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Small Corporation Assed Sale
Two of us started a corporation which is 50/50 with shares issued and stock certificates. One (A) agreed to put up angel financing for this business till we raised real money. The other (B) had the original idea, planned on doing and did most of the work and had approached A for financing.
Years went by with B doing a lot of work and A putting up a lot more than he expected to and over a lot longer than expected. A now claims he invested $3.5 million. B thinks it is more like $1.5 million but that is not the problem. B is perfectly willing to live with the $3.5 million figure in the current issue.
One thing that A asked for and B agreed to was that when real financing was found A would get all his money back first and then A and B would share 50/50 . B agreed. More financing was never found to date.
Four years into this corporation it bought an asset with $675,000 of A's money, part of the $3.5 million he says he has invested. It was bought in such a way that it could not be used for an unknown period. It was bought in the name of the corporation but paid for directly by A. It is a license registered in the corporation's name.
The idea was to use if for the purposes of the corporation but more licenses like it would have to be bought and that doesn't look like it will happen and A wants to sell the license.
B put in years of unpaid work to get to the point of using the license. The reason A wants to sell it is because it has increased in value to $30 million this week.
The problem is that on the day the license had to be paid for, the deadline, A called B in a hysterical frenzy, literally, and threatened not to pay for the license and incur the penalties due for not paying if B did not immediately, within the time before the deadline, like two hours, write a statement and sign it saying that B had no interest in the license and deliver it to A ASAP.
B had labored mightily over years and just before the purchase of the asset A had told B to consider A the investor that A and B had been looking for. B expected that the investment was just that according to the terms of the original agreement that A gets all his money back first if financing or activity produced funds.
B wanted to tell A that there was no problem that his investment was protected by their agreement that he would get all his invested capital back before B got anything and that B was willing to accept A's $3.5 million figure and even allow it to be doubled or tripled since so much time had past but that after that they should still spit 50/50 as per their agreement. B was open to almost anything but was so intimidated by A's hysteria that he worried that if he did not adhere perfectly to what A wanted immediately that the payment would not be made and all his hard work for years would be totally lost.
B was very sure that the investment would increase in value as it has and A did not seem to think that he would even get his money back. B thought that when the reality of the increase became apparent over the next few years, 2003 to 2007, that A would agee to share the profits somewhat more fairly and would not hold him to the intimidated agreement.
Now all has come to pass and A and B agree the asset is worth between $30 and $100 million dollars and A wants to sell it ASAP. He says to B that although B agreed that A had owned the asset totally he thought B should get something. He offered 5% of the first 20 million, 7.5% of the next $20 million and 10% of anything over $40 million. B asked for 50% of anything over $50 but has not received an answer yet on that request.
B told A that he agrees with this basically though he is asking politely for the 50% of proceeds over $50 million. B is very poor and would like to get his teeth fixed. A is very rich.
A has helped out B at times and considers him his best friend. B would like to maintain the friendship with A and is relieved that A offered something but feels he has been taken advantage of.
He feels that he should have been offered quite a bit more. B feels that he is owed 50/50 of the proceeds of the sale after the first TEN million goes to A. He would settle for something more than was offered and less than the 50/50 though. He would settle for 10% of the first $20 million and 30% of all that came after for instance.
The first $100,000 to a million is a lot of money to B and he is afraid to risk it but would like to know his odds.
He believes he has the voting right to stop the sale even if the statement he gave his partner is ruled totally in A's favor. He wonders if he can contest that signed document as having been given under undue duress and intimidation.
Before he asked for more from his partner in a nice way and possibly having his partner withdraw any offer he would like to know if he would stand a chance if this ends up in court with his partner demanding that B OK the sale of the corporations asset that A says B has no interest in.
Does B have a prayer?
Years went by with B doing a lot of work and A putting up a lot more than he expected to and over a lot longer than expected. A now claims he invested $3.5 million. B thinks it is more like $1.5 million but that is not the problem. B is perfectly willing to live with the $3.5 million figure in the current issue.
One thing that A asked for and B agreed to was that when real financing was found A would get all his money back first and then A and B would share 50/50 . B agreed. More financing was never found to date.
Four years into this corporation it bought an asset with $675,000 of A's money, part of the $3.5 million he says he has invested. It was bought in such a way that it could not be used for an unknown period. It was bought in the name of the corporation but paid for directly by A. It is a license registered in the corporation's name.
The idea was to use if for the purposes of the corporation but more licenses like it would have to be bought and that doesn't look like it will happen and A wants to sell the license.
B put in years of unpaid work to get to the point of using the license. The reason A wants to sell it is because it has increased in value to $30 million this week.
The problem is that on the day the license had to be paid for, the deadline, A called B in a hysterical frenzy, literally, and threatened not to pay for the license and incur the penalties due for not paying if B did not immediately, within the time before the deadline, like two hours, write a statement and sign it saying that B had no interest in the license and deliver it to A ASAP.
B had labored mightily over years and just before the purchase of the asset A had told B to consider A the investor that A and B had been looking for. B expected that the investment was just that according to the terms of the original agreement that A gets all his money back first if financing or activity produced funds.
B wanted to tell A that there was no problem that his investment was protected by their agreement that he would get all his invested capital back before B got anything and that B was willing to accept A's $3.5 million figure and even allow it to be doubled or tripled since so much time had past but that after that they should still spit 50/50 as per their agreement. B was open to almost anything but was so intimidated by A's hysteria that he worried that if he did not adhere perfectly to what A wanted immediately that the payment would not be made and all his hard work for years would be totally lost.
B was very sure that the investment would increase in value as it has and A did not seem to think that he would even get his money back. B thought that when the reality of the increase became apparent over the next few years, 2003 to 2007, that A would agee to share the profits somewhat more fairly and would not hold him to the intimidated agreement.
Now all has come to pass and A and B agree the asset is worth between $30 and $100 million dollars and A wants to sell it ASAP. He says to B that although B agreed that A had owned the asset totally he thought B should get something. He offered 5% of the first 20 million, 7.5% of the next $20 million and 10% of anything over $40 million. B asked for 50% of anything over $50 but has not received an answer yet on that request.
B told A that he agrees with this basically though he is asking politely for the 50% of proceeds over $50 million. B is very poor and would like to get his teeth fixed. A is very rich.
A has helped out B at times and considers him his best friend. B would like to maintain the friendship with A and is relieved that A offered something but feels he has been taken advantage of.
He feels that he should have been offered quite a bit more. B feels that he is owed 50/50 of the proceeds of the sale after the first TEN million goes to A. He would settle for something more than was offered and less than the 50/50 though. He would settle for 10% of the first $20 million and 30% of all that came after for instance.
The first $100,000 to a million is a lot of money to B and he is afraid to risk it but would like to know his odds.
He believes he has the voting right to stop the sale even if the statement he gave his partner is ruled totally in A's favor. He wonders if he can contest that signed document as having been given under undue duress and intimidation.
Before he asked for more from his partner in a nice way and possibly having his partner withdraw any offer he would like to know if he would stand a chance if this ends up in court with his partner demanding that B OK the sale of the corporations asset that A says B has no interest in.
Does B have a prayer?
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