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of NSI Enterprises, the tax benefit lease, the RD stock, and the
Decatur realty. Before August 31, 1996, Corisma had been an
inactive subsidiary of NSI Enterprises. Concurrently with the
conveyance of the Decatur realty to Corisma on August 31, 1996,
NSI leased back the Decatur realty from Corisma under a net lease
agreement for use by NSI’s Lithonia division.
Beginning in the fall of 1996 through December 1, 1996,
Meder (on NSI’s behalf) sought petitioner’s services in finding a
buyer for Corisma and helping NSI to consummate a sale of
Corisma’s shares to that buyer. On December 1, 1996, petitioner
and NSI Enterprises executed a consulting agreement pursuant to
which petitioner ostensibly would provide consulting services to
NSI Enterprises and its corporate affiliates for a 3-year period
ending November 30, 1999, in exchange for the $2.5 million fee,
payable “in advance” (December 1, 1996) at the inception of the
NSI Enterprises-petitioner consulting agreement.
As of the conclusion of the December 2, 1996, debt
conversion transaction, aside from CKH’s 100-percent stock
ownership interest in CKS, CKH did not have any significant
assets. Koehler held 91 percent of CKH’s outstanding common
stock and Crispin held the remaining 9 percent. Petitioner held
a large preferred stock interest in CKH. Koehler estimated that
petitioner’s CKH preferred stock represented 98 percent of the
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