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after March 1, 1995, which contradicts Article 4.2 of the royalty
agreement.
Third, the royalty agreement contains a debt offset
provision pursuant to which ECI agrees to accept MBL’s and
Crocus’s debt obligations to petitioner as payment of
petitioner’s debt obligation to ECI. The provision states that
petitioner’s obligation to ECI exceeds the amounts MBL and Crocus
owe petitioner. However, Schedule A of the royalty agreement
states that the total of MBL’s and Crocus’s debts to petitioner
is exactly equal to petitioner’s debt to ECI.8
During 1995 and 1996, the stockholders of ECI were Fallon
Nominees, Ltd. (Fallon), and Management Nominees, Ltd.
(Management). Petitioner claims that none of its officers or
stockholders owns shares of or otherwise controls ECI, Fallon, or
Management or knows who owns or controls Fallon or Management.
John Fitzgerald, a director of ECI, declared in an exhibit to the
declaration of Frank Agostino (petitioner’s counsel) in support
of petitioner’s motion for summary judgment, that petitioner had
no direct or indirect control over ECI, and there was no identity
or overlap of ownership between petitioner and ECI. However,
under Article VI of the royalty agreement, petitioner has rights
of first refusal over any of ECI’s stock that ECI intends to
assign, transfer, or dispose of.
8See supra note 6.
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