Insured buy and sell agreement. In the event of the death of a partner, the deceased partner's interest in the partnership shall be sold to and purchased by the surviving partner in the following manner: 1. _________ and _________ have each caused to be issued on the life of the other the insurance policies listed in exhibit A and made a part here which sets forth the policy numbers, the amount of insurance, the premium and the due date. Each of the partners shall pay all the premiums due on the policies taken out by him or her insuring the life of the other partner and the partner paying the premium shall be the beneficiary. Each of the partners shall have the right to take out additional insurance on the life of the other partner whenever in the opinion of the partner additional insurance may be reasonably required to carry out his or her obligation as set out. Each partner shall give proof of payment of premiums to the other within 15 days after the due date of each premium. 2. _________ and _________ are the sole owners of the policies taken out by each of them but they shall have no right during the term of this agreement to cancel any policy or to modify or impair any of the rights under the policy. 3. Upon the death of either _________ or _________, the survivor shall purchase and the estate of the decedent shall sell all of the deceased partner's interest in the partnership assets, except as provided, now owned or acquired by the partner. 4. The purchase price of the deceased partner's interest shall be its book value at the end of the fiscal year preceding the death of that partner, plus a sum equal to _____% of the net earnings of the partnership for a three-year period following the death of the partner. There shall be deducted from the book value of the assets the value of the building and adjacent lands located at _________ street, city of _________, state of _________, and the value of the stock owned by the partnership in _________[company]. These two assets shall be distributed as follows: The partnership stock in _________[company] shall be divided equally between the surviving partner and the estate of the deceased partner, and the real estate located at _________ referred to above shall be appraised by a committee appointed by the _________ real estate board and the surviving partner shall be obligated to purchase the deceased partner's interest in the real estate at one-half of the appraised value of the property placed by the board. The surviving partner shall be given additional time within which to pay for the one-half interest in the real estate not exceeding a period of five years provided the partner executes a note bearing interest at the rate of _____% per annum and secures it by executing a mortgage or trust deed on the entire property located at _________ street, _________. Notwithstanding the above, the partners may at any time fix the agreed value of each partner's interest in the partnership by a certificate of agreed value signed by each partner and filed with the partnership papers. If at any time it becomes necessary to determine the value of each partner's interest in the partnership and a certificate of agreed value is in existence and that certificate is dated less than one year before the date as of which the valuation is to be determined, the above formula computation shall not be required, and the agreed value set forth in the certificate shall be the purchase price to be paid for the deceased partner's interest. In no event shall a certificate of agreed value be effective unless signed by both partners and the partners may at any time execute a new certificate of agreed value which shall automatically replace all prior certificates. 5. The purchase price for the interest of a deceased partner shall be paid to the estate of the decedent within 30 days after the qualification of the legal representative, as follows: Cash
to the extent of the insurance proceeds, or the entire purchase price in cash if the price is less than the insurance proceeds on the life of the deceased partner. In the event that the purchase price is in excess of the insurance proceeds, the surviving partner shall give the estate a negotiable promissory note for the balance or pay the balance in cash. The note shall bear interest at the rate of _____% per annum and shall be payable over a period of not more than five years from its date and the note shall be secured by a mortgage on the real estate owned by the partnership and other fixed assets as may be agreed upon. The surviving partner shall have the right to prepay the note at any time. _____% of the earnings for the three-year period shall be paid to the estate of the deceased partner as earnings mature or accrue at the close of each year. It is the intention of this agreement that upon the death of a partner, the entire proceeds of the insurance policies of his or her life shall be used by the surviving partner in payment, in whole or in part, of the purchase price of the decedent's interest in the partnership. In the event that the proceeds of insurance exceed the purchase price, the excess shall be the sole and exclusive property of the surviving partner. 6. Upon the payment of the purchase price to the estate of a deceased partner in cash or in cash plus promissory notes, the representative of the deceased partner's estate shall execute all deeds, bills of sale and other papers as may be necessary and proper to transfer all the decedent's interest in partnership assets to the surviving partner. In the event a part of the purchase price is evidenced by promissory notes, the surviving partner shall secure the note by a mortgage on all tangible assets of the partnership. 7. Upon the death of a partner, the surviving partner shall have the right to purchase from the estate of the decedent any or all of the policies insuring the life of the surviving partner at a price equal to the cash surrender value of the policies at the date of decedent's death. This right shall be exercised at any time within thirty days after the qualification of the legal representative of the estate of the deceased partner by the payment of the purchase price to the representative. Upon receipt of the purchase price the legal representative of the decedent's estate shall deliver the insurance policies to the surviving partner and execute and deliver to the survivor appropriate documents effecting the transfer of the policies. In the event the surviving partner does not exercise this right, he or she shall have no further interest or rights in said policies. 8. This agreement shall terminate upon the occurrence of any of the following events: (a). The death of either partner, but death shall not relieve the estate of the deceased partner or the surviving partner from fulfilling all the terms of this agreement. (b). The termination of the partnership for any cause. (c). The bankruptcy of either partner. In the event of the termination of this agreement during the lives of both partners, each partner shall have the right to purchase the policies of insurance on his or her life from the other partner upon the same terms as provided in paragraph 7 for the purchase in the event of death, except that the purchase price shall be paid within 30 days after termination and except that the respective parties shall execute and deliver any papers as may be necessary to transfer ownership of the policies to the insured. If any policy is not purchased, the policy shall be surrendered by the owner to the issuing company and the cash surrender value shall be paid to the owner of the policy.