AMENDMENT NUMBER 1 TO REGISTRATION STATEMENT ON FORM S-1, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1997.
Registration Number 333-19183
_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
JYRA RESEARCH INC.
(NAME OF ISSUER IN ITS CHARTER)
DELAWARE 3679 Applied for
- --------------- --------------- ----------------
(STATE OR (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION
INCORPORATION OR CODE NUMBER) NUMBER)
ORGANIZATION)
41 THURLOE SQUARE
LONDON SW7 2RS
ENGLAND
Tel: 44 1 71 371 0702
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
RODERICK ADAMS, SECRETARY
41 THURLOE SQUARE
LONDON SW7 2RS
ENGLAND
Tel: 44 1 71 371 0702
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
JAMES BERNS, ESQ.
BERNS & BERNS
ONE ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
TELEPHONE NO.: (212) 332-3320
FACSIMILE NO.: (212) 332-3315
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement
becomes effective.
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[_]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<PAGE>
TITLE OF PROPOSED PROPOSED MAXIMUM
EACH CLASS OF AMOUNT MAXIMUM AGGREGATE
SECURITIES TO BE TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE(1)
REGISTRATION FEE
- -----------------------------------------------------------------
- ----------
<S> <C> <C> <C> <C>
Common Stock, $.001
par value.........1,043,100 $7.125 $7,432,088 $2,562
- -----------------------------------------------------------------
- ----------
- --------------
(1) Estimated solely for the purposes of calculating the
registration fee.
</TABLE>
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED
BY ITEMS OF FORM S-1
<TABLE>
<CAPTION>
FORM S-1 ITEM LOCATION IN PROSPECTUS
<S> <C>
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus................. Front Cover Page of
Registration
Statement;
Cross-Reference
Sheet; Outside Front
Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front Cover
Page of Prospectus
and Outside Back
Cover Page of
Prospectus
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges............................ Prospectus
Summary; Risk Factors
4. Use of Proceeds..................... Prospectus Summary;
Use of Proceeds
5. Determination of Offering Price..... Inapplicable
6. Dilution............................ Risk Factors;
Dilution
7. Selling Security Holders............ Selling Security
Holders
8. Plan of Distribution................ Front Cover
Page of Prospectus;
Selling Security
Holders
9. Description of Securities to Be
Registered......................... Front Cover
Page of Prospectus;
Prospectus Summary;
Description of
Securities
10. Interests of Named Experts and
Counsel............................ Inapplicable
11. Information with Respect to the
Registrant......................... Outside Front Cover
Page of Prospectus;
Risk Factors; The
Company; Dividend
Policy;
Capitalization and
Description of
Securities;
Management's
Discussion and
Analysis of
Financial Condition
and Results of
Operations;
Business; Directors,
Officers, and Key
Personnel;
Litigation; Office
Facilities;
Remuneration;
Related Party
Transactions;
Trading Market of
Company's Shares;
Principal
Stockholders; Shares
Eligible for Future
Sale; Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ Capitalization and
Description of
Securities
</TABLE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
JYRA RESEARCH INC.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL ____, 1997
PROSPECTUS
1,043,100 SHARES OF COMMON STOCK
All of the 1,043,100 shares of Common Stock ("Shares")
offered hereby are being sold by existing shareholders of Jyra
Research Inc. ("Selling Shareholders"). No proceeds will be
received by the Company.
Prior to this offering ("Offering"), there has been a
limited public market for the Common Stock of the Company on the
National Association of Securities Dealers, Inc.'s
Over-the-Counter Bulletin Board ("OTC Bulletin Board") and there
can be no assurance that any active trading market will ever
develop.
-----------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND
INVOLVE A HIGH DEGREE OF RISK AND INVESTORS SHOULD NOT INVEST ANY
FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE
NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE,
THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
PAGE
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by
reference to, and should be read in conjunction with, the more
detailed information and financial statements (including the
notes thereto) appearing elsewhere in this Prospectus. Unless
otherwise indicated, "Company" shall include its English
subsidiary, Jyra Research Ltd. Each prospective investor is
urged to read this Prospectus in its entirety.
THE COMPANY
The principal executive offices of the Company are located
at 41 Thurloe Square, London, England, and its telephone number
is 44 171 371 0702.
The Company was incorporated on May 2, 1996 under the laws
of Delaware. The Company's plans are to design, develop,
manufacture, and market new computer network management systems
to (i) maximize network productivity, (ii) minimize network
downtime, and (iii) solve network problems caused by the constant
increase in network traffic, combined with the growing complexity
of networks. These problems result in escalating costs and major
systems failures across the corporate spectrum. Management
believes that current network management systems do not have the
capability to effectively deal with these issues. Management
proposes to develop distributed monitoring systems incorporating
a proprietary technology linking advanced protocol decodes with
expert analysis capabilities to facilitate real-time
identification, diagnosis and resolution of network problems.
2
<PAGE> <PAGE>
THE OFFERING
Common Stock Offered on Behalf of
Selling Shareholders.........................1,043,100 shares
Common Stock Outstanding Prior to
this Offering ...............................6,276,600 shares
Common Stock to be Outstanding
After this Offering..........................6,276,600 shares
USE OF PROCEEDS
The Shares being registered pursuant to this prospectus were
originally sold to persons residing in Europe who purchased the
Shares from the Company in October and November 1996 (the
"European Offering"). These Shares will be offered for resale by
the purchasers in the European Offering (the "Selling
Shareholders"). The Company will receive no proceeds from sales
by the Selling Shareholders.
RISK FACTORS
The securities offered hereby involve a high degree of risk,
including, its status as a new business, its continued dependence
on securing additional financing, its lack of commercial
operations, its dependence upon key personnel, inexperience of
management, protection of intellectual property, competition, the
fact that its proposed products are only at the conceptual stage,
limited experience of management in manufacturing, delays in
development of software and related products, competitive
disadvantage of Company, changes in technology, risk of competing
technologies, risks associated with international operations,
dependence of the company upon unproven products, limited market
for Shares, potential sales of substantial amounts of share,
significant control and influence by existing shareholders,
limitation of officers' and directors' liabilities under Delaware
law, without limitation: See "Risk Factors."
An investment in the Shares is speculative and involves a
high degree of risk. See "Risk Factors."
DESCRIPTION OF OFFERING
The Shares being registered pursuant to this prospectus were
originally sold to persons who purchased the Shares from the
Company in Europe during November 1996 (the "European Offering").
No Shares are being sold by the Company and the Company will
receive no proceeds from the sales by the Selling Shareholders.
3
<PAGE>
Estimated expenses incurred by the Company with respect to this
Offering are $50,000. In the United States, the Shares are being
offered directly by the Selling Shareholders. No commissions are
being paid with respect to the sale of the Shares being offered
in the United States other than normal brokerage commissions.
SELLING SECURITY HOLDERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name Relationship No. of No. of No. of Shares
to Company Shares Shares & Percentage
Owned Offered of Company to
Prior to Owned After
Offering Offering
Ten Cafe None 105,000 95,000 10,000
& Cie .16%
Wexford None 15,000 15,000 0
Finance
Banque None 80,500 50,000 30,500
Paribas .48%
Mees None 10,000 10,000 0
Pierson BV
Mees None 10,000 10,000 0
Pierson
(Luxembourg) SA
Pim None 5,000 5,000 0
Holdings, NV
Veer None 20,000 20,000 0
Palthe
Voute Asset
Management
Belficom None 30,000 30,000 0
Optimix None 40,000 40,000 0
Vermogen-
sbeheer
Eeb g None 17,000 17,000 0
Vermogen-
eheer BV
Loek None 17,000 17,000 0
Van Den
Boog
PBI None 15,000 15,000 0
Securities
Plashof None 30,000 30,000 0
Beheer BV
Mees None 38,000 38,000 0
Pierson
Int'l None 425,000 300,000 125,000
Publishing 2.0%
Holdings, SA
Grupo de None 33,000 8,000 25,000
Creacion .4%
Ltd.
Union None 315,000 50,000 265,000
Bacaire 4.2%
Privee
Standard None 20,000 20,000 0
Bank Nomi-
nees (CI)
Limited
Securi- None 10,000 100,000 10,000
ties .16%
Trading SA
Bertrand None 5,000 5,000 0
Chatelain
Pascal None 5,000 5,000 0
Zannetti
Clark & None 5,000 5,000 0
Cie
Yves None 10,500 6,500 4,000
Gut .06%
M.F. None 10,000 10,000 0
Van Til
Finter None 18,000 18,000 0
Bank
Brewin None 75,000 10,000 65,000
Nominees 1.0%
Limited
Bank None 332,500 72,000 404,500
Von 6.4%
Ernst & Co.
Ltd.
Union /fn/ 132,600 41,600 91,000
Securities 1.4%
(Int'l) Ltd.
</TABLE>
/fn/ Mr. Timothy A.B. Mills, a founder of the Company, who owns
550,000 Shares, is a director, and owns 20%, of Union Securities
(International) Ltd.
GENERAL
Following is a glossary of terms used in this prospectus.
GLOSSARY OF TERMS
Access Terminal A screen and keyboard solely to access
information; incapable of independent
operation.
ATM Asynchronous Transfer Mode. A new
method of allowing far greater volumes
of data to be passed through a network.
Backbone Routers A series of devices used to guide and
direct data efficiently to its
destination by the most appropriate
path.
6
<PAGE>
Bridges Devices that prevent local traffic from
being flooded to an entire network.
Broadcast Any data or signal that is transmitted
throughout the entire network.
Code Language in which software programs are
written.
Control Mechanisms Methods to inhibit the flow of data
communications traffic.
Dealer Feeds Electronic supply of financial market
data.
Ethernet A standard that defines the way data is
transmitted.
FDDI A standard that defines the way data is
transmitted over fiber optic cable.
Global Network A data communications network that
connects interconnects international
operations worldwide.
IBM SNA A standard that defines the way in which
IBM computers are connected.
Interface Modules Adaptors that connect a device to the
network.
Interop A major international trade show
attended by leading Internet and
networking technology companies.
LAN Local Area Network. This a network
designed to interconnect personal
computers within a localized environment
by a type of highspeed data
communications arrangement.
Management System General term that refers to any system
for administering network devices or
traffic.
Mbps Millions of bits per second. A
measurement of the amount of data
passed. A bit is the smallest unit of
data.
7
<PAGE>
Modern Network Generic term for new applications that
Applications use the network. Current applications
are video, image and multi-media
applications.
Network The infrastructure that interconnects
computers to one another.
Novell Netware A widely used network operating
system that allows users to share data.
OEM Original Equipment Manufacturer. An
industry term for equipment originally
manufactured by a third party, but
branded and sold by a separate vendor.
On-line Active live connection.
Outsourcers Companies that are responsible for
operating and maintaining networks on
behalf of clients.
Probe A device that is connected to a network
for the proper monitoring of network
Protocols The sets of rules or standards that
describe the way in which traffic is
presented to devices on a network. The
most widely used of which are IP
(often called TCP/IP) and IPX>
Protocols Decoder The ability to breakdown and analyze
the way in which traffic is presented
to a network device.
RMON A standard for describing what should be
monitored by a network device.
RMON 2 A revision of the RMON standard.
RMON Sampling A revision of the RMON standard yet to
be ratified. Periodically monitoring
network traffic.
Serial Line Analyzers Probe devices that monitor the lines
that connect serial networks at
different locations.
SNMP Simple Network Management Protocol. A
Standard for monitoring network
hardware.
8
<PAGE>
TCP/IP A standard that describes the way in
which data traffic is transmitted
across a network.
Trunk A line that connects remote locations
over telecommunications networks.
Token Ring A standard that defines the way in
which data is transmitted.
Traffic The data that passes across a network.
UNIX A standard operating system for
computers.
Usage Accounting The ability to identify the origin of
traffic and thereby charge back
network costs to the source.
WAN Wide Area Network. A network that
connects users via telecommunications
lines.
RISK FACTORS
The securities offered hereby are speculative in nature and
involve a high degree of risk. Accordingly, in analyzing an
investment in these securities, prospective investors should
carefully consider, along with the other matters referred to
herein, the following risk factors.
1. NEW BUSINESS; CONTINUED DEPENDENCE ON SECURING ADDITIONAL
FINANCING. The Company was incorporated as a start-up business
on May 2, 1996. Accordingly, the Company, is subject to all of
the risks attendant to new business ventures including, without
limitation, raising capital, acquiring or developing products
and/or services for sale, securing appropriate leased space for
offices, obtaining necessary personnel, establishing and/or
penetrating markets for such products and/or services, and
achieving profitable operations, of which there can be no
assurance. Investors should not purchase any Shares unless they
are prepared, and can afford, to lose their entire investment.
As a new business having no sales or revenues, Management
anticipates that the Company may be dependent over the
foreseeable future upon securing additional financing, of which
there can be no assurance. There are numerous risks associated
with investments in start-up companies, including, among others,
those inherent in evaluating and acquiring a business involving
9
<PAGE>
technologies with limited or no commercial histories, effectively
identifying and penetrating the market for the goods and services
to be offered, competing with other companies with greater
financial and other resources, securing adequate financing, and
achieving profitable operations, of which there can be no
assurance.
2. NO COMMERCIAL OPERATIONS. The Company has no commercial
operations, and there can be no assurance that it will ever
achieve commercial operations.
3. DEPENDENCE UPON KEY PERSONNEL. The Company is very
dependent upon the continued services of (a) Mr. Paul Robinson,
Chief Executive Officer and Chairman of the Board of Directors of
the Company and (b) Mr. Peter Lynch, a director and Vice
President - Technical. These are deemed to be key persons of the
Company. The Company does no have key man life insurance on the
lives of any of these persons. Even though the Company has hired
experienced sales and technical personnel, in the event that
either Mr. Robinson or Mr. Lynch becomes unavailable for any
reason, the Company would be materially and adversely affected.
4. INEXPERIENCE OF MANAGEMENT. Management of the Company has
had limited experience in management positions. Although members
of management have worked for many years in various large
corporations in various positions, no member of Management has
ever served in a senior managerial role.
5. FINANCIAL CONDITION OF COMPANY; DIFFICULTY IN FUNDING
OPERATIONS. Although Management believes it will begin receiving
revenues from sales of its proposed products during the second
quarter of 1997, there can be no assurance that the Company will
be able to sell any products or ever receive any revenues. After
the completion of the Company's European Offering, the Company
had approximately $3,500,000 in funds. Management believes that
these funds would be sufficient to fund operations through
mid-1998, assuming the Company receives no other funds from sales
or otherwise. There can be no assurance the Company would be
able to raise any additional necessary funds at that time.
6. PROTECTION OF INTELLECTUAL PROPERTY; COMPETITION. Management
of the Company believes that there may be a significant business
opportunity to sell worldwide Jyra's line of proposed products
("Products"). The Company intends to copyright, where
appropriate, the software which would operate its various
Products. However, there can be no assurance that the software
can be copyrighted, or, even if copyrighted, third parties will
not infringe upon or design around such copyrights to develop a
competing product. Furthermore, others may design and manufacture
superior products. In the event that a third party infringes
10
<PAGE>
upon any such copyrights or makes a claim that Jyra's Products
infringe upon its proprietary rights to competing products, the
Company may not have the financial resources to enforce its
rights or successfully defend such a claim. In the event of any
infringement of the Company's rights, a claim being made against
the Company by third parties, the development of products which
are designed around copyrights held by the Company or the
development of a superior product by others, the Company's
business would be adversely affected. There has been substantial
litigation regarding patent and other intellectual property
rights in the software industry. As is typical in the software
industry, the Company anticipates that it may receive from time
to time notices from third parties alleging infringement claims.
Although there are currently no pending lawsuits against the
Company regarding any possible infringement claims, there can be
no assurance infringement claims will not be asserted in the
future or that such assertions will not materially adversely
affect the Company's business, financial condition and results
of operations. If any such claims are asserted against the
Company, the Company may need to seek to obtain a license under
the third party's intellectual property rights. There can be no
assurance a license will be available on reasonable terms or at
all. Failure to obtain a necessary license on commercially
reasonable terms would materially adversely affect the Company's
business, financial condition and results of operations. The
Company could decide, in the alternative, to resort to litigation
to challenge such claims. Such litigation could be expensive and
time consuming and could materially adversely affect the
Company's business, financial condition and results of
operations.
7. PROPOSED PRODUCTS ARE ONLY AT THE CONCEPTUAL STAGE. At the
present time, the Company has not sold any products. All of its
proposed products are at the conceptual stage or early software
only prototype states. Based upon preliminary tests, Management
believes it is possible to use Sun Microsystem's Java language to
distribute simple network management functions to remote devices.
However, two significant phases remain to be completed: (i)
commercializing the software prototype, and (ii) implementing the
software on the Company's chosen hardware platform. There can be
no assurance the Company will be able to successfully complete
these two steps. Moreover, for its other proposed products, the
Company must design its proposed products (including writing all
required software), arrange for prototypes of the products to be
manufactured, test the prototypes, and then make a determination
of whether the product should be marketed to its intended
audience. There can be no assurance that the Company will
successfully complete all the steps necessary to bring a product
to market.
11
<PAGE>
8. MANUFACTURING OF PRODUCT. At the present time the Company
has completed software-only prototypes for two of its proposed
products - the Mid-Level Manager ("MLM") and the Probe.
Accordingly, after the Company has completed designing a product,
it must then arrange for a prototype or model to be manufactured.
If tests of the prototypes are successful, and Management
believes that there will be a commercial demand for its products,
Management must arrange for the products to be manufactured. The
Company does not plan on manufacturing its Products itself, but
intends to have outside manufacturers produce its Products.
Accordingly, the Company will be relying upon outside
manufacturers, not under its control, to produce its products,
using industry standard components such as Intel microprocessors
and network adapters manufactured by Digital Equipment. Although
the Company believes that there are manufacturers which would be
available to produce its products, delays in receiving the
necessary hardware components or other delays in manufacturing
the Products could materially adversely affect the Company. Even
though Management believes its use of standardized industry
components and outside assemblers will lessen the risks it faces
in quality control, there can be no assurance the Company will
not have quality control problems. In the United States personal
computer industry, most of the major companies receive their
components from the same sources, such as Intel, Seagate, and
others. However, there are still significant disparities in the
actual, or perceived, reliability of the various companies'
computers. Furthermore, once a company obtains a reputation for
inferior quality, even if undeserved, it can be extremely
difficult to change the public's perception.
9. LIMITED EXPERIENCE OF MANAGEMENT IN MANUFACTURING. No member
of Management has extensive experience in manufacturing products
including, but not limited to, making arrangements with
manufacturers, monitoring the manufacturing process, and ensuring
a smooth, timely flow of completed products.
10. DELAYS IN DEVELOPMENT OF SOFTWARE AND RELATED PRODUCTS
COMMON IN COMPUTER INDUSTRY. Delays in the development of
software and related products are common in the computer
industry. Any delays in development could cause significant
additional expense and result in lost sales of the Company's
products, having a materially adverse effect on the Company. If
the Company is delayed in bringing its planned products to
market, the Company could be forced to seek additional financing
in order to continue operations. There can be no assurance the
Company will be able to raise any additional funds, or, even if
funds are available, on terms that are acceptable to the Company.
11. COMPETITIVE DISADVANTAGE OF COMPANY. The network system
management industry is characterized by an increasing number of
12
<PAGE>
participants who have introduced products and services for
network management. The Company will be competing with products
of other companies, most of which have substantially greater
financial, marketing, manufacturing and technical expertise.
Accordingly, the Company is at a competitive disadvantage with
respect to these other companies and their products.
12. CHANGES IN TECHNOLOGY; RISK OF COMPETING TECHNOLOGIES.
Management believes that its ability to compete will be
dependent, in large part, upon the software it intends to
develop. Management believes that the market for the probe it
intends to develop and market is established and rapidly
expanding. There can be no assurance that the market for network
management systems will continue to grow, or that if it does
develop and grow, the Company's proposed products will be
successful. Furthermore, there can be no assurance (i) the
Company will be able to successfully identify new product and
service opportunities for the Company's products, (ii) develop
and bring any such new and enhanced products and related services
to market in a timely manner, (iii) that such products, services
or technologies can be developed or will be commercially
successful, (iv) that the Company will benefit from such
developments, or (v) that the products, services or technologies
developed by others will not render the Company's planned
products obsolete. The International Standards Organization, one
of three major international bodies that sets standards for
computer management functions, has defined five functional areas
for network management applications: (1) performance management,
(2) fault management, (3) accounting, (4) configuration
management, and (5) security management. The initial range of
the Company's products are being designed to provide solutions
addressing only the first three areas. Therefore, even if the
Company is successful in designing and manufacturing its planned
initial products, it is possible that a competitor may design and
market a product that addresses these issues in a more
comprehensive way than does the Company's products, thereby
having a material adverse effect on the Company.
13. SUBSTANTIAL ADDITIONAL FUNDS MAY BE REQUIRED; SUBSTANTIAL
SHAREHOLDER DILUTION. Although the Company believes that Company
has sufficient funds to develop and bring its products to market,
there can be no assurance the Company's current plans and
projections are correct. In the event the Company's plans or the
basis for its assumptions change or prove to be inaccurate, or
the anticipated cash flow proves insufficient to fund the
Company's operations (due to delays, unanticipated expenses, lack
of sales revenues, problems, operating difficulties, or
otherwise) the Company would be forced to seek additional
financing. There can be no assurance that additional financing
would be available on commercially acceptable terms, or at all.
13
<PAGE>
To obtain any necessary financing, the Company could sell
additional Shares or other financial instruments convertible or
exchangeable into Shares, resulting in substantial dilution to
all shareholders.
14. RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. The
Company's operations are currently headquartered in the United
Kingdom, although it plans, initially, to engage in marketing
efforts in the United States and Europe. There are certain risks
inherent in international operations including, but not limited
to, remote management, unexpected changes in regulatory
requirements, export restrictions, export controls relating to
technology, tariffs and other trade barriers, difficulties in
staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political
instability, fluctuations in currency exchange rates, seasonal
reductions in business activity during the summer months in
Europe, and potential adverse tax consequences, which could
materially adverse affect the Company's business, operating
results, and financial condition.
15. COMPETITION. The Company anticipates that it will
experience competition from established and emerging computer,
communications, intelligent network wiring, network management
and test equipment companies and expects such competition to
increase in the future. New and competitive entrants into the
field of network fault and performance management may come from
areas as diverse as embedded systems in network hardware from
established network hardware companies, as well as certain
software referred to as "network management" by smaller
companies. The primary competitors for the Company planned
products are Network General, Hewlett-Packard Company
("Hewlett-Packard"), and 3Com, which are already well entrenched
in the market for network management systems. Network General,
Hewlett-Packard and 3Com have greater name recognition, more
extensive engineering, manufacturing and marketing organizations
and substantially greater financial, technological and personnel
resources than those available to the Company. Other competitors
include Azure Technologies Incorporated, Frontier Software
Development, Inc., Wandel & Goltermann, Inc., Shomiti Systems,
Inc. and embedded systems companies.
There can be no assurance that the Company's products will
ever receive commercial acceptance, or that there will ever be
any meaningful sales of its products. Furthermore, new companies
may emerge at any time with products that are superior, or that
the marketplace perceives are superior, to the Company's
products. New entrants, new technology and new marketing
techniques may cause customer confusion, thereby lengthening the
sales cycle process for the Company. Increased competition may
also lead to downward pricing pressure on the Company's products.
14
<PAGE>
The LAN and WAN industries are characterized by rapid
technological advances and can be significantly affected by
product introductions and market activities of industry
participants. In addition to its current principal competitors,
the Company expects substantial competition from established and
emerging computer, communications, intelligent network wiring,
network management, embedded systems and test instrument
companies. There can be no assurance that the Company will be
able to compete successfully in the future with existing or
anticipated competitors.
Competitive pressures from existing manufacturers who offer
lower prices or introduce new products may, in some instances,
result in delayed or deferred purchasing decisions by potential
customers of the Company. Purchase delays or deferrals by
potential customers of the Company's products may require the
Company to reduce its prices. These competitive scenarios could
materially adversely affect the Company's revenues and operating
margins.
16. DEPENDENCE UPON DEVELOPING NEW PRODUCTS. The Company
believes its future success will depend, in part, on its ability
to continue to develop, introduce and sell new products. The
Company is committed to continuing investments in research and
development; however, there is no assurance these efforts will
result in the development, timely release or market acceptance of
new products.
17. IMPACT OF GENERAL ECONOMIC CONDITIONS ON OPERATIONS AND
DEPENDENCE UPON OTHER COMPANY'S PRODUCTS AND THEIR AVAILABILITY.
The Company's proposed products may be considered by certain
customers to be capital purchases. An adverse change in general
economic conditions could cause certain of the Company's
potential customers to reduce their capital spending, which may
adversely affect the Company's operating results.
