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f. Recapture
The 1989 Agreement had an unlimited duration, and petitioner
could not unilaterally terminate it. Although Guardian could
recapture the underlying business after January 1, 1992, without
paying a recapture fee, the option to do so was solely
Guardian's. At various times after January 2, 1992, Guardian
could have elected to terminate the 1989 Agreement and recapture
the underlying business, leaving petitioner with a significant
loss. For example, if on January 3, 1992, Guardian had elected
to terminate the agreement, petitioner would have owed Guardian
approximately $945,000; i.e, the amount of the negative EAB.
If the 1989 Agreement had been terminated as of June 30, 1992,
petitioner would have owed Guardian approximately $606,159, for
the then-negative EAB.
g. Termination
The third amendment, which terminated the 1989 Agreement,
was drafted by Guardian. The third amendment provided that each
party to the 1989 Agreement waived any rights it had, that the
termination was conclusive for all purposes without exception,
and that neither party to the agreement would owe the other any
further obligations after the termination date. Guardian agreed
to the termination because it believed that the EAB had become
positive, and that it would have otherwise had to begin paying
petitioner profits from the underlying business. Petitioner
agreed to the termination because the Commissioner had challenged
the 1989 Agreement, and Mr. Gordon was concerned about how her
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