Barry Bozo founded and owned 100% of the outstanding stock of Clownfoot Corporation, Inc., a closely held company in the business of training and contracting clowns to circuses around the world. Clowns were in short supply, along with humor, given world events, and consequently, clowns also found themselves in high demand. Clownfoot Corporation grew rapidly in this economic cycle. Bozo felt that Gary Glowring, the lead clown trainer, was critical to Clown foot's quick success. Bozo therefore decided to offer Glowring an equity stake in the company. "Glowring you're an amazing clown," Bozo proclaimed addressing the matter of stock ownership in his conversation with Glowring. "I'd like to keep you here long term, and to that end I am prepared to offer you a 40% stake in the company," Bozo stated. "Gee thanks Bozo, but what's that worth?" Glowring asked. "I don't have much dis cretionary income to invest right now," Glowring added. "No problem," Bozo replied. "l will give you 10% of the company's stock as part of your annual salary each year for the next 4 years. Once you own 40%, in subsequent years you can draw your return on this investment from your salary and more importantly, bonuses that we will distribute at the end of each year in the form of dividends," Bozo explained. "Great I'm in," Glowring committed. Over the next four years, Clownfoot Corporation continued its whirlwind expansion and growth. Glowring proved critical to the comp any's success as Bozo had contemplated, and earned his 40% equity shareholder interest in the company, which Bozo conveyed pursuant to their agreement. In year 5, Goldman Silver Copper Bronze & Diamonds, the famous investment banking firm, approached Bozo about taking Clownfoot Corporation public. Bozo agreed it was time, and seeing his future potential wealth, he wished he had Glowring's 40% interest in the company back "Well Glowring," Bozo said after their journey together, "thanks for everything these past many years, but you're fired. The company will not be making any dividend distributions going forward. If you'd like to sell back your stock the Company will repurchase it for half what you paid."

What are Gary Glowring's options?

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Gary Glowring finds himself in a challenging situation with his equity stake in Clownfoot Corporatio... View the full answer