For certain critical components of its products, the Company
anticipates that it will be relying on a limited number of
suppliers. In addition, it is anticipated that some of the
Company's products will be designed around specific computer
platforms which are only available from certain manufacturers.
Any significant shortage of computer platforms or other critical
components for the Company's products could lead to cancellations
or delays of purchases of the Company's products which would
materially adversely affect the Company's operating results. If
purchases of computer platforms or other components exceed
demand, the Company would incur expenses for disposing of the
excess inventory, which would also adversely affect the Company's
operating results.
15
<PAGE>
18. NEED OF COMPANY TO COMPLY WITH ELECTRICAL, EMISSIONS, AND
OTHER APPLICABLE SAFETY REQUIREMENTS. There can be no assurance
that the Company's Products will meet all necessary electrical,
emissions or other applicable safety requirements in any of its
major potential markets or that standards imposed by federal or
local authorities will not be changed with material adverse
effects on the Company's activities. Moreover, compliance with
such laws may cause substantial delays and require capital
outlays in excess of those anticipated, thus, causing an adverse
effect on the Company.
19. DEPENDENCE UPON TECHNOLOGY FROM SUN MICROSYSTEMS. The
Company licenses Java and Solstice technology from Sun
Microsystems. The quality of those technologies can affect the
Company's ability to deliver and market its products in many
ways, including, but not limited to, timely delivery of product
to market, quality of finished goods, and market acceptance of
the Company's products.
20. SUBSTANTIAL IMMEDIATE DILUTION. The Selling Shareholders in
this Offering suffered immediate, substantial dilution of their
interests. Prior to the Selling Shareholders purchasing their
shares, 5,233,500 Shares were issued for $993,400. Therefore, the
Selling Shareholders contributed approximately 76% percent of all
cash raised and own, in the aggregate, 17% of the Company's
outstanding Shares.
21. DEPENDENCE OF THE COMPANY UPON UNPROVEN PRODUCTS.
Management believes that the Company's financial performance will
be dependent upon its ability to market its Products.
Because the Products are only at the conceptual stage, with
one product at the software only prototype stage, there can be
no assurance that the Company will be able to develop the
Products. Furthermore, even if the Company is able to develop a
product, there can be no assurance that the Company will be able
to sell any Products. Accordingly, there can be no assurance
that any significant demand for the Products will ever develop or
that the Products will be able to effectively compete with
products produced by others.
22. LIMITED MARKET FOR SHARES; POTENTIAL SALES OF SUBSTANTIAL
AMOUNTS OF SHARES. There are presently 6,276,600 outstanding
Shares. Prior to this offering ("Offering"), there has been a
limited public market for the Common Stock of the Company on the
National Association of Securities Dealers, Inc.'s
Over-the-Counter Bulletin Board ("OTC Bulletin Board") and there
can be no assurance that any active trading market will ever
develop. In the event that no liquid market for the Shares
develops, it will be extremely difficult for a shareholder to
dispose of the Shares. In the event a market develops, there can
16
<PAGE>
be no assurance that the market will be strong enough to absorb
all of the Shares which may be offered for sale by existing
shareholders. The resales of substantial amounts of Shares will
have a depressive effect on the market.
23. SIGNIFICANT CONTROL AND INFLUENCE BY EXISTING SHAREHOLDERS.
At this time, Management and insiders beneficially own
approximately 44% of the Company's outstanding shares. As a
result, Management will be able to control most matters requiring
shareholder approval, such as the election of directors, or a
merger or consolidation of the Company. Under certain
circumstances, such control could prevent shareholders from
receiving a premium over the then current market value for their
shares.
24. LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITIES UNDER
DELAWARE LAW. Pursuant to the Company's Certificate of
Incorporation, as authorized under Delaware law, officers and
directors of the Company are not liable for monetary damages for
breach of fiduciary duty, except in connection with breach of
duty or loyalty, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware
law, or for any transaction in which a director has derived an
improper personal benefit. In addition, the Company's
Certificate of Incorporation provides that the Company shall
indemnify its officers and directors to the fullest extent
permitted by law for expenses incurred in the settlement of any
actions against such persons in connection with their having
served as officers or directors of the Company.
25. CONSEQUENTIAL LOSS. The Company's products are complex,
distributed software systems, which under certain conditions have
the capability to damage rather than assist the network on which
it is installed. This leads to the possibility of a loss,
although the Company's software takes explicit steps to avoid
this type of fault. Although the Company's license terms
explicitly deny responsibility for losses of this type, the risk
still exists.
USE OF PROCEEDS
Because the Shares being offered hereby have already been
sold by the Company during November 1996, the Company will not be
receiving any proceeds from the sales of Shares by the Selling
Shareholders.
17
<PAGE>
DIVIDEND POLICY
The Company has never declared or paid cash or other
dividends on its Shares and it is currently the intention of the
Company not to declare or pay cash dividends on its Shares. The
payment of cash dividends in the future will depend on the
Company's earnings, financial condition, capital needs and other
factors deemed relevant by the Board, including statutory
restrictions on the availability of capital for the payment of
dividends, the rights of holders of any series of preferred stock
that may hereafter be issued and the limitations, if any, on the
payment of dividends under any then-existing credit facility or
other indebtedness. It is the current intention of the Board to
retain earnings, if any, to finance the operations and expansion
of the Company's business.
THE COMPANY
The Company was incorporated on May 2, 1996 under the laws
of Delaware. The Company's plans are to design, develop,
manufacture, and market new computer network management systems
to (i) maximize network productivity, (ii) minimize network
downtime, and (iii) solve network problems caused by the constant
increase in network traffic, combined with the growing complexity
of networks. These problems result in escalating costs and major
systems failures across the corporate spectrum. Management
believes that current network management systems do not have the
capability to effectively deal with these problems.
The Company is designing products consisting of portable
tools and centralized systems incorporating a proprietary
technology linking advanced protocol decodes with expert analysis
capabilities to facilitate identification, diagnosis and
resolution of network problems.
Background
Over the past ten years corporations have moved rapidly from
using mainframe computers with numerous access terminals to
individual personal computers ("PCs"), interconnected by
networks. This has resulted in the network traffic increasing to
the point where it outstrips the capacity of the existing
networks.
A corporate network may connect thousands of individual PCs
together. The network, rather than a mainframe computer, now
connects all the parts of the organization together. This
18
<PAGE>
resulting increase in network use can result in increased costs
to a company including (i) uncontrolled and unknown network
traffic, (ii) unnecessary telephone costs, and (iii) poor usage
accounting.
Management believes there a number of problems with the
management of networks today.
One major problem with existing network management systems
is their inability to determine the reason why the link between
two PCs is busy, or which type of traffic is causing the
congestion (i.e., processing, spreadsheets, dealer feeds, games,
etc.).
Management believes that another major problem with existing
network management systems is their inability to efficiently and
cost-effectively do anything other than real-time sampling. Real
time sampling will only describe the current state of the system,
which immediately after a failure is "down". Management believes
that a real-time view is not effective for long-term solving or
diagnosis.
Management believes that existing network management devices
are expensive, while being limited to carrying out a single
function. Existing networks probe devices or network analyzers
require other devices for these products to work most
effectively. Accordingly, the cost of deploying these network
probes and related devices can be quite expensive.
The Company plans to design products which would provide
practical tools to address the problems of (i) uncontrolled and
unpredictable network traffic, (ii) unnecessary telephone line
charges, and (iii) poor usage accounting.
Planned Initial Products
The initial products the Company currently plans to develop
are as follows:
1. Mid-Level Manager ("MLM")
It is intended that the MLM will be an application suite
suitable for execution on Sun Solaris, IBM AIX, Windows NT and
Windows 95. Management anticipates that the initial releases
will be on Windows NT. It is intended that the Manager will
provide the interface between the raw statistics gathered at the
probe and the presentation layer software used to display this
data.
19
<PAGE>
The MLM will support(i) RMON data capture interface allowing
data capture from existing RMON probes, and (ii) SNMP data
capture interface allowing data capture from existing SNMP
devices.
The MLM will be designed to allow secure network
installation of user applications. The security will prevent the
execution of unlicensed copies of Jyra Products. The MLM will
contain authentication capability internally to prevent
unauthorized access and will be designed to support external
authentication protocols such as TACACS, CHAP, and RADIUS.
2. Jyra Diagnosis Pack
It is intended that this product will provide local
diagnosis of network problems. Management plans that the probe
software will be secured so that it cannot be used in non-Jyra
systems.
3. Jyra Analysis Pack
Management anticipates that this product will provide a
global view of the performance of applications within a network,
capturing and analyzing data from more than one probe. This
product would provide the administrator of the network system
with a view of traffic across an entire network. This would
allow the administrator to gain an understanding of the flow of
traffic and to optimize the network by managing out unnecessary
traffic.
It is intended that this product would be equipped with
memory capacity sufficient to record problems as they occur and
play back the sequences of events that led up to the problem. In
addition, Management believes that this historical data allows
trend analysis and will provide a company with the ability to
charge its various operating companies according to their use of
the network.
It is anticipated that data analysis will be distributed
depending upon where the CPU, memory and network bandwidth
constraints exist within the monitoring system.
4. Jyra Probe
The Jyra Probe ("Probe") is likely to be available as a
10/100 Mbps Ethernet device. It is intended that the Probe will
support multiple packet capture contexts so that traffic streams
from different switching configurations can be separated.
20
<PAGE>
5. Service Management
Management anticipates that this product will initially
focus on measuring and reporting on response time as experienced
by network users. Management anticipates that this will be
supplemented by an application oriented network cost management
system based upon transactional monitoring and billings.
*******
It is the Company's goal that any products it may develop
will be compatible with the emerging standards being set by users
of the Internet and its equipment suppliers. Management hopes
that such an approach will help attract third parties to develop
applications supporting the Company's products.
However, there can be no assurance that the Company will be
able to develop any of the products described above, or that,
even if developed, that any of the products will be commercially
successful.
MANUFACTURING
After the Company completes designing a product, the Company
must then arrange for a prototype or model to be manufactured.
If tests of the prototype are successful, and Management believes
that there will be a commercial demand for the product,
Management must arrange for the product to be manufactured in
commercial quantities. Currently, the Company does not plan on
manufacturing any Products itself, but plans on having outside
manufacturers produce any Products.
Management intends that the hardware element of the Probe
will be assembled using industry standard components such as
microprocessors manufactured by Intel and network adaptors
manufactured by Digital Equipment. The Probe would then
assembled by a third party assembler. Management believes the
primary advantages of using a third party to assemble the Probe
are (1) the Company would not incur the expense of operating a
manufacturing plant, and (2) the Company would achieve lower
component costs through the buying capability of the assembler
who buys standard components in large numbers.
The Company anticipates that its manufacturing operations
will not require any capital expenditures for environmental
control facilities or any special activities for protection of
the environment.
21
<PAGE>
LICENSE FROM SUN MICROSYSTEMS
On June 29, 1996, the Company entered into a Technology
License and Distribution Agreement ("Agreement") with Sun
Microsystems, Inc. ("Sun"). Under the Agreement, the Company was
granted a worldwide non-exclusive license to develop and
distribute products based upon Sun's Java technology (the "Java
Technology"). The Agreement does not prohibit the Company from
using technology which is competitive with Java Technology.
Although Java Technology is a yet-untested work in progress,
since Management expects Java Technology to be a suitable basis
for the Company's initial products, Management intends to develop
the Company's Probe and related products based in large part upon
Java Technology.
Pursuant to the Agreement, the Company is required to meet
three principal payment obligations to Sun, consisting of: A.
upfront license fees; B. per unit royalties; and C. support and
update fees.
The Agreement is capable of ending either by expiration or
termination. The Agreement is scheduled to expire at the end of
its stated initial term of five (5) years, after which the
Company may, at its option, elect to renew the Agreement for as
many as five successive terms of one (1) year each. If the
Agreement ends by expiration of any such term, then, after
expiration, the Company may continue to sell its products
incorporating Java Technology as such technology existed at the
time of expiration, subject always to the Company's continuing
obligation to pay "per unit royalties."
Alternatively, if the Agreement ends by termination (as
distinguished from expiration), the Company would be required to
cease selling any products incorporating Java Technology
immediately, at which point the Company would very likely have no
practical alternative but to rewrite its products based upon
alternative technology. There can be no assurance that such
alternative technology would prove equally suitable for the
Company's products. It is possible for either party to terminate
the Agreement on grounds of the other party's breach, or upon
grounds stated in the Agreement. The Company also has the
contractual right, at its option, to elect to terminate Agreement
for its convenience effective as early as the end of the second
year of the initial term.
PROPRIETARY RIGHTS AND LICENSES
At the present time, the Company does not own any patents
relating to any of its planned Products. Management intends to
rely primarily upon copyright, trademark and trade secret laws to
22
<PAGE>
establish its proprietary rights in its products. Because the
LAN and WAN industry is characterized by rapid technological
change, the Company will be relying upon its innovative
management, technical expertise, and marketing skills to develop,
enhance and market its products.
MARKET FOR COMPANY'S PROPOSED PRODUCTS
The market for network monitoring equipment is a result of
the general globalization of business. Corporations are
increasing selling, developing and supporting products at all
times, throughout the world. This, in turn, causes the creation
of additional corporate networks.
Management believes there are millions of computers
connected to local area networks around the world. Management
also believes that the growth of these corporate networks will
continue to grow rapidly, fueled, in part, by the growth in the
Internet and the telecommunications industry. Management
believes that the market for network monitoring equipment is
growing and that the opportunity exists for new products to find
acceptance in the marketplace.
Management believes the market for networking products is
divided into five major semi-autonomous sections as described
below.
Fortune 500 Corporations
The Fortune 500 companies are major consumers of network
management technology. Networks are crucial to the success of
these companies. Although networks are important strategic
assets for these companies, they also present major risks and
constitute major expenses. Once the Company has Products that
are ready to be marketed, the Company intends to approach
directly major corporations where Management believes the Company
has a good possibility of making sales. Initially, the Company
will focus on approaching a limited number of companies (30), to
help ensure that early sales and implementations of the Products
go smoothly. Subsequently, the Company plans to recruit up to
two marketing representatives for the United Kingdom and United
States.
Telecommunications Providers
The increase in the use of the Internet and ATM services is
requiring providers of telecommunications equipment to develop
more flexible services, many of which will be billed by usage.
Manage significant demand in the area of Internet billing.
23
<PAGE>
In conjunction with the marketing activities planned for the
Fortune 500 companies described above, Management plans to
initially approach major telecommunications companies in the
United Kingdom and the United States with a view to initiating
trials of the Company's systems in the areas of networking and
Internet problem solving and network chargeback. If the trials
are successful, Management believes these companies will be in a
position to distribute the Company's products to their customers.
However, there can be no assurance that (i) any
telecommunications companies will test the Company's products,
(ii) that any trials conducted would be successful, or (iii)
these companies would distribute the Company's products to their
customers.
Because virtually all of the Fortune 500 companies are
customers of major telecommunications companies, Management
intends to focus its direct marketing activities to attempt to
create demand for the Company's Products within the Fortune 500
companies, which can then be fulfilled by the major
telecommunications companies.
Outsourcers
Outsourcers are outside organizations which a company uses
to manage certain aspects of the company's operations.
Outsourcing companies can reduce the cost of network ownership
through remote management. Outsourcers must demonstrate that
their services are effective to retain their contracts. It is
not uncommon that many of these contracts do not become
profitable until they are renewed. Outsourcers require the
networks that they manage to have a greater amount of remote
diagnosis, control and measurement equipment than previously
existed.
A key element for outsourcers is providing network
monitoring services less expensively than the company could do so
itself. Management believes that its proposed products will be
able to efficiently monitor significant events, carry out instant
diagnosis, and capture performance and billing information.
Initially, all approaches to outsource companies will be
made by Management. Once the Company obtains a reference
customer, the Company intends to recruit a third market
representative to focus on this area, along with third party
applications vendors.
Third Party Application Developers and Consultants
24
<PAGE>
Service-only companies, such as software application
developers, require technologies to which they can add value.
Management believes that the ability to add local programming for
specialist applications to its proposed products will make its
products attractive to consultants and software developers.
Management intends to control the architecture and platform
licensing, not the overall market. The Company plans to market
its open probe architecture over the Internet and publish the
links to its architecture necessary for third parties to build
applications to the Probe.
Existing Data Communications Equipment and Probe Vendors
Major equipment vendors are already utilizing distributed
approaches for controlling equipment, but, generally, own no
probe technology of their own. Management intends to attempt to
license its proposed products to both major and smaller vendors
within the network industry. Once the Company has established
sales for its products in the markets described above, Mr. Paul
Robinson, CEO of the Company, will approach existing vendors.
Management believes that the potential opportunities are of high
value but not numerous, so any marketing activities will be
carried out by Management.
UNITED STATES MARKETING OPERATIONS
The Company intends to establish a sales presence in the
United States during the second quarter of 1997, and plans to
attend a trade show in Las Vegas, Nevada in May 1997. At this
show the Company hopes that it will be able to publicly launch
its initial products.
In addition, the Company plans on opening sales offices in
New York and/or California. Initially, the Company intends to
hire three people for its United States operations. However,
there can be no assurance that the Company will be able to
attract qualified salespeople or that any salespeople hired will
be successful. Moreover, there can be no assurance that the
Company's products will be well received or that the United
States activities will result in increased revenues for the
Company.
COMPETITIVE TECHNOLOGY
The Company's planned products will compete in three sectors
of the systems and network management market:
25
<PAGE>
1. Network Diagnosis and Analysis;
2. Remote Monitoring; and
3. Systems Management.
Management believes that the primary forces that control
these markets are:
(i) minimizing overall user network cost on the theory
that application of the appropriate technology will
reduce the number of people required to manage the
network; and
(ii) the desire on the part of managers to catch up on
communications technology. Management believes that
owners of networks generally feel that they do not have
the right degree of control, compared to other business
assets such as mainframe computers. The protocols,
applications and bandwiths in use are changing much
faster than the management technology can keep up with.
NETWORK DIAGNOSIS AND ANALYSIS
This part of the market is highly fragmented, although
products can generally be placed into three categories:
1. portable packet capture;
2. local network analysis; and
3. global network analysis.
(A) Portable Packet Capture
Devices in the class are designed to capture all traffic
from a single network segment for later analysis. The device
will attempt to decode each packet seen on the network; expert
analysis of what is actually transpiring is left to the user.
Triticom LANDecoder
Triticom is the developer is many LAN management tools
designed for network administrators and integrators. Triticom's
products include software-based network monitors, protocol
analyzers, bridges and routers, RMON and Microsoft Windows
network management software.
26
<PAGE>
The Triticom LANDecoder is a software packet capture and
protocol analyzer product which runs on almost any PC. The
device is designed as an inexpensive field service tool. The
device makes it easy to capture data as it decodes a wide variety
of network protocols.
Wandel and Goltermann
The WG DA30 is the most expensive piece of network diagnosis
equipment in common use. It is typically sold to large
corporations, product manufacturers, and network integrators.
The device supports multiple physical interfaces at
wire-speed through the use of multiple processors. For a user
with significant programming skills, it is possible to write
specialized capture and diagnosis routines in Occam, a
parallel-processing programming language designed to support the
SGS-Thomson (Immos) Transputer, which is attached to each
physical interface. Wandel and Goltermann also produces the
Domino, which is a single module packaged for use with a laptop
PC.
Hewlett-Packard
Hewlett-Packard is recognized as the market leader in serial
line analyzers, but it has not been able to establish the same
leadership in LAN analyzers or in RMON probes. Management of the
Company believes this is due to competition from PC-based
platforms for the low-end market.
(b) Local Network Analysis
Network General
The Expert Sniffer, sold by Network General, is a PC-based
network monitor which accumulates information about traffic flows
on Ethernet, FDDI, and Token Ring segments in almost real-time.
Following data capture, a series of expert system modules
interpret the capture data traffic to make assessments of where
any problems may lie. This expert analysis makes protocol
knowledge available to less skilled field service staff and
reduces repair time in corporate environments. The Distributed
Sniffer consists of one or more probes and a management
application sells for around the same price.
(c) Global Network Analysis
ECONet
27
<PAGE>
ECONet is a PC-based application which first came to market
in early 1995, under the name CoroNet. The product won a Best in
Show award at Interop and was immediately purchased by Compuware
for $35 million. ECONet was the first product to use packet
capture and analysis techniques to attempt to automatically build
a global view of the applications in use within a network.
Compuware is now marketing the product as a relatively low-end PC
application rather than as an advanced corporate network
management tool. The product is very useful in providing network
managers application-oriented network utilization figures.
Management of the Company believes that there are no other
similar products which meets this need without significant
engineering work on the part of the end user.
Desktalk TrendSNMP+
This is a data collection and consolidation system for
long-term capture of SNMP and RMON data. The product can be used
as a base for service-level monitoring, capacity planning and
billing. The basis for monitoring is limited to the functions
provided by RMON and SNMP. It uses a standard relational
database. It has a sophisticated polling engine.
REMOTE MONITORING
Current and future remote monitoring products are based on
the RMON and RMON-2 standards. RMed set of monitoring functions
which can be performed by a probe on a single network segment.
RMON-2 includes packet capture, conversation statistics and by a
breakdown by communications protocol.
The primary disadvantages of RMON are:
a. due to the requirement that standards agree among
competing manufacturers, the standard that is
adopted, usually substantially trails user needs;
b. the reporting and control mechanism for RMON is SNMP,
which leads to highly inefficient data transfers. The
fixed function of the RMON probes means that
sophisticated applications have to be executed at a
central management station, to which all data must be
transferred. The use of SNMP makes this impractical in
many networks;
c. problem analysis still requires expert individuals for
such analysis;
28
<PAGE>
d. as the number of devices supported by each network
segment becomes reduced, the per-user cost of RMON
increases. Few organizations feel that they can afford
a probe per segment.
Management of the Company has had direct recent experience
constructing management reporting solutions with RMON products
and recognize the following limitations:
a. limited programming capability at the probe;
b. very inefficient data transfer;
c. limited security for captured data; and
d. limited resilience in the management system as a whole.
Each probe vendor has its own unique management technology.
This allows the probe vendor to drive the vendor-specific
features of each offering, while allowing the products to be
demonstrated. These management applications have required the
probe vendors to engage in a substantial amount of
re-engineering. As a general rule, the management applications
designed by probe vendors compare unfavorably to the products of
the leading systems management vendors.
Activity in RMON probe manufacturers is currently focused on
four areas:
a. alliances with major vendors of network switching
equipment;
b. upgrading from RMON to RMON-2;
c. supporting new physical interfaces; and
d. increasing management functionality.
The leading products in this area are manufactured by
Frontier Software, ARMON, AXON and Hewlett-Packard.
Frontier Software
Frontier Software ("Frontier") has two major products:
Netscout Probes and Netscout Manager. Generally, customers buy
one or more probes, depending upon the number of network segments
to be monitored, and one copy of the Netscout Manager.
29
<PAGE>
Frontier has the most third-party relationships, and
supplies products and technology to the market leading switch
vendor, Cisco Systems. Frontier supports the widest range of
physical interfaces: 10 mbps Ethernet, Token Ring, FDDI, and
high-speed serial links. Frontier uses a ruggedized PC hardware
platform, which gives Frontier a cost advantage when developing
new probes.
SYSTEMS MANAGEMENT
Systems management products take a top-down view of the
entire information technology infrastructure within a single
corporation. They developed as an extension of the market for
network management consoles. These are large complex
applications for which development takes a long time, and
innovation is rare. Management of the Company believes that
there have been no significant technical innovations in the area
since Hewlett-Packard Openview first came to the market.
The leading corporate systems management products are:
Computer Associates Unicenter, Hewlett-Packard Openview, IBM
System View, and Tivoli.
Typical customers spend in excess of $250,000 on systems
management products, and an additional $250,000 to make the
products perform.
Timetable
Management of the Company believes that it has adequate
funds to develop and bring to market its initial products.
Management anticipates that during the first half of 1997 it will
complete development and commence marketing its initial planned
products.
The primary steps the Company must complete include:
1. complete development of the software to be utilized in
the Probe and management functions;
2. location and evaluation of suitable OEM hardware
components to be used in manufacturing of Products;
3. complete management and analysis applications to enable
Company to demonstrate Company's planned Products to
potential customers.
30
<PAGE>
FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's audited financial statements for the period
from its inception, May 2, 1996, through December 31, 1996
reflect a net loss of $347,692, which relates to the expenses
incurred in developing its initial products, forming the Company,
and the raising of approximately $4 million through the sale of
6,276,600 Shares.
