Thomas F. and Therese Grojean - Page 7

                                        - 7 -                                          
          and contemporaneously debited the account for the interest                   
          payments due under the Grojean note.  Petitioner was not entitled            
          to participate in any of the principal on the Schanno note until             
          American recovered its full share of principal.  After American              
          recovered its entire principal on the Schanno note, petitioner               
          became entitled to his share of principal as a credit against the            
          principal due on the Grojean note.                                           
               American had sole authority and discretion to exercise its              
          rights under the Schanno note without the advice or consent of               
          petitioner, including authority to do all of the following:  (1)             
          Alter or modify the Schanno note or collateral agreement; (2)                
          release, substitute, or exchange collateral; (3) waive any                   
          enforcement of any contractual terms against the borrower; or (4)            
          forbear from collection.  American issued to petitioner a                    
          participation certificate evidencing petitioner’s ownership of a             
          $1.2 million participation interest in the Schanno note.  After              
          execution of the foregoing transactions, on September 6, 1989,               
          Schanno Acquisition merged with and into Schanno, leaving Schanno            
          as the surviving entity and petitioner as the sole shareholder.              
               In October 1989, petitioner and American restructured the               
          Grojean note and the participation agreement by reducing the                 
          Grojean note to $1 million and reducing petitioner’s                         

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011