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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Harris v. Ahtna, Inc. (02/11/2005) sp-5867

Harris v. Ahtna, Inc. (02/11/2005) sp-5867

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


RICHARD HARRIS,                )
                               )   Supreme Court No. S-10960
               Appellant,      )
                               )   Superior Court No.
     v.                        )   3AN-01-11346 CI
AHTNA, INC., AHTNA             )   O P I N I O N
               Appellees.      )   [No. 5867 - February 11, 2005]

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, John Reese, Judge.

          Appearances:   William G.  Royce,  Anchorage,
          for   Appellant.   Christopher  J.   Slottee,
          Atkinson,  Conway  & Gagnon,  Anchorage,  for
          Appellee Ahtna, Inc.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          MATTHEWS, Justice.

          The  main question in this case is whether the superior

court  properly  ordered specific enforcement  of  a  buy-or-sell

agreement between shareholders.  We conclude that the court erred

because the offer that triggered the buy-or-sell process did  not

set  out a price that was equal regardless of which party  bought

or sold, and contained unpermitted conditions.


          In  May  of 1999 Richard Harris and Ahtna, Inc., formed

Ahtna  Government  Services Corporation  (AGSC).   AGSCs  primary

business was to perform work for the federal government  that  is

reserved for minority-owned enterprises.  AGSC would qualify  for

this work because Ahtna is an Alaska Native regional corporation.

Ahtna  owned 5,100 shares, fifty-one percent, while Harris  owned

4,900  shares,  forty-nine percent.  Harris  was  to  manage  the

company  and  to  contribute  staff and  office  space  from  his

company,  Pacific  Native  Development Corporation,  while  Ahtna

agreed to provide AGSC with working capital and bond guarantees.

          Harris and Ahtna executed a shareholders agreement that

contained  a  buy-or-sell provision described as  a  put-and-call

option.   Under  this provision either shareholder  could,  under

certain  conditions, declare an impasse by issuing a  declaration

that  contains an offer to sell the offerors shares to the  other

shareholder.  Upon receipt of the declaration, the  offeree  must

either  buy  the offerors shares or sell its own  shares  to  the

offeror at the set price.

          The  AGSC venture started slowly.  In 1999 and 2000  it

incurred  losses.   In May of 2001 the AGSC  board  of  directors

terminated Harris from his position as president of the  company.

In  2001  there  were net earnings of approximately  $160,000  on

gross  revenues of about $9,000,000.  At the end  of  2001  AGSCs

balance sheet showed negative retained earnings of slightly  over

$1,000,000.  At that point Ahtna had made loans to AGSC in excess

of  $1,500,000.  The year 2002 was more profitable for AGSC.   As

of  July 31, 2002, the company had made profits of about $700,000

on predicted annual gross revenues in excess of $12,000,000.

          AGSC  filed  a complaint against Harris on October  19,

2001,  claiming that he had breached his fiduciary duty  to  AGSC

and that he had not paid for his stock.  Harris answered, denying

the  major  allegations of the complaint, counterclaimed  against

AGSC,  and filed a third-party complaint against Ahtna.   In  the

latter  he  alleged  that  an impasse  between  shareholders  had


          After the third-party complaint was filed, Ahtna sent a

letter  to  Harris  declaring an impasse under  the  put-and-call

option of the shareholders agreement. Ahtnas declaration set  the

price for the purchase of shares as follows:

               A.   6.87 per share;
               B.    the  Continuing Shareholder  shall
          assume  any Company indebtedness or liability
          guaranteed  by  the selling shareholder,  and
          shall obtain a written release of the selling
          shareholder   from   such   guarantees    and
          liabilities; and
               C.    the  Continuing  Shareholder  will
          cause   to   be  paid  in  full   the   valid
          indebtedness  of the Company to  the  selling
          shareholder.   In  the case of  the  Companys
          indebtedness  to Ahtna, the  portion  of  the
          indebtedness  represented by management  fees
          will be waived and relinquished by Ahtna.
Harris  responded  to the offer contained in the  declaration  by

agreeing to buy Ahtnas shares for $6.87 per share while rejecting

parts  B  and  C  of the offer as invalid under the  shareholders

agreement.   Ahtna  took Harriss response to be  a  rejection  of

Ahtnas  offer  to  sell  its shares and thereafter  claimed  that

Harris  was  obligated to sell his shares to Ahtna in  accordance

with the terms of the declaration.

