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case, the form of the transactions was a distribution of the
lawsuit from BFI to petitioners followed by a sale of stock by
petitioners to Norway.
The stock sale agreement states that “Purchaser acknowledges
that the following transactions may occur between the
Shareholders and the Company prior to the Closing Date.” Among
the transactions listed under that provision is the authorized
assignment of the lawsuit to petitioners: “The Company may
transfer to the Shareholders (or their designee) the rights
arising out of a lawsuit (the “Lawsuit”) commenced by the Company
in September 1995”. These provisions contemplate a distribution
of the lawsuit from BFI to petitioners before the stock sale
transaction.
Further, the actual assignment of the lawsuit to petitioners
took the form of a distribution from BFI that did not involve
Norway. In a document entitled “Written Consent in Lieu of
Meeting of Shareholders and Directors”, Messrs. Huse, Nymark, and
Steel, as directors of BFI, consented to the assignment of the
lawsuit. A document entitled “Assignment Agreement”, signed by
Mr. Nymark, as president of BFI, and Mr. Huse, as president of
Ottar, assigned the lawsuit to Ottar for the benefit of
petitioners. The form of the assignment was a distribution from
BFI to petitioners, not a transfer of the lawsuit by Norway to
petitioners for their stock.
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