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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
VISCORP
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Nevada 88-0101953
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
111 North Canal Street, Suite 933 60606
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Chicago, Illinois (Zip Code)
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(Address of principal executive offices)
Issuer's telephone number, (312) 655-0903
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which each
to be so registered class is to be registered
None None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.01 par value
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(Title of class)
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(Title of class)
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AN INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER THE RISK FACTORS INVOLVED IN AN
INVESTMENT IN THE COMPANY, INCLUDING THE FOLLOWING: (A) THAT THE COMPANY IS A
DEVELOPMENT STAGE COMPANY THAT HAS GENERATED NO CASH REVENUES SINCE ITS
INCEPTION, (B) THE COMPANY'S HISTORY OF LOSSES, (C) DOUBT AS TO WHETHER THE
COMPANY CAN CONTINUE AS A GOING CONCERN, (D) INTENSE COMPETITION IN THE INDUSTRY
IN WHICH THE COMPANY OPERATES, (E) VOLATILITY OF THE COMPANY'S STOCK PRICE AND
(F) THE UNCERTAINTY OF FUTURE FUNDING. PROSPECTIVE INVESTORS SHOULD CAREFULLY
READ EACH SECTION OF THIS REGISTRATION STATEMENT WHICH CONTAIN THESE AND OTHER
RISK FACTORS.
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ITEM 1. BUSINESS.
GENERAL
Visual Information Service Corp. ("VISC") was incorporated in Illinois in
May, 1990 and was founded to develop an electronic device capable of adding
modem, video data and telephone features to an ordinary television receiver over
a telephone line. On November 28, 1995, VISC merged into Global Telephone and
Communications, Inc. (GTCI), and pursuant to the merger each share of common
stock of VISC was exchanged for four shares of common stock of GTCI. Following
the merger, GTCI changed its name to Viscorp. As used herein, the Company
refers to Viscorp and its subsidiary VISC.
The Company continues to be in the development phase of operation. The
Company has developed two products -- the Universal Internet Television
Interface ("UITI") and the Electronic Device ("ED"). The Company is also
engaged in certain initial marketing efforts with respect to UITI and ED. Since
1990, the Company has generated losses as a result of significant expenditures
on research and development and substantial overhead expenses.
The Company has generated losses since its inception in May 1990 and cannot
currently generate sufficient revenues and cash flow from operations to meet its
business obligations. In prior years, the Company was able to raise capital by
issuing its Common Stock in private placements. The Company's future operations
are predicated on raising additional capital in debt or equity markets. Any
implementation of the commercialization of the UITI and ED is dependent on
obtaining additional financing that is necessary to achieve a level of sales
adequate to support the Company's operations.
PRODUCTS
The UITI is a set top device which is designed to give the home television
viewer access to the Internet, World Wide Web and other on-line services. The
ED is an enhanced set top device which, in addition to on-line services, will
feature capabilities such as telephone reception and dial-up, facsimile, pay-
per-view options and electronic mail. The UITI and ED are designed to be placed
next to or on top of a standard television set and connect directly to a
telephone jack either through a conventional telephone wire or through wireless
radio frequency connectivity. Through the use of specifically configured fonts,
the television set presents text
(2)
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and graphics that can be viewed at normal viewing distances. The UITI and ED
are equipped with a modem, video and audio circuitry, and a controller.
Extensive functions may also be controlled with an enhanced remote control.
In April, 1996, the Company entered into an agreement with Solectron France
S.A., a US-based manufacturing company listed on the New York Stock Exchange
("Solectron"), pursuant to which Solectron will produce the first 30 prototypes
of UITI at Solectron's facilities in France.
The Company conducted a field test of a preliminary prototype of the ED
with Booth Communications, a cable television system operator based in
Birmingham, Michigan. The ED was placed in the homes of approximately twenty
cable subscribers and connected to the existing cable set-top box to provide
access to the Internet, CompuServe and other services, including facsimile, TV-
based speaker phone, caller ID and pay-per-view ordering. Signa: Research
Management Group, an independent market-research firm, conducted a series of
quantitative and qualitative studies (including focus groups) of the
participating cable subscribers. The trial lasted approximately six months and
was concluded in March, 1996. The study concluded that some functions provided
by the ED may require some redesign, changes to the feature array and expansion
of capability. Technical and market-research results from this trial has been
incorporated into the Company's revised prototype design of the UITI.
Although the field test demonstrated the functionality of the Company's
products, there is no assurance that the Company will be able to successfully
manufacture or market the UITI and the ED.
PATENTS
The Company owns several patents covering the features of the UITI and the
ED, which expire commencing on March 7, 2012, assuming all maintenance fees are
paid. The Company relies on patents to protect its proprietary rights. The
Company's success will depend in part on its ability to obtain patent protection
for its products and to operate without infringing on the patent or other
proprietary rights of others. There can be no assurance that patent
applications filed by the Company will result in the issuance of patents or the
scope and breadth of those previously granted to the Company or that any patents
now or hereafter owned by the Company will afford protection against competitors
which develop similar technology or provide products with competitive advantages
to those designed by the Company. In addition, there can be no assurance that
any patents issued to the Company will be held valid if subsequently challenged
or that others will not claim rights in the patents and other proprietary
technology without violating any of the Company's proprietary rights. There can
be no assurance that others will not independently develop similar products,
duplicate the Company's products or design products that circumvent any patents
used by the Company. Moreover, in the absence of patent protection, the
Company's business may be adversely affected by competitors who independently
develop substantially equivalent or superior technology.
(3)
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LICENSES
In December 1995, the Company entered into an agreement with Amiga
Technologies GmbH, a German company ("Amiga"), for a nonexclusive,
nontransferable license to the Amiga computer operating system technology. The
initial term of the agreement expires December 26, 1998. Unless terminated, in
accordance with the terms of the agreement, the agreement is renewable for
subsequent three-year periods at the licensee's option. In January 1996, the
Company paid an initial royalty deposit of $450,000 to Amiga. The Company is
required to pay usage royalties as defined in the agreement. The Company
intends to use the Amiga operating system and chip sets in producing the UITI
and ED and also intends to license the Amiga technology to others. The Company
believes the Amiga operating system will enhance the operational capacity of the
UITI and ED. The Company has produced a prototype of the base board utilizing
the Amiga operating system and chip sets which boards will be used to produce
the UTI and the ED which is currently in the process of being tested.
In December 1994, the Company entered into a license agreement with NTN
Communications, Inc. ("NTN"). The initial term of the agreement expires
December 31, 2001. Unless terminated, in accordance with the terms of the
agreement, the agreement will be extended for a period of seven years. The
Company has a nonexclusive worldwide license to promote, market and develop an
on-line computer service, which will be provided by NTN, for use with the
Company's product. The technology of this service provides two-way interactive
computerized games that are broadcast to multiple locations, can be played by
multiple participants at each location and enables the retrieval and processing
of data entered by the participants. The Company is required to pay usage
royalties as defined in the agreement. The Company agreed to pay NTN $250,000
upon signing the agreement. To date, the Company has paid $200,000 of this
amount, with $50,000 due to NTN on August 31, 1996. The use of this license has
not yet generated any revenues for the Company.
In January 1995, the Company entered into a license agreement with Digital
Sciences, Inc. ("Digital") to license the ED technology and services. The
agreement with Digital ("Digital Agreement") grants to Digital an exclusive
license to use the ED technology and services solely in the health care industry
in the United States and Canada for a period of ten years. The Company received
on February 27, 1995 an initial license fee payable in the form of 250,000
shares of Digital Sciences, Inc. valued at $629,688, which amount reflected a
discount from the trading price of the stock because the shares were restricted.
In addition, Digital is obligated to pay a license fee based on a percentage of
gross revenues derived from the use of the ED technology and services. The
Company did not receive any license fees from Digital in 1995, other than the
initial license fee, and there is no assurance that the Digital agreement will
generate license fees in the future.
OTHER MATERIAL AGREEMENTS
On July 18, 1996, the Company entered into an agreement ("Amiga Agreement")
to acquire all of the assets of Amiga. The Company is acquiring these assets
from the bankruptcy estate of Escom Beteiligungs GmbH (a former manufacturer and
distributor of IBM compatible computers throughout Europe). The purchase price
for all of the assets of Amiga is $20.0 million less certain administrative
costs associated with releasing the inventory to the Company,
(4)
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estimated to be approximately $1.3 million. The purchase price is payable in
three installments, with the first installment occurring 30 days after the
Company posts a bank guarantee for such payment, which guarantee must be secured
within 30 days of the date of the Amiga Agreement. The first payment of $10.0
million is due approximately 60 days from the date of the Amiga Agreement, with
additional payments of $5.0 million and $3.7 million to occur 60 and 90 days,
respectively, after posting such bank guarantee.
Amiga will be acquired by a newly formed Delaware corporation ("Acquisition
Corp.") which was formed expressly for the contemplated transaction. The
Company intends to establish an operating entity in Switzerland, which will
enter into a series of sales representation agreements with sales organizations
located throughout the European community.
Prior to the Company posting the bank guarantee for the purchase price,
Amiga is obligated to continue its ongoing operations, including the sale of
existing inventories. Any funds received by Amiga from sales between July 15,
1996 and date the Company posts the bank guarantee will be deposited in a bank
account which will be transferred to the Company as part of the purchase of the
Amiga assets. As of July 30, 1996, such sales totaled $743,202. Although the
Company is currently seeking the financing necessary to consummate this deal,
the Company has not obtained any commitments from lenders. There is no
assurance the Company will be able to obtain the necessary financing to
consummate this transaction with Amiga.
COMPETITION
The Company faces intense competition within the interactive television
("ITV") industry, an industry in the midst of a period of significant volatility
due the convergence of computing, telephony and television. Currently, there
are many companies developing, in various stages, systems similar to the
Company's products. Products or procedures may become commercially available
that are competitive with the Company's products. Most of the Company's
competitors have substantially longer operating histories and substantially
greater financial and managerial experience and resources. However, the Company
does not believe that any of these companies are currently developing products
with the same set of performance capabilities the Company expects to develop
with its products.
Competitors for the Company include the following: (i) television
manufacturers such as Sony Electronics Corp. and Philips Consumer Electronics
Co. -- often working in conjunction with computer companies -- that plan to
introduce Internet-access set-top devices and/or "smart" interactive TV sets;
(ii) computer companies such as Oracle Corp., IBM Corp., Sun Microsystems Inc.,
Netscape Communications Corp. and Apple Computer Inc. who have announced plans
develop "network computers", which are stripped-down devices to be used in place
of an expensive hard drive on the home personal computer to provide access to
the Internet and e-mail; (iii) video game companies such as Sega Genesis, Sony
Electronics Corp., and Philips Consumer Electronics Co. that plan to enhance
their game machines with Internet access and on-line capabilities; (iv) cable
television set-top device manufacturers such as General Instrument and
Scientific Atlanta that are enhancing the overall performance capabilities of
their current analog and newer all-digital converter boxes; and (v) independent
companies like the Company.
(5)
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EMPLOYEES
In addition to its officers, the Company has eight employees in its office
in Chicago. The Company also routinely utilizes the services of consultants.
(6)
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ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the financial statements, related notes and other information included elsewhere
in this Registration Statement. The statement of operations data set forth
below for each of the years ended December 31, 1991, 1992, 1993, 1994 and 1995
are derived from financial statements of the Company that have been audited by
Blackman Kallick Bartelstein, LLP, independent auditors. The selected financial
data for the three months ended March 31, 1995 and 1996 are unaudited and
include, in the opinion of the Company, all adjustments, consisting of only
normal recurring accruals, that the Company considers necessary for a fair
presentation of its results for such periods.
<TABLE>
<CAPTION>
Three Months Ended March
Years Ended December 31, 31,
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1991 1992 1993 1994 1995 1995 1996
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<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Income 0 0 0 0 (629,688)(1) (629,688)(1) 0
Operating Expenses . . . . . .
Research and development . . 75,592 199,924 622,428 701,460 1,134,262 215,076 249,238
Travel and entertainment . . 11,633 53,233 122,840 194,162 620,012 134,213 105,075
Legal fees . . . . . . . . . 34,553 66,078 150,133 28,508 552,109 144,606 85,893
Consulting . . . . . . . . . 6,678 39,711 17,789 73,786 353,915 165,500 91,000
Other general and
administrative including
salaries . . . . . . . . . 117,357 239,085 335,170 316,448 562,191 132,104 212,982
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Total Operating
Expenses . . . . . . . . . 245,813 598,031 1,248,360 1,314,364 3,222,489 791,499 744,188
Operating Losses . . . . . . . 245,813 598,031 1,248,360 1,314,364 2,592,801 161,811 744,188
Other expense (income)
Interest expense - other
(stockholder debt) . . . . . 32,380 67,552 109,429 2,910 0 3,498
Interest expense - other . . 0 0 0 0 1,103 0 0
Interest income. . . . . . . 0 0 0 (4,095) (8,761) (1,685) (1,638)
Loss on disposal of
equipment. . . . . . . . . . 0 0 2,817 757 0 0 0
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Net loss . . . . . . . . . 278,193 665,583 1,360,606 1,311,026 2,588,053 160,126 746,048
Average shares outstanding . . 1,000 1,000 7,104,092 11,775,976 17,190,915 3,698,958 21,628,000
Loss per share . . . . . . . 278 666 .19 .11 .15 .04 .03
BALANCE SHEET DATA
Total assets . . . . . . . . . 46,246 29,492 16,982 664,328 1,258,853 6,948 693,445
Total liabilities. . . . . . . 424,807 1,073,636 1,622,532 170,576 552,217 418,071 658,573
Shareholders equity (deficit). (378,561) (1,044,144) (1,605,550) 493,752 706,636 11,687 519,963
</TABLE>
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(1) Represents the estimated market value of the 250,000 shares of Digital
received by the Company as the initial license fee under the Digital
License Agreement. See "Item 1. - Business - Licenses".
(7)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The information in this section should be read together with the
consolidated financial statements and notes thereto that are included elsewhere
in this Registration Statement.
The Company has incurred net losses in its last three fiscal years.
Moreover, there can be no assurance that the ED or the UITI will ever generate
significant revenues, will generate any revenues or that they will do so in the
time periods estimated by the Company. There can be no assurance that any of
the Company's products will be introduced or marketed successfully, or that the
Company will ever achieve a profitable level of operations or, if profitability
is achieved, that it can be sustained.
The Company's auditors have included an explanatory paragraph in their
report with respect to the Company's financial statements included herein which
states that the Company cannot currently generate sufficient revenues and cash
flow from operations to meet its business obligations and, therefore, future
operations are predicated on raising additional capital in debt or equity
markets.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
The Company had no license income in the first quarter of fiscal 1996
compared to $629,688 in the first quarter of fiscal 1995. The $629,688
represented the value of the 250,000 shares of Digital stock received by the
Company as an initial license fee pursuant to the Digital Agreement in 1995.
Research and Development Expenses increased to $249,238 for the first
quarter of 1996 from $215,076 for the first quarter of fiscal 1995 an increase
of $34,162. This increase was due to the increased activity relating to the
production of a prototype of the ED.
Travel and entertainment expenses decreased to $105,075 for the first
quarter of fiscal 1996 from $134,213 for the first quarter of fiscal 1995 a
decrease of $29,138. The decrease was due to the reduction in travel by one of
the Company's executive officers in connection with work relating to the
Company's patents.
Legal fees decreased to $85,893 for the first quarter of fiscal 1996 from
$144,606 for the first quarter of fiscal 1995, a decrease of $58,713. This
decrease was due to reduced activity relating to the Bushnell litigation and
reduced capital raising activities by the Company.
Other general and administrative expenses increased to $212,982 for the
first quarter of 1996 from $132,104 for the first quarter of 1995, an increase
of $80,878. This increase was due to the preparation and production of
marketing and advertising materials and to the relocation of the Company into
larger office facilities.
(8)
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1995 COMPARED TO 1994.
License income for 1995 was $629,688 which represented the value of 250,000
shares of Digital stock issued to the Company in payment of an initial license
fee pursuant to the Digital Agreement. The value of the stock of Digital
received by the Company reflected a discount from the trading price because the
stock was restricted.
Research and Development Expenses increased to $1,134,262 for fiscal 1995
from $701,460 for fiscal 1994, an increase of $432,802. This increase was due
to: (i) costs related to the field test of the ED with Booth Communications;
(ii) additional costs related to the continuing development of the printed
circuit layout for the base board, including fees for engineers and consultants;
and (iii) costs of producing design and mechanical drawings for manufacturers of
the prototypes of the UITI and the ED.
Travel and Entertainment Expenses increased to $620,012 for fiscal 1995
from $194,162 for fiscal 1994, an increase of $425,850. Because the Company was
successful in developing a prototype of the UITI and the ED during 1995, the
Company significantly increased its marketing efforts to develop relationships
with companies to manufacture and distribute the Company's products and to raise
additional equity financing.
Legal fees increased to $552,109 for fiscal 1995 from $28,908 for fiscal
1994, an increase of $523,201. This increase was due to: (i) legal fees
related to a lawsuit filed against the Company in December 1994 by a former
director and officer of the Company; (ii) legal fees related to the merger of
VISC and GTCI; and (iii) legal fees related to the negotiation and
documentation of the license agreements with Amiga and Digital.
Consulting fees for consultants other than engineers increased to $353,915
for fiscal 1995 from $73,786 for fiscal 1994, an increase of $280,129. This
increase was due primarily to the consulting fees associated with the
formulation of the Company's business plan in 1995.
Other general and administrative expenses increased to $562,191 for fiscal
1995 from $316,448 for fiscal 1994, an increase of $245,743. This increase was
primarily due to the increased salaries resulting from the hiring of additional
personnel, directors fees paid to the Chairman and printing costs associated
with the preparation of the Company's business plan.
1994 COMPARED TO 1993.
Research and Development Expenses increased to $701,460 for fiscal 1994
from $622,428 for fiscal 1993, an increase of $79,032. This increase was due to
a general increase in activity of the Company in the continuing developing of
its products.
Travel and Entertainment Expenses increased to $194,162 for fiscal 1994
from $122,840 for fiscal 1993, an increase of $71,322. The increase reflects
increased marketing efforts to develop relationships with companies to
manufacture and distribute the Company's products.
(9)
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Legal fees decreased to $28,908 for fiscal 1994 from $150,133 for fiscal
1993, a decrease of $121,225. This decrease was primarily due to
capitalizing legal expenses in connection with the Company's patents.
Consulting fees for consultants (other than engineers) increased to $73,786
for fiscal 1994 from $17,789 for fiscal 1993, an increase of $55,997. This
increase was due to the increase in the number of consultants retained in 1994.
The Company had no interest expense for fiscal 1994 compared to $109,429 in
fiscal 1993. Such amount represented interest accrued on a loan by Jerome
Greenberg to the Company, which loan was exchanged for common stock in November,
1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company has generated losses since its inception in May 1990 and cannot
currently generate sufficient revenues and cash flow from operations to meet its
business obligations. In prior years, the Company was able to fund its
operations through the issuance of its Common Stock in transactions exempt under
the Securities Act of 1933, and through stockholder loans. Any implementation
of the commercialization of the UITI and ED is dependent on obtaining additional
financing that is necessary to achieve a level of sales adequate to support the
Company's operations. The Company cannot currently generate sufficient revenues
and cash flow from operations to meet its business obligations and, therefore,
future operations are predicated on raising additional capital in debt or equity
markets
ITEM 3. PROPERTIES.
The Company currently leases its 3,100 square foot office facility pursuant
to a lease that expires on February 28, 1997. The annual base rent for this
facility is approximately $44,000. The Company believes that its facilities are
in good condition and adequate for its current operations.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 31, 1996 by (a) each director and
executive officer of the Company, (b) each person known by the Company to own
beneficially five percent or more of the Common Stock and (c) all current
executive officers and directors as a group.
DIRECTORS, OFFICERS NUMBER OF SHARES PERCENT OF
AND FIVE PERCENT BENEFICIALLY COMMON STOCK
STOCKHOLDERS OWNED OUTSTANDING
Jerome Greenberg 6,658,000(1) 29
William H. Buck 2,384,000(2) 10.4
(10)
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Roger Remillard 1,744,000(3) 7.6
Donald Gilbreath 1,230,400(4) 5.4
Robert E. Reid 40,000 *
Mitchell J. Melamed 40,000(5) *
David Rosen -- --
Robert Wussler -- --
All directors and officers 12,096,400 52.7
as a group (eight persons)
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* Less than one percent.
(1) Includes 100,000 shares which may be acquired pursuant to the exercise of
vested stock options
(2) Includes 384,000 shares which may be acquired pursuant to the exercise of
vested stock options
(3) Includes 488,000 shares which may be acquired pursuant to the exercise of
vested stock options
(4) Inclues 230,400 shares which may be acquired pursuant to the exercise of
vested stock options.
(5) Includes 40,000 shares which may be acquired pursuant to the exercise of
vested stock options
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each of
the directors and executive officers of the Company:
NAME AGE POSITION
---- --- --------
Jerome Greenberg 70 Chairman of the Board of Directors,
Treasurer and Director
William H. Buck 37 President and a Director
Roger Remillard 47 Vice President - Technology and a Director
Donald Gilbreath 38 Vice President - Engineering
David Rosen 56 Vice President - Marketing
Mitchell J. Melamed 52 Secretary
Robert J. Wussler 59 Director
Robert E. Reid 77 Director
Thomas Glenndahl 50 Director
JEROME GREENBERG. Mr. Greenberg is a co-founder and major shareholder of
the Company and has been the Chairman and Treasurer from its inception in
May, 1990.
(11)
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From 1982 and 1989 he was the principal shareholder and President of Leader
Communications Inc. ("Leader"), a Chicago-based cellular phone and two-way radio
company. In 1989, Mr. Greenberg sold Leader to Fleet Call, Inc., which
subsequently changed its name to NextTel. Mr. Greenberg is also the President
of Hampden Green Management Corporation, a private real estate management and
development company, which is not an active entity at this time.
WILLIAM E. BUCK. Mr. Buck has been the President of the Company since
November 1994. Prior to joining the Company in November 1994, from July 1994
to October 1994 he worked on and completed a consulting assignment for
Command Performance Network, Inc. which involved the creation of a joint
venture with NTN Communications, Inc. to form an international gaming
network. From September 1993 to June 1994, Mr. Buck was the Vice
President-Business Development for ICTV Inc. ("ICTV"). In this position he
was responsible for developing strategic alliances with application
providers, multiple system cable operators and regional bell operating
companies. Prior to joining ICTV, he worked as an independent consultant for
a number of companies with interests in the interactive television industry.
From 1991 to 1992, he served as Vice President - Strategic Development for IT
Network, Inc., the successor to Cableshare, Inc.("Cableshare") and in 1990
was President of Cableshare (U.S.) Limited, a subsidiary of Cableshare. Mr.
Buck is a graduate of the U.S. Military Academy at West Point and currently
holds the rank of Major in the Michigan National Guard.
ROGER REMILLARD. Mr. Remillard is a co-founder of the Company and has
served as a director and Vice President - Technology since the Company's
inception. Mr. Remillard is the inventor of the ED and has filed several
patents relating to interactive television technology. Prior to 1990, Mr.
Remillard served as a consultant in the communications industry, specializing in
the field of two-way, rapid cellular telephony and data-radio communications.
DONALD GILBREATH. Mr. Gilbreath has served as Vice President - Engineering
since he joined the Company in November 1994. Prior to November 1994, he worked
for the Company as a consultant and was instrumental in designing, and producing
the initial prototypes of, the ED. He formed Gilbreath Systems Inc. ("Gilbreath
Systems") a general engineering consulting company in 1992. From 1980 to 1991,
Mr. Gilbreath worked for Commodore International Ltd., a computer manufacturer
which filed for bankruptcy in April 1994, where he served in various capacities,
including Director of Product and Market Development (1987 to 1991), Director of
Research and Development (1985 to 1987) and Manager, Consumer Products Research
and Development (1985 to 1987). Under his direction, Commodore developed the
first consumer-priced multimedia compact disc player.
DAVID ROSEN. Mr. Rosen became the Vice President - Marketing when he
joined the Company in April, 1996. Prior to such date, he was a consultant to
the Company. In 1992, he formed his own consulting company called Praxis. Many
of his clients are in the communications and media area. There may be conflicts
of interest between Mr. Rosen's position with the Company and the activities
related to his consulting company. From 1990 to 1992, he was director of
international marketing of Commodore International.
MITCHELL J. MELAMED. Mr. Melamed has served as Secretary of the Company
since May 1990. Mitchell Melamed is a practicing attorney and is presently a
partner in the law firm of
(12)
<PAGE>
Frank, Miller, Melamed & Tabis, P.C., in Chicago, Illinois. He has been with
this firm and its predecessors since 1975.
ROBERT J. WUSSLER. Mr. Wussler was elected to the Board of Directors on
May, 1996. From 1992 to the present he has been the President and Chief
Executive Officer of the Wussler Group, located in Potomac, Maryland, advising
companies in TV, cable, interactive and other related activities. From 1989 to
1992, he was the President and CEO of COMSAT Video Enterprises which was in the
business of satellite delivery of entertainment to the U.S. lodging industry.
ROBERT E. REID. Mr. Reid was appointed to the Board of Directors in May,
1996. Mr. Reid has been the President of Engis Corporation ("Engis") based in
Wheeling, Illinois, since 1972. Engis is in the business of utilizing
industrial diamonds in machinery.
THOMAS GLENNDAHL. Mr. Glenndahl was elected to the Board of Directors on
August 5, 1996. He is the founder and, since 1982 has been the Chief
Executive Officer of the Aspect Group, an international education group with
offices in 26 countries.
BOARD OF DIRECTORS
All directors are elected to one-year terms by the Company's shareholders
and serve until their successors are duly elected and qualified. There has been
no election held by the Company for the past three years, but the Company
expects a meeting to be held in 1996. Executive officers of the Company are
appointed by the Board of Directors and serve at its discretion.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth certain information with respect to
compensation for fiscal years 1993, 1994 and 1995 paid to the Company's Chief
Executive Officer. No other executive officers of the Company received
compensation in excess of $100,000 during such periods.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME YEAR SALARY ($) BONUS ($) OPTIONS COMPENSATION($)
- - ------------------------------- ------ ------------ ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William H. Buck
Chief Executive Officer
and Director . . . . . . . .
1995 60,000 -- -- --
1994 5,000 -- 384,000 --
1993 -- -- -- --
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
OPTION TERM(2)
(13)
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- - -------------------------- ---------- ---------- ----------- ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Buck . . . . .
Chief Executive Officer 384,000 0 .625 11/11/99 66,307 382,080
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END($)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C>
William H. Buck . . . . . . . . . . . . . . . . . . . 384,000/0 /0
Chief Executive Officer
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of William
H. Buck, Roger Remillard, Jerome Greenberg and Donald Gilbreath. Each of the
employment agreements provides for an initial term expiring in November,
1997, which are automatically renewed for one-year periods unless notice of
non-renewal is given at least 120 days prior to the end of the expiration
term. Mr. Buck's employment agreement provides for an annual base salary of
$60,000 (subject to annual increase based upon the Consumer Price Index)
("CPI") and granted options to purchase 384,000 of Common Stock, at an
exercise price of $.625 per share. Mr. Remillard's employment agreement
provides for an annual base salary of $60,000 (subject to annual increase
based upon the CPI) and granted options to purchase 288,000 at an exercise
price of .625 per share. Mr. Greenberg's employment agreement provides for
an annual base salary of $37,500 (subject to annual increase based upon the
CPI) and granted options to purchase 100,000 shares of Common Stock at an
exercise price of $.625 per share. Mr. Gilbreath's employment agreement
provides for an annual salary of $48,000 (subject to annual increase based
upon the CPI) and granted options to purchase 230,400 shares of Common Stock
at an exercise price of $.625 per share. The information regarding options
in this section are adjusted for the merger between GTCI and VISC.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company made advances to a Roger Remillard during 1993. The Company
provided an allowance for the full amount of this receivable, as the Company did
not expect these advances to be repaid, resulting in bad debt expenses of
$127,532 in 1993. During 1994, this receivable was forgiven and the receivable
and related allowance were written off.
The Company loaned $39,238 to William H. Buck and $18,670 to Roger
Remillard during 1995. The Company has made an allowance for doubtful
collection of these amounts.
(14)
<PAGE>
Such amounts may be deemed additional compensation for Mr. Buck and Mr.
Remillard during 1996.
ITEM 8. LEGAL PROCEEDINGS.
The Company and certain officers and directors are defendants in a lawsuit
filed by a former employee. This lawsuit was filed on December 15, 1994 in the
California Superior Court and was subsequently removed to the United States
District Court for the Northern District of California. The second amended
complaint dated April 30, 1996 alleges multiple claims including breach of
fiduciary duty, breach of oral agreement, wrongful termination of employment,
interference with contract, breach of employment agreement and fraudulent
misrepresentation all arising out of the plaintiff's employment over a period of
2 1/2 months as the Company's President and Chief Executive Officer, the
termination of his employment and the aborted negotiations for a proposed merger
between the Company and the plaintiff's company. Damages claimed are in excess
of $10 million for failure to transfer one million shares of the Company's stock
allegedly promised to the plaintiff, salary and expenses arising out of his
employment relationship and punitive damages. The Company has filed a
crosscomplaint for fraud, breach of fiduciary duty, declaratory relief,
rescission and negligent interference with prospective business advantage. The
Company believes the allegations are without merit and intends to vigorously
defend itself and its directors and officers against the action.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's shares have been traded on a limited basis on the Nasdaq,
Bulletin Board under the symbol VICP since December 27, 1995. The following
table sets forth the range of high and low sales prices as reported on the
Nasdaq Bulletin Board. These prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
PERIOD LOW HIGH
Fourth quarter of 1995 (beginning December 8, 1995) 5-1/8 5-3/8
First quarter of 1996 7-1/2 8-1/4
Second Quarter of 1996 8-1/8 11-3/8
Third Quarter of 1996 (through July 31, 1996) 10-3/4 11/1/4
There were approximately 130 shareholders of record of the Common Stock as
of July 31, 1996.
(15)
<PAGE>
DIVIDENDS
The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future, but
intends to retain future earnings, if any, for reinvestment in the future
operation and expansion of the Company's business and related development
activities. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and such other
factors as the Board of Directors deems relevant, as well as the terms of any
financing arrangement.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
On May 13, 1993, upon the exercise of an option to purchase common stock
of VISC ("VISC Stock") by Jerome Greenberg, VISC issued 799,200 shares of
VISC Stock to Mr. Greenberg at a price of $1.00 per share. On December 31,
1993, upon the exercise of an option to purchase VISC Stock by Roger
Remillard, the Company issued 199,800 shares of VISC Stock to Mr. Remillard
at a price of $1.00 per share.
In November, 1994, VISC issued 160,000 shares of VISC Stock to Jerome
Greenberg upon conversion of a $400,000 loan Mr. Greenberg made to VISC in a
transaction not involving a public offering exempt pursuant to Section 4(2) of
the Securities Act of 1933, as amended ("Securities Act").
In November 1994, VISC entered into an agreement with a placement agent,
West America Securities ("West"), for a private offering. This private offering
resulted in the sale of 500,000 units at a purchase price of $2.50 per unit for
a total consideration of $1,250,000. Each unit consisted of one share of VISC
Stock, one Class A warrant and one Class B warrant. Each Class A warrant
entitled the registered holder to purchase one share of VISC Stock at an
exercise price of $5.00 at any time on or before March 1, 1995. Each Class B
warrant entitled the registered holder to purchase one share of VISC Stock at an
exercise price of $7.50 at any time on or before April 30, 1995. None of the
Class A warrants or Class B warrants were exercised prior to the expiration
date. West received 50,000 shares of VISC Stock and 12,000 units valued at
$155,000 as compensation for its services and costs. Attorneys' and finders'
fees totalling $108,833 were incurred and are included as stock issuance costs.
One of the consultants participating in the private placement received $25,000
in cash, 10,000 shares of VISC Stock with a deemed value of $25,000 and an
option, exercisable until November 27, 2000, to purchase 30,000 shares of VISC
Stock at $2.50 per share.
In April and May 1995, VISC issued 53,000 shares of VISC Stock for an
aggregate offering price of $265,000 in a transaction not involving a public
offering exempt pursuant to Regulation S of the Securities Act.
On August 30, 1995, VISC issued 8,000 shares of VISC Stock for an aggregate
offering price of $20,000 in a transaction not involving a public offering
exempt pursuant to Regulation S of the Securities Act.
(16)
<PAGE>
During 1995, VISC issued a total of 1,100,000 shares of VISC Stock for an
aggregate offering price of $2,750,000 in a transaction not involving a public
offering exempt pursuant to Regulation S under the Securities Act. Dextro
Establishment, the placement agent, received finder's fees totalling $330,000 in
connection with this offering which were included as stock issuance costs.
In April and May, 1995, VISC issued 176,500 shares of VISC Stock to
certain individuals in exchange for past services provided to VISC in a
transaction not involving a public offering under Section 4(2) of the
Securities Act.
In February 1996, the Company issued 20,000 shares of Common Stock for an
aggregate offering price of $50,000 in a transaction exempt pursuant to
Regulation S of the Securities Act. Grammont, Inc., a French brokerage firm,
received $5,000 in connection with this offering.
From March 1996 to April 1996, the Company issued 500,000 shares of Common
Stock for an aggregate offering price of $1,000,000 in a transaction not
involving a public offering exempt pursuant to Regulation D of the Securities
Act.
On April 26, 1996, upon the exercise of an option to purchase Common Stock
by a shareholder, the Company issued 400,000 shares of Common Stock to such
shareholder at a price of $.625 per share.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The authorized capital of the Company consists of 50,000,000 Common Stock,
par value $0.01 per share. The following summary of certain provisions of the
Common Stock does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Articles of Incorporation and
Bylaws that are included as exhibits to this Registration Statement and by
provisions of applicable law.
As of July 31, 1996 there were 21,728,000 shares of Common Stock of the
Company issued and outstanding. Each stockholder is entitled to one vote for
each share of Common Stock held of record on all matters submitted to a vote of
stockholders, including the elections of the members of the Board of Directors
of the Company. Holders of Common Stock have no preemptive rights and no rights
to convert their Common Stock into any other securities, and there are no
redemption provisions with respect to such shares. Upon liquidation,
dissolution or winding up of the Company, the holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of the Company's
liabilities. All outstanding shares of Common Stock are fully paid and non-
assessable.
VISC is currently not in good standing in the State of Illinois due to
certain issues regarding the calculation of its paid in capital to give effect
to the merger of VISC and GTCI. The Company is currently in the process of
resolving these issues with the Secretary of State of Illinois and expects that
VISC will be in good standing before this Registration Statement becomes
effective.
(17)
<PAGE>
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Corporate Stock
Transfer in Denver, Colorado.
SHARES ELIGIBLE FOR FUTURE SALE
As of July 31, 1996 there were approximately 2,150,000 shares of Common
Stock which may be sold without restriction under the Securities Act. There are
approximately 1,060,000 shares issued in reliance on Regulation S of the
Securities Act that may become unrestricted assuming compliance with Regulation
S. From September, 1995 to November, 1995 the Company made an offering in
reliance upon Regulation S and at the conclusion thereof 4,700,000 shares were
issued.
Under Rule 144 under the Securities Act the shares held by Messrs.
Greenberg and Remillard are currently available for sale, subject to the volume
limitations of Rule 144. The number of shares currently held by these two
individuals equal 7,814,000 shares in the aggregate. In November, 1994, Messrs.
Buck and Gilbreath acquired shares of Common Stock upon joining the Company.
Their shares would be available for sale subject to the limitations of Rule 144
in November, 1996.
In general, under Rule 144 as currently in effect, a stockholder,
including an "affiliate" of the Company, as that term is defined in Rule 144
(an "Affiliate"), who has beneficially owned his or her restricted securities
(as that term is defined in Rule 144) for at least two years from the later
of the date such securities were acquired from the Company or (if applicable)
the date they were acquired from an Affiliate is entitled to sell, within any
three-month period, a number of such shares that does not exceed the greater
of one percent of the then outstanding shares of Common Stock (approximately
217,280 shares as of July 31, 1996) or the average weekly trading volume in
the Common Stock during the four calendar weeks preceding the date on which
notice of such sale was filed under Rule 144, provided certain requirements
concerning availability of public information, manner of sale and notice of
sale are satisfied. In addition, under Rule 144(k), if a period of at least
three years has elapsed between the later of the date restricted securities
were acquired from the Company and the date they were acquired from an
Affiliate of the Company, a stockholder who is not an Affiliate of the
Company at the time of sale and has not been an Affiliate for at least three
months prior to the sale would be entitled to sell the shares immediately
without compliance with the foregoing requirements under Rule 144.
Stock options have been granted to certain individuals pursuant to a
plan under Rule 701 under the Securities Act. Under Rule 701, if an option is
exercised 90 days after this Company becomes a reporting company under the
Securities Exchange Act of 1934, the shares issued upon such exercise may
thereafter be immediately sold without compliance with the volume limitations of
Rule 144. 1,712,480 shares may be available for sale if and when, the
optionee exercises his or her stock options at such time.
(18)
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section XIV of the Company's Articles of Incorporation provides that the
Company shall indemnify and hold the officers and directors of the Company
harmless and free from liability for any claims against said officer and/or
director arising out of the performance of their duties on behalf of the Company
and shall, further, reimburse said person for any legal expenses incurred in the
defense of such claim.
Reference is made to Sections 2 and 3 of Article 78 of the Nevada Revised
Statutes which provides for indemnification of directors and officers in certain
circumstances.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The required financial statements are included under the section
"Financial Statements" in this Registration Statement.
(19)
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMETNS WITH ACCOUNTANTS WITH ACCOUNTANTS ON
ACOUNTING NAD FINANCIAL DISCLOSURE.
Not Applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Consolidated Balance Sheets (Unaudited) as of March 31, 1996 and March
31, 1995
Consolidated Statements of Operations (Unaudited) for the Three Months
Ended March 31, 1996 and March 31, 1995 and Period from inception (May
1, 1990) to March 31, 1996
Consolidated Statements of Cash Flows (Unaudited) for the Three Months
Ended March 31, 1996 and March 31, 1995 and Period from inception (May
1, 1990) to March 31, 1996
Consolidated Balance Sheets as of December 31, 1995, 1994 and 1993.
Consolidated Statements of Operations for the years ended December
31, 1995, 1994 and 1993 and Period from inception (May 1, 1990)
through December 31, 1995
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993 and Period from inception (May 1, 1990)
through December 31, 1995
Notes to Consolidated Financial Statements
(b) Exhibits
2.1 Agreement and Plan of Reorganization dated as of October 12,
1995 by and between Global Telephone and Communications,
Inc. and Visual Information Service Corp. and its
shareholders.
3.1 Articles of Incorporation, as amended, of VisCorp
3.2 Articles of Incorporation, as amended of Visual Information
Service Corp.
3.3 By-laws of VisCorp*
3.4 By-laws of Visual Information Service Corp.
4.1 Form of the Company's Stock Certificate
(20)
<PAGE>
10.1 Service Agreement dated as of April 8, 1996 between Viscorp
and Solectron France, S.A.
10.2 Technology License Agreement dated as of January 1, 1995 by
and between Visual Information Services Corp. and Digital
Sciences, Inc.
10.3 Employment Agreement between Visual Information Services
Corp. and Jerome Greenberg dated as of November 12, 1994.
10.4 Employment Agreement between Visual Information Services
Corp. and Don Gilbreath dated as of November 12, 1994.
10.5 Employment Agreement between Visual Information Services
Corp. and William Buck dated as of November 12, 1994.
10.6 Employment Agreement between Visual Information Services
Corp. and Roger Remillard dated as of November 12, 1994.
10.7 Employment Agreement between Visual Information Services
Corp. and David Rosen dated as of May 1, 1996.
10.8 License Agreement between Amiga Technologies GmbH and Visual
Information Service Corp. dated as of December 26, 1995.
10.9 Agreement for the Purchase of Inventories, Industrial
Property Rights and certain other Rights and Assets between
Escom AG, Amiga Technologies GmbH and VisCorp Acquisitions
Inc. dated July 18, 1996.
10.10 Gateway Information Provider Agreement between NTN
Communications, Inc. and Visual Information Services Corp.
dated as of December 13, 1994.
10.11 Viscorp Stock Option Plan
21 Subsidiaries
- - ------------------------------
* To be filed by amendment.
(21)
<PAGE>
FINANCIAL STATEMENTS
(22)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets (Unaudited)
As of March 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
AT MARCH 31,
------------------------
(Unaudited) (Unaudited)
1996 1995
------------ ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $106,547 $6,948
Receivables:
Officers (Net of allowance for doubtful accounts of
$57,908 in 1995). . . . . . . . . . . . . . . . . . . . . . . 24,598 0
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 562,300 0
---------- ----------
Total Current Assets . . . . . . . . . . . . . . . . . . . . 693,445 6,948
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,849 44,339
Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,656 2,656
Test equipment. . . . . . . . . . . . . . . . . . . . . . . . . 4,883 4,883
---------- ----------
70,388 51,878
Less accumulated depreciation. . . . . . . . . . . . . . . . . . (28,636) (17,636)
---------- ----------
Total Property and Equipment, Net. . . . . . . . . . . . . . 41,752 34,242
---------- ----------
OTHER ASSETS
Investment securities -- Digital Sciences, Inc. . . . . . . . . 343,750 284,375
Intangible assets (Net of accumulated amortization) . . . . . . 93,919 74,946
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,670 5,873
---------- ----------
Total Other Assets . . . . . . . . . . . . . . . . . . . . . 443,339 365,194
---------- ----------
$1,178,536 $406,384
---------- ----------
---------- ----------
</TABLE>
(23)
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED)
<TABLE>
<CAPTION>
AT MARCH 31,
--------------------------
(Unaudited) (Unaudited)
1996 1995
---------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $409,134 $417,317
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 11,547 754
Stockholders loans including accrued interest at a rate of
5.97%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,892 0
---------- ----------
Total Current Liabilities . . . . . . . . . . . . . . . . . 658,573 418,071
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . 216,280 2,541,167
Additional paid-in capital . . . . . . . . . . . . . . . . . . 7,640,498 1,669,361
Deficit accumulated during the development stage . . . . . . . (7,050,877) (3,896,902)
Net unrealized investment losses . . . . . . . . . . . . . . . (285,938) (345,313)
---------- ----------
Total Stockholders' Equity (Deficit). . . . . . . . . . . . 519,963 11,687
---------- ----------
$1,178,538 $406,384
---------- ----------
---------- ----------
</TABLE>
(24)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1996 and 1995 and
Period from May 1, 1990 (Inception) through March 31, 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------- From Inception
(Unaudited) (Unaudited) (May 1, 1990) to
1996 1995 March 31, 1996*
----------- ---------- ----------------
<S> <C> <C> <C>
LICENSE INCOME . . . . . . . . . . . . . . $ 0 $(629,688) $(629,688)
OPERATING EXPENSES
Research and development . . . . . . . . . 249,238 215,076 3,215,226
Travel and entertainment . . . . . . . . . 105,075 134,213 1,116,812
Legal fees:
Employee litigation . . . . . . . . . . . 14,432 47,678 308,219
Other . . . . . . . . . . . . . . . . . . 71,461 96,928 610,469
Consulting . . . . . . . . . . . . . . . . 91,000 165,500 584,612
Other general and administrative . . . . . 212,982 132,104 1,639,275
---------- ---------- ----------
Total Operating Expenses . . . . . . . 744,188 791,499 7,474,613
---------- ---------- ----------
OPERATING LOSS . . . . . . . . . . . . . . 744,188 161,811 6,844,925
---------- ---------- ----------
OTHER EXPENSE (INCOME)
Interest expense -- Stockholder debt . . . 3,498 0 215,769
Interest expense -- Other. . . . . . . . . 0 0 1,103
Interest income. . . . . . . . . . . . . . (1,638) (1,685) (14,494)
Loan on disposal of equipment. . . . . . . 0 0 3,574
---------- ---------- ----------
Total Other (Income) Expense, Net. . . 1,860 (1,685) 205,952
---------- ---------- ----------
NET LOSS . . . . . . . . . . . . . . . . . $746,048 $160,126 $7,050,877
---------- ---------- ----------
---------- ---------- ----------
AVERAGE SHARES OUTSTANDING . . . . . . . . 21,628,000 3,698,958
---------- ----------
---------- ----------
LOSS PER SHARE . . . . . . . . . . . . . . $0.03 $0.04
---------- ----------
---------- ----------
</TABLE>
* The data for the period December 31, 1995 to March 31, 1996 is unaudited.
