Dennis A. and Tai K. Praegitzer - Page 9

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               7.  Corporation will assume, by novation if possible,                  
               SBA loan in the amount of $58,000 (if novation not                     
               possible, Kathy and Kerry Dawes will hold Appellant                    
               harmless by appropriate agreement.)                                    
               8.  Appellant will transfer all shares of stock in the                 
               corporation to the corporation or Kerry Dawes.                         
               9.  The formal agreement to be structured to result in                 
               the least amount of tax liability legally possible for                 
               the Appellant; to the extent that the settlement                       
               agreement reached does result in tax liability to the                  
               Appellant, the agreement will be structured, if                        
               possible, to the Respondent's tax benefit.  For                        
               example, in the event the sums being paid would result                 
               in Appellant paying taxes on $60,000, then the                         
               Respondent would have the right to place in the                        
               agreement a covenant not to compete to that extent.                    
               10.  Appellant agrees to dismiss the Shasta County                     
               action in which an OSC is pending, and this appeal,                    
               when a final settlement agreement is executed; each                    
               side to pay its own costs and the remittitur to go down                
               forthwith.                                                             
               11.  Corporation or Dawes to retain all rights pursuant                
               to two assigned agreements dated November 12, 1980.                    

          Subsequent to December 12, 1989, there were additional                      
          negotiations concerning the terms and structure that the eventual           
          settlement agreement would take.  Subsequent to the December 12,            
          1989, settlement conference, Mr. Lopez, as counsel for petitioner           
          Dawes, and Mr. Murphy, as counsel for petitioner Praegitzer,                
          engaged separate tax counsel for advice on how to structure an              
          agreement pursuant to the 12/12 agreement.  Mr. Lopez consulted             
          Howard Schweitzer, and Mr. Murphy consulted Kevin Schoneman.                
               Mr. Schoneman proposed a structure involving payment of                
          $103,000 by petitioner Dawes and transfer of Ameritech assets               
          from Ameritech to petitioner Praegitzer, as outlined in a                   



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