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WHEREAS, [ESL] is willing to sell its joint venture
interest in Parker Properties and Twenty Mile for the
sum of $10,000.00 and Commercial is willing to accept
the sum of $10,990,000.00 in full settlement and
satisfaction of its above-described loan balances, all
subject to fulfillment of the terms of this Agreement,
and Parker Properties is desirous of purchasing such
joint venture interests and paying the outstanding
balances of the loans to Commercial as adjusted.
The draft agreement also provided that Parker Properties would
pay ESL $10,000 for its interest in Parker Properties and Twenty
Mile. In addition, Parker Properties was to pay Commercial
$7,990,000 cash and deliver a $3 million promissory note.
Handwritten just above the terms of the agreement appeared the
following: "WHEREAS Prior closing Commercial will contribute
capital to and reduce indebtedness - ESL wholly owned subs".
On June 22, 1988, the investing partners' attorney faxed
Commercial and its attorney a followup letter outlining the
transaction and referring to "what the borrower would like the
transaction to look like." The letter contained the following
chart which detailed "how the transaction would result":
Convert to
Debt Equity Forgive To be Paid Note
Parker Properties $9,319,963 $3,419,963 --- $2,900,000 $3,000,000
Twenty Mile 3,395,492 1,395,492 ---2,000,000 ---
Parker 480 3,256,910 --- $156,9103,100,000 ---
Total 15,972,365 4,815,455 156,910 8,000,000 3,000,000
On June 28, 1988, Commercial’s accountant was asked to
provide his comments "from a tax standpoint." Based on his
understanding of the proposed agreement, the accountant opined
that:
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Last modified: May 25, 2011