(25)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1996 and 1995 and
Period from May 1, 1990 (Inception) through March 31, 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED FROM INCEPTION
MARCH 31, MARCH 31, (MAY 1, 1990) TO
(UNAUDITED) (UNAUDITED) MARCH 31,
1996 1995 1996*
----------- ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . $(746,048) $(160,126) (7,050,877)
Depreciation and amortization . . . . . . . . . . . . . . . 3,284 2,040 63,214
License income received in stock. . . . . . . . . . . . . . 0 (629,688) (629,688)
Services paid in stock. . . . . . . . . . . . . . . . . . . 0 0 441,250
Interest on stockholder loans . . . . . . . . . . . . . . . 3,496 0 215,769
Provision for losses on employee advances . . . . . . . . . 0 0 299,055
Loss on disposal of equipment . . . . . . . . . . . . . . . 0 0 3,574
(Increase) decrease in prepaid expenses . . . . . . . . . . (462,300) 100,000 (562,300)
Increase in:
Accounts payable. . . . . . . . . . . . . . . . . . . . . 104,245 138,605 359,134
Accrued expenses. . . . . . . . . . . . . . . . . . . . . (1,387) (4,306) 11,547
---------- ---------- ----------
Total Adjustments. . . . . . . . . . . . . . . . . . . . (352,660) (393,349) 201,555
---------- ---------- ----------
Net Cash Used in Operating Activities. . . . . . . . . . (1,098,708) (553,475) (6,849,322)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment . . . . . . . . . . . . . . 0 0 500
Capital expenditures. . . . . . . . . . . . . . . . . . . . (10,077) (6,351) (80,233)
Net advances to employee and related company. . . . . . . . (24,598) 0 (323,653)
Patents and other expenditures. . . . . . . . . . . . . . . 0 0 (128,396)
---------- ---------- ----------
Net Cash Used in Investing Activities. . . . . . . . . . (34,675) (6,351) (531,782)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings from stockholders. . . . . . . . . . . . . . 0 0 3,090,484
Proceeds from issuance of common stock. . . . . . . . . . . 500,000 0 4,786,000
Payment of stock issuance costs . . . . . . . . . . . . . . 0 0 (388,833)
---------- ---------- ----------
Net Cash Provided by Financing Activities. . . . . . . . 500,000 0 7,487,651
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . (633,383) (559,826) 106,547
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . 739,930 552,878 0
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . $ 106,547 $ 6,948 106,547
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
* The data for the period December 31, 1995 to March 31, 1996 is unaudited
(26)
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
C O N T E N T S
---------------
<TABLE>
<CAPTION>
REFERENCE PAGE
--------- ----
<S> <C> <C>
Independent Auditor's Report 1-2
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Stockholders' Equity (Deficit) 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7-16
Consolidated Other General and Administrative Expenses 17
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
Stockholders
Viscorp
Chicago, Illinois
We have audited the accompanying consolidated balance sheets of VISCORP (A
DEVELOPMENT STAGE ENTERPRISE) as of December 31, 1995, 1994 and 1993, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the years then ended and for the period from May 1, 1990 (inception) through
December 31, 1995 (the cumulative period). These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VISCORP (A DEVELOPMENT STAGE
ENTERPRISE) as of December 31, 1995, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended and for the cumulative
period, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. The company cannot currently generate
sufficient revenues and cash flow from operations to meet its business
obligations. Therefore, future operations are predicated on raising additional
capital in debt or equity markets. These factors raise substantial doubt about
the company's ability to continue as a going concern. Any implementation of the
commercialization of the electronic device is dependent upon obtaining
additional financing as may be necessary to ultimately achieve a level of sales
adequate to support the company's operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
<PAGE>
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule
of operating expenses is presented for analysis purposes and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
March 21, 1996, except for Note 16, as to
which the date is April 23, 1996
- 2 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets
December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Note 3) $ 739,930 $ 552,878 $ -
Receivables
Officers (Net of allowance for doubtful
accounts of $57,908 in 1995) - - -
Other (Net of allowance for doubtful
accounts of $25,000 in 1995) - - -
Prepaid expenses 100,000 6,573 -
----------- --------- ---------
Total Current Assets 839,930 559,451 -
----------- --------- ---------
PROPERTY AND EQUIPMENT, AT COST
Equipment 52,772 37,988 17,985
Furniture 2,656 2,656 6,801
Test equipment 4,883 4,883 4,883
----------- --------- ---------
60,311 45,527 29,669
Less accumulated depreciation (26,028) (15,596) (13,687)
----------- --------- ---------
Total Property and
Equipment, Net 34,283 29,931 15,982
----------- --------- ---------
OTHER ASSETS
Investment securities - Digital Sciences, Inc.
(Notes 4, 12 and 16) 284,375 - -
Intangible assets (Net of accumulated
amortization) (Note 5) 94,595 74,946 1,000
Other 5,670 - -
----------- --------- ---------
384,640 74,946 1,000
----------- --------- ---------
$ 1,258,853 $ 664,328 $ 16,982
----------- --------- ---------
----------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 3 -
<PAGE>
EXHIBIT A
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES
Checks issued in excess of funds on deposit $ - $ - $ 31,745
Accounts payable 304,889 165,516 75,285
Due to affiliated company - - 18,689
Accrued expenses 12,934 5,060 2,652
Stockholder loans including accrued
interest at a rate of 5.97% 234,394 - -
----------- --------- ---------
Total Current Liabilities 552,217 170,576 128,371
STOCKHOLDER LOANS, INCLUDING ACCRUED
INTEREST AT A RATE OF 10% - - 1,494,161
----------- --------- ---------
Total Liabilities 552,217 170,576 1,622,532
----------- --------- ---------
STOCKHOLDERS' EQUITY (DEFICIT) (Exhibit C)
(Notes 6 and 14)
Common stock 212,080 2,541,167 800,200
Additional paid-in capital 7,144,698 1,669,361 -
Deficit accumulated during the
development stage (6,304,829) (3,716,776) (2,405,750)
Net unrealized investment losses (Note 4) (345,313) - -
----------- --------- ---------
Total Stockholders' Equity (Deficit) 706,636 493,752 (1,605,550)
----------- --------- ---------
$1,258,853 $ 664,328 $ 16,982
----------- --------- ---------
----------- --------- ---------
</TABLE>
- 3a -
<PAGE>
EXHIBIT B
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LICENSE INCOME (Note 12) $(629,688) $ - $ - $(629,688)
----------- ---------- ---------- ----------
OPERATING EXPENSES
Research and development 1,134,262 701,460 622,428 2,965,988
Travel and entertainment 620,012 194,162 122,840 1,011,737
Legal fees
Employee litigation 287,990 5,797 - 293,787
Other 264,119 22,711 150,133 539,008
Consulting 353,915 73,786 17,789 493,612
Other general and administrative 562,191 316,448 335,170 1,426,293
----------- ---------- ---------- ----------
Total Operating Expenses 3,222,489 1,314,364 1,248,360 6,730,425
----------- ---------- ---------- ----------
OPERATING LOSS 2,592,801 1,314,364 1,248,360 6,100,737
----------- ---------- ---------- ----------
OTHER EXPENSE (INCOME)
Interest expense - Stockholder debt 2,910 - 109,429 212,271
Interest expense - Other 1,103 - - 1,103
Interest income (8,761) (4,095) - (12,856)
Loss on disposal of equipment - 757 2,817 3,574
----------- ---------- ---------- ----------
Total Other (Income)
Expense, Net (4,748) (3,338) 112,246 204,092
----------- ---------- ---------- ----------
NET LOSS $ 2,588,053 $ 1,311,026 $ 1,360,606 $ 6,304,829
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
AVERAGE SHARES OUTSTANDING
(Note 2) 17,190,915 11,775,976 7,104,092
----------- ---------- ----------
----------- ---------- ----------
LOSS PER SHARE (Notes 2 and 14) $ .15 $ .11 $ .19
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 4 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Stockholders' Equity (Deficit)
Years Ended December 31, 1995, 1994, and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
$.01 Par Value
(25,000,000 Shares Common Stock
Authorized) No Par Value
------------------------- -------------------------
Shares Amount Shares Amount
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, MAY 1, 1990 (INCEPTION)
May 1, 1990 - Sale of 1,000 shares -
$1 per share - $ - 1,000 $ 1,000
NET LOSS THROUGH 1991 - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1991 - - 1,000 1,000
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1992 - - 1,000 1,000
OPTION AGREEMENT - $1.00 per share (Note 10) - - 799,200 799,200
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1993 - - 800,200 800,200
OPTION AGREEMENT - $1.00 per share (Note 10) - - 199,800 199,800
THREE-FOR-ONE STOCK SPLIT (Note 14) - - 2,000,000 -
SALES OF STOCK (Note 6) - - 500,000 1,250,000
CONVERSION OF STOCKHOLDER LOAN - - 160,000 400,000
STOCK EXCHANGED FOR SERVICES (Note 6) - - 62,000 155,000
STOCK ISSUANCE COSTS (Note 6) - - - (263,833)
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1994 - - 3,722,000 2,541,167
SALE OF STOCK (Note 6) - - 1,161,000 3,035,000
STOCK EXCHANGED FOR SERVICES (Note 6) - - 176,500 441,250
STOCK ISSUANCE COSTS (Note 6) - - - (330,000)
EFFECT OF MERGER (Note 2) 21,208,000 212,080 (5,059,500) (5,687,417)
NET LOSS FOR THE YEAR - - - -
----------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1995 21,208,000 $ 212,080 $ - $ -
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 5 -
<PAGE>
EXHIBIT C
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional during the
Paid-In Development
Capital Stage
----------- -----------
<S> <C> <C>
Balance, May 1, 1990 (Inception)
May 1, 1990 - Sale of 1,000 shares -
$1 per share $ - $ -
Net Loss through 1991 - (379,561)
----------- -----------
Balance, December 31, 1991 - (379,561)
Net Loss for the Year - (665,583)
----------- -----------
Balance, December 31, 1992 - (1,045,144)
Option Agreement - $1.00 per share (Note 10) - -
Net Loss for the Year - (1,360,606)
----------- -----------
Balance, December 31, 1993 - (2,405,750)
Option Agreement - $1.00 per share (Note 10) - -
Three-for-One Stock Split (Note 14) - -
Sales of Stock (Note 6) - -
Conversion of Stockholder Loan 1,669,361 -
Stock Exchanged for Service (Note 6) - -
Stock Issuance Costs (Note 6) - -
Net Loss for the Year - (1,311,026)
----------- -----------
Balance, December 31, 1994 1,669,361 (3,716,776)
Sale of Stock (Note 6) - -
Stock Exchanged for Service (Note 6) - -
Stock Issuance Costs - -
Effect of Merger 5,475,337 -
Net Loss for the Year - (2,588,053)
----------- -----------
Balance, December 31, 1996 $ 7,144,698 $(6,304,829)
----------- -----------
----------- -----------
</TABLE>
- 5a -
<PAGE>
EXHIBIT D
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,588,053) $ (1,311,026) $ (1,360,606) $ (6,304,829)
------------ ------------ ------------ ------------
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 13,136 4,798 19,993 59,930
License income received in stock (629,688) - - (629,688)
Services paid in stock 441,250 - - 441,250
Interest on stockholder loans 2,910 - 109,429 212,271
Provision for losses on employee advances 82,908 - 127,532 299,055
Loss on disposal of equipment - 757 2,817 3,574
(Increase) decrease in prepaid expenses (93,427) (6,573) 1,425 (100,000)
Increase in
Accounts payable 139,373 40,231 16,794 254,889
Accrued expenses 7,874 2,408 1,717 12,934
------------ ------------ ------------ ------------
Total Adjustments (35,664) 41,621 279,707 554,215
------------ ------------ ------------ ------------
Net Cash Used in Operating
Activities (2,623,717) (1,269,405) (1,080,899) (5,750,614)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment - 500 - 500
Capital expenditures (14,784) (20,004) (11,725) (70,156)
Net advances to employee and related company (82,908) - (127,532) (299,055)
Patents and other expenditures (28,023) (73,946) - (128,396)
------------ ------------ ------------ ------------
Net Cash Used in Investing Activities (125,715) (93,450) (139,257) (497,107)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments of) checks issued in excess
of funds on deposit - (31,745) 30,156 -
Net borrowings from stockholders 231,484 775,000 1,190,000 3,090,484
Net repayments to affiliated company - (18,689) - -
Proceeds from issuance of common stock 3,035,000 1,250,000 - 4,286,000
Payment of stock issuance costs (330,000) (58,833) - (388,833)
---------- ---------- ---------- ----------
Net Cash Provided by Financing
Activities 2,936,484 1,915,733 1,220,156 6,987,651
---------- ---------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 187,052 552,878 - 739,930
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 552,878 - - -
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 739,930 $ 552,878 $ - $ 739,930
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 6 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the company and
its wholly owned subsidiary after eliminating material intercompany balances and
transactions.
CASH EQUIVALENTS
For purposes of the statements of cash flows, the company considers all highly
liquid debt investments purchased with original maturities of three months or
less and money market accounts to be cash equivalents. As of December 31, 1995,
substantially all funds are held in a money market account at one financial
institution. The company does not believe it is exposed to any significant
credit risk on cash equivalents.
INVESTMENT SECURITIES
As of December 31, 1995, marketable equity securities have been categorized as
available for sale and as a result are stated at fair value. These securities
are held for noncurrent uses, such as capital expenditures, business expansion
or acquisitions and therefore are classified as long-term assets. Unrealized
holding losses are included as a component of stockholders' equity until
realized.
PROPERTY AND EQUIPMENT
The company's policy is to depreciate property and equipment over the estimated
useful lives of the assets as indicated in the following tabulation by use of
accelerated methods.
YEARS
Equipment 5
Furniture 7
Test equipment 5
LOSS PER SHARE
Loss per share is based upon the weighted average number of shares outstanding
during the year (Note 2).
- 7 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTANGIBLES
Legal fees incurred for patents allowed and/or pending have been capitalized.
The company received approval for several patents in 1995 which are being
amortized over 17 years. No amortization is being taken on patents not yet
issued as of December 31, 1995.
Legal fees incurred for trademarks pending have been capitalized. No
amortization was taken in 1995 as the trademarks had not been issued as of
December 31, 1995.
MANAGEMENT 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.
FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, advances receivable and
accounts payable are a reasonable estimate of their fair value. Investment
securities are carried at their fair value.
NOTE 2 - NATURE OF OPERATIONS
The company was formed in Chicago, Illinois in May 1990. The company is a
development stage enterprise and was founded to develop an electronic device
(ED) capable of adding modem, video data and telephone features to an ordinary
television receiver over a telephone line. The company is currently engaged in
the continuing development of that product and certain initial marketing
efforts. In 1995, the product has reached the demonstration stage, and the
company is seeking partners with software capabilities to utilize the ED
technology.
On November 28, 1995, the company merged with Global Telephone and
Communications, Inc. (GTCI) and reorganized under Section 368(a)(1)(B) of the
Internal Revenue Code. The merger was executed by an exchange of four shares of
GTCI stock for every share of Viscorp stock, resulting in the stockholders of
the former Viscorp retaining voting control over the merged entity. Accordingly,
for accounting purposes, the acquisition has been treated as a recapitalization
of Viscorp with Viscorp as the acquiror (reverse acquisition). The 1994 and
1993 loss per share and average shares outstanding amounts have been restated to
include the effect of the recapitalization due to the merger.
- 8 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 2 - NATURE OF OPERATIONS (Continued)
Upon completion of the reorganization, GTCI changed its name to Viscorp. Pro
forma results of operations have not been presented because the effects of this
acquisition were not significant.
NOTE 3 - CASH AND CASH EQUIVALENTS
1995 1994
-------- --------
Cash $8,547 $5,564
Money market funds* 731,383 -
U.S. Treasury Bill* - 547,314
-------- --------
$739,930 $552,878
-------- --------
-------- --------
*At cost (which approximates fair value)
NOTE 4 - INVESTMENT SECURITIES
Investment securities classified as noncurrent assets as of December 31, 1995
include marketable equity securities with a cost of $629,688, gross unrealized
losses of $345,313 and an estimated fair value of $284,375.
NOTE 5 - INTANGIBLES
Intangible assets consist of the following:
1995 1994
------- -------
Patents and patents pending $80,194 $73,946
Trademark and trademarks pending 17,105 1,000
------- -------
97,299 74,946
Less accumulated amortization (2,704) -
------- -------
$94,595 $74,946
------- -------
------- -------
- 9 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 6 - COMMON STOCK
In November 1994, the company entered into an agreement with a placement agent
for a private offering. This private offering resulted in the sale of 500,000
units at a purchase price of $2.50 per unit for a total consideration of
$1,250,000. Each unit consisted of one share of common stock, one class A
warrant and one class B warrant. The placement agent received 50,000 shares of
common stock and 12,000 expense units valued at $155,000 as compensation for its
services and costs. Each expense unit was composed of one share of common
stock, one class A warrant and one class B warrant. In addition, attorney and
finder's fees totaling $108,833 were incurred and are included as stock issuance
costs. Also, one of the consultants participating in the private placement was
granted an option, which was exercisable until March 8, 1998, for the purchase
of 20,000 shares at the price of $2.50 per share. This fee was revised in
1995. The previous options granted were cancelled and in exchange the
consultant received $25,000 in cash, 10,000 shares of common stock with a deemed
value of $25,000 and an option, which is exercisable until November 27, 2000,
for the purchase of 30,000 shares at the price of $2.50 per share.
Each class A warrant entitled the registered holder to purchase one share of
common stock at an exercise price of $5.00 at any time on or before March 1,
1995. Each class B warrant entitled the registered holder to purchase one share
of common stock at an exercise price of $7.50 at any time on or before April 30,
1995. None of the class A warrants were exercised by the March 1, 1995
expiration date, nor were any class B warrants exercised by the April 30, 1995
expiration date.
During 1995, the company entered into an agreement with Dextro Establishment,
located in Liechtenstein in Europe to raise equity financing solely from
offshore purchasers and purchasers who may be deemed "accredited investors" as
those terms are generally defined under Regulation S and Regulation D,
respectively, promulgated by the U.S. Securities and Exchange Commission. A
total of 1,100,000 shares of the company's stock were issued at a purchase price
of $2.50 per share for a total of $2,750,000. The placement agent received
finder's fees totaling $330,000 which are included as stock issuance costs.
Prior to signing the agreement with Dextro, the company was able to raise
$285,000 through the issuance of 53,000 shares at a purchase price of $5.00 per
share and 8,000 shares at a purchase price of $2.50 per share.
In addition, an officer of the company and outside consultants received 150,000
and 26,500 shares, respectively, during 1995 as payment for services rendered,
valued at the price of $2.50 per share.
- 10 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 7 - INCOME TAXES
The company had elected to be taxed as an S corporation under provisions of the
Internal Revenue Code. Under these provisions, the company did not pay federal
and state corporate income taxes on its taxable income but was responsible for
state replacement taxes. The election was terminated effective November 12,
1994.
The company has net operating loss carryforwards of approximately $3,325,000 for
federal and Illinois tax return purposes that may be offset against future
taxable income. If not used, the carryforwards will expire as follows:
Operating
Losses
----------
2009 $1,076,200
2010 2,249,000
----------
$3,325,200
----------
----------
Because of the uncertainty of ever utilizing the loss carryforwards, a deferred
tax asset of approximately $1,330,100 has been offset in total by a valuation
allowance.
Principal reasons for variations between the statutory federal rate and the
effective rates were as follows:
1995 1994
------- -------
U.S. federal statutory income tax rate 34.00% 34.00%
State income taxes, net of federal tax benefit - 4.71
Permanent differences regarding compensation - 17.85
S Corporation income - (25.29)
Valuation allowance (34.00) (32.01)
Other - .74
------- -------
-% -%
------- -------
------- -------
- 11 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 8 - OPERATING LEASES
The company entered into one-year leases for its office facilities. The lease
for one of its offices is with a significant stockholder. Total rental expense
for all operating leases, except those with terms of one month or less that were
not renewed, was $8,400, $15,650 and $17,100 for the years ended December 31,
1995, 1994 and 1993, respectively. The amount of related party rent expense
included above was $8,400, $9,100 and $8,400 for the years ended December 31,
1995, 1994 and 1993, respectively. Effective March 1, 1996, the company entered
into a one-year lease with a nonrelated party at an annual rental of $43,960.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AGREEMENTS
The company has entered into separate employment agreements with four of its
officers. All agreements expire November 11, 1997. All agreements
automatically renew for an additional one- year period unless the company or the
employee notifies the other party not less than 120 days prior to the expiration
of the agreement of the company's or the employee's intent to let the agreement
expire.
LITIGATION
In December 1994, a former director and officer of the company filed a lawsuit
in a California court against the company and several of its officers and
directors alleging that the company violated an alleged agreement with him to
become an executive officer of the company and claims damages in excess of
$5,000,000. The lawsuit alleges, among other things, that such acts constitute
breach of fiduciary duty, breach of oral agreement, interference with
contractual relations, conspiracy, restitution and fraud. This lawsuit is in
the discovery stage but the company believes the allegations are without merit
and intends to vigorously defend itself and its directors and officers against
the action. The company has filed a counterclaim in this matter.
- 12 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 10 - STOCK OPTIONS
On May 13, 1993, the company granted two stockholders (holders) an option to
purchase 799,200 and 199,800 shares (unadjusted for 1994 stock split - see Note
15) of common stock. The option price was $1 per share. The option could only
be exercised by the holder for no less than all of the shares. As of December
31, 1993, options to purchase 199,800 shares of common stock were outstanding.
On May 13, 1993 and August 31, 1994, options were exercised for 799,200 and
199,800 shares (unadjusted for 1994 stock split - see Note 15), respectively.
Payment was executed by retiring stockholder advances in the amount of $799,200
and $199,800, respectively.
In November 1994, the company adopted a stock option plan that reserved 465,000
authorized but unissued shares of common stock. Also in November 1994, the
company authorized the issue of options to purchase 250,600 shares of common
stock at an exercise price of $2.50 per share. These options were issued to
employees who are officers of the company. Options to purchase 53,200 shares of
the common stock were immediately vested with the balance of the options vesting
over a two-year period commencing February 1, 1995. These options will expire
in November 2004. None of these options were exercised during the 1994 fiscal
year. As of December 31, 1994, options to purchase 250,600 shares of common
stock were outstanding.
In September 1995, the company adopted a stock option plan which will reserve
2,400,000 authorized but unissued shares of common stock at an exercise price of
$.625. These options have been issued to employees who are officers of the
company and various individuals and companies who rendered services to the
company. The date to grant options expires June 30, 1996 and the options expire
on June 30, 2001. There are 1,573,700 options outstanding as of December 31,
1995. The options referred to in the prior paragraph were rolled into this
plan.
NOTE 11 - RELATED PARTY TRANSACTIONS
The company made advances to a stockholder during 1993. The company provided an
allowance for the full amount of this receivable, as the company did not expect
these advances to be repaid, resulting in bad debt expense of $127,532 in 1993.
During 1994, this receivable was forgiven and the receivable and related
allowance were written off.
In addition, the company advanced monies to a stockholder in 1995 and has
provided an allowance of the full amount of the receivable of $57,908, as the
company does not expect to be repaid.
See Notes 6 and 8 for additional related party disclosures.
- 13 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 12 - LICENSE FEE INCOME
In January 1995, the company entered into a license agreement with Digital
Sciences, Inc. to license the ED technology and services. The agreement
provides for Digital Sciences, Inc. to have an exclusive license to use ED
technology and services in the health care industry in the United States and
Canada for a period of ten years. The company received on February 27, 1995 an
initial license fee payable in the form of 250,000 shares of Digital Sciences,
Inc. with a fair value of $629,688, reflecting a discount from trading price as
the shares were not yet registered. The company recognized this stock receipt
as income during 1995 as all the requirements of the company under the agreement
were completed during the year. In addition, Digital Sciences, Inc. will pay a
license fee based on a percentage of gross revenue derived from the use of the
ED technology and services. The company did not receive any such license fees
in 1995.
NOTE 13 - LICENSE FEE EXPENSE
In 1994, as part of an agreement with NTN Communications, Inc. (NTN), the
company paid and expensed a license fee of $200,000. The initial term of the
agreement expires December 13, 2001. Unless terminated, in accordance with the
terms of the agreement, the agreement will be extended for a period of seven
years. The company has a nonexclusive worldwide license to promote, market and
develop an online computer service (service), which will be provided by NTN, for
use with the company's product. The technology of the service provides two-way
interactive computerized games that are broadcast to multiple locations, can be
played by multiple participants at each location and allow the retrieval and
processing of data entered by the participants. The company is required to pay
usage royalties as defined in the agreement.
NOTE 14 - COMMON STOCK SPLIT
In November 1994, the board of directors authorized a three-for-one stock split
of common shares effective immediately, which resulted in an increase of
authorized shares from 1,000,000 as of December 31, 1993 to 10,000,000 as of
December 31, 1994. All loss per share and average shares outstanding amounts
included in these financial statements have been adjusted for the stock split.
- 14 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 15 - UNCERTAINTY - GOING CONCERN
The accompanying financial statements have been prepared assuming the company
will continue as a going concern. The company cannot currently generate
sufficient revenues and cash flow from operations to meet its business
obligations. Therefore, future operations are predicated on raising additional
capital in debt or equity markets. These factors raise substantial doubt about
the company's ability to continue as a going concern. Any implementation of
the commercialization of the electronic device is dependent upon obtaining
additional financing as may be necessary to ultimately achieve a level of sales
adequate to support the company's operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Management is continuing its efforts to obtain additional funding from private
and venture capital sources and, with its merger with GTCI (Note 2), from public
sources so the company can meet its obligations and sustain future operations.
See Note 16 for additional information.
NOTE 16 - SUBSEQUENT EVENTS
In January 1996, the company finalized an agreement with Amiga Technologies GmbH
(Amiga), a German company, for a nonexclusive, nontransferable license to the
Amiga computer operating system technology. The initial term of the agreement
was to expire December 26, 1998. Unless terminated, in accordance with the
terms of the agreement, the agreement is to be renewable for subsequent three-
year periods at the licensee's option. In January 1996, the company paid an
initial royalty deposit of $450,000 to Amiga. The company is required to pay
usage royalties as defined in the agreement.
In April 1996, the company signed a letter of understanding with Amiga and its
parent, Escom AG, to acquire inventory and intellectual property, including
patents and the Amiga computer operating system referred to above. The
tentative acquisition price of the aforementioned assets is $40 million and is
subject to normal due diligence and the completion of the transaction. The
company intends to sell the inventory in the normal course of business through
distribution agreements. In addition, the company intends to incorporate the
patented technology as an integral component of the ED device. In the event
this transaction is closed, the royalty deposit above will be used to offset the
acquisition price.
In February 1996, the company raised $50,000 through the issuance of 20,000
shares of common stock. In addition, from March 1 through April 11, 1996, the
company raised $1,000,000 through the issuance of 500,000 shares of common stock
and $250,000 through the exercise of 400,000 options at a price of $.625 per
share which was convertible into 400,000 shares.
- 15 -
<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
- - --------------------------------------------------------------------------------
NOTE 16 - SUBSEQUENT EVENTS (Continued)
On February 5, 1996, the stockholders and board of directors approved an
increase in the number of authorized common shares from 25,000,000 to
50,000,000.
On March 22, 1996, the stockholders of Digital Sciences, Inc. (Notes 4 and 12)
approved the acquisition of Digital Sciences, Inc. by Resource Finance Group
Ltd. Digital Sciences, Inc. merged into DSI Acquisition Corp., a newly-formed,
wholly owned subsidiary of Resource Finance Group Ltd. On April 1, 1996,
Resource Finance Group Ltd. merged into Intelligent Decision Systems Inc., a
wholly owned subsidiary of Resource Finance Group Ltd. Each Digital Sciences,
Inc. common share was converted into one common share of Intelligent Decision
Systems Inc. As of April 11, 1996, Intelligent Decision Systems Inc.'s common
stock was traded on the OTC Bulletin Board at approximately $2.25 per share.
The company's per share carrying value for these shares is $1.75 as of December
31, 1995.
NOTE 17 - RECLASSIFICATION
For comparability, the 1994 and 1993 financial statements reflect
reclassifications where appropriate to conform to the financial statement
presentation used in 1995.
- 16 -
<PAGE>
SCHEDULE B-1
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Other General and Administrative Expenses
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Salaries $166,483 $47,427 $ - $213,910
Payroll taxes 10,887 3,338 - 14,225
Equipment rental - 722 - 722
Advertising - 69 38,214 46,545
Business plan 39,141 2,500 - 41,641
Accounting 59,811 46,920 14,050 136,256
Automobile - 14,159 12,829 37,773
Depreciation and amortization 8,161 3,235 19,993 53,392
Dues and subscriptions - 1,621 1,959 4,620
Delivery - 4,994 - 4,994
Office 25,812 2,489 2,182 34,912
Miscellaneous 26,820 12,152 10,471 49,845
Promotion 16,372 15,318 46,569 94,734
Repair and maintenance 1,344 131 1,312 4,875
Rent and utilities 8,610 15,969 17,653 67,231
Bank charges 486 479 1,385 2,350
Insurance 19,016 2,125 - 21,141
Telephone 58,840 34,372 26,487 137,321
Printing - 5,406 14,534 20,229
Bad debts - Related parties 57,908 - 127,532 274,055
Bad debts - Other 25,000 - - 25,000
Directors' fee 37,500 4,500 - 42,000
Outside services - 98,522 - 98,522
-------- -------- -------- ----------
Total (Exhibit B) $562,191 $316,448 $335,170 $1,426,293
-------- -------- -------- ----------
-------- -------- -------- ----------
</TABLE>
See independent auditor's report regarding supplemental information.
- 17 -
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
VISCORP
August 5, 1996 By: /s/ Jerome Greenberg
---------------------
VisCorp, Chairman of the Board
<PAGE>
EXHIBIT 2.1
-----------
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into this 12th day of October, 1995 by and between Global Telephone and
Communications, Inc., a Nevada Corporation, (hereinafter referred to as "GTCI"),
and Visual Information Service Corp., an Illinois Corporation, (hereinafter
referred to as "VisCorp") and its Shareholders, as listed on Exhibit A and on
the signatory pages hereafter.
RECITALS:
---------
A. GTCI desires to acquire all of the issued and outstanding capital stock
of Viscorp and Viscorp desires to exchange all of its shares of VisCorp capital
stock for shares of GTCI authorized but unissued shares of stock as hereinafter
provided.
B. It is the intention of the parties hereto that: (i) GTCI shall acquire
all of the issued and outstanding capital stock of VisCorp in exchange solely
for the number of shares of GTCI authorized but unissued shares of Common Stock,
par value $.01, set forth below (the "Exchange"); (ii) the Exchange shall
qualify as a tax free reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, and related sections thereunder; and (iii) the
Exchange shall qualify as a transaction in securities exempt from registration
or qualification under the Securities Act of 1933, as amended, and under the
applicable securities laws of each state or jurisdiction where the Shareholders
reside.
C. The board of directors of GTCI deem it to be in the best interest of
GTCI and its shareholders to acquire all of the issued and outstanding capital
stock of VisCorp.
D. The board of directors of VisCorp deem it to be in the best interest of
its shareholders to exchange all of the capital stock of VisCorp for shares of
GTCI authorized but unissued shares of common stock, as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
<PAGE>
SECTION 1. EXCHANGE OF SHARES
1.1.EXCHANGE OF SHARES. GTCI and the Shareholders hereby agree that the
Shareholders shall, on the Closing Date (as hereinafter defined), exchange all
of the issued and outstanding shares of the VisCorp capital stock in the ratio
of one (1) share of each VisCorp share for four (4) shares of GTCI stock (the
"Shares") so that if 100% of shares are Exchanged then 17,908,000 number of
shares of Common Stock, $.01 par value of GTCI (the "GTCI Shares") will be
issued as a result of the Exchange. The number of shares of VisCorp capital
stock owned by each Shareholder and the number of shares of Common Stock which
each will receive in Exchange is set forth in Exhibit A hereto.
1.2 DELIVERY OF SHARES. On the Closing Date, the Shareholders will deliver
to GTCI the certificates representing the Shares, duly endorsed (or with
executed stock powers) so as to make GTCI the sole owner thereof.
Simultaneously, GTCI will deliver certificates representing the GTCI Shares to
the Shareholders. The Exchange shall not be effected unless a minimum of eighty
(80 %) percent of VisCorp's outstanding shares of capital stock are delivered to
GTCI on the Closing Date.
1.3 INVESTMENT INTENT. The GTCI Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be resold unless the
GTCI Shares are registered under the Act or an exemption from such registration
is available. The Shareholders represent and warrant that each of them is
acquiring the GTCI Shares for his own account, for investment, and not with a
view to the sale or distribution of the GTCI shares. Each certificate
representing the GTCI Shares will have a legend thereon incorporating language
as follows:
"THE SHARES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT UNLESS
IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, REGISTRATION IS NOT
REQUIRED UNDER THE ACT."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF VISCORP
VisCorp hereby represents and warrants as follows:
2.1 ORGANIZATION AND GOOD STANDING: OWNERSHIP OF SHARES.
VisCorp is a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois. There are no outstanding
subscriptions, rights, options, warrants or other agreements obligating VisCorp
to issue, sell or transfer any stock
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<PAGE>
or other securities of VisCorp except the warrants and options listed on
Schedule 2.1 attached hereto and made a part hereof.
2.2 OWNERSHIP OF SHARES. The Shareholders are the owner of record and
beneficially of 4,477,000 shares of Common Stock of VisCorp, which shares are
free and clear of all rights, claims, liens and encumbrances, and have not been
sold, pledged, assigned or otherwise transferred except pursuant to this
Agreement. The Shares represent all of the outstanding capital stock of
VisCorp.
2.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS. Schedule 2.3 consists of the
audited financial statements of VisCorp as at December 31, 1994 and the
unaudited as at August 31, 1995 (the "Financial Statements"). The Financial
Statements fairly represent the financial position of VisCorp as at such date
and the results of their operations for the periods then ended. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis with prior periods except as otherwise
stated therein. The books of account and other financial records of VisCorp are
in all respects complete and correct in all material respects and are maintained
in accordance with good business and accounting practices.
2.4 NO MATERIAL ADVERSE CHANGES. Since the date of the Balance Sheet
there has not been:
(i) Since December 31, 1994, there has not been any material adverse
changes in the financial position of VisCorp except changes arising in the
ordinary course of business, which changes will in no event materially and
adversely affect the financial position of VisCorp;
(ii) any damage, destruction or loss materially affecting the assets
prospective business, operations or condition (financial or otherwise) of
VisCorp whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of VisCorp's capital
stock;
(iv) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by VisCorp of any properties or assets; or
(v) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
2.5 TAXES. VisCorp by the Closing Date, will have filed all material tax,
governmental and/or related forms and reports (or extensions thereof) due or
required to be filed and has (or will
-3-
<PAGE>
have) paid or made adequate provisions for all taxes or assessments which have
become due as of the Closing Date.
2.6 COMPLIANCE WITH LAWS. VisCorp has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business which, if not
complied with, would materially and adversely affect the business of VisCorp.
2.7 NO BREACH. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of VisCorp;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which VisCorp is a party or by or to which it or any of its assets or properties
may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
VisCorp or upon the properties or business of VisCorp; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a materially
adverse effect on the business or operations of VisCorp.
2.8 ACTIONS AND PROCEEDINGS. VisCorp is not a party to any material
pending litigation or, to its knowledge, and governmental investigation or
proceeding not reflected in the VisCorp Financial Statements, and to its best
knowledge, no material litigation, claims, assessments or any governmental
proceedings are threatened against VisCorp except for one lawsuit, (including
the status thereof) set forth on Schedule 2.8 attached hereto and made a part
hereof.
2.9 AGREEMENTS. Schedule 2.9 sets forth any material contract or
arrangement to which VisCorp is a party or by or to which it or its assets,
properties or business are bound or subject, whether written or oral.
2.10 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
VisCorp in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions by VisCorp or any of
its Shareholders except appearing
-4-
<PAGE>
on Schedule 2.10 and 3.14 as one Schedule attached hereto and made apart hereof.
2.11 REAL ESTATE. Except as set forth on Schedule 2.11, VisCorp owns no
real property or is a party to any leasehold agreement.
2.12 TANGIBLE ASSETS. VisCorp has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, projects,
owned or leased by VisCorp, any related capitalized items or other tangible
property material to the business of VisCorp (the "Tangible Assets"). VisCorp
holds all rights, title and interest in all the Tangible Assets owned by it on
the Balance Sheet or acquired by it after the date on the Balance Sheet free and
clear of all liens, pledges, mortgages, security interests, conditional sales
contracts or any other encumbrances. All of the Tangible Assets are in good
operating condition and repair and are usable in the ordinary course of business
of VisCorp and conform to all applicable laws, ordinances and government orders,
rules and regulations relating to their construction and operation.
2.13 LIABILITIES. VisCorp did not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any governmental charge
or lawsuit (all of the foregoing collectively defined to as "Liabilities"),
which are not fully, fairly and adequately reflected on the Financial Statement
except for a specific Liabilities set forth on Schedule 2.13 attached hereto and
made a part hereof. As of the Closing Date, VisCorp will not have any
Liabilities, other than Liabilities fully and adequately reflected on the
Financial Statements except for Liabilities incurred in the ordinary course of
business. To the best knowledge of the Shareholders, there is no circumstance,
condition, event or arrangement which may hereafter give rise to any Liabilities
not in the ordinary course of business.
2.14 OPERATIONS OF VISCORP. From the date of the Financial Statements
through the Closing Date hereof VisCorp has not and will not have:
(i) incurred any indebtedness or borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
-5-
<PAGE>
(iii) made any loan or advance to any shareholder, officer, director,
employee, consultant, agent or other representative or made any other loan or
advance otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or assumed
any indebtedness or liability (whether or not currently due and payable);
(v) disposed of any assets of VisCorp except in the ordinary course
of business;
(vi) materially increased the annual level of compensation of any
executive employee of VisCorp;
(vii) increased, terminated, amended or otherwise modified any plan
for the benefit of employees of VisCorp.
(viii)issued any equity securities or rights to acquire such equity
securities; or
(ix) except in the ordinary course of business, entered into or
modified any contract, agreement or transaction.
2.15 CAPITALIZATION. The authorized capital stock of VisCorp consists of
10,000,000 shares of common stock of which 4,477,000 shares are presently issued
and outstanding. VisCorp has not granted, issued or agreed to grant, issue or
make any warrants, options, subscription rights or any other commitments of any
character relating to the issued or unissued shares of capital stock of VisCorp
except for the warrants and options set forth on Schedule 2.1 attached hereto
and made a part hereof.
2.16 FULL DISCLOSURE. No representation or warranty by VisCorp in this
Agreement or in any document or schedule to be delivered by them pursuant
hereto, and no written statement, certificate or instrument furnished or to be
furnished GTCI pursuant hereto or in connection with the negotiation, execution
or performance of this Agreement contains or will contain any untrue statement
of a material fact or omits or will omit to state any fact necessary to make any
statement herein or therein not materially misleading or necessary to complete
and correct presentation of all material aspects of the business of VisCorp.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF GTCI
3.1 ORGANIZATION AND GOOD STANDING. GTCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada. It
has the corporate power to own its own property and to carry on its business as
now being conducted and is duly qualified to do business in any jurisdiction
where so
-6-
<PAGE>
required except where the failure to so qualify would have no material negative
impact.
3.2 CORPORATE AUTHORITY. GTCI have the corporate power to enter into this
Agreement and to perform their respective obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of GTCI
breach of any agreement, indenture, mortgage, license or other instrument or
document to which GTCI is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to GTCI or its properties.
The execution and performance of this Agreement will not violate or conflict
with any provision of the respective Articles of Incorporation or by-laws of
GTCI.
3.3 THE GTCI SHARES. As of the Closing Date, the GTCI shareholders are
the owners of 970,000 shares of GTCI Common Stock, par value $.01, which shares
are free and clear of all rights, claims, liens and encumbrances and have not
been sold, pledged, assigned or otherwise transferred. There are no outstanding
warrants, issued stock options, stock rights or other commitments of any
character relating to the issued or unissued shares of capital stock of GTCI.
The GTCI shares represent all of the outstanding capital stock of GTCI.
At the Closing, the GTCI Shares to be issued and delivered to the VisCorp
Shareholders hereunder will when so issued and delivered, constitute valid and
legally issued shares of GTCI capital stock, fully-paid and nonassessable.
