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nontaxable. To satisfy the concerns of Balfour's attorney that
such an allocation could expose Balfour to liability,
petitioner's attorney agreed to insert language in the agreement
stating that petitioner would indemnify Balfour for any Federal
income tax liability asserted against Balfour for unpaid Federal,
State, or local taxes owed on the settlement payment to
petitioner.
On November 30, 1993, petitioner and Balfour signed a
settlement agreement. Paragraph 1 stated that petitioner would
receive $425,000 and that his attorneys would receive $125,000.
The agreement stated that the $425,000 payment settled
claims for compensatory damages arising out of alleged
wrongful discharge, * * * [and]
* * * * * * *
Neither this Agreement nor any action on the part of
Balfour or Town & Country required by the Agreement,
nor the allocation or description of the Settlement
Amount as recited in paragraph 1 hereof, constitutes an
admission by Balfour or Town & Country of any unlawful
or tortious action.
The latter language was placed in the agreement as a caveat to
the statement in paragraph 1 that the settlement payment was made
to compensate petitioner for his claim of wrongful discharge.
The agreement also let petitioner represent Balfour's competitors
and sell non-Balfour products or services to Balfour's customers
in the New York City territory.
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