The opinion of the court was delivered by: WOODS
Henry Woods, U.S. District Judge.
I. The Corporate Structure of Vertac
1. Vertac ceased all of its manufacturing operations at its Jacksonville site in May 1986. From June 30, 1986, Vertac's business consisted of marketing agricultural chemical products. Vertac would purchase raw chemicals, formulate them into product and sell the product. Vertac would also buy formulated product and resell it.
2. Vertac had a supply contract with Dow Chemical, U.S.A. ("Dow") under which it would purchase raw product from Dow for resale, with the latter receiving a percentage of the resale proceeds and retaining a security interest in the materials.
3. In August 1986 Phoenix Capital Enterprises, Inc. ("Phoenix") acquired 100 per cent of Vertac from three Panamanian corporations. Phoenix is owned entirely by C. P. Bomar, Jr. who is its president and sole director. Ann Pekovich is secretary of Phoenix.
4. The minutes of a meeting of the shareholders of Vertac on September 15, 1986, called to fill vacancies on the Board of Directors, disclosed that the sole shareholder in Vertac was Phoenix who executed the minutes by its president, C. P. Bomar, Jr. The secretary was J. L. Hanna. At this meeting Bomar appointed J. Randal Tomblin and Raymond A. Guidi directors.
5. Vertac employed J. Randal Tomblin to serve as president for a two-year term, succeeding Bomar, who had served from 1980 until his resignation on June 30, 1986. Tomblin has served since July 1, 1986 at a salary of $ 117,500 plus a directors fee of $ 12,000 and an incentive bonus of $ 25,000. The contract of employment was executed on Vertac's behalf by Bomar, as Chairman of the Board. (PX 6).
6. On July 15, 1986 the officers of Vertac were as follows:
C. P. Bomar, Jr. Director
1119 Audubon Drive Chairman of the Board
Memphis, Tennessee 38117
J. R. Tomblin Director
2816 Hunter Forest Drive President and
Germantown, Tennessee 38138 Chief Executive Officer
R. A. Guidi Director
232 South Highland - Apt #805 Vice President of Operations
Memphis, Tennessee 38111
J. L. Hanna Vice President of Finance
2576 Shepherdwood Lane and Secretary-Treasurer
Germantown, Tennessee 38138
G. T. Manley Vice President of Marketing
Memphis, Tennessee 38134
Anne Pekovich Assistant Secretary
385 North Highland - Apt #4
Memphis, Tennessee 38122
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