3.4 FINANCIAL STATEMENT: BOOKS AND RECORDS. Schedule 3.4 consists of the
audited financial statements of GTCI at December 31, 1994 and 1993 and the
unaudited as at August 31, 1995 and the related unaudited statements of
operations for the periods then ended (collectively the "Financial Statements").
The Financial Statements fairly represent the consolidated financial position of
GTCI as at such date and the results of their operations for the periods then
ended. The Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with prior periods
except as otherwise stated therein. The books of account and other financial
records of GTCI are in all respects complete and correct in all material
respects and are maintained in accordance with good business and accounting
practices.
3.5 NO MATERIAL ADVERSE CHANGES.
(i) Since August 31, 1995 there has not been any material adverse
changes in the financial position of GTCI except changes arising in the ordinary
course of business, which changes will in no event materially and adversely
affect the financial
-7-
<PAGE>
position of GTCI.
(ii) any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of
VisCorp whether or not covered by insurance;
(iii) any declaration setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of GTCI capital stock;
(iv) any sale of an asset (other than in the ordinary course of
business) or any mortgage pledge by GTCI of any properties or assets; or
(v) adoption of any pension, profit sharing, retirement, stock
bonus, stock option or similar plan or arrangement.
3.6 TAXES. GTCI has (or by the Closing Date, will have filed) all
material tax, governmental and/or related forms and reports (or extensions
thereof) due or required to be filed and has (or will have) paid or made
adequate provisions for all taxes or assessments which have become due as of the
Closing Date.
3.7 COMPLIANCE WITH LAWS. GTCI has complied with all federal, state,
county and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business, which, if not
complied with, would materially and adversely affect the business of GTCI or the
trading market for the GTCI Shares and specifically, GTCI complied with
provisions for registration under the Securities Act of 1933 and all applicable
blue sky laws in connection with its public stock offering and there are no
outstanding, pending or threatened stop orders or other actions or
investigations relating thereto.
3.8 ACTIONS AND PROCEEDINGS. GTCI is not a party to any material pending
litigation or, to its knowledge, any governmental proceedings are threatened
against GTCI.
3.9 PERIODIC REPORTS. GTCI has delivered to VisCorp true and complete
copies of its Rule 211 report pursuant to SEC Rule 15c2-11 (a) 5 under the
Securities Exchange Act of 1934, as amended. As of their respective dates, such
reports and statements did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under which they were
made, not misleading. GTCI has no subsidiaries.
3.10 DISCLOSURE. GTCI has (and at the Closing it will have) disclosed in
writing all events, conditions and facts materially affecting the business,
financial conditions or results of
-8-
<PAGE>
operation of GTCI. GTCI has not now and will not have, at the Closing, withheld
disclosure of any such events, conditions, and facts which they have knowledge
of or have reasonable grounds to know may exits.
3.11 CAPITALIZATION. The authorized Capital Stock of GTCI consists of
25,000,000 shares of common stock of which 970,000 shares of GTCI Common Stock
are issued and outstanding.
3.12 ACCESS TO RECORDS. The corporate financial records, minute books, and
other documents and records of GTCI have been made available to VisCorp prior to
the closing hereof.
3.13 NO BREACH. The execution, delivery and performance of this of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) violate any provision of the Articles of Incorporation or
By-Laws of GTCI;
(ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which GTCI is a party or by or to which it or any of its assets or properties
may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
GTCI or upon the securities, properties or business to GTCI; or
(iv) violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
3.14 BROKERS OR FINDERS. No broker's or finder's fee will be payable by
GTCI in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions of GTCI except
appearing of Schedule 2.10 and 3.14 as one Schedule attached hereto and made a
part hereof.
3.15 OTC BULLETIN BOARD. GTCI shares are listed on the OTC Bulletin Board
under the symbol "GTCI.OB". No representation is being made by GTCI of any
trading of the shares of GTCI. At the Closing Date, GTCI's Rule 15c2-11
documentation as discussed above shall have been updated and shall be current in
all material respects.
3.16 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. GTCI has the full legal
right and power and all authority and approval required to enter into, execute
and deliver this Agreement and to
-9-
<PAGE>
perform fully its obligations hereunder. This Agreement has been duly executed
and delivered and is the valid and binding obligation of GTCI enforceable in
accordance with its terms, except as may be limited by bankruptcy, moratorium,
insolvency or other similar laws generally affecting the enforcement of
creditors' rights. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and the performance by GTCI
of this Agreement, in accordance with its respective terms and conditions will
not:
(i) require the approval or consent of any governmental or
regulatory body or the approval or consent of any other person;
(ii) conflict with or result in any breach or violation of any of the
terms and conditions of, or constitute (or with any notice or lapse of time or
both would constitute) a default under, any order, judgment or decree applicable
to GTCI, or any instrument, contract or other agreement to which GTCI is a party
or by or to which GTCI is bound or subject; or
(iii) result in the creation of any lien or other encumbrance on the
assets or properties of GTCI
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF VISCORP. All obligations of
VisCorp under this Agreement are subject to the fulfillment, prior to or as of
the Closing Date, as indicated below, of each of the following conditions:
(a) The representations and warranties by or on behalf of GTCI
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of
Closing Date as though such representations and warranties were made at and as
of such time.
(b) GTCI shall have performed and complied with all covenants,
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by them prior to or at the Closing.
(c) On or before the Closing, the Board of Directors of GTCI shall
have approved in accordance with Nevada law the execution, delivery and
performance of this Agreement and the consummation of the transaction
contemplated herein and authorizing all of the necessary and proper action to
enable GTCI to comply with the terms of the Agreement including the election of
VisCorp's nominees to the Board of Directors of GTCI.
(d) The Exchange shall be permitted by Nevada law and
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<PAGE>
GTCI shall have sufficient shares of GTCI's capital stock authorized to complete
the Exchange.
(e) On the Closing Date, the Board of Directors shall include persons
designated by VisCorp. Kim L. Farran, and Wayne Halliburton, shall resign as an
officer, director (and any other persons) shall resign as officers and directors
of GTCI.
(f) At the Closing, all instruments and documents delivered to
VisCorp Shareholders pursuant to provisions hereof shall be reasonably
satisfactory to legal counsel for VisCorp.
(h) At the Closing, GTCI shall have delivered to VisCorp an opinion
of counsel dated as of the Closing to the effect that:
(i) GTCI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada;
(ii) This Agreement has been duly authorized executed and
delivered by GTCI and is a valid and binding obligation of GTCI
enforceable in accordance with its terms;
(iii) GTCI through its Board of Directors have taken all
corporate action necessary for performance under this Agreement;
(iv) The documents executed and delivered to VisCorp and
the VisCorp Shareholders hereunder are valid and binding in accordance
with their terms and vest in VisCorp any Notices of Notes, Warrants
and Options if any the case may be, all right, title and interest in
and to the shares of GTCI shares to be issued pursuant to section 1.1
hereof, and such shares of capital stock issued will be duly and
validly issued, fully-paid and nonassessable; and
(v) GTCI has the corporate power to execute, deliver and perform
under this Agreement.
(i) The shares of restricted GTCI capital stock to be issued to
VisCorp Shareholders at Closing will be validly issued, nonassessable and
full-paid under Nevada corporation law and will be issued in a non-public
offering and isolated transaction in compliance with all federal and state
securities laws, bearing a restrictive legend, as is more fully set forth above.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF GTCI. All obligations of
GTCI under this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions:
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<PAGE>
(a) The representations and warranties by VisCorp and its
shareholders, contained in this Agreement or in any certificate or document
delivered pursuant to the provisions hereof shall be true in all material
respects at and as of the Closing as though such representations and warranties
were made at and as of such time;
(b) VisCorp shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by them prior to or at the Closing;
(c) VisCorp shall deliver on behalf of its shareholders to GTCI a
letter commonly known as an "Investment Letter," or investment representations
acknowledging that the shares of GTCI Common Stock are being acquired for
investment purposes.
(d) VisCorp shall deliver an opinion of its legal counsel to the
effect that:
(i) VisCorp is a corporation duly organized validly
existing and in good standing under the laws of the State of Illinois
and is duly qualified to do business in any jurisdiction where so
required except where the failure to so qualify would have no material
adverse impact on the company;
(ii) VisCorp has the corporate power to carry on its business
as now being conducted; and
(iii) This Agreement has been duly authorized, executed
and delivered by VisCorp.
SECTION 5. COVENANTS
5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing Date,
the parties acknowledge that they have been entitled, through their employees
and representatives, to make such investigation of the assets, properties,
business and operations, books, records and financial condition of the other as
they each may reasonably require. No investigations, by a party hereto shall,
however, diminish or waive in any of the representations, warranties, covenants
or agreements of the party under this Agreement.
5.2 EXPENSES. Each party hereto agrees to pay its own costs and expenses
incurred in negotiating this Agreement and consummating the transactions
described herein.
5.3 FURTHER ASSURANCES. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof
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<PAGE>
and the transactions contemplated hereby. Each such party shall use its best
efforts to fulfill or obtain the fulfillment of the conditions to the Closing,
including, without limitation, the execution and delivery of any documents or
other papers, the execution and delivery of which are necessary or appropriate
to the Closing.
5.4 CONFIDENTIALITY. In the event the transactions contemplated by this
Agreement are not consummated, GTCI, VisCorp and the Shareholders agree to keep
confidential any information disclosed to each other in connection therewith for
a period of two (2) years from the date hereof; provided, however, such
obligation shall not apply to information which:
(i) at the time of the disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge (except
due to the action of the receiving party); or
(iii) the receiving party had within its possession at the time of
disclosure.
5.5 STOCK CERTIFICATES. At the Closing, the Shareholders shall have
delivered the certificates representing the Shares duly endorsed (or with
executed stock powers) so as to make GTCI the sole owner thereof. At such
Closing, GTCI shall issue to the Shareholders the GTCI Shares.
5.6 INVESTMENT LETTERS. The Shareholders shall have delivered to GTCI an
"Investment Letter" agreeing that the shares are being acquired for investment
purposes only and not with the view to public resale or distribution.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF GTCI
Notwithstanding any right of VisCorp and the Shareholders fully to
investigate the affairs of GTCI, the Shareholders have the right to rely fully
upon the representations, warranties, covenants and agreements of GTCI contained
in this Agreement or in any document delivered to VisCorp and the Shareholders
by GTCI or any of their representatives, in connection with the transactions
contemplated by this Agreement. All such representations, warranties, covenants
and agreements shall survive the execution and delivery hereof and the Closing
hereunder for twelve (12) months following the Closing.
SECTION 7. INDEMNIFICATION
For a period of two (2) years from the Closing, GTCI agrees to indemnify
and hold harmless VisCorp, and VisCorp agrees to indemnify and hold harmless
GTCI, at all times after the date of
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<PAGE>
this Agreement against and in respect of any judgments, costs and expenses
including attorney's fees incident to any of the foregoing, resulting from any
material misrepresentations made by an indemnifying party to an indemnified
party, an indemnifying party's breach of covenant or warranty or an indemnifying
party's nonfulfillment of any agreement hereunder, or from any material
misrepresentation in or omission from any certificate furnished or to be
furnished hereunder.
SECTION 8. DOCUMENTS AT CLOSING
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
(a) VisCorp will deliver, or will cause to be delivered, to GTCI the
following:
(i) a certificate executed by the President and Secretary
of VisCorp to the effect that all representations and warranties made
by VisCorp under this Agreement are true and correct as of the
Closing, the same as though originally given to GTCI on said date;
(ii) a certificate from the State of Illinois dated at or about
the Closing to the effect that VisCorp is in good standing under the
laws of said State;
(iii) Investment Letters or investment representations in the
form executed by each VisCorp Shareholder;
(iv) Stock certificates representing those shares of VisCorp
Shares to be exchanged for GTCI;
(v) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions of this
Agreement;
(b) GTCI will deliver or cause to be delivered to VisCorp and
the VisCorp Shareholders:
(i) stock certificates representing those shares of GTCI Shares
to be issued as a part of the Exchange as described in Section 1
hereof;
(ii) a certificate of the President/Secretary of GTCI, to the
effect that all representations and warranties of GTCI made under this
Agreement are true and correct as of the Closing, the same as though
originally given to VisCorp on said date;
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<PAGE>
(iii) certified copies of resolutions by GTCI's Board of
Directors authorizing this transaction;
(iv) certificates from the Nevada Secretary of State dated at or
about the Closing Date that GTCI is in good standing under the laws of
said State;
(v) opinion of GTCI's counsel as described in Section 4.1 (h)
above;
(vi) such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement;
(vii) resignations of existing officers and directors of GTCI, as
set forth in the Agreement;
(viii)all other items, the delivery of which is a condition
precedent to the obligations of GTCI, as set forth in Section 4
hereof.
SECTION 8. THE CLOSING.
The Closing shall take place simultaneously with the execution of this
Agreement or at such other later time or place as may be agreed upon by the
parties hereto. At the Closing, the parties shall provide each other with such
documents as may be necessary or appropriate in order to consummate the
transactions contemplated hereby including evidence of due authorization of the
Agreement and the transactions contemplated hereby.
SECTION 9. MISCELLANEOUS
9.1 WAIVERS. The waiver of a breach of this Agreement or the failure of
any party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in nature or
as to the exercise of any further right under this Agreement.
9.2 AMENDMENT. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
9.3 ASSIGNMENT. This Agreement is not assignable except by operation of
law.
9.4 NOTICE Until otherwise specified in writing, the mailing addresses of
both parties of this Agreement shall be as follows:
VisCorp 2728 N. Hampden Court - Unit 207
Chicago, IL 60614
Attention: Mr. Jerome Greenberg
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<PAGE>
Chairman
Shareholders: c/o Mitchell Melamed, Esquire
200 South Wacker Drive -
Suite 420
Chicago, IL 60606
GTCI Global Telephone and
3061 Probasco Way
Sparks, Nevada 80431
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
9.5 GOVERNING LAW. This Agreement shall be construed, and the legal
relations be the parties determined, in accordance with the laws of the State of
Illinois, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
9.6 ARBITRATION.
(a) All disputes and differences arising in connection with or
relating to the provisions of this Agreement, including what constitutes a
dispute or difference, shall be settled and finally determined by arbitration
unless agreement in writing has been reached between the parties within ninety
(90) days after either party shall have given written notice to the other party
of the existence of a dispute or difference which it desires to have arbitrated.
Such notice shall state the point or points in dispute.
(b) Arbitration shall be conducted in accordance with the rules
of the American Arbitration Association by three (3) arbitrators, one of whom
shall be selected by the Seller, one by GTCI and a Chairman of the Arbitration
Court selected by the two arbitrators so selected. The applicable law shall be
as provided above. Each party shall notify the other party of the arbitrator
selected by it within sixty (60) days of the giving of written notice referred
to above. In the event that the two arbitrators selected by the parties are
unable to reach agreement as to the third arbitrator, the third arbitrator shall
be selected by the American Arbitration Association. Arbitration shall be held
in the jurisdiction of the party against which or whom the arbitration is
instituted. Each party shall be given the opportunity to present to the
arbitrators its evidence, witnesses and arguments, and the right to be
represented by counsel of its selection when the other party be represented by
counsel, of its selection when the other party presents its evidence, witnesses
and arguments. In the event
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<PAGE>
one of the parties shall fail, after reasonable notice, to appear and
participate in the arbitration proceedings as normally interpreted by the
above-mentioned rules, the arbitrators shall be entitled to make their decision
and award on the basis of evidence, witnesses and arguments presented by the
party appearing.
(c) The decision and the award of the arbitrators shall be in writing
and shall be final and binding upon the parties hereto. Judgment upon the award
rendered my be entered in any court having jurisdiction thereof, or application
may be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. The expenses of arbitration shall be borne in
accordance with the determination of the arbitrators with respect thereto.
Pending decision by the arbitrators with respect to the dispute or difference
undergoing arbitration, all other obligations of the parties hereto shall
continue as stipulated herein, and all monies not directly involved in such
dispute or difference shall be paid when due.
9.7 PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance by the other party.
9.8 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase and issuance of the
Shares and the GTCI Shares and related transactions, and supersede all prior
agreements, written or oral, with respect thereto.
9.9 HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way effect the meaning or interpretation of this
Agreement.
9.10 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of any
term, phrase, clause, paragraph, restriction, covenant, agreement or the
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
9.12 BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
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<PAGE>
9.13 TIME. Time is of the essence.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
Global Telephone and Communications, Inc.
By:
--------------------------------------
Visual Information Service Corp.
By:
--------------------------------------
SHAREHOLDERS
-----------------------------------------
Jerome C. Greenberg
-----------------------------------------
Roger Remillard
-----------------------------------------
William H. Buck
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<PAGE>
SHAREHOLDERS (cont.)
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SHAREHOLDERS (cont.)
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-21-
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
ARTICLE I
The name of the Corporation shall be CAMPER CLUBS OF AMERICA, INC.
ARTICLE II
The purpose for which this Corporation is organized is the transaction of
any or all lawful business for which corporations may be incorporated under the
laws of the State of Nevada, as may be amended from time to time.
ARTICLE III
The Corporation initially intends to conduct the business of owning and
operating recreational vehicle parks and campgrounds.
ARTICLE IV
The Principal office or place of business of the Corporation shall be in
Washoe County at 741 Skiway, Incline Village, Nevada.
ARTICLE V
The existence of the Corporation shall be perpetual.
ARTICLE VI
The Corporation shall have authority to issue 10,000,000 shares of Common
Stock $.01 par value per share.
ARTICLE VII
The name and address of the initial agent is: A.J. Banford, 741 Skiway,
Incline Village, Nevada 89402.
ARTICLE VIII
The members of the governing Board shall be called Directors. The number
of persons to serve on the Board of Directors shall be fixed by the Bylaws. The
initial Board of Directors
<PAGE>
shall consist of three (3) Directors. The persons who are to serve as Directors
until the first Annual Meeting of Shareholders or until their successors are
elected and qualified are:
Helen J. Brown Robert Wessels
4801 N. LaLomitz 9757 Mira Del Rio
Tucson, Arizona 85704 Sacramento, CA 95827
Steven Clements
1580 N. Kolb Road
Tucson Arizona 85715
ARTICLE IX
The names of the incorporators of the Corporation and their addresses are:
Robert Wessels
9757 Mira Del Rio
Sacramento, CA 95827
Helen J. Brown
4801 N. LaLomitz
Tucson, Arizona 85704
ARTICLE X
The Board of Directors of the Corporation may, from time to time,
distribute on a pro rata basis to its shareholders, out of the capital surplus
of the Corporation, a portion of its assets, in cash or property.
ARTICLE XI
The Board of Directors of the Corporation may, from time to time, cause the
Corporation to purchase its own shares to the extent of the unreserved and
unrestricted earned and capital surplus of the Corporation.
ARTICLE XII
The Corporation may issue rights and options to purchase shares of stock of
the Corporation to Directors, Officers or Employees of the Corporation or any
affiliate thereof, and no shareholder approval or ratification of any such
issuance of rights and options shall be required.
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<PAGE>
ARTICLE XIII
The stock of the Corporation after payment of the subscription price and
when issued shall not be assessable.
IN WITNESS WHEREOF, we have hereunto executed this instrument this 25th day
of May, 1984.
/s/ Helen Brown
---------------------------------------
Helen Brown
/s/ Robert Wessels
---------------------------------------
Robert Wessels
STATE OF ARIZONA )
) ss.
COUNTY OF PIMA )
This instrument was acknowledged before me this 25th day of May, 1994, by
HELEN BROWN and ROBERT WESSELS.
---------------------------------------
Notary Public
My Commission Expires:
- - -----------------------
-3-
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
A NEVADA CORPORATION
On the 8th day of August, 1987, the following resolution was adopted for
the purposes of amending the Articles of Incorporation of the above captioned
corporation:
RESOLVED, that the Articles of Incorporation of said corporation are
hereby amended by adding thereto as Section XIV the provisions of NRS.78,
Section 2 and 3 as amended and set forth as follows:
The Corporation shall indemnify and hold the Officers and Directors of the
Corporation harmless and free from liability for any claims received
against said Officer and/or Director in the performance of their duties on
behalf of the Corporation and shall, further, reimburse said persons for
any legal expenses incurred in the defense of such claim pursuant to
NRS.78, Section 2 and 3 as amended.
The undersigned, Fred V. Schiemann, Secretary of the above captioned
corporation, hereby certifies and confirms that the above resolution is a true,
correct and complete copy of the resolution adopted at the special meeting of
the Board of Directors and Shareholders at 136 Vista Street, in the City of
Reno, County of Washoe on the 8th day of August, 1987, at 11:00 in the a.m. of
said day.
IN WITNESS WHEREOF, the undersigned has executed this Amendment and
Certificate this 11th day of August, 1987.
/s/ Helen J. Brown /s/ Fred V. Schiemann
- - -------------------------------- --------------------------------------
Helen J. Brown Fred V. Schiemann
President Secretary/Treasurer
<PAGE>
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
The undersigned, being an Officer and Director of the Corporation, and in
pursuance of the corporate laws of the State of Nevada, being Chapter 78 of the
Nevada Revised Statutes, do hereby adopt the following Amendments to its
Articles of Incorporation:
(1) The number of authorized shares of common stock is twenty-five (25)
million, par value $.001.
(2) There are 3,500,000 shares of non-cumulative Series A Convertible
Preferred Stock, paying a 8% dividend, semi-annually authorized. The
conversion price to common stock will be $1.00 per share.
The above Amendments to the Articles of Incorporation were adopted by the
shareholders of the Corporation on the 27th day of March, 1988, by a majority
vote of the shareholders of the corporation.
Dated this 27th day of March, 1988.
--------------------------
HELEN J. BROWN, PRESIDENT
- - -------------------------------------------
FRED V. SCHIEMANN, Secretary/Treasurer-Director
- - ---------------------------- ----------------
Notary Seal
STATE OF NEVADA
COUNTY OF WASHOE
ON DECEMBER 9TH, 1991, PERSONALLY APPEARED BEFORE ME, A NOTARY PUBLIC, WHO
ACKNOWLEDGED THAT FRED V. SCHIEMANN AND HELEN J. BROWN EXECUTED THE ABOVE
INSTRUMENT.
---------------------
Notary
<PAGE>
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CAMPER CLUBS OF AMERICA, INC.
We the undersigned, being the directors and officers of the corporation, and the
pursuance of the corporate laws of the State of Nevada, being Chapter 78 of the
Nevada Revised Statutes, do hereby adopt the following Amendment to its Articles
of Incorporation:
1. The name of the corporation is B.T.C., Enterprises
The above amendment to the Articles of Incorporation was adopted by the
shareholders of the Corporation on the 25th day of October, 1991, by a majority
vote of the shareholders of the corporation.
Dated this 1st day of November, 1991.
/s/ Helen J. Brown
- - -------------------------------------------------
Helen J. Brown, President & Director
/s/ Fred V. Schiemann
- - -------------------------------------------------
Fred V. Schiemann, Secretary/Treasurer & Director
/s/ William P. Long
- - -------------------------------------------------
William P. Long, Director
State of Nevada )
) ss
County of Washoe )
On this 1st day of November, 1991, personally appeared before me, a notary
public, Helen J. Brown, Fred V. Schiemann, and William P. Long, who acknowledged
that they executed the above instrument.
- - ---------------------------------
Notary Public
-6-
<PAGE>
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
B.T.C. ENTERPRISES, INC.
We the undersigned, being directors and Officers of the corporation, and in
pursuance of the corporate laws of the State of Nevada, being Chapter 78 of the
Nevada revised Statutes, do hereby adopt the following Amendment to its Articles
of Incorporation.
ARTICLE 1
The name of the corporation shall be CARAVELLE HOLDING, INC.
ARTICLE IV
There shall be a reverse split of the common shares of one new share for each
two shares previously issued and outstanding. The corporation shall have the
authority to issue twenty five million (25,000,000) shares of common stock two
tenths of one cent ($.002) par value per share.
The company shall cancel all 3,500,000 of the previously authorized 3,500,000
shares of non-cumulative Series A Preferred Stock paying an 8% dividend.
Each share of common stock shall be entitled to one vote on all matters and
cumulative voting shall be denied.
There shall be no preemptive rights as to any of the shares of common stock,
which the corporation is authorized to issue.
The above amendments to the Articles of Incorporation was adopted by the
shareholders of the Corporation on the 21st day of December, 1991, by a majority
vote of the shareholders of the Corporation.
<PAGE>
This 21st day of December, 1991.
/s/ Helen J. Brown
- - -----------------------------------------
Helen J. Brown
President & Director
/s/ Fred V. Schiemann
- - -----------------------------------------
Fred V. Schiemann
Secretary & Director
State of Nevada )
) ss
County of Washoe )
On this 21st Day of December, 1991, personally appeared before me, a notary
public, Helen J. Brown & Fred V. Schiemann who acknowledged that they executed
the above instrument.
- - ----------------------------
Notary Public
-2-
<PAGE>
CERTIFICATE TO DECREASE NUMBER OF AUTHORIZED SHARES
PURSUANT TO NRS Section 78.207
of
CARAVELLE HOLDING, INC.
Pursuant to the provisions of NRS, Section 78.207(4), the undersigned
president and secretary of CARAVELLE HOLDING, INC., a Nevada corporation (the
"Corporation"), do hereby certify as follows:
1. The name of the Corporation is:
CARAVELLE HOLDING, INC.
2. The Board of Directors of the Corporation, by Unanimous Written
Consent Pursuant to NRS Section 78.315(2) dated April ___, 1994, adopted
resolutions (the "Resolutions") in accordance with NRS Section 78.207(1) to
decrease the number of authorized shares of common stock (the "Common Stock") of
the Corporation and correspondingly decrease the number of issued shares of the
same class held by each stockholder of record at the Effective Time of the
change (as herein defined). The Resolutions also provided for a corresponding
change in the par value of the Common Stock.
3. The following is provided as required by NRS Section 78.207(4):
(a) THE CURRENT NUMBER OF AUTHORIZED SHARES AND THE PAR VALUE, IF
ANY, OF EACH CLASS AND SERIES, IF ANY, OF SHARES BEFORE THE
CHANGE. The current number of authorized shares of Common Stock
is 25,000,000 shares. The par value of the Common Stock before
the change is $0.002 per share. The Corporation is not
authorized to issue any other class or series of shares.
(b) THE NUMBER OF AUTHORIZED SHARES AND THE PAR VALUE, IF ANY, OF
EACH CLASS AND SERIES, IF ANY, OF SHARES AFTER THE CHANGE. The
number of authorized shares of Common Stock after the change
shall be 5,000,000 shares. The par value of the Common Stock
after the change shall be $0.01 per share. After the change, the
Corporation shall not be authorized to issue any other class or
series of shares other than 5,000,000 shares of Common Stock, par
value $0.01 per share.
(c) THE NUMBER OF SHARES OF EACH AFFECTED CLASS AND SERIES, IF ANY,
TO BE ISSUED AFTER THE CHANGE IN EXCHANGE FOR EACH ISSUED SHARE
OF THE SAME CLASS OR SERIES. The affected class is Common Stock.
At the Effective Time of the change (as defined herein), each
issued share of Common Stock shall be reduced and converted into
and shall become two-tenths of a share (.2 shares) of Common
Stock, par value $0.01 per share, and that the number of shares
of Common Stock held by each shareholder after the
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<PAGE>
Effective time shall equal the number of shares of Common Stock
held by them immediately prior to the Effective Time divided by
five (5).
(d) THE PROVISIONS, IF ANY, FOR THE ISSUANCE OF FRACTIONAL SHARES, OR
FOR THE PAYMENT OF MONEY OR THE ISSUANCE OF SCRIP TO STOCKHOLDERS
OTHERWISE ENTITLED TO A FRACTION OF A SHARE AND THE PERCENTAGE OF
OUTSTANDING SHARES AFFECTED THEREBY. To the extent required in
connection with the holdings of any shareholder, the Corporation
shall issue fractional shares so that, for example, the holder of
11 shares immediately prior to the Effective Time shall hold,
after the Effective Time, 2.2 shares. No money will be paid to
any stockholder and no scrip will be issued to any stockholder
and the percentage of stockholders otherwise entitled to a
fraction of share that will receive money or scrip shall be zero
percent (0%).
(e) SHAREHOLDER APPROVAL REQUIREMENTS. Approval of the stockholders
is not required pursuant to NRS Section 78.207(1) and (2).
(f) WHETHER THE CHANGE IS EFFECTIVE ON FILING THE CERTIFICATE OR, IF
NOT, THE DATE AND TIME AT WHICH THE CHANGE WILL BE EFFECTIVE.
The change described in this certificate shall become effective
at 11:59 p.m. Pacific Daylight Time, on the date of filing in the
office of the Secretary of State of Nevada of this Certificate
(the "Effective Time").
DATED this 13th day of April, 1994.
/s/ Fred V. Schiemann
---------------------------------------
Fred V. Schiemann, President
/s/ Fred V. Schiemann
---------------------------------------
Fred V. Schiemann, Secretary
-2-
<PAGE>
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF PRESIDENT
County of Washoe )
On this 13th day of April, 1994, before me, the undersigned Notary Public,
personally appeared FRED V. SCHIEMANN, known to me or satisfactorily proven to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged the he/she executed the same in the capacities and for the purposes
therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
- - ---------------------
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF SECRETARY
County of Washoe )
On this 13th day of April, 1994, before me, the undersigned Notary Public,
personally appeared FRED V. SCHIEMANN, known to me or satisfactorily proven to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged the he/she executed the same in the capacities and for the purposes
therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
- - ---------------------
-3-
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
CARAVELLE HOLDING, INC.
Pursuant to the provisions of NRS Section 78.390, the undersigned president
and secretary of CARAVELLE HOLDING, INC., a Nevada corporation (the
"Corporation"), do hereby certify as follows:
1. The Board of Directors of the Corporation, by Unanimous Written
Consent Pursuant to NRS Section 78.315(2) dated June ___, 1994, adopted
resolutions in accordance with NRS Section 78.390(1)(a) directing that the
Articles of Incorporation, as amended, be amended as follows:
(a) NAME CHANGE. Article I of the original Articles of Incorporation
is amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: ONE PLUS, INC."
(b) CORRECTION OF SCRIVENER'S ERROR. The amendment to the Articles
of Incorporation of the Corporation filed on January 24, 1992 which purported to
amend "ARTICLE IV" was intended to refer to and amend "ARTICLE VI." The
reference in the center of page 1 of such January 24, 1992 amendment to "ARTICLE
IV" is hereby amended to read "ARTICLE VI."
(c) CHANGE IN AUTHORIZED CAPITAL STOCK. Article VI of the Articles
of Incorporation, as amended, is amended so as to increase the number of shares
of capital stock which the Corporation shall have the authority to issue to
twenty-five million (25,000,000) shares of common stock, par value $0.01 per
share. Such change shall not alter or change the issued and outstanding shares
of common stock of the Corporation. Article VI of the Articles of
Incorporation, as previously amended (including, without limitation, such
amendments as were filed on December 10, 1991, January 24, 1992 and May 19,
1994), is hereby deleted and the following is inserted in its place:
"ARTICLE VI
The Corporation shall be authorized to issue only one class
of stock which shall be Common Stock, par value $0.01 per share.
The total number of shares of stock which the Corporation shall
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<PAGE>
have the authority to issue is twenty-five million (25,000,000)
shares of Common Stock, par value $0.01 per share."
2. The number of shares of Common Stock of the Corporation issued
and outstanding and entitled to vote on the amendment to the Articles of
Incorporation is five million (5,000,000) shares.
3. The foregoing amendment has been consented to and approved by
written consent pursuant to NRS Section 78.320 signed by stockholders holding
shares of stock of the Corporation entitling them to exercise at least a
majority of the voting power of each class of stock outstanding and entitled to
vote thereon.
DATED this _________ day of June, 1994.
/s/ William G. Perrot
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William G. Perrot, President
/s/ Fran Peter Archuleta
--------------------------------------------
Fran Peter Archuleta, Secretary
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<PAGE>
STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF PRESIDENT
County of Washoe )
On this 15th day of June, 1994, before me, the undersigned Notary Public,
personally appeared WILLIAM G. PERROT, known to me or satisfactorily proven to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged that he/she executed the same in the capacities and for the
purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
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STATE OF NEVADA )
) ss. ACKNOWLEDGEMENT OF SECRETARY
County of Washoe )
On this 15th day of June, 1994, before me, the undersigned Notary Public,
personally appeared FRAN PETER ARCHULETA, known to me or satisfactorily proven
to be the person whose name is subscribed to the foregoing instrument, and
acknowledged that he/she executed the same in the capacities and for the
purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the
day and year first above written.
-------------------------------------------------
Notary Public
My Commission Expires:
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<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
One Plus Inc.
--------------------------------
Name of Corporation
the undersigned James S. Dixon and
------------------------------------
President or Vice President
James S. Dixon of One Plus Inc.
- - ------------------------------------- -------------------------------------
Secretary or Assistant Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 7th day of November, 1994, adopted a resolution to amend the
original articles as follows:
Article I is hereby amended to read as follows:
The name of the Corporation shall be:
Global Telephone and Communications, Inc.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 1 MILLION that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ James S. Dixon
---------------------------------------
President or Vice President
/s/ James S. Dixon
---------------------------------------
Secretary or Assistant Secretary
State of Arizona )
) ss.
County of Maricopa )
On January 10, 1995, personally appeared before me, a Notary Public, James
S. Dixon, who acknowledged that they executed the above instrument.
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Signature of Notary
My Commission Expires
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<PAGE>
The foregoing unanimous actions of the Board of Directors of Global
Telephone and Communications Inc., a Nevada corporation, be and hereby are taken
and adopted as acts of the Corporation effective as of the dates herein
provided.
/s/ Wayne Halliburton
---------------------------------------
Wayne Halliburton, DIRECTOR
/s/ Clara M. Dixon
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Clara M. Dixon, DIRECTOR
/s/ Kim L. Farran
---------------------------------------
Kim L. Farran, DIRECTOR
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<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Global Telephone and Communications, Inc.
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NAME OF CORPORATION
We the undersigned Roger Remillard and
---------------------------------------------
PRESIDENT OR VICE PRESIDENT
Mitchell J. Melamed of Global Telephone and Communications, Inc.
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SECRETARY OR ASSISTANT SECRETARY NAME OF CORPORATION
do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened
and held on the 27th day of NOVEMBER, 1995, adopted a resolution to amend
the original articles as follows:
Article I is hereby amended to read as follows:
"ARTICLE I
The name of the corporation shall be VisCorp"
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation are 970,000 ; that the said
change(s) and amendment has been consented to and approved by a majority vote of
the stockholders holding at least a majority of each class of stock outstanding
and entitled to vote thereon.
Roger Remillard - Vice President
--------------------------------------------
PRESIDENT OR VICE PRESIDENT
Mitchell J. Melamed - Secretary
--------------------------------------------
SECRETARY OR ASSISTANT SECRETARY
State of ILLINOIS )
) ss.
County of COOK )
On November 27, 1995, personally appeared before me, a Notary Public,
ROGER REMILLARD and MITCHELL J. MELAMED who acknowledged that they executed
the above instrument.
--------------------------------------------
SIGNATURE OF NOTARY
<PAGE>
ARTICLES OF EXCHANGE
FIRST: The name and place on incorporation of the corporation whose shares
will be acquired is Visual Information Services Corp., a corporation duly
organized and existing in the state of Illinois (the "Illinois corporation")
(the laws of which state permit this exchange) and Global Telephone and
Communications, Inc., duly organized and existing in the state of Nevada (the
"Nevada Corporation")
SECOND: The Plan of Exchange has been adopted by the board of directors of
each corporation that is a party to the exchange;
THIRD: The approval of the stockholders of both of these corporations were
required and received and that the stockholders of both corporations took such
action without a meeting but by written consents thereto signed by stockholders
holding at least a majority of the voting power in the Nevada Corporation and at
least 2/3 of the voting power in the Illinois corporation.
(a) In the Nevada corporation there are 970,000 shares of common stock
outstanding of which 720,000 shares have voted by written consent in
favor of the Plan; and
(b) In the Illinois corporation, as of October 1, 1995, there were
4,477,000 shares of Common Stock outstanding and in excess of
3,050,000 shares have voted by written consent in favor of the plan.
FOURTH: The complete executed plan of exchange is on file at the place of
business of the Nevada corporation located at 3061 Probasco Way, Sparks, Nevada
89431 and a copy of the plan will be furnished by the Nevada Corporation, on
request and without cost to any stockholder of any corporation which is a party
to this plan of exchange.
Global Telephone and Communications, Inc.
By
-----------------------------------------
Kim L. Farran, President
By
-----------------------------------------
Kim L. Farran, Secretary
State of Nevada )
)s.s.
County of Washoe )
On November 20th, 1995 personally appeared before me, a Notary Public Kim
L. Farran who acknowledged that he executed the above instrument.
--------------------------------------------
Signature of Notary
<PAGE>
Exhibit 3.2
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF INCORPORATION
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
ARTICLE ONE The name of the corporation is INFORMATION ON COMMAND, INC.
---------------------------------
(SHALL CONTAIN THE WORD "CORPORATION", "COMPANY", "INCORPORATED",
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"LIMITED" OR AN ABBREVIATION THEREOF)
ARTICLE TWO The name and address of the initial registered agent and its
registered office are:
Registered Agent Mitchell J. Melamed
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FIRST NAME MIDDLE NAME LAST NAME
Registered Office Two North LaSalle Suite 1910
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NUMBER STREET SUITE #
(A P.O. BOX ALONE IS NOT ACCEPTABLE)
Chicago 60607 Cook
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CITY ZIP CODE COUNTY
ARTICLE THREE The purpose or purposes for which the corporation is organized
are:
If not sufficient space to cover this point, add one or more
sheets of this size.
Electronic communication information services and the transaction
of any and all lawful business for which corporations can be
incorporated under the Illinois Business Corporation Act.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
Class *Par Value per share Number of shares authorized
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Common N/A 10,000
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----------------------------------------------------------------
----------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of the
shares of each class are:
If not sufficient space to cover this point, add one or more
sheets of this size.
None
ARTICLE FIVE The number of shares to be issued initially, and the consideration
to be received by the corporation therefor, are:
*Par Value Number of shares Consideration to be
Class per share proposed to be issued received therefor
-----------------------------------------------------------------
Common N/A 1,000 $1,000.00
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$
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$
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$
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TOTAL $1,000.00
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-------------------
declaration as to a "par value" is optional. This space may be marked "n/a"
when no reference to a par value is desired.
<PAGE>
ARTICLE SIX The number of persons constituting the initial board of directors
of the corporation is ___________, and the names and addresses of
the persons who are to serve as directors until the first annual
meeting of shareholders or until their successors be elected and
qualify are:
Name Residential Address
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ARTICLE SEVEN (OPTIONAL)
(a) It is estimated that the value of all property
to be owned by the corporation for the following
year wherever located will be: $
--------
(b) It is estimated that the value of the property
to be located within the State of Illinois during
the following year will be: $
--------
(c) It is estimated that the gross amount of business
which will be transacted by the corporation during
the following year will be: $
--------
(d) It is estimated that the gross amount of business
which will be transacted from places of business
in the State of Illinois during the following
year will be: $
--------
ARTICLE EIGHT (OTHER PROVISIONS)
ATTACH A SEPARATE SHEET OF THIS SIZE FOR ANY OTHER PROVISION
TO BE INCLUDED IN THE aRTICLES OF iNCORPORATION, E.G.,
AUTHORIZING PRE-EMPTIVE RIGHTS; DENYING CUMULATIVE VOTING;
REGULATING INTERNAL AFFAIRS; VOTING MAJORITY REQUIREMENTS;
FIXING A DURATION OTHER THAN PERPETUAL; ETC.
NAMES & ADDRESSES OF INCORPORATORS
The undersigned Incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Articles of Incorporation are
true.
Dated 19
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Signatures and Names Post Office Address
1. /s/Jerome Greenberg 1. 2728 North Hampden Court
------------------------------- -----------------------------
SIGNATURE STREET
Jerome Greenberg Chicago, Illinois 60614
------------------------------- -----------------------------
NAME (PLEASE PRINT) CITY/TOWN STATE ZIP
2. 2.
------------------------------- -----------------------------
SIGNATURE STREET
------------------------------- -----------------------------
NAME (PLEASE PRINT) CITY/TOWN STATE ZIP
3. 3.
------------------------------- -----------------------------
SIGNATURE STREET
------------------------------- -----------------------------
NAME (PLEASE PRINT) CITY/TOWN STATE ZIP
(SIGNATURES MUST BE IN INK ON ORIGINAL DOCUMENT. CARBON COPIES, XEROX OR RUBBER
STAMP SIGNATURES MAY ONLY BE USED ON CONFORMED COPIES)
NOTE: If a corporation acts as incorporator, the name of the corporation and the
state of incorporation shall be shown and the execution shall be by its
President or Vice-President and verified by him, and attested by its Secretary
or an Assistant Secretary.
<PAGE>
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF AMENDMENT
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned corporation hereby adopts these Articles of Amendment to its
Articles of Incorporation.
ARTICLE ONE The name of the corporation is Information on Command, Inc.
----------------------------------
---------------------------------------------------------(NOTE 1)
ARTICLE TWO The following amendment of the Articles of Incorporation was
adopted on May 15, 1990 in the manner indicated below. ("X"
ONE BOX ONLY.)
/ / By a majority of the incorporators, provided no directors were
named in the articles of incorporation and no directors have been
elected; or by a majority of the board of directors, in
accordance with Section 10.10, the corporation having issued no
shares as of the time of adoption of this amendment;
(NOTE 2)
/ / By a majority of the board of directors, in accordance with
Section 10.15, shares having been issued but shareholder action
not being required for the adoption of the amendment;
(NOTE 3)
/ / By the shareholders, in accordance with Section 10.20, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. At a meeting of shareholders, not
less than the minimum number of votes required by statute and by
the articles of incorporation were voted in favor of the
amendment;
(NOTE 4)
/ / By the shareholders, in accordance with Sections 10.20 and 7.10,
a resolution of the board of directors have been duly adopted and
submitted to the shareholders. A consent in writing has been
signed by shareholders having not less than the minimum number of
votes required by statute and by the articles of incorporation.
Shareholders who have not consented in writing have been given
notice in accordance with Section 7.10;
(NOTE 4)
/X/ By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors have been duly adopted and
submitted to the shareholders. A consent in writing has been
signed by all the shareholders entitled to vote on this
amendment.