At December 31, 1996 the Company had cash on hand of
approximately $3.4 million. The Company believes these funds are
adequate to finance operations through mid-1998, assuming the
Company receives no other funds, from either the sale of Shares
or its products.
From May 2, 1996 through December 31, 1996, the Company's
only source of revenues has been $30,366 in interest it has
received from funds on deposit.
On August 14, 1996 the Company formed a wholly-owned
subsidiary in the United Kingdom, Jyra Research Ltd., to carry
out research and development duties. Currently, the majority of
the Company's activities are carried out through Jyra Research
Ltd.
The Company's monthly general and administrative expenses
are approximately $125,000 (exclusive of legal, auditing and
license payments). Management anticipates that this figure will
increase significantly in the first half of 1997 as it launches
its products and establishes a presence in the United States. In
addition, the Company will be incurring costs of approximately
$100,000 in connection with the initial manufacture and launch of
its initial products, scheduled for the second quarter of 1997.
The Company also has financial commitments relating to its
agreement with Sun Microsystems to license Sun's Java technology.
For each of the first 5,000 products utilizing Java Technology
sold by the Company, the Company will be required to pay Sun a
royalty of $66 per unit; for each such product in excess of the
first 5,000, the Company will be required to pay Sun a royalty of
$20 per unit.
In addition, as "support and update fees," the Agreement
requires the Company to pay Sun: $50,000 per year for the period
during which the Company is paying "per unit royalties" of $66;
and $300,000 per year for the period when the Company is paying
Sun "per unit royalties" of $20.
31
<PAGE>
SELECTED FINANCIAL DATA
Following is selected financial data of the Company for the
period from the Company's incorporation, May 2, 1996, through
December 31, 1996.
<TABLE>
<CAPTION>
For the period
May 2, 1996
through
December 31,
1996
At December 31,
1996
<S>
<C>
<C>
Current Assets
3,449,489
Current
Liabilities
100,994
Stockholders
Equity
3,446,701
Revenues
0
Loss
347,692
</TABLE>
32
PAGE
<PAGE>
OFFICE FACILITIES
The Company's executive offices are located at 41 Thurloe
Square, London, England where it currently utilizes approximately
200 square feet. The Company leases approximately 2,700 square
feet of space at Hamilton House, 111 Marlowes, Hemel Hempstead,
Hertfordshire HP1 1BB England from where it conducts research and
development, at an annual rental of 23,500 pounds sterling. The
lease expires in August 1999.
DIRECTORS, OFFICERS AND KEY PERSONNEL
Management
<TABLE>
<CAPTION>
<S> <C> <C>
NAMEAGE POSITION
Paul Robinson 33 President, CEO, Chairman of the
Board
Peter Lynch 41 Director, VP - Technology
Roderick Adams 33 Director, VP-Corp. Development
Andy Mulholland 47 Director - Jyra Research Ltd.
</TABLE>
Paul Robinson has served as Chairman of the Board of
Directors, President, and Chief Executive Officer of the Company
since June 3, 1996. From August 1995 to October 1, 1996, Mr.
Robinson was an Account Manager for Cisco Systems, handling
customers in the United Kingdom financial sector. From 1992 to
August 1995 Mr. Robinson was employed by Biss Ltd. as a new
business sales executive. From 1989 to 1992 Mr. Robinson was a
sales executive for Prime Computers in the United Kingdom. In
1990, Mr. Robinson was transferred to Thailand where he was sales
manager for southeast Asia. Mr. Robinson intends to spend all of
his time on the Company's affairs.
Peter Lynch has served as a director of the Company since
its inception in May 1996. Since 1990 Mr. Lynch has held various
management positions with Wang Biss Ltd. in the areas of system
engineering, product marketing, and regional operations. Mr.
Lynch intends to spend all of his time on the Company's affairs.
33
<PAGE>
Roderick Adams has served as a director of the Company since
its inception in May 1996. Since 1991 Mr. Adams has acted as a
consultant to a number of companies seeking financing. Mr. Adams
provides services and advice on corporate matters including fund
raising, listings and quotes, investor and media relations. Mr.
Adams intends to spend all of his time on the Company's affairs.
Mr. Andy Mulholland has served as a director of Jyra
Research Ltd., the Company's wholly-owned English subsidiary,
since January 14, 1997. Since July 1996, Mr. Mulholland has been
a divisional director of Cap Gemini UK, part of Europe's largest
computer services business. From 1989, Mr. Mulholland was a
founder and marketing director (executive) of BISS Ltd. In 1993
he was a key figure in raising more than 5.5 million pounds
sterling for a management buy out of BISS Ltd. BISS Ltd. was
subsequently sold to Wang Laboratories, USA in 1995. Mr.
Mulholland is an experienced senior manager with strong skills in
strategic, tactical, and management aspects of technology and
services provisions.
REMUNERATION
SUMMARY COMPENSATION TABLE *
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
- -----------------------------------------------------------------
NUMBER OF
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul Robinson.............. 1996 46,500\1 0 0
Chairman, Chief Executive Of-
ficer, President
Peter Lynch................ 1996 46,500\2 0 0
Director, VP-Technical
Roderick Adams.............. 1996 43,000\3 0 0
Director, VP-Corp. Development
</TABLE>
34
<PAGE>
* All monetary amounts in this table are in English pounds
sterling.
1/ Mr. Robinson is being compensated at an annual rate of 46,500
pounds sterling per year. Such compensation commenced on October
1, 1996. From the Company's incorporation on May 2, 1996 through
September 30, 1996, Mr. Robinson received no compensation from
the Company. For the period from October 1, 1996 through
December 31, 1996, Mr. Robinson received compensation totaling
11,625 pounds sterling.
2/ Mr. Lynch is being compensated at an annual rate of 46,500
pounds sterling per year. Mr. Lynch began receiving compensation
in July 1996. Through December 31, 1996 Mr. Lynch received
compensation totaling 23,250 pounds sterling.
3/ Mr. Adams began receiving compensation at the annual rate of
43,000 pounds sterling in July 1996. Through December 31, 1996,
Mr. Adams received compensation totaling 21,500 pounds sterling.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-
END OPTIONS/SAR VALUES
At the present time, no stock options are held by any of the
Company's officers and directors. At the present time, the
Company has outstanding stock options to purchase a total of
60,000 Shares at an exercise price of $0.40 per Share, 40,000
Shares at an exercise price of $4.00 per Share, 55,0000 Shares at
an exercise price of $7.00 per Share, and 7,500 Shares at an
exercise price of $8.50 per Share.
STOCK OPTION PLAN
The Company has adopted the Stock Option Plan (the "Plan")
to attract and retain officers, non-employee directors,
employees, and consultants of the Company or any of its
subsidiaries or affiliates. The Plan authorizes the purchase of
up to 500,000 shares of Common Stock through the grant of stock
options and awards of restricted stock. The Company has granted
options under the Plan to purchase 162,500 Shares of the
Company's Common Stock at varying exercise prices. The Plan will
be administered by either the Board of Directors or a committee
of two or more non-employee directors ("Administrator"). In
general, the Administrator will determine which eligible
officers, directors, employees and consultants of the Company may
participate in the Plan and the type, extent and terms of the
stock option grants and awards of restricted stock.
35
<PAGE>
Options granted to employees may be either incentive stock
options within the meaning of Section 422 of the Code ("ISOs") or
non-ISOs. Each option has a maximum term of ten years from the
date of the grant, subject to early termination. The exercise
price of any options granted after this Offering shall be equal
to the greater of the market price per share of the Common Stock
on the date of grant or the initial public offering price. At
the discretion of the Administrator, the exercise price of the
options may be paid in cash, with shares of Common Stock having a
fair market value equal to the option exercise price, or with
other property having a fair market value equal to the option
exercise price, including other vested but unexercised options.
In the event of a change in control, as defined in the Plan, all
options will become immediately vested and exercisable and the
restrictions with regard to restricted stock will lapse, unless
provided otherwise.
RELATED PARTY TRANSACTIONS
During 1996 the Company has issued a total of 132,600 Shares
to Union Securities (International) Ltd., as compensation for its
services in assisting the Company sell Shares in the (i)
June/July 1996 offering and (ii) the European Offering in
October and November 1996. Mr. Timothy A.B. Mills, a founder of
the Company, who owns 550,000 Shares, is a director, and owns
20%, of Union Securities (International) Ltd.
DILUTION
The Selling Shareholders in this Offering suffered
immediate, substantial dilution of their interests upon their
investment in the Company. Prior to the Selling Shareholders
purchasing their shares, 5,233,500 Shares were issued for
$993,400. Therefore, the Selling Shareholders contributed
approximately 76% percent of all cash raised and own 17% of the
Company's outstanding Shares.
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information regarding the
beneficial ownership as of the date hereof and as adjusted to
reflect the sale of Common Stock offered hereby, by (i) each
36
<PAGE>
person known by the Company to own beneficially five percent or
more of the Common Stock, (ii) each of the Company's directors,
(iii) each of the Named Officers and (iv) all directors and
executive officers as a group. Except as otherwise indicated, (x)
the Company believes that each of the beneficial owners of the
Common Stock listed in the table, based on information furnished
by such owner, has sole investment and voting power with respect
to such shares, and (y) the address of the beneficial owner is
the address of the principal executive offices of the Company.
The information set forth in the table and accompanying footnotes
has been furnished by the named beneficial owners.
<TABLE>
<CAPTION>
PERCENTAGE(1)
NUMBER OF
SHARES
BENEFICIALLY BEFORE AFTER
NAME OWNED OFFERING OFFERING
- ----- ------------ -------- -------
<S> <C> <C> <C>
Paul Robinson 735,000 11.7% 11.7%
Peter Lynch 735,000 11.7% 11.7%
Roderick Adams 730,000 11.6% 11.6%
Timothy A.B. Mills 550,000 8.8% 8.8%
All executive officers and directors as a group
(3 persons) 2,200,000 35.1% 35.1%
- - --------
</TABLE>
37
PAGE
<PAGE>
TRADING MARKET OF COMPANY'S SHARES
The Company's shares have traded on National Association of
Securities Dealers Over the Counter Bulletin Board ("OTC Bulletin
Board") since September 24, 1996. The price range of trading in
the Shares, on a quarterly basis, since that time, is as follows:
<TABLE>
<CAPTION>
OTC BULLETIN
BOARD
1996 Trades Volume
Low |High
<S> <C> <C>
1st Quarter |
2nd Quarter |
3rd Quarter .90 | 1.625 182,200
4th Quarter 1.50 |12.00 4,496,500
1997 Trades Volume
Low |High
1st Quarter 7.125|24.00 2,756,300
</TABLE>
Note: OTC Bulletin Board Quotations - The OTC Bulletin Board
quotations represent inter-dealer prices, without mark-ups,
commissions, etc., and they may not necessarily be indicative of
actual sales prices.
The last trade of the Shares on the OTC Bulletin Board on
March ____, 1997 was $_____.
LITIGATION
None.
38
<PAGE>
CAPITALIZATION AND DESCRIPTION OF SECURITIES
The Company has one class of capital stock outstanding,
common stock having $0.001 par value ("Shares").
On March 31, 1997, there were 6,276,600 Shares outstanding
out of 20,000,000 Shares authorized.
All Shares are of the same class and have the same rights,
preferences and limitations. Holders of Shares are entitled to
receive dividends in cash, property or shares when and if
dividends are declared by the Board of Directors out of funds
legally available therefor. The By-Laws impose no limitations on
the payment of dividends. A quorum for any meeting of
shareholders is a majority of Shares then issued and outstanding
and entitled to be voted at the meeting. Holders of Shares are
entitled to one vote per Share. There is no cumulative voting
with respect to the election of directors, with the result that
the holders of more than 50% of the shares voted can elect all of
the directors then being elected. Upon any liquidation,
dissolution or winding up of the business of the Company, any
assets will be distributed to the holders of Shares after payment
or provision for payment of all debts, obligations or liabilities
of the Company. Except as otherwise disclosed in this
Memorandum, there are no preemptive rights, subscription rights,
conversion rights or redemption provisions relating to the
Shares, and none of the Shares carries any liability for further
calls.
The rights of holders of Shares may not be modified other
than by vote of two-thirds of the Shares voting on such
modification.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the General Corporation Law of Delaware, as
amended ("DGCL"), the Company's Certificate of Incorporation
limits the personal liability of a director or officer to the
Company for monetary damages for breach of fiduciary duty of care
as a director. Liability is not eliminated for (i) any breach of
the director's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law,
(iii) unlawful payment of dividends or stock purchases or
redemptions pursuant to Section 174 of the DGCL, or (iv) any
transaction from which the director derived an improper personal
benefit.
39
<PAGE>
The Company has also entered into indemnification agreements
with each of its directors and executive officers. The
indemnification agreements provide that the directors and
executive officers will be indemnified to the fullest extent
permitted by applicable law against all expenses (including
attorneys' fees), judgments, fines and amounts reasonably paid or
incurred by them for settlement in any threatened, pending or
completed action, suit or proceeding, including any derivative
action, on account of their services as a director or officer of
the Company or of any subsidiary of the Company or of any other
company or enterprise in which they are serving at the request of
the Company. No indemnification will be provided under the
indemnification agreements, however, to any director or executive
officer in certain limited circumstances, including on account of
knowingly fraudulent, deliberately dishonest or willful
misconduct. To the extent the provisions of the indemnification
agreements exceed the indemnification permitted by applicable
law, such provisions may be unenforceable or may be limited to
the extent they are found by a court of competent jurisdiction to
be contrary to public policy.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
DELAWARE LAW
The Company is subject to Section 203 of the DGCL, which
prevents an "interested stockholder" (defined in Section 203,
generally, as a person owning 15% or more of a corporation's
outstanding voting stock) from engaging in a "business
combination" with a publicly-held Delaware corporation for three
years following the date such person became an interested
stockholder, unless: (i) before such person became a
stockholder, the board of directors of the corporation approved
the transaction in which the interested stockholder became an
interested stockholder or approved the business combination; (ii)
upon consummation of the transaction that resulted in the
interested stockholder's becoming an interested stockholder, the
interested stockholder owns at least 85% of the voting stock of
the corporation outstanding at the time the transaction commenced
(subject to certain exceptions); or (iii) following the
40
<PAGE>
transaction in which such person became an interested
stockholder, the business combination is approved by the Board of
the corporation and authorized at a meeting of stockholders by
the affirmative vote of the holders of 66% of the outstanding
voting stock of the corporation not owned by the interested
stockholder. A "business combination" includes mergers, stock or
asset sales and other transactions resulting in a financial
benefit to the interested stockholder.
The provisions of Section 203 of the DGCL could have the
effect of delaying, deferring or preventing a change in control
of the Company.
TRANSFER AGENT
The transfer agent for the Common Stock is the Registrar and
Transfer Company, Cranford, New Jersey.
SHARES ELIGIBLE FOR FUTURE SALE
At the present time, the Company has 6,276,600 shares of
Common Stock outstanding, not including the 157,500 shares of
Common Stock issuable upon exercise of the options held by the
Company's employees, Of these outstanding shares, 5,233,500
shares may be freely traded without restriction or further
registration under the Securities Act, except that any shares
that are held by an "affiliate" of the Company (as that term is
defined in the rules and regulations under the Securities Act)
may be sold only pursuant to a registration under the Securities
Act or pursuant to an exemption from registration under the
Securities Act including the exemption provided by Rule 144
adopted under the Securities Act.
1,043,100 shares of Common Stock were sold in Europe in
October and November 1996 pursuant to the safe harbor from
registration set forth in Regulation S, promulgated under the
Securities Act. Under Regulation S, these shares are subject to
a "restricted period," that requires that the Company take such
steps as are necessary to ensure that the shares are not resold
into the United States for at least one year from the date of
sale. 1,043,100 of these shares, are being registered pursuant
to this prospectus. These Shares, if not sold pursuant to this
prospectus, will be available for resale into the United States
commencing in October 1997.
41
<PAGE>
In addition, shareholders who are deemed to be affiliates
are also subject to resale limitations pursuant to Rule 144.
Currently, there are 2,750,000 shares which are held by founders
of the Company which may be deemed to be "control stock." These
shares, although not subject to a two-year holding requirement,
are still subject to the other provisions of Rule 144, so long as
the shareholder is deemed to be an "affiliate" of the Company.
In general, under Rule 144 as currently in effect, an
affiliate will be entitled to sell, within any three-month
period, that number of shares that does not exceed tthe then
outstanding shares of Common Stock or (ii) the average weekly
trading volume of the Stock during the four calendar weeks
preceding the date on which notice of such sale is given to the
Commission provided certain public information, manner of sale
and notice requirements are satisfied. A stockholder who is
deemed to be an affiliate of the Company, including members of
the Board of Directors and senior management of the Company, will
still need to comply with the restrictions and requirements of
Rule 144, other than the two-year holding period requirement, in
order to sell shares of Common Stock that are not Restricted
Securities, unless such sale is registered under the Securities
Act. A stockholder (or stockholders whose shares are aggregated)
who is deemed not to have been an affiliate of the Company at any
time during the 90 days preceding a sale by such stockholder, and
who has beneficially owned Restricted Shares for at least three
years, will be entitled to sell such shares under Rule 144
without regard to the volume limitations described above. The
Commission is currently considering a reduction in the required
holding periods under Rule 144.
No predictions can be made of the effect, if any, that
future sales of shares of the availability of shares for sale
will have on the market price prevailing from time to time.
Nevertheless, sales of substantial amounts of Shares in the
public market could adversely affect the then-prevailing market
price.
In addition, any employee, officer or director of or
consultant to the Company who purchases his or her shares
pursuant to a written plan or contract may be entitled to rely on
the resale provisions of Rule 701, promulgated under the
Securities Act ("Rule 701"). Rule 701 permits affiliates to sell
their shares which are subject to Rule 701 ("Rule 701 shares")
under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell Rule 701 shares in reliance on Rule 144
without having to comply with the public information, volume
42
<PAGE>
limitation or notice provisions of Rule 144. In both cases, a
holder of Rule 701 shares is required to wait until 90 days after
the date of this Prospectus. At the present time, there are no
Rule 701 shares outstanding.
LEGAL MATTERS
The legality of the securities offered hereby will be passed
upon for the Company by Berns & Berns, New York, New York.
EXPERTS
The financial statements as of December 31, 1996, and for
the period from May 2, 1996 through December 31, 1996 included in
this Prospectus have been audited by Faw, Casson & Co., LLP,
independent auditors, as stated in their reports appearing herein
and elsewhere. Such financial statements included herein in
reliance upon the reports of such firm given upon their authority
as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration
Statement under the Securities Act with respect to the Securities
offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the
exhibits thereto, certain portions having been omitted from this
Prospectus in accordance with the rules and regulations of the
Commission. For further information with respect to the Company,
the securities offered by this Prospectus and such omitted
information, reference is made to the Registration Statement,
including any and all exhibits and amendments thereto. Statements
contained in this Prospectus concerning the provisions of any
documents filed as an exhibit are of necessity brief descriptions
thereof and are not necessarily complete, and in each instance
reference is made to the copy of the document filed as an exhibit
to the Registration Statement, each such statement being
qualified in its entirety by this reference.
Following the effectiveness of the Registration Statement,
the Company will be subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and in
accordance therewith will file reports, proxy statements and
other information with the Commission. Such reports, proxy
statements and other information may be inspected and copied at
the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwestern Atrium Center,
43
<PAGE>
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
7 World Trade Center, New York, New York 10048. Copies of such
material, including the Registration Statement, can be obtained
from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a site on the World Wide Web that
contains reports, proxy and information statements and other
information regarding registrants that file electronically of
such site is http://www.sec.gov.
The Company intends to furnish its stockholders with annual
reports containing audited financial statements, quarterly
reports containing unaudited financial information and such other
periodic reports as the Company may determine to be appropriate
or as may be required by law.
44
PAGE
<PAGE>
FINANCIAL STATEMENTS
TABLE OF CONTENTS
*****************************
PAGES
INDEPENDENT AUDITORS REPORT 1
AUDITED FINANCIAL STATEMENTS
Consolidated Balance Sheet 2
Consolidated Statement Of Operations 3
Consolidated Statement Of Stockholders Equity 4
Consolidated Statement of Cash Flows 5
Notes To Consolidated Financial Statements 6 - 10
SUPPLEMENTARY INFORMATION
Development And Administrative Expenses 11
Schedule 1: Condensed Financial Information - Omitted: Test Not
Met
Schedule 2: Valuation And Qualifying Accounts - Omitted:
Full Disclosure In Financial Statements And Notes Thereto
Schedule 3: Real Estate And Accumulated Depreciation - Omitted:
No Respective Financial Statement Caption
Schedule 4: Mortgage Loans On Real Estate - Omitted:
No Respective Financial Statement Caption
45
<PAGE>
Schedule 5: Supplemental Information Concerning Property -
Casualty Insurance Operations - Omitted:
No Respective Financial Statement Caption
*****************************
46
PAGE
<PAGE>
47
PAGE
<PAGE>
SUPPLEMENTARY INFORMATION
48
PAGE
<PAGE>
INDEPENDENT AUDITORS REPORT
BOARD OF DIRECTORS
JYRA RESEARCH INC. AND SUBSIDIARY
London, England
We have audited the accompanying consolidated balance sheet of
Jyra Research Inc. and its Subsidiary as of December 31, 1996, and
the related consolidated statements of operations, stockholders
equity and cash flows and the supplementary information as listed
in the Table of Contents for the period then ended. These
consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements and
supplementary information referred to above present fairly, in all
material respects, the financial position of Jyra Research Inc. and
its Subsidiary, at December 31, 1996, and the results of its
operations and its cash flows for the period then ended, in
conformity with generally accepted accounting principles.
Dover, Delaware March 10, 1997
49
PAGE
<PAGE>
50
PAGE
<PAGE>
- 2 -
JYRA RESEARCH INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
____________________________________________
A S S E T S
CURRENT ASSETS
Cash And Cash Equivalents $3,398,855
Prepaid Expenses 50,634
TOTAL CURRENT ASSETS $3,449,489
PROPERTY AND EQUIPMENT
Computers And Equipment 104,743
Less: Accumulated Depreciation 6,537
TOTAL PROPERTY AND EQUIPMENT 98,206
TOTAL ASSETS $3,547,695
L I A B I L I T I E S
CURRENT LIABILITIES
Accounts Payable $ 100,994
S T O C K H O L D E R S E Q U I T Y
COMMON STOCK
Authorized: 20,000,000 Shares, $.001 Par Value
Issued And Outstanding: 6,276,600 Shares $ 6,277
PAID-IN CAPITAL 3,819,405
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (347,692)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (31,289)
TOTAL STOCKHOLDERS EQUITY 3,446,701
51
<PAGE>
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $3,547,69
See Accompanying Notes To Consolidated Financial Statements.
52
<PAGE>
53
<PAGE>
54
<PAGE>
55
<PAGE>
56
<PAGE>
<PAGE>
57
PAGE
<PAGE>
- 3 -
JYRA RESEARCH INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD MAY 2, 1996 THROUGH DECEMBER 31, 1996
_______________________________________________________________
REVENUE $ -
DEVELOPMENT AND ADMINISTRATIVE EXPENSES 454,933
DEVELOPMENT LOSS $ (454,933)
OTHER INCOME (EXPENSES)
Currency Exchange Differences 83,412
Interest Income 30,366
Depreciation (6,537)
TOTAL OTHER INCOME 107,241
LOSS BEFORE INCOME TAXES (347,692)
PROVISION FOR INCOME TAXES
NET LOSS $ (347,692)
EARNINGS PER SHARE OF COMMON STOCK
Average Shares Of Common Stock Outstanding 4,277,897
Earnings Per Average Share Of Common Stock $ (.08)
See Accompanying Notes To Consolidated Financial Statements.
58
<PAGE>
59
<PAGE>
60
<PAGE>
61
<PAGE>
62
<PAGE>
63
<PAGE>
64
PAGE
<PAGE>
- 4 -
JYRA RESEARCH INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
PERIOD MAY 2, 1996 THROUGH DECEMBER 31, 1996
___________________________________________________________
DEFICIT
ACCUMULATED
FOREIGN
COMMON STOCK PAID-IN
DURING
CURRENCY
SHARES AMOUNT CAPITAL
DEVELOPMENT
TRANSLATION
BALANCE AT BEGINNING OF PERIOD - $ - $ - $ - $ -
NET LOSS - - - (347,692) -
COMMON STOCK ISSUED
Public And Private Offerings:
May, 1996 At $.001
Per Share 2,750,000 2,750 - - -
August, 1996 At $.40
Per Share 2,392,500 2,393 954,607 - -
December, 1996 At $3
Per Share 1,000,000 1,000 2,999,000 - -
Stock Issued As Commissions:
August, 1996 At $.40
Per Share 91,000 91 36,309 - -
November, 1996 At $3
Per Share 43,100 43 129,257 - -
Issuance Expenses Of Capital
Stock - - (299,768) - -
Translation Adjustment For
The Period - - - -
TOTAL 6,276,600 $ 6,277 $3,819,405 $(347,692) $(31,289)
65
<PAGE>
See Accompanying Notes To Consolidated Financial Statements.
