ESOPs and buy-sell agreements

[Guest JKemp]

Is it permissible for an ESOP to be a party to a buy-sell agreement where the ESOP agrees to purchase stock from a majority shareholder for fair and adequate consideration upon the death of the majority shareholder?

[RLL]

Hi JKemp ---

Are you the former Bills quarterback and running mate of Bob Dole?

An ESOP can be a party to certain types of buy-sell agreements, but it cannot be bound by such an agreement to purchase employer stock at some indefinite time in the future....such as upon the death of a majority shareholder (when it may not be appropriate for the ESOP to make such a purchase).