- 10 -
Funds Received Relating To Amount
Outstanding Stock $16,750,000
Covenant Not to Compete 5,000,000
Petitioner’s Taxes 2,589,759
Total $24,339,759
Also, upon closing of the LBO on August 25, 1989, under
separate agreements that were referred to as bonus and
noncompetition agreements, a total of $1.25 million was paid to
Panzica, Battistella, and Navarra. As stated, in years prior to
the LBO, these individuals generally had been underpaid by
petitioner for their services to petitioner, and an understanding
existed between Cruze and these individuals that, if Cruze ever
sold his stock in petitioner, an effort would be made to pay
these individuals additional compensation for their prior
services rendered to petitioner. Accordingly, in the
negotiations with JC Investors, Cruze emphasized that he wanted a
total of $1.25 million to be paid to Panzica, Battistella, and
Navarra in recognition for their services in prior years. In the
negotiations, however, JC Investors was hesitant to pay the
employees $1.25 million. Cruze then offered to have $1.25
million reduced from the $18 million that tentatively had been
agreed to be paid to him by JC Investors if this $1.25 million
would be paid to Panzica, Battistella, and Navarra for their
services in prior years. Petitioner and JC Investors agreed to
this reduction and, as indicated, under the final agreement that
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