New Mexico Shareholders' Agreement with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder should the Beneficiaries of the Deceased Shareholder Desire to Sell such Shares

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-02629BG
• Format: Word; Rich Text

Description

A corporation whose shares are held by a single shareholder or a closely-knit group of shareholders (such as a family) is known as a close corporation. The shares of stock are not traded publicly. Many of these types of corporations are small firms that in the past would have been operated as a sole proprietorship or partnership, but have been incorporated in order to obtain the advantages of limited liability or a tax benefit or both. 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 Mexico Shareholders' Agreement with 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 wish to sell such shares, is a legal document that outlines the terms and conditions for the transfer of shares in a New Mexico corporation upon the death of a shareholder. This agreement is designed to protect the interests of the corporation and its existing shareholders by giving the corporation the opportunity to purchase the shares before they are sold to outside parties. By including a first right of refusal clause, the agreement ensures that the corporation has the option to acquire the shares at a fair price, maintaining stability in the ownership structure and preventing potential conflicts with new shareholders. The key provisions of this agreement may include: 1. First Right of Refusal: This clause outlines that if the beneficiaries of the deceased shareholder wish to sell the shares, they must first offer them to the corporation. The corporation has the option to accept or decline the offer within a specified time frame. 2. Purchase Price: The agreement should establish a fair method for determining the purchase price, which could be based on a valuation formula or through an independent appraisal. The price should reflect the fair market value of the shares at the time of the shareholder's death. 3. Payment Terms: The agreement should specify how the purchase price will be paid by the corporation. It may include options such as a lump-sum payment or installment payments over a certain period. 4. Share Transfer Process: The agreement should outline the necessary steps and procedures involved in transferring the shares, including the execution of transfer documents and any required approvals from regulatory bodies or other shareholders. 5. Dispute Resolution: It is important to include a provision for resolving any disputes that may arise between the parties involved in the agreement. This could include mediation or arbitration clauses to resolve conflicts before resorting to litigation. Types of New Mexico Shareholders' Agreements with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of a Deceased Shareholder: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholders in the corporation have the right or obligation to purchase the shares of the deceased shareholder. Each shareholder is responsible for purchasing a proportionate share based on their ownership percentage. 2. Redemption Agreement: Under this agreement, the corporation itself has the right or obligation to buy back the shares from the deceased shareholder's beneficiaries. The corporation uses its funds to repurchase the shares. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and redemption agreements. The remaining shareholders and the corporation have the option to purchase the shares, depending on the circumstances. In conclusion, a New Mexico Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder is a crucial legal document that provides a framework for the orderly transfer of shares in a New Mexico corporation upon the death of a shareholder. It ensures the corporation has the opportunity to acquire the shares if desired and helps maintain stability within the ownership structure. Different types of agreements include cross-purchase, redemption, and hybrid agreements, each with its own variations in terms and conditions.

A New Mexico Shareholders' Agreement with 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 wish to sell such shares, is a legal document that outlines the terms and conditions for the transfer of shares in a New Mexico corporation upon the death of a shareholder. This agreement is designed to protect the interests of the corporation and its existing shareholders by giving the corporation the opportunity to purchase the shares before they are sold to outside parties. By including a first right of refusal clause, the agreement ensures that the corporation has the option to acquire the shares at a fair price, maintaining stability in the ownership structure and preventing potential conflicts with new shareholders. The key provisions of this agreement may include: 1. First Right of Refusal: This clause outlines that if the beneficiaries of the deceased shareholder wish to sell the shares, they must first offer them to the corporation. The corporation has the option to accept or decline the offer within a specified time frame. 2. Purchase Price: The agreement should establish a fair method for determining the purchase price, which could be based on a valuation formula or through an independent appraisal. The price should reflect the fair market value of the shares at the time of the shareholder's death. 3. Payment Terms: The agreement should specify how the purchase price will be paid by the corporation. It may include options such as a lump-sum payment or installment payments over a certain period. 4. Share Transfer Process: The agreement should outline the necessary steps and procedures involved in transferring the shares, including the execution of transfer documents and any required approvals from regulatory bodies or other shareholders. 5. Dispute Resolution: It is important to include a provision for resolving any disputes that may arise between the parties involved in the agreement. This could include mediation or arbitration clauses to resolve conflicts before resorting to litigation. Types of New Mexico Shareholders' Agreements with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of a Deceased Shareholder: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholders in the corporation have the right or obligation to purchase the shares of the deceased shareholder. Each shareholder is responsible for purchasing a proportionate share based on their ownership percentage. 2. Redemption Agreement: Under this agreement, the corporation itself has the right or obligation to buy back the shares from the deceased shareholder's beneficiaries. The corporation uses its funds to repurchase the shares. 3. Hybrid Agreement: This type of agreement combines elements of both the cross-purchase and redemption agreements. The remaining shareholders and the corporation have the option to purchase the shares, depending on the circumstances. In conclusion, a New Mexico Shareholders' Agreement with a Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder is a crucial legal document that provides a framework for the orderly transfer of shares in a New Mexico corporation upon the death of a shareholder. It ensures the corporation has the opportunity to acquire the shares if desired and helps maintain stability within the ownership structure. Different types of agreements include cross-purchase, redemption, and hybrid agreements, each with its own variations in terms and conditions.