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Questions and controversies have arisen between
counsel for the Foundation and counsel for the Company
regarding the interpretation of * * * the Redemption
Agreement. One interpretation would require the
Company to purchase, and the Foundation to sell, all of
the Shares. Another interpretation would require the
Company to purchase, and the Foundation to sell, only
the voting shares. The Foundation and the Company
understand that it is uncertain how a court would
resolve the varying interpretations of the Redemption
Agreement.
The instrument then provided that the Foundation would sell, and
SSE would purchase, all of the shares, both voting and nonvoting,
at an initial purchase price of $869,450,800.
Also on August 4, 1994, decedent’s Federal estate tax return
was signed by Lawrence, Mark, and Paul. The return was received
by respondent on August 10, 1994. Therein, decedent’s SSE stock
was valued at $869,450,800 in his gross estate, and a charitable
deduction was taken in that same amount for the bequest of the
shares to the Foundation. Similarly, the above-referenced
redemption transaction was completed on August 23, 1994, with the
Foundation receiving cash and a note totaling $869,450,800.
After the foregoing events, in May of 1995, Lorrie, Mark,
David, and Paul, individually and as parents of decedent’s
grandchildren, filed suit in the U.S. District Court for the
District of Minnesota against SSE, the Foundation, Alfred, and
Lawrence. In their amended complaint, the plaintiffs brought
numerous direct and derivative claims based principally on the
contention that, under the Redemption Agreement, “Schwan’s was to
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