          Both Ahtna and Harris moved for specific performance of

the  put-and-call  option.   The superior  court  granted  Ahtnas

motion, denied Harriss, and ordered Harris to deliver all of  his

shares  to  counsel  for Ahtna in exchange for the  consideration

specified in Ahtnas declaration.  When Harris did not tender  his

stock,  Ahtna  filed  a  motion for an order  holding  Harris  in

contempt.  The court issued an order to show cause.  In response,

Harris  filed  a supplemental brief arguing that  the  court  had

erred  in granting Ahtnas motion for specific performance because

Ahtnas  declaration contained terms that made its offer  invalid.

Harris  supported  his supplemental brief with  an  affidavit  of

George  L.  Johnson,  CPA,  who  stated  that  he  had  extensive

experience  working  with  put-and-call  options,  that  it   was

critical   that  an  offer  be  symmetrical,  and   that   Ahtnas

declaration lacked symmetry because Ahtna demanded

          that  Mr. Harris personally repay a corporate
          obligation  of  AGSC  and  assume  a  bonding
          guarantee  of Ahtna. . . .  Ahtnas  Put  Call
          offer is equivalent to Mr. Harris offering to
          sell his shares to Ahtna if Ahtna also repaid
          debt  that Mr. Harris owed to a third  party.
          (Emphasis in original.)
          The  superior  court  conducted an evidentiary  hearing

with  respect  to the order to show cause.  At the conclusion  of

the  hearing  the  superior  court reaffirmed  its  prior  ruling

requiring  Harris  to deliver his stock to Ahtnas  counsel.   The

court stated, in part:

               If  somebody  wants to  sell  something,
          they  can say Ill take this or Ill take  that
          and  thats what Ahtna said.  What they wanted
          was  off  the  hook  and it  wanted  so  many
          dollars  a  share on top of that.  They  were
          extended  financially  in  several  ways   on
          behalf  of the company and that was  part  of
          the  deal.   It certainly makes no  sense  to
          remain extended for the company if theyre not
          an  owner.  It does make sense for the  other
          shareholder,   Mr.  Harris,  to   cover   the
          extension that . . . theyve made.  Thats  not
          an impossible thing.
               These  are people in companies  involved
          in business and business is, to an extent,  a
          poker  game.  You have to have enough  stakes
          to  play.   Harris could assume the debt,  he
          could   pay  the  debt,  Harris  could   find
          alternate  bonding.  Harris  could  do  those
          things if Harris had a deep enough pocket  to
          do  it  and  he could pay for the  shares  as
          well.   All of that together, of course,  was
          the total price for the shares.
          The  superior court subsequently issued a partial final

judgment pursuant to Alaska Civil Rule 54(b) requiring Harris  to

deliver  his  shares  to Ahtna in exchange  for  $6.87  a  share,

totaling $33,663 for his 4,900 shares.  Harris appeals.


          The question in this case is the meaning of the put-and-

call  option  in the parties agreement.  The goal in interpreting

the  meaning  of  contracts is to give effect to  the  reasonable

expectation  of  the  parties.1  Reasonable expectations  may  be

ascertained through the language of the contract, the behavior of

the  parties,  case  law, and any relevant  extrinsic  evidence.2

Ordinarily the meaning of a contract presents a question  of  law

for  the  trial court, reviewable on appeal under the independent

judgment standard unless there is conflicting extrinsic evidence.3

Where  there  is  conflicting extrinsic  evidence,  findings  and

inferences  of  fact  made by the trial court  will  be  reviewed

deferentially under the clearly erroneous standard.4

          In  the  present case there is no evidence  as  to  the

parties intent concerning the put-and-call option at the time  of

contract formation or thereafter until this litigation arose, nor

was  there  conflicting extrinsic evidence.  We therefore  review

the  trial courts interpretation of the put-and-call option under

the independent judgment standard.5


          The issues in this case turn on the meaning of the put-

and-call option in the shareholders agreement.  The subparagraphs

of the agreement that are most relevant to this case provide:

          5.1  Put  and Call Options.  Each Shareholder
               shall have the right and option upon the
               written  declaration (a Declaration)  by
               such    Shareholder   to    the    other
               Shareholders  and  the  Company  of  the
               occurrence  of  an impasse  (as  defined
               below)   to   sell  to  the   Continuing
               Shareholders all of his Shares, and  the
               Continuing Shareholders shall  have  the
               obligation to either (i) purchase all of
               such   Shares  owned  by  the   offering
               Shareholder  in such proportion  as  the
               Continuing Shareholders may agree  upon,
               and if they cannot so agree, pro rata in
               proportion  to their then  ownership  of
               Shares  of  the  Company (excluding  the
               Offering Shareholders Share) or (ii)  if
               the  Continuing Shareholders are  unable
               or  unwilling  to purchase  all  of  the
               Shares    owned    by    the    Offering
               Shareholder, sell all of their Shares to
          the Offering     Shareholder,     and     the
               Offering  Shareholder  shall  have   the
               obligation to buy such Shares.
               . . . .
          5.3  Exercise   of  Option.   The  Continuing
               Shareholders shall exercise  any  option
               provided for in this Paragraph 5  within
               thirty  (30)  days after  receipt  of  a
               declaration.  Any closing of the sale of
               Shares  pursuant to such exercise  shall
               occur  within  ninety  (90)  days  after
               receipt of a Declaration.
          5.4  Purchase Price.  Any purchase or sale of
               Shares sold pursuant to this Paragraph 5
               shall  be  at the price as set forth  in
               the   Declaration   delivered   by   the
               Shareholder exercising his right to sell
               his  shares and shall be paid for at the
               closing of the sale of the Shares.   The
               purchase price may be amortized, at  the
               option of the Buyer, for a period of  up
               to 3 years.
          Harris argues that the put-and-call option (1) requires

that  the  price  be  stated  in  monetary  terms  and  precludes

nonmonetary  conditions, and (2) requires that the price  be  the

same  whether it is exercised by the offeror or the offeree.   He

argues  that  neither of these requirements  was  met  by  Ahtnas

declaration.  The price was not stated in monetary terms  because

the  declaration required the buyer to assume unstated fixed  and

contingent  liabilities  and to obtain written  releases  of  the

seller from sureties of AGSC.  The price Harris would be required

to pay Ahtna was not equal to the price that Ahtna would have had

to  pay  Harris;  Harris  would  have  been  required  to  assume

liabilities  already  incurred by Ahtna,  whereas  Ahtna  had  no

similar obligation because Harris had not guaranteed AGSCs  bonds

or  made loans to AGSC.  Harris also contends that since terms  B

and  C  of  the declaration were invalid, the court  should  have

ignored them and enforced his offer to buy Ahtnas shares for  the

stated cash price per share.

          Ahtna  responds to these points as follows.   Regarding

Harriss  argument that the price under the agreement  had  to  be

expressed in monetary terms, Ahtna argues that the agreement does

not  so  state.   It  also  argues that  nonmonetary  terms  were

necessary to allow Ahtna to divest itself of AGSC because of  the

substantial loans and guarantees it had made to AGSC or  for  its

benefit.   Concerning price equality, Ahtna  argues  that  Ahtnas

offer  did  not  establish a different price per share.   But  it

continues by stating: If Harris had matched Ahtna and put his own

money  at  risk  by loaning money to AGSC and guaranteeing  AGSCs

obligations,  then  his  price  per  share  would  be  the  same.

Concerning Harriss argument that his acceptance of only the  cash

price  term created a binding contract, Ahtna argues that Harriss

response accepting only part of the offer was a rejection of  the

offer and created no contract.

          We conclude for the reasons that follow that Harris has

the  better  argument  on  his points  that  the  price  must  be

expressed in money and must be equal regardless of who sells  and

who  buys.   But  we  conclude  that Harriss  argument  that  his

acceptance  of  only  the cash term of Ahtnas  offer  created  an

enforceable contract lacks merit.

     Equal Price

          We address first Harriss point that the price under the

put-and-call option must be equal regardless of which party buys.

Shareholders enter into buy-or-sell contracts in order to provide

a  deadlock-breaking mechanism that is fair to both participants.

The  underlying  premise of such agreements  is  that  the  price

proposed  by  the  offeror will be the same whether  the  offeror

sells  its  shares  or buys the shares of the other  shareholder.

The  fact  that the offeree is free to buy or sell  at  the  same

price  per  share  is the offerees guarantee of fairness.6   Even

where  there is price equality, the contract may prove not to  be

fair  if  one  party lacks the financial resources of  the  other

party.7   But the important point is that price equality  is  the

basic assumption of agreements of this sort.

