Accounting

Accounting

In negotiating the lease agreement, Big Bear paid $500,000 to its legal counsel Stripe, Berry, Mills and Buck ALP. The company is also required to pay $1 million of legal fees incurred by the lesser. Provision 2: The lease states a provision that Big Bear must pay a penalty to Goliath if Big Bear’s bank declares a default under its primary credit arrangement. The provision is dependent upon whether or not there is a “material adverse change” in Big Bear’s financial condition.

The Company believes the likelihood of default is remote and the bank has no relationship with the lesser. Provision 3: The lease agreement states that Big Bear’s annual lease payment must be $1 million per year and it is increased (but not decreased) by the same rate increase in the Consumer Price Index (ICP). These increasing levels of payments are ratable over 12 months at the beginning of each month. The annual increase in ICP is four percent In inception.

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