ASSIGNMENT OF LICENSE AGREEMENT
This Assignment of License Agreement (the "Agreement") is made as of
the 15th day of June, 1993 among NETWORK LICENSING, INC., a North Carolina
corporation having its principal place of business at 3101/2 West Franklin
Street, Chapel Hill, North Carolina, 27516 (hereinafter referred to as
"Network"); MICHAEL R. JONES, an individual residing at 233 Palmer Hill Road,
Old Greenwich, Connecticut, 06870 (hereinafter referred to as "Jones"); and
GERALD SINGER, an individual using an address of 3142 Pacific Coast Highway,
Torrance, California, 90505 and ARTHUR J. MURPHY, an individual residing at
18337 Superior Street, Northridge, California, 91324 (hereinafter collectively
referred to as "Licensor").
WHEREAS, Jones and Licensor have entered into an agreement dated
December 31, 1990 relating to U.S. Patents Nos. 4,554,446 and 4,672,377 and
improvements thereon, (including but not limited to any patent that may issue on
U.S. Application Serial No. 07/856- 250, filed March 25, 1992, or any foreign
patent that application thereon), a copy of which is attached hereto as Exhibit
A (the "License Agreement"), and an addendum, which may be executed, a copy of
which is attached hereto as Exhibit B ( the "Addendum") (collectively referred
to as the "New License Agreement"); and
WHEREAS, Network is desirous of an assignment of all of Jones' rights
under the License Agreement;
NOW, THEREFORE, the parties agree as follows:
1. The license previously granted to Jones by Licensor pursuant to the
License Agreement is hereby irrevocably assigned to Network.
2. Network hereby assumes responsibility for the fulfillment of all of
the terms and conditions of the License Agreement unless such terms are modified
in writing
signed by Licensor and Network.
3. Licensor hereby consents to and accepts the assignment of
the License Agreement to Network by Jones and agrees that Network shall
have the benefit of all the provisions thereof to the same extent as if
it were an original signatory thereto and were defined as the
"Licensee" as that term is used therein. Jones shall have no further
obligation or liability of any kind to Licensor under the License
Agreement, including, without limitation, any obligation, liability or
responsibility pursuant to Section E of the License Agreement, except
that obligation to Licensor under that agreement attached hereto as
Exhibit C. Licensor acknowledges that as of May 1, 1993, they have
credited Jones with Two Hundred Forty-Four Thousand Dollars ($244,000)
of the Five Hundred Thousand ($500,000) referred to in Section B of the
License Agreement in connection with the reduction of the royalty
thereunder. Jones and Licensor each warrants and represents that the
License Agreement is a valid and binding obligation of said party and
is in full force and effect as of the execution of this Agreement and
agrees to waive any right he or they may have to terminate the License
Agreement pursuant to Section D of the License Agreement based upon any
action or failure to act by any party thereto prior to the date hereof.
4. Except as otherwise specifically provided herein, Jones'
only remaining obligation or privilege under the New License Agreement
will be that, should a default in the License Agreement by Network be
alleged, Jones and Network shall promptly be so notified by Licensor.
If a default by Network, including, without limitation, any default
arising with respect to a breach of Section D4 of the License
Agreement, is
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determined to exist and is not timely cured by Network such that the
license granted by the Licensor under the New License Agreement is
terminated, then upon such termination and subject to Jones curing such
default the Licensor shall immediately grant a license to Jones
identical to that of the License Agreement, as modified by the changes
made by Paragraph 6 hereof.
5. The term of this Agreement shall be the
same as that of the License Agreement subject to the following: (a) If
the term of the License Agreement is reduced without the consent of
Jones, the term of this Agreement shall not be affected by such
modification of the term of the License Agreement and shall continue
for the term as set forth in the License Agreement; and (b) if the New
License Agreement is terminated because all the patents licensed
thereunder are determined to be invalid or unenforceable by a court of
competent jurisdiction, after all applicable appeals, this Agreement
shall have a term of five (5) years from the date of the final judgment
with respect to said appeals, if such determination is the result of a
challenge by Network, its successors, assigns, sublicensees or directly
or indirectly by any of its shareholders, this Agreement shall have a
term of fifteen (15) years from the date of such final determination;
provided, however, that in no event shall the term of this Agreement
exceed the term that the License Agreement would have had it not been
terminated as described above in this Paragraph 5(b).
