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Clawson v. Intercat Inc.

No fact question existed on plaintiff's claim for specific performance of a shareholder agreement requiring three former employees to sell back their shares of company stock, since the company submitted evidence of the company's value and the employees failed to dispute the amount or show that the sales price determined under the formula was unjust or unfair.

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Donald Clawson, Patrick Donahue, and G. Andrew Smith collectively “employees”, defendants below, appeal from the trial court’s order granting summary judgment to Intercat on its claim for specific performance of a contract. After reviewing the record in its entirety, we conclude there was no error and affirm. The contract at issue is an agreement entered into by each employee when he was hired by Intercat. As part of his compensation, the employee was awarded shares in the corporation. The shareholder agreement provided that, upon termination of the shareholder’s employment, the shareholder would sell all of the stock back to the company. The agreement specified that the total sales value of the stock would be determined as of the date of the close of the quarter preceding the date of termination. The agreement also specified that the value used to determine the price for the stocks would be the “total going concern” value of the company. The formula for calculating this “going concern” value was to be determined by combining the book value of the company and the capitalized after tax income. In no event, however, would the shares be valued at less than $25 a share.

The record shows that Smith’s employment was terminated on September 24, 1999, Donahue’s on October 17, 2000, and Clawson’s on February 21, 2002. During this same period, Intercat entered Chapter 11 bankruptcy. The bankruptcy case was initiated on October 6, 1999, and on February 21, 2002, Intercat’s plan of reorganization was confirmed.

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