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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10569
Experience:  30 years of corporate, litigation and international law
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My husband was let go of the company he works offered s

Customer Question

Hi! My husband was let go of the company he works for and offered his shares to the other shareholders (right of first refusal). Six months have gone by and we still have not reached an agreement. During this time they have barely had any contact with my husband. They do not answer our emails or phone calls, they takes ages to make the easiest and most insignificant changes to the contracts. They have come up with excuses from the get go. We want to be free of this company and these people but they are keeping us on the hook. What can we do? please help us
Submitted: 10 months ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 10 months ago.

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

What does the agreement say about how the price is determined of the shares to be repurchased? If the parties are to agree on a price and do not reach an agreement what does the agreement say about how the dispute is resolved? How long do they have to exercise the right of first refusal and did they exercise it?

Customer: replied 10 months ago.
Hi Richard. Thank you for your prompt answerWe are Dutch citizens and own an LLC in Texas. We are here on an L-1 visa (investment). Unfortunately, some of the things you mentioned are not mentioned in the contract as far as I am aware.We are 15% owners of an LCC in The Woodlands, Texas and also own 15% of the same company in The Netherlands. After three and a half years of being constantly bullied and oppressed by the other shareholders, my husband was fired in January by the majority shareholder without any explanation. We sent them an email a week after that offering our shares to the rest of the shareholders (right of first refusal). As mentioned, six months have gone by without being able to reach an agreement, they constantly come up with excuses for the delay. Also, they would never answer the phone when my husband called them. They took weeks to answer our emails. They finally gave us their offer last month which was less than half of what we were expecting and also demanded we sign a non-compete for the remaining of the year. We have been negotiating since but we can't seem to come to an agreement. They want all their conditions met and are not conceding in a single thing we are asking. Not one.In their offer they demand to have all the shares here in Texas and in the Netherlands at once but get SEVEN months to pay for them. Also as I have already mentioned, they want us to sign a non-compete until December 31st, 2016. As you can understand this is unacceptable for us as the amount they offer for our shares is way less than we should get (to answer your question no formal valuation was done). How do they except us to survive the rest of the year without being able to earn a living and also waiting seven months to receive full payment of our shares which is short of what we should get in the first place? As I said, we have tried to negotiate on this but they won't budge. We have considered selling our shares to a third party but in the operating agreement it is stipulated it has to be unanimously approved by the other shareholders. They have already expressed intentions of not approving that so we have hit a wall here. Isn't this blackmail? Please help us. We are desperate, what should we do? Is there something a judge here in Texas can do. I would highly appreciate any help you can provide
Customer: replied 10 months ago.
I need to add something else. They are ONLY offering money for the shares and in their offer they do not mention a compensation for a non-compete. Also, they demand my husband and his affiliates do not compete with the company and they mentioned even my parents, siblings, even our kids who are 4 an 6.
Customer: replied 10 months ago.
I just checked the contract and nowhere is mentioned how long they have to exercise their right of first refusal.
Expert:  Richard - Bizlaw replied 10 months ago.

There are some basic things you need to keep in mind. You are not obligated to sign a non compete at this time. You no longer work for the company and unless there is some other agreement in which you agreed to not compete, you are free to compete against them so long as you do not use any of their trade secrets. Second, I do not believe you have a right of first refusal. A right of first refusal usually comes into play if you offer your shares to a third party the other shareholders have a right to match the offer. It sounds like you are just trying to sell your shares to them. If my view is correct, you do not have to offer or agree to sell them any shares if your price is not satisfied. Also keep in mind that so long as you own your interest in the LLC you are entitled to your share of the profits. If people get distributions who are not salaried, you would be entitled to similar distributions on your interest.

If your agreement says they can refuse to allow you to sell your shares, then I again believe there is no right of first refusal.

The rules applicable to your rights on the shares in the Netherlands company would be governed by Nertherlands law. To be more precise on your rights under Texas law, I or some other lawyer would have to review your Operating agreement. Most of your rights are governed by the Operating Agreement but it does not sound like it is a well drafted document.

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