Estate of George C. Blount, Deceased, Fred B. Aftergut, Executor - Page 41

                                       - 41 -                                         
               Because BCC’s shareholders had not exercised their right to            
          reset the purchase price, when decedent modified the 1981                   
          Agreement in November 1996, the price dictated under that                   
          agreement was set by reference to book value.  Thus, had decedent           
          died during the fiscal year in which he modified the 1981                   
          Agreement, he would have received approximately $7.6 million for            
          his BCC shares under the 1981 Agreement in unmodified form.                 
               The 1996 Agreement modified the “Purchase Upon Death”                  
          section of the 1981 Agreement by (1) eliminating book value as              
          the redemption price for decedent’s shares and replacing it                 
          instead with a fixed price of $4 million, (2) removing the                  
          automatic mechanism for adjusting the price annually on the basis           
          of book value, (3) eliminating the shareholders’ right to set the           
          price annually on August 1, and (4) precluding the right of BCC             
          to pay in installments.                                                     
               The estate raises several arguments as to why these changes            
          are not substantial modifications.  Focusing first on the change            
          in price, the estate argues that the setting of a new price in              
          the 1996 Agreement was not a change in shareholder rights because           
          the 1981 Agreement gave the shareholders the ability to change              
          the price, and thus the price change was “in compliance with the            
          agreement.”  We disagree.  As set forth in the regulations, the             
          validity of which has not been challenged, even if a change is              

Page:  Previous  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  49  50  Next

Last modified: May 25, 2011