basic share count while the purchase agreement uses fully diluted shares, the per-share rollover value will be higher than the effective deal price — creating unintended economic advantages for rolling shareholders and potential disputes at closing.","Cross-reference the exact share count definition from the purchase agreement in the valuation schedule and have both counsel confirm the numbers match before execution.",{"mistake":389,"why_it_matters":390,"fix":391},"Setting the election deadline after the closing date","An election made after cash consideration has already transferred creates a deemed taxable sale followed by a reinvestment — eliminating the tax deferral the entire structure was designed to achieve.","Set the election deadline at least 5 business days before the anticipated closing date and make all elections irrevocable after that point.",{"mistake":393,"why_it_matters":394,"fix":395},"Using the wrong IRC code section for the entity type","Applying Section 351 corporation language to a partnership rollover — or Section 721 partnership language to a corporate acquisition vehicle — invalidates the non-recognition treatment, triggering an immediate capital gains tax on the rolled amount.","Confirm the tax code section with a qualified M&A tax advisor before finalizing the agreement, and include a mutual covenant requiring both parties to file consistent returns.",{"mistake":397,"why_it_matters":398,"fix":399},"Omitting the rollover cap and pro rata reduction formula","Without a cap, the acquirer may be forced to issue more rollover equity than the capital structure supports, diluting the sponsor's ownership below modeled levels. Without a pro rata formula, over-subscribed elections require case-by-case renegotiation.","State a hard dollar cap and include an automatic pro rata reduction formula that applies without further consent of any party when elections exceed the cap.",{"mistake":401,"why_it_matters":402,"fix":403},"Granting governance rights that conflict with the new entity's charter","A rollover agreement promising tag-along rights or board observer access that the new entity's shareholders agreement or charter does not accommodate creates unenforceable obligations and post-close litigation risk.","Review the new entity's governing documents before finalizing the rollover agreement and ensure all governance rights are explicitly reflected in both documents.",{"mistake":405,"why_it_matters":406,"fix":407},"Not tying the rollover agreement's effectiveness to the main deal closing","An unconditionally effective rollover agreement creates binding equity obligations even if the main transaction falls through, leaving rolling shareholders holding equity in an entity that never completed its acquisition.","Include an explicit condition precedent that the rollover takes effect simultaneously with — and only upon — the closing of the main purchase agreement.",[409,412,415,418,421,424,427,430,433],{"question":410,"answer":411},"What is a rollover agreement in an M&A transaction?","A rollover agreement is a contract used in mergers and acquisitions that allows a selling shareholder to exchange a portion of their existing equity for equity in the acquiring or surviving entity instead of receiving the full sale price in cash. The share valuation provisions determine the value credited to the rolled shares, and the election clause gives each eligible shareholder a formal, time-bound process to choose how much to roll. Rollover agreements are most commonly used in private equity buyouts to retain management alignment with the go-forward business.\n",{"question":413,"answer":414},"Why is the election clause important in a rollover agreement?","The election clause creates a documented, auditable record of each shareholder's voluntary decision to exchange deal consideration for new equity. Without a formal election process, the tax authorities may characterize the rollover as a mandatory exchange rather than a voluntary contribution, potentially eliminating the intended tax deferral. The clause also sets a hard deadline that prevents late elections from disrupting the closing timeline and gives the acquirer certainty on the final capital structure before close.\n",{"question":416,"answer":417},"How are rolled shares valued in a rollover agreement?","Rolled shares are typically valued at the same per-share price implied by the main transaction — calculated as the total equity value divided by the fully diluted share count as of the valuation date. This number is documented in a valuation schedule attached to the rollover agreement so there is no ambiguity about what consideration a rolling shareholder foregoes. It is critical that this calculation uses the same share count basis as the purchase price calculation in the main purchase agreement.\n",{"question":419,"answer":420},"What tax rules apply to equity rollovers in the United States?","The primary US tax rules are IRC Section 721, which generally allows tax-free contributions of property to a partnership in exchange for partnership interests, and IRC Section 351, which allows tax-free transfers to a corporation where the contributors control at least 80% of the new entity. The correct provision depends entirely on the legal form of the acquiring entity. Rolling shareholders typically defer capital gains on the rolled portion until a subsequent taxable sale of the new entity. Tax counsel review is strongly recommended before execution, as disguised sale rules and other anti-avoidance provisions can convert deferred gains into current income.\n",{"question":422,"answer":423},"Do I need a lawyer to prepare a rollover agreement?","Yes, in most cases. Rollover agreements involve tax-deferral mechanics, securities law representations, and governance provisions that interact with the main purchase agreement, the new entity's charter, and applicable tax code sections. Errors in any of these areas can produce immediate tax liability, unenforceable equity rights, or securities law violations. A high-quality template provides the structural foundation and reduces drafting time significantly, but qualified M&A counsel and a tax advisor should review the final document before execution.