CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 73

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          Cap Corp. (through Koehler), CKH (through Koehler), CKS (through            
          Koehler), and petitioner (through Crispin) executed a December 2,           
          1996, stock purchase agreement under which CKH assumed $2.259               
          million Cap Corp. debt in exchange for 100 percent of the                   
          outstanding stock of CKS (503,820 shares); and (2) CKH (through             
          Koehler) and petitioner (through Crispin) entered into a December           
          2, 1996, “Debt Conversion Agreement”, under which they agreed               
          that CKH would issue to petitioner 215,990 shares of CKH $10                
          preferred stock in exchange for petitioner’s cancellation of all            
          but $100,000 of the $2.259 million Cap Corp. debt assumed by CKH.           
          CKH paid the $100,000 of the Cap Corp. debt by offsetting it                
          against a $100,000 receivable due to CKH from petitioner.                   
               CKS (which CKH was acquiring from Cap Corp.) was worth far             
          less than $2.259 million as of December 2, 1996.  Crispin and               
          Koehler estimated that CKH’s net asset value (excluding CKS’s               
          indeterminate and highly speculative value) did not exceed                  
          $100,000 after the debt conversion transaction.11                           


               11As will be discussed more fully infra in connection with             
          the National Service Industries (NSI) consulting fee issue, at              
          the time Crispin Koehler Holding Corp. (CKH) was created in                 
          October 1996, NSI was negotiating with petitioner for                       
          petitioner’s help in arranging an NSI subsidiary’s divestment of            
          a “tax benefit transfer lease” without adverse tax consequences.            
          To effect such a divestment, it would be necessary for petitioner           
          to use a securities broker-dealer like Crispin Koehler Securities           
          (CKS).  On Dec. 1, 1996, NSI and petitioner executed a consulting           
          agreement whereby petitioner would be paid a $2.5 million                   
          consulting fee for its services in arranging such a divestment.             
          Petitioner contends that it and CKH had previously reached an               
                                                             (continued...)           




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