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interests between active and passive owners. He had witnessed
the conflicts that arose in other families when active owners
wanted to retain profits and grow the business, while passive
owners sought to distribute and consume profits. Accordingly, in
1973, after all the True children (or their spouses) were working
full time in the business, Dave True incorporated an active
participation requirement into the True family buy-sell
agreements. In general, the active participation requirement
provided that if an owner (or owner’s spouse) ceased to devote
all or substantial time to the business, he or she would be
deemed to have withdrawn from the business, absent unanimous
agreement to the contrary by the active owners.
Dave True’s philosophy was further memorialized in the
August 1988 “Policy for the Perpetuation of the Family Business”
(policy), which was executed by the then-active participants and
spouses. The policy articulated and adopted Dave True’s goal “to
perpetuate the family business by providing for ownership
succession through family members who qualify as active
participants”. The policy defined “active participants” as
follows:
Active participants are those family member-owners who
actively participate in the decision-making process for
family business decisions and policies or who work full
time in the businesses. The goal in designating active
participants is to avoid fragmentation of the family
business in future generations and to meld it into a
rational business organization. A family member who
limits their involvement principally to disbursing
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