(NOTE 4)
(INSERT AMENDMENT)
(ANY ARTICLE BEING AMENDED IS REQUIRED TO BE SET FORTH IN ITS ENTIRETY)
(SUGGESTED LANGUAGE FOR AN AMENDMENT TO CHANGE THE CORPORATE NAME IS: RESOLVED,
THAT THE ARTICLES OF INCORPORATION BE AMENDED TO READ AS FOLLOWS:)
RESOLVED, that the Articles of Incorporation be amended to read as follows:
VISUAL INFORMATION SERVICE CORP.
- - --------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2.
(over)
<PAGE>
ARTICLE THREE The manner in which any exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any class below the number of issued shares
of that class, provided for or effected by this amendment, is as
follows: (IF NOT APPLICABLE, INSERT "NO CHANGE")
No change.
ARTICLE FOUR (a) The manner in which said amendment effects a change in the
amount of paid-in capital (Paid-in capital replaces the terms
Stated Capital and Paid in Surplus and is equal to the total of
these accounts) is as follows: (IF NOT APPLICABLE, INSERT "NO
CHANGE")
No change.
(b) The amount of paid-in capital (Paid in Capital replaces the
terms Stated Capital and Paid in Surplus and is equal to the
total of these accounts) as changed by this amendment is as
follows: (IF NOT APPLICABLE, INSERT "NO CHANGE")
No change.
Before Amendment After Amendment
Paid-in Capital $ $
--------------- --------------
(Complete either Item 1 or 2 below)
(1) The undersigned corporation has caused these articles to be signed by its
duly authorized officers, each of whom affirm, under penalties of perjury, that
the facts stated herein are true.
Dated 5-18 , 19 90 Information on Command, Inc. now Visual
---------- ----- Information Service, Corp.
---------------------------------------
(EXACT NAME OF CORPORATION)
attested by /s/Mitchell J. Melamed by /s/Jerome Greenberg
------------------------ -----------------------------------
(SIGNATURE OF SECRETARY OR (SIGNATURE OF PRESIDENT OR VICE
ASSISTANT SECRETARY) PRESIDENT)
Mitchell J. Melamed-Secretary Jerome Greenberg
------------------------ -----------------------------------
(TYPE OR PRINT NAME AND TITLE) (TYPE OR PRINT NAME AND TITLE)
(2) If amendment is authorized by the incorporators, the incorporators must sign
below.
OR
If amendment is authorized by the directors and there are no officers, then a
majority of the directors or such directors as may be designated by the board,
must sign below.
The undersigned affirms, under penalties of perjury, that the facts stated
herein are true.
Dated , 19
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- - -------------------------------- --------------------------------------
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<PAGE>
MEMORANDUM OF ACTION OF DIRECTORS
We, JEROME GREENBERG, ROGER O. REMILLARD and MITCHELL J. MELAMED, all the
Directors of INFORMATION ON COMMAND, INC., an Illinois Corporation, pursuant to
Section 8.45 of the Illinois Business Corporation Act, take the following
actions, by consent and without a meeting, as if by unanimous vote, and waive
all notice of such meeting, pursuant to Section 7.20 of that Act:
1. By-laws: The By-Laws, in words and figures as inserted immediately
following this page of this memorandum, are hereby adopted as the By-Laws of
this Corporation:
<PAGE>
BY-LAWS
OF
VISUAL INFORMATION SERVICES CORP.
ARTICLE I
OFFICES
The corporation shall continuously maintain in the State of Illinois a
registered office and a registered agent whose office is identical with such
registered office, and may have other offices within or without the state.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. An annual meeting of the shareholders shall be
held on the 1st Monday in May of each year for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called either by the president, by the board of directors or by the holders of
not less than one-fifth of all the outstanding shares of the corporation, for
the purpose or purposes stated in the call of the meeting.
SECTION 3. PLACE OF MEETING. The board of directors may designate any
place, as the place of meeting for any annual meeting or for any special meeting
called by the board of directors. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be at Frank & Melamed,
Ltd.; Two North LaSalle Street; Suite 1910; Chicago, Illinois 60602.
SECTION 4. NOTICE OF MEETINGS. Written notice stating the place, date, and
hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than forty days before the date of the meeting, or in the case of a
merger or consolidation not less than twenty nor more than forty days before the
meeting, either personally or by mail, by or at the direction of the president,
or the secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be
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<PAGE>
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the records of the corporation, with postage
thereon prepaid.
When a meeting is adjourned to another time or place, notice need not be given
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken.
SECTION 5. FIXING OF RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend, or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of shares or for the purpose of any other lawful action,
the board of directors of the corporation may fix in advance a record date which
shall not be more than forty days and, for a meeting of shareholders, not less
than ten days, or in the case of a merger or consolidation not less than twenty
days, before the date of such meeting. If no record date is fixed, the record
date for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be the date on which notice of the meeting is
mailed, and the record date for the determination of shareholders for any other
purpose shall be the date on which the board of directors adopts the resolution
relating thereto. A determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting.
SECTION 6. VOTING LISTS. The officer or agent having charge of the
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order, showing the
address of and the number of shares registered in the name of the shareholder,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the registered office of the corporation and shall be open to inspection
by any shareholder for any purpose germane to the meeting, at any time during
usual business hours. Such list shall also be produced and kept open at the
time and place of the meeting and may be inspected by any shareholder during the
whole time of the meeting. The original share ledger or transfer book, or a
duplicate thereof kept in this State, shall be prima facie evidence as to who
are the shareholders entitled to examine such list or share ledger or transfer
book or to vote at any meeting of shareholders.
SECTION 7. QUORUM. The holders of a majority of the outstanding shares of
the corporation, present in person or represented by proxy, shall constitute a
quorum at any meeting of shareholders; provided that if less than a majority of
the outstanding shares are represented at said meeting, a majority of the shares
so represented may adjourn the meeting at any time
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<PAGE>
without further notice. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting shall be the act of the
shareholders, unless the vote of a greater number or voting by classes is
required by the Business Corporation Act, the Articles of Incorporation or these
By-Laws. At any adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the original
meeting. Withdrawal of shareholders from any meeting shall not cause failure of
a duly constituted quorum at that meeting.
SECTION 8. PROXIES. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
SECTION 9. VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote upon each matter submitted to vote at a meeting of
shareholders.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent, or proxy as the by-laws of such corporation may prescribe, or, in the
absence of such provision, as the board of directors of such corporation may
determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian, or conservator, either in person or by proxy without a transfer of
such shares into the name of such administrator, executor, court appointed
guardian, or conservator. Shares standing in the name of a trustee may be voted
by him, either in person or by proxy.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority so to do be contained in
an appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their share, for a period not to exceed ten years, by entering into a written
voting trust agreement specifying the terms and conditions of the voting trust,
and by transferring
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<PAGE>
their shares to such trustee or trustees for the purpose of the agreement. Any
such trust agreement shall not become effective until a counterpart of the
agreement is deposited with the corporation at its registered office. The
counterpart of the voting trust agreement so deposited with the corporation
shall be subject to the same right of examination by a shareholder of the
corporation, in person or by agent or attorney, as are the books and records of
the corporation, and shall be subject to examination by any holder of a
beneficial interest in the voting trust, either in person or by agent or
attorney, at any reasonable time for any proper purpose.
Shares of its own stock belonging to this corporation shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares at any given time.
SECTION 11. CUMULATIVE VOTING. In all elections for directors, every
shareholder shall have the right to vote, in person or by proxy, the number of
shares owned by him, for as many persons as there are directors to be elected,
or to cumulate said shares, and give one candidate as many votes as the number
of directors multiplied by the number of his shares shall equal, or to
distribute them on the same principle among as many candidates as he shall see
fit.
The Articles of Incorporation may be amended to limit or eliminate
cumulative voting rights in all or specified circumstances or to limit or deny
voting rights or to provide special voting rights as to any class or classes or
series of shares of the corporation.
SECTION 12. INSPECTORS. At any meeting of shareholders, the presiding
officer may, or upon the request of any shareholder shall appoint one or more
persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares represented
at the meeting, based upon their determination of the validity and effect of
proxies; count all votes and report the results; and do such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the shareholders.
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there be more than one inspector acting at such meeting. If
there is more than one inspector, the report of a majority shall be the report
of the inspectors. The report of the inspector or inspectors on the number of
shares represented at the meeting and the results of the voting shall be prima
facie evidence thereof.
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<PAGE>
SECTION 13. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders, or any other action which may be taken
at a meeting of the shareholders, may be taken without a meeting and without a
vote, if a consent in writing, setting forth the action so taken shall be signed
(a) if five (5) days prior notice of the proposed action is given in writing to
all of the shareholders entitled to vote with respect to the subject matter
hereof, by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voting or
(b) by all of the shareholders entitled to vote with respect to the subject
matter thereof.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given in writing to those
shareholders who have not consented in writing. In the event that the action
which is consented to is such as would have required the filing of a certificate
under any section of the Business Corporation Act is such action have been voted
on by the shareholders at a meeting thereof, the certificate filed under such
section shall state, in lieu of any statement required by such section
concerning any vote of shareholders, that written consent has been given in
accordance with the provisions of Section 7.10 of the Business Corporation Act
and that written notice has been given as provided in such Section 7.10.
SECTION 14. VOTING BY BALLOT. Voting on any question or in any election
may be by voice unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business of the corporation shall be
managed by its board of directors. A majority of the board of directors may
establish reasonable compensation for their services and the services of other
officers, irrespective of any personal interest.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. There shall be a minimum of
three and a maximum of eight directors of the corporation. Each director shall
hold office until the next annual meeting of shareholders or until his successor
shall have been elected and qualified. Directors need not be residents of
Illinois or shareholders of the corporation. The number of directors may be
increased or decreased from time to time by the amendment of this section; but
no decrease shall have the effect of shortening the term of any incumbent
directors.
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SECTION 3. REGULAR MEETINGS. A regular meeting of the board of directors
shall be held without other notice than this By-Law, immediately after the
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the president or any two directors. The
person or persons authorized to call special meetings of the board of directors
may fix any place as the place for holding any special meeting of the board of
directors called by them.
SECTION 5. NOTICE. Notice of any special meeting shall be given at least
seven (7) days previous thereto by written notice to each director at his
business address. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegram company. The attendance of a director
at any meeting shall constitute a waiver of notice of such meeting, except where
a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by these
By-Laws shall constitute a quorum for transaction of business at any meeting of
the board of directors, provided that if less than a majority of such number of
directors are present at said meeting, a majority of the directors present may
adjourn the meeting at any time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless the act of a greater number is required by statute, these
By-Laws, or the articles of incorporation.
SECTION 8. VACANCIES. Any vacancy occurring in the board of directors and
any directorship to be filled by reason of an increase in the number of
directors, may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose.
SECTION 9. RESIGNATION AND REMOVAL OF DIRECTORS. A director may resign at
any time upon written notice to the board of directors. A director may be
removed with or without cause, by a majority of shareholders if the notice of
the meeting names the director or directors to be removed at said meeting.
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SECTION 10. INFORMAL ACTION BY DIRECTORS. The authority of the board of
directors may be exercised without a meeting if a consent in writing, setting
forth the action taken, is signed by all of the directors entitled to vote.
SECTION 11. COMPENSATION. The board of directors, by the affirmative vote
of a majority of directors then in office, and irrespective of any personal
interest of any of its members, shall have the authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers, or otherwise. By resolution of the board of directors the directors
may be paid their expenses, if any, of attendance at each meeting of the board.
No such payment previously mentioned in this section shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
SECTION 12. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
SECTION 13. EXECUTIVE COMMITTEE. The board of directors, by resolution
adopted by a majority of the number of directors fixed by the By-Laws or
otherwise, may designate two or more directors to constitute an executive
committee, which committee, to the extent provided in such resolution, shall
have and exercise all of the authority of the board of directors in the
management of the corporation, except as otherwise required by law. Vacancies
in the membership of the committee shall be filled by the board of directors at
a regular or special meeting of the board of directors. The executive committee
shall keep regular minutes of its proceedings and report the same to the board
when required.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a president,
one or more vice-presidents (the number thereof to be determined by the board of
directors), a treasurer, a secretary, and such assistant treasurers, assistant
secretaries or other officers as may be elected by the board of directors. The
board of directors may also elect a Chairman of the Board. Any two or more
offices may be held by the same person, except the offices of president and
secretary.
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<PAGE>
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the board of directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall have
been removed in the manner hereinafter provided. Election of an officer shall
not of itself create contract rights.
SECTION 3. REMOVAL. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4-A. CHAIRMAN OF THE BOARD. The Chairman of the Board, when
elected, shall have general supervision, direction and control of the business
and affairs of the Corporation, subject to the control of the Board of
Directors, shall preside at meetings of shareholders and shall have such other
functions, authority and duties as customarily appertain to the office of the
chief executive of a business corporation or as may be prescribed by the Board
of Directors.
SECTION 4. PRESIDENT. During any period when there shall be an office of
Chairman of the Board, the President shall be the Chief Executive Officer of the
Corporation and shall have such functions, authority and duties as may be
prescribed by the board of directors or the Chairman of the Board.
SECTION 5. THE VICE-PRESIDENTS. The vice-president (or in the event there
be more than one vice-president, each of the vice-presidents) shall assist the
president in the discharge of his duties as the president may direct and shall
perform such other duties as from time to time may be assigned to him by the
president or by the board of directors. In the absence of the president or in
the event of his inability or refusal to act, the vice-president
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<PAGE>
(or in the event there be more than one vice-president, the vice-presidents in
the order designated by the board of directors, or by the president if the board
of directors has not made such a designation, or in the absence of any
designation, then in the order of seniority of tenure as vice-president) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. Except in
those instances in which the authority to execute is expressly delegated to
another officer or agent of the corporation or a different mode of execution is
expressly prescribed by the board of directors or these By-Laws, the
vice-president (or each of them if there are more than one) may execute for the
corporation certificates for its shares and any contracts, deeds, mortgages,
bonds or other instruments which the board of directors has authorized to be
executed, and he may accomplish such execution either under or without the seal
of the corporation and either individually or with the secretary, any assistant
secretary, or any other officer thereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
SECTION 6. THE TREASURER. The treasurer shall be the principal accounting
and financial officer of the corporation. He shall: (a) have charge of and be
responsible for the maintenance of adequate books of account for the
corporation; (b) have charge and custody of all funds and securities of the
corporation, and be responsible therefor and for the receipt and disbursement
thereof; and (c) perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the president
or by the board of directors. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the board of directors may determine.
SECTION 7. THE SECRETARY. The secretary shall: (a) record the minutes of
the shareholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these By-Laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation; (d) keep a register of
the post-office address of each shareholder which shall be furnished to the
secretary by such shareholder; (e) sign with the president, or a vice-president,
or any other thereunto authorized by the board of directors, certificates for
shares of the corporation, the issue of which shall have been authorized by the
board of directors, and any contracts, deeds, mortgages, bonds, or other
instruments which the board of directors has authorized to be executed,
according to the requirements of the form of the instrument, except when a
different mode of execution is expressly prescribed by the board of directors or
these By-Laws; (f) have general charge of the stock transfer books of the
corporation; (g) perform all duties incident to the office of secretary and such
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<PAGE>
other duties as from time to time may be assigned to him by the president or by
the board of directors.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant
treasurers and assistant secretaries shall perform such duties as shall be
assigned to them by the treasurer or the secretary, respectively, or by the
president or the board of directors. The assistant secretaries may sign with
the president or a vice-president, or any other officer thereunto authorized by
the board of directors, certificates for shares of the corporation, the issue of
which shall have been authorized by the board of directors, and any contracts,
deeds, mortgages, bonds, or other instruments which the board of directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these By-Laws. The assistant treasurers shall
respectively, if required by the board of directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the board of
directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents
and in such manner as shall from time to time be determined by resolution of the
board of directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the
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credit of the corporation in such banks, trust companies or other depositaries
as the board of directors may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be signed by the president or a vice-president or by such
officer as shall be designated by resolution of the board of directors and by
the secretary or an assistant secretary, and shall be sealed with the seal or a
facsimile of the seal of the corporation. If both of the signatures of the
officers be by facsimile, the certificate shall be manually signed by or on
behalf of a duly authorized transfer agent or clerk. Each certificate
representing shares shall be consecutively numbered or otherwise identified, and
shall also state the name of the person to whom issued, the number and class of
shares (with designation of series, if any), the date of issue, that the
corporation is organized under Illinois law, and the par value or a statement
that the shares are without par value. If the corporation is authorized and
does issue shares of more than one class or of series within a class, the
certificate shall also contain such information or statement as may be required
by law.
The name and address of each shareholder, the number and class of shares
held and the date on which the certificates for the shares were issued shall be
entered on the books of the corporation. The person in whose name shares stand
on the books of the corporation shall be deemed the owner thereof for all
purposes as regards the corporation.
SECTION 2. LOST CERTIFICATES. If a certificate representing shares has
allegedly been lost or destroyed the board of directors may in its discretion,
except as may be required by law, direct that a new certificate be issued upon
such indemnification and other reasonable requirements as it may impose.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares of the corporation
shall be recorded on the books of the corporation and, except in the case of a
lost or destroyed certificate, on surrender for cancellation of the certificate
for such shares. A certificate presented for transfer must be duly endorsed and
accompanied by proper guaranty of signature and other appropriate assurances
that the endorsement is effective.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the board
of directors.
ARTICLE VIII
DISTRIBUTIONS
The board of directors may authorize, and the corporation may make,
distributions to its shareholders, subject to any restrictions in the articles
of incorporation or provided by law.
ARTICLE IX
SEAL
The corporate seal shall have inscribed thereon the name of the corporation
and the words "Corporate Seal, Illinois". The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or in any manner reproduced,
provided that the affixing of the corporate seal to an instrument shall not give
the instrument additional force or effect, or change the construction thereof,
and use of the corporate seal is not mandatory.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of these
By-Laws or under the provisions of the articles of incorporation or under the
provisions of The Business Corporation Act of the State of Illinois, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance at any meeting shall constitute waiver of
notice thereof unless the person at the meeting objects to the holding of the
meeting because proper notice was not given.
ARTICLE XI
AMENDMENTS
Unless the power to make, alter, amend or repeal the By-Laws is reserved to
the shareholders by the articles of incorporation, the
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By-Laws of the corporation may be made, altered, amended or repealed by the
shareholders or the board of directors, but no by-law adopted by the
shareholders may be altered, amended or repealed by the board of directors if
the By-Laws so provide. The By-Laws may contain any provisions for the
regulation and management of the affairs of the corporation not inconsistent
with law or the articles of incorporation.
ARTICLE XII
INDEMNIFICATION OF OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. Subject to the laws of Illinois, the corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Subject to the laws of Illinois, the corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee,
agent or trustee of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and
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<PAGE>
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for gross
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper.
SECTION 3. To the extent that a director, officer, employee or agent of the
corporation has been successful, on the merits or otherwise, in defense of any
action, suit or proceeding referred to in Section 1 or 2 of this Article, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
SECTION 4. Any indemnification under Sections 1 or 2 of this Article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case, upon a determination that indemnification of the director,
officer, employee, agent, trustee, or plan member is proper in the circumstances
because he has met the applicable standard of conduct set forth in Sections 1 or
2 of this Article. Such determination shall be made (a) by the board of
directors by a majority vote of a quorum consisting of disinterested directors,
or (b) if such a quorum is not obtainable, or, even if obtainable, if a quorum
of disinterested directors or directs, by independent legal counsel in a written
opinion, or (c) by the shareholders.
SECTION 5. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding, as authorized by the board of directors in
the specific case, upon receipt of an undertaking by or on behalf of the
director, officer, employee, agent, trustee or plan member to repay such amount,
unless it shall ultimately be determined that he is entitled to be indemnified
by the corporation as authorized in this Article.
SECTION 6. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent, and shall inure to
the benefit of the heirs, executors and administrators of such a person.
SECTION 7. The corporation may purchase and maintain insurance
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on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or who is or was serving at the request of the corporation as a
director, officer, employee, agent of trustee of another corporation,
partnership, joint venture, trust, or other enterprise, or as a member of an
administrative committee or other committee of any plan created under a trust
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article.
SECTION 8. If the corporation has paid indemnity or had advanced expenses
to a director, officer, employee or agent, the corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders' meeting.
SECTION 9. References to "the corporation" shall include, in addition to
the surviving corporation, any merging corporation, including any corporation
having merged with a merging corporation, absorbed in a merger which otherwise
would have lawfully been entitled to indemnify its directors, officers, and
employees or agents.
<PAGE>
Exhibit 4
NUMBER SHARES
SEE REVERSE FOR
CUSTOMARY ABBREVIATIONS
CUSIP 92829K 10 1
VISCORP
ORGANIZED UNDER THE LAWS OF THE STATE OF NEVADA
THIS CERTIFIES THAT **SAMPLE**
IS THE OWNER OF
FULLY PAID AND NONASSESSABLE COMMON STOCK, $0.01 PAR VALUE OF
VISCORP
TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION IN PERSON OR BY ATTORNEY
UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE AND
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO ALL THE PROVISIONS OF THE
ARTICLES OF INCORPORATION, TO ALL OF WHICH THE HOLDER BY ACCEPTANCE HEREBY
ASSENTS.
THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT.
IN WITNESS WHEREOF, THE CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
ENDORSED BY THE FACSIMILE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS AND TO
BE SEALED WITH THE FACSIMILE SEAL OF THE CORPORATION.
DATED:
/s/Mitchell J. Melamed [SEAL] /s/Jerome Greenberg
SECRETARY PRESIDENT
COUNTERSIGNED:
CORPORATE STOCK TRANSFER, INC.
370 - 17th Street, Suite 2350, Denver, Colorado 80202
By:
-------------------------------------------------
Transfer Agent and Registrar Authorized Officer
<PAGE>
VISCORP
CORPORATE STOCK TRANSFER, INC.
TRANSFER FEE: $12.00 PER CERTIFICATE
--------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common UNIF GIFT MIN ACT. Custodian for
----------------------
(Cust.) (Minor)
TEN ENT --as tenants by the entireties under Uniform Gifts to Minors
JT TEN --as joint tenants with right of Act of
survivorship and not as tenants -------------------
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received hereby sell, assign and transfer unto
--------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------
---------------------------------------
Please print or type name and address of assignee
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Shares
--------------------------------------------------------------
of the common stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within named
Corporation, with full power of substitution in the premises.
Dated 19
--------------------- ------
SIGNATURE GUARANTEED: X
---------------------------------------------
X
----------------------------------------------
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan
Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 10.1
SERVICE AGREEMENT
This agreement is effective as of the ____ of ______ 1996 the ("Effective
Date") by and between:
VISCORP
Having a principal place of business at: 111 Canal Street, Suite 933, Chicago,
Illinois 60606 USA,
Represented by Mr. Don Gilbreath acting as Vice President of Engineering,
Hereafter referred to as "Viscorp".
and
SOLECTRON FRANCE SA,
Having a principal place of business at Chemin Departemental, 109, BP 6,
Canejan, 33611 Cestas Cedex, France
Represented by Jean-Loup Rousseau acting as Vice President of Sales.
Hereafter referred to as "Solectron"
Solectron is engaged in the business of pre-manufacturing services,
manufacturing, assembling, testing and packaging of electronic products.
Viscorp is a development stage company.
Viscorp wishes Solectron to provide on behalf of Viscorp, pre-manufacturing
services, including the Base Board Printed Circuit layout of Rio Project.
Solectron has agreed to provide these services.
The parties wish to enter into this Agreement to set out their mutual rights and
obligations in respect to the foregoing, and therefore mutually agree as
follows:
1.0 PRECEDENCE:
1.1 The terms and conditions and addenda herein shall govern all services
performed by Solectron pertaining to the subject matter.
<PAGE>
1.2 It is the intent of the parties that this Agreement and its addenda
represent the entire agreement and shall prevail over the terms and conditions
of any purchase order, acknowledgment form or other instrument.
1.3 This Agreement may be executed in one or more counterparts, each of which
will be deemed the original, but all of which will constitute but one and the
same document. The parties agree this Agreement and its addenda may not be
modified except in writing signed by both parties.
2.0 TERM
2.1 This Agreement shall commence on the effective date and shall continue
until design participation is completed. For subsequent follow on production
including pilot run and full production ramp-up, both parties agree to enter
into a new agreement.
3.0 SERVICE DESCRIPTION
Solectron will pursuant to the specifications and electrical drawing provided by
Viscorp to Solectron and contained in Addendum A, perform following services on
behalf of Viscorp.
A) Solectron will propose to Viscorp Printed Circuit layout for Base Board,
including
- - - Netlist import
- - - Placement and routing
- - - Design for manufacturing
- - - Documentation.
This Printed Circuit layout proposal will need to be formally approved by
Viscorp during the placement review scheduled at the end of the printed Circuit
layout stage.
B) Material procurement
Unless otherwise specified, Solectron shall purchase on behalf of Viscorp, all
nonconsigned material necessary to perform the services hereunder according to
Viscorp Approved Vendor List.
Solectron is responsible for monitoring supplier quality, including quality
problem solving, on standard components from Solectron AVL.
For single source product, and or customized product, Viscorp is responsible to
ensure that the supplier can consistently procure the components at the quantity
and quality levels in line with the project requirement.
Any proposal made by Solectron to improve the quality of components will have to
be formally approved by Viscorp prior to implementation.
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C) Assembly and test of 30 Prototypes.
Solectron will assemble and test 30 Prototypes in conformity with the technical
specifications given by Viscorp to Solectron.
Test will be visual test only.
Any additional prototype request from Viscorp will be subject to an Addendum
specifically referencing this Agreement.
4.0 VISCORP'S OBLIGATIONS
Before the start of service, Viscorp will provide Solectron with all necessary
information for the manufacture of Viscorp's prototypes.
- - - Technical specifications,
- - - Complete part number data, and data sheets for new components,
- - - Finalized Bill of Material,
- - - Drawings,
- - - Approved Vendor List "AVL".
- - - Viscorp will provide to Solectron such technical support as Viscorp and
Solectron mutually determine necessary to complete performance under this
Agreement.
- - - Viscorp will provide Solectron with the assistance of an Electronic
designer from Viscorp, during the PCB layout development.
- - - Viscorp will closely work with Solectron Purchasing Department to find
suitable replacements for obsolete or hard-to-find components, in Solectron AVL
whenever possible.
- - - Viscorp will provide preliminary component sketch for base PCB layout.
- - - Viscorp will send finalized Base PCB netlist with IC and connector pin-
numbering information to Solectron.
- - - Before commencing work hereunder, Viscorp must have issued to Solectron a
purchase order to fund the services herein. Viscorp will issue a purchase order
which shall contain following information:
- - - service description
- - - delivery schedule and price as agreed upon by both parties.
3.0 SOLECTRON'S OBLIGATIONS
Solectron will provide service described in section 3 of this Agreement
according to following schedule:
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Five (5) to seven (7) weeks after the receipt of Viscorp's order, Solectron
shall deliver to Viscorp two (2) Prototypes, providing that the Printed Circuit
layout proposed by Solectron has been formally approved by Viscorp during the
placement review as scheduled.
Five (5) to eight (8) additional days, after Viscorp formal approval of the 2
prototypes, Solectron will deliver the remaining 28 prototypes, if no change has
to be implemented.
Solectron will make its best efforts to assume its responsibilities within those
schedule limits.
Service will be fully completed when Solectron delivers to Viscorp the 30
prototypes corresponding to the service described in section 3 of this
Agreement.
4.0 PRICING
Pricing conditions for services sold under this Agreement are as follows:
- PCB layout of Base Board: 48 000 FF.
- 30 Prototypes 183 000 FF.
- Total Service Price is 231 000 FF. (taxes excluded).
5.0 PAYMENT TERMS
5.1 Solectron and Customer agree to following payment terms:
30% net of the total amount upon receipt of order,
30% net of the total amount upon placement review,
40% net of the total amount upon prototypes delivery
Payment will be made in French Francs.
5.2 Until the purchase price and all other charges payable to Solectron have
been received in full, Solectron retains and Viscorp grants to Solectron a
security interest in the prototypes delivered to Viscorp and any proceeds
therefrom.
6.0 DELIVERY
6.1 Delivery is ex works Solectron Canejan (according to Incoterm 1990).
Viscorp is responsible for all transportation, insurance, duties, customs
formalities and charges, applicable to Product sold under this Agreement.
Risk of loss and damage to Products pass to Viscorp upon delivery to Carrier at
Solectron Canejan.
Title to Product(s) pass to Viscorp upon complete payment of Prototypes by
Viscorp.
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7.0 ACCEPTANCE
Solectron will deliver prototypes that will conform to the technical
specifications contained in Addendum A.
Viscorp shall have five (5) working days from the date of receipt within which
to inspect the prototypes prior to Viscorp acceptance thereof.
Viscorp will notify Solectron in writing of all matter deficiencies discovered
during the inspection period. Failure to give notice within the five (5) days
period will result in Viscorp's full acceptance of the Prototypes.
8.0 PROJECT CHANGES
Any change in the concept of the design, features and configuration will be
mutually reviewed and agreed upon. All impacts such as design costs, inventory
costs, development expenses and delay in delivery schedules caused by those
changes will be mutually reviewed and agreed upon prior to implementation.
9.0 CANCELLATION AND LIABILITY
In case of cancellation of the service subject of this Agreement, Viscorp
accepts to pay to Solectron, all services performed prior to such termination,
whether those services are completed or not, all development, and all inventory
expenses as follows,
(i) the contract price of all finished Prototypes in Solectron's
possession,
(ii) the cost of material inventory (including handling charges and
value add), whether in raw form or work in process, and not
returnable to the vendor or usable for other customers,
(iii) the cost of material on order (including handling charges) which
cannot be canceled, and
(iv) any vendor cancellation charges incurred with respect to material
canceled or returned to the vendor.
10.0 CONFIDENTIALITY
Solectron and Viscorp agree to execute, as part of this Agreement, the Non
disclosure Agreement for the reciprocal protection of confidential information
signed on February 26, 1996 by the President and CEO of Viscorp, Mr. William H.
Buck and the President of Solectron France, Mr. Jean-Philippe Gallant.
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11.0 INTELLECTUAL PROPERTY
For the purpose of this Agreement "Invention" shall mean any idea, design,
concept, technique, invention, discovery or improvement, whether or not
patentable or registerable, which is conceived or reduced to practice during
this Agreement and in the performance of services hereunder. Those Inventions
will be treated as follows:
Each Solectron Invention shall be Solectron's property and Viscorp will have no
license. Each Viscorp Invention shall be Viscorp's property and Solectron will
have no license (text appears to be missing) joint inventions shall be jointly
owned by Solectron and Viscorp, and each party shall have the right to use it as
it wishes.
No license on patents acquired by one party prior to or after the date of this
Agreement is granted to the other party either expressly or impliedly.
In furnishing any information, or other elements hereunder, the disclosing party
makes no warranty, express or implied that the use or reproduction of any
information or element hereunder shall be free from any patent, trade secret or
copyright infringement.
Solectron shall be deemed to have been granted by Viscorp a non-exclusive,
royalty free license during the term of this Agreement and to use all of
Viscorp's patents, trade secrets, trademarks, copyrights and other intellectual
property required to perform Solectron's obligations under this Agreement.
12.0 PATENT, COPYRIGHT, AND TRADEMARK INDEMNITY
Each party (the "indemnifying party") shall defend, indemnify, and hold
harmless the other party from any claims by a third party of infringement of
intellectual properties resulting from the acts of the indemnifying party
pursuant to this Agreement, provided that the other party,
(i) give the indemnifying party prompt notice of any such claims,
(ii) renders reasonable assistance to the indemnifying party thereon,
and
(iii) permits the indemnifying party to direct the defense of the
settlement of such claims.
13.0 LIMITATION OF LIABILITY
13.1 In all situations involving performance or nonperformance of service
provided hereunder, Viscorp's remedy for defect is repair or replacement of the
defective prototype by Solectron if notified by Viscorp of the defect within the
acceptance period. If Solectron fails to perform its service responsibilities,
Viscorp shall be entitled to recover direct damages limited to the price of the
specific prototype which is purchased by Viscorp and which gives
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rise to the claim. This limitation will apply regardless of the form of action,
including without limitation negligence.
13.2 Under no circumstances including negligence, shall either party be
liable for any indirect, incidental, special or consequential damages resulting
from this Agreement, including but not limited to loss of profit, loss of
production, loss of contracts, even if either party or an authorized
representative has been advised of the possibility of such damages.
13.3 Viscorp warrants Solectron from all claims suits or proceedings of
third parties.
14.0 FORCE MAJEURE
Neither shall be liable for any failure or delay in its performance under this
Agreement due to acts of God, acts of civil or military authority, fires,
floods, earthquakes, riots, wars, sabotage, labor shortages or disputes,
destruction of production facilities, material unavailability or any other cause
beyond the reasonable control of the delayed party provided that the delayed
party:
(i) gives the other party written notice of such cause within fifteen (15)
days of the discovery of the event; and
(ii) uses its reasonable efforts to remedy such delay in its performance.
15.0 TERMINATION
15.1 If either party fails to meet anyone or more of the terms and
conditions as stated in either this Agreement or the addenda, Solectron and
Viscorp agree to negotiate in good faith to resolve such default. If the
defaulting party fails to cure such default or submit an acceptable written
plan to resolve such default within five (5) working days following notice of
default, the nondefaulting party shall have the right to terminate this
Agreement.
15.2 This Agreement shall immediately terminate should either party:
(i) become insolvent;
(ii) enter into or filing a petition, arraignment or proceeding
seeking an order for relief under the bankruptcy laws of its
respective jurisdiction,
(iii) enter into a receivership of any of its assets or,
(iv) enter into a dissolution of liquidation of its assets or an
assignment for the benefit of its creditors.
15.3 In case of termination and unless otherwise stipulated,
Solectron will deliver and Customer will pay all prototypes mentioned on the
purchase order accepted by Solectron before expiration or termination date.
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In the event Viscorp terminates this Agreement before service completion, or in
the event Solectron terminates this Agreement based on Viscorp's default,
Viscorp will compensate Solectron as stipulated in section 9 of this Agreement.
Each party will promptly return to the other party, all technical and / or
Confidential Documents related to the present Agreement.
16.0 GENERAL
16.1 Insurance
Each party to this Agreement will maintain necessary insurance to cover its
liabilities and protect itself from claims.
16.2 Assignment
Neither party shall delegate, assign or transfer its rights or obligations under
this Agreement, whether in whole or part, without the written consent of the
other party.
Failure by either party to enforce any provision of this Agreement shall not be
deemed to be a continuing waiver or a waiver of any other default or other term
and condition.
16.3 Severability.
If any provision of this Agreement is held by a court of competent jurisdiction
to be unenforceable, such provision shall be deemed null and void, and the
remainder of the Agreement shall continue to be in full force and effect, while
the parties shall negotiate in good faith to replace the provision with another
enforceable one reflecting as closely as possible the parties initial intention.
16.4 Relationship of the Parties.
Each of the parties shall at all times during the term of this Agreement act as,
and shall represent itself to be, an independent contractor. Neither party
shall have any right or authority to assume or create any obligations or to make
any representations or warranties on behalf of the other party whether express
or implied, or to bind the other party in a respect whatsoever.
16.5 Governing law
This Agreement shall be governed by and construed in accordance with the French
Laws. Any dispute arising out of or relating to this Agreement not settled
amicably by the parties shall be submitted exclusively to the Commercial Court
in Paris.
16.6 Choice of Language
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The original of this Agreement has been written in English. Both parties waives
any right it may have under the laws of either party's country to have this
Agreement written in the language of either party's country. Further any
notices given to either party as required by this Agreement shall be written in
the English language.
16.7 Notifications
Any and all notices and other communications whatsoever under this Agreement
shall be in writing, sent by registered mail or by telegram, or facsimile to the
address set forth below.
SOLECTRON France S.A.
Chemin Departemental 109E
Canejan - B.P6
33611 Cestas Cedex
France
VISCORP
111 Canal Street, Suite 933
Chicago, Illinois 60606
USA.
Agreed:
SOLECTRON FRANCE VISCORP
Date:________________________________ Date:______________________________
Name:________________________________ Name:______________________________
Title:_______________________________ Title:_____________________________
Signature: Signature:
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ADDENDUM A
Specifications
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EXHIBIT 10.2
VISUAL INFORMATION SERVICES CORP. AND DIGITAL SCIENCES INC.
TECHNOLOGY LICENSE AGREEMENT
This Technology License Agreement ("Agreement") made and entered into as of
the 1st day of January, 1995, by and between VISUAL INFORMATION SERVICES CORP.,
an Illinois corporation (hereinafter referred to as "VisCorp"), with offices at
2728 North Hampden Court, Chicago, Illinois 60614, and DIGITAL SCIENCES, INC., a
Nevada corporation (hereinafter referred to as "Digital"), with offices at 7150
East Camelback Road, Suite 300, Scottsdale, Arizona 85251.
RECITALS
A. VisCorp is the proprietor of certain technology as hereinafter
defined and of certain letters patent as hereinafter defined.
B. Digital desires to acquire and VisCorp is willing to grant to
Digital a license of the technology subject to the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the provisions of
this Agreement, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, unless the context
requires otherwise, the following expressions have the following meanings:
a. "Confidential Information" means all material, information,
and techniques pertaining to the inventions and processes constituting the
technology which is not protected by the letters patent.
b. The "Technology" and the "Licensed Product" mean the
electronic set top converter box ("ED"), which allows a user to interact with
programming transmitted to a television set using the "ED" operating system,
including Software and related equipment for providing Licensed Services.
c. "Software" shall mean the software products developed by
Digital Sciences for use, onsite, and offsite, with the Technology of VisCorp.
d. "License Fee" shall mean the fee charged by VisCorp to
Digital for the right to use the technology in accordance with this Agreement.
e. "Licensee Product" shall mean the product which has been
developed by Digital for use, onsite and offsite, with the Technology of
VisCorp.
f. "Gross Revenue" shall mean:
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(i) In the case of the Technology and Licensed
Product, the net amount received by Digital (less freight,
insurance, taxes, commissions).
(ii) In the case of Licensed Services, the net amount
received by Digital by whomever paid, whether health care
providers, nursing homes, advertisers, programmers, promoters,
viewers, or other persons.
(iii) Sales of Technology and Licensed Product and
Licensed Services shall be deemed to occur when paid for.
g. "Letters Patent" shall mean U.S. Patent No. 014752-000100
and U.S. Patent No. 014752-000200.
h. "Licensed Services" shall mean services available for use on
the Licensed Product and Technology platform as currently known or any future
derivation, enhancement, improvement, or modification of the Technology and
Licensed Product, including, but not limited to:
(i) In case of viewers - telephone, satellite or cable
deliveries, services and functions, including home shopping,
direct response marketing, and dissemination of information;
participation in two-way interactive computerized broadcast
games, including board and card games, trivia games, and play-
along games; connection to online services, voice chat programs, and the
Internet.
(ii) In the case of commercial users, the provision of the
Licensed Product and Technology.
i. A reference to a person includes a reference to a
corporation and vice versa and the single tense means and includes the plural,
and gender means and includes all other genders.
j. Clause headings contained in this Agreement are to be
disregarded in the construction of any provision of this Agreement.
k. "Health Care Industry"' shall mean all facilities and
individuals that provide health care services, including hospitals, clinics,
nursing homes, physicians, chiropractors, osteopathic physicians, podiatrists,
and dentists. The Health Care Industry does not include any services in
individuals' homes or home health care services, whether provided by physicians
or nurses.
2. GRANT OF LICENSE. VisCorp hereby grants to Digital during the
term hereof an exclusive license to purchase from VisCorp and utilize the
Technology and Licensed Product solely within the health care industry within
the United States of America and Canada for the purpose of the sale, marketing,
and networking of the Technology, Licensed Product, and
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Licensed Services. Marketing, sales, and networking of the Technology, Licensed
Product, and Licensed Services shall be made by Digital only within the health
care industry within the territory of the United States of America and Canada.
VisCorp also grants to Digital during the term of this Agreement an exclusive
license within the health care industry within the United States of America and
Canada of all trademarks and copyrights owned by VisCorp associated with
Licensed Product and Licensed Services, such as trademarks of "Tel Ed", "Play
Ed", and "Club Ed". Certain trademarks of NTN games are part of the Licensed
Services and utilized by VisCorp pursuant to a non-exclusive license agreement.
a. SCOPE OF LICENSE. The License of the Technology and
Licensed Product granted to Digital shall be non-exclusive except for sales and
marketing within the health care industry within the territory of the United
States of America and Canada of the Technology and Licensed Product. No other
license of the Technology, Licensed Product, and Licensed Services for any other
purposes is granted by this License Agreement. The license granted shall be
exclusive for the purposes for the term and within the health care industry
within the United States of America and Canada with the exception of all NTN
games which are utilized by VisCorp pursuant to a non-exclusive license.
VisCorp may grant other Licenses of the Technology, Licensed Product, and
Licensed Services outside the scope of this license.
b. SUBLICENSES. Digital may enter into contracts with
contractors for the technical implementation of the rights granted herein. Each
such contract shall provide for technical implementation of the Technology in
accordance with standard specifications to be provided by VisCorp. Each such
contract must provide for a covenant by the contractor for the benefit of
VisCorp and Digital, in form and substance approved by VisCorp, to keep all
proprietary information concerning the Technology, Licensed Product and Licensed
Services confidential. Such covenant shall be in the form attached hereto as
Exhibit "B" and shall require employees of the contractor who receive
confidential information to sign a confidentiality agreement in the form
attached hereto as Exhibit "A".
c. Digital may utilize pre-existing software, hardware, and
programming, and contract for and originate software, hardware, and programming,
whether onsite or offsite, for use and application with the Technology, Licensed
Product, and Licensed Services, and Digital grants to VisCorp a license to all
such Licensee Product, Software, hardware, and programming, onsite and offsite,
for any purpose outside of the scope of Digital's license, in exchange for the
license to use and receive all of VisCorp's upgrades, enhancements,
modifications, improvements and replacements of the Technology and Licensed
Product during the term of this Agreement.
3. USE OF TECHNOLOGY. Digital shall utilize its best efforts
consistent with its good faith business judgment to market the Technology,
Licensed Product, and Licensed Services. Digital represents, warrants, and
agrees that it will not utilize the Technology, Licensed Product, and Licensed
Services other than for the purposes stated herein and, except as provided
herein, Digital shall not knowingly permit any other person or entity to use the
Technology, Licensed Product, or Licensed Services for any purpose.
The Technology, Licensed Product, and Licensed Services are
proprietary to VisCorp and title thereto shall remain exclusively with VisCorp
throughout the term of this
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Agreement. All applicable rights to patents, patent applications, copyrights,
trademarks, trade secrets, software applications, hardware applications, or any
part thereof and any enhancements or modifications thereto developed by VisCorp
or any other person are and shall remain the exclusive property of VisCorp
subject to written licenses granted by VisCorp.
