Guam Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• Control #: US-02553BG
• 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. Guam Buy-Sell Agreement between Two Shareholders of Closely Held Corporation is a legally binding contract that outlines the terms and conditions regarding the transfer of shares in a closely held corporation located in Guam. This agreement is crucial for the smooth functioning of the corporation and serves to protect the interests of the shareholders involved. In Guam, there are different types of Buy-Sell Agreements that can be established between two shareholders of a closely held corporation. Some commonly used types are: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to purchase the shares of the other shareholder in the event of certain triggering events, such as death, disability, retirement, or desire to exit the corporation. This type allows the remaining shareholder(s) to have direct ownership of the shares and maintain control of the corporation. 2. Redemption Agreement: In a redemption agreement, the closely held corporation agrees to repurchase the shares of a departing shareholder. The corporation can fund this repurchase through various means, such as using cash reserves, securing a loan, or making periodic payments. This type of agreement enables the corporation itself to retain control over the shares. 3. Hybrid Agreement: This type of agreement combines elements of both cross-purchase and redemption agreements. It allows the remaining shareholders and the corporation to have the option to purchase the shares of the departing shareholder. The choice of who will purchase the shares is determined based on predetermined factors, such as financial ability or tax considerations. Regardless of the specific type chosen, a Guam Buy-Sell Agreement typically includes various key provisions, such as: 1. Triggers: Clearly defining the events that will trigger the buyout, such as the death, disability, retirement, or desire to sell by one of the shareholders. 2. Valuation: Establishing a method for valuing the shares to determine the purchase price, such as using a formula, an independent appraiser, or a predetermined price. 3. Funding: Determining how the buyout will be funded, whether through personal funds, insurance policies, or corporate resources. 4. Terms and Conditions: Outlining the terms and conditions of the buyout, including payment schedules, payment methods, restrictions on transfers, and non-compete agreements. 5. Dispute Resolution: Including provisions for resolving disputes that may arise during the execution of the buyout agreement, such as mediation or arbitration. In conclusion, a Guam Buy-Sell Agreement between Two Shareholders of Closely Held Corporation is a critical legal document that safeguards the interests of shareholders in a closely held corporation located in Guam. Whether it is a Cross-Purchase Agreement, Redemption Agreement, or a Hybrid Agreement, the specific type chosen should align with the shareholders' goals and the corporation's requirements.

Guam Buy-Sell Agreement between Two Shareholders of Closely Held Corporation is a legally binding contract that outlines the terms and conditions regarding the transfer of shares in a closely held corporation located in Guam. This agreement is crucial for the smooth functioning of the corporation and serves to protect the interests of the shareholders involved. In Guam, there are different types of Buy-Sell Agreements that can be established between two shareholders of a closely held corporation. Some commonly used types are: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder agrees to purchase the shares of the other shareholder in the event of certain triggering events, such as death, disability, retirement, or desire to exit the corporation. This type allows the remaining shareholder(s) to have direct ownership of the shares and maintain control of the corporation. 2. Redemption Agreement: In a redemption agreement, the closely held corporation agrees to repurchase the shares of a departing shareholder. The corporation can fund this repurchase through various means, such as using cash reserves, securing a loan, or making periodic payments. This type of agreement enables the corporation itself to retain control over the shares. 3. Hybrid Agreement: This type of agreement combines elements of both cross-purchase and redemption agreements. It allows the remaining shareholders and the corporation to have the option to purchase the shares of the departing shareholder. The choice of who will purchase the shares is determined based on predetermined factors, such as financial ability or tax considerations. Regardless of the specific type chosen, a Guam Buy-Sell Agreement typically includes various key provisions, such as: 1. Triggers: Clearly defining the events that will trigger the buyout, such as the death, disability, retirement, or desire to sell by one of the shareholders. 2. Valuation: Establishing a method for valuing the shares to determine the purchase price, such as using a formula, an independent appraiser, or a predetermined price. 3. Funding: Determining how the buyout will be funded, whether through personal funds, insurance policies, or corporate resources. 4. Terms and Conditions: Outlining the terms and conditions of the buyout, including payment schedules, payment methods, restrictions on transfers, and non-compete agreements. 5. Dispute Resolution: Including provisions for resolving disputes that may arise during the execution of the buyout agreement, such as mediation or arbitration. In conclusion, a Guam Buy-Sell Agreement between Two Shareholders of Closely Held Corporation is a critical legal document that safeguards the interests of shareholders in a closely held corporation located in Guam. Whether it is a Cross-Purchase Agreement, Redemption Agreement, or a Hybrid Agreement, the specific type chosen should align with the shareholders' goals and the corporation's requirements.