The Cleveland Trencher Company - Page 4

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          terms of payment to Mr. Aydin or AA&H are "irrevocable, sight               
          letter of credit confirmed by a major U.S. Bank", and provides              
          for a delay in payment of no more than 3 work days after funds              
          are received by petitioner.  The schedule of payments for the               
          three types of machines is identical to that under the first                
          commission agreement, except that the threshold of the obligation           
          to make payments with respect to the most expensive, heavy-duty             
          machine--Model 7036-SD--is raised from $122,000 to $128,000 per             
          unit.  The second commission agreement contains four pairs of               
          disjunctive references to "Metin Aydin or AA&H International":              
          The preamble referring to the following terms of payment to                 
          Mr. Aydin or AA&H for "sales he secures for the Government of               
          Turkey"; petitioner's acceptance of liability "for amounts due"             
          to Mr. Aydin or AA&H when an acceptable letter of credit is                 
          received; the agreement of Mr. Aydin or AA&H to allow delay in              
          payment of no more than 3 business days after funds are received            
          by petitioner; and Mr. Aydin's two signatures on behalf of                  
          himself and AA&H.                                                           
               In October 1987, Mr. Aydin, having sold trenching machines             
          for petitioner in previous years as a sales representative,                 
          became the owner and sole shareholder of petitioner.  He owned              
          100 percent of the stock of petitioner during the taxable year              
          ended September 30, 1989.  His acquisition of petitioner occurred           
          against expert advice questioning his wisdom in doing so.                   

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Last modified: May 25, 2011