Loren F. Paullus and Donna Paullus - Page 16

                                       - 16 -                                         

          determined that Shen’s proposal was unacceptable, and Paullus was           
          authorized to terminate negotiations and “proceed with the sales            
          of lots in the Unit 10 subdivision.”  On December 6, 1988, Shen’s           
          representative, Drosihn, and Paullus, however, signed a letter of           
          intent delineating the terms and conditions for Shen’s purchase             
          of Ridgemark’s outstanding shares.  Ridgemark reserved the right            
          to structure a tax-free or tax-deferred exchange without any                
          added cost or risk to the buyer.                                            
               On December 7, 1988, Shen rejected the proposed stock sale             
          because of “an adverse unresolved tax problem”.  Drosihn,                   
          however, advised Paullus that Shen was still interested in                  
          purchasing Ridgemark and sought a meeting of tax specialists to             
          structure the transaction in a mutually acceptable manner to                
          resolve the tax problem.  It became evident that Shen was not               
          interested in purchasing the Ridgemark Golf and Country Club                
          unless Paullus agreed to manage the operation for a period of 10            
          years.  Paullus was unwilling to continue the management of the             
          golf course and resort facilities.  On December 13, 1988,                   
          Ridgemark’s board of directors met to discuss Shen’s new offer to           
          purchase the 120 lots in the unit 10 subdivision.3  The tax                 
          consequences of the proposed purchase were discussed in the                 

               3 The minutes for Aug. 23, 1988, reflect that due to a                 
          boundary dispute, Ridgemark decided to exclude the disputed strip           
          of land and reduced the land in question from 164 to 120 lots.              

Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011