Utah Jojoba I Research, William G. Kellen, Tax Matters Partner - Page 18

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          be paid with the execution of the R&D agreement.  Subsequent                 
          installments of nine payments of $121,941 each, including                    
          interest on the unpaid balance at the rate of 7 percent, were to             
          be paid annually starting on July 31, 1983.  The final sum of                
          $232,921 representing the balance of the payments at 7 percent               
          and 2 percent of deferred interest not previously paid was to be             
          paid on July 31, 1992.  The record does not include evidence                 
          concerning actual payment of any of these amounts except for Utah            
          I's 1982 and 1983 tax returns and Pace's testimony that he                   
          recovered the amounts he advanced to start U.S. Agri from Utah I             
          funds.                                                                       
               The R&D agreement also specified that U.S. Agri was entitled            
          to "retain any and all amounts paid to it by the Partnership * *             
          * [Utah I], whether or not the R&D Program is successful and                 
          accomplishes the results contemplated hereunder.  * * * [U.S.                
          Agri] does not guarantee that its work will be successful and the            
          Partnership * * * [Utah I] shall have no rights of refund."  The             
          R&D agreement further provided that "Any real property and                   
          tangible personal property acquired or improved" by U.S. Agri in             
          connection with the research and development program was to                  
          remain U.S. Agri's sole property and that "no ownership rights in            
          such property will be transferred to the partnership * * * [Utah             
          I]."  The R&D agreement also stated that no income from the                  
          jojoba plantation was anticipated during the research and                    





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