Leonard Pipeline Contractors, Ltd. - Page 5

                                         -5-                                          
          the fact that petitioner did not pay Mr. Leonard any compensation           
          in 1985 or 1986.3                                                           

               3    The minutes of the board meeting stated, in pertinent             
          part:                                                                       
               1.   The President, through his efforts as early as                    
               1984 and resultant personal and business contacts                      
               acquired from those efforts, was able to have the                      
               corporation placed on the bidding list for All American                
               Pipeline Company.                                                      
               2.   The President[,] having acquired expertise in the                 
               coating and insulation of pipe in Saudi Arabia during                  
               1978 through to 1980[,] was able to develop a new                      
               insulation process starting in 1984, which process was                 
               ultimately successful in securing the All American                     
               contract (the “contract”).                                             
               3.   The corporation, notwithstanding the successful                   
               insulating process, would have been unable to complete                 
               the contract without the financial backing of a public                 
               corporation or a joint venture partner with financial                  
               backing.  The President, through his thirty years                      
               association with the President of the Permanent                        
               Concrete Ltd., was able to secure a financially strong                 
               joint venture partner for the corporation, which                       
               partner secured for the joint venture Five Million                     
               Dollars ($5,000,000) of financing and obtained                         
               approximately Twenty-Three Million Dollars                             
               ($23,000,000) of bonding.  This was accomplished                       
               without giving up more than fifty percent of the                       
               participation which would have otherwise been the case.                
               4.   The President personally guaranteed the                           
               corporation’s share of the bank financing and                          
               indemnified the joint venture partner, Anchor Wate, a                  
               subsidiary of Permanent Concrete Ltd., in respect of                   
               the bonding and further pledged his assets in support                  
               of the guarantee.                                                      
               5.   The President has received no compensation from                   
               the corporation for 1985 and 1986.  In addition, the                   
               corporation was unable to pay compensation to its                      
               President in those years due to Royal Bank of Canada                   
               credit line restrictions, which credit line was also                   
                                                             (continued...)           




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