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As of January 1992, the Corporation and LAG had not agreed
to the terms under which they would characterize the $350,000 as
an investment in the Corporation. On January 27, 1992, LAG
informed the Corporation that LAG was considering the $350,000 as
debt owed to it by the Corporation as of December 31, 1991, and
that the Corporation was in default of that debt. LAG agreed at
that time to lend an additional $50,000 to the Corporation,
making the total debt $400,000. LAG agreed to cancel the entire
debt if it and the Corporation reached a royalty or other
satisfactory agreement by February 29, 1992. On January 27,
1992, Mr. Lettunich, in his capacity as secretary/treasurer of
the Corporation, signed a promissory note in which the
Corporation agreed to pay $400,000, with interest, to LAG by
February 29, 1992. Neither that note, nor the enclosed letter
from LAG to the Corporation, referenced the Partnership. Nor did
either the note or the letter provide that the debt was secured.
On February 2, 1994, an agreement concerning the $400,000
was reached between LAG, on the one hand, and Magnitude, the
Partnership, and the Corporation (collectively, the Dynadeck
group), on the other hand. Pursuant to that agreement, which
provided that it was effective as of January 1, 1991, the
Dynadeck group agreed that in consideration of the $400,000, they
would, among other things, pay to LAG a royalty equal to 5
percent of the gross receipts received by the Dynadeck group.
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Last modified: May 25, 2011