SEC Presentation #3

SEC Presentation #3 (1/9/07) Barry Goldsmith Anthony Mahaj an Jim Walden Subject to Confidentiality Agreement of 11/14/2006 • GIBSON. DLINN'Sz,CRUTO.-11 ri LIP and ab w& s. EFTA00727161 DBZ 0008548 Airplane Purchase Barry Goldsmith O '40 -0 N O 0 0 0 14 C • o Subject to Confidentiality Agreement of 11/14/2006 c --/ ..S-111EZ13 •el :AA C C O >, V C2 EFTA00727162 900ZmllIJOJUOlI 加9』牙v向【偉pupg 【xo3m 鞫a畔s . oAii9dooo 人II屯S勘＼人Ut(11110D ● no!）眼岩DsaAuI Juapucdapu ! ui pnpuoj O) Sn PaJIH )s3Ja)uI q)IA生Spit珥pⅣdai'A生jIAaJ 4Iq阜u。pas眼玨翻 At扒u uii粵.iad o辜 2壯SPa'!H. 900Z釦J,tj UtpaJaA 。jsIp AUIcIIU03 M 3nssIJ0 S!SaUaD cOnfi 暑凱 ti 山1Trea 竹皋＝" Re e est 盅 思m rieFIan 甫arri8 sbriVer m Ja 　呂伍 OnI 日怕 白曲蜘 000Bs4 曲 EFTA00727163 O I. Executive summary • Date: Summer and Fall 2005 • Summary: $3.77 Million from LP and Hcma temporarily used to fund purchase • Purpose: Pay certain acquisition costs and down payment for letter of credit • Confirmed: SRZ conclusions • Gruss knew about and approved use of LP and HCM/Z money • Mixed evidence on Kahn's knowledge Subject to Confidentiality Agreement of 11/14/2006 GIBSON, DUNN SiCRCTCHER-LLP EFTA00727164 II. Detailed chronology A. Pre-closing events • Spring 2005: Dan Zwirn's travel became increasingly frequent and global • Zwirn began considering purchase of private plane. See Tab 1-2 • 8/5/05 — 9/14/05: O'Hara paid pre-closing costs from management company account, subject to reimbursement by Dan Zwirn. See Tab 3-8 Subject to Confidentiality Agreement of 11/14/2006 GIBSON. DUNN & CRUTC FR_Ltr EFTA00727165 Pre-closing events Payments from Management Company Date Transfer Source Transferee Amount 8/5/05 D.S. Zwirn & Co. Jackson, Wade & Blanck, LLC $10,000 8/12/05 D.B. Zwirn & Co. Jackson, Wade & Blanck, LLC $315 8/22/05 D.B. Zwirn & Co. PrivatAir, Inc. $25,000 9/1/05 D.B. Zwirn & Co. Insured Aircraft Title Service, Inc. $250,000 9/14/05 D.B. Zwirn & Co. MLBFS Equipment Finance $35,000 Subject to Confidentiality Agreement of 11/14/2006 D4 O EFTA00727166 B. Financing ■ Airplane Cost -- $17.95 million ■ Kahn/Gruss discussed possible need for revolver in the management company for regular expenses and airplane. See Tab 9 ■ Merrill Lynch financed 90% of transaction but required $1.9mm letter of credit • Citibank agreed to provide it as part of management company revolver • Later decoupled from Citi revolver ■ Closing targeted no later than 9/30 for tax reasons Subject to Confidentiality Agreement of 11/14/2006 "qtalgagnEl EFTA00727167 C. Closing ■ 9/26/05: Kahn advised Zwirn - "LC in place . . . now just waiting for the Merrill docs which we should get tonight." Tab 10 ■ Gruss and Kahn expected the Citi revolver, including letter of credit for plane, to be in place by Friday, 9/30/05. See Tabs 11-13 Subject to Confidentiality Agre.ement of 11/14/2006 GlBSON.DUNN &CRUTCHE Nu FY wd EFTA00727168 Closing (cont.) • Up until this point, all payments advanced by the management company • However, on September 27, 2005, Kahn emailed Li Anne Law: • "LL -- can you pls arrange to have the $1.9MM wired to Citi asap for the issuance of the LC. This will only be a short-term deposit in that once the Citi revolver is in place (should be w/in a week) we will credit the amount against the line." Tab 14-15 Subject to Cor4dentiality Agreement of 11/14/2006 GIBSON, DUN N SLCIRUfC EFTA00727169 O Closing (cont.) ■ 9/27/05: Kahn emailed Law to wire an $80,250 facility fee to Merrill. See Tab 16 ■ 9/28/05: Both payments made from HCM/Z. See Tab 30 Subject to ConfidentiaEty Agreement of 11/14/2006 Sitigi2M=1.12E2MEMOEMSZ 23=g-gatz. --1.0 