- 8 -
flow became positive or until its financial performance allowed
it to obtain credit at agreeable terms from a U.S. financial
institution. On December 17, 1984, Mr. Fares and Mr. Werner
signed a document entitled "Addendum No. 1" (addendum) to the
Marketing agreement. The addendum adds to paragraph 6 of the
Marketing agreement and states in part:
1. Royalty fees accruing since inception, until 31st
December, 1984, will be payable on the 31st
January, 1985.
2. As of 1st January, 1985, royalty fees will be
payable based on the net sales realised [sic] each
quarter, and will become due one month after the
end of each quarter, the first time on 30th April,
1985, on the basis of the first quarter's sales.
3. In consideration of the financial situation and
the cash position of RESTORE INC., the parties may
agree on postponement of payment to a mutually
agreeable later date. However, in such
circumstances, the amounts due will bear interest
from the due date, until the time of payment, at
the rate of 2% p.a. (two percent per annum) over
the U.S. prime rate. The applicable rate will be
the rate published on the first banking day of
each quarter, with validity for the full quarter.
This addendum forms an integral part of the above
[Marketing] Agreement.
The addendum was signed by Mr. Fares as president of Matrix and
by Mr. Werner as president of petitioner. For the tax year
ending December 31, 1985, petitioner accrued, expensed on its
books, and deducted for tax purposes, interest payable to Matrix
on the accrued royalties at an interest rate of prime plus two
percent. Petitioner never paid Matrix the accrued interest. As a
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011