Check-N-Go, Inc. ("CNG"), founded in 1994 by Jared Davis ("Jared"), is a privately held S-corporation that operates a payday loan business.
To resolve the matter, Jared
devised the following plan: (i) Allen transferred half of his CNG
shares to Judith (188.86 shares), subject to an option allowing Allen to repurchase the shares for $16 million; and (ii) CNG redeemed those shares, and amended the option by adding a cashless exercise provision3.
The Court affirmed that the option was granted in an arm's length transaction because "Jared
and David had interests adverse to Allen's and did not merely acquiesce to Allen's wishes.
1 The case is consolidated for purposes of trial, briefing, and opinion with the cases of J. David and Dianne M. Rosenberg ("Rosenberg", family friends), Jared A.
and Bridget Davis (founder and his wife), and A. David and Tracy Davis (Jared's brother and his wife).