U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB
|X| Annual report under Section 13 or 15 (d) of the Securities Exchange Act
of 1934 for the fiscal year ended
January 31, 1999
|_| Transition report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the transition
period from _____________to _____________
COMMISSION FILE NUMBER 000-22661
---------
INVU, INC.
(Name of Small Business Issuer in Its Charter)
COLORADO 84-1135638
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
THE BEREN
BLISWORTH HILL FARM
STOKE ROAD
BLISWORTH NORTHAMPTONSHIRE NN7 3DB
- -------------------------- -------
(Address of Principal Executive Offices) (Zip code)
011 44 1604 859 893
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code.)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange
------------------- on Which Registered
NONE ---------------------
N/A
Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK,
NO PAR VALUE
----------------
(Title of class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for past 90 days.
Yes x No
------- --------
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |_|
State issuer's revenues for its most recent fiscal year: $8,267
The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of September 30, 1999 was approximately
$6,584,285. For purposes of this computation, all executive officers, directors
and 10% stockholders were deemed affiliates. Such a determination should not be
construed as an admission that such executive officers, directors or 10%
stockholders are affiliates.
As of September 30, 1999, there were 30,206,896 shares of the common stock, no
par value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format: Yes No x
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INVU, INC.
Page
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PART I .........................................................................................................2
Item 1. Description of Business.........................................................................2
Item 2. Description of Properties.......................................................................7
Item 3. Legal Proceedings...............................................................................7
Item 4. Submission of Matters to a Vote of Security Holders.............................................7
PART II .........................................................................................................8
Item 5. Market for Common Equity and Related Stockholder Matters........................................8
Item 6. Management's Discussion and Analysis or Plan of Operations......................................8
Item 7. Financial Statements...........................................................................12
Report of Independent Certified Public Accountants.....................................................F-1
Consolidated Balance Sheets as of January 31, 1999 and 1998............................................F-2
Consolidated Statements of Operations for the year ended January 31, 1999, and
the periods from February 18, 1997 to January 31, 1998 and to January 31, 1999......................F-3
Consolidated Statements of Deficit in Stockholders' Equity for the years ended
January 31, 1999 and 1998...........................................................................F-4
Consolidated Statements of Cash Flows for the year ended January 31, 1999, and the periods
from February 18, 1997 to January 31, 1998 and to January 31, 1999..................................F-5
Notes to Consolidated Financial Statements.............................................................F-6
PART III ........................................................................................................13
Item 9. Directors, Executive Officers, Promoters and Control Persons...................................13
Item 10. Executive Compensation........................................................................15
Item 11. Security Ownership of Certain Beneficial Owners and Management................................15
Item 12. Certain Relationships and Related Transactions................................................17
Item 13. Exhibits, List and Reports on Form 8-K........................................................18
SIGNATURES
INDEX TO EXHIBITS.........................................................................................Index - 1
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PART I
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in, or incorporated by reference into, this report.
ITEM 1. DESCRIPTION OF BUSINESS
Background of Company
INVU, Inc. (the "Company" or "INVU") was incorporated under the name
Sunburst Acquisitions I, Inc. pursuant to the laws of the State of Colorado on
February 25, 1997, as a "shell" company. The Company's business plan at the time
was to seek, investigate, and, if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value.
After the consummation of the Share Exchange on August 31, 1998, which
is discussed below, the Company entered the business of marketing and selling
software for the electronic management of information and documents.
The structure of the business at this point consists of INVU, Inc. as
the ultimate holding company of three directly or indirectly wholly-owned
subsidiaries: INVU Plc, a UK holding company, and its subsidiaries, INVU
International (Holdings) Ltd., which holds certain intellectual property rights,
and Invu Services Ltd. ("INVU Services"), an operating company.
The Share Exchange
On August 31, 1998, the Company consummated the acquisition of all of
the issued and outstanding capital stock of INVU Plc, a company incorporated
under English law ("INVU Plc"), in exchange for 26,506,552 shares (the "Share
Exchange") of common stock, no par value, of the Company (the "Common Stock"),
pursuant to a Share Exchange Agreement, dated as of May 19, 1998, by and between
the Company and INVU Plc's majority shareholder Montague Limited ("Montague"),
an Isle of Man company (as amended by that certain First Amendment to Share
Exchange Agreement, dated as of July 23, 1998 (the "Share Exchange Agreement")).