Digital agrees not to attempt to create or derive derivative
works competitive with the Technology, Licensed Product, and Licensed Services,
source codes, or improvements to the Technology, Licensed Product, and Licensed
Services provided by VisCorp by disassembly, reverse engineering, decompiling,
or any other method without the express written consent of VisCorp, and Digital
shall take reasonable steps necessary to prevent third parties, including
without limitation, end-users, from disassembly, reverse engineering, and the
like.
4. TRANSFER OF TECHNOLOGY. Digital shall not assign, transfer,
sublicense, or allow any person or other entity to utilize the Technology,
Licensed Product, and Licensed Services, except as provided herein, without the
express consent of VisCorp.
5. TERM.
a. INITIAL TERM. Subject to the provisions of this Agreement,
the term of this Agreement in respect of the use of the Technology, Licensed
Product, and Licensed Services shall commence on the execution of this Agreement
by both parties and shall continue for a period of ten (10) years thereafter.
Notwithstanding the royalty commencement date, this Agreement shall commence on
the date of execution.
b. NEGOTIATION OF EXTENDED TERM. If Digital, during the term,
has fully and punctually paid all license fees and royalties and has duly
performed and observed all obligations of Digital, expressed or implied, in this
Agreement, then VisCorp shall negotiate in good faith with Digital, if so
requested by Digital in writing to VisCorp at least ninety (90) days prior to
the expiration of the third year of the term for a renewal of this Agreement for
a further period of time past the initial ten (10) year term on terms mutually
agreeable to the parties.
c. TERMINATION. Either party may terminate this Agreement at
any time in the event of a material breach by the other party which remains
uncured after ninety (90) days notice thereof; or at any time for any reason on
ninety (90) days prior written notice, such termination to be effective after
the end of the Initial Term. Upon termination of the license granted hereunder:
(i) Digital shall promptly pay all amounts provided
for herein whether royalties or other amounts within thirty (30)
days together with interest at the prime rate of interest plus
two percent per annum on amounts then due from the due date.
(ii) Digital shall immediately cease any utilization of
the Technology, Licensed Product, and Licensed Services and shall
cease marketing, selling, syndicating, developing, broadcasting,
and producing the Technology, Licensed Product, and Licensed
Services and any
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trademarks or copyrights associated with the Licensed Product or
Licensed Services, such as the trademark of "Tel Ed", "Play Ed",
"Club Ed", or similar rights.
d. SURVIVAL. Representations, warranties, and indemnities of
the parties and the obligations of the parties regarding confidentiality
provided herein shall survive termination of this Agreement.
6. GOVERNMENTAL APPROVAL.
a. RESPONSIBILITY FOR OBTAINING GOVERNMENTAL APPROVAL. Digital
acknowledges that it is responsible for obtaining any necessary governmental
permission, license, or approval for utilization of the Technology, Licensed
Product, and Licensed Services within the health care industry and within any
State or territory of the United States of America and Canada. Digital shall
exert its best efforts to obtain all appropriate governmental licenses, permits,
and approvals pertaining to the utilization of the Technology, Licensed Product,
and Licensed Services and VisCorp shall fully cooperate with Digital to obtain
all necessary licenses, permits, and approvals.
7. PAYMENTS.
a. LICENSE FEE AND PAYMENT TERMS. In exchange for the license
granted herein by VisCorp to Digital, Digital shall transfer, assign, and convey
two hundred fifty thousand (250,000) shares of unregistered common stock of
Digital to VisCorp. Within 180 days of the date of this Agreement, Digital will
deliver VisCorp free and clear of all encumbrances, certificates for two hundred
fifty thousand (250,000) shares. Digital agrees that VisCorp may piggy-back
upon any future security registrations and Digital shall pay all expenses of
VisCorp thereof. Upon registration Digital represents and warrants that the two
hundred fifty thousand (250,000) shares will be duly authorized and available
for free trading. Digital represents and warrants that it has no subsidiaries
and that the aggregate number of shares which Digital is authorized to issue is
12.5 million common shares of which 4.5 million shares are issued and presently
outstanding. All such issued shares have been validly issued and are fully paid
and nonassessable.
Digital warrants that it has full right and authority to transfer
said shares to VisCorp.
Within forty-five (45) days, Digital shall deliver to VisCorp
copies of any financial statements which are complete and have been prepared in
accordance with generally accepted accounting principles.
(i) Most recent Financial Statement and Balance sheet
certified by Digital's CPA and Digital's treasurer, each of which
represents a true and complete statement as of its date of
Digital's condition, financial and otherwise.
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(ii) Statements of Digital's profit and loss accounts,
including, without limitation, all taxable income of every
nature, certified by Digital's CPA and Digital's treasurer, each
of which accurately represents the results of Digital's
operations for the period indicated.
(iii) Last certified annual report.
Digital represents it is the issuer of the two hundred fifty
thousand (250,000) shares of Digital which are fully paid and nonassessable and
Digital has a right to issue the two hundred fifty thousand (250,000) shares
free of all encumbrances and VisCorp shall receive good and marketable title to
such shares.
b. USAGE FEES FOR LICENSED SERVICES. For the Licensed Services
described in this Agreement, including "Tel Ed", "Play Ed", and "Club Ed",
Digital shall pay VisCorp a percentage of the online usage revenue, as defined
herein, generated by the use of the Licensed Services, broadcast to end users.
The online usage revenue shall be equally distributed to Digital and VisCorp.
Online usage revenue shall mean the greater of a specific charge per event or
usage or a prorated percentage of subscription fees based on usage, excluding
amounts received for taxes, duties, or valid charges. Digital shall provide
VisCorp with statements detailing the amount of usage for each calendar quarter.
Digital shall keep VisCorp advised as to any change in hourly or other charges
and as to any free hours. The terms of this section are subject to
renegotiation as it applies to any "Play Ed" games in the event that VisCorp
must pay a licensing fee to a third party which would make the provision of said
game economically detrimental to VisCorp.
c. PAYMENT OF USAGE ROYALTIES FOR LICENSED SERVICES. Royalties
shall be payable by Digital to VisCorp on or before the forty-fifth (45th) day
following each calendar quarter with respect to all sales of Licensed Services
occurring during the previous quarter. On or before the forty-fifth (45th) day
following each calendar quarter, Digital shall provide VisCorp with a royalty
report which shall identify the Licensed Services sold, the party for whom the
Licensed Services were rendered, the gross billings for each Licensed Services,
the amount billed and received, and identification of each invoice. Receipt and
acceptance of sums paid hereunder shall not preclude VisCorp from thereafter
claiming that additional royalty payments are due.
d. RECORDS. Digital agrees to keep and maintain accurate
records of the sales of Licensed Product and Licensed Services, which shall
include a description of each Licensed Product, the number of units sold, the
gross billings of each unit sold, the Licensed Services, the party for whom such
Licensed Services were rendered, the gross billings for each Licensed Service,
and an identification of each invoice for the sale of Licensed Product or
Licensed Services and a copy of each such invoice. VisCorp or its
representatives may, during normal business hours, and upon reasonable notice,
inspect such records. Notice of five (6) business days shall be deemed
reasonable notice. If such inspection reveals any deficiencies in the payments
of royalties due pursuant to this Agreement, Digital shall immediately pay
VisCorp the amount of such deficiency plus interest on the deficiency at the
rate of prime plus two percent per annum from the date of the deficiency, and,
if the deficiency is two percent (2%)
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or more of royalty payments for the period audited, Digital shall reimburse
VisCorp for all of its costs and expenses incurred with respect to the
inspection of Digital's records.
e. CONTINUATION OF PAYMENT. All of the provisions of this
Agreement and Digital's obligation to make royalty payments and all other
payments pursuant to this Agreement shall continue, notwithstanding any
determination that the Technology and Licensed Product is not patentable or is
in the public domain provided that VisCorp exerts its best efforts to maintain
the Technology, Licensed Product and Licensed Services as a trade secret, and
continues to assist Digital in utilizing the Technology and Licensed Product and
Licensed Services.
f. ADVERTISING REVENUES. In the event that either Digital or
VisCorp sells sponsorship of any portion of the "Tel Ed", "Play Ed", or "Club
Ed" services to a third party, the party which sells such a sponsorship shall
receive a royalty to be mutually agreed upon, but not to be less than seventy
percent (70%) of the advertising revenue derived from the sale of that
sponsorship. Neither party shall sell nor solicit the sale of any sponsorship
of any portion of the "Tel Ed", "Play Ed", or "Club Ed" service without the
reasonable prior written approval of the other party. Prior to the sale of any
sponsorship, Digital and VisCorp shall cooperatively set and agree in writing to
the rates to be charged for sponsorship of any portion of the "Tel Ed", "Play
Ed", or "Club Ed" service. Each party reasonably reserves the right to refuse
any sponsorship which in its discretion it determines to be not suitable for the
"Tel Ed", "Play Ed", or "Club Ed" service.
g. PRIZES. Five percent (5%) of online usage revenue will be
reserved for prizes before fee computation for all "Play Ed" games.
8. TECHNICAL ASSISTANCE.
Each party will provide a reasonable level of technical
assistance.
a. Upon request and subject to availability, each party shall
make available technical help and assistance and will reimburse the other party
at the rate of Sixty Dollars ($60.00) per hour (such rate to be adjusted each
calendar year for inflation) for all such support services and will pay all
reasonable business related expenses, including travel expenses, meals, lodging,
telephone, fax, and postage associated with the technical support.
b. PROTOTYPES. Within fourteen (14) days after execution of
this Agreement, VisCorp shall provide three prototype "ED" units and necessary
technical assistance to enable Digital to conduct testing. VisCorp shall
provide Digital with any prototypes, interactive units and remotes, and
promotional videotapes and cassettes as developed by VisCorp. Each party will
provide reasonable levels of training to the other party's technical,
administrative, and marketing staff provided that the requesting party pays the
cost of the other party's staff, such as airfare, accommodations, salary or
wages, and the like. Each party shall cooperate and assist the other party in
promptly answering questions and complaints from the parties' customers,
subscribers, and end users regarding the Licensed Product, Licensed Services,
Software, and Licensee's Product.
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9. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
a. VisCorp represents, warrants, and covenants as follows:
(i) VisCorp has full power and authority to execute
this Agreement and conform to its provisions.
(ii) This Agreement does not violate any agreement or
covenant to which VisCorp is subject.
c. VisCorp has not granted any license for the use of
the Technology, Licensed Product, or Licensed Services for the
specific purposes described herein within the United States of America
and Canada, except for the license granted hereunder. VisCorp has
been issued two (2) patents for the Technology. Certain games
provided as Licensed Services are utilized by VisCorp pursuant to a
non-exclusive license agreement.
b. Digital represents, warrants, and covenants and follows:
(i) Digital has full power and authority to execute
this Agreement and conform to its provisions.
(ii) This Agreement does not violate any agreement or
covenant to which Digital is subject.
(iii) Digital acknowledges that all enhancements,
improvements, modifications, replacements, or continuations with
respect to the Technology, Licensed Product, and Licensed
Services, whether developed by VisCorp, Digital or others, is and
shall be deemed part of the Technology, Licensed Product, and
Licensed Services owned by VisCorp and accordingly shall be
subject to the provisions of this Agreement.
(iv) Digital shall not knowingly permit or allow the
utilization of the Technology, License Product, or Licensed
Services within the territory for any purpose by any other person
except to the extent specifically permitted by this Agreement.
(v) Digital shall not knowingly allow or permit any
sale of Licensed Product, Licensed Services, or the Technology
outside of the United States of America and Canada and outside of
the health care industry as defined in this Agreement.
(vi) Digital shall promptly inform VisCorp of any
disclosure of confidential information of which Digital becomes
aware by any party required to maintain the confidentiality of
such information
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hereunder, any possible infringement of any Letters Patent or any
other proprietary right with respect to the Technology, Licensed
Product, and Licensed Services by a third party.
c. VISCORP MAKES NO AND DIGITAL ACKNOWLEDGES THAT VISCORP HAS
NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
TECHNOLOGY, LICENSED PRODUCT, OR LICENSED SERVICES, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED
WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, VISCORP SPECIFICALLY DISCLAIMS ANY
WARRANTY REGARDING THE PROFITABILITY OF THE TECHNOLOGY, LICENSED PRODUCT, OR
LICENSED SERVICES.
d. DIGITAL MAKES NO AND VISCORP ACKNOWLEDGES THAT DIGITAL HAS
NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING
DIGITAL'S SOFTWARE, HARDWARE, PROGRAMMING, OR ITS OPERATION, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING. DIGITAL SPECIFICALLY
DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY OF ITS SOFTWARE, HARDWARE, OR
PROGRAMMING.
e. LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY USER OF THE TECHNOLOGY,
LICENSED PRODUCT, OR LICENSED SERVICES FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL, OR EXEMPLARY DAMAGES FOR REASONS, SUCH AS, BUT NOT LIMITED TO, LOSS OF
REVENUE, LOSS OF PROFITS, OR LOST BUSINESS.
10. INFRINGEMENT.
a. INFRINGEMENT ON TECHNOLOGY. If any Letters Patent, patent
applications, or any other proprietary right with respect to the Technology,
Licensed Product, or Licensed Services be infringed and should that infringement
be to the business detriment of Digital, upon written notice of such alleged
infringement from Digital, VisCorp may, but shall not be required to, at its own
expense, prosecute or settle any action necessary to protect the rights of the
parties under this License Agreement. If VisCorp fails to act after forty-five
(45) days of notice of such alleged infringement by Digital to VisCorp or
notifies Digital in writing in a lesser time that it does not intend to act,
then Digital shall have the privilege, but not be obligated, to prosecute or
settle any such action in the name of the appropriate party, including the name
of VisCorp, at Digital's sole cost and expense.
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<PAGE>
VisCorp shall be afforded up to forty-five (45) days to
investigate the alleged infringement and to determine whether or not in
VisCorp's opinion there is actual infringement.
Any judgment or settlement proceeds shall be received by the
prosecuting party.
b. INFRINGEMENT CLAIMS AGAINST THE TECHNOLOGY. If any action
is commenced against VisCorp or against Digital or any customer of Digital which
alleges that the Technology, Licensed Product, or Licensed Services infringes or
violates the rights of others, or that VisCorp is not entitled to license the
Technology, Licensed Product or Licensed Services, or that Digital is not
authorized to utilize the same, then Digital shall give fifteen (15) days notice
to VisCorp requesting VisCorp to defend such action. If VisCorp accepts the
defense of such action, Digital shall, at its own expense, be entitled to
non-controlling participation through its own counsel. If VisCorp fails to
accept the defense of such action, then Digital may, at its election, defend
such action, in which event all the costs of such defense, including reasonable
attorney fees, may be deducted by Digital from royalty payments and usage
royalties due hereunder to VisCorp.
11. INDEMNITY.
a. VISCORP'S INDEMNITY. Subject to the provisions of Digital's
indemnity, VisCorp shall indemnify, defend, and hold Digital harmless from and
against any and all claims, liability, expenses, damages, and costs due to the
breach of VisCorp's representations and warranties made pursuant to the
provisions of this Agreement.
b. Digital shall indemnify, defend, and hold VisCorp harmless
from and against any and all claims, liabilities, expenses, damages, and costs
due to injury, to persons or property arising or resulting from Digital's
utilization, marketing, or sale of the Technology, Licensed Product, and
Licensed Services pursuant to the provisions of this Agreement, except for those
claims, liabilities, expenses, damages, and costs occasioned by the negligence,
error, or omission, or material breach of the terms of this Agreement of or by
VisCorp or derived from a claim successfully asserted that the Letters Patent,
patent applications, the Technology, Licensed Product, or Licensed Services
infringe upon the rights of the party asserting the claim.
12. CONFIDENTIAL INFORMATION.
a. DISCLOSURE OF CONFIDENTIAL INFORMATION. Digital agrees not
to disclose any "Confidential Information" to persons other than the
contractors, its own employees, consultants, and advisors who have a "need to
know" the Confidential Information incident to utilizing the Confidential
Information for the purpose of producing, marketing, or selling the Technology,
Licensed Product, or Licensed Services, except pursuant to administrative or
judicial subpoena for testimony or production of documents. Digital shall
require each employee to whom Digital discloses Confidential Information to
execute prior to disclosure a Confidentiality Agreement agreeing to maintain and
not disclose any Confidential Information in the form attached hereto as Exhibit
"A". Digital shall require every other person to whom Digital discloses
Confidential Information to execute prior to disclosure a
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<PAGE>
Confidentiality Agreement agreeing to maintain and not disclose any Confidential
Information in the form attached hereto as Exhibit "B".
b. USE OF CONFIDENTIAL INFORMATION. Digital shall not use or
authorize others to use any of the Confidential Information except for the
purpose of producing, marketing, and selling the Technology, Licensed Product,
and Licensed Services.
c. DEVELOPMENTS, IMPROVEMENTS, AND ENHANCEMENTS. Each party
shall promptly disclose to the other party on a confidential basis all
developments, improvements, enhancements, information, and techniques learned or
developed by such party incident to utilizing the Technology, Licensed Product
and Licenses Services of VisCorp, and the Software, hardware, or programming
developed by Digital for use with the Technology, License Product, and Licensed
Services. Digital grants to VisCorp and to VisCorp's licensees a nonexclusive
license to utilize such developments, improvements, enhancements, information,
and techniques. The license to VisCorp and to VisCorp's licensee shall continue
and survive the termination of this Agreement.
d. LIQUIDATED DAMAGES AND INJUNCTIVE RELIEF. Digital
acknowledges that the covenants contained in Section 2, prohibiting marketing
and sales outside of the health care industry and outside of the United States
of America and Canada and the disclosure and use of Confidential Information as
prohibited in Sections (a) and (b) of Section 12, are crucial to the interests
of VisCorp and that violation of such covenants would cause irreparable damage
to VisCorp. Accordingly, Digital agrees that in the event of violation of the
covenants of Digital contained in Sections 2, 12(a), or 12(b), of this
Agreement:
(i) Digital shall pay VisCorp the amount of
twenty-five percent (25%) of the revenues from the sale of
products and services utilizing the Technology, Licensed Product,
and Licensed Services as a result of a violation of this
Agreement by Digital which payment shall be a payment of
liquidated damages and not a penalty, actual damages being
difficult or impossible to determine; and
(ii) VisCorp may seek and obtain restraining orders and
injunctions, both permanent and temporary in nature, which would
prohibit any breach of any covenant contained in Sections 2,
12(a), or 12(b) of this Agreement.
13. GENERAL PROVISIONS.
a. COMPLIANCE WITH LAW. VisCorp and Digital shall comply with
all applicable laws and regulations, the violation of which would materially
jeopardize or damage the fulfillment of such party's obligations under the terms
of this Agreement. In the event that any provision of this Agreement conflicts
with the law under which this Agreement is to be construed or if any such
provision is held invalid by a court with jurisdiction over the parties to this
Agreement, such provision shall be deemed to be restated to reflect as nearly as
possible the original intentions of the parties in accordance with applicable
law and the remaining provisions of this Agreement shall remain in full force
and effect.
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<PAGE>
b. LIABILITY OF VISCORP. Provided that VisCorp performed its
duties hereunder, VisCorp shall not be liable to Digital for any inability by
Digital to successfully utilize, sell, or market the Technology, Licensed
Product, or Licensed Services.
c. This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof, integrates all prior
understandings and agreements of the parties with respect to the subject matter
hereof and may not be altered, amended, or modified in any manner except by a
written agreement signed by the parties.
d. PATENT, TRADEMARK, AND COPYRIGHT NOTICES. Digital shall
place the following notice on all retail packages containing the Technology and
Licensed Product: "ED -TM- interactive television technology used under license
from Visual Information Services Corp., Chicago, Illinois." An appropriate
notice shall be placed on such packages regarding the status of patents in the
United States of America and Canada. Appropriate steps shall be taken with
regard to the Licensed Product and Licensed Services to assure that the
trademarks and patents of VisCorp are protected.
e. RELATIONSHIP OF PARTIES. The parties to this Agreement are
independent contractors. Neither party is an agent, representative, or partner
of the other party. Neither party shall have any right, power, or authority to
enter into any agreement for or on behalf of or incur any obligation or
liability of or to otherwise bind the other party. This Agreement shall not be
interpreted or construed to create an association, joint venture, or partnership
between the parties or to impose any partnership obligation or liability upon
either party.
f. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of VisCorp and
Digital.
g. NOTICES. All notices to be given by either party to the
other party shall be in writing and shall be either personally delivered or sent
by certified mail, return receipt requested to:
Licensor: Visual Information Services Corp.
(VisCorp) 2728 North Hampden Court,
Chicago, Illinois 60614
Attn.: William H. Buck, Chief Executive Officer
With Copy to: Charles E. Murphy, Esq.
Cox, Hodgman & Giarmarco
201 West Big Beaver Road, Fifth Floor
Troy, Michigan 48084-4160
Licensee: Digital Sciences, Inc.
(Digital) 7150 East Camelback Road, Suite 300
Scottsdale, Arizona 85251
Attn.: David A. Horowitz,
President and Chief Executive Officer
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<PAGE>
With Copy to: ----------------------------------------
----------------------------------------
----------------------------------------
Either party may change its address specified above by giving the other party
notice of such change in writing.
h. GOVERNING LAW. This Agreement shall be governed by and
shall be construed in accordance with the laws of the State of Michigan, United
States of America. Any claim for money arising out of this Agreement, which
cannot be settled by the parties, shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect and
judgment on the arbitration award may be entered by any court with jurisdiction.
The arbitration panel will not be permitted to modify any terms of this
Agreement or render a decision inconsistent with this Agreement.
i. ATTORNEY FEES. In the event of any legal action between
VisCorp and Digital on account of any alleged default by either party hereunder,
the prevailing party shall be entitled to be reimbursed for reasonable attorney
fees and costs incurred by the prevailing party.
j. BANKRUPTCY OF PARTY. In the event that either party shall
voluntarily file bankruptcy, or in the event that creditors of a party shall
petition for that party's bankruptcy:
(i) The other party shall be entitled to any
development and technical assistance provided from the other
party through the date of filing and
(ii) The license of the Technology, Licensed Product,
Licensed Services, Software, and Licensee Product shall be
binding upon the other party and its successors.
k. WAIVER. The failure of either party to insist upon or
enforce strict performance by the other party of any provision of this Agreement
or to exercise any right under this Agreement shall not be construed as a waiver
or relinquishment to any extent of such party's right to assert or rely upon any
such provision or right in that or any other instance.
l. RETURN OF INFORMATION. Upon the expiration or termination
of this Agreement, each party shall promptly return all information, documents,
manuals, and other materials belonging to the other party.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
VISUAL INFORMATION SERVICES CORP. DIGITAL SCIENCES, INC.
BY: BY:
- - --------------------------------- ------------------------------
(Print Name) (Print Name)
- - --------------------------------- ------------------------------
(Title) (Title)
Date Date
----------------------------- --------------------------
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<PAGE>
EXHIBIT "A"
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made and entered into this ________ day of ________________,
19__, by and between _______________________, a ________________________________
______ corporation, its successors and assigns, hereinafter called the
"Company", and ______________________________, hereinafter called the
"Employee",
W I T N E S S E T H: That,
WHEREAS, Employee desires to enter into or continue in an employment
relationship with the Company, by virtue of which employment relationship the
Company will disclose to Employee information relating to the interactive
process of transmission of signals to and from television sets through a set top
converter box, "ED", and the "ED" operating system and enhancements,
modifications, and improvements to said process (together referred to herein as
the "Confidential Information"; and
WHEREAS, the Employee has agreed to maintain as confidential the
Confidential Information.
NOW, THEREFORE, the Company and Employee agree as follows:
1. Employee agrees that Employee will not disclose to any other person or
entity any of the Confidential Information without the prior written consent of
Company.
2. Employee agrees that Employee will not use for the benefit of the
Employee or any other person or entity any of the Confidential Information
without the prior written consent of Company.
3. The parties hereto, recognizing that irreparable injury will result to
the Company, its business and its property, in the event of a breach of the
above covenants, agree that in the event of a violation of any of the covenants
herein by Employee, that the Company shall be entitled, in addition to any other
remedies and damages available under law or equity, to the issuance of
restraining orders or injunctions, both temporary and permanent, in order to
restrict the violation of such covenants by Employee. In the event of a breach
of the above covenants, Employee shall pay all costs incurred by Company to
enforce such covenants, including, but not limited to, court costs and
attorney's fees incurred by Company. This Agreement shall run for the benefit
of Company and any party licensing Confidential Information to the Company.
--------------------------------------------
("Company")
By:
-----------------------------------------
--------------------------------------------
("Employee")
<PAGE>
EXHIBIT "B"
CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made and entered into this ____ day of ___________________,
19__, by and between ______________________________________, a
__________________ corporation, its successors and assigns, hereinafter called
the "Company", and ________________________________, hereinafter called the
"Representative",
WITNESSETH: That,
WHEREAS, Representative desires to enter into or continue in a relationship
with the Company, by virtue of which relationship the Company will disclose to
Representative information relating to the interactive process of transmission
of signals to and from television sets through a set top converter box, "ED",
and the "ED" operating system and enhancements, modifications, and improvements
to said process (together referred to herein as the "Confidential Information";
and
WHEREAS, the Representative has agreed to maintain as confidential the
Confidential Information.
NOW, THEREFORE, the Company and Representative agree as follows:
1. Representative agrees that Representative will not disclose to any
other person or entity any of the Confidential Information without the prior
written consent of Company except pursuant to administrative or judicial
subpoena for testimony or production of documents. Representative shall provide
written notice to Company if the Confidential Information is subpoenaed.
2. Representative agrees that Representative will not use for the benefit
of the Representative or by any other person or entity any of the Confidential
Information without the prior written consent of Company.
3. The parties hereto, recognizing that irreparable injury will result to
the Company, its business and its property, in the event of a breach of the
above covenants, agree that in the event of a violation of any of the covenants
herein by Representative, that the Company shall be entitled, in addition to any
other remedies and damages available under law or equity, to the issuance of
restraining orders or injunctions, both temporary and permanent, in order to
restrict the violation of such covenants by Representative. In the event of a
breach of the above covenants, Representative shall pay all costs incurred by
Company to enforce such covenants, including, but not limited to, court costs
and attorney's fees incurred by Company. This Agreement shall run for the
benefit of Company and any party licensing Confidential Information to the
Company.
--------------------------------------------
("Company")
By:
-----------------------------------------
--------------------------------------------
("Representative")
<PAGE>
EXHIBIT C
PAYMENT TERMS FOR PURCHASE OF "ED" UNITS
Within the next thirty (30) days from the date of signing this Agreement,
the parties shall negotiate and mutually agree upon terms for the purchase of
"ED" units. The parties shall establish a minimum level of units to be
purchased, a price per unit and a discount schedule for purchases of units above
a certain level. The purchase price together with all applicable shipping
charges, packaging charges, other special charges and taxes, but less any
credits or deposits, shall be payable to VisCorp in full within ten (10) days
after acceptance and receipt of the invoice therefor.
If the parties agree to a pricing mechanism based upon a royalty rate being
charged by VisCorp to Digital based upon a percentage of Digital's gross
revenues in selling, marketing, leasing, distributing, and networking the
Technology and Licensed Product, then the parties shall mutually agree to a
royalty rate which shall not be less than ten percent of Digital's gross
revenues in selling, marketing, distributing, and networking the Technology and
Licensed Product less any allowable audited costs which must be approved by
VisCorp.
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of November 12, 1994, by and between VISUAL INFORMATION SERVICES CORP., an
Illinois corporation (the "Company"), and JEROME GREENBERG ("Officer") with
reference to the following:
WHEREAS, the Company desires to engage officer as Chief Executive Officer
of the Company and Officer desires to be so engaged by the Company in such
position, on the terms and conditions set forth and described herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the Company and Officer agree as follows:
1. EMPLOYMENT. The Company shall employ Officer in the capacity and on
the terms and subject to the conditions set forth in this Agreement. Officer
hereby accepts such employment.
2. TERM; RENEWAL.
(a) TERM. Unless sooner terminated as hereinafter provided or
renewed as provided below in this paragraph 2, the term of this Agreement and of
Officer's employment hereunder shall be for a period of three (3) years,
commencing on the date hereof (the "Commencement Date"). Such period of
employment is hereinafter referred to as the "Employment Period."
(b) RENEWAL. Unless either party hereto notifies the other party not
less than 120 days prior to the expiration of the Employment Period of such
party's intent to allow this Agreement and Officer's employment hereunder to
expire, this Agreement and Officer's employment hereunder shall, without further
act by either party, be deemed to be renewed as of the date this Agreement would
otherwise expire for an additional one-year period. Any renewal of this
Agreement pursuant to this subparagraph 2(b) shall be at the annual salary and
bonus and on the other terms and conditions of this Agreement then in effect.
3. DUTIES. Subject to the provisions of this Agreement, during the
Employment Period, the Company shall employ Officer and Officer shall serve the
Company as Chief Executive Officer of the Company. During the Employment
Period, Officer shall discharge the obligations and responsibilities normally
associated with such office and shall also perform such other duties and
responsibilities as the Board of Directors of the Company (the "Board") shall
determine from time to time. Officer agrees to perform such duties faithfully
and to the best of his ability, to devote his full working time and efforts to
the performance of such duties and not to accept any other gainful employment
without the prior written consent of the Board. During the Employment Period,
Officer shall report to the Board.
4. COMPENSATION; FRINGE BENEFITS. For all services rendered by Officer
pursuant to this Agreement, during the Employment Period, the Company shall
compensate Officer as follows:
<PAGE>
(a) ANNUAL SALARY. Commencing on the Commencement Date, Officer
shall be entitled to an annual base salary equal to $60,000, which shall be
payable in equal installments by the Company pursuant to the Company's normal
payroll procedures. Officer's annual base salary shall be subject to increase
annually on each year following the Commencement Date by a percentage equal to
the percentage increase, if any, in the Consumer Price Index during that year of
service.
(b) DISCRETIONARY BONUS. In addition to Officer's annual base
salary, the Company may pay Officer a bonus during the Employment Period.
(c) EMPLOYEE BENEFIT PLANS. During the Employment Period, in
addition to the annual base salary and bonus provided in subparagraphs 4(a) and
(b), Officer shall be entitled to (i) participate under any medical and dental
insurance, death, disability, retirement, profit sharing or other benefit plan
of the Company generally available to similar officers of the Company and for
which he is eligible and (ii) any additional fringe benefits that may be
authorized and approved from time to time by the Executive Compensation
Committee of the Board or, if there is no such committee, by the Board.
Officer's participation in each such benefit plan shall commence on the date
hereof, with respect to existing plans, and as of the earliest practicable date
with respect to plans hereafter instituted by the Company, and shall be subject
to the terms and conditions of each such plan.
(d) EXPENSE REIMBURSEMENTS. During the Employment Period, the
Company shall reimburse Officer promptly for all travel, entertainment, business
meeting and similar expenditures reasonably incurred by Officer in pursuit and
furtherance of the Company's business to the extent such expenditures comply
with the reimbursement requirements and policies established by the Company and
published from time to time.
(e) WITHHOLDING. The Company shall deduct from any payments to be
made by it to the Officer under this Section 4 or under Section 7 any amounts
required to be withheld in respect of any Federal, state or local income or
other taxes and related deductions as required by law.
(f) VACATION. Officer shall be entitled to a paid vacation annually
in accordance with the Company's vacation policy as determined by the Executive
Compensation Committee of the Board or, if there is no such committee, by the
Board.
(g) INDEMNIFICATION AGREEMENT. Upon the request of Officer, the
Company shall promptly take such steps as are necessary to authorize, and shall
enter into, an indemnification agreement with Officer providing for Officer's
indemnification by the Company to the fullest extent of applicable law for all
costs, liabilities and expenses incurred by Officer arising out of Officer's
performance of his duties hereunder. The terms of any such indemnification
agreement will be set forth in a separate agreement between the Company and
Officer on terms mutually agreeable to both.
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<PAGE>
(h) ISSUANCE OF OPTIONS. In addition to the compensation described
above, Officer shall receive options to purchase 25,000 shares of the Company's
common stock under (and subject to the provisions of) the Company's Stock Option
Plan. All of such options shall be immediately vested. Such options shall have
an exercise price of $2.50 per share and shall be exercisable for a period of
ten years.
5. REPRESENTATIONS AND WARRANTIES. Officer represents and warrants to
the Company that there are no agreements or arrangements, whether written or
oral, or any legal considerations applicable to unfair competition, trade
secrets or proprietary information that would be breached or violated by Officer
upon execution of this Agreement or that would prevent or impair Officer from
rendering exclusive services to the Company during the Employment Period.
6. TERMINATION. This Agreement and Officer's employment hereunder may be
terminated prior to the expiration of the term hereof upon the first to occur of
(for convenience of reference, the date upon which any termination of the
employment of Officer pursuant to Section 6 shall be effective shall be
hereinafter referred to as the "Termination Date"):
(a) TERMINATION FOR CAUSE. Officer's employment hereunder and all
of the Company's obligations hereunder (except as hereinafter provided) may be
terminated by the Company immediately for "cause" by giving written notice of
such termination to Officer. For purposes of this Agreement, "cause" shall
mean: (i) Officer's material, willful misconduct which could reasonably be
expected to have a material adverse effect on the business, assets, operations,
results of operations, condition (financial or otherwise), performance or
prospects of the Company (a "Material Adverse Effect"), (ii) Officer's willful
disregard of lawful instructions of the Board consistent with Officer's position
relating to the business of the Company or material neglect of duties or
material failure to act, (iii) the commission by Officer of an act constituting
common law fraud or embezzlement, or a felony or criminal act (other than
traffic violations), (iv) Officer's abuse of alcohol or other drugs or
controlled substances, or conviction of a crime involving moral turpitude, in
each case which has or could be reasonably expected to have a Material Adverse
Effect or impairs Officer's ability to perform his duties hereunder, (v)
Officer's material breach of a material provision of this Agreement or (vi)
Officer's resignation hereunder. Each of the matters referred to in the
preceding sentence shall be determined in good faith by the Board. A
termination contained in Section 6(a)(i), (ii), (iv) (other than as a result of
a conviction of a crime involving moral turpitude) or (v) shall take effect 30
days after the giving of the notice contemplated hereby unless Officer shall,
during such 30-day period, remedy to the satisfaction of the Board the
misconduct, disregard, abuse or breach specified in such notice; PROVIDED,
HOWEVER, that such termination shall take effect immediately upon the giving of
such notice if the Board shall have determined that such misconduct, disregard,
abuse or breach is unremediable (which determination shall be stated in such
notice). A termination pursuant to Section 6(a)(iii), (iv) (as a result of a
conviction of a crime involving moral turpitude) or (vi) shall take effect
immediately upon the giving of the notice contemplated hereby.
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<PAGE>
(b) TERMINATION DUE TO DISABILITY OR DEATH. Officer's employment
hereunder may be terminated by the Company (i) upon thirty (30) days' notice
to Officer in the event that Officer has been unable to perform at least eighty
(80%) of his duties under this Agreement for an aggregate of one hundred twenty
(120) days within any 12-month period, or can reasonably be expected to be
unable to do so for such period, as the result of Officer's incapacity due to
physical or mental impairment, and within 30 days of receipt of such notice,
Officer shall not have returned to the full-time, continuing performance of his
duties hereunder (an "Involuntary Termination") and (ii) immediatel yupon the
death of Officer.
7. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) Upon the termination of Officer's employment pursuant to Section
6(a) hereof, neither Officer nor Officer's beneficiaries or estate shall have
any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive, within 30 days of
the Termination Date:
(i) the unpaid portion of the annual base salary provided for in
Section 4(a) and payment for any accrued vacation provided for in Section 4(f),
in each case computed on a PRO RATA basis to the Termination Date; and
(ii) reimbursement for any expenses for which Officer shall not
have theretofore been reimbursed, as provided in Section 4(c) and (d).
(b) Upon the termination of Officer's employment pursuant to Section
6(c) hereof, neither Officer nor Officer's beneficiaries or estate shall have
any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections 7(a)(i) and
(ii); and
(ii) payment of any annual bonus provided for in Section 4(b), if
any, computed on a PRO RATA basis to the Termination Date.
(c) Upon the termination of Officer's employment pursuant to Section
6(b) hereof, neither Officer nor Officer's beneficiaries or estate shall have
any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections 7(a)(i) and
(ii) and 7(b)(ii);
(ii) so long as officer complies with the terms of Sections 8 and
9 hereof following the Termination Date, severance compensation equal to the
annual base salary provided for in Section 4(a) for the greater of (A) the
remainder of the three-year period commencing on the Commencement Date and (B)
the 12-month period commencing on the
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<PAGE>
Termination Date, payable in equal installments in accordance with the Company's
normal payroll procedures; and
(iii) continued coverage under the benefit arrangements
provided pursuant to Section 4(c)(ii) (or substantially equivalent benefit
arrangements) for the greater of (A) the remainder of the three-year period
commencing on the Commencement Date and (B) the 12-month period commencing on
the Termination Date.
(d) Officer's obligations under Sections 8 and 9 of this Agreement
shall survive the termination of Officer's employment hereunder.
8. CONFIDENTIAL INFORMATION.
(a) Officer acknowledges that by reason of his employment hereunder
he will have access to Confidential Information (as defined below) concerning
the business and policies of the Company and any affiliate thereof. From and
after the date hereof, Officer shall not (i) divulge or disclose, directly or
indirectly, any Confidential Information to any person, firm, corporation or
other entity, for any purpose or reason whatsoever, or (ii) make use of any of
the Confidential Information for Officer's purposes or for the benefit of any
person, firm, corporation or other business entity except the Company or any
affiliate thereof, except, in each case, to the extent (A) such Confidential
Information is obtainable from public sources (other than as a result of
Officer's breach of this Agreement) or is known to Officer by reason of his
prior employment by any entity other than the Company or any predecessor thereof
or (B) such disclosure is required by applicable law or authorized in writing by
the Company or (C) in connection with Officer's enforcement of his rights under
this Agreement.
(b) For purposes of this Agreement, "Confidential Information" shall
mean all proprietary information relating to the Company and its business (as
currently conducted and as proposed to be conducted), properties and assets.
(c) Officer agrees that at the time of termination of his employment
with the Company, regardless of the reasons therefor, or upon the expiration of
this Agreement, he will deliver to the Company and not deliver to anyone else
any and all originals and copies of all notes, files, memoranda, papers and in
general, any and all physical matter containing Confidential Information or any
other information related to the conduct of the business of the Company, except
for any document for which the Company has given written consent to removal at
the time of termination of Officer's employment. Officer acknowledges that all
such materials are and shall remain the sole and exclusive property of the
Company.
9. NONCOMPETITION.
(a) Officer and the Company acknowledge and recognize that the
Company's business has been conducted, and sales of its Products have been and
will be made, in each State of the United States and world-wide, that the nature
of the industry in which the Company
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competes is highly competitive and that the Company would find it extremely
difficult or impossible to replace Officer. Accordingly, in consideration of
the premises and the covenants contained herein, the consideration to be
received hereunder, Officer shall not, during the Employment Period and the
Noncompete Period (as hereinafter defined), (i) directly or indirectly engage
in, whether such engagement shall be as an employee, consultant, officer,
director, partner, stockholder (other than ownership of up to 3% of the
outstanding securities of any public company with a market capitalization of
less than $1,000,000,000, ownership of up to 1% of the outstanding securities of
any public company with a market capitalization of $1,000,000,000 or more or
investments in mutual funds or similar investment vehicles), affiliate or other
participant in any Competitive Business (as hereinafter defined), or represent
in any way, any Competitive Business, whether such engagement or representation
shall be for profit or not, (ii) interfere with, disrupt or attempt to disrupt
the relationship, contractual or otherwise, between the Company and any third
party, including, without limitation, any customer, supplier, employee, or
consultant of the Company, or (iii) affirmatively assist, solicit or induce
others to engage in any Competitive Business in any manner described in the
foregoing clauses (i) and (ii). As used herein, "Competitive Business" shall
mean any business involving the sale of products in any city or county in any
State of the United States or any other jurisdiction outside of the United
States if such business or the products sold by it are competitive, directly or
indirectly, with (A) the business of the Company, (B) any of the Products or (C)
any product or business being developed or conducted by the Company or any
subsidiaries of the Company during the Employment Period. As used herein,
"Noncompete Period" shall mean (x) in the event that Officer's employment
hereunder is terminated pursuant to Section 6(a) hereof, the 18-month period
commencing on the Termination Date or (y) in the event that Officer's employment
hereunder is terminated pursuant to Section 6(b), the later of (1) the one-year
period commencing on the Termination Date or (2) 6(b) hereof, the period of time
during which Officer is receiving any severance payments pursuant to Section
7(c)(ii).
(b) Anything to the contrary contained herein notwithstanding,
subject to Section 3 hereof, nothing in this Section 9 is intended to prohibit
Officer from making any passive or personal investments, conducting his private
business affairs, donating his time for charitable purposes or giving seminars
or speeches so long as such activities are not competitive with or adverse to
the Company, the Business or the Products.
(c) Officer acknowledges and agrees that the breadth of the
territorial restriction in this Section 9 is reasonable and necessary to protect
the Company because, among other things, the Company conducts the Business
throughout the United States and outside the United States; the Business could
be located in any jurisdiction in the United States or outside the United
States; and any lesser restriction would unfairly infringe upon the Company's
conduct of the Business.
(d) Officer understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the Business, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits from the transactions contemplated by the
Documents and as an employee of the Company and as
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otherwise provided hereunder to clearly justify such restrictions which, in any
event, given his education, abilities and skills, Officer does not believe would
prevent him from earning a living.
10. ASSIGNMENT. This Agreement shall inure to the benefit of and shall be
binding upon the Company, its successors and assigns. The obligations and
duties of Officer hereunder are personal and not assignable, whether voluntarily
or involuntarily or by operation of law or otherwise.
11. NOTICES. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy (if automated
confirmation of full transmission is received), nationally-recognized overnight
courier or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party to the
other parties:
(i) if to the Corporation, to:
Visual Information Service Corp.
2728 North Hampden Court
Chicago, Illinois 60614
Telecopy: (312) 472-6213
Attention: President
(ii) If to Officer, to:
Mr. Jerome Greenberg
2728 North Hampden Court
Chicago, Illinois 60614
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by telecopy
(if automated confirmation of full transmission is received), on the date of
such delivery, (b) in the case of dispatch by nationally-recognized overnight
courier, on the next business day following such dispatch and (c) in the case of
mailing, on the third business day after the posting thereof.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
Company and Officer relating to the subject matter hereof, and it replaces and
supersedes any and all prior agreements between the parties relating to the same
subject matter.
