A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights.
A New Hampshire Buy-Sell Agreement is a legal contract between two shareholders of a closely held corporation in the state of New Hampshire. This agreement outlines the terms and conditions under which one shareholder can buy or sell their shares to the other shareholder. In New Hampshire, there are different types of Buy-Sell Agreements that shareholders of a closely held corporation can choose from, depending on their specific needs and objectives. Some of these agreements include: 1. Cross-Purchase Agreement: This type of agreement allows one shareholder to buy the shares of another shareholder in the event of certain triggering events, such as death, disability, or retirement. The remaining shareholder(s) will purchase the shares directly from the departing shareholder. 2. Redemption Agreement: In a redemption agreement, the corporation itself buys back the shares of a departing shareholder. This type of agreement can be funded through life insurance policies or corporate assets. 3. Hybrid Agreement: A hybrid buy-sell agreement combines elements of both the cross-purchase and redemption agreements. It allows both the shareholders and the corporation to have the option to buy back the shares of a departing shareholder. Regardless of the type of agreement chosen, a New Hampshire Buy-Sell Agreement typically addresses various key aspects, including: — Purchase/sale price: The agreement should specify how the shares' value will be calculated, such as through an independent appraisal or a predetermined formula. — Triggering events: The agreement should outline the events that will trigger the buy-sell provisions, such as death, disability, retirement, or voluntary exit from the corporation. — Funding mechanisms: The agreement should detail how the purchase/sale will be financed, whether through the shareholder's personal funds, corporate funds, or insurance policies. — Restrictions on transfer: The agreement often includes provisions that restrict shareholders' ability to transfer their shares without first offering them to the other shareholder(s) or the corporation. — Dispute resolution: The agreement should establish a mechanism for resolving any disputes that may arise, such as through arbitration or mediation. A carefully drafted New Hampshire Buy-Sell Agreement is crucial for closely held corporations as it ensures the smooth transfer of ownership and provides a clear framework for addressing potential conflicts. Seeking legal advice from a qualified attorney experienced in corporate law is recommended to ensure that the agreement meets all legal requirements and adequately protects the shareholders' interests.
