Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 34

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          v. Commissioner, 148 F.2d 285 (9th Cir. 1945); sec. 20.2031-2(h),           
          Estate Tax Regs.                                                            
               The 1981 Agreement provided that no “Shareholder” could                
          transfer his BCC shares without the written consent of the other            
          “Shareholders.”18  Because the 1996 Agreement was not a novation            
          but merely a modification of the 1981 Agreement, the latter’s               
          provision requiring “Shareholders” to consent to any lifetime               
          transfer of BCC shares survived.  The estate argues that the                
          Modified 1981 Agreement was binding during decedent’s life                  
          because any lifetime transfer of decedent’s BCC shares required             
          the consent of other shareholders; namely, the ESOP.  Respondent            
          argues that the requirement of shareholder consent was not                  
          sufficient to satisfy the binding-during-life requirement, and,             
          in any event, the ESOP’s consent was not a meaningful restriction           

               18 The 1981 Agreement also set forth an endorsement that was           
          required to be placed on BCC’s stock certificates.  The                     
          endorsement cross-referenced the 1981 Agreement’s requirement of            
          shareholder consent to transfers of stock, and, in addition,                
          provided that shares must first be offered for sale to BCC and              
          other shareholders before being offered or sold to third parties.           
               There is no evidence in the record that this endorsement was           
          actually placed on any BCC stock certificate; the only                      
          certificates in the record do not contain it, and the parties               
          have not addressed it.  In any event, since the mandated                    
          endorsement cross-referenced the requirement of shareholder                 
          consent to transfers, we conclude that the endorsement’s                    
          additional reference to a right of first refusal in no way                  
          derogates the requirement of shareholder consent.                           

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