13. WAIVER; AMENDMENT. No provision hereof may be waived except by a
written agreement signed by the waiving party. The waiver of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
other term or condition hereof. This Agreement may be amended only by a
subsequent writing signed by a party or parties to be bound thereby.
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14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
15. REMEDIES. All remedies hereunder are cumulative, are in addition to
any other remedies provided for by law and may, to the extent permitted by law,
be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed to be an election of such remedy or to preclude the exercise
of any other remedy. Officer acknowledges that in the event of any breach of
Officer's covenants contained in Sections 8 and 9, the Company shall be entitled
to immediate relief enjoining such violations in any court or before any
judicial body having jurisdiction over such claim.
16. SEVERABILITY. In the event that any provision of this Agreement would
be held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
affecting the invalidity or enforceability of such provision in any other
jurisdiction.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
18. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
19. ATTORNEYS' FEES. In the event that any party hereto brings an action
or proceeding for a declaration of the rights of the parties under this
Agreement, for injunctive relief, for an alleged breach or default of, or any
other action arising out of, this Agreement or the transactions contemplated
hereby, or in the event any party is in default of its obligations pursuant
hereto, whether or not suit is filed or prosecuted to final judgment, the
prevailing party
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in any such action or proceeding shall be entitled to reasonable attorneys'
fees, in addition to any court costs incurred and in addition to any other
damages or relief awarded.
IN WITNESS WHEREOF, the Company and Officer have executed this Agreement as
of the date first above written.
VISUAL INFORMATION SERVICE CORP.
By:
----------------------------
Name:
Title:
OFFICER:
- - --------------------------------
Jerome Greenberg
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement" ) is made and entered into as
of November 12, 1994, by and between VISUAL INFORMATION SERVICES CORP., an
Illinois corporation (the "Company"), and DON GILBREATH ("Officer") with
reference to the following:
WHEREAS, the Company desires to engage officer as Vice President -
Engineering of the Company and Officer desires to be so engaged by the Company
in such position, on the terms and conditions set forth and described herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the Company and officer agree follows:
1. EMPLOYMENT. The Company shall employ Officer in the capacity and
on the terms and subject to the conditions set forth in this Agreement Officer
hereby accepts such employment.
2. TERM; RENEWAL.
(a) Term. Unless sooner terminated as hereinafter provided or
renewed as provided below in this paragraph 2, the term of this Agreement and of
Officer's employment hereunder shall be for a period of three (3) years,
commencing on the date hereof (the "Commencement Date"). Such period of
employment is hereinafter referred to as the "Employment Period."
(b) RENEWAL. Unless either party hereto notifies the other
party not less than 120 days prior to the expiration of the Employment Period of
such party's intent to allow this Agreement and Officer's employment hereunder
to expire, this Agreement and Officer's employment hereunder shall, without
further act by either party, be deemed to be renewed as of the date this
Agreement would otherwise expire for an additional one-year period. Any renewal
of this Agreement pursuant to this subparagraph 2(b) shall be at the annual
salary and bonus and on the other terms and condition" on this Agreement then in
effect.
3. DUTIES. Subject to the provisions of this Agreement, during the
Employment Period, the Company shall employ Officer and Officer shall serve the
Company as Vice President - Engineering of the Company. During the Employment
Period, Officer shall discharge the obligations and responsibilities normally
associated with such office and shall also perform such other duties and
responsibilities as the Board of Directors of the Company (the "Board") shall
determine from time to time. Officer agrees to perform such duties faithfully
and to the best of his ability, to devote his full working time and efforts to
the performance of such duties and not to accept any other gainful employment
without the prior written consent of the Board. During the Employment Period,
Officer shall report to the Chief Executive Officer of the Company and the
Board.
<PAGE>
4. COMPENSATION; FRINGE BENEFITS. For all services rendered by
Officer pursuant to this Agreement, during the Employment Period, the Company
shall compensate Officer as follows:
(a) ANNUAL SALARY. Commencing on the Commencement Date,
Officer shall be entitled to an annual base salary equal to $48,000, which shall
be payable in equal installments by the Company pursuant to the Company's normal
payroll procedures. Officer's annual base salary shall be subject to increase
annually on each year following the Commencement Date by a percentage equal to
the percentage increase, if any, in the Consumer Price Index during that year of
service.
(b) DISCRETIONARY BONUS. In addition to Officer's annual base
salary, the Company may, but is not required to pay Officer a bonus at the end
of each calendar year during the Employment Period.
(c) EMPLOYEE BENEFIT PLANS. During the Employment Period, in
addition to the annual base salary and bonus provided in subparagraphs 4(a) and
(b), Officer shall be entitled to (i) participate under any medical and dental
insurance, death, disability, retirement, profit sharing or other benefit plan
of the Company generally available to similar officers of the Company and for
which he is eligible and (ii) any additional fringe benefits that may be
authorized and approved from time to time by the Executive Compensation
Committee of the Board or, if there is no such committee, by the Board.
Officer's participation in each such benefit plan shall commence on the date
hereof, with respect to existing plans, and as of the earliest practicable date
with respect to plans hereafter instituted by the Company, and shall be subject
to the terms and conditions of each such plan.
(d) EXPENSE REIMBURSEMENTS. During the Employment Period, the
Company shall reimburse Officer promptly for all travel, entertainment, business
meeting and similar expenditures reasonably incurred by Officer in pursuit and
furtherance of the Company's business to the extent such expenditures comply
with the reimbursement requirements and policies established by the Company and
published from time to time.
(e) WITHHOLDING. The Company shall deduct from any payments to
be made by it to the Officer under this Section 4 or under Section 7 any amounts
required to be withheld in respect of any Federal, state or local income or
other taxes and related deductions as required by law.
(f) VACATION. Officer shall be entitled to a paid vacation
annually in accordance with the Company's vacation policy as determined by the
Executive Compensation Committee of the Board or, if there is no such committee,
by the Board.
(g) INDEMNIFICATION AGREEMENT. Upon the request of Officer,
the Company shall promptly take such steps as are necessary to authorize, and
shall enter into, an indemnification agreement with Officer providing fox
Officer's indemnification by the Company to the fullest extent of applicable law
for all costs, liabilities and expenses incurred by officer arising out of
Officer's performance of his duties hereunder. The terms of any such
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indemnification agreement will be set forth in a separate agreement between the
Company and Officer on terms mutually agreeable to both.
(h) ISSUANCE OF OPTIONS. In addition to the compensation
described above, Officer shall receive options to purchase 57,600 shares of the
Company's common stock under (and subject to) the Company's Stock Option Plan.
Seven thousand two hundred (7,200) of such options shall be immediately vested
and the remainder shall vest at a rate of 2,400 options per month (on the first
of every month) commencing February 1, 1995. Such options shall have an
exercise price of $2.50 per share and shall be exercisable for a period of ten
years.
5. REPRESENTATIONS AND WARRANTIES. Officer represents and warrants
to the Company that there are no agreements or arrangements, whether written or
oral, or any legal considerations applicable to unfair competition, trade
secrets or proprietary information that would be breached or violated by officer
upon execution of this Agreement or that would prevent or impair Officer from
rendering exclusive services to the Company during the Employment Period.
6. TERMINATION. This Agreement and Officer's employment hereunder
may be terminated prior to the expiration of the term hereof upon the first to
occur of (for convenience of reference, the date upon which any termination of
the employment of Officer pursuant to Section 6 shall be effective shall be
hereinafter referred to as the "Termination Date").
(a) TERMINATION FOR CAUSE. Officer's employment hereunder and
all of the Company's obligations hereunder (except as hereinafter provided) may
be terminated by the Company immediately for "cause" by giving written notice of
such termination to officer. For purposes of this Agreement, "cause" shall
mean: (i) officer's material, willful misconduct which could reasonably be
expected to have a material adverse effect on the business, assets, operations,
results of operations, condition (financial or otherwise), performance or
prospects of the Company (a "Material Adverse Effect"), (ii) Officer's willful
disregard of lawful instructions of the Board consistent with Officer's position
relating to the business of the Company or material neglect of duties or
material failure to act, (iii) the commission by Officer of an act constituting
common law fraud or embezzlement, or a felony or criminal act (other than
traffic violations), (iv) Officer's abuse of alcohol or other drugs or
controlled substances, or conviction of crime involving moral turpitude, in each
case which has or could be reasonably expected to have a Material Adverse Effect
or impairs Officer's ability to perform his duties hereunder, (v) Officer's
material breach of a material provision of this Agreement or (vi) Officer's
resignation hereunder. Each of the matters referred to in the preceding
sentence shall be determined in good faith by the Board. A termination
contained in Section 6(a)(i), (ii), (iv) (other than as a result of a conviction
of crime involving moral turpitude) or (v) shall take effect 30 days after the
giving of the notice contemplated hereby unless Officer shall, during such
30-day period, remedy to the satisfaction of the Board the misconduct,
disregard, abuse or breach specified in such notice; PROVIDED, HOWEVER, that
such termination shall take effect immediately upon the giving of such notice if
the Board shall have determined that such misconduct, disregard, abuse or breach
is unremediable (which determination shall be stated in such notice). A
termination pursuant to Section 6(a) (iii), (iv) (as a result of a conviction of
a crime involving moral turpitude) or (vi) shall take effect immediately upon
the giving of the notice contemplated hereby.
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<PAGE>
(b) TERMINATION WITHOUT CAUSE. The Company may terminate the
employment of Officer and all of the Company's obligations hereunder (except as
hereinafter provided) at any time and for any reason or for no reason during the
Employment Period without "cause" by giving Officer written notice of such
termination, to be effective 30 days following the giving of such written
entice.
(c) TERMINATION DUE TO DISABILITY OR DEATH. Officer's
employment hereunder may be terminated by the Company (i) upon 30 days' notice
to Officer in the event that Officer has been unable to perform at least 80% of
his duties under this Agreement for an aggregate of 120 days within any 12-month
period, or can reasonably be expected to be unable to do 50 for such period, as
the result of Officer's incapacity due to physical or mental impairment, and
within 30 days of receipt of such notice, Officer shall not have returned to the
full-time, continuing performance of his duties hereunder (an "Involuntary
Termination") and (ii) immediately upon the death of officer.
7. EFFECT OF TERMINATION OF EMPLOYMENT. (a) Upon the termination of
Officer's employment pursuant to Section 6(a) hereof, neither Officer nor
Officer's beneficiaries or estate shall have any further rights under this
Agreement or any claims against the Company arising out of this Agreement,
except the right to receive, within 30 days of the Termination Date:
(i) the unpaid portion of the annual base salary
provided for in Section 4(a) and payment for any accrued vacation
provided for in Section 4(f), in each case computed on a pro rata
basis to the Termination Date; and
(ii) reimbursement for any expenses for which officer
shall not have theretofore been reimbursed, as provided in Section
4(c) and (d).
(b) Upon the termination of Officer's employment pursuant to
Section 6(c) hereof, neither Officer nor Officer's beneficiaries or estate shall
have any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections
7(a)(i) and (ii), and
(ii) payment of any annual bonus provided for in Section
4(b), if any, computed on a pro rata basis to the Termination
Date.
(c) Upon the termination of Officer's employment pursuant to
Section 6(b) hereof, neither Officer nor Officer's beneficiaries or estate shall
have any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections
7(a)(i) and (ii) and 7 (b)(ii);
(ii) so long as officer complies with the terms of
Sections 8 and 9 hereof following the Termination Date, severance
compensation equal to
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the annual base salary provided for in Section 4(a) for the
greater of (A) the remainder of the three-year period commencing
on the Commencement Date and (B) the 12-month period commencing on
the Termination Date, payable in equal installments in accordance
with the Company's normal payroll procedures; and
(iii) continued coverage under the benefit arrangements
provided pursuant to section 4(c) (ii) (or substantially
equivalent benefit arrangements) for the greater of (A) the
remainder of the three-year period commencing on the Commencement
Date and (B) the 12-month period commencing on the Termination
Date.
(d) Officer's obligations under Sections 8 and 9 of this
Agreement shall survive the termination of Officer's employment hereunder.
8. CONFIDENTIAL INFORMATION. (a) Officer acknowledges that by reason
of his employment hereunder he will have access to Confidential Information (as
defined below) concerning the business and policies of the Company and any
affiliate thereof. From and after the date hereof, Officer shall not (i)
divulge or disclose, directly or indirectly, any Confidential Information to any
person, firm, corporation or other entity, for any purpose or reason whatsoever,
or (ii) make use of any of the Confidential Information for Officer's purposes
or for the benefit of any person, firm, corporation or other business entity
except the Company or any affiliate thereof, except, in each case, to the extent
(A) such Confidential Information is obtainable from public sources (other than
as a result of Officer's breach of this Agreement) or is known to Officer by
reason of his prior employment by any entity other than the Company or any
predecessor thereof or (B) such disclosure is required by applicable law or
authorized in writing by the Company or (C) in connection with Officer's
enforcement of his rights under this Agreement.
(b) For purposes of this Agreement, "Confidential Information"
shall mean all proprietary information relating to the Company and its business
(as currently conducted and as proposed to be conducted), properties and assets.
(c) Officer agrees that at the time of termination of his
employment with the Company, regardless of the reasons therefor, or upon the
expiration of this Agreement, he will deliver to the Company and not deliver to
anyone else any and all originals and copies of all notes, files, memoranda,
papers and, in general, any and all physical matter containing Confidential
Information or any other information related to the conduct of the business of
the Company, except for any document for which the Company has given written
consent to removal at the time of termination of Officer's employment. Officer
acknowledges that all such materials are and shall remain the sole and exclusive
property of the Company.
9. COMPETITION. (a) Officer and the Company acknowledge and
recognize that the Company's business has been conducted, and sales of its
Products have been and will be made, in each state of the United States and
world-wide, that the nature of the industry in which the Company competes is
highly competitive and that the Company would find it extremely difficult or
impossible to replace Officer. Accordingly, in consideration of the premises
and the covenants contained herein, the consideration to be received hereunder,
Officer shall not, during
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the Employment Period and the Noncompete Period (as hereinafter defined), (i)
directly or indirectly engage in, whether such engagement shall be as an
employee, consultant, officer, director, partner, stockholder (other than
ownership of up to 3% of the outstanding securities of any public company with a
market capitalization of less than $1,000,000,000, ownership of up to 1% of the
outstanding securities of any public company with a market capitalization of
$1,000,000,000 or more or investments in mutual funds or similar investment
vehicles), affiliate or other participant in any Competitive Business (as
hereinafter defined), or represent in any way, any Competitive Business, whether
such engagement or representation shall be for profit or not, (ii) interfere
with, disrupt or attempt to disrupt the relationship, contractual or otherwise,
between the Company and any third party, including, without limitation, any
customer, supplier, employee, or consultant of the Company, or (iii)
affirmatively assist, solicit or induce others to engage in any Competitive
Business in any manner described in the foregoing clauses (i) and (ii). As used
herein, "Competitive Business" shall mean any business involving the sale of
products in any city or county in any State of the United state" or any other
jurisdiction outside of the United States if such business or the products sold
by it are competitive, directly or indirectly, with (A) the business of the
Company, (B) any of the Products or (C) any products or business being developed
or conducted by the Company or any subsidiaries of the Company during the
Employment Period. As used herein, "Noncompete Period" shall mean (x) in the
event that Officer's employment hereunder is terminated pursuant to Section 6(a)
hereof, the 18-month period commencing on the Termination Date or (y) in the
event that Officer's employment hereunder is terminated pursuant to Section
6(b), the later of (1) the one-year period commencing on the Termination Date or
(2) 6(b) hereof, the period of time during which Officer is receiving any
severance payments pursuant to Section 7(c)(ii).
(b) Anything to the contrary contained herein notwithstanding,
subject to Section 3 hereof, nothing in this Section 9 is intended to prohibit
Officer from (i) engaging in the activities set forth on Exhibit A attached
hereto or (ii) from making any passive or personal investments, conducting his
private business affairs, donating his time for charitable purposes or giving
seminars or speeches so long as the activities described in this clause (ii) are
not competitive with or adverse to the Company, the Business or the Products.
(c) Officer acknowledges and agrees that the breadth of the
territorial restriction in this Section 9 is reasonable and necessary to protect
the Company because, among other things, the Company conducts the Business
throughout the United States and outside the United States; the Business could
be located in any jurisdiction in the United States or outside the United
States; and any lesser restriction would unfairly infringe upon the Company's
conduct of the Business.
(d) Officer understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the Business,
but he nevertheless believes that he has received and will receive sufficient
consideration and other benefits from the transactions contemplated by the
Documents and as an employee of the Company and as otherwise provided hereunder
to clearly justify such restrictions which, in any event, given his education,
abilities and skills, Officer does not believe would prevent him from earning a
living.
10. ASSIGNMENT. This Agreement shall inure to the benefit of and
shall be binding upon the Company, its successors and assigns. The obligations
and duties of Officer hereunder
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are personal and not assignable, whether voluntarily or involuntarily or by
operation of law or otherwise.
11. NOTICES. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy (if automated
confirmation of full transmission is received), nationally-recognized overnight
courier or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party to the
other parties;
(i) if to the Corporation, to:
Visual Information Service Corp.
2728 North Hampden Court
Chicago, Illinois 60634
Telecopy: (312) 472-6213
Attention: President
(ii) if to Officer, to:
All such notices, requests, consent and other communications shall be deemed to
have been delivered (al in the case of personal delivery or delivery by telecopy
(if automated confirmation of full transmission is received), on the date of
such delivery, (b) in the case of dispatch by nationally recognized overnight
courier, on the next business following such dispatch and (c) in the case of
mailing, on the third business day after the posting thereof.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the Company and Officer relating to the subject matter hereof, and it replaces
and supersedes any and all prior agreements between the parties relating to the
same subject matter.
13. WAIVER; AMENDMENT. No provision hereof may be waived except by a
written agreement signed by the waiving party. The waiver of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
other term or condition hereof. This Agreement may be amended only by a
subsequent writing signed by the party or parties to be bound thereby.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
15. REMEDIES. All remedies hereunder are cumulative, are in addition
to any other remedies provided for by law and may, to the extent permitted by
law, be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed to be an election of such remedy or to preclude the exercise
of any other remedy. Officer acknowledges that in the event of any breach of
Officer's covenants contained in Section 8 and 9, the Company shall be entitled
to immediate relief enjoining such violations in any court or before any
judicial body having jurisdiction over such claim.
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16. SEVERABILITY. In the event that any provision of this Agreement
would be held in any jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement in any other
jurisdiction. Notwithstanding the foregoing, if such provision could me more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
affecting the invalidity or enforceability of such provision in any other
jurisdiction.
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which, taken together,
shall constitute one and the same instrument.
18. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
19. ATTORNEYS' FEES. In the event that any party hereto brings an
action or proceeding for a declaration of the rights of the parties under this
Agreement, for injunctive relief, for an alleged breach or default of, or any
other action arising out of, this Agreement or the transactions contemplated
hereby, or in the event any party is in default of its obligations pursuant
hereto, whether or not suit is filed or prosecuted to final judgment, the
prevailing party in any such action or proceeding shall be entitled to
reasonable attorneys' fees, in addition to any court costs incurred and in
addition to any other damages or relief awarded.
IN WITNESS WHEREOF, the Company and Officer have executed this Agreement
as of the date first above written.
VISUAL INFORMATION SERVICE CORP.
By:
---------------------
Name:
Title:
OFFICER:
------------------------
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Exhibit A
[TO BE MUTUALLY AGREED UPON BY OFFICER AND THE COMPANY]
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
as of November 12, 1994, by and between VISUAL INFORMATION SERVICES CORP., an
Illinois corporation (the "Company"), and BILL BUCK ("Officer") with reference
to the following:
WHEREAS, the Company desires to engage officer as Chief Executive Officer
of the Company and Officer desires to be so engaged by the Company in such
position, on the terms and conditions set forth and described herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the Company and Officer agree as follows:
1. EMPLOYMENT. The Company shall employ Officer in the capacity and on
the terms and subject to the conditions set forth in this Agreement. Officer
hereby accepts such employment.
2. TERM; RENEWAL.
(a) TERM. Unless sooner terminated as hereinafter provided or
renewed as provided below in this paragraph 2, the term of this Agreement and of
Officer's employment hereunder shall be for a period of three (3) years,
commencing on the date hereof (the "Commencement Date"). Such period of
employment is hereinafter referred to as the "Employment Period."
(b) RENEWAL. Unless either party hereto notifies the other party not
less than 120 days prior to the expiration of the Employment Period of such
party's intent to allow this Agreement and Officer's employment hereunder to
expire, this Agreement and Officer's employment hereunder shall, without further
act by either party, be deemed to be renewed as of the date this Agreement would
otherwise expire for an additional one-year period. Any renewal of this
Agreement pursuant to this subparagraph 2(b) shall be at the annual salary and
bonus and on the other terms and conditions of this Agreement then in effect.
3. DUTIES. Subject to the provisions of this Agreement, during the
Employment Period, the Company shall employ Officer and Officer shall serve the
Company as Chief Executive Officer of the Company. During the Employment
Period, Officer shall discharge the obligations and responsibilities normally
associated with such office and shall also perform such other duties and
responsibilities as the Board of Directors of the Company (the "Board") shall
determine from time to time. Officer agrees to perform such duties faithfully
and to the best of his ability, to devote his full working time and efforts to
the performance of such duties and not to accept any other gainful employment
without the prior written consent of the Board. During the Employment Period,
Officer shall report to the Board.
4. COMPENSATION; FRINGE BENEFITS. For all services rendered by Officer
pursuant to this Agreement, during the Employment Period, the Company shall
compensate Officer as follows:
<PAGE>
(a) ANNUAL SALARY. Commencing on the Commencement Date, Officer
shall be entitled to an annual base salary equal to $60,000, which shall be
payable in equal installments by the Company pursuant to the Company's normal
payroll procedures. Officer's annual base salary shall be subject to increase
annually on each year following the Commencement Date by a percentage equal to
the percentage increase, if any, in the Consumer Price Index during that year of
service.
(b) DISCRETIONARY BONUS. In addition to Officer's annual base
salary, the Company may, but is not required to pay Officer a bonus at the end
of each calendar year during the Employment Period.
(c) EMPLOYEE BENEFIT PLANS. During the Employment Period, in
addition to the annual base salary and bonus provided in subparagraphs 4(a) and
(b), Officer shall be entitled to (i) participate under any medical and dental
insurance, death, disability, retirement, profit sharing or other benefit plan
of the Company generally available to similar officers of the Company and for
which he is eligible and (ii) any additional fringe benefits that may be
authorized and approved from time to time by the Executive Compensation
Committee of the Board or, if there is no such committee, by the Board.
Officer's participation in each such benefit plan shall commence on the date
hereof, with respect to existing plans, and as of the earliest practicable date
with respect to plans hereafter instituted by the Company, and shall be subject
to the terms and conditions of each such plan.
(d) EXPENSE REIMBURSEMENTS. During the Employment Period, the
Company shall reimburse Officer promptly for all travel, entertainment, business
meeting and similar expenditures reasonably incurred by Officer in pursuit and
furtherance of the Company's business to the extent such expenditures comply
with the reimbursement requirements and policies established by the Company and
published from time to time.
(e) WITHHOLDING. The Company shall deduct from any payments to be
made by it to the Officer under this Section 4 or under Section 7 any amounts
required to be withheld in respect of any Federal, state or local income or
other taxes and related deductions as required by law.
(f) VACATION. Officer shall be entitled to a paid vacation annually
in accordance with the Company's vacation policy as determined by the Executive
Compensation Committee of the Board or, if there is no such committee, by the
Board.
(g) INDEMNIFICATION AGREEMENT. Upon the request of Officer, the
Company shall promptly take such steps as are necessary to authorize, and shall
enter into, an indemnification agreement with Officer providing for Officer's
indemnification by the Company to the fullest extent of applicable law for all
costs, liabilities and expenses incurred by Officer arising out of Officer's
performance of his duties hereunder. The terms of any such indemnification
agreement will be set forth in a separate agreement between the Company and
Officer on terms mutually agreeable to both.
(h) ISSUANCE OF OPTIONS. In addition to the compensation described
above, Officer shall receive options to purchase 96,000 shares of the Company's
common stock under
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<PAGE>
(and subject to) the Company's Stock Option Plan. Twelve thousand (12,000) of
such options shall be immediately vested and the remainder shall vest at a rate
of 4,000 options per month (on the first of every month) commencing on February
1, 1995. Such options shall have an exercise price of $2.50 per share and shall
be exercisable for a period of ten years.
5. REPRESENTATIONS AND WARRANTIES. Officer represents and warrants to
the Company that there are no agreements or arrangements, whether written or
oral, or any legal considerations applicable to unfair competition, trade
secrets or proprietary information that would be breached or violated by Officer
upon execution of this Agreement or that would prevent or impair Officer from
rendering exclusive services to the Company during the Employment Period.
6. TERMINATION. This Agreement and Officer's employment hereunder may be
terminated prior to the expiration of the term hereof upon the first to occur of
(for convenience of reference, the date upon which any termination of the
employment of Officer pursuant to Section 6 shall be effective shall be
hereinafter referred to as the "Termination Date"):
(a) TERMINATION FOR CAUSE. Officer's employment hereunder and all
of the Company's obligations hereunder (except as hereinafter provided) may be
terminated by the Company immediately for "cause" by giving written notice of
such termination to Officer. For purposes of this Agreement, "cause" shall
mean: (i) Officer's material, willful misconduct which could reasonably be
expected to have a material adverse effect on the business, assets, operations,
results of operations, condition (financial or otherwise), performance or
prospects of the Company (a "Material Adverse Effect"), (ii) Officer's willful
disregard of lawful instructions of the Board consistent with Officer's position
relating to the business of the Company or material neglect of duties or
material failure to act, (iii) the commission by Officer of an act constituting
common law fraud or embezzlement, or a felony or criminal act (other than
traffic violations), (iv) Officer's abuse of alcohol or other drugs or
controlled substances, or conviction of a crime involving moral turpitude, in
each case which has or could be reasonably expected to have a Material Adverse
Effect or impairs Officer's ability to perform his duties hereunder, (v)
Officer's material breach of a material provision of this Agreement or (vi)
Officer's resignation hereunder. Each of the matters referred to in the
preceding sentence shall be determined in good faith by the Board. A
termination contained in Section 6(a)(i), (ii), (iv) (other than as a result of
a conviction of a crime involving moral turpitude) or (v) shall take effect 30
days after the giving of the notice contemplated hereby unless Officer shall,
during such 30-day period, remedy to the satisfaction of the Board the
misconduct, disregard, abuse or breach specified in such notice; PROVIDED,
HOWEVER, that such termination shall take effect immediately upon the giving of
such notice if the Board shall have determined that such misconduct, disregard,
abuse or breach is unremediable (which determination shall be stated in such
notice). A termination pursuant to Section 6(a)(iii), (iv) (as a result of a
conviction of a crime involving moral turpitude) or (vi) shall take effect
immediately upon the giving of the notice contemplated hereby.
(b) TERMINATION WITHOUT CAUSE. The Company may terminate the
employment of Officer and all of the Company's obligations hereunder (except as
hereinafter provided) at any time and for any reason or for no reason during the
Employment Period without "cause" by
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<PAGE>
giving Officer written notice of such termination, to be effective 30 days
following the giving of such written notice.
(c) TERMINATION DUE TO DISABILITY OR DEATH. Officer's employment
hereunder may be terminated by the Company (i) upon 30 days' notice to Officer
in the event that Officer has been unable to perform at least 80% of his duties
under this Agreement for an aggregate of 120 days within any 12-month period, or
can reasonably be expected to be unable to do so for such period, as the result
of Officer's incapacity due to physical or mental impairment, and within 30 days
of receipt of such notice, Officer shall not have returned to the full-time,
continuing performance of his duties hereunder (an "Involuntary Termination")
and (ii) immediately upon the death of Officer.
7. EFFECT OF TERMINATION OF EMPLOYMENT. (a) Upon the termination of
Officer's employment pursuant to Section 6(a) hereof, neither Officer nor
Officer's beneficiaries or estate shall have any further rights under this
Agreement or any claims against the Company arising out of this Agreement,
except the right to receive, within 30 days of the Termination Date:
(i) the unpaid portion of the annual base salary provided for in
Section 4(a) and payment for any accrued vacation provided for in
Section 4(f), in each case computed on a PRO RATA basis to the
Termination Date; and
(ii) reimbursement for any expenses for which Officer shall not
have theretofore been reimbursed, as provided in Section 4(c) and (d).
(b) Upon the termination of Officer's employment pursuant to Section
6(c) hereof, neither Officer nor Officer's beneficiaries or estate shall have
any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections 7(a)(i) and
(ii); and
(ii) payment of any annual bonus provided for in Section 4(b), if
any, computed on a PRO RATA basis to the Termination Date.
(c) Upon the termination of Officer's employment pursuant to Section
6(b) hereof, neither Officer nor Officer's beneficiaries or estate shall have
any further rights under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections 7(a)(i) and
(ii) and 7(b)(ii);
(ii) so long as officer complies with the terms of Sections 8 and
9 hereof following the Termination Date, severance compensation equal
to the annual base salary provided for in Section 4(a) for the greater
of (A) the remainder of the three-year period commencing on the
Commencement Date and
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<PAGE>
(B) the 12-month period commencing on the Termination Date, payable in
equal installments in accordance with the Company's normal payroll
procedures; and
(iii) continued coverage under the benefit arrangements
provided pursuant to Section 4(c)(ii) (or substantially equivalent
benefit arrangements) for the greater of (A) the remainder of the
three-year period commencing on the Commencement Date and (B) the
12-month period commencing on the Termination Date.
(d) Officer's obligations under Sections 8 and 9 of this Agreement
shall survive the termination of Officer's employment hereunder.
8. CONFIDENTIAL INFORMATION. (a) Officer acknowledges that by reason of
his employment hereunder he will have access to Confidential Information (as
defined below) concerning the business and policies of the Company and any
affiliate thereof. From and after the date hereof, Officer shall not (i)
divulge or disclose, directly or indirectly, any Confidential Information to any
person, firm, corporation or other entity, for any purpose or reason whatsoever,
or (ii) make use of any of the Confidential Information for Officer's purposes
or for the benefit of any person, firm, corporation or other business entity
except the Company or any affiliate thereof, except, in each case, to the extent
(A) such Confidential Information is obtainable from public sources (other than
as a result of Officer's breach of this Agreement) or is known to Officer by
reason of his prior employment by any entity other than the Company or any
predecessor thereof or (B) such disclosure is required by applicable law or
authorized in writing by the Company or (C) in connection with Officer's
enforcement of his rights under this Agreement.
(b) For purposes of this Agreement, "Confidential Information" shall
mean all proprietary information relating to the Company and its business (as
currently conducted and as proposed to be conducted), properties and assets.
(c) Officer agrees that at the time of termination of his employment
with the Company, regardless of the reasons therefor, or upon the expiration of
this Agreement, he will deliver to the Company and not deliver to anyone else
any and all originals and copies of all notes, files, memoranda, papers and in
general, any and all physical matter containing Confidential Information or any
other information related to the conduct of the business of the Company, except
for any document for which the Company has given written consent to removal at
the time of termination of Officer's employment. Officer acknowledges that all
such materials are and shall remain the sole and exclusive property of the
Company.
9. NONCOMPETITION. (a) Officer and the Company acknowledge and
recognize that the Company's business has been conducted, and sales of its
Products have been and will be made, in each State of the United States and
world-wide, that the nature of the industry in which the Company competes is
highly competitive and that the Company would find it extremely difficult or
impossible to replace Officer. Accordingly, in consideration of the premises
and the covenants contained herein, the consideration to be received hereunder,
Officer shall not, during the Employment Period and the Noncompete Period (as
hereinafter defined), (i) directly or indirectly engage in, whether such
engagement shall be as an employee, consultant, officer,
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<PAGE>
director, partner, stockholder (other than ownership of up to 3% of the
outstanding securities of any public company with a market capitalization of
less than $1,000,000,000, ownership of up to 1% of the outstanding securities of
any public company with a market capitalization of $1,000,000,000 or more or
investments in mutual funds or similar investment vehicles), affiliate or other
participant in any Competitive Business (as hereinafter defined), or represent
in any way, any Competitive Business, whether such engagement or representation
shall be for profit or not, (ii) interfere with, disrupt or attempt to disrupt
the relationship, contractual or otherwise, between the Company and any third
party, including, without limitation, any customer, supplier, employee, or
consultant of the Company, or (iii) affirmatively assist, solicit or induce
others to engage in any Competitive Business in any manner described in the
foregoing clauses (i) and (ii). As used herein, "Competitive Business" shall
mean any business involving the sale of products in any city or county in any
State of the United States or any other jurisdiction outside of the United
States if such business or the products sold by it are competitive, directly or
indirectly, with (A) the business of the Company, (B) any of the Products or (C)
any product or business being developed or conducted by the Company or any
subsidiaries of the Company during the Employment Period. As used herein,
"Noncompete Period" shall mean (x) in the event that Officer's employment
hereunder is terminated pursuant to Section 6(a) hereof, the 18-month period
commencing on the Termination Date or (y) in the event that Officer's employment
hereunder is terminated pursuant to Section 6(b), the later of (1) the one-year
period commencing on the Termination Date or (2) 6(b) hereof, the period of time
during which Officer is receiving any severance payments pursuant to Section
7(c)(ii).
(b) Anything to the contrary contained herein notwithstanding,
subject to Section 3 hereof, nothing in this Section 9 is intended to prohibit
Officer from making any passive or personal investments, conducting his private
business affairs, donating his time for charitable purposes or giving seminars
or speeches so long as such activities are not competitive with or adverse to
the Company, the Business or the Products.
(c) Officer acknowledges and agrees that the breadth of the
territorial restriction in this Section 9 is reasonable and necessary to protect
the Company because, among other things, the Company conducts the Business
throughout the United States and outside the United States; the Business could
be located in any jurisdiction in the United States or outside the United
States; and any lesser restriction would unfairly infringe upon the Company's
conduct of the Business.
(d) Officer understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the Business, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits from the transactions contemplated by the
Documents and as an employee of the Company and as otherwise provided hereunder
to clearly justify such restrictions which, in any event, given his education,
abilities and skills, Officer does not believe would prevent him from earning a
living.
10. ASSIGNMENT. This Agreement shall inure to the benefit of and shall be
binding upon the Company, its successors and assigns. The obligations and
duties of Officer hereunder are personal and not assignable, whether voluntarily
or involuntarily or by operation of law or otherwise.
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<PAGE>
11. NOTICES. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy (if automated
confirmation of full transmission is received), nationally-recognized overnight
courier or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party to the
other parties:
(i) if to the Corporation, to:
Visual Information Service Corp.
2728 North Hampden Court
Chicago, Illinois 60614
Telecopy: (312) 472-6213
Attention: President
(ii) if to Officer, to:
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by telecopy
(if automated confirmation of full transmission is received), on the date of
such delivery, (b) in the case of dispatch by nationally-recognized overnight
courier, on the next business day following such dispatch and (c) in the case of
mailing, on the third business day after the posting thereof.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
Company and Officer relating to the subject matter hereof, and it replaces and
supersedes any and all prior agreements between the parties relating to the same
subject matter.
13. WAIVER; AMENDMENT. No provision hereof may be waived except by a
written agreement signed by the waiving party. The waiver of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
other term or condition hereof. This Agreement may be amended only by a
subsequent writing signed by a party or parties to be bound thereby.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
15. REMEDIES. All remedies hereunder are cumulative, are in addition to
any other remedies provided for by law and may, to the extent permitted by law,
be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed to be an election of such remedy or to preclude the exercise
of any other remedy. Officer acknowledges that in the event of any breach of
Officer's covenants contained in Sections 8 and 9, the Company shall be entitled
to immediate relief enjoining such violations in any court or before any
judicial body having jurisdiction over such claim.
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<PAGE>
16. SEVERABILITY. In the event that any provision of this Agreement would
be held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
affecting the invalidity or enforceability of such provision in any other
jurisdiction.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
18. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
19. ATTORNEYS' FEES. In the event that any party hereto brings an action
or proceeding for a declaration of the rights of the parties under this
Agreement, for injunctive relief, for an alleged breach or default of, or any
other action arising out of, this Agreement or the transactions contemplated
hereby, or in the event any party is in default of its obligations pursuant
hereto, whether or not suit is filed or prosecuted to final judgment, the
prevailing party in any such action or proceeding shall be entitled to
reasonable attorneys' fees, in addition to any court costs incurred and in
addition to any other damages or relief awarded.
IN WITNESS WHEREOF, the Company and Officer have executed this Agreement as
of the date first above written.
VISUAL INFORMATION SERVICE CORP.
By:
------------------------------------------
Name:
Title:
OFFICER:
---------------------------------------------
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<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement" ) is made and entered into as
of November 12, 1934, by and between VISUAL INFORMATION SERVICES CORP., an
Illinois corporation (the "Company"), and ROGER REMILLARD ("Officer") with
reference to the following:
WHEREAS, the Company desires to engage Officer as Senior Vice President -
Technology of the Company and Officer desires to be so engaged by the Company in
such position, on the terms and conditions set forth and described herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the Company and Officer agree as follows:
1. EMPLOYMENT. The Company shall employ Officer in the capacity and on
the terms and subject to the conditions set forth in this Agreement. Officer
hereby accepts such employment.
2. TERM; RENEWAL.
(a) TERM. The term of this Agreement and of Officer's employment
hereunder shall be for a period of three (3) years, commencing on the date
hereof (the "Commencement Date"). Such period of employment is hereinafter
referred to as the "Employment Period."
(b) RENEWAL. Unless either party hereto notifies the other party not less
than 120 days prior to the expiration of the Employment Period of such party's
intent to allow this Agreement and Officer's employment hereunder to expire,
this Agreement and Officer's employment hereunder shall, without further act by
either party, be deemed to be renewed as of the date this Agreement would
otherwise expire for an additional one-year period. Any renewal of this
Agreement pursuant to this subparagraph 2(b) shall be at the annual salary and
bonus and on the other terms and conditions of this Agreement then in effect.
3. DUTIES. Subject to the provisions of this Agreement, during the
Employment Period, the Company shall employ Officer and Officer shall serve the
Company as Senior Vice President - Technology of the Company. During the
Employment Period, Officer shall discharge the obligations and responsibilities
normally associated with such office and shall also perform such other duties in
relation to invention and presentation and responsibilities as the Board of
Directors of the Company (the "Board") shall determine from time to time.
Officer agrees to perform such duties faithfully and to the best of his ability,
to devote his full working time and efforts to the performance of such duties
and not to accept any other gainful employment without the prior written consent
of the Board. During the Employment Period, Officer shall report to the Board.
<PAGE>
4. COMPENSATION; FRINGE BENEFITS. For all services rendered by Officer
pursuant to this Agreement, during the Employment Period, the Company shall
compensate Officer as follows:
(a) ANNUAL SALARY. Commencing on the Commencement Date, Officer shall be
entitled to an annual base salary equal to $60,000, which shall be payable in
equal installments by the Company pursuant to the Company's normal payroll
procedures. Officer's annual base salary shall be subject to increase annually
on each year following the Commencement Date as determined by the Board of
Directors, but in no event, less than by a percentage equal to the percentage
increase, if any, in the Consumer Price Index during that year or service.
(b) DISCRETIONARY BONUS. In addition to Officer's annual base salary, the
Company may pay Officer a bonus during the Employment Period.
(c) EMPLOYEE BENEFIT PLANS. During the Employment Period, in addition to
the annual base salary and bonus provided in subparagraphs 4(a) and (b), Officer
shall be entitled to (i) participate under any medical and dental insurance,
death, disability, retirement, profit sharing or other benefit plan of the
Company generally available to similar officers of the Company and for which he
is eligible and (ii) any additional fringe benefits that may be authorized and
approved from time to time by the Executive Compensation Committee of the Board
or, if there is no such committee, by the Board. Officer's participation in
each such benefit plan shall commence on the date hereof, with respect to
existing plans, and as of the earliest practicable date with respect to plans
hereafter instituted by the Company, and shall be subject to the terms and
conditions of each such plan.
(d) EXPENSE REIMBURSEMENTS. During the Employment Period, the Company
shall reimburse Officer promptly for all travel, entertainment, business meeting
and similar expenditures reasonably incurred by Officer in pursuit and
furtherance of the Company's business to the extent such expenditures comply
with the reimbursement requirements and policies established by the Company and
published from time to time.
(e) WITHHOLDING. The Company shall deduct from any payments to be made by
it to the Officer under this Section 4 or under Section 7 any amounts required
to be withheld in respect of any Federal, state or local income or other taxes
and related deductions as required by law.
(f) VACATION. Officer shall be entitled to a paid vacation annually in
accordance with the Company's vacation policy as determined by the Executive
Compensation Committee of the Board or, if there is no such committee, by the
Board.
(g) INDEMNIFICATION AGREEMENT. Upon the request of Officer, the Company
shall promptly take such steps as are necessary to authorize, and shall enter
into, an indemnification agreement with Officer providing for Officer's
indemnification by the company to the fullest extent of applicable law for all
costs, liabilities and expenses incurred by Officer arising out of Officer's
performance of his duties hereunder. The terms of any such indemnification
agreement will be set forth in a separate agreement between the Company and
Officer on terms mutually agreeable to both.
(h) ISSUANCE OF OPTIONS. In addition to the compensation described above,
Officer shall receive options to purchase 72,000 shares of the Company's common
stock under (and
<PAGE>
subject to the provisions of) the Company's Stock Option Plan. Nine thousand
(9,000) of such options shall be immediately vested and the remainder shall vest
at a rate of 3,000 options per month (on the first of every month) commencing on
February 1, 1995. Such options shall, have an exercise price of $2.50 per share
and shall be exercisable for a period of ten years.
5. REPRESENTATIONS AND WARRANTIES. Officer represents and warrants to
the Company that there are no agreements or arrangements, whether written or
oral, or any legal considerations applicable to unfair competition, trade
secrets or proprietary information that would be breached or violated by Officer
upon execution of this Agreement or THAT would prevent or impair Officer from
rendering exclusive services to the Company during the Employment Period.
