2. Critchfield and Company is a second generation family business operating as a calendar year C-corporation in the United States. Two key employees recently announced that they might be leaving the company to join a competitor because the competitor had offered them a comparable salary, plus a 10% ownership position. Critchfield and Company realized that the loss of these two key employees would be devastating to the continued successful operation of the business. Critchfield and Company, therefore negotiated an arrangement to allow each of the two employees to become 10% shareholders in Critchfield and Company, effective immediately, in return for a commitment that the two employees would continue to work for at least five years. But, Critchfield and Company is a family corporation which wants to remain a family corporation for foreseeable generations into the future. The Company therefore, insists that each of its two new shareholders agree to a buy/sell agreement under which the Company or its shareholders would have the option to acquire the shares of the two employees in the event of their death or termination of employment. Now the question is whether the Buy/Sell Agreement should be written in a form of an entity agreement or a cross-purchase agreement. Critchfield and Companys CFO seeks your advice on the following issues: (a) (5 Points). Are there any concerns he should be aware of if he chooses to use a entity approach rather than a cross purchase approach? (b) (10 Points). If you determine that there are any disadvantages to the entity approach, explain whether the cross purchase approach would correct these deficiencies and, if true, how? (c) (5 Points). Then the CFO asks if the cross purchase agreement adds any disadvantages of its own compared to the entity agreement? (d) (5 Points). Do the disadvantages of the cross purchase agreement also exist when the entity agreement is used?