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specifically contracted for, but were essentially discretionary
with W&H.
Moreover, up until the execution of the April 1987 addendum
to the Contract, petitioner was fully liable on a recourse basis
to repay W&H for the excess draws petitioner received. This
repayment liability caused petitioner’s certified public
accounting firm to express serious concern about petitioner’s
continued existence and economic viability, in the accounting
firm’s management letter dated May 23, 1986, to petitioner’s
board of directors and Executive Committee.
Although petitioner had a longstanding existence before its
involvement with W&H, the position W&H occupied in relation to
petitioner, during 1984 and 1985, was in many ways analogous to
that of a founder and major contributor to a new organization.
Petitioner, which was on the brink of insolvency, was being
heavily financed and kept in existence by W&H pursuant to the
fundraising arrangement that petitioner and W&H entered.
Petitioner became dissatisfied with its lack of control over
the Escrow Account funds. In 1986 and 1987, petitioner made a
number of concerted efforts to obtain more control over the
Escrow Account. However, its efforts were unsuccessful as a
result of W&H’s refusal to give up control over the account. W&H
continued to retain control over the Escrow Account long after it
and petitioner knew the direct mail fundraising campaign was
financially successful.
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