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Thereafter, payments were due based on percentage of completion,
with 25 percent of the balance due at 25 percent completion, 25
percent at 50 percent completion, 25 percent at 75 percent
completion, and 25 percent due at 100 percent completion. The
contract price for Shaktoolik II was $1,138,500, with payment
terms similar to those for Shaktoolik I.
On December 22, 1983, petitioner and Burke executed a buy-
sell agreement with respect to the shares of INI. Petitioner
drafted the buy-sell agreement using a form provided by Mutual
Life Insurance Co. of New York (Mutual Life). The buy-sell
agreement required that upon the death of either shareholder, the
surviving shareholder would purchase, and the estate of the
deceased shareholder would sell, the stock of the deceased
shareholder at a price determined under article 3 of the
agreement. Article 3 of the agreement required semiannual
valuation of the stock. The purchase price of the decedent’s
stock was to be based on the most recent valuation unless more
than 1 year had elapsed since the valuation, in which case the
value of the decedent's stock would be determined, as of the date
of death, by agreement of the surviving shareholder and the
estate, or by arbitration if they could not agree.
Article 4 of the buy-sell agreement provided for the
purchase of insurance from Mutual Life by each shareholder on the
life of the other, with the proceeds to be used to fund any
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