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provision” in the certificate, it intended to purchase the shares
because of the cessation of his employment with Drexel. The per-
share purchase price was set at the adjusted book value on May
26, 1989, which was $45.06. Pursuant to the terms of the
certificate, petitioner was entitled to contest Drexel’s
determination of the book value of the shares.
In August 1989 (effective May 26, 1989), Drexel redeemed the
shares in exchange for a cash payment of $67,950 and a
subordinated note (note) dated May 26, 1989, in the principal
amount of $166,361. The note was nonnegotiable and could not be
encumbered or disposed of without the consent of Drexel. The
note provided for two principal payments: The first, in the
amount of $142,930, was payable on November 26, 1990, and the
second, in the amount of $23,431, was payable on May 24, 1994.
Interest accrued on the unpaid principal balance and was payable
semiannually on June and December 15. On August 23 and December
19, 1989, Drexel paid petitioner interest on the principal amount
of the note pursuant to its terms.
Events Preceding the Bankruptcy of Drexel
In November 1986, the Securities Exchange Commission (SEC)
and the U.S. Department of Justice (Justice Department) commenced
investigations (investigations) of alleged violations of the
Securities Exchange Act by Ivan Boesky and Drexel insiders and/or
employees.
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