          Price  equality  is lacking in Ahtnas declaration.   If

          Harris decided to buy Ahtnas shares the price that he would have

to pay would be calculated by adding to the $6.87 per share price

his  assumption of AGSCs liabilities to Ahtna, his assumption  of

Ahtnas  guarantees, and whatever cost he would have to  incur  to

obtain  written  releases  from  sureties  of  Ahtnas  continuing

liability.   Ahtna has acknowledged that items B  and  C  of  its

offer  involve  sums substantially exceeding  $1,000,000.8   Thus

Harris  might  well have had to pay, as buyer of  Ahtnas  shares,

$35,037   ($6.87   per  share  times  5,100),  plus   an   amount

substantially  in excess of $1,000,000.  By contrast,  Ahtna,  as

buyer of Harriss shares would have to pay only $33,633, $6.87 per


          Ahtnas argument that the price would have been equal if

Harris  had matched Ahtna in making loans to AGSC and had been  a

co-guarantor of AGSCs bonding seems irrelevant.  Those conditions

did  not  exist,  nor, apparently, was Harris obligated  to  lend

funds  to  AGSC  or act as a guarantor of its bonding.   We  thus

agree with Harris that the put-and-call option required that  the

price  to each party be equal and that the Ahtna declaration  did

not meet this requirement.

     Nonmonetary Terms and Conditions

          We also agree with Harriss related point that the price

in  the  declaration must be stated in money and must not contain

nonmonetary conditions.  We reach this conclusion for a number of

reasons.   Since the price must be equal regardless of  who  pays

it,  a  medium of exchange available to both parties is required.

Nonmonetary conditions often will not burden the parties equally.

Relatedly,  if nonmonetary conditions were permitted  each  party

would  have an incentive to declare an impasse before  the  other

party in order to craft favorable conditions.  This would lead to

premature and possibly unnecessary deadlocks.

          Further,  the option available to the buyer to amortize

the  purchase price over three years, set forth in paragraph 5.4,

implies  that the price must be a money price.  At oral  argument

          before  the superior court, counsel for Ahtna indicated

uncertainty as to how to quantify the price reflected in  part  C

of  the  declaration, acknowledging that he was not certain  that

this  could  be  done.9   An unquantifiable  price,  or  a  price

consisting  of contingent liabilities that have been assumed  but

not  realized, cannot be amortized.  The same is  true  as  to  a

nonmonetary condition.

          Moreover,  the language of various other provisions  of

the shareholders agreement suggests that the parties intended the

price  term  to  be  limited to a monetary price.   In  paragraph

3.3.3,  the agreement states, concerning a shareholders  transfer

of  shares  to  the company, that a Shareholder may  give,  sell,

transfer or otherwise dispose of all or any of its Shares to  the

Company  at such price and on such terms and conditions  as  such

Shareholder and the Board of Directors of the Company may  agree.

(Emphasis   added.)   In  another  section  of   the   agreement,

paragraphs  3.3.4-6,  the  company  and  other  shareholders  are

granted a first right of purchase when a shareholder proposes  to

sell  to  a  third party.  Paragraph 3.3.7 states that  when  the

company or a continuing shareholder elects to purchase the shares

from  the  selling shareholder under these provisions, the  Buyer

must  elect to purchase all Shares which the Offering Shareholder

proposes  to  sell  for the price and upon  the  same  terms  for

payment  of  the price as are set forth in the Offer.   (Emphasis

added.)  Finally, in paragraph 4.1 of the agreement, shareholders

are given the right of first refusal to purchase common stock and

options  issued  by the company, and the agreement  requires  the

company  to  offer such securities . . . at a price and  on  such

other  terms  as  shall have been specified  by  the  Company  in

writing  delivered  to such Shareholder.  (Emphasis  added.)   In

contrast  to  these sections, the put-and-call  option  does  not

contain  language  referring  to terms  and  conditions,  stating

instead  that [a]ny purchase or sale of Shares sold  pursuant  to

this  Paragraph  5  shall be at the price as  set  forth  in  the

          Declaration delivered by the Shareholder.  The coupling of price

with  terms or conditions in other portions of the agreement  but

not  in the put-and-call option suggests that the parties did not

contemplate  that  the  price in the  put-and-call  option  would

include terms and conditions in addition to a monetary price.

