Delaware Buy Sell or Stock Purchase Agreement Covering Common Stock in Closely Held Corporation with Option to Fund Purchase through Life Insurance

• Category: Contracts - Buy Sell - Stock Purchases
• State: Multi-State
• Control #: US-00455BG
• Format: Word; Rich Text

Description

This form is set up as a Buy Sell Agreement between the Corporation and a key shareholder. It applies in the case of the death, disability, retirement or offer of shareholder to sell the stock during his lifetime. A Delaware Buy Sell or Stock Purchase Agreement Covering Common Stock in a Closely Held Corporation with an Option to Fund the Purchase through Life Insurance is a legally binding contract between shareholders or owners of a closely held corporation located in the state of Delaware. This agreement outlines the terms and conditions for buying and selling common stock within the corporation in the event of specific triggering events such as death, disability, retirement, or the desire to exit the business. By including an option to fund the purchase through life insurance, this agreement provides financial security and ensures the smooth transition of ownership. The agreement typically details the process for triggering events and the subsequent actions to be taken by both the transferring shareholder (seller) and the remaining shareholders (buyers). It commonly includes important provisions such as: 1. Purchase Price: The agreement defines the formula or method to determine the purchase price of the common stock. Typically, this involves valuing the shares based on a pre-determined formula, independent appraisal, or negotiated price. 2. Triggering Events: The agreement specifies the events that will trigger a stock purchase, such as death, disability, retirement, divorce, or involuntary termination. These events are usually predefined to ensure clarity and avoid disputes among shareholders. 3. Obligation to Sell and Purchase: The agreement establishes the obligation of the selling shareholder to offer their stock for purchase, and the obligation of the remaining shareholders to buy the stock. This ensures the availability of a market for the stock and offers protection to both parties. 4. Funding Mechanism: The option to fund the purchase through life insurance is a key feature of this agreement. It allows the purchasing shareholders to use the proceeds from a life insurance policy on the life of the departing shareholder to finance the purchase of the stock. This mechanism provides liquidity and financial stability to facilitate the transaction. 5. Insurance Policy: The agreement outlines the requirements for the life insurance policy, such as the face amount, beneficiaries, and potential assignment of the policy to the purchasing shareholders. This ensures that the necessary funds are available promptly upon the triggering event. 6. Payment Terms: The agreement specifies the terms for payment, such as lump sum or installment payments. It may also define the timelines for completing the transaction, including any necessary approvals or waiting periods. 7. Dispute Resolution: In case of disagreements or disputes related to the agreement, it may include provisions for mediation, arbitration, or other alternative dispute resolution methods to avoid litigation and facilitate a fair resolution. Different variations of the Delaware Buy Sell or Stock Purchase Agreement Covering Common Stock in a Closely Held Corporation with an Option to Fund Purchase through Life Insurance may exist based on the specific needs and preferences of the parties involved. These variations can arise from variations in valuation methods, purchase price determination, triggering events, funding mechanisms, payment terms, or other unique circumstances.

A Delaware Buy Sell or Stock Purchase Agreement Covering Common Stock in a Closely Held Corporation with an Option to Fund the Purchase through Life Insurance is a legally binding contract between shareholders or owners of a closely held corporation located in the state of Delaware. This agreement outlines the terms and conditions for buying and selling common stock within the corporation in the event of specific triggering events such as death, disability, retirement, or the desire to exit the business. By including an option to fund the purchase through life insurance, this agreement provides financial security and ensures the smooth transition of ownership. The agreement typically details the process for triggering events and the subsequent actions to be taken by both the transferring shareholder (seller) and the remaining shareholders (buyers). It commonly includes important provisions such as: 1. Purchase Price: The agreement defines the formula or method to determine the purchase price of the common stock. Typically, this involves valuing the shares based on a pre-determined formula, independent appraisal, or negotiated price. 2. Triggering Events: The agreement specifies the events that will trigger a stock purchase, such as death, disability, retirement, divorce, or involuntary termination. These events are usually predefined to ensure clarity and avoid disputes among shareholders. 3. Obligation to Sell and Purchase: The agreement establishes the obligation of the selling shareholder to offer their stock for purchase, and the obligation of the remaining shareholders to buy the stock. This ensures the availability of a market for the stock and offers protection to both parties. 4. Funding Mechanism: The option to fund the purchase through life insurance is a key feature of this agreement. It allows the purchasing shareholders to use the proceeds from a life insurance policy on the life of the departing shareholder to finance the purchase of the stock. This mechanism provides liquidity and financial stability to facilitate the transaction. 5. Insurance Policy: The agreement outlines the requirements for the life insurance policy, such as the face amount, beneficiaries, and potential assignment of the policy to the purchasing shareholders. This ensures that the necessary funds are available promptly upon the triggering event. 6. Payment Terms: The agreement specifies the terms for payment, such as lump sum or installment payments. It may also define the timelines for completing the transaction, including any necessary approvals or waiting periods. 7. Dispute Resolution: In case of disagreements or disputes related to the agreement, it may include provisions for mediation, arbitration, or other alternative dispute resolution methods to avoid litigation and facilitate a fair resolution. Different variations of the Delaware Buy Sell or Stock Purchase Agreement Covering Common Stock in a Closely Held Corporation with an Option to Fund Purchase through Life Insurance may exist based on the specific needs and preferences of the parties involved. These variations can arise from variations in valuation methods, purchase price determination, triggering events, funding mechanisms, payment terms, or other unique circumstances.