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proposed a purchase price in excess of $8 million, of which 90
percent would be paid in stock and the remaining 10 percent in
cash.
Moshe Melnik, who was surprised at the amount of the MMI
proposal, was interested in the proposal and sought legal advice
regarding it from Larry Pennoni, an attorney whom he had met when
Larry White had offered to purchase HouTex in the 1990s. Mr.
Pennoni practiced in the areas of tax, international tax, and
corporate mergers and acquisitions. Moshe Melnik and HouTex’s
accountant, Margie Reedy, met with Mr. Pennoni on a date that
does not appear in the record to discuss the proposed sale of
HouTex. Moshe Melnik wanted advice from Mr. Pennoni on the risks
to himself and to Zalman Melnik if MMI acquired HouTex.
On dates that do not appear in the record, Mr. Pennoni met
with the Melniks and discussed with them the risks of being sued
by Barbara Melnik, whether the original HouTex valuation would be
respected in such a suit, and how to prove that any offer to
purchase HouTex was received after Moshe and Barbara Melnik’s
property settlement agreement. Mr. Pennoni outlined the tax
aspects of a merger agreement and discussed with the Melniks
various planning scenarios that might be used in connection with
the sale of HouTex stock. The scenarios that Mr. Pennoni
explained included setting up trusts for Moshe Melnik’s children
and gifting HouTex stock to them or putting the stock in a trust,
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Last modified: May 25, 2011