A Cross-Option Agreement is a legal document used in the UK to protect business owners in the event of death or critical illness. It is typically used in a situation where there are two or more business owners who each own a share of the company.

The agreement gives each business owner the option to purchase the other owner's share of the business in the event of their death or critical illness. This option can be exercised by the surviving business owner or by the deceased or critically ill owner's estate.

The purpose of a Cross-Option Agreement is to ensure that the business can continue to operate without disruption in the event of the death or critical illness of one of the owners. It also provides a mechanism for the deceased or critically ill owner's estate to receive a fair value for their share of the business.

The agreement typically sets out the terms of the purchase, including the price to be paid for the share of the business and the payment schedule. It may also include provisions for how the business will be valued and how disputes will be resolved.

A Cross-Option Agreement can be particularly useful for small and medium-sized businesses, where the loss of one owner could have a significant impact on the future of the business. It can also provide peace of mind for business owners who are concerned about what will happen to their share of the business in the event of their death or critical illness.