          Ahtnas   argument  that  nonmonetary  conditions   were

necessary in order to relieve it of continuing liability to  AGSC

and  to sureties is understandable, but unpersuasive.  While  the

argument is relevant to Ahtnas perceived needs, it has little  or

no  bearing on the meaning of the put-and-call option.  The  fact

that  Ahtna is a creditor of AGSC does not give it special status

as a shareholder.  Ahtnas remedies as a creditor of AGSC and as a

guarantor of AGSCs obligations are separate from its rights as  a

shareholder.   If  Ahtna  were to sell all  of  its  shares,  its

remedies  as  a creditor and guarantor would still be  available.

If  it  believes that it needs more protection from the  risk  of

nonpayment, this might logically be a factor when it decides what

price  to set under the put-and-call option.  Just as buy-or-sell

contracts may provide only illusory fairness when one shareholder

cannot  afford  to buy out the shares of the other shareholder,10

such  agreements also may not function well when one  shareholder

does  not believe that it can afford to let the other shareholder

buy it out.  But these shortcomings are, if anything, an argument

against  the use of such agreements rather than an indication  of

how they should be interpreted.

          The  parties have directed our attention to cases  from

other jurisdictions involving buy-or-sell agreements in which the

offeror  attempted to impose conditions in addition to a monetary

price.   In  one case, McTeague v. Treibits, the court held  that

the conditions were invalid and that the offeree could accept the

cash  offer without the conditions.11  In another case, Wyatt  v.

Phillips,  the  court held that the imposition of the  conditions

prevented  the  triggering of the action-forcing  aspect  of  the

agreement,  and that the offers as made should be  treated  under

          the common law rules of contract formation.12  In a third case,

Wilcox v. Stiles, the court held that a nonmonetary condition was

valid  and  the agreement was triggered despite its  inclusion.13

Our holding in this case concerning the invalidity of nonmonetary

conditions  is consistent with McTeague and Wyatt.   We  disagree

with  the  rationale  of the third case, Wilcox,  insofar  as  it

approves of an offer that imposed unequal conditions depending on

which party became the buyer.14

     Harris Is Not Entitled to Specific Performance

          For  the  above reasons we have concluded that terms  B

and  C  of  Ahtnas  offer are inconsistent with the  put-and-call

option.   Harris  argues that since these terms are  inconsistent

with  the  put-and-call option, he should  be  able  to  purchase

Ahtnas  shares under the only valid term of the offer  for  $6.87

per  share.   He cites McTeague v. Treibtis15 in support  of  his


          McTeague involved a shareholders agreement with a  buy-

or-sell  agreement  similar  to the put-and-call  option  in  the

present case.  Under the McTeague agreement, when one shareholder

(the  initiating shareholder) notified the other shareholder (the

responding shareholder) that the initiating shareholder wished to

sell  his shares, the responding shareholder would set the  price

and terms under which the initiating shareholder could either buy

the  responding  shareholders shares or sell his  shares  to  the

responding   shareholder.16   Treibits  initiated  the   process.

McTeague  responded  by  stating a  cash  price  and  conditions,

including  payment  of  an  amount  claimed  to  be  owing  to  a

construction  company owned by McTeague.  Treibits  purported  to

accept  the  offer  with  respect to  the  monetary  price  only,

rejecting the additional conditions.  The trial court ruled  that

the  conditions other than the cash price were not in  accordance

with the phrase price and terms in the shareholders agreement and

held that Treibits had the right to accept the monetary term  and

ignore the other conditions.  The court of appeals agreed, noting

          that the construction companys claim against the corporation was

currently in litigation and if the construction company prevailed

the  objective  of  the condition imposed by  McTeague  would  be

satisfied.   McTeague is arguably distinguishable on the  grounds

that  the main condition imposed would be independently satisfied

if  it  was  legitimate  and, in any  event,  the  condition  was

arguably less important than the invalid conditions set by  Ahtna

in  the present case.  Nonetheless, McTeague is fair support  for

Harriss position.

          But  Wyatt  v. Phillips17 and Roy Herider Feed  Co.  v.

Modern Feeds of Nacogdoches, Inc.,18 reach different and, in  our

view,  more  defensible results.  In Wyatt the court  noted  that

where  a  buy-or-sell  clause (referred to  there  as  a  shotgun

provision) similar to that in the present case contained a number

of  contingencies, or conditions precedent, other than price  and

payment  terms neither contained nor contemplated by the drafters

of  the Shotgun Provision, this would render the offer subject to

ordinary contract principles of offer and acceptance.19   In  Roy

Herider  Feed the trial court concluded on summary judgment  that

the  buy  or  sell  agreement  was validly  invoked  despite  the

presence  of conditions precedent.  On appeal the court reversed,

holding  that  the conditional nature of the offer prevented  the

action-forcing  aspect  of the agreement  from  being  triggered.

