Clint Wade owns 70 percent of the stock of Knock-Down Inc., a demolition and gra

Question

Clint Wade owns 70 percent of the stock of Knock-Down Inc., a demolition and gravel supply company. The remaining 30 percent of the stock is owned in equal shares by three of the key managers of the business.   The minority owners recently had their attorney draw up a “standard” buy-sell agreement to protect them in case one of them dies, retires, or wants out of the business. The agreement gives all the shareholders equal rights in the event of a triggering event. You represent Wade. How would you advise him?

Explanation / Answer

I WADE HOLDER OF 70% STOCK WOULD AVICE, IN CASE OF ANY MINORITY SHAREHOLDER DIES, RETIRES OR WANTS OUT OF THE BUSINESS, THEN THE OUTGOING SHAREHOLDER STOCK SHOULD BE DIVIDED AMONG ALL THE REAMINING SHAREHOLDERS IN THE RATIO OF THEIR HOLDINGS, IE (7:9, 1:9, 1:9), AND THE AGREEMENT BETWEEN THEM ALSO CONTAINS THE SAME CLAUSE.

IN GENERAL PURPOSES IN CASE ANY SHAREHOLDER DIES, RETIRES OR GOES OUT OF THE BUSINESS ITS SHARES GOES TO ITS LEGAL HIER BUT AS AGREEMENT ALREADY BEEN MADE BETWEEN SHAREHOLDER IN THE GIVEN CAE, SO STOCK MUST BE DIVIDED AMONG REMAINING SHAREHOLDER IN THEIR SHARE HOLDING RATIOS ONLY.

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