Rhode Island 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. Rhode Island Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncom petition Provisions is a legal document that outlines the terms and conditions concerning the buying and selling of stock shares in a privately held corporation in Rhode Island, including provisions for noncom petition. This agreement is essential for protecting the interests of shareholders and maintaining the stability of the close corporation. A Rhode Island Shareholders Buy Sell Agreement typically includes the following key provisions: 1. Shareholders' Rights and Obligations: The agreement highlights the rights and obligations of shareholders in the close corporation, including their authority to buy or sell shares under specified circumstances. 2. Triggering Events: The agreement defines the events that may trigger a buy-sell situation, such as the death, disability, retirement, or voluntary exit of a shareholder. These events determine when a shareholder can sell their shares or when the remaining shareholders can purchase them. 3. Purchase Price and Valuation: The agreement establishes a mechanism for determining the purchase price of the shares. It may include provisions for using a predetermined formula, obtaining independent appraisals, or utilizing the corporation's financial statements. 4. Payment Terms: This section specifies the payment terms for buying or selling shares, including the timeline for completing the transaction and the permissible methods of payment. 5. Noncom petition Provisions: Rhode Island Shareholders Buy Sell Agreement may also incorporate noncom petition clauses, restricting selling shareholders from engaging in similar business activities that compete with the close corporation for a specified period of time. 6. Restrictions on Transfers: The agreement may include provisions that govern the transfer of shares outside the corporation, ensuring that existing shareholders have the first right of refusal before shares can be sold to outside parties. Types of Rhode Island Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncom petition Provisions: 1. Cross-Purchase Agreement: This type of agreement enables the remaining shareholders to purchase the departing shareholder's shares individually. 2. Redemption Agreement: The corporation itself redeems the shares from the departing shareholder, ensuring the continuity of ownership within the business. 3. Hybrid Agreement: In some cases, a combination of cross-purchase and redemption agreements may be utilized, depending on the triggering event and specifics of the close corporation. It is crucial to consult with a qualified attorney in Rhode Island when drafting or reviewing a Shareholders Buy Sell Agreement to ensure compliance with state laws and to tailor the agreement to the specific needs and circumstances of the close corporation.

Rhode Island Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncom petition Provisions is a legal document that outlines the terms and conditions concerning the buying and selling of stock shares in a privately held corporation in Rhode Island, including provisions for noncom petition. This agreement is essential for protecting the interests of shareholders and maintaining the stability of the close corporation. A Rhode Island Shareholders Buy Sell Agreement typically includes the following key provisions: 1. Shareholders' Rights and Obligations: The agreement highlights the rights and obligations of shareholders in the close corporation, including their authority to buy or sell shares under specified circumstances. 2. Triggering Events: The agreement defines the events that may trigger a buy-sell situation, such as the death, disability, retirement, or voluntary exit of a shareholder. These events determine when a shareholder can sell their shares or when the remaining shareholders can purchase them. 3. Purchase Price and Valuation: The agreement establishes a mechanism for determining the purchase price of the shares. It may include provisions for using a predetermined formula, obtaining independent appraisals, or utilizing the corporation's financial statements. 4. Payment Terms: This section specifies the payment terms for buying or selling shares, including the timeline for completing the transaction and the permissible methods of payment. 5. Noncom petition Provisions: Rhode Island Shareholders Buy Sell Agreement may also incorporate noncom petition clauses, restricting selling shareholders from engaging in similar business activities that compete with the close corporation for a specified period of time. 6. Restrictions on Transfers: The agreement may include provisions that govern the transfer of shares outside the corporation, ensuring that existing shareholders have the first right of refusal before shares can be sold to outside parties. Types of Rhode Island Shareholders Buy Sell Agreement of Stock in a Close Corporation with Noncom petition Provisions: 1. Cross-Purchase Agreement: This type of agreement enables the remaining shareholders to purchase the departing shareholder's shares individually. 2. Redemption Agreement: The corporation itself redeems the shares from the departing shareholder, ensuring the continuity of ownership within the business. 3. Hybrid Agreement: In some cases, a combination of cross-purchase and redemption agreements may be utilized, depending on the triggering event and specifics of the close corporation. It is crucial to consult with a qualified attorney in Rhode Island when drafting or reviewing a Shareholders Buy Sell Agreement to ensure compliance with state laws and to tailor the agreement to the specific needs and circumstances of the close corporation.