66
<PAGE>
67
PAGE
<PAGE>
- 5 -
JYRA RESEARCH INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD MAY 2, 1996 THROUGH DECEMBER 31, 1996
_____________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (347,692)
Adjustments To Reconcile Net Loss To Net Cash
Used For Operating Activities:
Depreciation 6,537
Decrease (Increase) In Prepaid Expenses (50,634)
Increase (Decrease) In Accounts Payable 100,994
NET CASH USED FOR OPERATING ACTIVITIES $(290,795)
CASH FLOWS FROM INVESTMENT ACTIVITIES
Purchases Of Property And Equipment
(104,743)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From The Issuance Of Common Stock
3,825,682
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (31,289)
NET INCREASE IN CASH AND CASH EQUIVALENTS
3,398,855
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,398,855
NONCASH TRANSACTIONS
Stock Issued For Services Performed $165,700
68
<PAGE>
See Accompanying Notes To Consolidated Financial Statements.
69
PAGE
<PAGE>
70
PAGE
<PAGE>
- 6 -
71
<PAGE>
JYRA RESEARCH INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
_________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company's Activities
The Company was incorporated in the State of Delaware May 2,
1996. The Company's plans are to develop new computer network
management systems to solve network problems caused by the constant
increase in network traffic and growing complexity of networks.
This Company is still in the development stage.
Cash
The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents. Substantially all cash accounts are interest bearing.
Basis Of Consolidation
The accounts of the wholly owned United Kingdom subsidiary
Jyra Research Ltd. are included in the consolidated financial
statements. All intercompany accounts and transactions have been
eliminated.
Property And Equipment
Property and equipment are stated at cost. Major expenditures
for property and those which substantially increase useful lives
are capitalized. Maintenance and repairs are expensed as incurred.
Property and equipment are depreciated using the straight-line
method based on the expected useful life.
Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
72
<PAGE>
Use Of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
73
<PAGE>
74 <PAGE>
- 7 -
JYRA RESEARCH INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1996
_________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Foreign Currency Translation
Through December 31, 1996, the Company had determined that the
U.S. dollar was the "functional currency" of its operations. All
foreign currency asset and liability amounts were remeasured into
U.S. dollars at end-of-period exchange rates. Foreign currency
income and expenses were remeasured at average exchange rates in
effect during the year. Unrealized currency adjustments in the
consolidated balance sheet are accumulated in stockholders equity.
Exchange gains and losses arising from remeasurement of foreign
currency-denominated monetary assets and liabilities were included
in income in the period in which they occur.
Concentration Of Credit Risk
As of December 31, 1996, the Company had cash deposits on hand
in financial institutions which exceeded depositor's insurance
provided by the applicable guaranty agency.
Software Development Costs
In accordance with Statement of Financial Accounting Standards
No. 80, Accounting for the Costs of Computer Software to be sold,
leased or otherwise marketed, initial costs are charged to
operations as research prior to the development of a detailed
program design or a working model. Thereafter, the Company will
capitalize the direct costs and allocated overhead associated with
the development of software products. Costs incurred subsequent to
the product release, and research and development performed under
contract will be charged to operations.
NOTE B - COMMITMENT
The Company has entered into an agreement with another
corporation pursuant to which the Company was granted a worldwide
non-exclusive license to develop and distribute products based upon
the Corporation's technology.
75 <PAGE>
Also pursuant to the agreement, the Company is required to meet
three principal payment obligations consisting of: (a) upfront
license fees; (b) per unit royalties; and (c) support and update
fees, described as follows: As an "upfront license fee", the
Company has paid $50,000 for the first package chosen by the
Company. For each additional package that may be chosen by the
Company, the Company will be required to pay an additional "upfront
license fee" of $50,000. In addition, as "per unit royalties", for
each of the first 5,000 products utilizing the Corporation's
technology to be sold by the Company, the Company will be required
to pay a royalty of $66 per unit; for each such product in excess
of the first 5,000, the Company will be required to pay a royalty
of $20 per unit.
76
<PAGE>
77
<PAGE>
- 8 -
JYRA RESEARCH INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1996
_________________________________________________________________
NOTE B - COMMITMENT - CONTINUED
In addition, as "support and update fees", the agreement
requires the Company to pay: (i) $50,000 per year for the period
during which the Company is paying "per unit royalties" of $66; and
(ii) $300,000 per year for the period when the Company is paying
"per unit royalties" of $20. The agreement is capable of ending
either by expiration or termination. The agreement is scheduled to
expire at the end of its stated initial term of five(5) years,
after which the Company may, at its option, elect to renew the
agreement for as many as five successive terms of one (1) year
each. If the agreement ends by expiration of any such term, then,
after expiration, the Company may continue to sell its products
incorporating the Corporation's technology as such technology
existed at the time of expiration, subject always to the Company's
continuing obligation to pay "per unit royalties".
NOTE C - INCOME TAXES
The Company's total deferred tax assets, deferred tax
liabilities, and deferred tax asset valuation allowances at
December 31, 1996 are as follows:
U.S. Federal $ -
U.S. State -
Outside United States 124,000
Total Deferred Tax Assets 124,000
Less: Valuation Allowance (124,000)
NET DEFERRED TAX ASSET $ -
The deferred tax assets have been recorded based on a net
operating loss carry - forward. Management has based the valuation
allowance on the risky nature of the industry.
Factors determining Jyra Research Inc.'s effective tax rate:
U.S. Federal Statutory Rate 34%
Nondeductible Costs 2%
EFFECTIVE INCOME TAX RATE
36%
78
<PAGE>
Those amounts have been presented in the Company's financial
statements as follows:
Net Deferred Tax Asset $ -
79
PAGE
<PAGE>
- 9 -
JYRA RESEARCH INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1996
___________________________________________________________________
NOTE C - INCOME TAXES - CONTINUED
For tax return purposes, the Subsidiary Company has approximately
$375,000 of net operating loss carryforwards as of December 31,
1996, which expire in the year 2011.
NOTE D - LEASES
The Company leases its United Kingdom facilities from a third
party. The lease is for three years at a rental rate of $22,247
per year. The current lease expires August, 1999.
NOTE E - STOCK OPTION PLAN
The Company has a stock option plan for key employees of the
Company. The Plan was adopted July 20, 1996. The Plan provides
for the granting of
incentive stock options as defined in Section 422 of the Internal
Revenue
Code, as well as nonincentive stock options. All options are
awarded at
not less than the market price of the Company's common stock on
the date
of grant. Such options expire on the fifth anniversary of the
date on
which the option was granted.
Of the 175,000 shares granted, 105,000 are exercisable according
to the
following schedule:
PERCENT
EXERCISABLE EXERCISE EVENT
50% On Or After The First Customer Shipment
12.5% One Year From Grant Date
12.5% Two Years From Grant Date
25% Three Years From Grant Date
Of the 175,000 shares granted, 70,000 are exercisable
according to the following schedule:
80
<PAGE>
PERCENT
EXERCISABLE EXERCISE EVENT
25% One Year From Grant Date
25% Two Years From Grant Date
25% Three Years From Grant Date
25% Four Years From Grant Date
The number of shares for which options may be granted cannot
exceed 300,000 shares of the Company's common stock. The Plan
shall terminate on the tenth anniversary of its original effective
date, July 20, 1996, after which no awards may be granted.
81
PAGE
<PAGE>
82
PAGE
<PAGE>
- 10 -
JYRA RESEARCH INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1996
________________________________________________________________
NOTE E - STOCK OPTION PLAN - CONTINUED
Transactions involving the Plan are summarized as follows:
AVERAGE
OPTION
OPTION PRICE PRICE PER
OPTION SHARE SHARES RANGE PER SHARE SHARE
Outstanding At Beginning Of Period - $ -
Granted 175,000 $.40 - 7.00 $3.30
Exercised - -
OUTSTANDING AT DECEMBER 31, 1996,
OF WHICH NONE ARE EXERCISABLE AT
DECEMBER 31, 1996 175,000
At December 31, 1996, there were 137,500 shares available
for future grants under the Plan.
Because of the development stage nature of the Company, the
remaining disclosures of FASB 123 are not determinable and,
therefore, are not included.
83
PAGE
<PAGE>
84
PAGE
<PAGE>
- 11 -
JYRA RESEARCH INC. AND SUBSIDIARY
DEVELOPMENT AND ADMINISTRATIVE EXPENSES
PERIOD MAY 2 THROUGH DECEMBER 31, 1996
__________________________________________________________________
Advertising And Promotion
$ 6,500
Bank Charges
1,701
Director's Fees
91,237
Franchise Tax
1,530
Insurance
1,735
Leases
20,141
Licenses And Software Fees
100,287
Miscellaneous Expenses
1,170
Printing
7,988
Professional Fees
16,853
Repairs, Maintenance And Security
6,165
Salaries And National Insurance
72,177
Staff Costs
64,053
Subcontractors
10,762
Telephone And Internet
13,088
Travel And Entertainment
39,209
Utilities
337
TOTAL OPERATING EXPENSES
$454,933
85
PAGE
<PAGE>
F-9
86
PAGE
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . 2
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . 3
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 3
DESCRIPTION OF OFFERING. . . . . . . . . . . . . . . . . . . . 3
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . 4
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GLOSSARY OF TERMS. . . . . . . . . . . . . . . . . . . . . . . 6
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 9
New Business; Continued Dependence on Securing Addi-
tional Financing . . . . . . . . . . . . . . . 9
No Commercial Operations . . . . . . . . . . . . . . . 10
Dependence Upon Key Personnel. . . . . . . . . . . . . 10
Inexperience of Management . . . . . . . . . . . . . . 10
Financial Condition of Company; Difficulty in Funding
Operations . . . . . . . . . . . . . . . . . . 10
Protection of Intellectual Property; Competition . . . 11
Proposed Products are Only at the Conceptual Stage . . 12
Manufacturing of Product . . . . . . . . . . . . . . . 12
Limited Experience of Management in Manufacturing. . . 12
Delays in Development of Software and Related Products
are Common in Computer Industry. . . . . . . . 12
Competitive Disadvantage of Company. . . . . . . . . . 12
Changes in Technology; Risk of Competing Technologies. 13
Substantial Additional Funds May be Required; Substan-
tial Shareholder Dilution. . . . . . . . . . . 13
Risks Associated with International Operations . . . . 14
Competition. . . . . . . . . . . . . . . . . . . . . . 14
Dependence Upon Developing New Products. . . . . . . . 15
Impact of General Economic Conditions on Operations and
Dependence Upon Other Company's Products and
their Availability . . . . . . . . . . . . . . 15
Need of Company to Comply with Electrical, Emissions,
and Other Applicable Safety Requirements . . . 16
Dependence upon Technology from Sun Microsystems . . . 16
Substantial Immediate Dilution . . . . . . . . . . . . 16
Dependence of the Company Upon Unproven Products . . . 16
Limited Market For Shares; Potential Sales of Substantial
Amounts of Shares. . . . . . . . . . . . . . . 16
Significant Control and Influence by Existing Share-
holders. . . . . . . . . . . . . . . . . . . . 17
Limitation of Officers' and Directors' Liabilities
<PAGE> - 87 -
under Delaware Law . . . . . . . . . . . . . . 17
Consequential Loss . . . . . . . . . . . . . . . . . . 17
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 17
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . 18
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background . . . . . . . . . . . . . . . . . . . . . . 18
Planned Initial Products . . . . . . . . . . . . . . . 19
Mid-Level Manager . . . . . . . . . . . . . . 19
Jyra Diagnosis Pack. . . . . . . . . . . . . . 19
Jyra Analysis Pack . . . . . . . . . . . . . . 20
Jyra Probe . . . . . . . . . . . . . . . . . .
Service Management . . . . . . . . . . . . . . 21
MANUFACTURING. . . . . . . . . . . . . . . . . . . . . . . . . 21
LICENSE FROM SUN MICROSYSTEMS . . . .. . . . . . . . . . . . . 22
PROPRIETARY RIGHTS AND LICENSES. . . . . . . . . . . . . . . . 22
MARKET FOR COMPANY'S PROPOSED PRODUCTS . . . . . . . . . . . . 23
Fortune 500 Corporations . . . . . . . . . . . . . . . . . . . 23
Telecommunications Providers . . . . . . . . . . . . . 23
Outsourcers. . . . . . . . . . . . . . . . . . . . . . 23
Third Party Application Developers and Consultants . . 24
Existing Data Communications Equipment and Probe Ven-
dors . . . . . . . . . . . . . . . . . . . . . 25
UNITED STATES MARKETING OPERATIONS . . . . . . . . . . . . . . 25
COMPETITIVE TECHNOLOGY . . . . . . . . . . . . . . . . . . . . 25
NETWORK DIAGNOSIS AND ANALYSIS . . . . . . . . . . . . . . . . 26
Portable Packet Capture. . . . . . . . . . . . . . . . 26
Triticom LANDecoder. . . . . . . . . . . . . . 26
Wandel and Goltermann. . . . . . . . . . . . . 27
Hewlett-Packard. . . . . . . . . . . . . . . . 27
Local Network Analysis . . . . . . . . . . . . . . . . 27
Network General. . . . . . . . . . . . . . . . 27
Global Network Analysis. . . . . . . . . . . . 27
ECONet . . . . . . . . . . . . . . . . . . . . 27
Desktalk TrendSNMP+. . . . . . . . . . . . . . 28
REMOTE MONITORING. . . . . . . . . . . . . . . . . . . . . . . 29
Frontier Software. . . . . . . . . . . . . . . . . . . 29
SYSTEMS MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 30
Timetable. . . . . . . . . . . . . . . . . . . . . . . 30
FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . 31
Management's Discussion and Analysis of Financial Con-
dition and Results of Operations . . . . . . . 31
Selected Financial Data. . . . . . . . . . . . . . . . 32
<PAGE> - -
OFFICE FACILITIES. . . . . . . . . . . . . . . . . . . . . . . 33
DIRECTORS, OFFICERS AND KEY PERSONNEL. . . . . . . . . . . . . 33
Management . . . . . . . . . . . . . . . . . . . . . . 33
REMUNERATION . . . . . . . . . . . . . . . . . . . . . . . . . 34
STOCK OPTION PLAN. . . . . . . . . . . . . . . . . . . . . . . 35
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . 36
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . 36
TRADING MARKET OF COMPANY'S SHARES . . . . . . . . . . . . . . 38
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . 38
CAPITALIZATION AND DESCRIPTION OF SECURITIES . . . . . . . . . 39
INDEMNIFICATION OF OFFICERS AND DIRECTORS. . . . . . . . . . . 39
DELAWARE LAW . . . . . . . . . . . . . . . . . . . . . . . . . 40
TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . 41
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . 41
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 43
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 43
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 45
INDEPENDENT AUDITORS REPORT. . . . . . . . . . . . . . . . . . 49
PAGE
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the
expenses to be incurred by it in connection with the issuance and
distribution of the securities being registered, other than
underwriting discounts and commissions:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee.....$2,587
Fees and expenses of Registration................ 40,000*
Accounting fees and expenses....................... 10,000*
Miscellaneous......................................
-----------
Total.................................................. $
</TABLE>
===========
- - ---------
* Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware,
as amended ("DGCL"), authorizes a Delaware corporation to
indemnify its officers, directors, employees and agents against
expenses and liabilities incurred in legal proceedings involving
such persons because of their holding or having held such
positions with the corporation and to purchase and maintain
insurance for such indemnification. The Company's By-Laws and
Article 8 of its Certificate of Incorporation, as amended,
substantively provide that the Company indemnify its officers,
directors, employees and agents to the fullest extent permitted
by Section 145 of the DGCL.
In accordance with Section 102(b)(7) of the DGCL, Article
8 of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the Company or its
stockholders for monetary damages for breach of fiduciary duty as
a director with certain limited exceptions set forth in Section
102(b)(7).
The Company has also entered into indemnification
agreements with each of its directors and executive officers. The
indemnification agreements provide that the directors and
executive officers will be indemnified to the fullest extent
permitted by applicable law against all expenses (including
attorneys' fees), judgments, fines and amounts reasonably paid or
incurred by them for settlement in any threatened, pending or
completed action, suit or proceeding, including any derivative
action, on account of their services as a director or officer of
the Company or of any subsidiary of the Company or of a or
enterprise in which they are serving at the request of the
Company. No indemnification will be provided under the
indemnification agreements, however, to any director or executive
officer in certain limited circumstances, including on account of
knowingly fraudulent, deliberately dishonest or willful
misconduct. To the extent the provisions of the indemnification
agreements exceed the indemnification permitted by applicable
law, such provisions may be unenforceable or may be limited to
the extent they are found by a court of competent jurisdiction to
be contrary to public policy.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Described below is information regarding all securities
that have been issued by the Company since its incorporation on
May 2, 1996.
1. On May 10, 1996, the Company sold a total of 2,750,000 Shares
to Messrs. Paul Robinson, Peter Lynch, Roderick Adams and Timothy
A.B. Mills, founders of the Company, at a price of $.001 per
share, for an aggregate offering price of $2,750. The Shares
were offered and sold pursuant to the exemption from registration
set forth in Rule 504, promulgated under the Securities Act of
1933, as amended (the "Securities Act").
2. During July 1996, the Company sold a total of 2,483,500
Shares to approximately 50 investors, located in various
countries in Europe, at a price of $.40 per Share, receiving
proceeds of $993,400. The Shares were offered and sold pursuant
to the exemption from registration set forth in Rule 504,
promulgated under the Securities Act.
3. During October and November 1996, the Company sold a total of
1,043,100 Shares to 29 investors, located in various countries in
Europe, at a price of $3.00 per Share, receiving proceeds of
$3,129,300. The Shares were offered and sold pursuant to the
exemption from registration set forth in the rules comprising
Regulation S, promulgated under the Securities Act.
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
***3.01(i) -- Certificate of Incorporation of the Registrant.
***3.01(ii)-- By-Laws of the Registrant.
*4.01 --Specimen Certificate representing the Common Stock,
par value $0.001 per share.
**5.01 --Opinion of Berns & Berns.
*10.01 -- Amended and Restated Stock Option Plan
*10.02 --Technology License and Distribution Agreement dated
July 19, 1996 with Sun Microsystems, Inc.
*10.03 --Form of Indemnification Agreement of Directors.
***21.01 --Subsidiaries of the Registrant.
</TABLE> <PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
**23.01 --Consent of Berns & Berns (included in Exhibit 5)
*23.02 --Consent of Faw, Casson & Co. LLP
*27.01 --Financial Data Schedule
</TABLE>
--------
* Filed herewith
** To be filed by amendment
*** Previously filed
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) and to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) that, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof;
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering;
(4) to provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit
prompt delivery to each purchaser;
(5) insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the
successful defense of any action suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue;
(6) for purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of pro the
Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective;
(7) for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY OF LONDON,
ENGLAND, ON APRIL 1, 1997.
Jyra Research Inc.
By: /Paul Robinson/
Paul Robinson,
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE
TITLE
DATE
/s/ Paul Robinson
Paul Robinson
President, Chief Execu-
tive Officer, Director
(Principal Executive
Officer)
April 1,
1997
/s/ Roderick Adams
Roderick Adams
Chief Financial Officer,
Director (Principal Fi-
nancial and Accounting
Officer)
April 1,
1997
/s/ Peter Lynch
Peter Lynch
Director
April 1,
1997
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE NUMBER
------- ----------------------
<S> <C>
***3.01(i) --Certificate of Incorporation of the Registrant.
***3.01(ii) --By-Laws of the Registrant.
*4.01 --Specimen Certificate representing the Common Stock, par
value $0.001 per share.
**5.01 --Opinion of Berns & Berns.
*10.01 --Amended and Restated Stock Option Plan.
*10.02 --Technology License and Distribution Agreement dated
July 19, 1996 with Sun Microsystems, Inc.
*10.03 --Form of Indemnification Agreement of Directors.
**23.01 --Consent of Berns & Berns (included in Exhibit 5)
*23.02 --Consent of Faw, Casson & Co. LLP
*27.01 --Financial Data Schedule
</TABLE>
* Filed herewith
** To be filed by amendment
*** Previously filed<PAGE>
NUMBER
SHARES
[ ] [
]
JYRA RESEARCH INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP
482228 10 3
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
PAR VALUE
$.001 EACH, OF
JYRA RESEARCH INC., transferable on the books of the Corporation by
the
holder hereof, in person or by duly authorized attorney, upon
surrender of
this Certificate properly endorsed. This certificate is not valid
until
countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures
of its duly authorized officers.
Dated:
[(JYRA RESEARCH INC.)
(CORPORATE SEAL 1996 DELAWARE)]
/s/ Roderick Adams /s/ Paul Robinson
Director and Secretary President and Director
COUNTERSIGNED AND REGISTERED:
REGISTRAR AND TRANSFER COMPANY
(New Jersey)
JYRA RESEARCH INC.
AMENDED STOCK OPTION PLAN
dated March 30, 1997
This Amended Stock Option Plan dated March 30, 1997
hereby amends and restates in its entirety
Jyra Research Inc.'s Stock Option Plan dated July 20, 1996.
1. Purpose. The purpose of this Plan is to provide
financial incentives to Key Employees of Jyra Research Inc. whose
entrepreneurial and management talents and commitments are
essential for the continued growth and expansion of that
corporation's business. It is intended that both options which
qualify as incentive stock options within the meaning of section
422A of
the Internal Revenue Code ("Incentive Stock Options") and options
which do not qualify as incentive stock options ("Non-Incentive
Stock Options") may be granted under this Plan.
2. Definitions. For purposes of this Plan:
(a) Board means the board of directors of the
Corporation.
(b) Code means the Internal Revenue Code of 1986, as
amended.
(c) Committee means a group of persons appointed by,
and serving at the pleasure of, the Board, whose purpose is to
administer the Plan and perform the functions set forth herein
for the Committee.
(d) Common Stock means the Common Stock, par value
$0.001 per share, of the Corporation, and any other stock or
securities resulting from the adjustment thereof or substitution
therefor as described in paragraph 9 below.
(e) Corporation means Jyra Research Inc.
(f) Disability means the condition which results
when an individual has become permanently and totally disabled
within the meaning of section 105(d)(4) of the Code.
(g) Key Employee means an officer or a director of
the Corporation or any Subsidiary thereof, and such other key
employees of the Corporation or any Subsidiary thereof designated
by the Committee as being eligible to receive options under the
Plan.
(h) Optionee means a Key Employee to whom an option
has been granted under this Plan.
(i) Plan means the Jyra Research Inc. Stock Option
Plan as set forth in this instrument and as it may be amended
from time to time.
(j) Stock Option Agreement (or the "Agreement")
means the written agreement between a Key Employee and the
Corporation evidencing the grant of an option under the Plan and
setting forth the terms and conditions of that option.
(k) Subsidiary means a subsidiary corporation of the
Corporation within the meaning of section 425(f) of the Code.
(l) Successor Corporation means a corporation, or a
subsidiary of such corporation, which issues or assumes a stock
option in a transaction to which section 425(a) of the Code
applies.
(m) Ten-Percent Stockholder means a Key Employee
who, at the time an option is to granted to such employee, owns
stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Corporation, or of a
Subsidiary within the meaning of section 422A(b)(6) of the Code.
3. Administration. The Plan shall be administered by
the Committee, which shall keep minutes of its meetings. The
Committee shall have all of the powers necessary to enable it to
carry out its duties under the Plan properly, including the power
and duty to construe and interpret the Plan and to determine all
questions arising under it. The Committee's interpretations and
determinations shall be conclusive and binding upon all persons.
It may also establish, from time to time, such regulations,
provisions, procedures and conditions regarding the options and
granting of options which in its opinion may be advisable in
administering the Plan. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members
present at any meeting at which there is a quorum, or acts
approved in writing by a majority of its members, shall be acts
of the Committee.
4. Eligibility. Only Key Employees shall be eligible to
be granted options to purchase Common Stock under the Plan. The
Committee shall, from time to time, (i) determine those Key
Employees to whom stock options shall be granted; (ii) determine
the number of shares and conditions of each such option; and
(iii) grant such options.
