Legal Question in Business Law in California

Yes ...

Yes. You can do this legally, and we can help.

1) We'd have to look at the original Stockholders

Agreement to see what language is in there in terms of amending the agreement and/or terminating it.

2) We could do a stock purchase agreement between the Company and the friend whereby the friend agrees to give exchange his shares for guaranteed retirement (terms, length, amount, taxes would need to be covered)and 5% equity ownership in the company (after 10 years who does it go to? Sell back to the Company? One of the two remaining shareholders or split equally?).

3) The Corporation could then issue the shares to you in exchange for past services rendered or some other consideration (there may be a tax hit for the value of the shares). I'd have your father (who I assume is a board member) sign off on everything ahead of time. You may want to execute a side letter whereby your father agrees to this arrangement or have all the documents executed at the same time so that your father then doesn't have you over a barrel (won't sign off on the share issuance from the Company to the son).

4) Finally, enter into a new Stockholder Agreement between you and your father.

5) There may be filings with the state required

depending on what state you are incorporated in (CA ... I assume).

Please contact me at 310.575.9942 or via email at [email protected]. Thank you.

Re: changing a corporate agreement

You can create a Shareholder Agreement, you can make all sorts of agreements including the first right of refusal to buy shares when someone retires, etc. Hope this helps as there are lots of things that can be done, depending on what others in the Inc. want to do. Regards, Paul

Re: changing a corporate agreement

No. I don't think its too good to be true. You are all shareholders and you can enter into agreements to sell/buy shares. The retirement part of the transaction could have some tax implications, but only if you are giving him more for it than the value of his shares. If you have further questions, e-mail me at [email protected].

Re: changing a corporate agreement

It can probably be done. If you are in Northern California, send me an email and I can give you more information.

Re: changing a corporate agreement

this raises soooooo many reaistic questions than simple answerers. i sounds like it could work as long as the business is successful and if it doesn't what then --- call me if you wish as i have helped folks for over 30 years in business -- 925-945-600

Re: changing a corporate agreement

You can achieve your objectives, and I don't think there is too much complexity. However, it is not quite as simple as a new agreement. First of all, you will be transferring securities so you need to make sure that the securities you receive haven't already been transferred to someone else. Securities transfer also involves regulatory requirements, both state and federal. Whenever someone sells appreciated property, including stock, they need to take into account tax issues as well. Less your concern than that of the seller. There are ways to structure this to minimize your partners tax burden. Finally, you will need a shareholder agreement. I would be happy to help you on this. If you are interested, please feel free to contact me.

Re: changing a corporate agreement

Essentially, what you would be doing is buying your friends shares and paying him that amount over a period of years. The corporation would buy back the shares and they would be redistributed to you and your father. Then, the corporation would pay your friend monthly per the agreement for his/her retirement. Relatively straitforward. We would be happy to help. Good luck and thanks for inquiring.