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promote GTE Sylvania's products; (3) dedicate on average at least
12 lineal feet of shelf space to GTE Sylvania's products in its
member stores; and (4) purchase $17 million in lamp products
during the term of the agreement. In consideration of Westpac's
volume purchase commitment, GTE Sylvania agreed to pay Westpac
$1,100,000 as an “unearned advance allowance”. This allowance
was paid to Westpac by check dated July 31, 1990. GTE Sylvania
further agreed to pay Westpac $200,000 on the first, second, and
third anniversaries of the agreement, provided that Westpac
established to the satisfaction of GTE Sylvania an adequate
warehouse distribution arrangement. During Westpac's 1991 tax
year, GTE Sylvania paid to Westpac the first $200,000 annual
installment.
The contract refers to the total $1,700,000 in payments as
the “Westpac Allowance” and contains the following passage
regarding Westpac's obligation to repay such allowance:
Upon termination of this Agreement, WestPac will
reimburse GTE Sylvania on a pro-rated basis for any
portion of the WestPac Allowance advanced to WestPac
but not earned due to the failure by WestPac to
purchase at least $17.0 million in lamps.
GTE Sylvania further reserved the right to decrease the Westpac
Allowance if, in its judgment, Westpac did not (1) use its best
efforts to promote and purchase for resale GTE Sylvania branded
lamps or (2) dedicate on average at least 12 linear feet of shelf
space to GTE Sylvania products through its member stores.
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Last modified: May 25, 2011