A buy-sell agreement should consider means by which a business and the remaining owners are protected against the perfidy or talent of a former employee-owner. Part of this consideration should be the acknowledgement that any former employee-owner is entitled to earn a livelihood with the skills and experience possessed by that person. These concerns are dealt with by the terms of noncompetition, nonsolicitation, and confidentiality clauses.
Chapter 19 of Business Succession Planning deals with the issues concerning these clauses. Many states have enacted legislation governing noncompete agreements. Often these clauses are sought to be enforced by injunction. Frequently there are provisions for damages as well. Court cases often evolve, rightly or wrongly, about the reason for employment termination and the nature of the trigger compelling sale of ownership in the buy-sell agreement.
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