6. Licensor agrees that Section M of the License Agreement
has been satisfied in full by the issuance of four (4) shares of the
common stock of Clearing Systems, Inc. ("CSI") to Gerald Singer and
four (4) shares of the common stock of CSI to
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Arthur J. Murphy, and that Section M of the License Agreement is hereby
terminated and of no further force or effect.
7. Licensor and Network agree that if any improvement or
extension to the Inventions (as defined in the License Agreement) which
improvement or extension is licensable to Network under Section A2 of
the New License Agreement is not accepted by Network, Jones shall be
entitled to receive immediately from Network and/or Licensor an
exclusive license of such improvement or extension to the same extent
that Network would have been entitled to receive it except for its
failure to accept the license thereof. In the event that Jones accepts
such exclusive license and pays the required expenses with respect to
the improvement or extension in question as required under the License
Agreement, Jones shall be deemed to be granted a sublicense under the
New License Agreement to the extent necessary to enable him to use in
commerce such improvement or extension.
8. As compensation for the assignment all of Jones' rights,
including but not limited to the license under the License Agreement,
Network will pay to Jones Five Thousand Dollars ($5,000) per month on
or before the 15th day of such month commencing with the month of June,
1993 until operating kiosks are installed in a second store.
9. Upon installation of operating kiosks in a second store,
the payment to Jones will increase by One Thousand Dollars ($1,000) per
month until it reaches the sum of Ten Thousand Dollars ($10,000) per
month.
10. Following collection by Network and/or its assignee or
sublicensee of
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gross revenues in an amount sufficient to trigger a
reduction in the royalty percentage payable to Licensor under Section B
of the License Agreement, the compensation set forth in Paragraphs 8
and 9 above will cease and Jones will then receive 1.7777% of the gross
collected revenues of Network and/or its assignee or sublicensee
derived from the business of Network and/or its assignee or sublicensee
as such business pertains to the Inventions (as that term is defined in
the License Agreement) throughout the remainder of the term of the
License Agreement, or $10,000 per month, whichever is greater. If,
however, the License Agreement is terminated pursuant to Paragraph 5(b)
hereof, the royalty payment to Jones under this Agreement shall be
$10,000 per month and no more. Notwithstanding the foregoing, if the
royalties payable under the License Agreement are reduced under
Paragraph 1 of the Addendum, the royalty payable under this Agreement
shall be (i) 1.7777% of the gross collected revenues of Network and/or
its assignee or sublicensee derived from the business of Network and/or
its assignee or sublicensee as such business pertains to the Inventions
other than those licensed by Stratton plus, with respect to Inventions
licensed by Stratton, 1.7777% of the gross collected revenues of
Network and/or its assignee or sublicensee derived from the business of
Network and/or its assignee or sublicensee as such business pertains to
the Inventions reduced by an amount proportionate to the reduction in
the royalty payable to Licensor by Network pursuant to Paragraph 1 of
the Addendum or (ii) $10,000 per month, whichever is more. With each
payment required under this Paragraph 10, Network and/or its assignee
or sublicensee will provide Jones a statement of its gross revenues and
that of any assignee or sublicensee and its computation of the payment
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enclosed therewith (the "Statement"). For purposes of this Agreement,
the terms "assignee" and "sublicensee" are deemed to include one or
more assignee or sublicensee, as the case may be, and any subsequent
assignee or sublicensee.
11. Network may grant sublicenses and make assignments of its
rights with respect to the license assigned to it hereunder, provided
that any such sublicense or assignment shall provide for payments to
Licensor as required by the New License Agreement and for the payment
to Jones of royalties as set forth in Paragraphs 8, 9 and 10 of this
Agreement, if not paid by Network, and further provided that the rights
granted to Jones in Paragraph 13 hereof are contained in such
assignment or sublicense.
