WSB Liquidating Corporation - Page 12

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          interdependent with the Pension Agreement, makes the character of           
          the payments clear and fully supports respondent’s contention               
          that the payments functioned as alimony or as a constructive                
          dividend to Barbara.  Although petitioner argues that the Pension           
          Agreement and the Settlement Agreement are independent and                  
          separate agreements, the record contradicts this claim.  Both               
          agreements were executed on the same day; the Settlement                    
          Agreement makes specific reference to, and attaches as an                   
          exhibit, the Pension Agreement.  More significantly, the                    
          Settlement Agreement modifies and supplements the terms of the              
          Pension Agreement, in one instance providing for a modification             
          of the amount of the payments (in the event that Walter’s salary            
          or other benefits from petitioner increased) and in another                 
          supplementing the Pension Agreement’s terms (by providing for               
          Walter’s personal guaranty of petitioner’s obligation in the                
          Pension Agreement to make the payments).  It also bears                     
          mentioning that the Settlement Agreement effectively imposed                
          obligations on petitioner, notwithstanding the fact that                    
          petitioner was not a party to the agreement.  The Settlement                
          Agreement does so by having petitioner’s controlling shareholders           
          “agree” that the payments under the Pension Agreement will be               
          increased in certain circumstances.  Obviously, the Settlement              
          Agreement contemplated that petitioner’s shareholders would use             
          their controlling positions to effect petitioner’s implementation           

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Last modified: May 25, 2011