EFTA00727170 Closing (cont.) • 9/29/05: Kahn emailed Law to wire $1,681,350 for plane expenses: • "we are trying to do the close late-morning/mid- day." Tab 17 • Kahn stated that this was "full remaining payment by n Holdings, LLC relating to the purchase." Tab 18 • 9/30/05: Kahn emailed Law and O'Hara to wire $112,575 in broker fees to Privatair. See Tab 19 Subject to Confide,:tiality Agreement of 11/14/2006 EFTA00727171 Closing (cont.) ■ Both payments made from LP account. See Tab 20-21 ■ All payments from LP or HCM/Z approved by Gruss. See Tabs 20-21 & 30 Subject to Coadeatiality Agreement of 11/14/2006 EFTA00727172 Transfers Using Fund/Managed Account Money 9/28/05 HCM/Z Special Opportunity LLC (Acct # 102-27052-USD-2) MLBFS Equipment Finance $80,250 9/28/05 HCM/Z Special Opportunity LLC (Acct # 102-27052-USD-2) Citibank, N.A. $1,900,000 9/29/05 Highbridge Zwirn LP (Acct # 721599) Insured Aircraft Title Service, Inc. $1,681,350 9/30/05 Highbridge Zwirn LP (Acct # 721599) PrivatAir, Inc. $112,575 Subject to Confidentiality Agreement of 11/14/2006 DBZ 0008559 EFTA00727173 Closing (cont.) ■ O'Hara prepared expense spreadsheet for Kahn, which he reviewed. Spreadsheet ■ In response to the spreadsheet, Kahn wrote, — "But you didn't format for letter printing... :). Very good..." Tab 22 Subject to Confidentiality Agreement of I I/ 14/2006 reggetwar r...t.mamm,yfeerat— ,7",14'1Wer .101230.011 1 EFTA00727174 Remaining Payments ■ 10/25/05: O'Hara emailed Gruss • "Please approve - $163,267.50 for DZ airplane expense. Fyi, I am now out completely of cash. ... I have about 2MM of invoices holding on my desk waiting to be paid." Tab 23 ■ Gruss reply: • "okpag. Pls move $ from Ltd" Id. ■ However, no subsequent transfer from LTD to management company; management company money used instead Subject to Confidentiality Agreement of 11/14/2006 BSON. DUNN &CRU TCHE R. LLNY 1 EFTA00727175 W. Reimbursement for Closing Costs • 11/1/05: Month after close, revolver still not in place • Gruss email to Citigroup: • "What's the status? This is beyond ridiculous." Tab 24 II 11/4/05: $8.1 million of Citibank revolver credited to Management Company account. See Tab 25 Subject to Confidentiality Agreement of 11/14/2006ws "1" Gb W Y1 1'4 EFTA00727176 Reimbursement for Closing Costs (cont.) 11/9/05: Law email to Gruss • "Repay LP fund for airplane wires (3.8)." Tab 26 • Law was not being precise — money actually owed to LP and Highbridge ■ Law intended to repay the money borrowed despite the fact that she felt "our cash needs thru dec are look pretty tight." Id. k"A Subject to Confidentiality Agreement of 11/14/2006 111111•1111111MNINIMMIOMIIME 61BSON, DUNN &CRUTCH ERLLP 5,2 Wit EFTA00727177 Reimbursement for Closing Costs (cont.) ■ 11/10/05: Law email to Gruss • "we need to send $3.77mm from the new account where we recvd the 8.1mm loan back to the LP fund for reimbursement of the airplane wires." Tab 27 IN 11/10/05: LP was reimbursed. See Tab 28 ■ 11/23/05: HCM/Z reimbursed. See Tab 29 DBZ 0000564 va Subject to Confidentiality Agreement of 11/14/2006 E, GIBSON, DUNK&CRUTCHEA_ t • ga, EFTA00727178 Reimbursement for Closing Costs (cont.) • 5/06: Issue uncovered by new controller • Company engaged SRZ to conduct investigation • Based on SRZ review, company compensated • 6/12/06: DBZ paid compensation for lost interest • $29,624.07 to LP. See Tab 30 • $97,395.32 to HCM/Z. See id. — HCM/Z paid through year end despite repayment in November 1.1 41' Subject to Confidentiality Agreement of 11/14/2006 ;e, UN N & CRUI EFTA00727179 III. Witness Perspectives • Law: • Because she primarily