I understand your point, but I'm not confused either.

I don't believe PTSC is obligated to pay any portion of TPL's debt to Brown, legally or ethically. However, Leckrone being Leckrone, and armed with a court order that says 3.5% of Gross is the Browns' as long as TPL is the sole licensor, and an agreement with PTSC that allows TPL to be paid for "TPL Direct Reimbursable Expenses not in conformity with the applicable Business Plan, to the extent approved by the P-Newco Management Committee", coupled with a BOD that has a history of using PTSC funds and cutting path of least resistance deals to pay for items for which we're not legally responsible, I certainly think it's likely that Leckrone will try to come after PTSC, and equally likely that PTSC will cave to some extent.

At worst, I think there will be an argument presented that will re-account for the way the MMP funds have been distributed that will likely hurt PTSC.

For example, where previously, it's been understood that for each $100 of MMP license brought in, TPL would be paid their 15% plus any reimburseable expenses (let's say for example that amounts to $21 total as historically, 21% is the average), then PDS company expenses would be paid (accountants, auditors, LLC filing fees, etc. - let's put that at $1), then funding of the working capital if any required (I'll use $4 for this example), and then the 50/50 distribution to PTSC & TPL (that would be $37 / ea). Presumably, from the 50% net profit that TPL received, they'd pay Brown $3.50 for his 3.5% of gross. So TPL would ultimately get $33.50, while PTSC would get $37.

Possibly now, TPL can try to come back and say, it really should be as follows: $100 MMP license - $3.50 to Brown, $21 to TPL for expenses, $1 to PDS expenses, $4 for Working Capital funding, and 50/50 split of the remaining $70.50 or $35.25 to each TPL & PTSC. Now TPL gets $1.75 more and PTSC $1.75 less.

I would argue that's water under the bridge and TPL's problem at this point, but what I would argue and what Leckrone would argue are carrots and horse manure.

As far as what grifters would say, I don't think Brown can be considered totally innocent on this issue if what the testimony holds is accurate. Essentailly, he had a deal with TPL long before the deal with PTSC. When he made his deal, he understood that TPL and only TPL would be involved with MMP deals, and he cut a deal for a flat 3.5% of gross, so that he wouldn't have to deal with TPL's expenses, Moore's portion, and any other stuff TPL did with the money. In a vacuum, that's great and I have no problem with it. If he was as silent investor, that was remote and not attached to TPL's business, or the formation of PDS, then he would have no dirt on his hands, IMO.

However, in this instance, he WAS involved in the dealings of TPL. He was involved in the discussions with PTSC regarding the merger per the testimony. He was aware of the resultant agreements as we all were, as they were largely public info.

In that context, for him to sit by and NOT make PTSC aware of his $3.50 share of every $100 that the MMP would bring in, would be unethical, IMO. For him not to insist that TPL disclose it, or to assure that the CommAg and PDS Operating agreement not specifically address it for the protection of his interests, as well as for the honest dealings with PTSC, raises questions about his intent and honesty, IMO. If he were some remote investor in TPL with the same agreement, who was overseas, or totally uninvolved in the TPL business, or unaware or uninvolved with the merger talks, then I wouldn't hold that opinion, as it would be totally TPL's obligation to inform PTSC and to incorporate some specific language that addressed such an instance.

That Brown remained quiet on this issue implies that he either a) expected that TPL would cover the 3.5% totally from their share and that it had nothing to do with PTSC at all and thus nothing to inform PTSC about, or b) figured now that PTSC was involved, he would only receive 3.5% of their half of the license.

If it were a), then it seems to me the fact that they accept now that they are entitled to only 3.5% of HALF of $15M generated from the Matsushita settlement is a bit incongruous with that position as they're recognizing that their 3.5% doesn't apply to the GROSS license fee. To play that technicality of the agreement language now, seems purely a legal position aimed at maximizing their payout. They're putting the screws to TPL because TPL wasn't tidy enough to have squared this away at the time of the PDS merger and because they've decided that their friend, who has a history of being a shady guy, deserves it now ONLY because he's been shady with them. It didn't seem to bother them before. Again, frankly, I don't have a problem with that position either legally or ethically, EXCEPT, that it might ultimately affect PTSC shareholders per the scenario above.

What I can say is that PERSONALLY, if I'm in a business meeting and a property in which I have an interest is the subject of a merger, I would fell obligated both morally and legally to disclose my interest to the merging partners, not only to make them aware, but to secure my own interests without cloud. That's where I feel Brown has fallen short as without knowing him, it's hard to know if that was intentional, or simply an oversight of inexperience. Based on the company he had kept to that point (ie. Leckrone), I'd feel inclined to take a more cautious and cynical view of his character and business practices. The testimony I've read doesn't change my inclination.