6. TERMINATION. This Agreement and Officer's employment hereunder may be
terminated prior to the expiration of the term hereof upon the first to occur of
(for convenience of reference, the date upon which any termination of the
employment officer pursuant to Section 6 shall be effective shall be hereinafter
referred to as the "Termination Date"):
(a) TERMINATION FOR CAUSE. Officer's employment hereunder and all of the
Company's obligations hereunder (except as hereinafter provided) may be
terminated by the Company immediately for "cause" by giving written notice of
such termination to Officer. For purposes of this Agreement, "cause" shall
mean: (i) Officer's material, willful misconduct which could reasonably be
expected to have a material adverse effect on the business, assets, operations,
results of operations, condition (financial or otherwise), performance or
prospects of the Company (a "Material Adverse Effect"), (ii) Officer's willful
disregard of lawful instructions of the Board consistent with Officer's position
relating to the business of the Company or material neglect of duties or
material failure to act, (iii) the commission by and determination of a court of
law that officer of an act constituting common law fraud or embezzlement, or a
felony or criminal act (other than traffic violations), (iv) Officer's abuse of
alcohol or other drugs or controlled substances, or conviction of a crime
involving moral turpitude, in each case which has or could be reasonably
expected to have a Material Adverse Effect or impairs Officer's ability to
perform his duties hereunder, (v) officer's material breach of a material
provision of this Agreement or (vi) Officer's resignation hereunder. Each of
the matters referred to in the preceding sentence shall be determined in good
faith by the Board. A termination contained in Section 6(a)(i), (ii), (iv)
(other than as a result of a conviction of a crime involving moral turpitude) or
(v) shall take effect 30 days after the giving of the notice contemplated hereby
unless Officer shall, during such 30-day period, remedy to the satisfaction of
the Board the misconduct, disregard, abuse or breach specified in such notice;
PROVIDED, HOWEVER, that such termination shall take effect immediately upon the
giving of such notice if the Board shall have determined that such misconduct,
disregard, abuse or breach is unremediable (which determination shall be stated
in such notice). A termination pursuant to Section 6 (a) (iii), (iv) (as a
result of a conviction of a crime involving moral turpitude) or (vi) shall take
effect immediately upon the giving of the notice contemplated hereby.
<PAGE>
(b) TERMINATION DUE TO DISABILITY OR DEATH. Officer's employment
hereunder may be terminated by the Company (i) upon 30 days, notice to officer
in the event that Officer has been unable to perform at least 80% of his duties
under this Agreement for an aggregate of 120 days within any 12-month period, or
can reasonably be expected to be unable to do so for such period, as the result
of Officer's incapacity due to physical or mental impairment, and within 30 days
of receipt of such notice, Officer shall not have returned to the full-time,
continuing performance of his duties hereunder (an "Involuntary Termination")
and (ii) immediately upon the death of officer.
12. EFFECT OF TERMINATION OF EMPLOYMENT. (a) Upon the termination of
officer's employment pursuant to Section 6(a) hereof, neither Officer nor
Officer's beneficiaries or estate shall have any further rights under this
Agreement or any claims against the Company arising out of this Agreement,
except the right to receive, within 30 days of the Termination Date:
(i) the unpaid portion of the annual base salary provided for in
Section 4(a) and payment for any accrued vacation provided for in Section
4(f), in each case computed on a pro rata basis to the Termination Date;
and
(ii) reimbursement for any expenses for which Officer shall not have
theretofore been reimbursed, as provided in Section 4(c) and (d).
(b) Upon the termination of Officer's employment pursuant to Section 6(b)
hereof, neither Officer nor Officer's beneficiaries or estate shall have any
further rights under this Agreement or any claims against the Company arising
out of this Agreement, except the right to receive:
(i) the payments, if any, referred to in Sections 7(a)(i) and (ii);
and
(ii) payment of any annual bonus provided for in Section 4(b), if any,
computed on a pro rata basis to the Termination Date.
(c) Upon any other termination of Officer's employment, neither Officer nor
Officer's beneficiaries or estate shall have any further rights under this
Agreement or any claims against the Company arising out of this Agreement,
except the right to receive:
(i) the payments, if any, referred to in Sections 7(a)(i) and (ii) and
7(b) -ii):
(ii) so long as officer complies with the terms of Sections 8 and 9
hereof following the Termination Date, severance compensation equal to the
annual base salary provided for in Section 4(a) for the greater of (A) the
remainder of the three-year period commencing on the Commencement Date and
(B) the 12-month period commencing on the Termination Date, payable in
equal installments in accordance with the Company's normal payroll
procedures; and
<PAGE>
(iii) continued coverage under the benefit arrangements provided
pursuant to Section 4(c)(ii) (or substantially equivalent benefit
arrangements) for the greater of (A) the remainder of the three-year period
commencing on the Commencement Date and (B) the 12 month period commencing
on the Termination Date.
(d) Officer's obligations under Sections 8 and 9 of this Agreement shall
survive the termination of Officer's employment hereunder.
8. CONFIDENTIAL INFORMATION. (a) Officer acknowledges that by reason of
his employment hereunder he will have access to Confidential Information (as
defined below) concerning the business and policies of the Company and any
affiliate thereof. From and after the date hereof, Officer shall not (i)
divulge or disclose, directly or indirectly, any Confidential Information to any
person, firm, corporation or other entity, for any purpose or reason whatsoever,
or (ii) make use of any of the Confidential Information for Officer's purposes
or for the benefit of any person, firm, corporation or other business entity
except the Company or any affiliate thereof, except, in each case, to the extent
(A) such Confidential Information is obtainable from public sources (other than
as a result of Officer's breach of this Agreement) or is known to Officer by
reason of his prior employment by any entity other than the Company or any
predecessor thereof or (B) such disclosure is required by applicable law or
authorized in writing by the company or in connection with Officer's enforcement
of his rights under this Agreement.
(b) For purposes of this Agreement, "Confidential Information" shall mean
all proprietary information relating to the Company and its business (as
currently conducted and as proposed to be conducted), properties and assets.
(c) Officer agrees that at the time of termination of his employment with
the Company, regardless of the reasons therefor, or upon the expiration of this
Agreement, he will deliver to the Company and not deliver to anyone else any and
all originals and copies of all notes, files, memoranda, papers and, in general,
any and all physical matter containing Confidential Information or any other
information related to the conduct of the business of the Company, except for
any document for which the company has given written consent to remove, at the
time of termination of Officer's employment. Officer acknowledges that all such
materials are and shall remain the sole and exclusive property of the Company.
9. NONCOMPETITION. (a) Officer and the Company acknowledge and recognize
that the Company's business has been conducted, and sales of its Products have
been and will be made, in each State of the United states and world-wide, that
the nature of the industry in which the Company competes is highly competitive
and that the company would find it extremely difficult or impossible to replace
Officer. Accordingly, in consideration of the premises and the covenants
contained herein, the consideration to be received hereunder, officer shall not,
during the Employment Period and the Noncompete Period (as hereinafter defined),
(i) directly or indirectly engage in, whether such engagement shall be as an
employee, consultant, officer, director, partner, stockholder (other than
ownership of up to 3% of the outstanding securities of any public company with a
market capitalization of less than $1,000,000,000, ownership of up to 1% of the
outstanding securities of any public
<PAGE>
company with a market capitalization of $1,000,000,000 or more or investments in
mutual funds or similar investment vehicles), affiliate or other participant in
any Competitive Business (as hereinafter defined), or represent in any way, any
Competitive Business, whether such engagement or representation shall be for
profit or not, (ii) interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the company and any third party,
including, without limitation, any customer, supplier, employee, or consultant
of the Company, or (iii) affirmatively assist, solicit or induce others to
engage in any competitive Business in any manner described in the foregoing
clauses (i) and (ii). As used herein, "Competitive Business" shall mean any
business involving the sale of products in any city or county in any State of
the United States or any other jurisdiction outside of the United States if such
business or the products sold by it are competitive, directly or indirectly,
with (A) the business of the Company, (B) any of the Products or (C) any
products or business being developed or conducted by the Company or any
subsidiaries of the Company during the Employment Period. As used herein,
noncompete Period" shall mean (x) in the event that Officer's employment
hereunder is terminated pursuant to Section 6(a) hereof, the 18-month period
commencing on the Termination Date or (y) in the event that Officer's employment
hereunder is terminated pursuant to Section 6(b), the later of (1) the one-year
period commencing on the Termination Date or (2) 6(b) hereof, the period of time
during which Officer is receiving any severance payments pursuant to Section
7(c)(ii).
(b) Anything to the contrary contained herein notwithstanding subject to
Section 3 hereof, nothing in this Section 11 is intended to prohibit Officer
from making any passive or personal investments, conducting his private business
affairs, donating his time for charitable purposes or giving seminars or
speeches so long as such activities are not competitive with or adverse to the
company, the Business or the Products.
(c) Officer acknowledges and agrees that the breadth of the territorial
restriction in this Section 9 is reasonable and necessary to protect the Company
because, among other things, the Company conducts the Business throughout the
United States and outside the United States; the Business could be located in
any jurisdiction in the United States or outside the United States; and any
lesser restriction would unfairly infringe upon the Company's conduct of the
Business.
(d) Officer understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the Business, but he
nevertheless believe. that he has received and will receive sufficient
consideration and other benefits from the transactions contemplated by the
Documents and as an employee of the Company and as otherwise provided hereunder
to clearly justify such restrictions which, in any event, given his education,
abilities and skills, Officer does not believe would prevent him from earning a
living.
10. ASSIGNMENT. This Agreement shall inure to the benefit of and shall be
binding upon the Company, its successors and assigns. The obligations and duties
of Officer hereunder are personal and not assignable, whether voluntarily or
involuntarily or by operation of law or otherwise.
<PAGE>
11. NOTICES. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered IN person or sent by telecopy (if automated
confirmation of rull transmission is received), nationally-recognized overnight
courier or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party to the
other parties:
(i) if to the Corporation, to:
Visual Information Service Corp.
2728 North Hampden Court
Chicago, Illinois 60614
Telecopy: (312) 472-6213
Attention: President
(ii) if to Officer, to:
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by telecopy
(if automated confirmation of full transmission is received), on the date of
such delivery, (b) in the case of dispatch by nationally recognized overnight
courier, on the next business day following such dispatch and (c) in the case of
mailing, on the third business day after the posting thereof.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
Company and Officer relating to the subject matter hereof, and it replaces and
supersedes any and all prior agreements between the parties relating to the same
subject matter
13. WAIVER; AMENDMENT. No provision hereof may be waived except by a
written agreement signed by the waiving party. The waiver of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
other term or condition hereof. This Agreement may be amended only by a
subsequent writing signed by the party or parties to be bound thereby.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
15. REMEDIES. All remedies hereunder are cumulative, are in addition to any
other remedies provided for by law and may, to the extent permitted by law, be
exercised concurrently or separately, and the exercise of any one remedy shall
not be deemed to be an election of such remedy or to preclude the exercise of
any other remedy. Officer acknowledges that in the event of any breach of
Officer's covenants contained in Section 8 and 9, the Company shall be entitled
to immediate relief enjoining such violations in any court or before any
judicial body having jurisdiction over such claim.
<PAGE>
16. SEVERABILITY. In the event that any provision of this Agreement would
be held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement in any other
jurisdiction. Notwithstanding the foregoing, if such provision could me more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
affecting the invalidity or enforceability of such provision in any other
jurisdiction.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
18. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
19. ATTORNEY FEES. In the event that any party hereto brings an action or
proceeding for a declaration of the rights of the parties under this Agreement,
for injunctive relief, for an alleged breach or default of, or any other action
arising out of, this Agreement or the transactions contemplated hereby, or in
the event any party is in default of its obligations pursuant hereto, whether or
not suit is filed or prosecuted to final judgment, the prevailing party in any
such action or proceeding shall be entitled to reasonable attorneys' fees, in
addition to any court costs incurred and in addition to any other damages or
relief awarded.
IN WITNESS WHEREOF, the Company and Officer have executed this Agreement as
of the date first above written.
VISUAL INFORMATION SERVICE CORP.
By:
----------------------
Name:
Title:
OFFICER:
-------------------------
<PAGE>
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This document constitutes an Employment Agreement (hereafter the "Agreement")
dated May 1, 1996 (hereafter "Date of this Agreement"), by and between Visual
Information Service Corp., and Illinois corporation (hereafter "Company"), and
DAVID ROSEN (hereafter the "Employee").
INTRODUCTION
The Employee has extensive experience in business-development, marketing,
management and was, previously, a consultant to many leading corporations and,
prior to that, a senior executive at Commodore International.
Through the period of January 17, 1996 through May 1, 1996, the Employee was a
provisional employee to the Company and prepared the Company Business Plan and
performed all other assigned tasks in a fully satisfactory manner. The Company
wishes to secure the Employee's talents and services, and Employee wishes to
provide them to the Company.
This Employment Agreement incorporates and supersedes the initial Agreement
signed January 17, 1996.
Now therefore, in consideration of the mutual promises and agreements
contained herein, the parties agree as follows:
1. EMPLOYMENT AND TERM:
1.1 The terms of this Agreement shall be for two (2) years
(hereinafter "Term of this Agreement"), commencing on the Date of this
Agreement. Company hereby agrees to employ Employee, and Employee hereby
accepts such employment for the Term of this Agreement.
1.2 This agreement may be terminated prior to the end of the Term of
this Agreement only as provided in the below Sections 6 and 7 of this
Agreement.
2. PERFORMANCE AND SCOPE:
2.1 During the Term of this Agreement, unless otherwise mutually
agreed to in writing by Employee and Company, Employee agrees to devote
his full time and best efforts in the discharge of his duties on behalf
of Company.
2.2 During the Term of this Agreement, Employee will, at a minimum,
serve as Vice President.
2.3 During the Term of this Agreement, Employee will report to the
Chief Executive Officer (CEO).
2.4 During the Term of this Agreement, Employee will be responsible
for all related operations of the company and other efforts relating to
fulfilling the Company's overall
<PAGE>
business mission. Employee shall perform all such other duties as may
be assigned to him by the CEO which are consistent with Employee's
stature, position and experience.
3. CASH & OTHER COMPENSATION
3.1 Effective as of the Date of this Agreement, Company shall provide
employee with an initial base cash salary of sixty-five hundred U.S.
dollars ($6,500) per month. Payment will be made twice per month on the
1st and 15th of each and every month during the Term of this Agreement.
The initial base cash salary will be effective for twelve (12) months.
3.2 Company has agreed to increase this base cash salary as Company
secures an additional round(s) of financing; with the additional
financing, the base salary will increase to ten thousand U.S. dollars
($10,000) per month. At such time, payment will be made twice per month
on the first (1st) and fifteenth (15th) day of each and every month
during the Term of this Agreement.
3.3 Employee's base cash salary compensation level will be reviewed at
least annually during the Term of this Agreement and be increased at a
rate no less than five percent (5%) effective upon the first (1st) day of
the thirteenth (13th) and twenty-fifth (25th) months of employment, as
measured from the Date of this Agreement.
3.4 Employee will be entitled to participate in any Company cash,
stock incentive or bonus plans provided to Executives, Officers, or
Directors of the Company.
4. EQUITY INCENTIVES
4.1 In consideration for services to be provided by Employee during
the Term of this Agreement, Company will provide Employee with fully
vested common stock options at a par value of $0.625 per option on a
fully diluted basis (as defined in Section 5 below), as provided for in
Sections 4.2, 4.3 and 4.4 below.
Not that Sections 6 and 7 below cover arrangements regarding stock option
incentives in event of early termination of Employee's services or this
Agreement.
4.2 Effective as of the Date of this Agreement, Company will initially
grant to Employee an incentive stock option (hereinafter "ISO") at a par
value of $0.625 per option on a fully diluted basis. This initial ISO
grant shall consist of an option to purchase two hundred and fifty
thousand (250,000) fully diluted shares of Company's common stock.
Vesting of this ISO shall be as follows:
- At Date of this Agreement: 25,000 shares
- At end of first year (April 30, 1997): 100,000 shares
- At end of second year (April 30, 1998) 125,000 shares
-2-
<PAGE>
4.3 If in the case that Company is acquired or sold during the period
of the Term of this Agreement, any and all options will be fully vested
at time of such acquisition or sale.
4.4 The exercise period during which Employee may exercise his rights
regarding all ISOs granted to Employee under the Term of this Agreements
shall extend for a minimum of 90 days after expiration or termination of
this Agreement, without regard to the reason for expiration or
termination of this agreement, except as my be otherwise noted in
Sections 6.1 and 6.2 below.
5. TERMINATION
5.1 COMPANY TERMINATION FOR JUST CAUSE: The Company may only
terminate the employment of Employee for just cause limited only to
nonperformance of duties as defined in Section 2 (above) or for proven
malfeasance.
If Employee is terminated for just cause, Employee will be compensated at
Employee's then-current rate of base cash compensation up to the date of
termination, plus accrued vacation or other vested benefits, if any, in
accordance with Company policy.
In the event of termination for just cause, Employee will have ninety
(90) days from the date of termination of exercise any vested stock
options as of the date of termination. Employee will not be entitled to
any further benefits under this Agreement following the date of
termination.
5.2 COMPANY TERMINATION FOR OTHER THAN JUST CAUSE: If Company
terminates the employment of Employee for any reason other than just
cause, Employee will be entitled to the following:
5.2.1 Six (6) months current base cash salary and full benefits
after leaving Company's employment, provided the company continues
to operate as an independent entity;
5.3 EMPLOYEE VOLUNTARY TERMINATION: Employee may terminate his
employment at any time by providing one (1) month advance notice in
writing. In the event of voluntary termination, Employee will be
entitled to the compensation arrangements set forth in Section 5.1
(above), unless such termination in connection with the relocation of the
Company, the acquisition or sale of the Company, or disability or death
(see Sections 5.4, 5.5 and 7.3 below).
5.4 TERMINATION DUE TO COMPANY RELOCATION: If Company relocates the
facilities where Employee normally reports to work outside of a fifty
(50) mile driving distance from the Company offices as of the Date of
this Agreement, at any time during the Term of this Agreement, Employee
may elect to terminate employment and will be entitled to financial
compensation arrangements set forth in Section 5.1 and the stock
compensation set forth in Section 5.2 and 5.3.
5.5 TERMINATION DUE TO DISABILITY OR DEATH: In the event of forced
termination of Employee's services under this Agreement due to disability
or death, Employee or
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<PAGE>
Employee's estate will be entitled to the stock compensation arrangement
set forth in Sections 4.2 and 7.2.
6. RELOCATION AND OTHER EXPENSES.
6.1 During the Term of this Agreement, Employee will conduct all
necessary business activities from his current residence(s) in San
Francisco, CA, and/or New York, NY. Employee will make himself available
for regular, periodic vists to Company headquarters in Chicago, IL, as
required by the Company.
6.2 If, during the Term of this Agreement, it becomes necessary for
Employee to relocate to Chicago, he will do so upon receipt of a written
request from Company.
6.3 Company agrees to pay for all covered expenses required to move
Employee (and family that resides with employee, if necessary) from his
present residence in San Francisco to within a 50 mile radium of
Company's current offices in Chicago. Covered relocation expenses which
will be paid by Company are as follows:
6.3.1 Company shall pay all expenses necessary to professional
move Employee's personal belongings from his present dwelling
place to dwelling place in Chicago, IL.
6.3.2 Company shall pay all expenses necessary to professionally
transport Employee from his present dwelling to a new dwelling in
Chicago; choice of transport shall be at Employee's discretion.
6.3.3 Upon arrival of Employee in Chicago, Company shall provide
Employee with temporary housing and all associated services, at
Company's expense, which shall be agreeable to Employee, for a
period of up to three (3) months. If necessary, Company shall pay
for the professional storage and handling of Employee's personal
belongings for a period of up to six (6) months.
6.3.4 Providing that Employee shall purchase a home, cooperative
or condominium dwelling within a fifty (50) mile radius of
Company's current offices in Chicago within one (1) year from the
date of relocation, Company shall pay for up to ten thousand
dollars ($10,000) of Employee's closing costs, loan origination
fees, points, miscellaneous fees and the like, associated with
Employee's purchase of a dwelling.
7. NON-COMPETITION & CONFIDENTIAL INFORMATION:
Employee shall execute the Company's standard agreement regarding
noncompetition and the protection of the Company's confidential
information which shall survive the termination of this Agreement for a
period of one (1) year.
8. ENTIRE AGREEMENT, AMENDMENT:
The Agreement constitutes the entire agreement between the parties
pertaining to the subject matter and supersedes all prior agreements,
representations and understandings of the parties hereto with respect to
the subject matter hereof. This
-4-
<PAGE>
Agreement may be supplemented, modified or amended only by a written
instrument executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date below
written.
Effective Date: Effective Date:
- - ----------------------------------- -----------------------------------
David Rosen William Buck, CEO
345 Union Street Visual Information Service Corp.
San Francisco, CA 94133 111 North Canal Street
Chicago, IL 60606
<PAGE>
EXHIBIT 10.8
LICENSE AGREEMENT
THIS AGREEMENT, (the "License Agreement") is entered into effective
December 26, 1995 (the "Effective Date") between AMIGA Technologies GmbH, a
German company, having offices at Berliner Ring 89, 64625 Bensheim, Germany
("AMIGA" or "Licensor"), and Visual Information Service Corp., an Illinois
(U.S.A.) corporation, located at 2728 Hampden Court, Chicago, Illinois, U.S.A.
60614 ("VISCORP" or "Licensee")
WHEREAS, ESCOM owns and has, or may have, rights in various patents issued,
and applications for patents pending, proprietary rights, proprietary marks,
copyrights, trademarks, trade secrets, know-how, ideas utility models, petty
patents, inventor's certificates, design patents, processes, methods and devices
in various countries of the world as to which VISCORP desires to acquire
licenses as hereinafter provided;
WHEREAS, AMIGA is authorized by ESCOM to license certain technology related
to the Amiga operating system and certain compatible parts;
WHEREAS, Licensee desires to obtain a non-exclusive, non-transferable
license to the technology related to the Amiga operating system and the
compatible parts and Licensor is willing to grant a license to Licensee upon the
following terms and conditions;
WHEREAS, Licensee desires to exercise the license by making electronic
systems using the compatible parts;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, it is agreed as follows:
1. Definitions
For the purpose of this License Agreement, the following terms shall have
the following meanings:
1.1 Licensee means VISCORP
1.2 Licensor means AMIGA
1.3 Proprietary Parts refers to parts which embody elements of the
Licensed Technology over which Licensor has exclusive rights and are currently
available only from AMIGA, ESCOM or a manufacturer who manufactures the parts
under an agreement, with AMIGA or ESCOM.
1.4 Licensed Products refers to products which are made by, or for,
Licensee or used, sold, Distributed, imported, or offered for sale by Licensee
where the products are used as, or as part of, interactive television devices
(defined as electronic devices that uses a display monitor for TV-signals and a
communications-medium to allow a user to respond to the displayed signal) which
contain one or more Proprietary Parts; EXCLUDING devices that are commonly known
to
<PAGE>
day as home computers on personal computers which use computer monitors, hard
drives, floppy drives and keyboards, fully or share developed by AMIGA.
1.5 Distributing, Distribute and Distributed refer to the act of disposing
of a Licensed Product for direct compensation or otherwise, whether by sale,
lease, or transfer in exchange for indirect benefits. If the Licensed Product
is Distributed across a governmental boundary, then the act of Distributing
includes any necessary acts of exporting and importing.
1.6 Licensed Acts refers to any act of making, having made, having
assembled, using, Distributing, importing, exporting, or offering for sale a
Licensed Product, practicing any process or method involved in the manufacture
or use of Licensed Products, and making, having made or using any proprietary
manufacturing apparatus and to practice any process or method in the manufacture
or use of Licensed Products.
1.7 Licensed Technology refers to the intellectual proprietorship of the
technology embodied in current versions of the Amiga operating system and the
Proprietary Parts. "Licensed Technology" includes microcomputer programs,
subroutines or instruction sequences, address maps and memory layouts, operating
systems, disc operating systems, utilities, programmer aides, programming
languages, compilers, assemblers, emulators, support programs, games and
applications software, whether originally designed and developed for the Amiga
operating system or converted from other languages or versions, and including
all updates and variations, and all documentation, user's manuals and other
literature and publication for or relating to the foregoing, for use in or with
the Licensed Products, and all developments, enhancements, and improvements
thereto which Licensor has the right to license to Licensee.
1.8 Licensed Rights includes any and all rights, interest and claims for
the worldwide intellectual proprietorship (including, but not limited to, U.S.
and foreign patents and patens pending, proprietary rights, proprietary marks,
copyrights, trademarks, trade secrets, know-how, ideas, utility models, petty
patents, inventor's certificates, design patents, processes, methods and
devices) of the Licensed Technology and includes the right of the Licensee to
perform any of the Licensed Acts and includes the right to develop derivative
works and derivative designs based on the Licensed Technology.
1.9 An Affiliate of a party refers to a person, corporation, company or
other legal entity which controls, is controlled by, or is under common control
of the party at any time during the period for which the determination of
affiliation is being made but only for as long as said control continues.
,Control" means the power, whether of not normally exercised, to direct the
management and affairs of another corporation or other legal entity, directly or
indirectly, whether through the ownership of 15% or more of the voting stock or
other equity interest or by contract.
1.10 Original Term refers to the 3 year period beginning when the License
Agreement is signed.
1.11 Unit refers to one Licensed Product regardless of the number of
Proprietary Parts used in the Licensed Product.
-2-
<PAGE>
2. Grant of License
2.1 Licensor hereby grants, under the Licensed Rights, to the full extent
Licensor has the power to grant, for the term of this License Agreement, to
Licensee a nonexclusive and non-transferable license to perform the Licensed
Acts and to sublicense others to perform any Licensed Acts for Licensee.
2.1.1 The grant of license in paragraph 2.1 is a world-wide grant,
except in the People's Republic of China, Taiwan, Hong Kong, Macao and the Asian
bordering countries between the Peoples Republic of China and the former Soviet
Union. To the extent that Licensor is not currently able to grant license
throughout the world but later is able to grant a license greater than the
license initially granted under the License Agreement, Licensor agrees to
automatically grant Licensee the greater license and agrees to promptly notify
Licensee when such grant of a greater license has occurred.
2.1.2 The greater license referred in paragraph 2.1.1 shall
include a sublicense to others to perform any Licensed Act for Licensee, as set
out in paragraph 2.1, as if the greater license was originally part of the
license granted by paragraph 2.l.
2.2 Licensor hereby grants, under the Licensed Rights, to the full extent
Licensor has the power to grant, for the term of this License Agreement, to
Licensee the right to sublicense the right to SELL or otherwise Distribute
subassemblies made by, or for, Licensee under this License Agreement.
3. Royalty Payments
3.1 Licensee estimates that it will Distribute 1,000,000 Units of the
Licensed Products within the Original Term. The 1,000,000 Unit figure is a non-
binding good faith estimate, and Licensee's ability to achieve the estimate
shall not be a condition precedent to Licensor's obligations under this License
Agreement nor a term of default under this License Agreement.
3.2 Licensee shall pay a minimum royalty the full amount of which minimum
royalty will fall due within a term of twelve months following the day of the
start of Distribution of the Licensed Product or upon termination of the
Original Term of this Agreement or upon any earlier termination date, whatever
of the above dates will be the earliest date. The minimum royalty is equivalent
to the royalty on 50,000 units. This minimum royalty is not so much to be
regarded as an incentive for the Licensee to exploit the license as is customary
and exclusive license agreements but rather as an at least partly deferred
payment of compensation for initial technology transfer. The minimum royalty
will therefore fall due irrespective of what may happen to this Agreement after
initial technology transfer from Licensor to Licensee has occurred. Payments
made by Licensee in lieu of the minimum royalty are not refundable.
3.3 Licensee shall pay a royalty (the "Royalty" or "Royalties") to
Licensor for each Licensed Product Distributed by Licensee, pursuant to the
following Royalty Schedule. For purposes of the Royalty Schedule, Licensee is
only obligated to pay Licensor a Royalty once for
-3-
<PAGE>
a given Unit regardless of how many times the given Unit is Distributed,
returned and Distributed again.
3.4 Royalty Schedule
Beginning on the Effective Date and extending for the term of this License
Agreement, Licensee agrees to pay Licensor the following payments:
A. US$18.00 per Unit for the first 50,000 Units Distributed.
B. US$14.00 per Unit for the next 200,000 Units Distributed (the
50,001st to 250,000th Units.)
C. US$11.00 per Unit for the next 250,000 Units Distributed (the
250,001st to 500,000th Units) with a set-off credit of US$200,000
to be applied to royalties beginning with the 250,001st Unit.
(This reflects a credit from US$18 to US$14 for each of the first
50,000 Units.)
D. US$8.00 per Unit for the next 500,000 Units Distributed (the
500,001st to 1,000,000th Units) with a set-off credit of
US$750,000 to be applied to royalties beginning with the
500,001st Unit. (This reflects a credit from US$14 to US$11 for
each of the first 250,000 Units.)
E. US$8.00 per Unit for all Units over 1,000,000 Units Distributed
with a setoff credit of US$1,500,000 to be applied to royalties
beginning with the 1,000,001st Unit. (This reflects a credit from
US$11 to US$8 for each of the first 500,000 Units.)
3.5 Licensee shall make an advance Royalty payment of US$450,000 as a
credit towards royalties payable by Licensee for Distributing the first 25,000
Units as part of the execution of this License Agreement. This advanced royalty
payment is conditioned on Licensor's performance of the technology transfer
requirements set forth in this License Agreement and may be made by check. The
advance royalty payment is to be regarded as part of the minimum royalty.
3.6 Licensee shall furnish to AMIGA a written report for each calendar
quarter, not later than 30 days following the close of the quarter, setting
forth the quantity of Licensed Products Distributed during the quarter and the
computation of the aggregate Royalties payable. Each report shall be
accompanied by a payment due with respect to that quarter. For any undisputed
payment hereunder which is delayed for more than thirty (30) days beyond the due
date, AMIGA shall be entitled to receive interest on any unpaid balance
hereunder at a rate of 12% per year or such lesser rate, if any, as may be
required by law, until paid. The first report to AMIGA will be done by VISCORP
not later than August 1, 1996.
3.7 In the event Licensor enters into an Agreement with a third party
granting a license comparable to the License granted in this License Agreement
but containing commercial
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terms which are more favorable to the third party than the commercial terms
contained in this License Agreement, Licensor shall notify Licensee of such more
favorable commercial terms and Licensee shall have the right to elect and
replace the commercial terms contained in this License Agreement with such more
favorable commercial terms. This option granted to Licensee will not in any way
effect Licensee's obligation to pay the advanced royalty payment (=US-$450,000)
as calculated according to this Agreement.
3.8 Paragraph 3.7 will also be applicable in the event that a third party
performs an act which would require payment of a royalty under this License
Agreement if the act were performed by Licensee and Licensor does not take legal
action against such third party or reaches an agreement with such third party,
be it as a result of a litigation or not - the terms of which are more
favourable than the terms of this License Agreement.
3.9 Licensee shall keep books and records in sufficient detail to permit
ready and accurate determination of any Royalties payable to Licensor. Licensee
agrees to permit its books or records to be examined at Licensor's expense at
least once per quarter to the extent necessary to verify the accuracy of the
reports provided to AMIGA pursuant to paragraph 3.6. The examination will be
performed by a certified public accountant or accountancy firm appointed by
Licensor, or by an auditor appointed by Licensor if the auditor is acceptable to
Licensee. Licensor shall provide at least 7 business days prior notice of a
request for an audit.
3.10 All payments becoming due under this contract shall be made to:
AMIGA Technologies GmbH
Berliner Ring 89
D-64625 Bensheim
Germany
Account No: 200 1600
Bank: Commerzbank AG Mainz, Code: 550 400 22
3.11 Licensor and its Affiliates shall bear all taxes imposed on them, with
respect to payments made under this section 3 provided that, if so required by
applicable law, Licensee shall withhold the amount of taxes levied by the
Government of the United States or other state or local governmental bodies on
payments to be made by Licensee to Licensor pursuant to this Agreement, and
shall promptly make payment of the withheld amount to the appropriate taxing
authority and transmit to AMIGA an official tax receipt to enable Licensor to
support a claim for German tax credit, of other tax credit, based on the
withheld taxes paid by Licensee.
4. Technology Transfer
4.1 In consideration of the terms of this License Agreement Licensor
agrees to provide Licensee in a form acceptable to both parties all
documentation pertaining to the Licensed Technology that is or may be required
by Licensee for producing the licensed products. This obligation of Licensor
does not generally include an obligation to surrender source codes.
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4.2 In particular Licensor agrees to provide documentation for each
version of the Proprietary Parts and the Amiga Operating System for versions
before and including Version 3.1 except for the source codes associated
therewith.
5. Term and Termination
5.1 This License Agreement shall continue in full force and effect for the
Original Term and will be renewable for subsequent 3 year periods at Licensee's
option, by written notice to Licensor at least 60 days prior to the termination
of any such period.
5.2 In addition to any other remedy which it may have at law or in
equity,either party may immediately terminate this License Agreement if the
other party (a) materially breaches or fails to perform any of its obligations
hereunder and if such breach or failure is not capable of being cured, or if
such breach or failure, though curable, is not cured within 60 days of
sufficient notice thereof from the nonbreaching party. Sufficient notice is
notice which identifies the material breach and specifically identifies the
precise actions required to cure such breach.
5.3 The following rights, duties, privileges and obligations shall survive
termination of this License Agreement:
A. Obligation to pay Royalties as set forth hereinabove; and
B. Obligations to keep confidential information information
confidential as set forth herein.
C. Using Technology not as defined.
5.4 The parties expressly understand and agree that repeated breaches
cannot constitute a material breach in and of themselves and agree that repeated
breaches provide separate opportunities for cure.
5.5 After 4 years either party may give a 1 year notice on the anniversary
of the agreement that this agreement may be terminated without any reason.
6. Assignability
6.1 Assignability by Licensor. This License Agreement may be assigned or
transferred by Licensor without the prior consent of Licensee if assigned or
transferred together with all of the rights and obligations of Licensor under
this License Agreement. Any assignment by Licensor shall not affect Licensee's
rights under this License Agreement.
6.2 Assignability by Licensee. This License Agreement may not be assigned
or transferred by Licensee except with the prior written consent of AMIGA unless
the assignment is to an Affiliate of VISCORP. AMIGA's consent shall not be
unreasonably withheld.
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7. Proprietary Rights Protection
7.1 Licensor and Licensee acknowledge that by virtue of this License
Agreement their employees and agents may gain access to information that is
confidential and/or proprietary to the other party and that such material may or
may not be marked or stamped "confidential", including without limitation, the
product, the work, the process, the know-how, the show-how, the licensed
software and other trade secrets related to the manufacturing of Licensed
Products and the manufacturing of products compatible therewith ("Confidential
Information"). Licensor and Licensee will use all reasonable efforts to
maintain in confidence all Confidential Information, to avoid disclosing the
Confidential Information to any third party, and to avoid using or permitting
others to use the Confidential Information, commercially or otherwise, in any
manner contrary to the purposes of this License Agreement or the best interests
of the other party.
7.2 Licensor and Licensee shall only disclose Confidential Information of
the other to those of its employees who have a need to know the same in order to
accomplish the purposes of this License Agreement. Prior to disclosing any
Confidential Information, Licensor or Licensee shall inform such employees who
are to have access to the Confidential Information, of the party's limitations,
duties and obligations regarding the use, nondisclosure and copying of the
Confidential Information shall obtain the written agreement of such employees to
comply with those limitations, duties and obligations. Both Licensor and
Licensee shall maintain a list of its employees who have access to the
Confidential Information. Upon reasonable notice to the other party, the party
disclosing Confidential Information may audit such records.
7.3 Notwithstanding the above, Licensor and Licensee shall have no
obligation with respect to any information which: (1) was already known to them
at the time of receipt hereunder, (2) is or becomes public or rightfully
received by them from a third party without similar restriction and without
breach hereof; (3) is independently developed by them without benefit of any
disclosure hereunder, or (4) is approved for release by written authorization of
the disclosing party.
7.4 The provisions of this License Agreement obligating the parties
regarding Confidential Information shall survive the termination of this License
Agreement.
7.5 Upon proper termination of this License Agreement by either party, use
of all License Technology, ESCOM AG's proprietary rights and proprietary marks
by Licensee shall be discontinued and the licenses and rights granted hereunder
shall expire and Licensee shall have no further rights or access to the Licensed
Technology, ESCOM AG's proprietary information and proprietary marks, except as
to Licensed Products for which a Royalty has already been paid or which have
already been Distributed or shipped. Within 30 days after any such termination
of this License Agreement, all materials pertaining to the Licensed Technology
provided by the Licensor (except as has been incorporated into the Licensed
Products) and all other materials containing any Confidential Information shall
be returned to AMIGA, or destroyed on written instructions. If such termination
is not a result of any breach of this License Agreement by Licensee, Licensee
may continue to Distribute Licensed Products as have
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been manufactured prior to such termination provided Licensee pays the Royalty
for each Unit Distributed or shipped on which a Royalty has not already been
paid.
7.6 Licensee shall not remove or otherwise obliterate any trademark,
patent, copyright or other proprietary rights notices or markings included on or
in any material supplied to Licensee.
8. Representations and Warranties
8.1 AMIGA, as condition precedent to the entering of this License
Agreement, represents, warrants and covenants the following:
A. AMIGA has the right and power to enter into this License
Agreement;
B. Amiga represents that ESCOM AG purchased proprietary rights and
proprietary marks from Commodore Electronics Limited, Bahamas,
Commodore Amiga Inc., California, Commodore International Service
Corporation, Delaware, Commodore Business Machines, Delaware, and
Commodore Business Machines Limited, Canada as far as such
proprietary rights and marks were offered for sale and available
for purchase.
C. AMIGA is licensed and/or authorized by ESCOM, the legal owner of
the Licensed Technology, its successors and assigns, to grant
this license to Licensee/VISCORP for all proprietary rights and
proprietary marks owned by ESCOM in the Licensed Technology.
D. AMIGA represents that it has the power to bind ESCOM to follow
the terms of this License Agreement as if ESCOM were a Licensor
signatory hereto.
E. AMIGA represents that it has no knowledge of any third party
rights with which the Licensed Technology may be in conflict.
However, AMIGA assumes no warranty for the Licensed Technology to
be free from any conflicting third party rights.
8.2 AMIGA warrants that it has both the right and the power to grant, to
the Licensee, or for the benefit of the Licensee, the rights, privileges,
immunities and license granted herein.
8.3 AMIGA warrants that it has not granted any exclusive licenses or other
rights to a third party which might give the third party a cause of action
against licensee based on licensee performing a Licensed Act.
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<PAGE>
8.4 Nothing in this License Agreement shall be construed as:
A. A restriction on rights for things not licensed.
B. An admission, warranty or representation as to validity or scope
of right, or limitation on contesting the validity or scope of
right.
C. An obligation to file patent applications.
9. Indemnity
9.1 AMIGA shall defend or settle, at its own expense (including attorneys'
fees), any claim, suit, loss or damage of Licensee arising out of Licensee's use
of the Proprietary Parts, as far as they have been supplied by Licensor or one
of this affiliates pursuant to the license granted in this License Agreement,
including claims, suits, losses and damages based on a claim that the making,
use or sale of the Proprietary Parts infringes any patent, trademark, copyright,
trade secret, or other proprietary right belonging to any third party.
9.2 AMIGA shall indemnify and hold Licensee harmless against all damages,
judgments, and attorneys' fees arising out of the foregoing, provided that
Licensee gives AMIGA prompt written notice of such claim.
10. Distribution by AMIGA
10.1 Licensee grants to AMIGA and to ESCOM AG or its Affiliates, at AMIGA's
or ESCOM AG's option, a non-exclusive and non-transferable right for the term of
this License Agreement to market Licensed Products, purchased from Licensee,
within the territory specified in Exhibit A. Subject to the foregoing, Licensee
agrees to supply AMIGA or ESCOM AG the Licensed Products on the most favorable
terms then available to any other vendor or distributor in the countries
specified in Exhibit A.
10.2 Licensee shall defend or settle, at its own expense (including
attorneys' fees), any claim, suit, loss or damage of Licensor arising out of
Licensor's use of the Licensed Products pursuant to the grant in paragraph 10.1
if the claim, suit, loss or damage is based on a claim that the marking, use or
Distribution of Licensed Products infringes any patent, trademark, copyright,
trade secret, or other proprietary right belonging to any third party, unless
the claim could be made against the making, use or Distribution of the
Proprietary Parts alone.
11. Grant Back Rights
11.1 Licensee agrees to license AMIGA and ESCOM AG or its Affiliates, at
AMIGA's or ESCOM AG's option, enhancements made by Licensee to the Proprietary
Parts at a reasonable royalty rate, to be negotiated in good faith, in fields of
use which do not compete with Licensee's business.
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<PAGE>
11.2 Nothing in the License Agreement, except as expressly set forth
herein, is a grant to Licensor of any interest or license to the rights of
Licensee.
12. Miscellaneous
12.1 This License Agreement shall be construed in accordance with the laws
of the Federal Republic of Germany with exclusive venue in the courts in
Frankfurt am Main, Germany.
12.2 No other Understanding. This License Agreement set forth the entire
agreement and understanding between the parties as to the subject matter thereof
and supersede all prior discussions or agreements between them.
12.3 Disclaimers and Limitations of Rights and Duties. Nothing contained
in this License Agreement shall be construed as imposing on either party any
obligation to file any patent application or to secure any patent or maintain
any patent in force, except that Licensor will, at Licensee's request and
expense, file, secure, or maintain a patent or patent application if Licensee
deems it to be of a competitive benefit to Licensee.
12.4 Marking. Wherever it is the practice of Licensee to mark its products
with patent notices, the Licensed Products shall be so treated. The parties
acknowledge that the aforesaid marking shall not be deemed or construed as any
admission by Licensee as to the infringement, validity or enforceability of any
right proprietary to the Licensor.
12.5 Captions. The captions used in this License Agreement are for
convenience only and are not to be used in interpreting the obligations of the
parties under this License Agreement.
12.6 World Usage. Words denoting the singular will include the plural and
vice versa; words denoting any gender will include all genders; words denoting
persons will include corporations and vice versa, where applicable.
12.7 Severability. If any term, clause, or provision of this License
Agreement shall be judged to be invalid or unenforceable, the validity or
enforceability of any other term, clause or provision, shall not be affected;
and such invalid unenforceable term, clause, or provision shall be deemed
deleted from this License Agreement and this License Agreement adjusted
accordingly.
12.8 Confidentiality. The terms and conditions including the Royalties set
forth in Section 3 above, shall remain strictly confidential, and neither party
shall disclose, advertise or inform third parties of the amount of said
Royalties, terms or conditions, unless required by law. The existence of this
License Agreement is not confidential.
12.9 Signatures. The signing of this License Agreement may be in multiple
parts and may be made by facsimile without affecting the validity of this
License Agreement.
