International Capital Holding Corp. and Subsidiaries - Page 12




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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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