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were to be deposited.13 Second, HJA, NBC, Henry, Abram, and
Julius entered into an agreement dated August 27, 1990 (the sweep
account agreement), which established the sweep account agreed
upon in the side letter agreement. The sweep account agreement
required HJA to deposit the covenant not to compete payments
($23,767 per month for 120 months) into the sweep account. It
also required NBC to make specified disbursements of those
deposited funds, including $7,999 per month to FirsTier and
$6,393 per month to Chevrolet “until the obligation of HM is
fully paid”.14 The remainder of the sweep account funds was to
be paid to Henry and to the appropriate Federal, State, and city
income tax agencies to satisfy Henry’s tax obligations resulting
from the purchase of his stock and the covenant not to compete
payments.
4. The Sweep Account Payments
Pursuant to the EOA and the side letter agreement, HJA paid
the option price to Henry and began to deposit the covenant not
to compete payments into the sweep account. HJA continued to
13Henry and Esther attached the side letter agreement to
their 1992 Federal income tax return.
14The monthly payment to FirsTier under the sweep account
agreement equaled the monthly payment required by the FirsTier
note signed by Henry and Esther in their individual capacities,
as modified by the Apr. 5, 1990, term note. The monthly payment
to Chevrolet under the sweep account agreement equaled the
monthly payment Henry was required to make on the Chevrolet debt.
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