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the repayment of any portion of the upfront payments received by
Save Mart or Westpac, American Greetings calculated Westpac's
repayment obligation at $406,243 on a prorated calendar basis.
Westpac's internal correspondence reflected a repayment
obligation of $512,500 based on the percentage of the volume
purchase commitment it had satisfied. Accordingly, Westpac
accepted American Greetings’ lower demand and paid American
Greetings $406,243 by check dated September 28, 1995. The check
stub contains a notation that the payment constitutes a
“repayment of contract adv[ance]”.
McCormick Contract
On or about March 4, 1991, Westpac entered into an agreement
with McCormick & Co., Inc. (McCormick), dated February 27, 1991,
by which Westpac agreed to use McCormick as its “primary
supplier” of spices, extracts, foil seasonings, mixes, gourmet
spices, and cake decorations. In addition, Westpac agreed to
purchase $50 million in McCormick products over an indefinite
period.
In consideration of Westpac's commitments, McCormick agreed
to make a series of cash payments to Westpac and to supply
Westpac with certain amounts of free products. In particular,
McCormick agreed to pay Westpac $5 million4 and to provide
4 McCormick actually paid Westpac $4,801,000 during the
1991 taxable year.
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