Attorneys

Highlights

  • Over a five-month period, Cummins & White, LLP, successfully represented a founding shareholder in a complex business transaction involving stocks, real estate, and severance pay, among several key items.
  • The firm worked diligently to make certain that the Client, who was severing his ties to the business and selling his shares to the Employee Stock Ownership Trust and the other shareholder, received the greatest price and terms for the valuation of his shares and payment of the note, as well as continuation of salary and benefits. Approximately 2,000 shares—valued at more than $3.3 million pursuant to the note—were sold to the ESOT.
  • Cummins & White successfully negotiated a buyout with two founding shareholders who did not have a partnership or a shareholder’s agreement and no written plan for dissolution of the partnership.

Case Study

The client’s founding shareholder was leaving Company A and selling his shares to the Employee Stock Ownership Trust (ESOT) and the other shareholder. At the same time, the client also was buying out the other shareholder’s interest in the commercial building leased by Company A, as well as gifting his interest in a second company (Company B) to a charity as part of an integrated tax plan.

As part of the transaction, Company A needed to obtain a bank loan in order to repay a shareholder loan, as well as acquire a life insurance policy with proceeds sufficient to pay off the note between the client and the Employee Stock Ownership Trust for the purchase of his shares totaling more than $3.3 million.

Legal Strategy

Fred Whitaker of Cummins & White, LLP, handled all aspects of the transaction for the client, ensuring that everything closed as planned.

As part of the multifaceted and detailed transaction, the attorneys actively participated in complex negotiations, first for the Letter of Intent (the cornerstone of the transaction), and then in discussion and execution of 15 additional documents including:

  • Stock Purchase & Sale Agreement; Stock Pledge Agreement, and Stock Assignments
  • Resignation of the client as a trustee of the ESOT, board member of Company A, and board member of Company B
  • Promissory Note
  • Purchase & Sale Agreement
  • Commercial Lease
  • Continuing Compensation Agreement & General Release (between the client, client’s wife, Company A, Company B, ESOT, and other shareholder)

Result/Implication

Over a five-month period, Mr. Whitaker and his team successfully assisted their client in a complex business transaction involving stock, real estate, and continuation pay, among several key items.

The attorneys worked diligently to make certain their client received the greatest price and terms for the valuation of his shares, payment of the note as well as a continuation of salary and benefits.

Approximately 2,000 shares of Company A—valued at more than $3.3 million pursuant to the note—were sold to the ESOT. The attorneys also worked to obtain the best terms for the lease of the commercial building. As negotiated, the client transferred more than 400 shares of Company A to the other shareholder—an equivalent of $700,000—in exchange for the shareholder’s interest in the building. The client then leased the building back to Company A.

The attorneys also successfully worked to negotiate the following for the client:

  • Company A repaid the client’s shareholder loan of almost $550,000.
  • Company A removed the client as guarantor for any of Company A’s loans.
  • The client then gifted his interest in a separate company worth $150,000, to a foundation in exchange for a charitable tax deduction.
  • Company A paid the client $250,000 in continued salary, including continued employment for the client’s spouse for one year.