dealt with transfers from funds and HCM/Z, she believed Kahn was directly asking for payment from those sources • No recollection of any discussions about the transfers from LP or HCM/Z for plane-related expenses • But any transfer of fund and managed account money required Gruss' approval, which she received Spbject to Confidentiality Agreement of 11/14/2006 • GIBSONcDUNN &4CRUICRI::RILP • • EFTA00727180 Witness Perspectives (cont.) ■ O'Hara: • Kahn directed all transfers for plane-related expenses • Tasked with keeping track of plane-related expenses for later reimbursement by Dan Zwirn • Does not recall discussing with Kahn, Gruss or Law the use of fund money for plane expense payments prior to the transfers • Generally responsible for accounts payable for management company; Law responsible for fund side • After transactions, knew fund money used for payments Subject to Confidentiality Agreement of 11/14/2006 EFTA00727181 Witness Perspectives (cont.) ■ Gruss: • Was against plane purchase because of liquidity problems • Shared his concerns with Kahn and others, but not Zwirn • Kahn was largely responsible for the transactions • Intense pressure to close because of tax reasons • Gruss said he "likely" knew plane expenses were paid with fund money • Believes, but does not know as a fact, that Kahn knew • Did not discuss source of payments with Zwirn Subject to Confidentiality Agreement of 11/14/2006 EFTA00727182 Witness Perspectives (cont.) • Zwirn: • Did not know fund/managed account was used for plane expenses • Was never informed of any actual details of transaction, other than high-level updates on progress and generally how transaction was to be financed • Knew about Citibank revolver but did not know of management company liquidity problems o. 11 G1 d as Subject to Confidentiality Agreement of 11/14/2006 ":4 EFTA00727183 2 Witness Perspectives (cont.) • Kahn: • Said he did not know plane expenses were paid with fund money • Did not discuss source of four managed account/fund payments with Gruss, Law, O'Hara, or Zwirn • Discussed management company liquidity problems and need for revolver with Zwim Subject to Confidentiality; Agreement of 11/14/2006 1 *.G.1:B.-.$O1'.°;,1; DUB` N &..CRUICFEEP: EFTA00727184 Postscript on Kahn ■ That He Knew • Knew management company liquidity was low and borrowing maybe required to complete purchase • First documented contact with Law was just prior to closing when $$ wired from HCM/Z and LP -- all other dealings with O'Hara • On 10/25/05, he reviewed O'Hara's spreadsheet, including references to "FUND" as a source for payments Subject to Confidentiality Agreement of 11/14/2006 aWFilr'+`..7.=5 20.9.04Mgr' EFTA00727185 900Z/4 JO matandy Aniegu pgtiononDa Itins (pal-Eddins sIsugdma) 6j qEl ,,... amp ol alum saauvapv d磷戶/unman atp＝ maul aip 01377 ‘sffuipioll- rz tgno／dvdai mat a　‘縱（?jj!wow awoau! aaf *numb ixau gartPdal :(CO/OE/6) A＼町01. jpIlla • gams jo posiApe ATIROUTOOdS SEM 8trimacis sumo ou `ssaig oNITun • Posn $ Z/INDH 2S' cfl MOIDI lou pip Qil SUMl.UMW • 　。 hfide =g 山1 T Heat1 同＆廿 t Re .= est 盅 邏羿＆M “山＝一 Harrisshriver 一 Ja n呂．gg . AtouN JON plia all ）眼 u EN tuteI uo plmosisod 。出蚪 。。。曲m 嘞忡 EFTA00727186 O O O V. Conclusions • LP and HCM/Z used to fund portion of plane transaction • Gruss knew of and approved use of money from those sources • Mixed evidence on Kahn • Law effectuated transfers based on emails from Kahn • O'Hara knew after-the-fact • No evidence Zwirn knew that LP or HCM/Z were sources for payments • LP and HCM/Z repaid with interest Subject to Confidentiality Agreement of 11/14/2006 EFTA00727187