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* * * Please sign the originals and return them to me
for inclusion in the corporate record book. * * *
The enclosed Security Agreement was dated February 15, 1980,
and gave Kolonaki "a present security interest in collateral
described as all of the personal property * * * of DEBTOR
[Georgiou], * * * to secure * * * advances under a certain line
of credit". The Consent by Directors document dated 1988
resolved that all advances made under the line of credit to
Georgiou shall bear interest at the rate of 10 percent per annum.
Interest only payments were due annually, with all unpaid
principal due December 31, 1995.
During 1989 and 1990, Kolonaki paid Georgiou a salary of
$144,000 and $225,641, respectively. The Georgious' 1989 and
1990 Form 1040 tax returns show adjusted gross income of $218,281
for 1989 and $283,987 for 1990. Georgiou stated that he believed
the salary he received from Kolonaki was very low.
During 1989 and 1990, Kolonaki had taxable income and
retained earnings as follows:
Year Ended
Sept. 30 Taxable Income Retained Earnings
1989 $1,149,333 $2,391,725
1990 1,032,955 2,424,499
Kolonaki did not pay dividends for either 1989 or 1990. Kolonaki
has never paid dividends for any year since its incorporation.
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