12. During the term of this Agreement, Jones will consult with
and provide to Network whatever reasonable assistance may be necessary
and requested by Network in order to achieve the goals of Network.
13. Jones shall have the right at his own expense, and not
more often than once in each calendar quarter, to have a certified
public accountant examine the books of Network and/or its assignees or
sublicensees to verify the Statements. In the event that a discrepancy
of more than 5% of the payments required under paragraph 10 is verified
by Jones' accountant (which verification is not successfully disproved
by Network in a court of competent jurisdiction), Network shall within
60 days pay to Jones all expenses of the examination, including all
reasonable legal fees expended in sustaining any alleged discrepancy,
in addition to the additional royalties due.
14. In the event that any litigation or claim is brought or
made with respect to the New License Agreement or any of the patents
which are the subject matter thereof,
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including, without limitation, a claim or defense of patent invalidity,
the Licensor shall promptly give notice thereof to Jones and Network
and Jones and/or Network each, at his or its respective option, shall
be entitled at his or its own cost and expense to be present at, and to
participate in, conferences with persons asserting such claim or
lawsuit and any proceedings with respect thereto and to be represented
thereat by attorneys of his or its own choosing.
15. In the event that Jones files a lawsuit against Network
and/or its assignee or sublicensee to collect amounts allegedly owed by
Network and/or its assignee or sublicensee to Jones hereunder and Jones
is the prevailing party in said lawsuit, Jones shall be entitled to
recover from Network and/or its assignee or sublicensee all reasonable
costs, expenses and attorneys' fees incurred by him in connection with
the lawsuit. For the purpose of this Agreement, "prevailing party" is
defined as the party in favor of which any judgment is rendered
regardless of the dollar amount of such judgment.
16. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, arrangements and
understandings related thereto. This Agreement may not be modified or
amended in any manner except by written agreement.
17. The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the parties hereto, their
heirs, executors, administrators, successors, legal representatives and
assigns. Without limiting the foregoing in any way, it is specifically
agreed by all parties hereto that Network may assign or
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sublicense any or all of its rights and obligations under this
Agreement and the New License Agreement to Interactive Networks
Incorporated or any other party.
18. Any notice required or permitted to be sent under the terms
of this Agreement shall be deemed sufficient if transmitted by
certified or registered mail, or any nationally recognized
overnight delivery service, addressed to the parties at the addresses
first above written.
19. This Agreement shall be interpreted under and pursuant to
the laws of the State of North Carolina, and the parties consent to
jurisdiction in said state. IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first written above.
NETWORK LICENSING, INC.
By: /s/ T.B. HUBBARD III
Its: President
/s/ MICHAEL R. JONES (SEAL)
Michael R. Jones
LICENSOR:
/s/ GERALD SINGER (SEAL)
Gerald Singer
/s/ ARTHUR J. MURPHY (SEAL)
Arthur J. Murphy
8
EXHIBIT A
LICENSE AGREEMENT
This Agreement is made as of the 31st day of December, 1990 between
Michael R. Jones, an individual, residing at 233 Palmer Hill Road, Old
Greenwich, CT 06870 (hereinafter referred to as "Licensee"), and Gerald Singer
an individual using an address of 3142 Pacific Coast Highway, Torrance, CA 90505
and Arthur J. Murphy an individual residing at 18337 Superior Street,
Northridge, CA 91324 (hereinafter collectively referred to as "Licensor").
