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terms of the trust. The trustees had the power to vote any stock
or other voting securities held in the trust. In case of death,
resignation, refusal, removal, or inability to act of either of
the trustees, the remaining trustee was to act as sole trustee.
Redemption Transaction
In 1987, after discussions between decedent and Nikita
Maggos, attorneys for Nikita Maggos and PCAB prepared documents
which effected the transaction at issue in this case. All
documents that were prepared to effect the transaction were
executed together as part of an integrated transaction. Pursuant
to the above-mentioned documents, Nikita Maggos and decedent, as
cotrustees, transferred 567 PCAB shares from the trust to
decedent (in her individual capacity) on May 1, 1987. PCAB then
redeemed the 567 PCAB shares from decedent. Decedent received
the redemption price from PCAB in the form of a promissory note
with a $3 million face amount and a 10-year maturity. The note
provided for interest to be paid annually at a rate of 8 percent
per annum and principal to be repaid in a single balloon payment
at maturity. As a result of the redemption transaction, Nikita
Maggos became the sole owner of PCAB.2
2The redemption was subject to a pledge agreement that acted
as a security for the performance of the promissory note.
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