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12.10 Purchase Agreement. The parties agree to enter in a mutually
agreeable Purchase contract referring to the supply of the required chipsets
which should be done exclusively by AMIGA.
12.11 Correspondence. All correspondence between Licensor and Licensee
shall be made to the addresses as listed below.
Licensor:
AMIGA Technologies GmbH
ATTN: Mr. Petro Tyschtschenko ATTN: Mr. Ralf Schmied
President Company Lawyer
Berliner Ring 89 Berliner Ring 89
D-64625 Bensheim, Germany D-64625 Bensheim, Germany
Phone: +49-(0)6251-802113 Phone: +49-(0)6251-802151
Fax: +49-(0)6251-802138 Fax: +49-(0)6251-802119
Licensee:
Visual Information Service Corp.
ATTN: Mr. William H. Buck
2728 Hampden Court
Chicago, Illinois 60614 U.S.A.
Phone: +1-312 935 1010
Fax: +1-312 472 6213
with simultaneous copy to:
Townsend and Townsend and Crew
ATTN: Michael E. Woods
One Market Plaza, 20th Floor
San Francisco, CA 94105
Phone: +1-415-543-9600
Fax: +1-415-543-5043
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IN WITNESS WHEREOF, the parties have caused this License Agreement to be
executed by their duly authorized representatives.
AMIGA TECHNOLOGIES GMBH LICENSEE--VISCORP
Date:_________________________ Date:_______________________________
By:___________________________ By:_________________________________
Name: Petro Tyschtschenko Name: William H. Buck
Title: President Title: President
Address: 2728 Hampden Court and
Chicago, Illinois 60614
By:___________________________ Fax: +1-312-472-6213
Name: Stefan Domeyer
Title: President
Address: Berliner Ring 89
D-64625 Bensheim
Germany
Fax: +49-(0)6251-802138
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EXHIBIT A
TERRITORY OF DISTRIBUTION
Finland
Norway
Sweden
Iceland
Denmark
Ireland
UK
Belgium
Netherlands
Luxembourg
Germany
France
Spain
Portugal
Austria
Switzerland
Italy
Czech Republic
Slovakia
Hungary
Turkey
Romania
Bulgaria
Malta
Cypress
Greece
Albania
Former Yugoslavia
Ukraine
<PAGE>
EXHIBIT 10.9
AGREEMENT
FOR THE PURCHASE OF INVENTORIES, INDUSTRIAL PROPERTY RIGHTS
AND CERTAIN OTHER RIGHTS AND ASSETS
between
Attorney Bernhard Hembach (the "ADMINISTRATOR"), acting as court-appointed
Administrator in Bankruptcy (Konkursverwalter) for and on behalf of
1. Escom AG, Burgstrasse 27-31, 44867 Bochum ("ESCOM") and
2. Amiga Technologies GmbH, Berliner Ring 89, 64625 Bensheim ("AMIGA")
and
VIScorp Acquisitions Inc., a stock corporation pursuant to the laws of Delaware,
represented by its President, William H. Buck, with its principal place of
business located at 111 N. Canal Street, Chicago, Illinois 60606 USA
("VISCORP").
I.
PREAMBLE
1.1 Escom and Amiga filed an application for the opening of bankruptcy
proceedings on July 15th, 1996 with the Magistrate's Court in Bensheim,
the latter being the competent bankruptcy court for both bankrupt
companies, Escom and Amiga (the "BANKRUPTCY COURT"). The bankruptcy
proceedings were opened by resolutions of the Bankruptcy Court at 16:30
hours on July 15th, 1996. In the resolution, Attorney Bernhard Hembach
was appointed to the office of Administrator of both the Escom and Amiga
bankruptcy estates. The respective resolutions of the Bankruptcy Court
are attached hereto as EXHIBIT 1 hereto.
1.2 VIScorp wishes to purchase certain rights and assets from the
Administrator consisting of inventories and industrial property rights
and other rights pursuant to the terms and conditions of the following
Agreement.
II.
INVENTORIES OF THE ESCOM GROUP TO BE PURCHASED BY VISCORP
2.1 Subject to the terms set forth herein, the Administrator herewith sells
and conveys and VIScorp agrees to purchase the inventories (the
"INVENTORIES") held by the Administrator which are located at certain
warehouses listed in EXHIBIT 2 together with respective listings of items
and quantities in the inventory schedules likewise set forth in EXHIBIT 2
of this Agreement.
<PAGE>
2.2 The Administrator shall release and deliver the Inventories to VIScorp
upon presentation of an irrevocable first demand guarantee in the amount
of maximum twenty million U.S. Dollars ($20,000,000) more fully described
in Article 5.4 hereof (the "BANK GUARANTEE"), such presentation by
VIScorp to take place as soon as possible after execution of this
Agreement. The delivery of the Inventories for the purposes of German
law shall take the form of an assignment of the respective warehousing
and storage contracts for the Inventories from the Administrator to
VIScorp, or if portions of the inventories are held in the possession of
the Administrator, he shall hold such inventories for VIScorp free of
charge until actual delivery. To the extent the inventories are located
abroad and foreign law requires further acts and measures to effect valid
transfer of title, the parties agree to undertake such acts and measures.
2.3 The Administrator agrees to place at the disposal of VIScorp as soon as
possible after delivery of the Inventories all purchase documentation,
including purchase orders placed by Administrator with suppliers, order
confirmations and other related purchase correspondence, in such form and
completeness as to enable VIScorp to assert, INTER ALIA, any warranty
rights against the respective suppliers. Administrator herewith assigns
all rights and claims, in particular, warranty claims against the
respective suppliers relating to the Inventories purchased pursuant
hereto and VIScorp accepts such assignment.
2.4 Purchase and delivery of the Inventories pursuant to this Article II
shall be free of any rights of third parties, in particular, any liens or
other security interests held by third parties. The Administrator
disclaims any warranties pursuant to sections 459 et seq. BGB.
III.
ASSIGNMENT OF INDUSTRIAL PROPERTY RIGHTS
3.1 Subject to the terms set forth herein, the Administrator hereby sells and
assigns certain industrial property rights to Escom to VIScorp, such
rights to include all patent and trademark rights, including related
copyrights, acquired by Escom from the former Commodore International
Ltd. and any of its affiliates. Excepted herefrom is the trademark
"Commodore". Such rights shall include any rights currently registered
in the name of Escom and any rights to which Escom or any of its
affiliates have already acquired commercial ownership, but which have not
yet been recorded in the respective patent or trademark register as being
in title ownership of Escom (the "INDUSTRIAL PROPERTY RIGHTS"). These
rights have been set forth in EXHIBIT 3 HEREOF.
3.2 The parties agree to execute as soon as reasonably possible following the
presentation of the Bank Guarantee more fully described in Article 5.4
below all instruments of assignment necessary in order to effect the
change of ownership registration for the Industrial Property Rights in
the respective rolls of the German Patent Office and other national,
foreign and international patent and trademark registers.
3.3 Administrator agrees to render any additional declarations and to
undertake any further measures necessary following the execution of this
Agreement in order to effect the
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change of ownership registration for the Industrial Property Rights with
domestic, foreign and international industrial property registers.
VIScorp shall bear all costs in connection herewith.
3.4 To the extent the Industrial Property Rights contain copyrights pursuant
to German law, Administrator agrees to grant VIScorp an exclusive,
irrevocable, perpetual and worldwide license to use and to sub-license
such copyrights. The grant of such license shall be evidenced by a
written exclusive license agreement to be executed by the parties as soon
as possible following the execution of this Agreement. The consideration
to be paid for the grant of such license shall be a one-time, lump-sum
payment to be included in the purchase price for the Industrial Property
Rights set forth in this Article III.
3.5 As soon as possible following the posting of the Bank Guarantee pursuant
to Article 2.2 above, the Administrator shall deliver, or procure the
delivery of all documents including existing drawings and technical
documentation relating to the Industrial Property Rights assigned
pursuant to this Article III.
3.6 The purchase and assignment of the Industrial Property Rights pursuant to
this Article III shall be free of any rights of third parties, in
particular, any liens or security interests held by third parties. The
Administrator disclaims all warranties pursuant to sections 459 et seq.
IV.
NOVATION OF CERTAIN AGREEMENTS
4.1 Simultaneously with the posting of the Bank Guarantee pursuant to Article
II above, VIScorp shall assume certain contracts, license agreements,
agreements and binding sales orders of Amiga listed in EXHIBIT 4 hereof.
To the extent any contracting party of Amiga refuses to provide consent
to the assignment of any contract or order to VIScorp, such contract or
order shall remain with Administrator and shall not transfer to VIScorp.
In this event, VIScorp shall be entitled to an adjustment of the purchase
price in an amount which corresponds to the commercial value of the
unassigned contract or sales order.
4.2 To the extent security deposits or other forms of credit are held for the
account of the Administrator with regard to the contracts, license
agreements and binding sales orders to be transferred to VIScorp, such
deposits and credits shall transfer to the account of VIScorp. The
consideration for such transfer is contained in the purchase price set
forth in Article V hereof.
V.
PURCHASE PRICE; POSTING OF BANK GUARANTEE
5.1 The purchase price for the Inventories and the Industrial Property Rights
(the "PURCHASE PRICE") described in Articles II and III hereof shall be
allocated as follows:
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5.1.1 Inventories (Exhibit 2) $10,000,000.00
5.1.2 Industrial Property Rights (Exhibit 3) $10,000,000.00
--------------
Total $20,000,000.00
5.2 The amount of the purchase price allocated to Inventories shall be
reduced by the costs and disbursements set forth in EXHIBIT 5 hereof and
shall be deducted from the second and third installments of the Purchase
Price in accordance with the payment schedule contained in Article VI
hereof.
5.3 Value added tax, to the extent incurred, shall be deemed in addition to
the Purchase Price set forth in Article 5.1.
5.4 In order to secure payment of the Purchase Price, VIScorp shall post as
soon as possible following the execution of this Agreement an irrevocable
first demand bank guarantee, limited to a specific term of six months.
This bank guarantee shall be issued to the Administrator in an amount of
maximum twenty million U.S. Dollars ($20,000,000.00) (the "BANK
GUARANTEE"). VIScorp agrees to post the aforementioned Bank Guarantee by
no later than thirty (30) days following the execution of this agreement.
If this Bank Guarantee is not posted by VIScorp prior to expiration of
this deadline, the Administrator shall be entitled to rescind this
agreement. In this case, all claims for damages shall be waived.
VI.
PAYMENT OF THE PURCHASE PRICE; CONDITIONS PRECEDENT
6.1 PAYMENT OF THE FIRST INSTALLMENT OF THE PURCHASE PRICE
By no later than thirty (30) days following the presentation of the Bank
Guarantee and the submission of a corresponding invoice by Administrator,
VIScorp agrees to pay Administrator the first installment of the Purchase
Price totalling ten million dollars ($10,000,000). For internal
accounting and VAT purposes, such amount shall be deemed to constitute
payment for the Industrial Property Rights pursuant to Article III
hereof.
6.1.1 Condition Precedent to Payment.
As a condition precedent to VIScorp's obligation to pay the first
installment of the Purchase Price, Administrator shall submit an original
opinion letter bearing the date of the presentation of the Bank Guarantee
from Patent Attorneys Fuchs, Luderschmidt & Partner, Wiesbaden, which
confirms that the Industrial Property Rights purchased by VIScorp are
currently registered and in good standing and are not the subject of
cancellation or annulment proceedings nor that such proceedings have been
threatened by any third party. In addition, the patent attorneys will
confirm that any Industrial Property Rights not already registered in the
name of Escom are currently on application
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for assignment to Escom and that they have no knowledge of any hindrances
or other impediments which would prevent transfer of the registration to
Escom.
In the event Administrator is unable to submit the above opinion letter
containing the stated confirmations on the date the first installment
payment becomes due, VIScorp and the Administrator shall be entitled to
issue the other party written notice of its intention to rescind this
Agreement and such rescission shall become effective upon expiration of
fourteen (14) days following receipt of the notice by the other party.
6.2 THE SECOND INSTALLMENT OF THE PURCHASE PRICE.
The second installment of the Purchase Price in the amount five million
US Dollars ($5,000,000), in addition to VAT at the currently governing
rate, reduced, however, by the deductions set forth in EXHIBIT 5 hereof,
shall be due and payable thirty (30) days following the payment of the
first installment of the Purchase Price pursuant to Article 6.1 above
against submission of a corresponding invoice.
6.3 THE THIRD INSTALLMENT OF THE PURCHASE PRICE.
The third installment in the amount of five million U.S. Dollars
($5,000,000), in addition to VAT at the currently governing rate,
reduced, however, by any remaining deductions not covered by the second
installment shall be due and payable thirty (30) days following the
payment of the second installment of the Purchase Price pursuant to
Article 6.2 above against submission of a corresponding invoice.
6.4 Administrator agrees to return the Bank Guarantee to the issuing bank
immediately upon receipt of the third installment payment set forth
above.
VII.
WARRANTIES
7.1 Administrator represents and warrants that he possesses all requisite
rights of disposition and powers to dispose of the Inventories (Article
II.) and the Industrial Property Rights (Article III.) constituting the
subject matter of this Agreement and to effect the assignment of
contracts, license contracts and binding sales orders orders (Article
IV). Moreover, Administrator represents and warrants that, except with
regard to the assets listed in ANNEX 5 hereof, at the time of transfer of
ownership of the foregoing assets to VIScorp, no liens, security
interests or other form of creditor rights exist with regard to the
Inventories and the Industrial Property Rights which would hinder the
transfer of clear and uncontested title to VIScorp. The Assets listed in
ANNEX 5 shall be released by the Administrator against payment of the
release sums by VIScorp. The payment of the release sums shall be
directly regulated between VIScorp and the third party having rights in
such assets.
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7.2 Administrator has stated to VIScorp that he has notified the Creditor
Pool of Escom and Amiga regarding the subject matter of this Agreement
and the dispositions effected herein and that the Creditor Pool has
approved the transactions set forth in this Agreement.
VIII.
LIABILITIES
8.1 In the event of breach of any of the warranties and representations set
forth in Article VII above, VIScorp shall be entitled to reduce the
Purchase Price in an amount which represents the fair value of the lost
benefit of the Agreement to VIScorp. In accordance therewith, VIScorp
shall be entitled to deduct such amount from any unpaid portion of the
Purchase Price.
8.2 VIScorp shall have the right to rescind this Agreement, if, prior to the
payment of the third installment of the Purchase Price pursuant to
Article 6.3 above, the validity or fulfillment of this Agreement shall be
challenged or hindered by any third party in such a manner as to
significantly endanger the fulfillment of this Agreement in the manner
contemplated herein. In this case, VIScorp shall exercise its right to
rescind this Agreement by declaration to the Administrator to be received
by him no later than thirty (30) days following the date upon which the
third installment payment becomes due.
IX.
MISCELLANEOUS
9.1 All Exhibits to this Agreement constitute material components hereof and
shall be deemed incorporated into the body of this Agreement by
reference.
9.2 This Agreement shall be subject to German law. The courts in Frankfurt
shall have exclusive jurisdiction over any disputes arising from or in
connection with this agreement.
9.3 If any individual provision of this Agreement is or becomes invalid or
unenforceable, the validity of the remaining provisions shall remain
unaffected. The parties shall be obligated in this case to replace the
invalid provision with a valid and enforceable one, the content of which
most closely approximates the commercial purpose of the invalid
provision.
9.4 In case provision of this Agreement require interpretation or amendment,
the provisions shall be interpreted or amended in a manner most closely
approximating the spirit, content, and purpose of this Agreement. In
this regard, the parties shall agree on a provision on which they would
have agreed at the time of the execution of this agreement if they had
realized the need to interpret or amend the agreement. The same shall
apply in the event of any omissions.
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<PAGE>
9.5 The Parties have executed an English translation of this agreement which
has been translated by a court-sworn translator. The German language
version of this agreement, however, shall govern.
Date:
Place:
Administrator VIScorp
- - ------------------------------ --------------------------------------------
-7-
<PAGE>
AMIGA
Inventory Report
-8-
<PAGE>
1) INVENTORY
LOCATION MATERIAL PAYMENT TO RELEASE MATERIAL
DEM USD
conv. rate: 1.527
Bordeaux A1200 RM 1,178,324.10 771,659.55
SOLECTRON Raw Material DEM USD
10,458,315 DEM
Philadelphia A4000T RM 145,065.00 DEM 95,000.00 USD
QUIKPAK 3,913,910 DEM
Papendrecht Components 11,511.46 DEM 7,538.61 USD
KUEHNE & NAGEL 11,110,239 DEM
Weinheim Cabinets 6,300.00 DEM 4,125.74 USD
265,347 DEM
Braunschweig Spares
STREIFF Finished Goods 11,256.11 DEM 7,371.39 USD
WANDT 26,477,768 DEM 78,531.82 DEM 51,428.82 USD
Verrieref le Buisson CD ROM Drives
ARCHUS 97,016.72 DEM 63,534.20 USD
2) INTELLECTUAL PROPERTY
Wiesbaden 90,207.94 DEM 59,075.27 USD
PATENT LAWYER
Jena 410,900.98 DEM 289,090.36 USD
MAZet
Documentation
TOTAL 2,029,113.90 DEM 1,328,823.90 USD
-9-
<PAGE>
EXHIBIT 10.10
GATEWAY INFORMATION PROVIDER AGREEMENT
This agreement, dated as of December 13, 1994, is made and entered into by and
between VISUAL INFORMATION SERVICES CORP. ("VISCORP") with offices at 2728 North
Hampden Court, Chicago, Illinois 60614 and NTN Communications, Inc. ("NTN"), a
Delaware corporation, with offices at 2121 Palomar Airport Road, Suite 305,
Carlsbad, California 92009.
INTRODUCTION
VISCORP and NTN each desire that NTN provide the non-exclusive online computer
service described in Paragraph 1.1.2. below (the "Gateway Online Service") on
the VISCORP network (the "Network"), subject to the terms and conditions set
forth in this Agreement.
TERMS
1. GATEWAY ONLINE SERVICE. NTN grants and VISCORP accepts a non-exclusive
worldwide license to promote, market and develop the Gateway Online Service
during the term hereof, for use on the VISCORP platform as it presently exists
or may be otherwise modified or enhanced in the future, including any
derivations thereof.
1.1. Duties of NTN. NTN shall provide the Gateway Online Service, at its
own expense, including, without limitation, the following:
1.1.1 Providing all computer, telephone, and other equipment
necessary to access the Network in accordance with the Schedule
attached as Addendum 1.
1.1.2 Creating the Gateway Online Service with the following
content: NTN's two-way interactive computerized broadcast games (the
"Games") that involve broadcast of data to multiple locations, play by
multiple participants at each location and retrieval and processing of
data entered by the players.
The Games shall include:
1.1.2.1 Trivia games such as Countdown, Showdown, Sports Trivia
Challenge, Spotlight, Passport, Playback, including all updates,
revisions and enhancements, and other standard trivia games that
exist or may be developed by NTN for general electronic
distribution to all platforms, in the future during the Initial
Term and any Renewal Term of this Agreement; subject to
Addendum 2.
1.1.2.2 Play-along games: QB1, Diamondball, Powerplay, Brackets,
Hoops, DreamTeam, Undercover, Wipeout, Scatter, Triples, Award
Shows (e.g., Academy Awards), Uppercut, including all updates,
<PAGE>
revisions and enhancements, and other standard play-along games
that exist or may be developed by NTN for general electronic
distribution to all platforms in the future during the Initial
Term and any Renewal Term of this Agreement ("Play-Along Games"),
subject to Addendum 2.
1.1.3 Software Development
1.1.3.1 Developing the software necessary for the operation of
the Gateway Online Service (the "Software"). The Software and
the Gateway Online Service will be capable of supporting all
Network users without noticeable degradation in response time,
throughput or reliability;
1.1.3.2 Developing the Software so that the Gateway Online
Service will operate through a telecommunications link between
the NTN and VISCORP host computer systems that utilizes TCP/IP
communications protocols (the "Telecommunications Link").
1.1.4 Operations
1.1.4.1 Monitoring the Software and the Gateway Online Service to
ensure that it operates as designed. NTN recognizes that time is
of the essence and will make all reasonable efforts to re-start
the Software in the event that the Software ceases to operate.
1.1.5 Cooperating and assisting VISCORP in promptly answering
questions and complaints from VISCORP or from customers, subscribers
and end-users regarding the Gateway Online Service.
1.1.6 Cooperating and assisting VISCORP in supplying material for
VISCORP marketing and promotional activities.
1.1.7 International Preference. If VISCORP develops a PAL system
NTN will present it to Licensees as a preferred NTN ready platform.
1.2. Duties of VISCORP
1.2.1 VISCORP shall Provide NTN with reasonable technical
assistance as requested in writing by NTN to assist NTN in a timely
manner with the successful completion of its duties as outlined in
Section 1.1 of this Agreement, including documentation of and
assistance with the RMG;
1.2.2 Provide NTN executives with Overhead Accounts;
1.2.3 Make every reasonable effort to develop the Gateway Online
Service on the VISCORP network in accordance with the Schedule
attached as Addendum 1;
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1.2.4 Design, implement and document the online screens that will
be incorporated into the Gateway Online Service. VISCORP will make
all necessary changes to the online screens as requested by NTN to
assist in the design, implementation, debugging and maintenance of the
Software and the Gateway Online Service;
1.2.5 Pay for the costs of the Telecommunications Link between
VISCORP and NTN. This will be a standard leased line of at least
9.6KB with a preference of 56.4KB
1.2.6 Make every reasonable effort to promote and market NTN and
NTN products and include NTN and NTN products in advertising.
1.2.7 VISCORP agrees not to attempt to create or derive source
code, derivative works or improvements to any of the NTN products
provided to VISCORP by disassembly, reverse engineering or any other
method, and to take reasonable steps necessary to prevent third
parties, including without limitation, end-users, from disassembly,
reverse engineering, and the like.
1.3. Joint Responsibilities of VISCORP and NTN. Each party will submit
marketing, advertising, and all other promotional materials related to the
Gateway Online Service and/or referencing the other party and/or the
trademarks of the other party to the other party (the "Materials") for such
party's prior written approval, prior to the use or distribution of such
Materials. Each party shall solicit and reasonably consider the views of
the other party in designing and implementing such Materials. Approval
shall not be unreasonably withheld or delayed, and once approved, the
Materials may be reused until such approval is reasonably withdrawn with
reasonable prior notice.
1.4. Exclusivity. The Gateway Online Service shall be provided by NTN on a
non-exclusive, worldwide basis for services originating in the United
States. For services originating outside of the United States, NTN will
present VISCORP as a preferred affiliation.
1.5. Grant of Service Rights to VISCORP. NTN hereby grants VISCORP the
right during the Initial and any Renewal Term of this Agreement (as defined
in Section 6 below) to distribute the Gateway Online Service through the
Network and to market and promote the Gateway Online Service and, only in
connection with such distribution, marketing and promotion, to use the
following trade names and trademarks of NTN: those pertinent to the
games/NTN products being advertised, distributed or promoted, subject to
any existing restrictions on such use.
1.6. If NTN is unable to provide programming content, then VISCORP may
provide this same programming for the term of this Agreement unless
restricted by another agreement between NTN and a third party.
2. PAYMENTS
2.1. Usage Royalties.
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2.1.1 For the Trivia Games described in Section 1.1.2.1 of this
Agreement, VISCORP will pay NTN a percentage of the Online Usage
Revenue, as defined herein, generated by the Trivia Games on the
Network. The percentage of Online Usage Revenue VISCORP will pay NTN
will be thirty percent (30%). Until VISCORP receives one hundred and
twenty five thousand ($125,000) in revenues, usage royalties will be
split on 85% VISCORP and 15% NTN basis. Thereafter, the permanent
split will revert to the normal 70% /30% basis. Two years after the
expected activation date of NTN programming on VISCORP'S gateway
online service, VISCORP will pay NTN a minimum annual royalty of
$24,000. The settlement of this minimum amount will occur at the end
of the year on the anniversary of the Gateway Online Service. Gateway
Online Service initiation is expected to be 1 May 1995. The first
minimum royalty payment, if required, would be on 31 May 1998.
2.1.2 For the Play-Along Games described in Section 1.1.2.2 of
this Agreement, VISCORP will pay NTN thirty percent (30%) of Online
Usage Revenue, as defined herein, generated by the Play-Along Games on
the Network. The terms of this Section 2.1.2 are subject to
renegotiation as it applies to any one of the Play-Along Games, in the
event that NTN must pay a licensing fee to a third party which would
make the provision of said game economically detrimental to NTN (i.e.
NTN; tangible costs versus anticipated revenues, in NTN's
determination);
2.1.3 Online Usage Revenue shall mean the greater of a specific
charge per event or a prorated percentage of subscription fees based
on usage, excluding amounts received for taxes, duties, or valid
charges. VISCORP shall provide NTN with monthly statements detailing
the amount of usage of the Gateway Online Service for that month;
2.1.4 VISCORP will continue to keep NTN advised as to any change
in hourly or other charges and as to any free hours.
2.2. Advertising Revenues.
2.2.1 In the event that either VISCORP or NTN sell sponsorship of
any portion of the Gateway Online Service to a third party
("Advertising Revenues"), the party which sells such a sponsorship
shall receive a royalty to be mutually agreed upon, but not to be less
than 70 percent of the Advertising Revenue derived from the sale of
that sponsorship. Neither party shall sell nor solicit the sale of
any sponsorship of any portion of the Gateway Online Service without
the reasonable prior written approval of the other party.
2.2.2 Prior to the sale of any sponsorships, VISCORP and NTN shall
cooperatively set and agree in writing to the rates to be charged for
sponsorship of any portion of the Gateway Online Service.
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<PAGE>
2.2.3 Each party reasonably reserves the right to refuse any
sponsorship which, in its discretion, it determines to be not suitable
for the Network or the Gateway Online Service.
2.3. VISCORP and NTN agree to pay the other party all monies earned and
received within thirty (30) days of the end of the month in which such
monies were earned and received.
2.4. License Fees and Conversion Charges. VISCORP will pay NTN two hundred
thousand dollars ($200,000) upon the signing of this agreement and
compliance with Steps 1 and 2 of the Schedule by NTN and fifty thousand
dollars ($50,000) when the system is live, but not later than December 31,
1995.
3. Prizes. Five percent (5%) of online usage revenue will be reserved for
prizes before royalty computation.
4. Confidentiality. Each party acknowledges and agrees that any and all
information emanating from the other party's business and not publicly known,
including, without limitation, the contents of this Agreement, technical
processes and formulas, source codes, product designs, customer lists, sales,
cost and other unpublished financial information, product plan, and marketing
data, is confidential and proprietary information. Each party agrees that it
shall take reasonable steps, at least substantially equivalent to the steps as
it takes to protect its own proprietary information, during and after the
Initial Term and any Renewal Term, to prevent the duplication or disclosure of
any such confidential and proprietary information, other than by or to its
employees or agents who must have access to such information to perform such
party's obligations hereunder, who shall treat such information as provided
herein. If such information is publicly known, already known by a party, is
thereafter rightly obtained by the non-disclosure party from a source other than
the disclosing party, or is required to be disclosed by law, regulation, or
court order, then there shall be no restriction on the use of such information.
5. LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION.
5.1. Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY OR ANY USER OF THE GATEWAY ONLINE SERVICE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES EXCEPT AS SPECIFIED
IN SECTION 5.3 ENTITLED "INDEMNITY", (EVEN IF SUCH OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES) FOR REASONS SUCH AS, BUT NOT
LIMITED TO, LOSS OF REVENUE, LOSS OF PROFITS OR LOST BUSINESS.
5.2. Warranties.
5.2.1 VISCORP MAKES NO, AND NTN ACKNOWLEDGES THAT VISCORP HAS NOT
MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING
THE NETWORK OR THE OPERATION OF THE GATEWAY ONLINE SERVICE ON THE
NETWORK, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
5
<PAGE>
FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM
COURSE OF DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, VISCORP SPECIFICALLY DISCLAIMS ANY
WARRANTY REGARDING THE PROFITABILITY OF THE GATEWAY ONLINE SERVICE AS
OPERATED ON THE NETWORK.
5.2.2 NTN MAKES NO, AND VISCORP ACKNOWLEDGES THAT NTN HAS NOT MADE
ANY, REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING
NTN'S PRODUCTS OR THEIR OPERATION ON THE NETWORK, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR
COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, NTN SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE
PROFITABILITY OF THE GATEWAY ONLINE SERVICE AS OPERATED ON THE
NETWORK.
5.3. Indemnity. If either party breaches any of its obligations under this
Agreement, it will defend, indemnify, save and hold harmless the other
party and the officers, directors, agents and employees of the other party
from any and all claims, demands, liabilities, judgments, cost or expense,
including reasonable attorneys' fees ("Liabilities"), resulting from such
breach, except where Liabilities result solely from the negligence or
knowing and willful misconduct of the other party. Without limiting the
generality of the foregoing, NTN shall defend, indemnify, and hold harmless
VISCORP against Liabilities arising out of (i) any injury to person or
property caused by any products sold or otherwise distributed in connection
with the Gateway Online Service, (ii) any defamatory or illegal, or
allegedly defamatory or allegedly illegal material placed on the Gateway
Online Service, and (iii) any material infringing or allegedly infringing
on the proprietary rights of a third party including patents, copyrights,
trademarks and trade secrets. Each party agrees to (A) promptly notify the
other party in writing of any indemnifiable claim and give the other party
the opportunity to defend or negotiate a settlement of any such claim at
that party's expenses, and (B) cooperate fully with the other party, at
that other party's expense, in defending or settling such claim. VISCORP
reserves the right, at its own expense, to assume the exclusive defense and
control of any matter otherwise subject to indemnification by NTN
hereunder, and in such event, NTN shall have no further obligation to
provide indemnification or any damages or settlement for such matter
hereunder.
6. RENEWAL AND TERMINATION. The initial term of this Agreement shall be seven
(7) years from the date of this Agreement ("Initial Term"). This Agreement
shall be automatically extended for a period equal to the length of the Initial
Term (each a "Renewal Term") unless the agreement has been terminated in
accordance with the following. Either party may terminate this Agreement (i) at
any time in the event of a material breach by the other party which remains
uncured after sixty (60) days notice thereof; or (ii) at any time for any reason
on sixty (60) days prior written notice, such termination to be effective after
the end of the Initial Term and on the commencement of the next Renewal Term
hereof. Neither party is precluded
6
<PAGE>
from complying with existing contractual obligations and commitments by the
termination of this agreement.
7. General Provisions.
7.1. Excuse. Neither party shall be liable for, or be considered in breach
of or in default under this Agreement on account of, any delay or failure
to perform as required by this Agreement as a result of any causes or
conditions which are beyond such party's reasonable control and which such
party is unable to overcome by the exercise of reasonable diligence.
7.2. Independent Contractors. The parties to this Agreement are
independent contractors. Neither party is an agent, representative, or
partner of the other party. Neither party shall have any right, power or
authority to enter into any agreement for or on behalf of, or incur any
obligation or liability of, or to otherwise bind, the other party. This
Agreement shall not be interpreted or construed to create an association,
joint venture or partnership between the parties or to impose any
partnership obligation or liability upon either party.
7.3. Notice. Any notice, approval, request, authorization, direction or
other communication under this Agreement shall be given in writing and
shall be deemed to have been delivered and given for all purposes (i) on
the delivery date if delivered by facsimile; (ii) on the delivery date if
delivered personally to the party to whom the same is directed; or (iii)
two business days after the mailing date, whether or not actually received,
if sent by U.S. mail postage and charges prepaid or another means of rapid
mail delivery for which a receipt is available, to the address of the party
to whom the same is directed as set forth in the introductory paragraph of
this Agreement. Either party may change its address specified above by
giving the other party notice of such change. Notices of default shall be
addressed to an officer of each party.
7.4. No Waiver. The failure of either party to insist upon or enforce
strict performance by the other party of any provision of this Agreement or
to exercise any right under this Agreement shall not be construed as a
waiver or relinquishment to any extent of such party's right to assert or
rely upon any such provision or right in that or any other instance;
rather, the same shall be and remain in full force and effect.
7.5. Return of Information. Upon the expiration or termination of this
Agreement, each party shall promptly return all information, documents,
manuals and other materials belonging to the other party.
7.6. Survival. Sections 3,4,5,6, and 7.5, and all other provisions of this
Agreement which may reasonably be interpreted or construed as surviving the
completion, expiration, termination or cancellation of this Agreement,
shall survive the completion, expiration, terminations or cancellation of
this Agreement.
7.7. Entire Agreement. This Agreement sets forth the entire agreement, and
supersedes any and all prior agreements of the parties with respect to the
transactions set
7
<PAGE>
forth herein. Neither party shall be bound by, and each party specifically
objects to, any term, conditions or other provision which is different from
or in addition to the provisions of this Agreement (whether or not it would
materially alter this Agreement) and which is proffered by the other party
in any correspondence or other document, unless the party to be bound
thereby specifically agrees to such provision in writing. Notwithstanding
the foregoing, NTN shall also be bound by the Network Terms of Service
except as such Network Terms of Service are specifically amended by this
Agreement.
7.8. Amendment. No change, amendment or modification of any provision of
this Agreement shall be valid unless set forth in a written instrument
signed by the party to be bound thereby.
7.9. Construction. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed or if
any such provision is held invalid by a court with jurisdiction over the
parties to this Agreement, such provision shall be deemed to be restated to
reflect as nearly as possible the original intentions of the parties in
accordance with applicable law, and the remainder of this Agreement shall
remain in full force and effect.
7.10. Applicable Law; Jurisdiction. This Agreement shall be
interpreted, construed and enforced in all respects in accordance with the
laws of the state of California.
7.11. Counterparts. This agreement may be executed in counterparts,
each of which shall be deemed as original and all of which together shall
constitute one and the same document.
7.12. Binding Arbitration. Any dispute between the parties over
interpretation, breach, default or enforcement of this Agreement shall be
submitted to binding arbitration. The panel shall consist of three
arbitrators. The parties shall each select one arbitrator and the two
arbitrators shall select a neutral arbitrator. The decision of the
arbitrator shall be final, may include injunctive relief, and may be
enforced by either party in any court of competent jurisdiction.
7.13. This Agreement is binding upon the successors and assignees of
either party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
VISUAL INFORMATION SERVICES CORP. NTN Communications, INC.
BY: BY:
___________________________________ ___________________________________
___________________________________ ___________________________________
(Print Name) (Print Name)
8
<PAGE>
____________________________________ ___________________________________
(Title) (Title)
Date________________________________ Date_______________________________
9
<PAGE>
ADDENDUM 1
SCHEDULE
GATEWAY ONLINE SERVICE
DEVELOPMENT SCHEDULE
STEP DATE TO BE COMPLETED
- - --------------------------------------------------------------------------------
1. NTN delivers packet architecture to VISCORP Date of receipt of license
payment
2. NTN delivers artwork to VISCORP Date of receipt of license
payment
3. Communications link established between March 1, 1995
NTN and VISCORP
4. Beta test March 15, 1995
5. System Live May 1, 1995
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<PAGE>
ADDENDUM 2 TO GATEWAY INFORMATION PROVIDER AGREEMENT
1.1.2.1. VISCORP shall not be entitled to any Games with respect to which
VISCORP declines to contribute its proportional share of the funding required by
NTN and/or a third party to acquire and develop new Games, for which the
acquisition or licensing of rights from a third party is required.
VISCORP's proportional contribution shall be measured by the anticipated
relative benefits as determined by number of units, revenues and actual number
of subscribers or users, to be calculated by NTN.
1.1.2.2. VISCORP shall not be entitled to any Games with respect to which
VISCORP declines to contribute its proportional share of the funding required by
NTN and/or a third party to acquire and develop new Games, for which the
acquisition or licensing of rights from a third party is required.
VISCORP's proportional contribution shall be measured by the anticipated
relative benefits, as determined by number of units, revenues and actual number
of subscribers or users, to be calculated by NTN.
ACCEPTED AND AGREED TO:
VISUAL INFORMATION SERVICES CORP NTN COMMUNICATIONS, INC.
__________________________________ ______________________________________
Date:_____________________________ Date:_________________________________
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<PAGE>
EXHIBIT 10.11
-------------
VISUAL INFORMATION SERVICE CORP
STOCK OPTION PLAN
PURSUANT TO
SEC RULE 701
------------
1. The purpose of the Visual Information Service Corp. ("VisCorp") Stock
Option Plan (the "Plan") pursuant to the U.S. Securities and Exchange Commission
("SEC") Rule 701 is to provide a means whereby consultants, advisors, employees,
officers, directors, agents and others who may provide services or other
benefits to VisCorp, subject to the provisions of SEC Rule 701, may be awarded
options to purchase VisCorp's Common Stock under the terms set forth in this
Plan.
2. Options qualifying under this Plan may be granted from time to time,
subject to the approval of the Board of Directors of VisCorp, to purchase shares
of VisCorp's Common Stock at a set price per share for a fixed period of time.
3. The maximum number of option of Shares of VisCorp's Common Stock
available to be granted pursuant to this Plan shall be 600,000 shares of
VisCorp's Common Stock based on the fact that there are presently issued and
outstanding over 4,000,000 shares of Common Stock. Such shares may consist
either in whole or in part of shares of VisCorp's authorized but unissued Common
Stock or shares of VisCorp's authorized and issued Common Stock re-acquired by
VisCorp and held in its treasury as may from time to time be determined by its
Board of Directors. If an option granted under the Plan is surrendered or for
any reason ceases to be exercisable in whole or in part, the shares which were
subject to such option but as to which the option has not been exercised, shall
continue to be available under the Plan, unless the Plan is no longer effective
as a result of the conditions of SEC Rule 701 or whether the Plan has been
terminated by VisCorp, at such time.
4. The options to be granted to a qualified person, may be initially
authorized by a duly elected and qualified officer of VisCorp, subject to the
approval of the Board of Directors. Any grant of an option may contain
restrictions and other terms and obligations upon the person receiving such
options as such officer may deem appropriate, subject to the approval and/or to
whatever terms the Board of Directors may deem appropriate.
5. Under the circumstances existing at the time this Plan has been adopted
by VisCorp, the option price shall be USD $2.50 per share (cash or wired funds).
Once an option has been granted the price per share shall be fixed and may not
be changed except pursuant to the terms of the Plan or by mutual consent and
agreement of VisCorp and the optionee. VisCorp reserves the right to change the
option price (only as to options not previously granted), at any time in the
future, so that each optionee should inquire of VisCorp prior to the grant of
the option the effective option price.
<PAGE>
6. Each option and all rights and obligations under it shall be subject to
the provisions of the Plan, expire on a date to be determined by the Board of
Directors, however, such date shall not be later than five years from the date
on which the option is granted.
7. (a) During the period when any option, or a portion of it, remains
exercisable, such option may be exercised at any time in whole or in part;
provided, however, that the Board of Directors may require a partial exercise of
an option to be for no less than a stated minimum number of shares, if any, as
specified in the grant of the option.
(b) Each exercise of an option or part of it shall be by notice in
writing to VisCorp, accompanied by payment in full of the option price of the
shares then being purchased, as set forth above.
(c) The option shall terminate and may no longer be exercised if the
optionee's relationship with VisCorp was terminated by VisCorp for good cause as
determined, in good faith, by VisCorp.
8. The consideration received by VisCorp for shares of its Common Stock
issued pursuant to stock options granted under the Plan shall be credited to the
capital of VisCorp, as determined by the Board of Directors. All shares of
Common Stock issued pursuant to the Plan shall constitute valid and legally
issued shares of VisCorp and shall be deemed fully paid and non assessable.
9. If there shall be any change in the stock of VisCorp subject to the
Plan or to any option granted under it, through merger, consolidation,
reorganization, stock split, stock dividend of 5 percent or more in any one
year, or other change in the corporate structure, appropriate adjustment may be
made by the Board of Directors in (a) the aggregate number of shares subject to
the Plan, (b) the maximum number of shares for which options may be granted
under it to any one person, and (c) the number of shares and the price per share
subject to outstanding options. Any stock dividend or stock dividends
distributed by VisCorp on its Common Stock amounting to less than 5 percent in
any one year shall not require adjustment in the number of shares or option
price of the stock optioned under this Plan.
10. No option granted under the Plan shall be transferable otherwise than
by will or the law of descent and distribution, and an option may be exercised,
during the lifetime of the holder thereof, by her or him.
11. The Plan shall become effective on such date as the Board of Directors
shall determine, provided, however, that the holders of a majority of all the
shares of Common Stock issued and
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<PAGE>
outstanding and entitled to vote shall approve this Plan, with the prior
approval of the Board of Directors. VisCorp shall as and when appropriate,
comply with all legal requirements for the issuance of shares of Common Stock
pursuant to the exercise of options granted under this Plan and to take whatever
other steps that may be necessary to comply with any other requirements, under
such circumstances.
12. The VisCorp Common Stock issued pursuant to the exercise of an option
under the Plan shall be deemed restrictive stock issued pursuant to SEC Rule 701
and shall bear a restrictive legend, if any, as may be determined by the counsel
for VisCorp at the time of the issuance of such Common Stock.
13. The Board of Directors may at any time suspend or terminate the Plan.
The Plan may terminate by operation of law and/or pursuant to SEC Rule 701 when
the provisions of SEC Rule 701 may not be met. Unless the Plan shall
theretofore have been terminated by the Board of Directors, the Plan shall
terminate on December 31, 2000. No option may be granted during such suspension
or after such termination. The suspension or termination of the Plan shall not,
without the optionee's consent alter or impair any rights or obligations under
any option previously granted under the Plan.
14. The Board of Directors may at any time amend the Plan in such respects
as the Board of Directors may deem advisable in order that options granted under
it shall be stock options, qualified under SEC Rule 701, as amended, or in order
to conform to any change in the law, or in any other respect which the Board of
Directors may deem to be in the best interest of VisCorp, provided, however,
that no such amendment shall, without further approval of the stockholders of
the VisCorp, except as provided above in this Plan, (a) increase the aggregate
number of shares of Common Stock of VisCorp which may be issued under options
granted pursuant to the Plan; (b) change the minimum option purchase price; (c)
increase the maximum period during which options may be exercised; or (d) extend
the termination date of the Plan. Any amendment to the Plan shall not, without
the optionee's consent, alter or impair any rights or obligations under any
option theretofore granted under the Plan.
Dated: At Chicago, Illinois By approval of the
September , 1995 Shareholders and
the Board of Directors
of
Visual Information Service
Corp, an Illinois corporation
By
---------------------------
A duly authorized officer
<PAGE>
EXHIBIT 21
SUBSIDIARIES
Visual Information Services Corp., an Illinois corporation