\n",{"question":425,"answer":426},"What is a rollover cap and why does it matter?","A rollover cap is the maximum aggregate dollar amount or percentage of total deal consideration that the acquirer will accept as rolled equity. It matters because the capital structure of the acquiring entity is modeled around a specific split between rolled equity and cash — too much rollover dilutes the sponsor's ownership or violates debt covenants that limit seller equity participation. A pro rata reduction mechanism in the rollover agreement automatically scales back elections when the cap is exceeded, avoiding renegotiation after the election deadline passes.\n",{"question":428,"answer":429},"Can a rollover agreement include a non-compete clause?","Yes, and it commonly does. Because rolling shareholders are typically key management members who will continue in the business, the acquirer often includes non-compete, non-solicit, and equity lock-up provisions directly in the rollover agreement. Enforceability depends on jurisdiction and scope — restrictions must be reasonable in duration, geography, and breadth. California and certain other jurisdictions restrict or ban post-employment non-competes, so jurisdiction-specific carve-outs are necessary for rolling shareholders located in those states or provinces.\n",{"question":431,"answer":432},"What happens to the rollover agreement if the main transaction does not close?","If the rollover agreement contains a condition precedent linking its effectiveness to the closing of the main purchase agreement, it automatically terminates without creating ongoing obligations. Without that condition, the parties may be bound by an agreement to exchange equity in a transaction that never occurred, creating disputes over whether any consideration is owed. Always include an explicit simultaneous-closing condition to avoid this outcome.\n",{"question":434,"answer":435},"How is a rollover agreement different from a share purchase agreement?","A share purchase agreement governs the sale of all shares for cash consideration — the seller exits entirely. A rollover agreement governs the partial retention of equity by the seller in exchange for reduced cash consideration at closing. The two documents typically run in parallel in the same transaction: the share purchase agreement covers the cash portion of the deal, while the rollover agreement covers the equity reinvestment portion and the tax mechanics that apply to it.\n",[437,441,445,449],{"industry":438,"icon_asset_id":439,"specifics":440},"Private Equity and Investment","industry-private-equity","Management rollover is a standard feature of LBO structures, aligning seller-managers with the sponsor's return profile and reducing the cash required at close.",{"industry":442,"icon_asset_id":443,"specifics":444},"Technology / SaaS","industry-saas","Founder rollovers preserve equity incentives through earn-out periods and support second-bite-of-the-apple participation in a subsequent sponsor exit at a higher valuation.",{"industry":446,"icon_asset_id":447,"specifics":448},"Professional Services","industry-professional-services","Partner equity rollovers in professional services acquisitions retain client relationships and human capital, with lock-up periods typically tied to client retention milestones.",{"industry":450,"icon_asset_id":451,"specifics":452},"Manufacturing","industry-manufacturing","Operational management teams in manufacturing buyouts roll equity to maintain decision-making continuity, with non-compete terms scoped to specific product categories and geographies.",[454,456,459,462],{"vs":255,"vs_template_id":256,"summary":455},"A share purchase agreement governs the outright sale of all shares for cash — the seller exits fully at closing. A rollover agreement governs the portion of equity the seller retains in the new entity instead of receiving cash. In most private equity buyouts, both documents are executed simultaneously: the SPA handles the cash sale, and the rollover agreement handles the equity reinvestment and associated tax deferral mechanics.",{"vs":243,"vs_template_id":457,"summary":458},"","A subscription agreement covers a new cash investment in a company in exchange for newly issued shares. A rollover agreement covers the exchange of existing shares in a target entity for equity in an acquiring entity — no new cash changes hands for the rolled portion. The tax treatment differs significantly: a subscription is generally a taxable event, while a qualifying rollover may defer capital gains under applicable non-recognition provisions.",{"vs":460,"vs_template_id":457,"summary":461},"Shareholders Agreement","A shareholders agreement governs the ongoing relationship among equity holders in the new entity after the rollover — voting rights, transfer restrictions, information rights, and exit mechanics. The rollover agreement governs the transaction by which the rolling shareholder acquires their position. Both documents are needed: the rollover agreement creates the equity; the shareholders agreement governs it going forward.",{"vs":463,"vs_template_id":457,"summary":464},"Equity Incentive Plan","An equity incentive plan grants new equity to employees as compensation, typically subject to vesting schedules and performance conditions. A rollover agreement converts existing sale consideration into equity — the shareholder already earned the underlying value through ownership. Rollover equity typically comes with fewer forfeiture conditions than incentive equity, though lock-up and non-compete restrictions are common in both.",{"use_template":466,"template_plus_review":470,"custom_drafted":474},{"best_for":467,"cost":468,"time":469},"Straightforward management rollovers in domestic transactions where the parties have experienced M&A counsel overseeing the broader deal","Free","2–4 hours to complete the template",{"best_for":471,"cost":472,"time":473},"Mid-market buyouts under $50M where the rollover amount is below $5M and the entity structure is a standard Delaware LLC or