Re: M

Hello

I just left you a voicemail. I would like to speak with you briefly ab=ut the terms of the deal you proposed to MZ so that we can give it appr=priate analysis. Could you please give me a call at 301- 404-4736 tel:301-404=4736 or reply t= this email as soon as possible? We are trying to schedule a conference=call with tax advisors on Monday between 10 and 12 and it would be very he=pful to have your proposal in hand by then.

Thanks and Happy New Year.

EH you told me that morts basis in the 12 perce=t notes had been written down, can you explain, . can you tell me=the status of the trust accounting to date. ? you stated that Rand R=A0 was being valued, and planned to put it in a preferred partnership. = what is the plan if the cashflow is not enough to pay the preferred. ?=

where and when is the COD?

On your question abou= Mort's basis in the notes, I checked with Brian and He said the notes=had not been written down so I gave you bad information. Sorry.

In my opinion, your purchase of the receivables from Mo=t would not cure the COD issue we are worried about. Even if the sale gene=ated a capital loss, that would not offset ordinary income from COD. Howev=r, we will continue to explore this along with other ideas

My partner is working on an accounting for the 1983 and=1996 trusts. She is still getting data. This has been in process for le=s than a month. I expect that it will be some time before it is done becau=e I am told that the records prior to 2000 are limited.

SRR is appraising R&R. We are hoping, of course, th=t the cash flow will be sufficient to cover the preference. Since we don&#=9;t have the appraisal or the preference yet we don't know whether thi= will be a

problem. If it is, I would use debt to reduce value so cash f=ow would cover the preference. This is a problem under section 2701, becau=e the common has to equal 10% of enterprise value before debt, but we will=figure it out.

COD is first at the e=tity level but is allocable to Mort.

As to when - many possib=lities. Substantial modification of debt, actual forgiveness, contribution=of the debt to the company, transfer of Mort's interest, to name a =ew.

all understood, but i dont see it on sale. ? what is th= basis in the equity? If the debt were to be bought for roughtly the sa=e amount as the equity, . eventually , the debt would receive the prefe=rence giving the holder enough money to pay off the equity, . ( p=tential gain issues.? ) . I would thihnk an eventual bankruptcy . could=be a solution , after his death,