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that Northwest would issue 1,000 shares of class B common stock
to be purchased by petitioner for $1,000. At the end of 3 years,
Nicholson was granted an option to repurchase petitioner's 51-
percent stock holdings of class A common stock at book value if
petitioner's loans to Northwest had been repaid and corporate
debts guaranteed by petitioner had been paid. Nicholson viewed
petitioner's ownership of the Northwest stock as a temporary
arrangement because he intended to purchase the stock back from
petitioner in a very short time. Petitioner granted Nicholson a
further option to buy the shares of class B stock from petitioner
at the end of 10 years for $1,000 plus interest, but only if
Northwest had repurchased petitioner's class A stock. Petitioner
also lent Northwest $22,983 to be repaid over 10 years. In a
separate agreement dated September 9, 1985, petitioner and its
officers guaranteed the floorplan of Northwest up to $1.2 million
financed by Idaho First National Bank (Idaho First). Prior to
this time, Fishfader had guaranteed Northwest's floorplan. Idaho
First also required petitioner to pledge as additional collateral
a certificate of deposit in the amount of $150,000.
A floorplan arrangement works as follows. The dealership
wanting coaches for inventory makes the necessary arrangements
with a lender. When the dealership orders a coach, the
manufacturer contacts the lender for approval to ship the coach
to the dealership. Title documents are sent through the banking
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