Instead, the court invoked customary contract provisions:

          [A]cceptance of a proposal to sell, in  order
          to  bind  the  maker of the  proposition  and
          conclude  the contract, must be unconditional
          and  unqualified.   The exact  terms  of  the
          proposition,  without addition or  variation,
          must be acceded to before the proposition  is
          withdrawn;   otherwise  the  maker   of   the
          proposition    is   not    bound    by    the
          We   believe  that  the  offer  contained   in   Ahtnas

declaration should be construed as were the conditional offers in

Wyatt and Roy Herider Feed.  Since the offer did not comply  with

the  put-and-call provisions of the shareholders agreement it was

          an offer governed by the common law.  Under common law rules

acceptance  of  an  offer  must  be  unequivocal  and  in   exact

compliance  with  the  requirements  of  the  offer.21   Where  a

purported  acceptance qualifies the terms of the original  offer,

the  result is a counter-offer which may be accepted or  rejected

by  the  party who made the initial offer.22  Here, since  Ahtnas

offer  failed to trigger the put-and-call option, Harriss partial

acceptance  was a counter-offer that Ahtna did not accept.   Thus

no   contract  was  formed  and  Harriss  request  for   specific

performance was properly denied.

          For  the  above  reasons, we REVERSE the partial  final

judgment  and REMAND this case to the superior court for  further

proceedings consistent with this opinion.

     1     See  Keffer v. Keffer, 852 P.2d 394, 397 (Alaska 1993)
(The  goal  in interpreting a contract is to give effect  to  the
reasonable  expectations of the parties.); Mitford v. de  Lasala,
666 P.2d 1000, 1005 (Alaska 1983) (In interpreting a contract, we
seek  to  give  effect  to  the reasonable  expectations  of  the
parties.);  Peterson  v. Wirum, 625 P.2d 866,  872  n.10  (Alaska
1981)  (In interpreting a contract, the object is to give  effect
to the reasonable expectations of the parties.).

     2     Jensen v. Ramras, 792 P.2d 668, 670 (Alaska 1990) (The
parties reasonable expectations can be assessed by reviewing  the
language  of  the  disputed  provision,  the  language  of  other
provisions of the contract, relevant extrinsic evidence, and case
law  interpreting similar provisions.) (quotation marks omitted);
Smalley v. Juneau Clinic Bldg. Corp., 493 P.2d 1296, 1305 (Alaska
1972)  ([W]here uncertainty or ambiguity exists in  the  language
employed  in an agreement, the intent of the parties thereto  may
be  ascertained from the language and conduct of the parties, the
objects   sought   to   be  accomplished  and   the   surrounding
circumstances   at   the  time  the  contract  was   negotiated.)
(quotation marks omitted).

     3     Klosterman  v.  Hickel Inv. Co.,  821  P.2d  118,  122
(Alaska 1991) (although we will apply our independent judgment to
a  trial  court's  interpretation of  a  written  contract  based
exclusively  on documentary evidence, we will apply  the  clearly
erroneous  standard when the trial court has relied on  extrinsic
testimonial evidence).

     4     Rockstad v. Global Fin. & Inv. Co., Inc., 41 P.3d 583,
586  (Alaska  2002)  (when the trial court  relies  on  extrinsic
testimonial  evidence  to  provide  a  factual  basis   for   its
interpretation  of  a  contract, we apply the  clearly  erroneous
standard in reviewing the court's background findings of fact).

     5     When  reviewing the interpretation of contracts  under
the  independent judgment standard, we adopt[] the  rule  of  law
most persuasive in light of precedent, reason, and policy.  Casey
v. Semco Energy, Inc., 92 P.3d 379, 382 (Alaska 2004).

