- 9 - 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 bankingPage: 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