Steve Simpson and Joseph Pendergast are two of the four shareholders in Historic Motorsports Holdings, Ltd. “HMH”. Pendergast brought an action for declaratory judgment and specific performance against Simpson, seeking to require Simpson to sell his shares in HMH to Pendergast. The trial court granted summary judgment to Pendergast, finding that he “is entitled to specific performance by Simpson of Simpson’s obligation to close the sale of his shares to Pendergast.” Simpson appeals, and, for reasons that follow, we affirm in part and reverse in part. Summary judgment is proper where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.1 We conduct a de novo review of a trial court’s ruling on a motion for summary judgment, and we construe the evidence and all inferences and conclusions drawn from it in favor of the non-moving party.2 So viewed, the record shows that Pendergast, Simpson, Howard Turner, and Peter McLaughlin are shareholders in HMH. The Shareholder Agreement the “Agreement” among these four provides the method by which a shareholder may voluntarily dispose of his shares in HMH to the other shareholders. Section 5 of the Agreement states that:A. The Offeror shall provide to the other Shareholders collectively, the “Offerees” and individually an “Offeree” a written notice of the intended Disposition specifying the purchase price and other terms and conditions the “Offer” upon which the Offeror is willing to sell all, but not less than all, of the shares of the Offeror to the Offeree.B. Upon receipt of an Offer delivered pursuant to Subsection A, the Offerees shall then be obligated, in accordance with the provision of this Section 5, to either i purchase the Offeror’s stock upon the terms and conditions contained in the Offer, or ii sell to the Offeror all, but not less than all, of the shares of Stock of the Offerees on the same terms and conditions contained in the offer. The Offerees shall give a written notice to the Offeror stating the election of the Offerees within sixty 60 days after receipt of the Offer. Such notice may be given by one or more Offerees on behalf of the others as herein provided or jointly. Failure of the Offerees to provide the Offeror within such period of sixty 60 days with a written notice stating that the Offerees have elected to proceed under clause i of this Subsection B shall be conclusively deemed to be an election by the Offerees to proceed under clause ii of this Subsection B. The Agreement also provides terms for the sale of shares if one or more but not all Offerees choose to purchase the Offeror’s shares.
On April 5, 2005, Pendergast sent a letter to the other three shareholders proposing to sell his 258.33 shares in HMH for $1,000 per share, or $258,330, with the following terms and conditions: The Purchase Price is to be paid by certified check or wire transfer at closing.The purchasing Shareholders shall cause HMH the “Corporation” to make a distribution pro rata, based on the relative stock ownership in place immediately prior to the closing, to the Shareholders equal to 40 of any taxable income of the Corporation for 2004 plus 40 of any taxable income of the Corporation for 2005 from and including January 1, 2005 and through the date immediately before the date of closing. This distribution shall be made within 30 days following the closing.The selling Shareholders shall be relieved of the non-competition covenants set forth in Section 10 i of the Shareholders’ Agreement.This Offer is based upon a review of the June 30, 2004 financial statements of HMH. Accordingly, it is a further condition of the Offer that there shall have been no material adverse change in the financial condition, results of operations, or assets of HMH from June 30, 2004 through the date of closing. McLaughlin purchased 78.33 of Pendergast’s shares his pro rata share of the stock. Simpson, however, took the position that Pendergast’s offer was invalid because of the terms and conditions placed on the sale, including the “change in the Agreement to release Pendergast’s non-compete obligation.” Simpson failed to reply in writing to Pendergast within 60 days; Pendergast therefore contends that he is entitled to purchase Simpson’s shares under the terms of the Agreement.