5. Shares Available for Option. The Board shall cause
to be made available for the purposes of the Plan a total of
500,000 shares of Common Stock (or the number and kind of shares
of stock or other securities which, in accordance with paragraph
9 below, are substituted for those 500,000 shares or to which
those shares are adjusted). The aggregate fair market value (as
fixed at the time the option is granted) of the Common Stock for
which a Key Employee may be granted Incentive Stock Options in
any calendar year (under the Plan and all other plans of the
Corporation, or those of any Subsidiary corporations required to
be aggregated for this purpose under the provisions of
section 422A(b)(8) of the Code), shall not exceed $100,000 plus the
"unused limit carryover" to that calendar year within the meaning
of sections 422A(b)(8) and 422A(c)(4) of the Code. In the event
that an
option granted under the Plan to any Key Employee expires or is
terminated unexercised as to any shares covered by the option,
those shares shall thereafter be available for the granting of
future options under the Plan.
6. Grant of Options. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select
those Key Employees to whom options are to be awarded and to
determine the number of shares to be covered by each option,
whether an option is intended to be an Incentive Stock Option or
a Non-Incentive Stock Option and the other terms thereof;
provided, however, that no Incentive Stock Option shall be
awarded to any Key Employee who is not an employee of the
Corporation at the time the option is granted. The terms of each
option need not be the same, but may vary for options granted
under the Plan at the same time or from time to time. The
Committee may also grant more than one option to a given Key
Employee during the term of the Plan, either in addition to, or
in substitution for, one or more options previously granted that
Key Employee.
7. Option Price. The Committee shall establish the
option price at the time an option is granted. The option price
for shares of Common Stock subject to an Incentive Stock Option
shall not be less than 100% of the fair market value of such
shares at the time the option is granted; provided, however, that
the option price for shares of Common Stock subject to an Incen-
tive Stock Option shall be at least 110% of the fair market value
of such shares at the time such option is granted, if the option
is granted to a Ten-Percent Stockholder.
8. Exercise of Options.
(a) Each option granted under the Plan shall be
exercisable at such time, in such amount and upon such conditions
as may be determined by the Committee at the time of the granting
of the option and set forth in the Stock Option Agreement. In
the case of an option not immediately exercisable in full, the
Committee may, from time to time and in its sole discretion,
accelerate the time at which all or any part thereof may be
exercised.
(b) The Committee shall determine the term of each
option at the time it is granted. However, (i) no Incentive
Stock Option granted under the Plan shall be exercisable more
than ten years after the date it is granted to a Key Employee
other than a Ten-Percent Stockholder; and (ii) no Incentive Stock
Option granted under the Plan shall be exercisable more than five
years after the date it is granted to a Key Employee who is a
Ten-Percent Stockholder. Not less than 100 shares may be
purchased at any one time upon the exercise of an option, unless
the number of shares so purchased constitutes the total number
then exercisable under the option.
(c) Options granted under the Plan shall not be
transferable by the Optionee except by will, or if the Optionee
dies interstate, by the laws of descent and distribution of the
state of the Optionee's domicile at the time of his death.
During an Optionee's lifetime, options granted under the Plan are
exercisable only by the Optionee.
(d) Subject to the terms and conditions and within
the limitations of the Plan, and, if applicable, section 422A of
the
Code, the Committee may modify, extend, replace or renew out-
standing options granted under the Plan, or accept the surrender
of outstanding options (to the extent they have not yet been
exercised) and grant new options in substitution for them.
Notwithstanding the foregoing, however, other than modifications
made pursuant to paragraph 12 below, no modification of an option
shall alter or impair any rights or obligations under any option
granted under the Plan without the affected Optionee's consent.
(e) In the event that the employment of an Optionee
shall be terminated (other than by reason of his death or
Disability), such option may, except as otherwise provided in the
Stock Option Agreement or subparagraph 8(c) hereof, be exercised
(to the extent exercisable at the time of the termination of
employment of the Key Employee) at any time within three months
(or such longer period as determined pursuant to paragraph 12
below) after such termination of employment, but in no event
after the expiration of the term of the option. Thereafter, such
option shall be deemed terminated. In the event that the
employment of an Optionee shall be terminated by reason of his
death or Disability, such option may, except as otherwise
provided in the Stock Option Agreement or subparagraph 8(c)
hereof be exercised (to the extent exercisable on the date of the
Key Employee's death or Disability) at any time within one year
(or such longer period as determined pursuant to paragraph 12
below) after the date of such death or Disability, but in no
event after the expiration of the term of the option.
Thereafter, such option shall be deemed terminated. In the event
of an Optionee's death, such Optionee's options shall be
exercisable, to the extent provided in the Plan or under the
Stock Option Agreement, by the legatee or legatees under such
Optionee's will, or by such Optionee's personal representatives
or distributees.
(f) Each option shall be confirmed by a Stock Option
Agreement which shall be executed by the Corporation and by the
Optionee.
(g) The option price for each share of Common Stock
purchased pursuant to the exercise of an option shall be paid in
full at the time the option is exercised and shall be paid in
cash. Each share to be issued upon such exercise shall be issued
and delivered to the person entitled to receive it at the
principal office of the Corporation.
(h) To the extent that an option is not exercised
within the period of time prescribed by the Plan and the Stock
Option Agreement confirming the option, or, as provided for in
the Plan or the Stock Option Agreement, the option is terminated,
the option shall lapse and all rights of the Optionee with
respect to it shall terminate.
(i) Nothing in the Plan or in the Stock Option
Agreement shall confer on any employee any right to continue in
the employ of the Corporation or any Subsidiary or Successor
Corporation; affect the right of the Corporation or any
Subsidiary or Successor Corporation to terminate such employee's
employment at any time; or be deemed a waiver or modification of
any provision contained in any agreement between the employee and
the Corporation or any Subsidiary or successor corporation. The
Stock Option Agreement may contain such provisions as the
Committee shall approve with reference to the effect of approved
leaves of absence.
9. Changes in Common Stock.
(a) In the event that the outstanding shares of the
Common Stock are changed into or exchanged for a different number
or kind of shares of stock or other securities of the Corporation
or of another corporation or entity, whether through
reorganization, recapitalization, stock dividend, stock split-up,
combination of shares, merger, consolidation, or otherwise, the
Committee shall make appropriate adjustments to the maximum
number and class of shares of stock as to which options may be
granted under the Plan and the number and class of shares of
stock with respect to which options have been granted under the
Plan and the option price for such shares. The Committee's
adjustment shall be effective and binding for all purposes of the
Plan and each Stock Option Agreement entered into under the Plan.
No adjustment provided for in this paragraph 9 shall require the
Corporation or such other corporation or entity to issue a
fractional share, and the total adjustment with respect to each
Stock Option Agreement shall be limited accordingly.
(b) Upon the effective date of any merger,
consolidation, reorganization, liquidation or sale of all or
substantially all of the assets of the Corporation (a
"Terminating Event"), the Plan and any unexercised options
granted under the Plan shall terminate unless provision shall be
made in writing in connection with such Terminating Event for the
continuance of the Plan and for the assumption of such
unexercised options by a successor employer or parent or
subsidiary thereof or for the substitution for such unexercised
options of new options covering shares of such successor with
appropriate adjustments as to number and kind of shares and
prices of shares subject to such new options. In such event, the
Plan and the unexercised options theretofore granted or the new
options substituted therefore shall continue in the manner and
under the terms provided in the Plan.
10. Amendment or Termination of Plan. The Board shall
have the right to amend, suspend or terminate the Plan at any
time; provided that, except as and to the extent authorized and
permitted by paragraph 9 above or paragraph 12 below, no
amendment shall be made which shall (i) increase the total number
of shares which may be issued and sold pursuant to the exercise
of options granted under the Plan, (ii) increase the total number
of shares which may be covered by any option or options to one
individual, (iii) extend the period for granting or exercising
any option, or (iv) change the class of employees eligible to
receive options, unless such amendment is made by or with the
approval of the shareholders of the Corporation. With the
exception of any amendment made pursuant to paragraph 12 below,
the rights of an Optionee under any option granted prior to an
amendment, suspension or termination of the Plan shall not be
adversely affected thereby except with the consent of the
Optionee.
11. Indemnification of Stock Option Committee. The
members of the Committee shall be indemnified by the Corporation
for any acts or omissions as a member of the Committee to the
full extent permitted under applicable law, including the Dela-
ware General Corporation Law, as amended from time to time.
12. Compliance with Law and Other Conditions. All
options and Stock Option Agreements shall be governed by the laws
of the State of Delaware to the extent not superseded by the laws
of the United States. No shares shall be issued pursuant to the
exercise of any option granted under the Plan prior to compliance
by the Corporation or any successor thereto, to the satisfaction
of their counsel, with any applicable laws. The Stock Option
Agreements and amendments thereto shall set forth any
requirements for, or restriction of, exercise that the Committee
deems appropriate to comply with any securities or other laws or
regulations or exemption therefrom, including but not limited to,
restrictions as to the times permitted for exercise. In the
event that the Committee does restrict such times, it may extend
the three month and one year periods stated in subparagraph 8(f)
above, should the end of such periods fail to occur during a time
in which the exercise is permitted, provided that in no event may
such period be extended beyond the term provided for in
subparagraph 8(c) above.
13. Good Faith Attempts. To the extent consistent with
section 422A(c)(1) of the Code and regulations issued by the
Secretary
of the Treasury for Incentive Stock Options, (i) the requirement
set forth in paragraph 7 above that the option price of an
Incentive Stock Option granted under the Plan be not less than
100% of the fair market value of the Common Stock subject to the
option at the time it is granted to a Key Employee other than a
Ten-Percent Stockholder, and not less than 110% of the fair
market value of the Common Stock subject to the option at the
time it is granted to a Ten-Percent Shareholder, and (ii) the
limitation on the aggregate fair market value of the Common Stock
for which a Key Employee may be granted Incentive Stock Options
as set forth in paragraph 5 above, shall be considered to have
been met if the Committee has made a good faith attempt, within
the meaning of section 4221(c)(1).
14. Construction. It is intended that all Incentive
Stock Options granted under the Plan shall qualify under section
422A of
the Code. To that end, the Plan and all Stock option Agreements
providing for Incentive Stock Options entered into pursuant to it
shall be construed and interpreted so that all Incentive Stock
Options granted under the Plan meet the requirements of section
422A of
the Code, unless the terms and provisions of the instrument
clearly and unequivocally require a contrary interpretation or
construction.
15. Effective Date and Duration of Plan. The effective
date of the Plan shall be the date of its adoption by the Board.
No options may be granted under the Plan after the date ten years
from the date the Plan is adopted by the Board.
JYRA RESEARCH INC.
___________________
Paul Robinson,
Director
___________________
Peter Lynch,
Director
___________________
Roderick Adams,
Director
TECHNOLOGY LICENSE
AND
DISTRIBUTION AGREEMENT
This Technology License and Distribution Agreement (the
"Agreement") is entered into this 19th day of July, 1996 (the
"Effective Date") between Sun Microsystems, Inc, acting by and
through its JavaSoft business unit ("Sun") with its principal place
of business at 2550 Garcia Avenue, Mountain View, California 94043
and Jyra Research, Inc., a US corporation with its principal place
of
business at 41 Thurlow Square, Kensington, London 5W7, UK
("Licensee").
RECITALS
WHEREAS Sun wishes to license its eJavaOS technology, while
maintaining compatibility among JAVA language-based products; and
WHEREAS Sun wishes to protect and promote certain trademarks
used
in connection with its eJavaOS and JAVA technologies; and
WHEREAS Licensee wishes to develop and distribute products
based
upon Sun's eJavaOS technology;
NOW THEREFORE, Sun and Licensee enter into this Technology
Licensing and Distribution Agreement on the following terms.
1.0DEFINITIONS
1.1"Core Classes "means the classes listed in Exhibit A.I.b.
1.2'Derivative ~work(s)" means: (i) for material subject to
copyright or mask work right protection, any work which is based
upon
one or more pre-existing works of the Technology, such as a
revision,
modification, translation, abridgement, condensation, expansion,
collection, compilation or any other form in which such
pre-existing
works may be recast, transformed or adapted, (ii) for patentable or
patented materials, any adaptation, subset, addition, improvement
or
combination of the Technology, and (iii) for material subject to
trade secret protection, any new material, information or data
relating to and derived from the Technology, including new material
which may be protectable by copyright, patent or other proprietary
rights, and, with respect to each of the above, the preparation,
use
and/or distribution of which, in the absence of this Agreement or
other authorization from the owner, would constitute infringement
under applicable law.
1.3"Documentation" means the documentation which Sun provides
for use with the Technology, as more particularly identified in
Exhibit A.ll.
1.4"eJavaOS Environment' means the combination of the JavaOS
Runtime Interpreter, Core Classes and Net Classes.
1.5"Embedded Application Programming lnterface"or "EAPI" means
the public application programming interface to the Technology as
identified in Exhibit A, the bytecode specification in the
Documentation entitled "Java Virtual Machine Specification" and by
the Java language specification in the Documentation entitled "Java
Language Specification" and as modified by Sun during the term of
this Agreement, including all public class libraries and
interfaces.
1.8"Field of Use" means the relevant market segments and/or
product areas identified in Exhibit B.
1.7"Java OS Runtime Interpreter" means the program which
implements the Java Virtual Machine, as specified in the Java
Virtual
Machine Specification, without the need for a desktop-style
<PAGE>
operating system, i.e., directly on bare silicon. The JavaOS
Runtime
Interpreter is formed of the Shared Part and the Platform-Dependent
Part.
1.8"Licensee Open Classes" means additional Java classes
developed by Licensee which represent extensions to the EAPI, and
which are made available to third parties in either source or
binary
form to use in the development of additional software which outputs
Java bytecodes and/or runs on a Java compatible Runtime
Interpreter.
1.9"Net Classes" means the classes listed in Exhibit A.l.c.
1.10
"Platform Dependent Part" means those Source Code files and
corresponding binary code of the eJavaOS Environment which are not
in
a "share" directory or subdirectory thereof.
1.11
"Product(s) "means a Licensee product into which the Technology
is integrated in whole or in part. A "Product" must: (i) have a
principal purpose which is substantially different from that of the
stand-alone eJavaOS Environment; (ii) represent a significant
functional and value enhancement to the eJavaOS Environment; (iii)
operate in conjunction with the eJavaOS Environment; and (iv) not
be
marketed as a technology which replaces or substitutes for the
eJavaOS Environment, A current list of Product(s) is specified in
Exhibit B, which may be amended by Licensee to add Product(s) from
time to time.
1.12
"Shared Pad"means those those Source Code files and
corresponding
binary code of the eJavaOS Environment which are in any "share"
directory or subdirectory thereof.
1.13
"Source Code"means the human readable version, in whole or in
part, of the Technology whether supplied by Sun or any other
entity,
and any corresponding comments and annotations.
1.14
"Technology" means the JavaOS Runtime Interpreter, Core Classes
and Net Classes, and Updates thereto to the extent that Licensee is
entitled to receive them hereunder.
1.15
"Trademarks" means all names, logos, designs, characters, and
other designations or brands used by Sun in connection with the
Technology.
1.16
"Updates" means bug fixes, modifications, variations,
enhancements, to the extent included in a patch or dot release of
the
Technology which Sun generally licenses as part of the Technology.
2.0 LICENSE GRANTS
2.1Source Code License.
a. Subject to the terms and conditions contained in this
Agreement and subject to Licensee's payments specified in
Exhibit
C, Sun hereby grants to Licensee, under and to the extent of
Sun's Intellectual Property Rights and solely for the Field(s)
of
Use specified in Exhibit B, a perpetual, worldwide, non-
exclusive, non-transferable license, without the right to
sublicense (except as specified in Section 2.lb(iii)), to: (i)
use the Source Code for internal development and porting
purposes, (ii) modify the Source Code to create Derivative
Works
(provided that Licensee shall be limited solely to creating
Derivative Works that constitute Product(s), Licensee Open
Classes, and Licensee-implemented modifications to the Platform
Dependent Part ("Permitted Derivative Works")), and (iii)
compile
the Source Code and Permitted Derivative Works thereof.
Licensee shall have no right to modify or subset the EAPI or to
modify' the functional behavior of the JavaOS Runtime
Interpreter. Licensee may use the Source Code of the Shared
Part
of the eJavaOS Environment to develop Product(s), Licensee
Open Classes, and Licensee-implemented modifications to the
Platform Dependent Part, but if it uses such Source Code, it
must
use all of it without modification.
Except as specified in Section 2.1 b(iii), Licensee shall have
no
right to distribute the Source Code of the Technology or of
Derivative Works.
<PAGE>
b.Porting.
(i)Licensee may port the Platform Dependent Part to
platforms
other than those specified in Exhibit C.
(ii)Sun will work with Licensee to identify any changes
which
are necessary to the Shared Part of the eJavaOS
Environment to
allow porting it to other platforms, and Sun will use
reasonable
efforts to make changes necessary to the code for the
Shared
Part.
(iii) Licensee may sublicense and deliver a copy of the
Source
Code of the Technology to third parties (i) only in
association
with the delivery and sublicensing of Licensee Products,
(ii)
solely for the purpose of enabling such third party to
port or
localize Products for Licensee, and (iii) only with Sun's
prior
written approval. Any such sublicense shall be made
subject to
terms and conditions relating to ownership, use,
compatibility,
and confidentiality of the Technology substantially
similar to
those contained herein.
c.Bug Fixes. Licensee will inform Sun promptly, and no later
than
it informs any third party, of any bugs identified in the
Technology,
and to the extent that Licensee elects to correct such bugs,
Licensee
will make the Source Code of such bug fixes promptly available
to Sun
free. of all restrictions as they are implemented.
2.2 Binary Code License.
a.Sun hereby grants Licensee, under and to the extent of Sun's
Intellectual Property Rights, a non-exclusive, worldwide, fully
paid
up license to make, use and reproduce an unlimited number of
copies
of the Technology in binary form, for Licensee's internal use
during
the term of this Agreement.
b.Worldwide Distribution. Sun hereby grants Licensee a
worldwide,
nonexclusive license to distribute the Product(s), solely in
binary
form. Licensee may use such distribution channels as Licensee
deems
appropriate, including distributors, resellers, dealers and
sales
representatives (collectively, "Distributors"), provided
however,
that such Distributors shall not modify the Technology, and
shall be
obligated to abide by the relevant terms in this Agreement
governing
use, distribution, compatibility, and confidentiality.
2.3 Documentation.
a. Sun hereby grants to Licensee, under and to the extent of
Sun's
Intellectual Property Rights, a non-exclusive, non-transferable
license to: (i) use the Documentation for internal development
purposes, (ii) copy, use and modify the Documentation to create
technically accurate Licensee documentation (which must include
all
the relevant Sun copyrights, notices, and marks), (iii)
translate the
Documentation into other languages, and (iv) distribute such
translated or modified Documentation in connection with
distribution
of the Product(s). Licensee may also use a pointer to the Sun
Documentation on the Internet in connection with distribution
of the
Product(s).
2.4 Compatibilitv.
[Confidential information has been omitted and has been filed
separately with the SEC.]
2.5 Licensee Open Classes.
(i) Licensee shall deliver to Sun free of all restrictions the
specification for the application programming interface for
each
Licensee Open Class as early as is reasonably possible but in
no
event later than the date on which it first provides such
specification or an implementation thereof to any third party.
Included in such specification shall be an appropriate test
suite
sufficiently detailed to allow Sun and third parties to produce
implementations compatible with the specification. Licensee
shall use
its reasonable commercial efforts to clarify' and correct the
specification or the test suite upon written request by Sun and
failure to do so within sixty (80) days after such request
shall
constitute breach of this Agreement.
(ii) Licensee shall notify Sun as soon as it has made any
general
disclosure (i.e., not subject to confidentiality obligations)
of such
specification, or first releases a Product implementing such
specification, after which Sun shall have no obligation of
confidentiality whatsoever with respect to such specification.
Licensee agrees that it will take no steps whatsoever to
prevent Sun
or any third party from creating independent and compatible
implementations based on such specification, provided that such
implementations do not violate Licensee's patents, copyrights
or
trade secrets in Licensee's implementation of the Licensee Open
Classes (i.e., Licensee agrees that it will not enforce
copyright or
patent claims that relate to interface or compatibility with
such
specification).
(iii) Licensee shall confine the names of all Licensee Open
Classes
to names beginning with "COM.Licensee" or such other convention
as
Sun may reasonably require and shall not modify or extend the
names
of public class or interface declarations whose names begin
with
"java", "COM.sun" or their equivalents in any subsequent naming
convention. Licensee will make reasonable commercial efforts to
ensure that other commercial software packages which it
redistributes
conform to this convention.
(iv) Licensee hereby grants Sun a non-exclusive, worldwide,
fully-
paid-up license to use an unlimited number of copies of the
Licensee
Open Classes, in binary form, for Sun's internal use, such use
including but not limited to demonstration rights. Licensee
agrees
to reasonably negotiate in good faith with Sun the terms of a
commercial license for the source code of the Licensee Open
Classes.
The parties agree that the fees and other terms and conditions
of
this Agreement are a reasonable standard against which to judge
such
a license on a proportionate basis comparing the scope and
complexity
of the portion of the Licensee Open Class being licensed to the
scope
and complexity of the Technology.
<PAGE>
2.6Ownership.
a.Ownership bv Sun. Sun retains all right, title and interest
in
the Technology, Documentation, Updates, bug fixes, Trademarks,
and
Derivative Works, (except for Permitted Derivative Works) and
associated Intellectual Property Rights. Licensee agrees to
execute (in recordable form where appropriate) any instruments
and/or documents as Sun may reasonably request to verify and
maintain Sun's ownership rights, or to transfer any part of the
same which may vest in Licensee for any reason. Licensee
further
agrees to promptly deliver to Sun any Derivative Works in
source
code form (except for Permitted Derivative Works) of the
Technology created by Licensee pursuant to and during the term
of
this Agreement. Sun shall have no obligations of
confidentiality
to Licensee for such Derivative Works, nor shall Sun be
obligated
to incorporate any such Derivative Works into the Technology.
b.Ownership bv Licensee. Licensee retains all right, title and
interest in Permitted Derivative Works created by Licensee
pursuant to and during the term of this Agreement, subject to
Sun's underlying rights in the Technology and associated
Intellectual Property Rights identified in Section 2.6a.
2.7Protection of Sun's Rights. Licensee shall use, modify' and
practice the Technology and manufacture, market, distribute and
sell
Product(s), Licensee Open Classes, and Licensee-implemented
modifications to the Platform-Dependent Part of the eJavaOS
Environment
only in a manner consistent with the terms of this Agreement, and
only
in a manner reasonably designed not to jeopardize or prejudice
Sun's
Intellectual Property Rights, including trademarks, trade dress and
service marks, and other proprietary rights.
2.8No Other Grant. Each party agrees that this Agreement does
not
grant any right or license, under any Intellectual Property Rights
of
the other party, or otherwise, except as expressly provided in this
Agreement, and no other right or license is to be implied by or
inferred
from any provision of this Agreement or by the conduct of the
parties.
2.9Pre-Release. Licensee may release Product(s) based on the
pr~CS
Technology licensed by Sun hereunder only for beta testing
purposes.
3.0SUPPORT AND UPDATES
3.1During the Support Period (as defined below), Sun shall
provide
to Licensee under the terms and conditions of this Agreement,
Updates
for the platforms specified in Exhibit C when and if any such
Updates
are made available by Sun to any commercial licensee similarly
situated.
3.2Subject to payment of the fee specified in Exhibit C (3),
Sun
shall assign the equivalent of one (1) half-time engineer to be
available via phone, electronic mail and/or scheduled appointment
during
regular business hours to support Licensee, from the Effective Date
through the fifth (5th) anniversary of the Sun FCS Date (as defined
below) (the "Support Period"). The selection of the support
engineer
shall be at Sun's sole discretion. Licensee may designate a maximum
of
three (3) contacts to interface with the Sun support engineer.
3.3Upon the request of Licensee, Sun agrees to reasonably
negotiate
in good faith for additional support through a separate support
agreement.
4.0
PAYMENT
4.1License Fees. Support Fees and Royalties. Licensee shall
pay to
Sun the license and support fees set forth in Exhibit C within
thirty
(30) days from the Effective Date of this Agreement, unless
otherwise
specified in Exhibit C. Thereafter, and for the term of the
Agreement,
Licensee shall pay the Support Fee on or before the anniversary of
the
Effective Date. Licensee shall pay to Sun the Royalties due
hereunder
as set forth in Exhibit C.
4.2Taxes. All payments required by this Agreement shall be
made in
United States dollars, are exclusive of taxes, and Licensee agrees
to
bear and be responsible for the payment of all such
<PAGE>
taxes, including, but not limited to, all sales, use, rental
receipt,
personal property or other taxes and their equivalents which may be
levied or assessed in connection with this Agreement (excluding
only
taxes based on Sun's net income).
4.3Records. Licensee shall maintain account books and records
consistent with Generally Accepted Accounting Principles
appropriate to
Licensee's domicile, as may be in effect from time to time,
sufficient
to allow the correctness of the royalties required to be paid
pursuant
to this Agreement to be determined.
