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“Shareholders Agreement” (the 1981 Agreement).1 At the time,
decedent and Mr. Jennings each owned one-half of BCC’s
outstanding stock. The 1981 Agreement contained restrictions on
transfers of BCC stock both during the shareholders’ lifetimes
and at death. The preamble provided that subsequent shareholders
would “benefit from and be bound by” the agreement. With respect
to lifetime transfers, a section entitled “Restrictions on
Transfer of Capital Stock During Life” provided: “No Shareholder
shall transfer or encumber any of his Capital Stock in the
Company to any person, firm, or corporation without the written
consent of the other Shareholders.” “Shareholders” were defined
in the 1981 Agreement’s first paragraph as decedent and Mr.
Jennings, a definition that excluded subsequent shareholders.
However, section 3(a) of the 1981 Agreement, entitled “Other
Shareholders to be Bound”, also denoted as “shareholders” persons
other than Mr. Jennings or decedent who received shares directly
from BCC or as transferees from other shareholders. The section
further provided that the shares of such other shareholders would
1 Decedent, Mr. Jennings, and BCC had previously entered
into a restrictive agreement in 1958 covering their BCC stock.
The 1981 Agreement expressly provided that it superseded any
earlier agreements.
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Last modified: May 25, 2011