WHEREAS, Licensor represents and warrants to Licensee that Licensor
owns not less than fifty-five (55%) percent of U.S. Patent Number 4,554,446 and
of U.S. Patent Number 4,672,377 (henceforth collectively referred to as
"Inventions");
WHEREAS, Licensor represents and warrants to Licensee that Licensor is
legally empowered to grant a non-exclusive license in and to the manufacture,
and/or sale and/or use of the Inventions in the United States and throughout the
world;
WHEREAS, Licensee desires to obtain rights in and to the manufacture
and/or sale and/or use of the Inventions in the United States and throughout the
world;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the parties agree as follows:
A. License.
1. Licensor hereby grants to Licensee the non-exclusive right and license in the
United States and throughout the world to manufacture, use and sell, and the
right to grant non-exclusive sub- licenses for the manufacture, use and sale of
the Inventions in the United States and throughout the world. Notwithstanding
the foregoing the license hereby granted shall be exclusive with respect to all
rights held by Licensor.
2. The term Inventions shall include any improvement or extension, patentable or
not, made by Licensor or Licensee or their representatives, employees, agents,
assignees or contractors, which improvement or extension shall be assigned to
Licensor and immediately upon such assignment, shall be made subject to the
terms of this license, provided that Licensee subject to paragraph A5 shall
retain the right to decline to participate in said improvements or extensions.
3. Licensee agrees to obtain the necessary agreements to assign any improvement
to the Inventions from its employees, agents, assignees or contractors.
4. The terms "improvement" or "extension" to the Inventions shall include any
process or apparatus involving related equipment and other means heretofore or
hereafter utilized in the process involved in the original Inventions or related
process or extensions, all test reports, data and other information developed
with reference to said process, and all improvements and refinements
9
whether or not any application for a patent is filed.
5. Licensee shall pay all legal costs and expenses incurred in filing said
improvement patent and shall use patent attorneys selected by Licensor, provided
however that Licensee expressly reserves the right to reject any improvement
patent application submitted by Licensor and in so doing Licensee shall not be
obligated to pay any costs or expenses incurred in obtaining said improvement
patent. Licensor shall at all times be permitted to file and obtain improvement
patents at its own expense in the event that Licensee declines to participate.
Any improvements or extensions not rejected by Licensee shall be subject to the
same terms and conditions of this license agreement. In the event that Licensee
rejects any improvement patent application and Licensor prosecutes and obtains
such patent, Licensee shall be entitled to bring such patent under the terms and
conditions of this License Agreement by reimbursing Licensor for all costs and
expenses incurred in obtaining such patent provided further that Licensor then
retains such rights.
B. Royalties.
1. Licensee shall pay to the Licensor a royalty of four percent (4%) of the
gross collected revenues derived from the business of Licensee, only as such
business pertains to the Inventions, until Licensor shall have received the
aggregate sum of Five Hundred Thousand ($500,000) Dollars. At such time as
Licensor has received the aggregate sum of Five Hundred Thousand ($500,000)
dollars, then the royalty shall be reduced to two and two thousand two hundred
and twenty three ten thousands percent (2.2223%) of the gross collected revenues
derived from the business of the Licensee, only as such business pertains to the
Inventions. Notwithstanding the foregoing, Licensee shall pay to Licensor not
less than the sum of Six Thousand ($6,000) Dollars per month during the first
year of this agreement and not less than Ten Thousand ($10,000) Dollars per
month during the balance of the term of this agreement.
2 . Licensee shall maintain accurate accounts of its operations coming under the
scope of this license agreement and shall submit to Licensor in writing a
statement of operations within thirty (30) days after the end of each calendar
quarter.
3. Licensee shall include with the quarterly statement the payment to the
Licensor in the
amount of the royalties accrued during the quarterly period.
4. Licensor shall have the right at its own expense, and not more often than
once in each quarterly period, to have certified public accountant examine the
books of the Licensee to verify the royalty statements. In the event that a
discrepancy of more than five (5%) percent of the collected gross revenues is
verified by Licensor's accountant, the Licensee shall within sixty (60) days pay
all expenses of the examination in addition to the additional royalties due.
C. Term.
This license is granted for a period of thirty (30) years or for such longer
period as any patent for the Inventions including improvements or extensions
which have been accepted by Licensee under
10
paragraph A5 hereof shall be in force or in effect in the United States or any
other country.