corporation","$1,500–$4,000 for M&A counsel review","3–7 business days",{"best_for":475,"cost":476,"time":477},"Large or complex transactions, multi-jurisdiction rollovers, rollovers involving partnership disguised-sale risk, or transactions with multiple rolling shareholders across different share classes","$5,000–$25,000+","2–6 weeks",[479,484,489,494],{"code":480,"name":481,"flag_asset_id":482,"note":483},"us","United States","flag-us","The primary non-recognition provisions are IRC Sections 721 and 351, depending on whether the acquiring entity is a partnership or corporation. Rolling shareholders must also consider the disguised sale rules under IRC Section 707(a)(2)(B) if they receive any cash boot alongside the rolled equity. State-level non-compete enforceability varies sharply — California, Minnesota, and North Dakota impose significant restrictions on post-closing covenants. Securities law representations (accredited investor status under Regulation D) are required for private placements of new equity.",{"code":485,"name":486,"flag_asset_id":487,"note":488},"ca","Canada","flag-ca","Canadian rollovers typically rely on the Section 85 rollover election under the Income Tax Act, which allows a tax-deferred transfer of eligible property to a Canadian corporation at an elected amount. Provinces impose their own securities rules on private equity issuances. Quebec's Civil Code imposes distinct requirements on non-compete clauses, including a 5-year maximum duration. CRA scrutinizes the elected amount closely — it must fall within the range of the property's adjusted cost base to fair market value.",{"code":490,"name":491,"flag_asset_id":492,"note":493},"uk","United Kingdom","flag-uk","UK rollover relief is primarily available under TCGA 1992 Sections 135 and 136 for share-for-share exchanges, where HMRC treats the exchange as a reorganization rather than a disposal for capital gains purposes. HMRC clearance under Section 138 is available and strongly advisable for material transactions. Enterprise Investment Scheme and Entrepreneurs Relief considerations may apply to qualifying sellers. Post-Brexit, EU state aid rules no longer limit relief structuring for UK-only transactions.",{"code":495,"name":496,"flag_asset_id":497,"note":498},"eu","European Union","flag-eu","EU rollover transactions are governed by the EC Merger Directive and each member state's implementation of share exchange relief. French, German, and Dutch tax law each provide rollover mechanisms, but the conditions, elected value ranges, and reporting requirements differ materially by jurisdiction. GDPR considerations apply when transferring shareholder personal data across borders as part of the closing process. Non-compete clauses require financial compensation to the departing shareholder in several member states, including France and Germany, to be enforceable.",[256,500,501,502,503,504,505,506,507,508,509,510],"letter-of-intent_acquisition-of-business-D5197","non-disclosure-agreement-nda-D12692","term-sheet-D473","employment-agreement-executive-D543","general-non-compete-agreement-D882","shareholders-agreement-D1016","promissory-note-D434","indemnification-agreement-D13016","asset-purchase-agreement-D928","certificate-of-corporate-resolution-D3","checklist-customer-due-diligence-D13916",{"emit_how_to":196,"emit_defined_term":196},{"primary_folder":113,"secondary_folder":513,"document_type":514,"industry":515,"business_stage":516,"tags":517,"confidence":522},"equity-and-mergers","agreement","general","exit",[518,519,520,516,521],"m-and-a","equity","shareholder","rollover-agreement",0.95,"\u003Ch2>What is a Rollover Agreement Values Shares With Election Clause?\u003C/h2>\n\u003Cp>A \u003Cstrong>Rollover Agreement Values Shares With Election Clause\u003C/strong> is a legally binding contract used in mergers, acquisitions, and recapitalizations to govern the process by which a selling shareholder exchanges a portion of their existing equity — rather than receiving that portion as cash — for an equity interest in the acquiring or surviving entity. The share valuation provisions establish the agreed per-share price at which rolled equity is credited against the total purchase consideration, ensuring the rolling shareholder neither gains nor loses value relative to a full cash sale. The election clause provides each eligible shareholder with a formal, irrevocable mechanism — subject to a fixed deadline — to specify exactly how much of their consideration they wish to roll, creating a documented record that is essential for tax-deferral compliance and securities law purposes. Together, these provisions give both the acquirer and the rolling shareholder certainty on the go-forward capital structure, the tax treatment of the transaction, and the governance rights the rolling shareholder holds in the new entity.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Proceeding with an equity rollover without a properly executed rollover agreement — or relying solely on a few paragraphs buried in the main purchase agreement — exposes every party to serious risk simultaneously. Without documented share valuation mechanics, per-share rollover value disputes arise at closing when deal math shifts due to working capital adjustments or option pool changes. Without a formal election clause with a fixed deadline, tax authorities may characterize the rollover as an involuntary exchange rather than a voluntary contribution, eliminating the capital gains deferral that rolling shareholders expect under IRC Section 721, IRC Section 351, ITA Section 85, or their international equivalents. Without a rollover cap and pro rata reduction mechanism, an over-subscribed election round forces last-minute renegotiation that delays closing and erodes deal confidence. This template gives acquirers, selling shareholders, and their counsel a structured, professionally drafted starting point that covers valuation methodology, election mechanics, tax covenants, governance rights, and restrictive covenants — reducing drafting time and ensuring nothing critical is left to informal side agreements.\u003C/p>\n",1781186039410]