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In 1988, Mr. Wright decided he wanted to leave MEC. A
dispute arose because Mr. Wright believed that he owned 40
percent of the outstanding shares of MEC, while Mr. Gussman and
Mr. Friedman believed he owned only 10 percent. Mr. Wright also
believed that MEC had paid Mr. Gussman and Mr. Friedman
disproportionately larger bonuses than it had paid him. The
corporate records of MEC reflect that Mr. Wright was a 10-percent
shareholder, because he owned 40 shares of MEC’s 400 outstanding
shares of common stock. Mr. Wright was emotionally distraught by
the discrepency between his understanding and the corporate
records.
Mr. Wright engaged the law firm of Paul, Hastings, Janofsky
& Walker (Paul, Hastings) and began a lengthy effort to extract a
resolution from MEC and the other shareholders that would provide
a significant payment to him. Tolliver Besson and John Burns of
Paul, Hastings represented Mr. Wright in negotiating with MEC and
the other shareholders.
By October 1990, Mr. Burns was engaged in settlement
negotiations on behalf of Mr. Wright. Mr. Burns prepared two
draft agreements as part of the negotiations. The first was
dated October 26, 1990. It outlined a settlement including a $7
million stock buyout and a payment of $1 million for emotional
distress. It did not contain any reference to the underpayment
of compensation. The second draft agreement was dated January
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