DIY Legal Forms

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Buy-Sell Agreement on Stockholder's Death

(Funded With Life Insurance)

AGREEMENT made [date] by and between [name] (Stockholder A), [name] (Stockholder B), and [name of corporation], a corporation organized pursuant to the laws of [state], having principal place of business at [address] (Corporation).

WHEREAS, Stockholders A and B each own one half of Corporation's outstanding capital stock; and

WHEREAS, Stockholder A has obtained a policy of insurance on the life of Stockholder B in the sum of ........ dollars ($.......), issued by the [name of insurance company] and has paid the first premium; and

WHEREAS, Stockholder B has obtained a policy of insurance on the life of Stockholder A in the sum of ........ dollars ($.......), issued by the [name of insurance company] and has paid the first premium; and

WHEREAS, Stockholders wish to keep control of Corporation in the survivor upon the death of either of them, and

WHEREAS, Stockholders intend to accomplish this by the provisions of this Agreement;

IT IS AGREED AS FOLLOWS:

1. Deposit of Stock and Policies. Stockholders have deposited their stock certificates, properly indorsed, together with the life insurance policies described above, in Safe Deposit Box [number] at the [name of bank], located at [address]. Access to the safe deposit box will only be by stockholders, jointly or by the personal representative of the estate of a deceased Stockholder and surviving Stockholder, jointly. Neither Stockholder, while they are both alive, shall remove the stock certificates or life insurance policies.

2. Payment of Premiums. As long as both stockholders are alive, Corporation shall make timely payment of all premiums on the policies and shall charge Stockholder A and Stockholder B's personal accounts with the premiums paid on the polices owned by each.

3. Purchase of Stock. Upon the death of one of Stockholders, the survivor shall purchase the shares in Corporation owned by deceased Stockholder from the personal representative of deceased Stockholder's estate. The purchase price shall be the face amount of the policy on deceased Stockholder's life. Stockholders shall annually refix the value of Corporation's stock. If such value has increased by more than ........ percent (........%) over the face value of the life insurance policies at the time of the valuation, Stockholders shall obtain additional insurance to cover such increase in value. The personal representative of deceased Stockholder's estate will accept an assignment of this policy as payment in full of the purchase price.

4. Time of Purchase. The sale of deceased Stockholder's stock shall be completed within [number] weeks, following the appointment of a personal representative of stockholder's estate. The closing shall take place at the office of the [name of bank] at a time agreed upon by the personal representative and surviving Stockholder. At the closing, all documents needed to assign the policy on the life of deceased Stockholder to his estate and to transfer deceased Stockholder's shares of Corporation's stock to surviving Stockholder shall be executed.

5. Insurance on Survivor's Life. Surviving Stockholder may acquire the insurance policy on surviving Stockholder's life owned by deceased Stockholder, for its cash surrender value. If there is no cash surrender value, the acquisition price of the insurance policy shall be one half the total premium paid on it. Surviving Stockholder shall make known Stockholder's own election to acquire or not to acquire the policy to the personal representative of deceased Stockholder's estate no later than [number] days before the date set for the completion of the sale of deceased Stockholder's stock. If surviving Stockholder elects to acquire the policy, all documents needed to effect the transfer shall be executed at the closing.

6. Rights in Stock. Stockholders shall retain all rights in the stock owned by each of them except those that are renounced in this Agreement.

7. No Pledge, Sale, Etc. Stockholders shall not sell, transfer, pledge, assign, or encumber their stock or insurance policies except as provided in this Agreement.

8. Termination. This Agreement will terminate upon the occurrence of any of the following events:

a. Voluntary or involuntary termination of corporation's business;

b. By written agreement of Stockholders;

c. Adjudication of bankruptcy or insolvency of any Stockholder or appointment of a receiver of the assets of any Stockholder unless the appointment is vacated within [number] days after it became effective;

d. If the insurance policy on deceased Stockholder shall not be in full force and effect for its full face amount;

e. Upon the transfer of deceased Stockholder's stock to the survivor, the assignment of the policy on the life of deceased Stockholder to his estate's personal representative, and the assignment of the policy on the life of surviving Stockholder, if he so elects; or

f. If both Stockholders die simultaneously or so close in time to each other that there is insufficient time to transfer the stock of one to the other in accordance with the terms of this Agreement.

9. Notice on Stock Certificate. The following legend shall be placed on Corporation's certificates of stock immediately following the execution of this Agreement.

"TAKE NOTICE that the sale, assignment, transfer, or pledge of the shares represented by this Certificate upon the death of the owner of the shares is subject to the restrictions contained in an agreement made [date] between [names] and Corporation, a copy of which is on file at Corporation's offices."

10. Agreement Binding on Third Persons. This Agreement is binding on Stockholders and Corporation, their heirs, legal representatives, successors, and assigns.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

[signature]

Stockholder A

[signature]

Stockholder B

[name of Corporation]

By: [signature]

President

[corporate seal]

Attest:

[signature]

Secretary

*** If Required By State Law ***

This Section for Notary:

ACKNOWLEDGMENT

State of _________

County of ________ [COUNTY]

On [DATE] before me, [NAME OF NOTARY], notary, personally appeared [NAME OF PERSON(S) INVOLVED], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

Witness my hand and official seal.

Signature ________
Notary

My commission expires: _____

(Seal)