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to obtain from banks without Mr. Kadlec’s accompanying personal
guarantee. In addition, at a special meeting on May 6, 1986,
SLI’s board ratified Mr. Kadlec’s 1985 advance. The corporate
minutes indicate that Mr. Kadlec’s advance was necessary, because
no other sources of funds were available. SLI has never made any
payments of principal or interest to Mr. Kadlec pursuant to these
notes.
From 1984 through 1987, SLI subleased office space to
Datatrol, producing rental income as follows:
Year Rental Income
1984 $31,033.31
1985 65,218.95
1986 62,008.39
1987 32,168.17
Mr. Kadlec believed that his advances to SLI would be repaid out
of profits generated by product sales and from rental income
received from Datatrol. The sublease with Datatrol ended in
August 1987, and SLI was unable to find another subtenant until
1990.
On March 15, 1988, at a special meeting of SLI’s board of
directors, the board declared Mr. Kadlec's promissory notes for
1981 through 1985 worthless. However, at the same meeting, the
board ratified a note dated December 31, 1987, to Mr. Kadlec in
the amount of $43,900 for money that SLI had borrowed from Mr.
Kadlec. Mr. Kadlec also made additional advances subsequent to
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