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II. True Family Buy-Sell Agreements
A. Origin and Purpose
The True-Brown partnership experience convinced Dave True
not to own businesses with outsiders. He therefore used buy-sell
provisions to restrict a related owner’s ability to sell outside
the True family. Such provisions were included in partnership
agreements, for True companies that were partnerships, and in
stockholders’ restrictive agreements, for those that were
corporations (collectively, buy-sell agreements).
The original Eighty-Eight Oil, True Oil, and True Drilling
partnership agreements, entered into by Dave and Jean True in the
mid-1950's, prohibited a partner from transferring or encumbering
his or her interest. In addition, they provided that if Jean
True were to die or become disabled, Dave True would be obligated
to purchase her interests at book value. Alternatively, the
partnership would terminate with Dave True’s death or disability.
These agreements served as prototypes for later buy-sell
agreements. Dave True incorporated the provisions restricting
transfers to outsiders and setting the transfer price at book
value into all subsequent versions of the True companies’
corporate and partnership buy-sell agreements (except for White
Stallion--see infra p. 48).
Dave True also felt strongly that owners should actively
participate in the family business to avoid any divergence of
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