4.4Audit Rights. Sun shall have the right to audit such
accounts
upon reasonable prior notice. The right to audit may be exercised
through an independent auditor of Sun's choice (the "Auditor"). The
Auditor shall be bound to keep confidential the details of the
business
affairs of Licensee and to limit disclosure of the results of any
audit
to only the sufficiency of the accounts and the amount, if any, of
any
additional payment or other payment adjustment that should be made.
Such
audits shall not occur more than once each year (unless
discrepancies
are discovered in excess of the five percent (5%) threshold set
forth
in Section 4.5, in which case two consecutive quarters per year may
be
audited). Except as set forth in Section 4.5 below, Sun shall bear
all
costs and expenses associated with the exercise of its rights to
audit.
4.5Pavment Errors. In the event that any errors in payments
shall
be determined, such errors shall be corrected by appropriate
adjustment
in payment for the quarterly period during which the error is
discovered. ln the event of an underpayment of more than five
percent
(5%) of the proper amount owed, upon such underpayment being
properly
determined by the Auditor, Licensee shall reimburse Sun the amount
of
said underpayment and the reasonable charges of the Auditor in
performing the audit that identified said underpayment, and
interest on
the overdue amount at the prime rate plus three percent (3%), from
the
date of accrual of such obligation.
5.0
ADDITIONAL AGREEMENT OF PARTIES
5.1Notice of Breach or Infringement. Each party shall notify'
the
other immediately in writing when it becomes aware of any breach or
violation of the terms of this Agreement, or when Licensee becomes
aware
of any potential or actual infringement by a third party of the
Technology or Sun's Intellectual Property Rights therein.
5.2Notices. Licensee shall not remove any copyright notices,
trademark notices or other proprietary legends of Sun or its
suppliers
contained on or in the Technology or Documentation. Each unit of
Product(s) containing the Technology distributed by Licensee shall
include in Licensee's documentation, or in other terms and
conditions
of sale, notices substantially similar to those contained on and in
the
Technology. Licensee or its Distributors shall require an end user
license agreement for each unit of Product(s) shipped and Licensee
shall
provide Sun with a copy of such form agreement for review and
approval.
If Licensee or its Distributors use a package design or label for
the
Product(s), such package design or label shall include an
acknowledgement of Sun as the source of the Technology and such
other
notices as specified in Exhibit F In addition, Licensee shall
comply
with all reasonable requests by Sun to include Sun's copyright
and/or
other proprietary rights notices on the Product(s), documentation
or
related materials, including but not limited to the notices and
acknowledgements as specified in Exhibit F.
5.3End User Support. Licensee shall provide technical and
maintenance support service for its distributors and end user
customers
in accordance with Licensee's standard support practices. Sun shall
not
be responsible for providing any support to Licensee's distributors
or
customers for the Technology or the Product(s).
5.4Marketing. Licensee will cooperate with Sun on mutually
agreeable marketing and promotional activities relating to the
Technology. Licensee's initial press announcement concerning
execution
of this Agreement must be reviewed and approved by Sun prior to its
release.
5.5Use of Licensee's name. Licensee hereby authorizes Sun to
identify' Licensee as a user of the Technology in advertising,
marketing, collateral, customer lists and customer success stories
prepared by or on behalf of Sun for the Technology, provided that
Licensee will have the right to approve the use of its name, such
approval not to be unreasonably withheld or delayed.
(
1/4
>
1/2
<PAGE>
6.0LIMITED WARRANTY AND DISCLAIMER
6.1Limited Warranty. Sun represents and warrants that the
media on
which the Technology is recorded will be free from defects in
materials
and workmanship for a period of ninety (90) days after delivery.
Sun's
sole liability with respect to breach of this warranty is to
replace the
defective media. Except as expressly provided in this Section 8.1,
Sun
licenses the Technology and Documentation to Licensee on an "AS 15"
basis.
6.2General Disclaimer. EXCEPT AS SPECIFIED IN THIS AGREEMENT,
ALL
EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES, INCLUDING ANY
IMPLIED
WARRANTY OF MERCHANTABILITY FITNESS FOR A PARTICULAR PURPOSE OR
NON-
INFRINGEMENT, ARE HEREBY DISCLAIMED.
6.3Logo Disclaimer. SUN MAKES NO WARRANTIES OF ANY KIND
RESPECTING
THE COMPATIBILITY LOGO(s), INCLUDING THE VALIDITY OF SUN'S RIGHTS
IN THE
COMPATIBILITY LOGO(s) IN ANY COUNTRY AND DISCLAIMS ANY AND ALL
WARRANTIES THAT MIGHT OTHERWISE BE IMPLIED BY APPLICABLE LAW,
INCLUDING
WARRANTIES AGAINST INFRINGEMENT OF THIRD PARTY TRADEMARKS.
6.4Limitation. The warranties set forth in this Article 6.0
are
expressly subject to Section 9.0 (Limitation of Liability).
7.0
CONFIDENTIAL INFORMATION
7.1Confidential Information. For the purposes of this
Agreement,
"Confidential Information" means the Technology and hat information
which relates to (i) Sun hardware or software, (ii) Licensee
hardware
or software, (iii) the customer lists, business plans and related
information of either party, and (iv) any other technical or
business
information of the parties, including the terms and conditions of
this
Agreement In all cases, information which a party wishes to be
treated
as "Confidential Information" shall be marked as "confidential" or
"proprietary" (or with words of similar import) in writing by the
disc!osing party on any tangible manifestation of the information
transmitted in connection with the disclosure, or, if disclosed
orally,
designated as "confidential" or "proprietary" (or with words of
similar
import) at the time of disclosure. Sun has no obligation of
confidentiality to Licensee with respect to Derivative Works
(except for
Permitted Derivative Works) and the specifications of the Licensee
Open
Classes.
7.2Preservation of Confidentiality. The parties agree that all
disclosures of Confidential Information (as defined under Section
7.1
above) shall be governed by and treated in accordance with the
terms of
the Confidential Disclosure Agreement (the "CDA") attached hereto
as
Exhibit D and incorporated herein by reference, modified as
follows:
(a)the definition of "Confidential Information" shall be as
set
forth in Section 7.1 above notwithstanding any definition
set forth in the CDA;
(b)the use of Confidential Information shall be limited to
the
scope of the licenses provided in this Agreement; and
(c)the obligations of confidentiality expressed in the CDA
shall extend three (3) years beyond termination of this
Agreement, except with respect to Sun Source Code which
shall be held in confidence in perpetuity; and
(d)the CDA shall remain in effect for the term of this
Agreement.
8.0 LIMITED INDEMNITY
8.1Licensee acknowledges that Sun shall not be liable for any
defects or deficiencies in the Technology or in any Product process
or
design created by, with or in connection with the Technology
whether or
not such defect and/or deficiencies are caused, in whole or in
part, by
defects or deficiencies in the design or .implementation of the
Technology. Upon delivery of the Technology by Sun pursuant to this
Agreement, Sun will provide to Licensee a limited indemnity as
described
in Sections 8.2-8.5 below.
1/2
<PAGE>
8.2Sun will defend, at its expense, any legal proceeding
brought
against Licensee, to the extent it is based on a claim that use of
the
Technology is an infringement of a trade secret or copyright in any
country that is a signatory to the Berne Convention, and will pay
all
damages awarded by a court of competent jurisdiction attributable
to
such claim, provided that Licensee: (i) gives written notice of the
claim promptly to Sun; (ii) gives Sun sole control of the defense
and
settlement of the claim; (iii) provides to Sun, at Sun's expense,
all
available information, assistance and authority to defend; and (iv)
has
not compromised or settled such proceeding without Sun's prior
written
consent.
8.3Should any Technology or any portion thereof become, or in
Sun's
opinion be likely to become, the subject of a claim of infringement
for
which indemnity is provided under Section 8.2, Sun shall, as
Licensee's
sole and exclusive remedy for ongoing infringement, elect to: (i)
obtain
for Licensee the right to use such Technology; (ii) replace or
modify
the Technology so that it becomes non-infringing; or (iii) accept
the
return of the Technology and grant Licensee a refund of the License
Fee
and royalties, as depreciated on a five year straight-line basis.
8.4Sun shall have no liability for any infringement or claim which
results from: (i) use of other than a current unaltered version of
the
Technology, if such version was made available to Licensee; (ii)
use of
the Technology in combination with any non-Sun-provided equipment,
software or data; or (iii) Sun's compliance with designs or
specifications of Licensee.
8.5THIS ARTICLE STATES THE ENTIRE LIABILITY OF SUN WITH
RESPECT TO
INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS BY THE TECHNOLOGY.
SUN
SHALL HAVE NO OTHER LIABILITY WITH RESPECT TO INFRINGEMENT OF
INTELLECTUAL PROPERTY RIGHTS OF LICENSEE OR ANY THIRD PARTY AS A
RESULT
OF USE, LICENSE, OR SALE OF TECHNOLOGY
8.6Indemnity by Licensee. Except for claims for which Sun is
obligated to indemnify Licensee under Section 8.2, Licensee shall
defend
and indemnify Sun from any and all claims brought against Sun by
third
parties, and shall hold Sun harmless from all corresponding
damages,
liabilities, costs and expenses, (including reasonable attorneys'
fees)
incurred by Sun arising out of or in connection with Licensee's
use,
reproduction or distribution of the Technology, Product(s) or
Licensee
Open Classes. Licensee's obligation to provide indemnification
under
this Section shall arise provided that Sun: (i) gives notice of the
claim promptly to Licensee; (ii) gives Licensee sole control of the
defense and settlement of the claim; (iii) provides to Licensee, at
Licensee's expense, all available information, assistance and
authority
to defend; and (iv) has not compromised or settled such proceeding
without Licensee's prior written consent.
9.0LIMITATION OF LIABILITY
9.1Limitation of Liability. Except for express undertakings to
indemnify under this Agreement and/or breach of Sections 2.4, 7.0
or
9.2:
a. Each party's liability to the other for claims relating to this
Agreement, whether for breach or in tort, shall be limited to the
license fees and royalties paid by Licensee for the Technology
related
to the claims.
b. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INDIRECT
INCIDENTAL,
SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH OR
ARISING
OUT OF THIS AGREEMENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR
OTHER
ECONOMIC ADVANTAGE), NO MATTER WHAT THEORY OF LIABILITY, EVEN IF
THE
EXCLUSIVE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR
ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OR PROBABILITY OF SUCH DAMAGES. FURTHER, LIABILITY FOR
SUCH
DAMAGE SHALL BE EXCLUDED, EVEN IF THE EXCLUSIVE REMEDIES PROVIDED
FOR
IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE. The provisions
of
this Section 9.0 allocate the risks under this Agreement between
Sun and
Licensee and the parties have relied upon the limitations set forth
herein in determining whether to enter into this Agreement.
9.2High Risk Activities. The Technology is not designed or
intended
for use in on-line control of aircraft, air traffic, aircraft
navigation
or aircraft communications; or in the design, construction,
operation or maintenance of any nuclear facility. Sun disclaims any
express or implied warranty of fitness for such uses. Licensee
agrees
that it will not knowingly use or license the Technology for such
purposes, and that it will ensure that its customers and end users
of
the Technology are provided with a copy of the foregoing notice.
10.0 TERM AND TERMINATION
10.1 Term. The term of this Agreement shall begin on the Effective
Date
and shall continue for a period of five (5) years, or until
terminated
as provided below. Each year for five (5) consecutive years
following
expiration of the initial five (5) year term, at Licensee's sole
option,
Licensee may extend the term of this Agreement for one (1)
additional
year. Licensee shall indicate its intent to extend the Agreement by
written notice to Sun within thirty (30) days prior to the
expiration
of the preceding term. Termination is permitted either for breach
of
this Agreement, upon thirty (30) days written notice to the other
party
and an opportunity to cure within such thirty (30) day period, or
upon
any action for infringement of any patent relating to the
Technology by
Licensee against Sun or any of Sun's licensees of the Technology.
10.2Termination for Convenience. Licensee may notify Sun in writing
at
any time after the first full year of this Agreement of its intent
to
terminate this Agreement for Licensee's convenience. Such
termination
shall be effective at the next anniversary date of the Agreement
that
occurs more than ninety (90) days after Sun's receipt of such
notice.
10.3Effect of Expiration. Upon expiration of this Agreement, Sun
shall
retain use, under the terms of this Agreement, of the Intellectual
Property Rights received hereunder, and Licensee shall be
authorized to:
(i) distribute Product(s) containing the version of the Technology
incorporated therein at the time of expiration, subject to
Licensee's
continued compliance with the JavaOS Test Suites current at the
time of
expiration, and payment of royalties, and (ii) retain one (1) copy
of
the Technology in Source Code form to support customers having
copies
of Product(s) distributed by Licensee. All rights of Licensee to
receive
Updates and/or Support hereunder shall terminate upon such
expiration.
10.4Effect of Termination.
a. In the event of termination of this Agreement by Sun in
accordance
with Section 10.1 above or by Licensee in accordance with Section
10.2
above, Licensee shall promptly: (i) return to Sun all copies of the
Technology and Derivative Works thereof in tangible or electronic
form,
Documentation, and Confidential information (collectively "Sun
Property") (excluding Products, Licensee Open Classes and Licensee-
Implemented modifications to the Platform Dependent Pant) in
Licensee's
possession or control; or (ii) permanently destroy or disable all
copies
of the Sun Property in Licensee's possession or control, except as
specifically permitted in writing by Sun; and (iii) provide Sun
with a
written statement certifying that Licensee has complied with the
foregoing obligations. All rights and licenses granted to Licensee
shall
terminate upon such termination.
b. In the event of termination of this Agreement by Licensee in
accordance with Section 10.1 above, the rights and licenses granted
to
Licensee in this Agreement shall not terminate.
10.5No Liability for Expiration or Lawful Termination. Neither
party
shall have the right to recover damages or to indemnification of
any
nature, whether byway of lost profits, expenditures for promotion,
payment for goodwill or otherwise made in connection with the
business
contemplated by this Agreement, due to the expiration or permitted
or
lawful termination of this Agreement. EACH PARTY WAIVES AND
RELEASES THE
OTHER FROM ANY CLAIM TO COMPENSATION OR INDEMNITY FOR TERMINATION
OF THE
BUSINESS RELATIONSHIP UNLESS TERMINATION IS IN MATERIAL BREACH OF
THIS
AGREEMENT.
10.6No Waiver. The failure of either party to enforce any provision
of
this Agreement shall not be deemed a waiver of that provision. The
rights of Sun under this Section 1 0.0 are in addition to any other
rights and remedies permitted by law or under this Agreement.
10.7Survival. The parties' rights and obligations under Sections
4.0
(for royalty payments), 5.2, 5.3, 6.0, 7.0, 8.0, 9.0,10.0, and 11.0
shall survive expiration or termination of this Agreement.
10.8 Irreparable Harm. The parties acknowledge that breach of
Sections
2.0, 5.2, 5.3,7.0, 9.2, or 11.8 may cause irreparable harm, the
extent
of which would be difficult to ascertain. Accordingly, they agree
that,
in addition to any other legal remedies to which a non-breaching
party
might be entitled, such party may seek immediate injunctive relief
in
the event of a breach of the provisions of such Articles.
11.0 MISCELLANEOUS
11.1Notices. All notices must be in writing and delivered either in
person or by certified mail or registered mail, postage prepaid,
return
receipt requested, to the person(s) and address specified below.
Such
notice will be effective upon receipt.
Sun
Licensee
Sun Microsystems, lnc.
2550 Garcia Avenue, UCUP01~O5
Cupertino, California 9501~2233
Attn:Sun General Counsel
Jyra Research, Inc.
41 Thurlow Square, Kensington
London 5W7, UK
Attn: Peter Lynch - Technical Director
Roderick Adams - Director and Secretary
11.2
Partial Invalidity. If any term or provision of this Agreement
is
found to be invalid under any applicable statute or rule of law
then,
that provision notwithstanding, this Agreement shall remain in full
force and effect and such provision shall be deleted unless such a
deletion would frustrate the intent of the parties with respect to
any material aspect of the relationship established hereby, in
which
case, this Agreement and the licenses and rights granted hereunder
shall terminate.
11.3
Complete Understanding. This Agreement and the Exhibits hereto
constitute and express the final, complete and exclusive agreement
and
understanding between the parties with respect to its subject
matter and
supersede all previous communications, representations or
agreements,
whether written or oral, with respect to the subject matter hereof.
No
terms of any purchase order or similar document issued by Licensee
shall
be deemed to add to, delete or modify the terms and conditions of
this
Agreement. This Agreement may not be modified, amended, rescinded,
canceled or waived, in whole or part, except by a written
instrument
signed by the parties.
11.4Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions of
this
Agreement in any other language shall be for accommodation only and
shall not be binding on the parties to this Agreement. All
communications and notices made or given pursuant to this
Agreement, and
all documentation and support to be provided, unless otherwise
noted,
shall be in the English language.
11.5Governing Law. This Agreement is made under and shall be
governed by and construed under the laws of the State of
California,
regardless of its choice of laws provisions.
11.6 Compliance with Laws. The Technology, including technical
data,
is subject to U.S. export control laws, including the U.S. Export
Administration Act and its associated regulations, and may be
subject
to export or import regulations in other countries. Licensee agrees
to
comply strictly with all such regulations and acknowledges that it
has
the responsibility to obtain such licenses to export, re-export or
import the Technology or Product(s) as may be required after
delivery
to Licensee.
Licensee shall make reasonable efforts to notify and inform its
employees having access to the Technology of Licensee's obligation
to
comply with the requirements stated in this Article.
117
Disclaimer of Agency. Licensee is not authorized to make any
representation or warranty on behalf of Sun to its end users or
third
parties. The relationship created hereby is that of licensor and
licensee and the parties hereby acknowledge and agree that nothing
herein shall be deemed to constitute Licensee as a franchisee of
Sun.
Licensee hereby waives the benefit of any state or federal statutes
dealing with the establishment and regulation of franchises.
<PAGE>
11.8 Delivery. As soon as practicable after the Effective Date, Sun
shall deliver to Licensee one (1) copy of each of the deliverables
set
forth in Exhibit A. Licensee acknowledges that certain of the
deliverables are in various stages of completion and agrees to
accept
the deliverables as and to the extent completed as of the date of
delivery and "AS IS." In the event any deliverable is already in
the
possession or custody of Licensee, such item(s) shall, to the
extent
used in connection with the rights granted in Section 2.0 above, be
subject to the terms of this Agreement, notwithstanding any
pre-existing
agreement or understanding between Licensee and Sun with respect to
such
items.
11.9 Assignment and Change in Control. This Agreement may not be
assigned by either party without the prior written consent of the
other
party, which consent shall not be unreasonably withheld or delayed,
except that Sun may assign this Agreement to a majority-owned
subsidiary, and Licensee may assign this Agreement to a
majority-owned
subsidiary domiciled in the United States or the European Union.
11.10 Construction. This Agreement has been negotiated by Sun and
Licensee and by their respective counsel. This Agreement will be
fairly
interpreted in accordance with its terms and without any strict
construction in favor of or against either party.
11.11 Force Majeure. Except for the obligation to pay money and
Sun's
obligation to make an initial delivery of the Source Code, neither
party
shall be liable to the other party for non-performance of this
Agreement, if the non-performance is caused by events or conditions
beyond that party's control and the party gives prompt notice under
Section 11.1 and makes all reasonable efforts to perform.
11.12 Exhibits.
The following are included herein by reference as integral
parts of
this Agreement:
Exhibit A - Description of Technology and Documentation
Exhibit B - Identification of Licensee Product(s)
Exhibit C - Schedule of Fees and Royalties
Exhibit D - Confidential Disclosure Agreement
Exhibit E - Document Type Definition
Exhibit F - Trademark License
11.13
Section References. Any reference contained herein to an
article
of this agreement shall be meant to refer to all subsections of the
article.
11.14
No Competitive Restrictions. The Parties agree that nothing in
this Agreement is intended to prohibit Licensee from independently
developing or acquiring technology that is the same as or similar
to
the Technology, provided that Licensee does not do so in breach of
Exhibit D to this Agreement.
11.15
Condition Subsequent.
a.The parties acknowledge the following: Licensee is currently
engaged in an initial offering of its common stock scheduled to
expire on July 5, 1996 unless extended by Licensee to a later
date
(the "Initial Offering"). Licensee is looking to the proceeds
of
the Initial Offering to enable Licensee to fulfill its initial
payment obligations under this Agreement. Licensee intends
promptly
to disclose to its prospective common stockholders the
existence
and principal terms of this Agreement in advance of the
scheduled
expiration date of the Initial Offering in order to enable its
prospective common stockholders to determine whether they wish
to
purchase their shares notwithstanding Licensee's entering into
this
Agreement.
b.On or before July 19, 1996, Licensee shall provide written
notice to Sun ("Licensee's Notice") truthfully indicating
either
that: (i) Licensee has not received and accepted the minimum
proceeds required to close the Initial Offering; or (ii)
Licensee
has received and accepted the minimum proceeds required to
close the
Initial Offering.
<PAGE>
c.In the event that Licensee's Notice shall truthfully
indicate
that Licensee has not received and accepted the minimum
proceeds
required to close the Initial Offering, then this Agreement and
all
agreements entered into pursuant to or in contemplation of this
Agreement shall be cancelled and of no effect as though they
had
never been signed or delivered. In the event that Licensee's
Notice
truthfully indicates that Licensee has received and accepted
the
minimum proceeds required to close the Initial Offering, then
this
Agreement and all such other agreements shall remain fully
effective in accordance with their terms without reference to
this
condition subsequent.
d.Licensee agrees that no press release concerning this
Agreement
will be made prior to satisfaction of this Condition
Subsequent,
and that its disclosures concerning this Agreement to
prospective
common stockholders shall be identified as confidential
information
of Licensee.
e.Neither Sun's obligation to make its initial delivery of the
Source Code under this Agreement nor Licensee's obligations to
make
any payments under this Agreement will be triggered unless
Licensee
has timely received and accepted the minimum proceeds required
to
close the Initial Offering in such manner as to require
Licensee
to provide a Licensee" Notice as set forth in subparagraph (b)
(ii), above.
f.Sun's obligation to make its initial delivery of the Source
Code hrereunder will not be triggered until fifteen (15)
business
days after satisfaction of the condition subsequent identified
in
this Section.
g. 3 page side letter attached - dated 11 July 1996.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
Sun Microsystems; Inc.
By /s/ Alan Baratz
Name: Alan Baratz
Title: President, JavaSoft
Date: 7-19-96
Licensee:
By: Roderick Adams
Director & Secretary
Date: July 19, 1996
12
<PAGE>
EXHIBIT A
DESCRIPTION OF TECHNOLOGY AND DOCUMENTATION
To the extent that Sun has not already delivered any of the
following listed items to Licensee as of the Effective Date of the
Agreement to which this Exhibit A is attached, Sun will deliver to
Licensee under the terms of the Agreement those items identified
below.
I.eJavaOS Environment The eJavaOS Environment consists of the
following source code:
a.The Source Code for the JavaOS Runtime Interpreter
b.Core Classes: All the java files from the following eJavaOS
Packages:
java.lang(eJavaOS Implementation)
Language Classes
java.io(eJavaOS Implementation)Stream I/O
java.util(eJavaOS Implementation)
General utilities
java.applet(eJavaOS Implementation)
Java Classes
c.Net Classes: All the java files from the following JavaOS
Package:
java.net (JavaOS
Implementation)Networking Classes
11. Documentation:
Java OEM Language Specification
Java OEM API Documentation
Java OEM Virtual Machine Specification
eJavaOS OEM Specification
13
<PAGE>
EXHIBIT B
IDENTIFICATION OF LICENSEE PRODUCT(S)
Product(s):Network Probe
Field(s) of Use: Computer Network Management Systems
14<PAGE>
EXHIBIT C
SCHEDULE OF FEES AND ROYALTIES
I.Technology: eJavaOS Environment
1. Upfront License Fees: [Confidential information has been
omitted and has been filed separately with the SEC.]
The fees and royalties specified in this Agreement are for the
platforms identified below: (check applicable platforms)
SPARC/Solaris Win32/lntelXX
Where such versions are not complete as of the Effective Date, the
license fees cover the first commercial version shipped by Sun for
that platform.
2. Per Unit Royalty:
Royalty Fees are to be applied on a non-recurring basis per Product
unit per CP\3 architecture.
Unit Volume Per Unit Royalty
1-5k $66.00
Thereafter $20.00
Payment of the royalties shall be made quarterly, shall be due
forty- five (45) days following the end of Licensee's fiscal
quarter to which they relate and shall be submitted with a written
statement certifying the number of Products sold and showing the
calculation of the royalties due. A network probe Product shall be
deemed a single unit of Product for purposes of royalty payments
hereunder.
