Restore, Inc. - Page 7

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          Paragraph 18 of the Marketing agreement stated:                             

               This Agreement shall be initially valid for a period of                
               5 (five years) from the date of its signing by the last                
               of the two Parties.  Unless terminated in accordance                   
               with the provision of paragraph 19 (nineteen) below, it                
               shall be automatically renewed thereafter on a year by                 
               year basis.[4]                                                         

          The Marketing agreement was signed by Mr. Fares as president of             
          Matrix and by Mr. Werner as president of petitioner.                        
               At the time the Marketing agreement was signed, petitioner             
          began incurring expenses, building inventory, and accruing                  
          receivables.  Petitioner also began accruing royalties owed to              
          Matrix under the terms of the Marketing agreement.  Petitioner,             
          however, has never paid any of the accrued royalties to Matrix.             
               Prior to Matrix's first shareholders' meeting in April of              
          1984, Matrix estimated that by August of 1985 petitioner would              
          have positive cash-flow.  Also, the shareholders of Matrix agreed           
          that although Matrix expected to accrue over $2 million in                  
          royalties from petitioner by August 1985, Matrix would cause the            
          royalties to be retained by petitioner until petitioner's cash-             


               4Paragraph 19 states:                                                  

               This Agreement may be terminated by either Party at any                
               time during its validity in case of breach of any of                   
               its provisions by the other Party and failure to                       
               correct the breach within 30 (thirty) days from                        
               notification to that effect by the complaining Party to                
               the breaching Party.                                                   




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