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driving the Corona transaction and were the primary reason in
1997 for Imperial’s investing in the Corona transaction.
3. Initial Purchase of SMP’s Interest in Corona
SMP and Imperial executed a purchase agreement (the purchase
agreement), as of December 15, 1997, providing for Imperial’s
purchase from SMP of a 79.2-percent membership interest in
Corona. According to the purchase agreement, Imperial was to pay
$1,252,000 for the membership interest, of which $212,000 was to
be paid in cash and the $1.04 million balance was to be paid with
a note. In connection with the purchase agreement, Imperial
executed a $1.04 million promissory note (the $1.04 million note)
dated December 15, 1997, payable to SMP. On December 18, 1997,
Imperial paid $212,000 to SMP. No payments of principal or
interest were ever made on the $1.04 million note.60
In an amendment and restatement dated as of December 15,
1997, Corona’s LLC agreement was amended and restated to reflect
the admission of Imperial as a new member of Corona. This
document reflected Imperial’s agreement to pay SMP a fee of 20
percent of the tax losses received from Corona. This fee was to
be structured as a contribution by Imperial to Corona and a
60 Pursuant to the $1.04 million note, interest was to
accrue at a rate of 8 percent per annum and was payable
semiannually on June 15 and December 15 of each year. Imperial
agreed to pay the outstanding principal amount of the $1.04
million note together with accrued and unpaid interest thereon on
Dec. 15, 2002.
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