May 24, 2000
Reference is made to the (a) Agreement dated June 30, 1999 (the "June
30 Agreement") between Xxxx-Xxx.xxx, Inc. ("Phon-Net") and Quad-Linq Software,
Inc. ("Quad-Linq"), and (b) Agreement dated December 3,1999 (the "December 3
Agreement"), by and between Xxxxx X. Xxxxxxxxx ("Xxxxxxxxx") and Xxxxxxxxxxx X.
Georgelin ("Georgelin"), on the one hand, and Phon-Net, on the other hand. The
purpose of this letter is to confirm our understandings and to clarify certain
portions of the June 30 Agreement and the December 3 Agreement.
1. Xxxxxxxxx and Georgelin hereby confirm that at the time the June 30 Agreement
was entered into, each was an officer, director and principal shareholder of
Quad-Linq.
2. The June 30 Agreement was entered into for the principal purpose of
confirming that Quad-Linq had relinquished all of its right, title and interest
in and to software developed for Phon-Net, titled "Direct Connect" software (the
"Software"), including any right to revenue derived from the sale, license or
other marketing of the Software. Those rights were previously conferred on
Quad-Linq under a January 6, 1999 agreement between Phon-Net and Quad-Linq.
3. At the time the June 30 Agreement was entered into, development of the
Software had been completed and the Software was fully operational and ready to
be marketed. While Quad-Linq undertook to perform certain support services
pursuant to the June 30 Agreement (the "Services"), such services were not
deemed significant and were ancillary to product development.
4. As consideration for the relinquishment of rights by Quad-Linq under the June
30 Agreement, Phon-Net issued 3,000,000 shares of common stock to Quad-Linq and
granted options to purchase an additional 2,000,000 shares of common stock to
Quad-Linq. Quad-Linq assigned a portion of the shares and options to each of its
three principals, with the balance being retained by Quad-Linq.
5. In November 1999, the principals of Quad-Linq caused the dissolution of
Quad-Linq, as a result of which, Quad-Linq was unable to continue to perform the
remaining Services under the June 30 Agreement. The sentence of the December 3
Agreement stating that "[t]his Agreement is to replace the Amended Agreement
between Quad-Linq and the Client due to non-performance" was intended to convey
Quad-Linq's inability to perform due to its dissolution.
6. In order to provide continuity of support services for the Software,
Xxxxxxxxx and Georgelin, individually, entered into the December 3 Agreement and
agreed to provide the balance of the Services required of Quad-Linq under the
June 30 Agreement.
7. Phon-Net was not obligated to compensate Xxxxxxxxx and Georgelin for their
services under the December 3 Agreement. However, Phon-Net recognized the
assignment by Quad-Linq to Xxxxxxxxx and Georgelin of the 1,000,000 Phon-Net
shares and 986,667 Phon-Net options that remained in Quad-Linq's name at the
date of its dissolution. Included in such options were 320,000 options
previously assigned by Quad-Linq to Seidmehdi Seidbagherzadeh, and reassigned to
Quad-Linq in connection with its dissolution.
8. The sentence in the December 3 Agreement stating that [t]he Common Shares and
Options received will be the remaining balance of the Amended Agreement referred
to in Exhibit A" refers to Quad-Linq's assignment of the shares and options to
Xxxxxxxxx and Georgelin.
9. Xxxxxxxxx and Georgelin agree and acknowledge that, other than the 3,000,000
shares and 2,000,000 options issued pursuant to the June 30 Agreement, (a) no
additional shares or options have been issued by Phon-Net pursuant to the June
30 Agreement or the December 3 Agreement, and (b) Phon-Net is not obligated to
issue additional shares, grant additional options or otherwise to further
compensate them for their assumption of the balance of Quad-Linq's services as
delineated in the June 30 Agreement and assumed by them in the December 3
Agreement.
10. While not legally obligated to do so, Xxxxxxxxx and Georgelin agreed to
assume the balance of Quad-Linq's obligations under the June 30 Agreement
because (a) the services to be performed would not require them to devote
substantial time or resources to complete, (b) they felt morally obligated to
complete the services of Quad-Linq, an entity in which they were principals and
a relationship which affected their individual reputations, and (c) they
received an assignment of the balance of the shares and options remaining in
Quad-Linq's name, and, as shareholders of Phon-Net, they would benefit from
completion of the Services and the successful marketing of the Software by
Phon-Net.
11. The parties confirm and acknowledge that the 3,000,000 shares of Phon-Net
common stock and the 2,000,000 options to purchase Phon-Net common stock that
were issued under the June 30 Agreement are currently owned as follows:
Name No. Shares No. Options
---- ---------- -----------
Xxxxx X. Xxxxxxxxx 1,652,666 1,280,000
Xxxxxxxxxxx X. Georgelin 853,677 720,000
Seidmehdi Seidbagherzadeh 493,657 -
--------- -------------
3,000,000 2,000,000
========= =============
XXXX-XXX.XXX, INC.
By:/s/ Xxxxx Xxxxxxx
--------------------
Xxxxx Xxxxxxx, CEO
/s/ Xxxxx X. Xxxxxxxxx
----------------------
XXXXX X. XXXXXXXXX
Xxxxxxxxxxx X. Georgelin
------------------------
XXXXXXXXXXX X. GEORGELIN
