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Krieger v. Bonds

Court of Appeals of Georgia

July 9, 2015

KRIEGER
v.
BONDS

Contract. Douglas Superior Court. Before Judge James.

George A. Koenig, David J. Hungeling, for appellant.

Joel Dodson; Hipes & Belle Isle, John D. Hipes, Layne M. Kamsler, for appellee.

MCMILLIAN, Judge. Barnes, P. J., concurs. Ray, J., concurs in judgment only.

OPINION

Page 265

McMillian, Judge.

This appeal arises out of a " Buy-Sell Agreement for Southeast Cooler Corp." (the " Agreement" ) executed between Steven Krieger and Craig Bonds governing their respective shares of stock in Southeast Cooler Corp. (" SCC" ). Steven Krieger[1] appeals

Page 266

the trial court's grant of summary judgment to Bonds, and the denial of his own [333 Ga.App. 20] motion for summary judgment, on Bonds' claim for specific performance of the Agreement. Steven Krieger also appeals the denial of his motion for summary judgment on his counterclaim for specific performance.

" We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Because this opinion addresses cross-motions for summary judgment, we will construe the facts in favor of the nonmoving party as appropriate." (Citation omitted.) Maree v. ROMAR Joint Venture, 329 Ga.App. 282, 283 (763 S.E.2d 899) (2014).

SCC is a closely held corporation that manufactures walk-in coolers and freezers, ice merchandisers, and some bakery-related products. Steven Krieger was one of the two original owners of SCC, and at the time pertinent to this lawsuit, Steven Krieger served as president and chief executive officer of SCC. Bonds was hired in 2002 as controller and remained in that position until 2008 when he became chief financial officer (" CFO" ).[2] SCC corporate documents indicate that as of January 2009, Steven Krieger held 27,500 shares of SCC and Bonds held 5,500 shares.

On January 26, 2010, SCC adopted new bylaws (the " Bylaws" ) which placed certain restrictions on corporate borrowing and the use of the corporation's credit. Pertinent to this appeal, the Bylaws provided that no loan could be entered into by SCC unless authorized by a resolution of the Board of Directors, and the Board was only authorized to lend money " in furtherance of any of the purposes of the Corporation" and to assist any employee or director, if approved by the holders of a majority of the voting shares.

Buy-Sell Agreement

Steven Krieger and Bonds entered into the Agreement on June 11, 2010 to address the future disposition of the company's stock. Section Four of the Agreement, entitled " Mandatory Put and Call Buy-Sell," provides that at any time, one shareholder may offer both to sell all of his shares[3] in the corporation or to buy all of another [333 Ga.App. 21] shareholder's shares. The Agreement requires that the offer be in writing and that it contain certain representations, including " [a] statement that the purchase price of the [shares] subject to the offer shall be payable in cash at closing."

The Agreement further provides that such offers remain open for 60 days, and an offeree can accept either the offer to sell or the offer to buy, but not both. But if the offeree fails to accept the offer within 60 days, the offeror has the right, within the next 15 days, to either buy all of the offeree's shares or to sell all his shares to the offeree. If the offeror exercises this right, the offeree is required to sell or to buy at the offeror's request. And the closing on such a transaction must take place " on or before the 10th day after such right to purchase or sell has been exercised."

The Agreement also prescribes that

[a]cceptance by the offeree of an offer to buy or to sell and the exercise by an offeror of the right to buy or sell shall consist of a tender of all documents, duly executed, necessary to convey the [shares] being sold, with full warranties of title thereto and appropriate arrangements made for the payment of the purchase price of the [shares], as the case may be.

Moreover, under Section Two of the Agreement, neither Steven Krieger nor Bonds was permitted to transfer, assign, or pledge their shares without the prior written consent of the Corporation and the other shareholders, except that a shareholder would be allowed to pledge his shares " as security for a loan with any lending institution regularly engaged in the business of

Page 267

making loans" so long as the other terms of the ...


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