This is an agreement for a company to repurchase a shareholder's stock in the event of the shareholder's death. Upon death of the shareholder named in the agreement, the company agrees to redeem the stock of the shareholder and pay the consideration to the shareholder's estate. The agreement is useful to individuals or corporations seeking to form an agreement for the company to redeem the stock of a deceased shareholder.
This is an agreement for a company to repurchase a shareholder's stock in the event of the shareholder's death. Upon death of the shareholder named in the agreement, the company agrees to redeem the stock of the shareholder and pay the consideration to the shareholder's estate. The agreement is useful to individuals or corporations seeking to form an agreement for the company to redeem the stock of a deceased shareholder. [Comment: Businesses seeking to use a stock redemption agreement should seek advice from an account knowledgeable in this area to determine the cost and tax implications as well as buy/sell planning. Further, as this Redemption Agreement only pertains to the purchase of Shareholder’s Stock upon death, parties should have a stock redemption agreement for all other purposes.] AGREEMENT TO REDEEM STOCK ON SHAREHOLDERS DEATH This agreement (the “Redemption Agreement”) is made as of the _____ day of ______________, 2________, [Instruction: Insert date.] amongst: __________________________________, an individual residing in the City of __________, in the State of _____________, (hereinafter called "Shareholder 1"), and __________________________________, an individual residing in the City of __________, in the State of ______________, (hereinafter called "Shareholder 2"), and __________________________________, a company duly incorporated under the laws of the State of ________________, (hereinafter called the "Company"), [Instruction and Comment: Insert applicable information. Parties should consider whether or not to include all Stockholders, spouses and Company as parties to Redemption Agreement.] © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 2 1. RECITALS Whereas: A. The Company is a duly incorporated business company which as of the date of this Redemption Agreement carries on the business of ________________ [Instruction: Insert type of business.] and such other businesses as are necessarily incidental thereto; B. Shareholder 1 and Shareholder 2 (hereinafter collectively referred to as the “Shareholders”) are the only shareholders of the Company owning the following shares: Shareholder 1 - __________ Shares Shareholder 2 - __________ Shares; C. In the event of a Shareholder’s death, the Shareholders and the Company have agreed on redemption of all of the issued and outstanding Stock owned by such Shareholder; and D. The parties wish to execute this Redemption Agreement this date to evidence their collective intent to be bound by and complete the redemption of a Shareholder’s Stock in the Company owned at the date of such Shareholder’s death as further set out herein and to execute, as and when required, all documentation required to properly complete and document the said share redemption. NOW THEREFORE THIS REDEMPTION AGREEMENT WITNESSES that in consideration of the respective covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: 2. RECITALS TRUE A. The recitals contained in Article 1 are true in substance and in fact and form an integral part of this Redemption Agreement as though the recitals were hereinafter recited again, in full. 3. SHARE REDEMPTION UPON DEATH © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 3 A. The Stock owned by a Shareholder in the capital of the Company on the date of their death shall be redeemed by the Company within _______ (___) [Instruction: Insert time in which stock must be purchased.] days/years after the death of such Shareholder. B. The Company shall take all actions necessary to ensure Stock of Shareholder in the event of death is redeemed. 4. CONSIDERATION A. The Company shall pay to the order of the Estate (except as otherwise set forth in a valid will of such deceased Shareholder) of such deceased Shareholder the sum equal to the then current fair market value of the Stock immediately preceding the death of a Shareholder. [Comment: Parties should consider whether stock to be redeemed at per-death value or value at redemption, especially if redemption will be long after death.] B. Company shall have no liability to any person or entity in any will contest or inheritance dispute as long as company duly pays according to this Redemption Agreement. 5. GENERAL PROVISIONS A. Each of the parties hereto confirm that they have read this Redemption Agreement, in its entirety, and being of sound mind and that they understand fully the nature and consequence of executing this Share Redemption Agreement. The parties hereto understand and acknowledge that each is a sophisticated party and has had the opportunity to avail him or herself of legal advice, if desired. Each of the parties further acknowledge and declare that none of the parties hereto have used any compulsion or made any threat or exercised any undue influence to induce any other party to execute this Share Redemption Agreement. B. Each of the parties hereto retains all rights and remedies at law and in equity to enforce this Redemption Agreement or to obtain relief for breach of this Redemption Agreement. Each of the parties recognize and agree, however, that the remedy at law for any breach of this Redemption Agreement may be inadequate and agree that each shall in addition to such other remedies as may be available to them at law or in equity, be entitled to enforce their rights by an action for injunctive relief or specific performance, to the extent permitted by law. C. This Redemption Agreement constitutes the entire understanding and agreement between the parties hereto relating to the specific subject matter hereof and supersedes any previous agreements, understandings or negotiations in connection with or related to the specific subject matter hereof. No variation or modification of this Redemption Agreement or waiver of any of the terms or © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 4 provisions hereof shall be binding unless in writing and signed by or on behalf of all of the parties hereto. D. Each of the parties hereto acknowledges and agrees that this Redemption Agreement now represents a firm and binding contract as between the parties hereto. E. Shareholder shall provide for the redemption of all Shareholder’s issued and outstanding stock pursuant to this Redemption Agreement in any and all estate planning documents, as necessary and applicable in such a manner that this Redemption Agreement may be carried out upon Shareholder’s death. IN WITNESS WHEREOF the parties hereto have executed this Redemption Agreement as of the day and year first above written. Witness: Shareholder 1 Witness: Shareholder 2 (COMPANY) Per: _________________________________ Name: Title: I have authority to bind the Company. [Instruction: Parties to Redemption Agreement sign above. In the event Parties determine spouses should be added as party to the Redemption Agreement, additional signature lines should be added for same.] © Copyright 2011 Docstoc Inc. registered document proprietary, copy not 5
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