Denkins v. Zinkan Enterprises

1997 Ohio.App. Lexis 4742 (1997)

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Nature of the Case

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Facts

P and D signed a subscription agreement whereby P agreed to purchase 147 shares of D's common stock for $200,000. They made a collateral oral agreement that the price of the stock would be payable in two installments: $150,000 during September 1991 and $50,000 during January 1992. On September 17, 1991, they signed a share transfer restriction, option, and pre-emptive rights agreement, whereby P would be able to exercise a 'put' option between September 17, 1994, and September 16, 1995, to sell his shares back to D for either $1500 per share or 2.5 times the book value of the stock, whichever was greater. The parties also agreed that P would provide consulting services to D for $25,000 per year plus expenses. P made a payment of $150,000 towards the price of the stock. P did not make the remaining $50,000 payment. P and D agreed to modify the price of the stock to the $150,000 P had already paid, and the certificates for the 147 shares were delivered to P. On May 8, 1995, P sought to exercise his put option, but D failed to repurchase the stock. P sued for breach of contract. P sought $343,340.55 plus interest. P asserted that D's equity at the time he sought to exercise his option was $685,745, as shown on a corporate balance sheet provided by D to Star Bank on April 30, 1995. That balance sheet had been required by the bank in connection with credit arrangements between D and it. The trial court found that P had failed to establish that the $685,745 equity figure shown on the balance sheet represented D's book value. The trial court awarded P the $1500/share for a total award of $ 220,500. P appealed.