- 8 -
their stock ownership. Clinpath conducted no business during the
period from October 5, 1993, the date of Clinpath’s
incorporation, through October 30, 1993.
B. Sale of Clinpath Stock to NHL
Pursuant to an acquisition agreement dated October 30, 1993,
on October 30, 1993, immediately following the distribution of
Clinpath stock to petitioner’s shareholders, Clinpath
shareholders5 transferred all of the issued and outstanding
Clinpath stock to NHL in exchange for $5,530,000. The purchase
price paid by NHL for the Clinpath stock was negotiated and
agreed upon by unrelated parties at arm’s length.
As a condition precedent to the sale, NHL demanded that each
of Clinpath’s physician-shareholders execute covenants not to
compete, dated October 30, 1993. The covenants not to compete
provided that each of the physician-shareholders agreed not to
compete with NHL in the clinical laboratory business anywhere
within the 918 area code of the State of Oklahoma for 5 years,
except as provided in the contract. NHL paid each of the
physician-shareholders $10,000, or a total of $70,000, in
exchange for the covenants not to compete. The total
5Before completing the sale to NHL, petitioner’s
shareholders transferred 244 shares of the Clinpath stock they
received from petitioner to the profit-sharing plan of
petitioner’s business manager. Consequently, the Clinpath
shareholders consisted of petitioner’s shareholders and the
profit-sharing plan.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011