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86 years old, Poesch was 77 years old, and Simone was 34 years
old.
Among other things, the 1987 redemption agreement provided
that, upon decedent’s death, the company would redeem from
decedent’s estate a sufficient number of decedent’s shares to
provide decedent’s executors with the funds necessary to pay
death taxes, funeral expenses, and administration expenses (the
mandatory redemption). The company had the option to purchase
additional shares (the optional redemption). The 1987 redemption
agreement also gave the company a right of first refusal
restricting decedent’s right to transfer his shares during his
life.
When executed, the 1987 redemption agreement did not contain
any price terms. In order to establish those price terms, the
parties agreed: (1) KPMG Benchmark (Benchmark) would appraise
the value of the company’s shares (the 1987 appraisal), and (2)
that appraisal value would control the agreement’s price terms.
Decedent did not further negotiate the price terms in the 1987
redemption agreement.
The values in the 1987 appraisal were later entered onto the
1987 redemption agreement. Those values were as follows: Common
shares, $440 a share; 4-percent preferred shares, $34.75 a share;
6-percent preferred shares, $48 a share.
The 1987 redemption agreement provided that, with respect to
the mandatory redemption, the company was required to pay the
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Last modified: May 25, 2011