D. Termination.
1. If the Licensee defaults by failing to render statements or to make payments
of royalties as herein provided, the Licensor may give notice pursuant to
section J of default by Licensee. If such default is not cured within thirty
(30) days from the date of said notice, this agreement shall terminate
automatically upon the date set forth in such notice without prejudice, however,
to all monies then due to the Licensor.
2. In the event Licensee fails to exploit either of the two patents comprising
the Inventions by failing for a period of one (1) year from the execution of
this agreement to manufacture and install a system based at least in part on one
of the patents in the United States or in any other country, then in that event
Licensor may on thirty (30) days written notice immediately terminate this
agreement without prejudice, however, to all monies then due to the Licensor.
3. Either party, may terminate this license agreement at any time after only the
minimum payments called for in paragraph B1 shall have been paid to the Licensor
for any period of twelve (12) consecutive months.
4. This License Agreement shall terminate and all rights to said Inventions
shall revert to the Licensor in the event of any of the following:
a. The institution by Licensee of voluntary bankruptcy, receivership or
insolvency proceedings.
b. In case any such proceedings described in the preceding
subsection is instituted by- third parties and is not
dismissed within ninety (90) days after its institution.
c. An assignment for the benefit of creditors by Licensee.
d. If a receiver of the Licensee's property shall be appointed
and such receiver shall not be discharged within sixty (60)
days from the date of appointment.
E. Assignability and Warranties by Licensee.
Licensee is hereby granted the right and privilege to assign all or any portion
of its right, title and interest under this license agreement at any time
provided that Licensee shall at all times remain primarily responsible for the
fulfillment of all of the terms and conditions of this agreement other than
those pertaining to the payment of money only for so long as this agreement
shall remain in full force and effect.
F. Warranties by Licensor.
1. Licensor warrants and represents to Licensee that Licensor has the right to
grant this license and has not executed and will execute no other license
agreements of any kind regarding the
11
Inventions.
2. Licensor further warrants and represents to Licensee that Licensor is unaware
of any conflicting or competing rights therein held by any third party other
than Joseph F. Stratton and Licensor shall indemnify Licensee against any claims
of third parties in connection with the ownership of the Inventions.
3. Licensor warrants to Licensee that it has good and marketable title in and to
the Inventions.
a. In the event that Licensor and/or Licensee become involved in any
legal proceeding in which Licensor's ownership of the Inventions or the right to
grant this license is challenged, Licensor hereby agrees, at its sole expense,
to pay for any and all costs relating to the defense of Licensor and/or Licensee
in connection therewith.
4. In the event that either of the Inventions in use become invalid for any
reason then Licensee shall be immediately released from all of its obligations
under this agreement. Further, Licensee is expressly permitted to continue in
the operation of its business without incurring any financial obligation to the
Licensor under this agreement whatsoever.
G. Prosecution of Infringements and Defense of Infringement Claim.
1. In the event that either party becomes aware of any infringement of the
Inventions, then that party shall promptly notify the other and the parties
shall thereupon promptly confer as to the desirability of bringing an action for
infringement.
2. If Licensor desires to file an infringement action, Licensee must be notified
and the parties will equally bear all costs, expenses and attorney's fees
associated with the lawsuit. In the event of recovery from such litigation, all
amounts recovered will belong to the parties equally.
3. If Licensee desires to file an infringement action, Licensor must be notified
and Licensee will bear all costs, expenses and attorney's fees associated with
the lawsuit. In the event of recovery from such action instituted by Licensee,
all amounts recovered will belong to Licensee and amounts in excess of the
costs, expenses and attorney's fees will be subject to the royalty provisions of
paragraph B.
H. No Waiver.
Failure of Licensor or Licensee at any time to require performance by the other
of any of their respective obligations hereunder shall in no way affect the full
right to require such performance thereafter. The waiver by Licensor or
Licensee, of a breach of any provision hereof shall not be taken or held to be a
waiver of any succeeding breach of such provision or as a waiver of the
provision itself.