     6     See Wyatt v. Phillips, 2002 WL 31053832, *3 (Pa.  Com.
Pl.  Aug  27, 2002), where the court stated concerning a  similar

          the  purpose of the Provision was to  attempt
          to  control these contentious parties so that
          one  could  not take advantage of the  other.
          An   offeror   could  not  make   the   price
          inordinately  low for fear  the  other  would
          counter-offer and purchase [the  company]  at
          the  low  price.  On the other hand,  if  the
          price were too high, the offeror would become
          obligated  to  purchase  in  excess  of   the
          companys true value.
     7     See  Fredric D. Tannenbaum, What Every Business Lawyer
and  Business  Owner Should Know About Buy-Sell Agreements,  1089
PLI/Corp. 441, 485 (Dec. 1998) (Theoretically, the offerees right
to  buy  out the offeror at the same price offered by the offeror
will  incite the offeror to quote a fair price, for fear that  if
the  price  is too low, the offeror will be bought  out  at  that
price.   In  reality,  however, the offeror and  offeree  do  not
always have the same financial resources, and the offerees rights
to match a low offer by the offeror may be illusory.).

     8     This statement was made in Ahtnas reply memorandum  in
support  of  its motion for an order holding Harris in  contempt.
The full statement was:

          Contrary   to  Harriss  repeated  assertions,
          Ahtnas  offer  was  not a  one-part,  $33,000
          offer.   It  was  instead a three-part  offer
          which  included  the  requirement  that   the
          selling  [sic buying] shareholder assume  all
          indebtedness   guaranteed  by   the   selling
          shareholder, obtain a release for the selling
          shareholder,  and that all valid indebtedness
          to  the selling shareholder be paid in  full.
          The  latter  two  elements  of  Ahtnas  offer
          involve   sums  substantially  exceeding   $1
     9    The colloquy between court and counsel was:

          THE  COURT:   Okay.  Lets stop  right  there.
          Mr. ODonnell, how can they quantify C?
          MR.  ODONNELL (Ahtnas counsel): Well, Im  not
          certain whether they can.  The arbitration is
          scheduled to . . . . . (Emphasis supplied.)
          THE  COURT: Well, lets find out.  How can  he
          accept?  What would he have to do to properly
          accept  if  there  is some vagueness  in  the
          outcome or what it means?
          . . . .
          MR.  ODONNELL: What he would have had  to  do
          was  clearly set out in the offer.   One,  he
          would  have to pay the amount; two, he  would
          have  to agree to have obtained financing  or
          take  other steps to have removed Ahtna as  a
          lender  to the corporation and as a guarantor
          on  its  bonds  and if there was indebtedness
          owing   to   Ahtna   from  Ahtna   Government
          Services, make arrangements to get that paid.
          He was unwilling to do that.
     10    See supra note 7.

     11    388 So. 2d 309 (Fla. App. 1980).

     12    2002 WL 31053832, *4 (Pa. Com. Pl. Aug. 27, 2002).

     13    873 P.2d 1102 (Or. App. 1994).

     14    We note however that Wilcox is arguably distinguishable
because  both the offeror and the offeree were personally  liable
for  all  the debts of the corporation.  Thus the main condition,
release  of liability of the seller, was, at least theoretically,
equal  regardless  of  which party became  the  buyer.   But  one
shareholder  had substantial personal collateral at  risk,  while
the  other  did  not.   Thus  the  practical  risk  of  loss  was
asymmetrical  even  though the theoretical  risk  may  have  been

     15    388 So. 2d 309 (Fla. App. 1980).

     16    Id. at 311.

     17    2002 WL 31053832 (Pa. Co. Pl. Aug. 27, 2002).

     18    468 S.W.2d 554 (Tex. App. 1971).

     19    2002 WL 31053832, at *4.

     20     468 S.W.2d at 560 (quoting Patton v. Rucker, 29  Tex.
402, 409 (1867)).

     21     Thrift Shop, Inc. v. Alaska Mut. Sav. Bank, 398  P.2d
657, 659 (Alaska 1965).

     22    See Southwest Marine, Inc. v. State, Dept of Transp. &
Pub.  Facilities, Div. of Alaska Marine Highway  Sys.,  941  P.2d
166,  173  (Alaska 1997); Hall v. Add-Ventures,  Ltd.,  695  P.2d
1081,  1088-1089  (Alaska 1985) (If the terms suggested by  Large
constitute  a conditional acceptance, it would be a counter-offer
and  thus  a  rejection  of  the  original  offer.);  Restatement
(Second)  of  Contracts  59 (1981) (A reply  to  an  offer  which
purports  to accept it but is conditional on the offerors  assent
to  terms additional to or different from those offered is not an
acceptance but is a counter-offer.).