Liquid Air Corporation and Subsidiaries - Page 6

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          was delivered to petitioner at closing.4                                    
               Prior to the closing, approximately 80 percent of                      
          petitioner's stock was beneficially owned, assuming conversion of           
          certain preferred stock, by L'Air Liquide S.A. (L'Air Liquide), a           
          French corporation.  Approximately 2 percent of petitioner's                
          stock was owned by officers and directors of petitioner.  The               
          remaining 18 percent of petitioner's stock was publicly owned and           
          was traded on the over-the-counter market.  After the closing,              

          4We note that the percentage of post-July 1978 earnings provision of the    
          Contract was not literally followed.  On brief, petitioner explains this as 

                    We point out, for purposes of completeness, that Chemetron's      
               contractual obligation to deliver 50 percent of the pre-tax            
               earnings of the IGD Division from July 3, 1978 to the day              
               immediately preceding the closing merely reflected the parties'        
               initial expectation (ultimately unrealized) that the closing would     
               take place in the third quarter of 1978, but before the record         
               date for the third quarter LAC dividend.  That is, the parties         
               expected that Chemetron would be receiving the full third quarter      
               dividend from LAC even though it would only have owned the LAC         
               stock for a portion of the third quarter.  Thus, the "50 percent       
               of pre-tax earnings" amount referred to in the Contract merely         
               refers to (i) the 25 percent of pre-tax earnings balancing, or         
               mirror, amount negotiated by the parties, plus (ii) an additional      
               25 percent of pre-tax earnings from the beginning of the third         
               quarter dividend period to the anticipated closing date,               
               representing the portion of the third quarter LAC earnings that        
               would be paid as a dividend to Chemetron after the (originally         
               anticipated) closing date even though allocable to a period prior      
               to which Chemetron would actually own the relevant LAC shares.  It     
               is apparent that the parties sought carefully and minutely to          
               negotiate the economics of the transaction.  However, the closing      
               of the transaction ultimately did not take place prior to the          
               record date for the third quarter dividend for 1978, as the            
               parties had initially expected.  Rather, as a result of the            
               protracted FTC investigation, the closing actually took place on       
               March 28, 1979--i.e., at the close of the first quarter of 1979,       
               but after the record date for the first quarter dividend.              
               Therefore, Chemetron never had to "disgorge" a portion of a            
               dividend allocable to a period during which it did not actually        
               own the LAC stock, and no "50% of pre-tax earnings" amount ever        
               had to be calculated or paid.                                          

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