9
exchange for $3.5 million cash and cancellation of a $724,000
intercompany receivable owed by Thor to S&B.
The S&B board of directors held a telephone conference
special meeting on November 14, 1988. The minutes of that
meeting state:
RATIFICATION
Mr. Fender asked for ratification by the Board of
the previous informal discussion after the previous
meeting concerning the declaration on April 29, 1988,
of an asset distribution dividend to the shareholders
of record on May 31, 1988. The dividend will consist
of the balance classified on the Company's books as
"Intercompany" and will be distributed in the same form
and character as it is carried on the Company's books
as of six months from the date of declaration. The
dividend will be distributed on January 31, 1989.
There will be no adverse tax consequences to Shefferman
& Bigelson Company. Mr. Shefferman made a motion that
the Board ratify the details set out above regarding
the informal discussion after the previous meeting.
Mrs. Fender seconded and the motion carried
unanimously.
There were no restrictions, qualifications, or contingencies
associated with the payment of the dividend distribution
referenced in the minutes of the November 14, 1988, meeting.
Richard Anderson, an accountant who advised petitioner on the S&B
stock sale, did not attend or participate in any April 29, 1988,
meeting of the S&B board of directors, and there are no minutes
of that April 29, 1988, meeting.
On November 17, 1988, Thor and the Buyer entered into an
agreement whereby the Buyer approved, pursuant to section 4.18 of
the SPA, the dividend declaration set forth in the November 14,
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