3.Support and Update Fees: For the period in which Licensee is
paying a royalty of $66.00 per unit, Licensee shall pay $50,000.
per year (for updates and bug reporting only), the initial payment
due within thirty days of first delivery of Source Code of the
eJavaOS Environment, and subsequent payments due upon each
anniversary date thereof. During this period, and subject to
availability from Sup, Licensee may request primary support (112
time engineer at Sun for technical support, upgrades and bug
reporting) for the Technology at a price of an additional $20,000
per month for the period in which such primary support is
requested.
For the period in which Licensee is paying a royalty of $20.00 per
unit, Licensee shall pay $300,000. per year for primary support
(1/2 time engineer at Sun for technical support, upgrades and bug
reporting).
Licensee will be permitted a maximum of three (3) contact persons
to communicate with the Sun support staff. If more than three
contacts becomes necessary, Sun and Licensee will negotiate in good
faith additional support fees on a per subsidiary basis as
appropriate.
15<PAGE>
EXHIBIT D
CONFIDENTIAL DISCLOSURE AGREEMENT
(to be attached)
16
<PAGE>
BI-LATERAL CONFIDENTIAL DISCLOSURE AGREEMENT
Effective Date: 16 May 1996
Sun Microsystems, Inc. by and through its JavaSoft business unit,
("Sun"); and Jyra Research Inc. ("Party") agree that:
1. a) The information disclosed under this Agreement
("Information") includes the following:
Sun Information: JavaSoft technology, business and technical
information relating to JavaSoft products, JavaSoft product
licensing practices and fees, research and development plans,
customers, and marketing and future business plans:
Party Information: _______________________________________________
(If not filled in by Party, then no Party information is to be
disclosed)
B) Information may be used solely for the purpose of
evaluating business opportunities between the parties.
2. This Agreement covers only information which is disclosed
between the Effective Date and twelve (12)months thereafter. Each
party's obligation regarding information expires three (3) years
after the date of disclosure (except for Sun source code, which
shall be protected in perpetuity). Information shall be used
solely as permitted above, and shall not be disclosed to a third
party other than a subsidiary, agent, or subcontractor of the
receiving party who has agreed to be bound by the terms of this
Agreement. Each party shall protect information of the other party
using the same degree of care, but no less than a reasonable degree
of care, as such party uses to protect its own confidential
information. Upon termination of this Agreement or the disclosing
party's written request, the receiving party shall cease use of
information and return or destroy all information.
3. Each party shall be obligated to protect only information: (a)
disclosed in tangible form clearly labeled as confidential or
proprietary at the time of disclosure; or (b) disclosed in
non-tangible form, identified as confidential or proprietary at the
time of disclosure, and summarized in writing, designated as
confidential or proprietary, and delivered to the other party
within thirty (30) days after disclosure.
4. This Agreement imposes no obligation upon the receiving party
with respect to information which: (a) was in the possession of, or
was known by, the receiving party prior to its receipt from the
disclosing party, without an obligation to maintain its
confidentiality; (b) is or becomes generally known to the public
without violation of this Agreement; (c) is obtained by the
receiving party from a third party, without an obligation to keep
such information confidential; or (d) is independently developed by
the receiving party without use of information. Disclosure of the
other party's information is not prohibited if prior notice is
given to the other party and such disclosure is: (a) compelled
pursuant to a legal proceeding, or (b) otherwise required by law.
5. Information is provided "AS IS", and all representations and
warranties, express or implied, including fitness for a particular
purpose, merchantability, and noninfringement, are hereby
disclaimed. Neither party has an obligation to sell or purchase
any items from the other party. Except for breaches relating to
Sun source code, neither party shall be liable for any special,
incidental, consequential or punitive damages by reason of any
alleged breach of this Agreement based upon any theory of
liability. Nothing in this Agreement shall be construed as a
representation that the receiving party will not develop or acquire
information that is the same or similar to information, provided
that the receiving party does not do so in breach of this
Agreement. The receiving party agrees that any breach of this
Agreement may result in irreparable harm to the disclosing party
for which damages would be an inadequate remedy and, therefore, in
addition to its rights and remedies otherwise available at law, the
disclosing party shall be entitled to equitable relief, including
injunction, in the event of such breach. The receiving party does
not acquire any rights in information, except the limited right to
use information as described above.
6. The Agreement constitutes the entire agreement between the
parties concerning its subject matter. All additions or
modifications to this Agreement must be made in writing and must be
signed by an authorized representative of each party. The parties
agree to comply strictly with all applicable export control laws
and regulations. Any action related to this Agreement will be
governed by California law, excluding choice of law rules.
SUN MICROSYTEMS, INC., by and PARTY: Jyra Research Inc.
through JAVASOFT
BY: /s/ Jon Kannegaarel BY: /s/ Roderick Adams
NAME: Jon Kannegaarel NAME: Roderick Adams
TITLE: VP, JAVASOFT TITLE: Director, Secretary
<PAGE>
EXHIBIT E
F
DOCUMENT TYPE DEFINITION
In order to ensure interoperability between all Java compliant
browsers, Sun needs to define the exact notation of applets in HTML
documents. The format of the APPLET tag is chosen to be
implementation language independent and SGML compliant. SGML
compliance is important if the APPLET tag is to be accepted as part
of the HTML standard in the future.
Example:
[applet codebase='"http://java.sun.com/people/avh/classes"
code="Bounceltem.java" width=400 height=300]
[lapplet]
The applet tag has the following attributes:
CODEBASE The base url of the applet. The applet's code
is
located relative to this URL. If this
attribute
is not specified, it defaults to the document's
URL.
CODE The file in which the applete is located. This
file is relative to base url of the applet, It
cannot be absolute.
ALT Alternate text which can be displayed by text
only browsers.
NAME The symbolic name of the applet..This name can
be used by applets in the same page to locate
each other.
WIDTH Required attribute which specifies the initial
width of the applet in pixels.
HEIGHT Required attribute which specifies the initial
height of the applet in pixels.
ALIGN The alignment of the applet, similar to the img
tag.
VSPACE The vertical space around the applet, similar
to
img tag.
HSPACE The horizontal space around the applet, similar
to the img tag.
Note that the position of the applet in the page is determined by
the
width, height, align, vspace and hspace attributes just like the
img
tag.
Applets can access the above attributes using the getParameter()
method
c all defined in the Java Class. All attribute/parameter names are
automatically folded to lower case. Applets that require parameters
in
addition to the predefined ones need to use the param tag. It is
unfortunately not legal in SGML for a tag to have an arbitrary list
of
attributes. That is why additional applet parameters explicitly
using
the PARAM tag have to be named. For example:
[applet code="Dateltem.class" alt="The Date" width=200
height=40] [param name="speaker" value="avh"]
[param name--translator" value='~DutchTime"]
[lapplet]
In addition to the ALT tag, Licensee can include additional text
and
markup before the applet end tag. Java compliant browsers will
ignore
this text, but browsers that do not understand the applet tag will
display it instead of the applet. For example:
<applet codebase=classes code=ImageLoop.class width=1 00
height=1 00> <param name=imgs value="images/duke">
17
If Licensee were using a Java enabled browser, Licensee would see
an
animation instead of this static image. [p]
[img src=imageslduke/T1 gif"] [/app let]
Below is the formal SGML DTD for the APPLET and PARAM tags.
[!ELEMENT APPLET - - (PARAM*, (%text;)*~] [!ATTLIST APPLET
CODEBASE CDATA #IMPLIED
CODE CDATA #REOUIRED-code file-
ALT CDATA#IMPLIED-alternative string-
NAME CDATA #IMPLIED- the applet name -
HEIGHT NUMBER #REQUIRED
ALIGN (left/right/top/texttop/middIe/
absmiddle/baseline/bottom/absbottom) baseline
VSPACE NUMBER #IMPLIED
HSPACE NUMBER #IMPLlED
-code base-
[!ELEMENT PAPAM -0 EMPTY] [!ATTLIST PARAM
NAME NAME #REQUIRED-The name of the
parameter-VALUE
CDATA #IMPLIED - The value of the
parameter -
'
<PAGE>
EXHIBIT F
TRADEMARK LICENSE
JAVA-Powered Logo
LICENSOR
SUN MICROSYSTEMS, INC.
2550 Garcia Avenue
Mountain View, CA 94303
U.S.A.
(415) 960-1300
LICENSEE
19
<PAGE>
TRADEMARK LICENSE
The following terms and conditions governing Java
compatibility branding and trademarks generally ("License") are
incorporated by reference into the Technology License and
Distribution Agreement ("TLDA") between Sun and Licensee, attached
hereto. Where this License is more specific than or inconsistent
with the TLDA, the terms of this License shall govern. Otherwise
the TLDA shall apply. The parties agree that:
1.DEFINITIONS
1.1."Branded Product" means all online software or tangible copies
or units of any version of Licensee's Products being distributed in
association with any Compatibility Logo.
1.2."Compatibility Logo" means the Java-owned logo supplied by Sun
to Licensee from time-to-time. The current version of the logo is
depicted at the end of this License.
1.3."Licensee's Products" means only the products described in
Exhibit B of the TLDA.
2.GRANT OF LICENSE
Sun grants to Licensee a non-exclusive, non-transferable, personal,
paid-up, royalty-free license, within the Territory in Section 3,
to use the Compatibility Logo ("License") as provided herein with
respect to each of Licensee's Products that fully meet the
certification requirements of Section 4. Licensee is granted no
other right, title, or license to the Compatibility Logo or any
other Sun trademark, and is specifically granted no right or
license to sublicense the Compatibility Logo or any other Sun
trademarks. This License shall apply and pass through to Licensee's
distributors who distribute Licensee's Products as transferred by
Licensee (i.e., without any modifications to the Product, product
packaging, documentation or other materials) ("Distributors").
Licensee shall provide notice of this License to and enforce its
terms with Distributors. Sun shall be entitled to enforce the terms
of this License directly against any Distributor in the event
Licensee fails to do so. All subsequent references herein to
"Licensee" shall include and apply to "Distributors".
3.TERRITORY
Licensee shall not use any Compatibility Logo on or in Licensee's
Products distributed via tangible media (e.g., CD or diskettes) or
on any other tangible materials (e.g., user documentation) in
countries other than those listed below ("Territory"), unless Sun
expressly agrees in writing beforehand to extend the Territory
(which Sun may refuse to do in its sole discretion). This
territorial restriction shall not apply to on-line distribution of
Licensee's Products over the Internet. Licensee shall pay all
costs, including fees for legal services, registrations, recordals,
and foreign language translations associated with any extension of
the Territory requested by Licensee. Sun may eliminate any country
from the Territory if it determines in its sole judgment that Use
or continued use of the Compatibility Logo in such country may
subject Sun or any third party to legal liability, or may
jeopardize the Compatibility Logo or any Sun trademark in that or
any other country. In such event, Licensee shall promptly cease all
use of the Compatibility Logo in such countries upon written notice
from Sun.
Australia
Austria
Belgium
Benin
Netherlands
Luxembourg
Brazil
Burkino Faso
Cameroon
Canada
20
<PAGE>
Central African Republic
Chad
Chile
China (P.R.C)
Columbia
Congo
Czech Republic
Denmark
Egypt
France
Gabon
Germany
Greece
Guinea
Hong Kong
Hungary
India
Indonesia
Israel
Italy
Ivory Coast
Japan
Mali
Malaysia
Mauritania
Mexico
New Zealand
Niger
Norway
Philippines
Portugal
Russia
Senegal
Singapore
South Korea
Spain
Sweden
Switzerland
Taiwan
Thailand
Togo
Turkey
Ukraine
UAE
U.K.
United States
Venezuela
4.CERTIFICATION
License applies only to versions of Licensee's Products that have
successfully passed the Java Test Suites made available by Sun to
Licensee pursuant to the TLDA, and which otherwise fully comply
with all other compatibility and certification requirements of the
TLDA. Upon thirty (30) days written notice by Sun no more than two
(2) times per calendar year, Licensee shall permit Sun to inspect
and test any Branded Products at a mutually agreeable location to
ensure that they meet the compatibility requirements of the TLDA.
Upon request by Sun, Licensee shall promptly make any modifications
to any version of a Branded Product necessary for it
to meet such compatibility requirements.
5.LOGO AND TRADEMARK USAGE
Licensee shall use the Compatibility Logo only as specified in any
guidelines or policies made by Sun concerning the appearance,
placement or use of the Compatibility Logo ("Logo Guidelines").
Licensee shall: (i) use only approved logo artwork provided by Sun,
(ii) for tangible media, display the Compatibility Logo on external
product packaging, documentation, and media (disk, CD-ROM, tape,
etc.); (iii) for online versions of Licensee's Product, display the
Compatibility Logo on web pages featuring information about the
Product in GIF images that point to the current Sun Java page
(http://java.sun.com) via hypertext link; (iv) for both
tangible~media and online versions, display the Compatibility Logo
on "splashscreens" appearing upon launch of Licensee's Product, if
any, and in general product information screens (e.g., "About",
"Help", "Info"); (v) display the Compatibility Logo on tangible
marketing collateral featuring Licensee's Products, including
advertisements and datasheets; and (vi) not display Compatibility
Logo more prominently or larger than Licensee's company name/logo
and product name/logo, wherever displayed.
Licensee shall comply with the current versions of the Sun
Trademark & Logo Policies and the Java/'HotJava Trademark
Guidelines [http://java. sun.com/tm_guidelines. html], including
but not limited to using the Java mark as an adjective followed by
generic descriptors, marking the Java mark with a TMsymbol, and
attributing the Java mark as a trademark of Sun Microsystems, Inc.
in a legend on packaging, splashscreens, web page, and other
collateral and materials. Licensee may not include any Sun
trademark (e.g., Sun, Java, HotJava, Solaris, etc.) in Licensee's
company, business or subsidiary names, or in the name of any of
Licensee's products, services, technologies, or web pages. Licensee
shall promptly modify any usage and any material that does not
conform to the Logo Guidelines, the Sun Trademark & Logo Policies,
or the JavatHotJava Trademark Guidelines upon notice from Sun
specifying the non- conformance. Licensee shall notify its
distributors and customers of any such non-conformance as to
materials or products already distributed, as may be reasonably
requested by Sun.
6.PROTECTION OF TRADEMARKS AND LOGOS
Sun is the sole owner of the Compatibility Logos (including the
marks depicted therein) and all goodwill associated therewith.
Licensee's use of the Compatibility Logos inures solely to the
benefit of Sun. Licensee shall not do anything that might harm the
reputation or goodwill of the Compatibility Logo. Licensee shall
not challenge Sun's rights in or attempt to register the
Compatibility Logo, or any other name or mark owned by Sun or
substantially similar thereto. Licensee shall take no action
inconsistent with Sun's rights in the Compatibility Logo. If at any
time Licensee acquires any rights in, or registrations or
applications for, the Compatibility Logo by operation of law or
otherwise, it will immediately upon request by Sun and at no
expense to Sun, assign such rights, registrations, or applications
to Sun, along with any and all associated goodwill. Licensee shall
assist Sun to the extent reasonably necessary to protect and
maintain the Compatibility Logo worldwide, including but not
limited to giving prompt notice to Sun of any known or potential
infringement of the Compatibility Logo, and cooperating with Sun in
the preparation and execution of any documents necessary to record
this License as may be required by the laws or rules of any
country. Sun may at its option commence, prosecute or defend any
action or claim concerning the Compatibility Logo in the name of
Sun or Licensee, or join Licensee as a party thereto. Sun shall
have the right to control any such litigation. Licensee shall not
commence any action regarding the Compatibility Logo. Sun shall
reimburse Licensee for the reasonable costs associated with
providing such assistance, except to the extent that any such costs
result from a breach of the License by Licensee.
22
IN WITNESS WHEREOF, the parties hereby execute this Agreement through the
authorized representatives whose names appear below
SUN MICROSYSTEMS, INC.
LICENSEE
By:/s/ Alan Baratz By: /s/ R. Adams
Name: Alan Baratz Name: Roderick Adams
Title: President, JavaSoft Title: Director & Secretary
Date: 7-19-96 Date: 19 July 1996<PAGE>
COMPATIBILITY LOGOS LICENSED HEREUNDER
23<PAGE>
[JAVA COMPATIBLE LOGO]
4-Color on Black or Dark Colored Background
The master Java Compatible identity, i.e.,. type and cup graphic.
are custom art and cannot be modified from the repro art. When it
appears as 4-color process against a black or dark colored
background. the word Java and steam print Red (1OQM, lOQY) with a
white drop shadow behind the steam. The Compatible and the cup
print Purple (80C, 75M) with a white drop shadow behind the cup.
Background trapezoid prints white.<PAGE>
[JAVA COMPATIBLE LOGO]
4-Color on Gray or Light Colored Background
The master Java Compatible identity, ie. type and cup graphic, are
custom art and cannot be modified from the repro art. When it
appears as 4-color process against a gray or light colored
background, the word Java and steam print Red (lOOM, lOOY) with a
white drop shadow behind the steam. The word Compatible and the cup
print Purple (8OC, 75M) with a white drop shadow behind the cup.
Background trapezoid prints white.<PAGE>
[JAVA COMPATIBLE LOGO]
4-Color on a white background
The master Java Compatible identity, le. type and cup graphic, are
custom art and cannot be modified from the repro art. When it
appears as 4-color process against a white background, the word
Java and steam print red (1OO~, 1OOY) with a white drop shadow
behind the steam. The word Compatible and the cup print Purple ~
75~~ with a white drop shadow behind the cup. Background trapezoid
prints black.<PAGE>
[JAVA COMPATIBLE LOGO]
2-Color on Black or Dark Colored Background
The master Java Compatible identity, i.e. type and cup graphic, are
custom art and cannot be modified from the repro art. When it
appears as 2-color against a black or dark colored background, the
word Java and steam print Pantone PMS485C Red with a white drop
shadow behind the steam. The word Compatible and the cup print
Pantone PMS2665C Purple with a white drop shadow behind the cup.
Background trapezoid prints white.<PAGE>
[JAVA COMPATIBLE LOGO]
2 color on Gray or Light Colored Background
The master Java Compatible identity, ie. type and cup graphic, are
custom art and cannot be modified from the repro art. When it
appears as 2-color against a gray or light colored background, the
word Java and steam print Pantone PMS485C Red with a white drop
shadow behind the steam. The word compatible and the cup print
Pantone PMS2665C Purple with a white drop shadow behind the cup.
Background trapezoid prints white.<PAGE>
[JAVA COMPATIBLE LOGO]
2-Color on a White Background
The master Java Compatible identity, i.e. type and cup graphic,
are custom art and cannot be modified from the repro art. When it
appears as 2-color against a white background, the word Java and
steam print Pantone PMS485C Red with a white drop shadow behind the
steam. The word Compatible and the cup print Pantone PMS2665C
Purple with a white drop shadow behind the cup Background trapezoid
prints black.<PAGE>
[JAVA COMPATIBLE LOGO]
Black + White on Black or Dark Colored Background
The master Java Compatible identity, le. type and cup graphic. are
custom art and cannot be modified from me repro art. When Lt
appears as black + wh~te against a black or cark colored
background,, the type. cup and steam print white. Background
trapezoid prints 50% Black.<PAGE>
[JAVA COMPATIBLE LOGO]
Black + White on Gray or Light
Colored Background
The master Java Compatible identity, je. type and cup graphic, are
custom art and cannot be modified from the repro art. When it
appears as black + white against a gray or light colored
background, the type, cup and steam print black with a white drop
shadow behind the cup and steam. Background trapezoid prints white.
<PAGE>
[JAVA COMPATIBLE LOGO]
Black + White on a White
Background
The master Java Compatible identity, le type and cup graphic are
custom art and cannot be modified from the repro art. When it
appears as black + white against a white background. the type, cup
and steam print black with a white drop shadow behind the cup and
steam. Background trapezoid prints 50% black.
JYRA RESEARCH INC.
41 Thurloe Square
London SW7 2RS
Tel: 01 71 371 0702
Fax: 01 71 371 5037
July 11, 1996
Sun Microsystems, Inc.
2550 Garcia Avenue
Mountain View, California
94043
Attn: Lee Patch, General Counsel
Technology License and Distribution Agreement
Dear Mr. Patch:
This Letter Agreement will confirm the agreement between Jyra
Research Inc. ("Jyra") and Sun Microsystems, Inc. ("Sun") regarding
the terms and conditions under which Jyra will be entitled to
disclose information regarding the Technology License and
Distribution Agreement, dated June 29, 1996, entered into between
Sun and Jyra.
Sun acknowledges the following: Jyra is a startup company in
need of capital. For Jyra to obtain future financing in a lawful
manner, whether by incurring debt or by sale of equity, Jyra may be
required from time to time to make certain disclosures and exhibit
copies of agreements to which it may be or become a party. The
Technology License and Distribution Agreement between Sun and Jyra
(the "Technology License") may be deemed material from the
viewpoint of a prospective lender or shareholder, and therefore
disclosure of its existence and terms may become necessary. As a
legal or contractual condition to Jyra's lawful incurring of debt
or sale of equity or in fulfillment of other disclosure obligations
of Jyra relating to its securities, from time to time, Jyra may be
required to disclose the existence and terms of the Technology
License to third parties and to exhibit or file copies of the
Technology License with securities exchanges and with certain
governmental or quasi-governmental agencies. Some such files may be
open to examination by the public. Although Sun's policy, adopted
as a matter of business prudence, is to require its licensees to
maintain the confidentiality of the existence and terms of
documents such as the Technology License, Sun wishes to avoid
interfering unduly with Jyra's ability to obtain financing and
issue its shares.
Therefore, not less than twenty (20) days before disclosing the
existence or terms of the Technology License to any third parties
in a manner prohibited by the Technology License, Jyra will submit
to Sun a written statement containing all material terms of such
proposed disclosure and its reasons therefor, together with Jyra's
request that Sun approve such disclosure within ten (10) days
thereafter. Within said ten (10) days, Sun will complete such
review as it deems appropriate of such written statement and notify
Jyra in writing of whether Sun approves or disapproves Jyra's
prospective disclosure. In the event that Sun disapproves Jyra's
prospective disclosure, Sun shall contemporaneously state its
reasons therefor with particularity in writing. Jyra shall not
make such disclosures as may be disapproved by Sun in such manner,
provided, however, that Sun shall not unreasonably withhold or
delay its approval and shall give due weight in its consideration
to both Jyra's and Sun's interests in the matter.
In connection with a current offering of shares of Jyra's common
stock, Jyra has prepared an Amendment to its Offering Memorandum
which describes the material elements of the agreement with Sun,
attached hereto as Appendix A. Sun acknowledges that the Amendment
will be distributed to prospective investors in Jyra, and, to
facilitate trading of Jyra's shares in the over- the-counter market
in the United States, to the National Association of Securities
Dealers, Standard & Poors Corporation Records, and a registered
broker-dealer firm to enable it to fulfill its due diligence
requirements. Jyra undertakes to mark the Amendment as "Private and
Confidential" and to notify all recipients of the Amendment of its
private and confidential nature.
Anything contained herein to the contrary notwithstanding,
under no circumstances shall Jyra disclose Java Source Code or
Technology, as those terms are defined in the Technology License,
except as may be permitted pursuant to the Technology License.
If you are in agreement with the above, please sign and
return the enclosed photocopy of this Letter Agreement on or before
July 25, 1996, and this Letter Agreement will become our entire
understanding.
Very truly yours,
JYRA RESEARCH INC.
By: /s/ Roderick Adams
Roderick Adams
Secretary
READ AND AGREED:
SUN MICROSYSTEMS, INC.
by: /s/ Lee Patch
Lee Patch
General Counsel
Appendix A
PRIVATE AND CONFIDENTIAL
Amendment Number 1
dated July 1, 1996 to
OFFERING MEMORANDUM
(June 19, 1996)
JYRA RESEARCH INC.
41 Thurloe Square
London SW7 2RS
Tel: 01 71 371 0702
Fax: 01 71 371 5037
$600,000 Minimum - $900,000 Maximum
Offering of Common Shares at $0.40 per Share
Offering of 1,500,000 shares (Minimum) to 2,250,000 shares
(Maximum) of capital stock, $0.001 per share par value ("Shares"),
of Jyra Research Inc. ("Jyra" or the "Company") at a price of $0.40
per Share.
On June 29, 1996, the Company entered into a Technology
License and Distribu- tion Agreement ("Agreement") with Sun
Microsystems, Inc. ("Sun"). Under the Agreement, the Company was
granted a worldwide non-exclusive license to develop and distribute
products based upon Sun's eJavaOS technology (the "Java
Technology"). The Agreement does not prohibit the Company from
using technology which is competitive with Java Technology.