I. Governing Law.
This agreement shall be governed by and construed under the substantive and
procedure law,
12
including the law governing conflict of laws, of the State of California.
J. Notice.
Notice to either of the parties shall be effective upon notice to the following
by Certified Mail Return Receipt Requested:
If to Licensor: Gerald Singer, Esq.
3142 Pacific Coast Highway
Torrance, CA 90505
If to Licensee: Mr. Michael R. Jones
233 Palmer Hill Road
Old Greenwich, CT 06870
with copy to: Michael Katz, Esq.
300 East 42nd Street, 9th Floor
New York, NY 10017
K. Entire Agreement.
This agreement constitutes the entire agreement among the parties and supersedes
any prior agreement, option or understanding. This agreement may not be modified
or amended in any manner unless in writing executed by the parties to this
agreement.
L. Binding Provisions.
The covenants and agreements contained herein shall be binding upon and inure to
the benefit of the heirs, executors, administrators, successors and assigns of
the parties hereto.
M. Grant by Licensee.
Licensee hereby grants to Licensor a five (5%) percent equity interest in any
business or enterprise(s) of Licensee's benefiting from this license agreement.
Licensor warrants that each individual will do nothing to disturb any Subchapter
S election made by any corporate assignee of this agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date first written above.
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Licensee: Licensor:
/s/ MICHAEL R. JONES /s/ GERALD SINGER
Michael R. Jones Gerald Singer
/s/ ARTHUR J. MURPHY
Arthur J. Murphy
14
EXHIBIT B
ADDENDUM TO LICENSE AGREEMENT
This Addendum to License Agreement ("Addendum") is for that purpose of
amending that License Agreement dated as of December 31, 1990 between Michael R.
Jones (the "Licensee") and Gerald Singer and Arthur J. Murphy (collectively
referred to as "Licensor") (the "License Agreement"), which License Agreement is
being assigned from Michael R. Jones to Network Licensing, Inc. ("Network") on
this 15th day of June, 1993 pursuant to that Assignment of License Agreement
dated as of June 15, 1993 among Licensee, Licensor and Network.
WHEREAS Licensor and Network agree that certain changes should be made
to the License Agreement; now, therefore, the parties agree as follows:
1. Since Joseph F. Stratton is a co-inventor and co-owner of United
States Patents Nos. 4,554,446 and 4,672,377 only, and can issue licenses
thereunder, Licensor and Network hereby agree that, should Stratton issue
licenses under either of said patents and the royalty thereunder is less than
that payable to the Licensor under the License Agreement, paragraph B.1 of the
License Agreement shall be replaced by the following alternative paragraph B.1
which shall be controlling with respect to royalties.
Alternative paragraph B.1.
Network shall pay to Licensor a royalty based upon the gross collective
revenues derived from the business of Network as such business that
certain changes pertains to the Inventions equal to the amount of the
royalty paid to Stratton with respect to the license of the Inventions
granted by him.
2 . Any royalties owed to Licensor not paid when due shall draw
interest payments at the rate of 1% per month or the highest legal rate,
whichever is lower.
3. Paragraph C of the License Agreement, which pertains to the term of
the License
15
Agreement, shall be rewritten to read:
This license is in effect until the expiration of the last of any
patent of the Inventions including improvements or extensions which
have been accepted by licensee under paragraph A.5 hereof as to the
United States or for such patents for the inventions in any other
country as shall be in force.
4 . The term "Inventions" as set forth in the License Agreement, shall
include any patent, domestic or foreign, which may issue on U.S. Application
Serial No. 07/856-250, filed March 25, 1992, and all improvements thereon which
shall or may be assigned to Licensor, and any foreign applications corresponding
thereto.
