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The sales price for the media division’s assets was
$1,200,000. Of this amount, Demco received $120,000 in cash; it
also received the purchasing partnership’s note (media note) for
the remaining $1,080,000 due. The media note was collateralized
by substantially all of the acquired assets and bore interest at
7.64 percent. Mr. Wall expected Demco to receive full payment of
the media note, and the note’s outstanding principal amount had
been reduced to approximately $430,000 by the time of trial.
Prior Transactions in Demco Stock
The parties have identified six transactions in Demco stock
that occurred between 1978 and the gifts in 1992. All six
transactions involved the sale or repurchase of stock to or from
Demco employees. Three of the transactions occurred more than 5
years before the gifts. The three others occurred approximately
2 years before the gifts, on February 9, 1990, when Demco
redeemed a total of 600 shares of its voting common stock from
three of its officers.
The redeemed shares were subject to a buy-sell agreement at
the time of the redemptions. The redemptions were not made
pursuant to that agreement, because neither of the events that
would have triggered the agreement (the death or termination of
employment of any of the officers/shareholders) had occurred.
The redemption price paid to each officer was instead determined
through individual negotiations. However, under the terms of the
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