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operations of Norcom, with the exception of Mr. McColl’s work in
1992-93.
6. Payments From Norcom to Quest
Norcom did not make any payments to Quest before 1991 for
management services. In October 1991, Norcom paid Quest $1,716
to reimburse Quest for expenses incurred by Mr. McColl in a
meeting he conducted with LaSalle regarding Norcom’s loan. This
appears to be the only pre-1992 payment from Norcom to Quest that
relates to consulting services provided by Quest. From July
through December 1993, Quest issued monthly invoices to Norcom
for $3,146 for a “consulting fee.” From July 1993 through the
end of 1996, Quest regularly issued invoices to Norcom for
reimbursement of expenses. Also, in July 1993, Norcom paid to
Quest $76,000 for “management services” Quest provided to Norcom.
On January 1, 1994, Norcom and Quest entered into a formal
consulting agreement (the 1994 consulting agreement). The 1994
consulting agreement provided that Quest would provide to Norcom
advice on financial, strategic planning, and operational issues.
In turn, Norcom was required to pay Quest an annual consulting
fee of $62,500, payable in monthly installments of $5,208.33.
From the beginning of 1994 through the end of 1996, Norcom paid
Quest the monthly consulting fees. Respondent did not challenge
the deductibility of these compensation payments.
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