Exploring the mind of Barry .......
Barry used some clever trickery when he sold the original Empire company. Nearly every business sale includes a non-compete clause.
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By splitting (legal) hairs he got away with it when starting an identical business (Apotex) by claiming Barry Sherman LLC and Barry Sherman are two different things. ....
From what I read, the company who purchased Empire did not pursue any infringement in that regard.
And we must remember the first offer Barry made to the Empire trustees was rejected.
Are you talking about the offer made to Lou Winter's wife? Are you talking about the offer made to the trustees after Beverly Winter's death? Both were declined, and I'm not aware that we know the monetary value of the offer? Are *you*? From what I read, the offer was for BS to become general manager for approximately one year only, during which time he would manage and protect the value of the company in return for a salary, a vehicle, and right of first refusal should the company be sold. (“proposed that he would “assume the position of General Manager of the pharmaceutical and chemical companies until January 31, 1966, in consideration of……the right of first refusal on the sale of the…..assets”, a salary, and the use of an automobile. His offer was open for one day. Royal Trust rejected the offer.” )
His next offer was for more money and was accepted . In part because it also included future plans for the orphaned children and the deal was accepted by Royal Trust .
On what are you basing that BS’s next offer was for more money, when the first offer was merely to become general manager in return for pay? Royal Trust had apparently listed the business for sale on the open market and already had one bonafide offer on the table. BS's offer was for FAR more money (28.7% higher - approx $450,000 vs $350,000) than the only other offer.
BS's offer ALSO included an 'option' that for as long as the buyers (BS and his co-purchaser) owned the company, the orphans would each be given the opportunity to work there at a certain age/time, and that after working there for TWO YEARS, each orphan would THEN be allowed to each *acquire* 5% of shares in the company. The *other* prospective purchaser would NOT have been subject to ANY such terms, and would have purchased the company for some hundred thousand LESS dollars, had BS's offer NOT been put forth. What do you suppose would have happened to the boys then? (“In 1967, however, Royal Trust decided to sell the Empire Companies’ business….. Sherman and Joel Ulster’s offer of about $450,000 was the higher of the two offers, about $100,000 above the only other offer.
[16] The Sherman & Ulster offer also included an option for the Winters children to be employed by the purchased business and to acquire 5% of the shares of the company if employed for two years.
[17] The option had four pre-conditions attached; the opportunity of employment and subsequent acquisition of shares would only arise if all four pre-conditions were met. If any one of the conditions was not fulfilled at the point in time when the children were to have the opportunity of employment or share acquisition, Sherman’s obligations were to be null and void.
[18] Royal Trust had wanted stronger option terms that would have inhibited Sherman’s ability to resell the purchased business or take the Empire Companies public. Sherman refused such terms.”)
Remember that Royal Trust had the responsibility for the future of the children and Barry's "sweetener promise" of employment and share ownership appeared to satisfy the trust company .
What would Royal Trust have done had BS *not* come along with an offer of almost 1/3 more money AND the ‘sweetener promise’? Would RT *ever* have found a buyer who would be willing to operate indefinitely under such an option agreement? Personally, I wouldn’t think so.
But Barry was clever enough to add the caveat ... "only if he was still owner of the business" .
Would you expect that BS or anyone, should be so UNclever as to beholden themselves to uphold an option to provide employment and 5% each of the shares of a company one did NOT own??
Fair enough , a careful businessman would want to protect himself from unseen circumstances. But Barry would have known full well it also released him from the future obligations and intentions such as the "sweetener clause" regarding the orphaned children which he signed with the trust company to get them to approve the original sale to him.
Well, YES! It seems that RT thought it was okay for themselves to sell the business, but NOT okay for the purchaser to sell the business. That makes sense. (NOT!) But yet somehow, BS is being made out to be a heinous villain by some.
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Regarding the trust company ....
Royal Trust maybe should have retained control of those proceeds (the sale of Empire) (many hundreds of thousands of dollars) They could have dispensed the proceeds on behalf of the Winter children including payments to the adoptive parents (who took on a huge responsibility) with a remainder of the funds dispensed to the children when they achieved adulthood.
RT was selling Empire – the *only* OTHER offer was for 1/3 LESS, at $350,000 NOT many hundreds of thousands of dollars. I’m sure RT dispensed those funds as they saw fit, as the executors of the Winter estates. As a sidenote, imho, usually adoptive parents adopt children without being compensated.
Remember , back in those days (1970's) investment incomes and bank savings account interests were very high , some Government of Canada savings bonds paid 19% . If the net proceeds of the Empire sale was $300,000 even just a 10% return would be $30,000 per year , a handsome income in those days , even for a family with 5 children.
How would that have looked for *each* of the 4 orphans upon their reaching adulthood? Doesn’t seem to come close to ‘Bank Sherman’, which BS became to the boys, through no legal obligation.
I expect that whatever the adoptive parents did with the funds was honorable , what they did is none of my business , and none of our business .
My point is that Royal Trust was obligated to take care of the future of the orphaned children. In hindsight they maybe could have done better ..... which I understand was one aspect of the legal actions taken by the Winter children . (I believe the lawsuit was against BOTH Barry Sherman and Royal Trust).
Barry sold the original Empire company without honoring the signed non-compete contact , along with the fact it removed the responsibility he signed with Royal Trust regarding the orphaned children .
BS’s ‘non-compete’ clause in the sale agreement when he sold Empire, had zero to do with this saga.
By splitting (legal) hairs he got away with it by claiming Barry Sherman LLC and Barry Sherman are two different things. Technically correct but has a very bad aroma surrounding it.
That BS went on to begin a new company he named Apotex has zero to do with the orphans.
The bad aroma was not enough to win the lawsuit on behalf of the orphaned Winter children , but it sure makes sense why they took the action in the first place.
Namely, greed, if we’re calling a spade a spade.
Not to mention that Barry and Apotex are known as the most lawyered up company in Canada. Not to mention the efforts a famous trust company would undertake to protect their good name.
The Winter children were up against a mountain of lawyers retained by billionaires .
