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share values were used when the ESOP purchased BCC shares and
when the BCC stock of ESOP participants was redeemed. BVS
concluded that the value of 100 percent of BCC stock was
$8,041,126 ($86.73/share) as of January 31, 1996, and $8,491,321
($164.01/share) as of January 31, 1997.4
IV. Life Insurance and the Death of Mr. Jennings
As part of succession planning, BCC obtained life insurance
of approximately $3 million each on the lives of decedent and Mr.
Jennings. Decedent also had BCC’s controller, Mr. Truono,
prepare “pro forma” financial analyses showing the impact on BCC
of the redemption of his and Mr. Jennings’s shares at different
prices and under various assumptions. Mr. Jennings died on
January 13, 1996, and BCC received $3,046,823 in life insurance
proceeds. BCC redeemed Mr. Jennings’s shares in September 1996
for $2,990,791, the price being based on BCC’s book value of
approximately $6.4 million at the preceding fiscal yearend, as
required in the 1981 Agreement.5 BCC used $1,990,791 in cash and
4 Mr. Jennings died on Jan. 13, 1996, and his 43,080 shares
were redeemed pursuant to the 1981 Agreement, see infra Pt. IV,
on Sept. 4, 1996. The substantial difference in per-share value
between the 1996 and 1997 BVS valuations reflects the redemption
of Mr. Jennings’s shares that occurred between the two
valuations.
5 Mr. Truono calculated BCC’s book value as of the preceding
fiscal yearend (Jan. 31, 1995) and the resulting price for Mr.
Jennings’s shares.
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