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Diamonds and stated in pertinent part:
the Diamonds have agreed to forestall collection of
rent until such time as judgement has been rendered in
the litigation ongoing. This is also in consideration
of the risk that litigation may be unsuccessful, and
the Diamonds would be out their rent due. They are
willing to extend this credit as further consideration
to avoid personal litigation expenses in the ongoing
suit.
Allocation by DCI and the Diamonds of
the Proceeds of the Farmers Lawsuit
On August 9, 1988, the Diamonds, in their capacity as the
officers and shareholders of DCI and in their capacity as the
owners of ETS, met with attorneys from Markowitz & Herbold in
order to discuss how the proceeds of the Farmers lawsuit should
be divided or allocated between DCI and the Diamonds as the
owners of ETS. On that date, Markowitz & Herbold issued a check
to DCI in the amount of $1,162,780, which contained a notation
indicating that that check was in "settlement of claims" and
which was endorsed by Mr. Diamond as president of DCI. On that
same date, Markowitz & Herbold also issued a check to Mr. Diamond
in the amount of $400,000, which contained a notation indicating
that that check was in "settlement of personal claim", was
endorsed by Mr. Diamond as an individual, and represented the
Diamonds' share of the proceeds of the Farmers lawsuit as the
owners of ETS. The law firm of Markowitz & Herbold retained
$692,203 of the proceeds of the Farmers lawsuit as attorneys'
fees and costs that were incurred in the Farmers lawsuit (attor-
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