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not require CamVic or the other shareholders to buy the shares if
tendered. If the value of the shares declined, below $11,333.30,
the rights to buy shares pursuant to the agreement would not be
exercised. Therefore, neither decedent nor his estate was protected
in the event of declining values. On the other hand, if the value
of real estate in general, and CamVic in particular, rose, neither
decedent nor his estate could sell the controlling interest in
CamVic for more than $11,333.30. The only beneficiaries of an
increase in the value of CamVic's stock were the natural objects of
decedent's bounty.
In addition to the fixed price per share, the generous payment
terms of the Buy-Sell Agreement and the Revised Agreement are a
further indication of their testamentary nature. Under the
agreements, payments could be made pursuant to the following terms:
A 10-percent cash downpayment and a promissory note to pay 10 annual
installments with the unpaid balance accruing interest at a 5-
percent annual rate. Petitioners' own expert witness stated that in
the first half of 1975 banks were not granting loans to borrowers
who had less than an AAA credit history, and the interest rate on
business loans in excess of $1 million during this period was 11.81
percent. He also stated that in 1981 the prime interest rate
exceeded 21 percent. Based on these figures, purchasers of CamVic
under the agreements enjoyed the benefit of an interest rate that
was less than one-half of the rate for 1975 and less than one-fourth
of the rate for 1981.
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