Purchase of Stock at EmploYee's Death Clause Samples
The "Purchase of Stock at Employee's Death" clause establishes the procedure for a company or other designated party to buy back shares owned by an employee upon their death. Typically, this clause outlines the method for determining the purchase price, the timeline for the transaction, and the payment terms, such as lump sum or installments. By providing a clear mechanism for the transfer of shares, this clause ensures continuity of ownership, prevents unwanted third parties from acquiring an interest in the company, and offers financial security to the deceased employee's estate or beneficiaries.
Purchase of Stock at EmploYee's Death. Upon the death of the Employee, the Representative may require Systems to purchase all but not less than all of the Stock owned by the Employee at the time of the Employee's death, and any Transferee may require Systems to purchase all but not less than all of the Stock owned by it at the time of the Employee's death, in accordance with the provisions of this Section 14 of this Agreement. This option may be exercised by notice to Systems given within six (6) months after the date of death of the Employee. Upon the giving of such notice, the Person who gave such notice shall be obligated to sell and Systems shall be obligated to purchase the Stock at Fair Market Value per share. Systems shall pay to such Person by cash an amount equal to the lesser of the Purchase Price or the Life Insurance Proceeds at the closing of any such purchase. Any remaining balance shall be payable by Systems giving such Person a promissory note payable in equal monthly installments over the course of 36 months at an interest rate equal to the publicly announced prime rate of interest of M&l ▇▇▇▇▇▇▇▇ & Ilsley Bank, changing on each day such prime rate changes. In the event that more than one Person gives Systems such a notice, the cash paid to each Person at the closing of any such purchase shall be an amount equal to the lesser of (i) the Purchase Price or (ii) the Life Insurance Proceeds multiplied by a fraction, the numerator of which is the number of shares of Stock owned by such Person and the denominator of which is the number of shares of Stock owned by all Persons who have given notice to Systems under this Section 14(a)(1) of this Agreement.