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On January 30, 1997, NSI paid petitioner the $2.5 million
fee mentioned in the December 1, 1996, consulting agreement.
Although the December 1, 1996, consulting agreement stated that
petitioner was to provide “consulting services” for a 3-year
period ending November 30, 1999, after January 30, 1997,
petitioner was not required to render any further services.
On February 1, 1997, CKS and petitioner executed an
investment banking services agreement, pursuant to which
petitioner agreed to provide consulting services to CKS with
respect to CKS’s disposition of the RD stock and the tax benefit
lease. Upon CKS’s disposition of the RD stock, petitioner was to
receive the net proceeds, less $132,000. Upon CKS’s disposition
of the tax benefit lease, petitioner was to receive 75 percent of
the net proceeds.
On February 4, 1997, LLDEC (now also a CKH subsidiary)
transferred the tax benefit lease and the RD stock to CKS. On
February 13, 1997, petitioner transferred $2 million to CKH. On
May 5, 1997, Norwest (through its subsidiary Norwest Equipment)
redeemed the RD stock and paid CKS $758,123.64 representing the
liquidation value of the RD stock, plus accrued dividends. CKS,
in turn, transferred $624,123.64 of the $758,123.64 to
petitioner, leaving CKS with $134,000.16
16As indicated above, the investment banking services
agreement between CKS and petitioner provided that $132,000 was
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