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in the limited circumstances identified in that agreement.
Principally, if any of the three shareholders had died, that
shareholder’s heirs or that shareholder’s estate would have had a
put to the corporation for the formula price under the
agreement.29 It is not at all clear whether the formula in the
agreement applies to voluntary sales among shareholders.
Respondent relies upon the phrase “in all other circumstances”
which appears in the formula, and he contends that the formula
clause applies to voluntary sales among shareholders as well as
other sales and purchases. The formula covers only shares that
are “sold and purchased pursuant to this Agreement”. The
agreement by its terms applies only to offers to sell arising
from a shareholder’s intent to transfer or encumber shares,
deemed offers to sell in the case of bankruptcy or insolvency of
a shareholder, and mandatory offers to sell coincident to the
termination of a shareholder’s employment by HII.30
In these circumstances, we cannot agree that the
stockholders agreement is determinative of the fair market value
of HII stock. We consider the value that Mr. Engstrom determined
29Respondent agrees the formula provision was binding only
in certain circumstances not involved in this case.
30Mr. Kucklick referred to pricing formulas in negotiating
for a higher price as part of the redemption transaction;
however, the final purchase price was not determined on the basis
of the pricing formula in the stockholders agreement.
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