John C. Archer and Nancy M. Archer - Page 7




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          3. Three computers                                  2,000                   
          4. 30 percent of the proceeds from                  2,800                   
          Archer v. Houseman                                                          
          5. PAYS’ covenant not to sue                       37,739                   
          (litigation settlement)                                                     
               Total                                         92,039                   
               For petitioners’ calculation to be valid, petitioner’s stock           
          in PAYS must have a value of at least $92,039, and the following            
          provisions in the agreement must have no value or values that               
          benefit the two parties to the agreement equally:  (1)                      
          Petitioner’s agreement to pay the $25,000 deductible for                    
          professional liability claims payments, (2) petitioner’s covenant           
          not to compete, (3) petitioner’s covenant not to sue, (4)                   
          petitioner’s agreement to indemnify PAYS for claims due to his              
          departure, (5) petitioner’s agreement to return PAYS’ property              
          not specifically given to him, (6) PAYS’ agreement to obtain                
          release or indemnify petitioner with respect to the note to                 
          Chester Young, (7) PAYS’ agreement to indemnify petitioner                  
          against judgments in a pending lawsuit, (8) PAYS’ assignment of             
          its collection contracts with Liberty and Trinity Counties to               
          petitioner, and (9) PAYS’ release of petitioner from liability              
          for the $100,000 line of credit.  Petitioners did not establish             
          that these items have no value or have offsetting values.  Thus,            
          it is impossible to calculate the value of PAYS’ covenant not to            
          sue.3                                                                       


               3  Petitioners contend that petitioner’s stock was worth               
                                                             (continued...)           





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