5. In order that Licensor be kept aware of the overall business status
of Interactive Networks Incorporated (North Carolina), Licensee shall, in timely
fashion, provide copies of: a. all monthly closing financial statements, b.
minutes of all meetings of the Board of Directors of Interactive, and c. list of
all stockholders. In those cases where significant events are under
consideration or are occurring and information regarding them is not contained
in regularly scheduled routine reports, Licensee shall provide information and
keep Licensor informed by whatever means are available and appropriate. Among
the subjects proposed or accomplished upon which Licensee shall provide
information are: a. all financing arrangements, b. All sub- licenses and or
sub-assignments under license agreement, c. company organization and schedules,
and d. all joint ventures and contracts.
6. Paragraph J of the License Agreement, which pertains to notice,
shall be changed to indicate that the identified as:
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Network Licensing, Inc.
310 1/2 West Franklin Street
Chapel Hill, North Carolina 27516.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum
as of the date first written above.
LICENSORS: NETWORK LICENSING, INC.
/s/ GERALD SINGER /s/ THOMAS B. HUBBARD III
Gerald Singer Thomas B. Hubbard III, President
/s/ ARTHUR J. MURPHY
Arthur J. Murphy
17
EXHIBIT C
MEMO
TO: Jack Murphy
Gerald Singer
Michael Jones
FROM: Tim Hubbard
DATE: 6/10/93
We agreed as follows and I am having the appropriate documents drawn up and
passed around for signatures.
1. The license to Michael Jones is current and valid and unbreached in all
respects.
2. Regarding the $5,000 threshold upon which the royalties due will be modified,
the patent holders are credited with $244,000 not including this May and June
payments.
3. Paragraphs M, D2, and D3 of the License agreement between Murphy/Singer and
Jones have all been satisfied in full.
4. INI, NC is issuing 2,816,900 share of stock 816,900 (29%) will go to CSI as
payment for the purchase of all of its assets.
5. Murphy/Singer will each receive CSI founders stock in an amount equivalent to
22,911 shares of INI, NC stock. It is planned that INI, NC stock held by CSI
will be distributed to CSI shareholders within the next few months. In any
event, INI, NC agrees to convert Murphy's and Singer's CSI stock into 22,911
shares of INI, NC stock respectively, if that conversion is not otherwise made
for all CSI shareholders as planned. The plan is that all CSI shareholders will
be converted to INI, NC shareholders within the next 6 months, but in any event
as soon as we can do so.
6. If the March, 1994 consulting fee due from INI, NC to CSI, of which Jones'
portion is $216,000, becomes due and payable prior to March, 1994, then at that
time, Murphy and Singer will be notified in writing and may request, within one
week and in writing that Jones purchase all or a portion of the stock referred
to in Para. 5 above. If the request is made, then INI, NC will pay the
appropriate amount of Jones' portion of the consulting fee to Murphy and/or
Singer on behalf of Jones. The appropriate amount will be determined based on
the ratio of $5.32 per share of INI, NC stock of its equivalent if CSI stock.
7. Jones agrees that, if by November 1, 1993, the March, 1994 consulting fee due
CSI has not become due and payable, Murphy and/or Singer may request in
November, 1993 that Jones buy up to 50% of their respective shares referred to
in Para. 5 above, Jones agrees that he will purchase shares from each at the
rate $5.32 per share of INI, NC stock or its equivalent if CSI
18
stock within 30 days of the request. If Jones fails to purchase these shares in
a timely fashion, then INI, NC agrees that it will do so within 14 additional
days.
8. Jones agrees that, if by March 1, the March, 1994 consulting fee due CSI has
not become due and payable, Murphy and/or Singer may request in writing in
March, 1994 that Jones buy up 50% of their respective shares referred to in
Para. 5 above, Jones agrees that he will purchase these at an amount based on
the ratio of $5.32 per share of INI, NC stock or its equivalent if CSI stock
with 30 days of the request. If Jones fails to purchase these shares in a timely
fashion, then INI, NC agrees that it will do so within 14 additional days.
Please indicate your agreement with the above by signing below. Fax a copy to me
now and drop the original in the mail.
If both Jones and INI, NC fail to purchase shares in accordance with this
agreement, Tim Hubbard agrees to purchase rights 50% of the number they would be
obligated to purchase.
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