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enclosed with the letter was Haff’s signed statement declaring
that the facts mentioned in the letter were true.
Rubin spoke with Haff regarding the accumulation of earnings
during the subject years. Rubin advised Haff in 1989 that
petitioner should not pay a dividend but should accumulate its
funds possibly to redeem the disputed shares in the event that
the plaintiffs prevailed in the family lawsuit. Petitioner’s
articles of incorporation provide with respect to the sale of
petitioner’s stock that
Any stockholder, including the heirs, assigns,
executors or administrators of a deceased stockholder,
desiring to sell such stock owned by him or them, shall
first offer it to the corporation through the board of
directors in the manner following:
He shall notify the directors of his desire to
sell by notice in writing which notice shall contain
the price at which he is willing to sell and the name
of one arbitrator. The directors shall within thirty
days thereafter either accept the offer, or by notice
to him in writing name a second arbitrator, and those
two shall name a third. It shall then be the duty of
the arbitrators to ascertain the fair market value of
the stock and if any arbitrator shall neglect or refuse
to appear at any meeting appointed by the arbitrators,
a majority may act in the absence of such arbitrator.
After the acceptance of the offer, or the report
of the arbitrators of the value of the stock, the
directors shall have thirty days within which to
purchase the same at such valuation, but if after the
expiration of thirty days, the owner of the stock shall
be at liberty to dispense of the same as he sees fit.
No shares of stock shall be sold or transferred on
the books of the corporation until these provisions
have been complied with.
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