A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights. This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
A New Jersey Shareholders' Agreement is a legally binding contract between the shareholders of a corporation that outlines the rights and obligations of each party involved. It serves as a means of protecting the interests of shareholders and maintaining the smooth functioning of the corporation. One type of New Jersey Shareholders' Agreement which incorporates a Buy-Sell Agreement allowing the corporation the First Right of Refusal to purchase the shares of a deceased shareholder, should the beneficiaries of the deceased shareholder desire to sell such shares, is commonly known as the "Death Buyout Agreement." This agreement ensures that when a shareholder passes away, the corporation has the opportunity to repurchase the shares before they are sold to third parties. The purpose of this agreement is to maintain control and ownership of the corporation within the existing shareholders. By granting the corporation the first option to repurchase the shares, it prevents the introduction of unfamiliar shareholders who may disrupt the corporation's operations. The Death Buyout Agreement typically includes specific provisions that outline the process and terms of repurchasing the shares. It may include provisions such as: 1. First Right of Refusal: This provision states that the corporation has the right to purchase the deceased shareholder's shares before they can be sold to any third party. 2. Purchase Price: The agreement will determine the purchase price of the shares, which could be based on a predetermined formula or determined through an independent valuation. 3. Payment Terms: The agreement may specify the payment terms, such as lump sum payment or installment payments over a designated period. 4. Beneficiaries' Obligations: The agreement may require the beneficiaries of the deceased shareholder to provide the corporation with certain information or documentation before proceeding with the sale of shares. 5. Timeframe for Purchase: The agreement may include a timeframe within which the corporation must exercise its right of first refusal to purchase the shares. It is important for all shareholders to understand and agree to the terms outlined in the Shareholders' Agreement, including the Buy-Sell Agreement. This type of agreement can help prevent disputes and ensure a smooth transition of ownership in the event of a shareholder's death. Other types of Shareholders' Agreements may exist based on the specific needs and circumstances of the corporation. Some additional types include: 1. Shareholders' Agreement with a Right of First Offer: This agreement grants the corporation the right to make the first offer to purchase shares before they are offered to other shareholders or third parties. 2. Shareholders' Agreement with a Right of First Refusal: This agreement grants the corporation the right to purchase shares if any shareholder intends to sell them, before those shares are offered to other shareholders or third parties. 3. Shareholders' Agreement with a Drag-Along Provision: This agreement allows a majority shareholder to force minority shareholders to sell their shares if a certain percentage of shareholders agree to sell to a third party. In conclusion, a New Jersey Shareholders' Agreement with a Buy-Sell Agreement allowing the corporation the First Right of Refusal to purchase the shares of a deceased shareholder provides security and control over the ownership and direction of the corporation. Understanding the specific terms and provisions of such agreements is crucial for all involved parties to ensure the smooth functioning and preservation of the corporation's value.
