Ohio Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncompetition Provisions

• Category: Contracts - Buy Sell - Stock Purchases
• State: Multi-State
• Control #: US-0546BG
• Format: Word; Rich Text

Description

The provisions of non-compete clauses are one of the key issues that shareholders should take into consideration at the drafting of a shareholders' agreement. Ohio Shareholders Buy Sell Agreement A Shareholders Buy Sell Agreement is a legally binding contract between the shareholders of a business that establishes the procedures to be followed if one or more shareholders wish to sell their stock in a closely held corporation. In Ohio, this agreement can also include noncom petition provisions to protect the business from competition from the selling shareholder(s) after the transaction. Key Terms and Provisions: 1. Sale of Stock: The agreement outlines the process for a shareholder to sell their stock. It includes the method for determining the value of the stock, such as through an independent appraisal or based on a predetermined formula. 2. Right of First Refusal: This provision gives existing shareholders the opportunity to purchase the stock before it is offered to third parties. If a shareholder intends to sell their stock, they must first give notice to the other shareholders, who then have the option to purchase the stock at the offered price. 3. Purchase Price and Payment Terms: The agreement specifies how the purchase price will be paid, whether in a lump sum or through installments. It may also include provisions for financing the purchase, such as through promissory notes or the use of business assets as collateral. 4. Noncom petition Provisions: Noncom petition provisions restrict the selling shareholder from engaging in similar business activities that could compete with the corporation. These provisions usually specify the geographic area and the duration of the restriction. Types of Ohio Shareholders Buy Sell Agreement with Noncom petition Provisions: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholders agree to purchase the stock of the selling shareholder. Each remaining shareholder becomes the purchaser of a proportionate share of the selling shareholder's stock. 2. Stock Redemption Agreement: This type of agreement allows the corporation itself to purchase the stock directly from the selling shareholders. The corporation utilizes funds from its own resources to finance the transaction. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and stock redemption agreements. The remaining shareholders and the corporation have the option to purchase the stock, depending on their respective capabilities. 4. Wait-and-See Agreement: This agreement delays the determination of who will purchase the stock until the event triggering the sale occurs. This type of agreement provides flexibility in adapting to changing circumstances. In conclusion, an Ohio Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncom petition Provisions is a comprehensive document that outlines the procedures and terms for the sale of stock between shareholders in a closely held corporation. The inclusion of noncom petition provisions helps protect the corporation from potential competition by the selling shareholder(s) after the transaction. Different types of agreements, such as cross-purchase, stock redemption, hybrid, and wait-and-see, provide flexibility and options for the parties involved.

Ohio Shareholders Buy Sell Agreement A Shareholders Buy Sell Agreement is a legally binding contract between the shareholders of a business that establishes the procedures to be followed if one or more shareholders wish to sell their stock in a closely held corporation. In Ohio, this agreement can also include noncom petition provisions to protect the business from competition from the selling shareholder(s) after the transaction. Key Terms and Provisions: 1. Sale of Stock: The agreement outlines the process for a shareholder to sell their stock. It includes the method for determining the value of the stock, such as through an independent appraisal or based on a predetermined formula. 2. Right of First Refusal: This provision gives existing shareholders the opportunity to purchase the stock before it is offered to third parties. If a shareholder intends to sell their stock, they must first give notice to the other shareholders, who then have the option to purchase the stock at the offered price. 3. Purchase Price and Payment Terms: The agreement specifies how the purchase price will be paid, whether in a lump sum or through installments. It may also include provisions for financing the purchase, such as through promissory notes or the use of business assets as collateral. 4. Noncom petition Provisions: Noncom petition provisions restrict the selling shareholder from engaging in similar business activities that could compete with the corporation. These provisions usually specify the geographic area and the duration of the restriction. Types of Ohio Shareholders Buy Sell Agreement with Noncom petition Provisions: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholders agree to purchase the stock of the selling shareholder. Each remaining shareholder becomes the purchaser of a proportionate share of the selling shareholder's stock. 2. Stock Redemption Agreement: This type of agreement allows the corporation itself to purchase the stock directly from the selling shareholders. The corporation utilizes funds from its own resources to finance the transaction. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and stock redemption agreements. The remaining shareholders and the corporation have the option to purchase the stock, depending on their respective capabilities. 4. Wait-and-See Agreement: This agreement delays the determination of who will purchase the stock until the event triggering the sale occurs. This type of agreement provides flexibility in adapting to changing circumstances. In conclusion, an Ohio Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncom petition Provisions is a comprehensive document that outlines the procedures and terms for the sale of stock between shareholders in a closely held corporation. The inclusion of noncom petition provisions helps protect the corporation from potential competition by the selling shareholder(s) after the transaction. Different types of agreements, such as cross-purchase, stock redemption, hybrid, and wait-and-see, provide flexibility and options for the parties involved.