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an exclusive basis for JDP and was free to engage in any other
activities, including other research and development, whether for
itself or for others.
JDP paid all of the $360,000 contract price required under
the R & D Agreement to HJI as follows. By check dated December
30, 1981, JDP paid HJI $85,000 pursuant to the R & D Agreement.
On December 31, 1981, JDP issued to HJI five promissory notes
bearing interest at the rate of 10 percent per year. The face
amounts of the notes, dates payable, and amounts and dates of
payment are as follows:
Face Amount
Payable Date Payable Amount Paid Date Paid
$80,000 6/1/82 $82,933.33 5/12/82
50,000 10/1/82 53,750.30 9/29/82
60,000 10/1/83 70,500.00 9/29/83
45,000 10/1/84 57,375.00 9/26/84
40,000 10/1/85 1 1
1Information not provided in the record.
The promissory notes contained no restrictions or nonrecourse
features.
When Whittaker and Berberich signed the R & D Agreement,
they both understood that HJI would not undertake for JDP all of
the activities specified in section 2 of the R & D Agreement
because the offering had not raised sufficient funds. Having
failed to raise sufficient funds to carry out the program
described in the offering circular, on December 31, 1981,
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