Ralph W. Emerson and Suzanne O. Emerson - Page 5

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          and market the products.  The complaint also discussed the loans            
          made by ProGuard to petitioner.  Petitioner alleged that he                 
          “reasonably believed” that the loans represented advances of                
          future compensation to be paid to him rather than a decrease in             
          his expected capital interest.                                              
               The complaint referred to a document titled “Amendment to              
          Contract for Services dated June 26, 1994 and Secured Promissory            
          Note” signed in June 1997 (June 1997 agreement).  Petitioner                
          additionally alleged that, in the June 1997 agreement, ProGuard             
          loaned to him a final amount of $10,174.72 and, in consideration            
          of this loan, petitioner waived any interest in a future startup            
          entity formed by petitioner and the defendants.                             
               After raising the general allegations regarding the contract           
          and the June 1997 agreement, the complaint raised several causes            
          of action including:  (1) Rescission based on undue influence;              
          (2) rescission based on fraud and false promises; (3) breach of             
          contract; (4) breach of covenant of good faith and fair dealing;            
          (5) declaratory relief; (6) slander; (7) constructive trust;                
          (8) quantum meruit; (9) conspiracy; (10) intentional infliction             
          of emotional distress; and (11) injunctive relief.                          
               On October 2, 1997, petitioner filed a first amended                   
          complaint in the lawsuit.  The amended complaint added                      
          reformation based on unconscionability, fraud, and unilateral               

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