Although Java Technology is a yet-untested work in progress,
since Management expects Java Technology to be a suitable basis for
the Company's initial products, Management intends to develop the
Company's Probe and related products based in large part upon Java
Technology.
Pursuant to the Agreement, the Company is required to meet
three principal payment obligations to Sun, consisting of: P.
upfront license fees; per unit royalties; and support and update
fees, described as follows:
As an "upfront license fee," the Company is required to pay
Sun [Confidential information has been omitted and has been filed
separately with the SEC.] within thirty days of signing the
Agreement for the first CPU architecture chosen by the Company.
For each additional CPU architecture supported by Sun that may be
chosen by the Company, the Company will be required to pay an
additional "upfront license fee" of. [Confidential infor- mation
has been omitted and has been filed separately with the SEC.]
In addition, as "per unit royalties," for each of the first 5,000
products utilizing Java Technology to be sold by the Company, the
Company will be required to pay Sun a royalty of $66 per unit; for
each such product in excess of the first 5,000, the Company will
be required to pay Sun a royalty of $20 per unit.
In addition, as "support and update fees," the Agreement
requires the Company to pay Sun: (i) $50,000 per year for the
period during which the Company is paying "per unit royalties" of
$66; and (ii) $300,000 per year for the period when the Company is
paying Sun "per unit royalties" of $20.
The Agreement is capable of ending either by expiration or
termination. The Agreement is scheduled to expire at the end of
its stated initial term of five (5) years, after which the Company
may, at its option, elect to renew the Agreement for as many as
five successive terms of one (1) year each. If the Agreement ends
by expiration of any such term, then, after expiration, the Company
may continue to sell its products incorporating Java Technology as
such technology existed at the time of expiration, subject always
to the Company's continuing obligation to pay "per unit royalties."
Alternatively, if the Agreement ends by termination (as
distinguished from expiration), the Company would be required to
cease selling any products incorporating Java Technology
immediately, at which point the Company would very likely have no
practical alternative but to rewrite its products based upon
alternative technology. There can be no assurance that such
alternative technology would prove equally suitable for the
Company's products. It is possible for either party to terminate
the Agreement on grounds of the other party's breach, or upon
grounds stated in the Agreement. The Company also has the
contractual right, at its option, to elect to terminate the
Agreement for its convenience effective as early as the end of the
second year of the initial term.
EXHIBIT 10.03
INDEMNIFICATION AGREEMENT
-------------------------
AGREEMENT made as of this _____day of ___, 1997, Jyra
Research Inc. , a Delaware corporation (the "Company"), and
__________________ (the "Indemnitee").
WHEREAS, it is essential to the Company and its
stockholders to attract and retain qualified and capable directors
and officers;
WHEREAS, the Certificate of Incorporation of the Company
(the "Certificate of Incorporation") and the By-laws of the Company
(the "By-laws") allow the Company to indemnify and advance expenses
to its directors and officers;
WHEREAS, in recognition of Indemnitee's need for
protection against personal liability in order to induce Indemnitee
to serve the Company in an effective manner, and to supplement or
replace the Company's directors' and officers' liability insurance
coverage, and, in part, to provide Indemnitee with specific
contractual assurance that the protection provided by the
Certificate of Incorporation and the By-laws will be available to
Indemnitee (regardless of, among other things, any amendment to or
revocation of the Certificate of Incorporation and the By-laws),
the Company wishes to provide the Indemnitee with the benefits
contemplated by this Agreement; and
WHEREAS, as a result of the provision of such benefits
Indemnitee has agreed to continue to serve the Company as a
director and/or officer;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Definitions. The following terms, as used herein,
shall have the following respective meanings:
a. AFFILIATE: of a specified Person is a Person who
directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the
Person specified. The term ASSOCIATE used to indicate a
relationship with any Person shall mean (i) any corporation or
organization (other than the Company or a Subsidiary) of which such
Person is an officer or partner or is, directly or indirectly, the
Beneficial Owner of ten (10) percent or more of any class of Equity
Securities; (ii) any trust or other estate in which such Person has
a substantial beneficial interest or as to which such Person serves
as trustee or in a similar fiduciary capacity (other than an
Employee Plan Trustee), (iii) any Relative of such Person, or (iv)
any officer or director of any corporation controlling or
controlled by such Person.
b. BENEFICIAL OWNERSHIP: shall be determined, and a
Person shall be the BENEFICIAL OWNER of all securities which such
Person is deemed to own beneficially, pursuant to Rule 13d-3 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended (or any successor rule or statutory provision),
or, if such Rule 13d-3 shall be rescinded and there shall be no
successor rule or statutory provision thereto, pursuant to such
Rule 13d-3 as in effect on the date hereof; provided, however, that
a Person shall, in any event, also be deemed to be the
Beneficial Owner of any Voting Shares: (A) of which such Person or
any of its Affiliates or Associates is, directly or indirectly, the
Beneficial Owner; or (B) of which such Person or any of its
Affiliates or Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants
or options, or otherwise, and (ii) sole or shared voting or
investment power with respect thereto pursuant to any agreement,
arrangement, understanding, relationship or otherwise (but shall
not be deemed to be the Beneficial Owner of any Voting Shares
solely by reason of a revocable proxy granted for a particular
meeting of stockholders, pursuant to a public solicitation of
proxies for such meeting, with respect to shares of which neither
such Person nor any such Affiliate or Associate is otherwise deemed
the Beneficial Owner), or (C) of which another Person is, directly
or indirectly, the Beneficial Owner if such first mentioned Person
or any of its Affiliates or Associates acts with such other Person
as a partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital
stock of the Company; and provided further, however, that (i) no
director or officer of the Company, nor any Associate or Affiliate
of any such director or officer, shall, solely by reason of any or
all of such directors and officers acting in their capacities as
such, be deemed for any purpose hereof, to be the Beneficial Owner
of any Voting Shares of which any other such director or officer
(or any Associate or Affiliate thereof) is the Beneficial Owner and
(ii) no trustee of an employee stock ownership or similar plan of
the Company or any Subsidiary ("Employee Plan Trustee") or any
Associate or Affiliate of any such Trustee, shall, solely by reason
of being an Employee Plan Trustee or Associate or Affiliate of an
Employee Plan Trustee, be deemed for any purposes hereof to be the
Beneficial Owner of any Voting Shares held by or under any such
plan.
(c) A CHANGE IN CONTROL: shall be deemed to have
occurred if (A) any Person (other than (a) the Company or any
subsidiary or (b) any pension, profit sharing, employee stock
ownership or other employee benefit plan of the Company or any
subsidiary or any trustee of or fiduciary with respect to any such
plan when acting in such capacity, is or becomes, after the date of
this Agreement, the Beneficial Owners of 30% or more of the total
voting power of the Voting Shares, (B) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new
director whose election or appointment by the Board of Directors or
nomination or recommendation for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof, or (C) the stockholders of the
Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Shares of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Shares of the
surviving entity) at least 60% of the total voting power
represented by the Voting Shares of the Company or such surviving
entity outstanding, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company's assets.
(d) CLAIM: means any threatened, pending or completed
action, suit, arbitration or proceeding, or any inquiry or
investigation, whether brought by or in the right of the Company or
otherwise, that Indemnitee in good faith reasonably believes might
lead to the institution of any such action, suit, arbitration or
proceeding, whether civil, criminal, administrative, investigative
or other, or any appeal therefrom.
(e) EQUITY SECURITY: shall have the meaning given to
such term under Rule 3a11-1 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on the date
hereof.
(f) D&O INSURANCE: means any valid directors' and
officers' liability insurance policy maintained by the Company for
the benefit of the Indemnitee, if any.
(g) DETERMINATION: means a determination, and DETERMINED
means a matter which has been determined based on the facts known
at the time, by: (i) a majority vote of a quorum of disinterested
directors, or (ii) if such a quorum is not obtainable, or even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or, in the event
there has been a Change in Control, by the Special Independent
Counsel (in a written opinion) selected by Indemnitee as set forth
in Section 6, or (iii) a majority of the disinterested stockholders
of the Company, or (iv) a final adjudication by a court of
competent jurisdiction.
(h) EXCLUDED CLAIM: means any payment for Losses or
Expenses in connection with any Claim: (i) based or attributable
to Indemnitee gaining in fact any personal profit or advantage to
which Indemnitee is not entitled; or (ii) for the return by
Indemnitee of any remuneration paid to Indemnitee without the
previous approval of the Board or stockholders of the Company
which, but for such approval, would be illegal; or (iii) for an
accounting of profits in fact made from the purchase or sale by
Indemnitee of securities of the Company within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, or
similar provisions of any state law; or (iv) resulting from
Indemnitee's knowingly fraudulent, dishonest or willful misconduct;
or (v) the payment of which by the Company is not permitted by
applicable law.
(i) EXPENSES: means any reasonable expenses incurred
by Indemnitee as a result of a Claim or Claims made against
Indemnitee for an Indemnifiable Event including, without
limitation, reasonable attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(j) FINES: means any fine, penalty or, with respect to
an employee benefit plan, any excise tax or penalty assessed with
respect thereto.
(k) INDEMNIFIABLE EVENT: means any event or occurrence,
occurring prior to or after the date of this Agreement, related to
the fact that Indemnitee is, was or has agreed to serve as, a
director, officer, employee, trustee, agent or administrator or
fiduciary of any pension or benefit plan, including but not limited
to a 401(k) trustee, of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, and by
reason of anything done or not done by Indemnitee in any such
capacity, including, but not limited to, any breach of duty,
neglect, error, misstatement, misleading statement, omission, or
other act done or wrongfully attempted by Indemnitee, or any of the
foregoing alleged by any claimant.
(l) LOSSES: means any amounts or sums which Indemnitee
is legally obligated to pay as a result of a Claim or Claims made
against Indemnitee for Indemnifiable Events including, without
limitation, damages, judgments and sums or amounts paid in
settlement of a Claim or Claims, and Fines.
(m) PERSON: means any individual, partnership,
corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority
or other entity of whatever nature.
(n) POTENTIAL CHANGE IN CONTROL: shall be deemed to have
occurred if (A) the Company, enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control; or (B) the Board of Directors adopts a resolution to the
effect that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(o) RELATIVE: means a Person's spouse, parents,
children, siblings, mother-and father-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law.
(p) REVIEWING PARTY: means any appropriate person or
body consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Board
(including the Special Independent Counsel referred to in Section
6) who is not a party to the particular Claim for which Indemnitee
is seeking indemnification.
(q) SUBSIDIARY: means any corporation of which a
majority of any class of Equity Security is owned, directly or
indirectly, by the Company.
(r) TRUST: means the trust established pursuant to
Section 7 hereof.
(s) VOTING SHARES: means any issued and outstanding
shares of capital stock of the Company entitled to vote generally
in the election of directors.
2. Basic Indemnification Agreement. In consideration
of, and as an inducement to, the Indemnitee rendering valuable
services to the Company, the Company agrees that in the event
Indemnitee is or becomes a party to or witness or other participant
in, or is threatened to be made a party to or witness or other
participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company will indemnify Indemnitee to the
fullest extent authorized by law, against any and all Losses and
Expenses (including all interest, assessments and other charges
paid or payable in connection with or in respect of such Losses and
Expenses) of such Claim, whether or not such Claim proceeds to
judgment or is settled or otherwise is brought to a final
disposition, subject in each case, to the further provisions of
this Agreement.
3. Limitations on Indemnification. Notwithstanding
the provisions of Section 2, Indemnitee shall not be indemnified
and held harmless from any Losses or Expenses (a) which have been
Determined, as provided herein, to constitute an Excluded Claim;
(b) indemnifiable hereunder if and to the extent that Indemnitee
has actually received payment in connection with such Losses and
Expenses pursuant to the Certificate of Incorporation, By-laws, D&O
Insurance or otherwise; or (c) other than pursuant to the last
sentence of Section 4(d) or Section 14, in connection with any
claim or proceeding initiated by Indemnitee against the Company or
any director or officer of the Company, unless the Company has
joined in or the Board of Directors has authorized such claim or
proceeding.
4. Indemnification Procedures.
(a) Promptly after receipt by Indemnitee of notice of any
Claim, Indemnitee shall, if indemnification with respect thereto
may be sought from the Company under this Agreement, notify the
Company of the commencement thereof; provided, however, that the
failure to give such notice promptly shall not affect or limit the
Company's obligations with respect to the matters described in the
notice of such Claim, except to the extent that the Company is
prejudiced thereby. Indemnitee agrees, further, not to make any
admission or effect any settlement with respect to such Claim
without the consent of the Company, except any Claim with respect
to which the Indemnitee has undertaken the defense in accordance
with the third sentence of Section 4(d).
(b) If, at the time of the receipt of such notice, the
Company has D&O Insurance in effect, the Company shall give prompt
notice of the commencement of any Claim to the insurers in
accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such
Claim.
(c) The Company shall be obligated to pay the Expenses of
any Claim in advance of the final disposition thereof and the
Company, if appropriate, shall be entitled to assume the defense of
such Claim, with counsel reasonably satisfactory to Indemnitee,
upon the delivery to Indemnitee of reasonable written notice of
its election to do so. After delivery of such notice, the Company
will not be liable to Indemnitee under this Agreement for any legal
or other Expenses subsequently incurred by Indemnitee in connection
with such defense other than reasonable Expenses of investigation;
provided that Indemnitee shall have the right to employ its counsel
in such Claim but the fees and expenses of such counsel incurred
after delivery of notice from the Company of its assumption of such
defense shall be at the Indemnitee's expense; provided further that
if: (i) the employment of counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have
reasonably concluded that there will be a conflict of interest
between the Company and Indemnitee in the conduct of any such
defense, or (iii) the Company shall not, in fact, have employed
counsel to assume the defense of such action, the reasonable fees
and expenses of counsel shall be at the expense of the Company.
(d) All payments on account of the Company's
indemnification obligations under this Agreement shall be made
within sixty (60) days of Indemnitee's written request therefor
unless a Determination is made that the Claims giving rise to
Indemnitee's request are Excluded Claims or otherwise not payable
under this Agreement, provided that all payments on account of the
Company's obligation to pay Expenses under Section 4(c) of this
Agreement prior to the final disposition of any Claim shall be made
within 30 days of Indemnitee's written request therefor and such
obligation shall not be subject to any such Determination but shall
be subject to Section 4(e) of this Agreement. Notwithstanding the
foregoing, such sixty (60) day period may be extended for a
reasonable time, not to exceed an additional thirty (30) days, if
the Person or Persons making the Determination with respect to
entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation
and/or information relating thereto. In the event the Company takes
the position that Indemnitee is not entitled to indemnification in
connection with the proposed settlement of any Claim, Indemnitee
shall have the right at his own expense to undertake defense of any
such Claim, insofar as such proceeding involves a Claim against the
Indemnitee, by written notice given to the Company within 10 days
after the Company has notified Indemnitee in writing of its
contention that Indemnitee is not entitled to indemnification;
provided, however, that the failure to give such notice within such
10-day period shall not affect or limit the Company's obligations
with respect to any such Claim if such Claim is subsequently
determined not to be an Excluded Claim or otherwise to be payable
under this Agreement, except to the extent that the Company is
prejudiced thereby. If it is subsequently determined in connection
with such proceeding that the Indemnifiable Events are not Excluded
Claims and that Indemnitee, therefore, is entitled to be
indemnified under the provisions of Section 2 hereof, the Company
shall promptly indemnify Indemnitee and pay to Indemnitee on
account the amount of Expenses or Losses set forth in Indemnitee's
written request.
(e) Indemnitee hereby expressly undertakes and agrees to
reimburse the Company for all Losses and Expenses paid by the
Company in connection with any Claim against Indemnitee in the
event and only to the extent that a Determination shall have been
made by a court of competent jurisdiction in a decision from which
there is no further right to appeal that Indemnitee is not entitled
to be indemnified by the Company for such Losses and Expenses
because the Claim is an Excluded Claim or because Indemnitee is
otherwise not entitled to payment under this Agreement.
(f) In connection with any Determination as to whether
Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not
so entitled.
(g) Indemnitee hereby expressly undertakes and agrees to
(i) notify (and deliver to, as applicable) the Company in writing
of any and all information or documents relating to any Claim or
matter which may entitle Indemnitee to indemnification for Losses
or Expenses under this Agreement; and (ii) to notify the Company in
writing of any and all developments relating to any Claim to which
the Company has notified Indemnitee in writing pursuant to the
terms of Section 4(d) herein of its contention that Indemnitee is
not entitled to indemnification under this Agreement.
5. Settlement. The Company shall have no obligation to
indemnify Indemnitee under this Agreement for any amounts paid by
Indemnitee in settlement of any Claim effected without the
Company's prior written consent. The Company shall not settle any
Claim in which it takes the position that Indemnitee is not
entitled to indemnification in connection with such settlement
without the prior written consent of Indemnitee, nor shall the
Company settle any Claim in any manner which would impose any Fine
or any obligation on Indemnitee, without Indemnitee's written
consent. Neither the Company nor Indemnitee shall unreasonably
withhold its or his consent to any proposed settlement.
6. Change in Control; Extraordinary Transactions. The
Company and Indemnitee agree that if there is a Change in Control
of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control), then all
Determinations thereafter with respect to the rights of Indemnitee
to be paid Losses and Expenses under this Agreement shall be made
only by a special independent counsel (the "Special Independent
Counsel") selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld) or by a court of
competent jurisdiction. The Company shall pay the reasonable fees
of such Special Independent Counsel and shall indemnify such
Special Independent Counsel against any and all reasonable expenses
(including reasonable attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
The Company covenants and agrees that, in the event of a
Change in Control of the type described in clause (C) of Section
1(c), the Company will use its best efforts (a) to have the
obligations of the Company under this Agreement including, but not
limited to, those under Section 7, expressly assumed by the
surviving, purchasing or succeeding entity, or (b) otherwise
adequately to provide for the satisfaction of the Company's
obligations under this Agreement, in a manner reasonably acceptable
to the Indemnitee.
7. Establishment of Trust. In the event of a Potential
Change in Control, the Company shall, upon written request by
Indemnitee, create a trust (the "Trust") for the benefit of
Indemnitee and from time to time upon written request of Indemnitee
shall fund the Trust in an amount sufficient to satisfy any and all
Losses and Expenses which are actually paid or which Indemnitee
reasonably determines from time to time may be payable by the
Company under this Agreement. The amount or amounts to be
deposited in the Trust pursuant to the foregoing funding obligation
shall be determined by the Special Independent Counsel, in any case
in which the Special Independent Counsel is involved. The terms of
the Trust shall provide that upon a Change in Control: (i) the
Trust shall not be revoked or the principal thereof invaded without
the written consent of Indemnitee; (ii) the trustee of the Trust
shall advance, within 20 days of a request by Indemnitee, any and
all Expenses to Indemnitee (and Indemnitee hereby agrees to
reimburse the Trust under the circumstances under which Indemnitee
would be required to reimburse the Company under Section 4(e) of
this Agreement); (iii) the Company shall continue to fund the Trust
from time to time in accordance with the funding obligations set
forth herein; (iv) the trustee of the Trust shall promptly pay to
Indemnitee all Losses and Expenses for which Indemnitee shall be
entitled to indemnification pursuant to this Agreement; and (v) all
unexpended funds in the Trust shall revert to the Company upon a
final determination by a court of competent jurisdiction in a final
decision from which there is no further right of appeal that
Indemnitee has been fully indemnified under the terms of this
Agreement. The trustee of the Trust shall be chosen by Indemnitee
and shall be approved by the Company, which approval shall not be
unreasonably withheld.
8. No Presumption. For purposes of this Agreement, the
termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of
nolo contendere, or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
9. Non-exclusivity, Etc. The rights of Indemnitee
hereunder shall be in addition to any other rights Indemnitee may
have under the Certificate of Incorporation, the By-laws, the
Delaware General Corporation Law, any vote of stockholders or
disinterested directors or otherwise, both as to action in
Indemnitee's official capacity and as to action in any other
capacity by holding such office, and shall continue after
Indemnitee ceases to serve the Company as a director or an officer
for so long as Indemnitee shall be subject to any Claim by reason
of (or arising in part out of) an Indemnifiable Event. To the
extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the Certificate of Incorporation, the By-laws and this Agreement,
it is the intent of the parties hereto that Indemnitee shall enjoy
by this Agreement the greater benefits so afforded by such change.
Nothing contained herein shall, or be construed to, limit or
diminish the indemnification of Indemnitee, as provided by the laws
of the State of Delaware, the Company's Certificate of
Incorporation and/or By-laws, to the maximum extent provided
therein.
10. Liability Insurance. To the extent the Company
currently or in the future maintains an insurance policy or
policies providing directors' and officers' liability insurance,
Indemnitee shall be and continue to be covered by such policy or
policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any director of the Company.
11. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit
to enforce such rights.
12. Partial Indemnity, Etc. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of the Losses and Expenses of a Claim
but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all
Claims relating in whole or in part to any Indemnifiable Event or
in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
13. Liability of Company. Indemnitee agrees that
neither the stockholders nor the directors nor any officer,
employee, representative or agent of the Company shall be
personally liable for the satisfaction of the Company's obligations
under this Agreement and Indemnitee shall look solely to the assets
of the Company for satisfaction of any claims hereunder.
14. Enforcement. (a) Indemnitee's right to
indemnification and other rights under this Agreement shall be
specifically enforceable by Indemnitee only in the state or Federal
courts of the State of Delaware and Great Britain shall be
enforceable notwithstanding any adverse Determination by the
Company's Board of Directors, independent legal counsel, the
Special Independent Counsel or the Company's stockholders and no
such Determination shall create a presumption that Indemnitee is
not entitled to be indemnified hereunder. In any such action the
Company shall have the burden of proving that indemnification is
not required under this Agreement.
(b) In the event that any action is instituted by
Indemnitee under this Agreement, or to enforce or interpret any of
the terms of this Agreement, Indemnitee shall be entitled to be
paid all court costs and reasonable expenses, including reasonable
counsel fees, incurred by Indemnitee with respect to such action,
unless the court determines that each of the material assertions
made by Indemnitee as a basis for such action was not made in good
faith or was frivolous.
15. Severability. In the event that any provision of
this Agreement is determined by a court to require the Company to
do or to fail to do an act which is in violation of applicable law,
such provision (including any provision within a single section,
paragraph or sentence) shall be limited or modified in its
application to the minimum extent necessary to avoid a violation of
law, and, as so limited or modified, such provision and the balance
of this Agreement shall be enforceable in accordance with their
terms to the fullest extent permitted by law.
16. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed entirely within
such State.
17. Consent to Jurisdiction. The Company and Indemnitee
each hereby irrevocably consents to the jurisdiction of the courts
of the State of Delaware and Great Britain for all purposes in
connection with any action or proceeding which arises out of or
relates to this Agreement and agrees that any action instituted
under this Agreement shall be brought only in the state and Federal
courts of the State of Delaware and Great Britain.
18. Notices. All notices or other communications
required or permitted hereunder shall be sufficiently given for all
purposes if in writing and personally delivered or sent by
registered or certified mail, return receipt requested, with
postage prepaid addressed as follows, or to such other address as
the parties shall have give notice of pursuant hereto:
(a) If to the Company, to:
Jyra Research Inc.
41 Thurloe Square
London SW7 2Rs
England
With a copy to:
James Berns, Esq.
Berns & Berns
One Rockefeller Plaza
New York, New York 10020
(b) If to Indemnitee, to:
____________________________________
____________________________________
____________________________________
____________________________________
19. Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original and all of which,
when taken together, shall constitute one and the same instrument.
20. Successors and Assigns. This Agreement shall be (i)
binding upon all successors and assigns of the Company, including
any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business and/or
assets of the Company, and (ii) binding upon and inure to the
benefit of the Indemnitee and any successors and assigns, heirs,
and personal or legal representatives of Indemnitee.
21. Amendment; Waiver. No amendment, modification,
termination or cancellation of this Agreement shall be effective
unless made in a writing signed by each of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing
waiver.
IN WITNESS WHEREOF, the Company and Indemnitee have
executed this Agreement as of the day and year first above written.
______________________________
Name:
JYRA RESEARCH INC.
By:___________________________
Name:
Title:
ATTEST:
By:___________________________
Name:
Title:
Subsidiaries of the Registrant.
The only subsidiary of the Registrant is Jyra Research Ltd., a
corporation organized under the laws of the United Kingdom.
CONSENT AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this Registration Statement of our
report dated March 10, 1997, relating to the financial statements
of Jyra Research Inc., and Subsidiary and to the reference to our
firm under the caption "Experts" in the Prospectus.
Faw, Casson & Co. LLP
Dover, Delaware March 29, 1997
