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FOR LORI ONLY The lawyer from my former company called as to…

FOR LORI ONLY The lawyer from...
FOR LORI ONLY
The lawyer from my former company called as a follow up to our call a week or so ago. I had told him that since the loan is secured by the stock and they are demanding payment, the stock should be valued at fair market value and not the discounted price in a unit redemption agreement initiated by the stock holder. His position is their demand for payment in the agreement doesn't require redemption of stock and therefore I should either pay the balance of the note out of pocket or redeem stock at the discounted price. That's not the way I read the agreement. I've scanned it in (~1.5 pages) and will send it to you.
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3/7/2018
Lori
Lori, Attorney
Category: Business Law
Satisfied Customers: 2,389
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Under the Note, the lender may exercise whatever rights and remedies allowed. (Page 2, para. 6 - last paragraph). That means that the lender can seek payment or redeem shares. It does not have to do one first. It can not redeem and just sue you for the debt on the note.

The note is absolutely silent as to the share rate that the lender and you agreed to for the redemptions of the shares. Note only states that you agree to "comply with any instructions provided by Lender, or by the issuer of the shares with respect to a transfer..."

That does not in any way stated that they can transfer or sell the shares at whatever share value they want. Since the agreement is silent as to share value, you are entitled to argue that fair market value is the reasonable value of the shares to be transferred back to the company.

You do not have to redeem the stock at the discounted price. Is there some other shareholder agreement that you signed with the company?

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Lori
Lori, Attorney
Category: Business Law
Satisfied Customers: 2,389
Experience: Business law attorney with over 25 years experience
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