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personally guarantee performance of the contract and of all of
J&J’s financial obligations to SEKO.
J&J became indebted to SEKO in its first year of business.
In May 1989, J&J executed a promissory note to SEKO for an amount
in excess of $155,000. The borrowed funds were used to pay J&J’s
operating expenses. The promissory note reflected an unsecured
loan without interest and with payments scheduled to end on June
1, 1993, or upon termination of the independent contractor
agreement between J&J and SEKO. The payments were made from the
periodic settlement of commissions owed by SEKO to J&J. SEKO
would reduce the commission to J&J by an amount equal to 10
percent of the commission. Under this payment schedule, J&J paid
its indebtedness to SEKO in approximately 1 year.
TLC was also incorporated in 1988 but did not begin
operations until 1992 when it received its Ohio business
certificate. Mr. Shedd was the president and treasurer, and Mrs.
Shedd was secretary of TLC. TLC also contracted with SEKO and
established a customer base due to the SEKO affiliation.
TLC was incorporated with $500 paid in capital, and no
additional capital was contributed by the Shedds. Advances in
the total amount of $119,700 were made by J&J to TLC from
February 1992 through October 1995 for operating expenses
evidenced by unsecured demand notes bearing 7-percent interest
and signed by Mrs. Shedd, as TLC’s secretary, as follows:
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Last modified: May 25, 2011