(a) Life Insurance Policies. Within thirty (30) days after the execution of this Agreement, Shareholder A shall purchase and obtain a policy of life insurance insuring the life of Shareholder B with a death benefit in an aggregate amount equal to ___________ Dollars ($___________), and shall purchase and obtain a policy of life insurance insuring the life of Shareholder C with a death benefit in an aggregate amount equal to
___________ Dollars ($___________). Within thirty (30) days after the execution of this Agreement, Shareholder B shall purchase and obtain a policy of life insurance insuring the life of Shareholder A with a death benefit in an aggregate amount equal to ___________ Dollars
($___________), and shall purchase and obtain a policy of life insurance insuring the life of Shareholder C with a death benefit in an aggregate amount equal to___________ Dollars ($___________). Within thirty (30) days after the execution of this Agreement, Shareholder C shall purchase and obtain a policy of life insurance insuring the life of Shareholder A with a death benefit in an aggregate amount equal to ___________ Dollars ($___________), and shall purchase and obtain a policy of life insurance insuring the life of Shareholder B with a death benefit in an aggregate amount equal to ___________ Dollars ($___________).
The Shareholders mutually agree that during the term of this Agreement, each of them shall keep and maintain said policies of insurance, pay all premiums due thereon as such premiums become due and shall not cause or allow any termination or lapse of said policies of insurance. Any
insurance policy maintained under this Subparagraph 10(a) shall provide that such policy shall not lapse or be terminated without thirty (30) days notice to the Shareholder on whose life such insurance policy is in effect (hereinafter referred to as the “Insured Shareholder”). Upon the death of an Insured Shareholder, the other Shareholders shall use any insurance proceeds payable upon such Insured Shareholder’s death towards the purchase of the Insured Shareholder’s Shares as set forth in Subparagraph 7(a)(i) above. In the event that either the Insured Shareholder or the
Shareholder (hereinafter referred to as the “Insuring Shareholder”) who is responsible to keep and maintain the life insurance policy or policies on the life of the Insured Shareholder shall receive notice of the pending lapse or termination of the policy on the life of the Insured Shareholder, then the Insuring Shareholder shall, within ten (10) days of the date of such notice of the pending lapse or termination of such policy, either: (i) take such steps as may be necessary to prevent the lapse or termination of such policy including, but not limited to, the payment of any premiums which may be due and payable; or (ii) cause a suitable replacement policy or policies with the same death benefit amount to be purchased insuring the life of the Insured Shareholder. In the event that the Insuring Shareholder cannot, within such ten (10) day period, provide evidence to the Insured Shareholder, in form and substance reasonably acceptable to the Insured Shareholder, that either such policy shall not lapse or terminate or that a suitable replacement policy or policies with the same death benefit amount has been purchased, then the Insured Shareholder, may either: (i) take such steps as may be necessary to prevent the lapse or termination of such policy including, but not limited to, the payment of any premiums which may be due or payable; or (ii) cause a suitable replacement policy or policies with the same death benefit amount to be purchased insuring the life of the Insured Shareholder. The Insuring Shareholder shall reimburse the Insured Shareholder for any sums of money expended by the Insured Shareholder in avoiding a lapse or termination of such policy or in obtaining a suitable replacement policy or policies, including, but not limited to, any premiums paid by the Insured Shareholder together with interest at the
highest rate permitted by law from the date the Insured Shareholder incurred such expense until the date of full payment by the Insuring Shareholder.
Each Insuring Shareholder shall, upon the request of the other
Shareholders, provide written evidence, in form and substance reasonably acceptable to the other Shareholders, that the life insurance policies required to be maintained by the Insuring Shareholder on the other Shareholder remain in full force and effect. In order to secure the
obligations of each Insuring Shareholder under this Subparagraph 10(a), each Insuring Shareholder shall pledge and collaterally assign to the Insured Shareholder the policy or policies maintained by such Insuring Shareholder on the life of the Insured Shareholder. Each such collateral assignment shall be in form and substance reasonably acceptable to the Insured Shareholder.
(b) Purchase of Life Insurance Policies by Terminated Shareholder. In the event of a purchase and sale of all of the Shares of a Shareholder pursuant to the terms of this Agreement, other than by reason of the death of such Shareholder (hereinafter referred to as the “Terminated
Shareholder”) the Terminated Shareholder shall have the right to purchase, at or before the closing of the purchase and sale of the Terminated
Shareholder’s Shares pursuant to this Agreement, all contracts of insurance maintained on his life by the Corporation or by the other
Shareholders, as the case may be. The purchase price for such insurance contracts shall be equal to the sum of any unearned premiums on such insurance contracts plus the total cash surrender value of such insurance contracts, if any, including the cash value of all dividends standing to the credit of such insurance contracts, less any indebtedness with respect to such insurance contracts. If the Terminated Shareholder fails to exercise his right to purchase such insurance contracts under this Subparagraph 10(b), the Corporation or the other Shareholders, as the case may be, shall have the privilege of holding or disposing of such insurance contracts at their sole discretion.
(c) Purchase of Life Insurance Policies by Remaining Shareholders. In the event of a purchase and sale of all of the Shares of a Shareholder pursuant to the terms of this Agreement, whether by death or for any other reason (hereinafter referred to as the “Selling Shareholder”), each
remaining Shareholder shall have the right to purchase, at or before the closing of the purchase and sale of the Selling Shareholder’s Shares pursuant to this Agreement, all contracts of insurance maintained on the life of such remaining Shareholder. The purchase price for such insurance contracts shall be equal to the sum of any unearned premiums on such insurance contracts plus the total cash surrender value of such insurance contracts, if any, including the cash value of all dividends standing to the credit of such insurance contracts, less any indebtedness with respect to such insurance contracts. If a remaining Shareholder fails to exercise his right to purchase such insurance contracts pursuant to this Subparagraph 10(c), the Selling Shareholder shall have the privilege of holding or disposing of such insurance contracts at his sole discretion.