California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 4 - Insurer Securities Permits
Article 13 - Forms and Addenda
Section 2613.08 - Agreement by Organizers, Promoters, Original Officers and Directors Restricting Transfer of Shares

Universal Citation: 10 CA Code of Regs 2613.08

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

The following represents a composite, sample form of an agreement the nature of which has been approved by the Commissioner:

AGREEMENT RESTRICTING TRANSFER OF SHARES

This Agreement made and entered into this __________ day of_______________, 199 __, by and between ABC LIFE INSURANCE COMPANY, a California corporation (hereinafter called "Company") and ____________________ (hereinafter called "Shareholder"),

WITNESSETH:

WHEREAS, Company has obtained a permit from the Insurance Commissioner of the state of California (hereinafter called "Commissioner"), being No, __________ issued ____________________, authorizing the sale and issuance of company's shares; and

WHEREAS, Condition ____________________ of said permit required the promoters, organizers and all original officers and directors of Company before any public offering and sale is made to purchase a certain number of the shares sought to be authorized and requires certain restrictions to be placed upon transfer of their said shares for varying periods of time; and

WHEREAS, Shareholder has purchase, or has agreed to purchase, from Company certain of its shares which will be subject to said restrictions, and the number of shares to be purchased and restricted is enumerated on an addendum attached hereto:

NOW, THEREFORE, the parties hereto agree as follows:

1. That, except as stated in Paragraph 2 hereof, Shareholder will not sell, transfer, or encumber any of the restricted shares without prior written consent of the Commissioner.

2. The exceptions referred to in Paragraph 1 above are as follows:

a. The following percentages to the nearest whole share of the restricted shares shall be released automatically from the restrictions set forth in this Agreement without further approval or consent by the Insurance Commissioner, or any other party, at the following respective times: 5% at the end of the first year of the 5-year restriction period; an additional 5% at the end of the second year; an additional 10% at the end of the third year; an additional 20% at the end of the fourth year; and the remainder at the end of the fifth year.

b. Any or all of the restricted shares may be transferred by Shareholder at any time by gift to the following described person or persons: Shareholder's spouse, child, or grandchildren; Shareholder or spouse's parent, brother, sister, or child of brother or sister. (It is understood that the singular includes the plural, and vice versa,in this Agreement.)

c. Any or all of the restricted shares may be transferred at any time by operation of law, pursuant to last will and testament of Shareholder, or pursuant to the laws of descent and distribution.

d. Any or all of the restricted shares may be transferred at any time with the prior written consent of the Commissioner, and Company hereby consents to such transfers. It is understood that among the reasons which may, but not necessarily will, cause the Commissioner to give such consent are the following:
(1) Significant change in the financial position or affairs of Shareholder, not within the control of Shareholder, that would otherwise result in hardship;

(2) Proposed pledging of any or all of the restricted shares as collateral for a loan to be made to shareholder;

(3) A transfer of any or all of the restricted shares by Shareholder to another Shareholder, some or all of whose shares are subject to the restrictions of this Agreement, or similar restrictions;

(4) The transfer of any or all of the restricted shares by Shareholder to a transferee having a sufficient financial sophistication and/or knowledge of the insurance industry and such insurance securities to satisfy the Commissioner that such transfer would be in the proper interest of Company, its policyholders and other shareholders. Any such transfer which would destroy or impair desirable leadership of the Company, or be conducive to internal dissension will be disfavored.

3. Any of the restricted shares which are transferred pursuant to the provisions of Paragraph 2 above, except shares automatically released from these (or similar) restrictions upon elapsation of the periods stated in subparagraph (a) of said Paragraph 2 above, and restricted shares transferred pursuant to last will and testament of Shareholder,or the laws of descent and distribution, shall continue to be subject to the provisions of this Agreement after such transfer, as if such transfer had not occurred.

4. Each certificate representing restricted shares shall bear the following legend until the shares represented by such certificate are released from the aforementioned restrictions: Not transferable except per Condition ____________________ of Insurance Commissioner's Permit No.__________, prior to ____________________."

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

ABC LIFE INSURANCE COMPANY

By_________________________

Officer

_________________________

Shareholder

Disclaimer: These regulations may not be the most recent version. California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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