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as we have a buyer for it by the end of the year.)” The email
further states:
5. * * * [Imperial] will need to put capital in for
the tax sharing, above and some debt to increase basis.
* * * Paul [Lasiter] understands this point. I want to
use paart [sic] of the cash to invest with The Lew
Horowitz organization to finance movie production.
This will come out of our share of the tax sharing
payment. * * *
On or about December 12, 1997, drafts were prepared of a
purchase agreement and an amendment and restatement of the Corona
LLC agreement. In the purchase agreement, SMP agreed to sell and
Imperial agreed to purchase 80 percent of SMP’s interest in
Corona. Mr. Gubman reviewed these drafts and made a handwritten
notation on the draft amendment and restatement of Corona’s LLC
agreement which proposed that “if Imperial’s Allocated Losses are
disallowed, then upon liquidation of the Company [Corona] all
moneys contributed to the Company by Imperial shall be returned
to Imperial and accrued interest shall be paid thereon at the
Treasury (IRS) rate.”59
On December 17, 1997, at a fourth meeting of Imperial’s
board of directors, Mr. Snavely announced that Mr. Lerner had
submitted a revised proposal under which Imperial could invest in
Corona rather than SMP. Imperial’s board reviewed and approved
the revised proposal. Mr. Snavely testified that tax losses were
59 This notation was the only significant comment that Mr.
Gubman made on the draft amendment and restatement of the Corona
LLC agreement.
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