- 8 -
the promissory note and the pledge and escrow agreement.6 Mr.
Reif suggested several changes to the promissory note and the
pledge and escrow agreement, but none of the changes were made
and the documents were executed as originally drafted by Mr.
Neill.
No formal appraisals determining the value of BHC or its
stock were made prior to the signing of the purchase documents.
Mr. Becker and William Becker fixed the price themselves. There
was no discussion at the time of the sale about allocating any
portion of the consideration to the covenant not to compete.
In the fall of 1991, William Becker’s accountant, Richard
Lynch (Mr. Lynch), informed William Becker that BHC missed tax
advantage opportunities by not allocating any portion of the
consideration to the covenant not to compete. Mr. Lynch
suggested that William Becker meet with Mr. Dempsey (BHC’s chief
financial officer) to discuss the possible allocation of a
portion of the purchase price to the covenant not to compete in
exchange for additional consideration or a shorter noncompete
period. In February 1992, William Becker and Mr. Lynch met with
BHC, Mr. Dempsey, and an accountant for BHC to discuss redrafting
the purchase documents. However, the discussions terminated, and
no agreement was reached.
6 We refer to the redemption agreement, the promissory
note, and the pledge and escrow agreement collectively as the
“purchase documents”.
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