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in the Modified 1981 Agreement was a fair market price value.
Accordingly, his conclusion that the Modified 1981 Agreement
established a price comparable to those of similar arrangements
entered into at arm’s length by people in similar businesses is
flawed.
While we do not doubt that a corporation’s redemption of a
shareholder’s stock that is subject to a restrictive agreement,
as here, might well occur at an arm’s-length price less than fair
market value, the failure of Mr. Grizzle’s proof leaves us only
to speculate as to what such a below-fair-market-value, yet
arm’s-length, price might be. Decedent set a price in the 1996
Agreement that he believed was the most BCC could pay without
impairing its liquidity. But this $4 million price was reached
between decedent and his controlled corporation, with the
remaining shareholder excluded. The best evidence we have on
this record of an arm’s-length arrangement involving the BCC
stock is the unmodified 1981 Agreement, which was negotiated
between decedent and his brother-in-law when both were 50-percent
shareholders and neither knew who would survive the other. The
redemption price set in that agreement was (i) book value or (ii)
whatever price these two shareholders, in relatively equal
bargaining positions, could annually agree upon. Given the
disparity in the prices dictated in the 1981 Agreement versus the
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