As a result of the Share Exchange, INVU Plc became a wholly-owned subsidiary of
the Company. As conditions precedent to the consummation of the Share Exchange,
(i) Montague received a power of attorney from Halcyon Enterprises Plc, a
minority shareholder and a company incorporated under English law ("Halcyon"),
to transfer its shares of INVU Plc to the Company, and (ii) all of the
outstanding shares of Series A Convertible Preferred Stock of the Company (the
"Preferred Stock") were converted into Common Stock of the Company at a
conversion rate of two (2) shares of Common Stock for each share of Preferred
Stock.
As of August 31, 1998, the Company had a total of 2,190,000 shares of
Common Stock issued and outstanding after the conversion of the Preferred Stock.
Upon consummation of the Share Exchange, Montague and Halcyon (collectively, the
"INVU Plc Shareholders") received in the aggregate 26,506,552 shares of Common
Stock of the Company in exchange for all of the issued and outstanding share
capital of INVU Plc.
In addition, the Company issued 1,510,344 shares of Common Stock to
Robert P. Jeffcock pursuant to an agreement regarding consulting services, dated
May 15, 1998, for introducing INVU Plc to the Company and for agreeing to pay
certain expenses if the Share Exchange was not consummated. As a condition
precedent to the Share Exchange, INVU Plc was required to deposit $500,000 to be
used as future working capital of the Company (the "Initial Capital Deposit")
into an account maintained by INVU Services. On July 30, 1998, INVU Services
borrowed such $500,000 from certain private investors who also received from
Montague approximately a 151,030 shares of Common Stock, as the Initial Capital
Deposit. The Share Exchange Agreement required the Company to deposit an
additional $500,000 within fourteen (14) days after the consummation of the
Share Exchange (the "Second Deposit"). The Company had extended the period for
payment of the Second Deposit. The same private investor group loaned INVU
Services the funds for the Second Deposit as described hereinafter as the First
Financing Transaction.
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The Market and Market Strategy
There has, in the recent past, been a significant increase in the
volume of information with the advent of inexpensive computing and the arrival
of wide area networks (which provide a conduit to this information). A
significant amount of information (e.g. on-line databases, documents, graphics,
audio, recordings and video) is now available via the internet to organizations
and individuals from sources around the world. Management believes that the
proliferation of such information and documents over the years has created a
problem for individuals and organizations to manage large and disparate sets of
data created internally and arriving externally. Personal computers are now
shipped with up to 16 Gigabyte hard disks, and these machines are rapidly
becoming repositories for lost files and information. Management believes that
the need to solve this problem has resulted in an international market for
document management technologies, which management expects to grow significantly
in the next five years. Information is now regarded as the key resource for
organizations and individuals. Management believes that accessing and sharing
information are two of the biggest challenges currently facing businesses.
Management expects that those organizations which are able to harness and
exploit information will derive a competitive advantage in their markets.
By contrast, management estimates that the availability of services
that enable organizations to manage and control this mass of information has
lagged behind the requirement for such services. Therefore, management believes
that the market for document management services has the potential for rapid
growth in markets throughout the world. The document management market is
applicable to all information users, both organizations and individuals, and
therefore, while difficult to define, is broad in terms of potential in the
estimate of management.
The Company markets and sells software for the electronic management of
many types of information and documents, such as forms, correspondence,
literature, faxes, technical drawings and electronic files. As this is a task
which for the most part is inherently clerical in nature, automation of document
management control is effectively dealt with by computer. Management believes
there is an increasing demand for ease of use in relation to document and
information management software and INVU software has been designed specifically
to address this need. Management believes the largest sector of this market with
the highest growth profile is document management software. Management estimates
that the market is growing rapidly and is global. Geographically, the Company's
first target markets are the United States and the United Kingdom.
INVU serves both the personal computer ("PC") and client server market
segments and is, therefore, firmly placed in what management believes are the
two principal growth areas. Management believes that the client server segment
(i.e. mid-range network user running open "multi-task software") has in
particular been largely neglected by the Company's competitors, which generally
fall into two categories:
i. Large corporate suppliers that offer proprietary (own software)
solutions based on large, often mainframe, systems; or
ii. Small niche suppliers addressing the needs of small highly
specialized groups (e.g. lawyers or estate agents).
Management believes that other trends in the document management market
are:
i. A switch from "all-in-one" hardware and software in a single unit
(i.e. proprietary stand alone systems) to open PC based systems,
as evidenced by the PC and packaged systems showing the highest
growth of all market segments;
ii. Increasing use of document management systems to control everyday
paperwork and electronic files. Historically, the first adopters
of the technology were the engineering users for their large
format systems (i.e. engineering documents and drawings rather
than office documents); and
iii. Increasing user requirements in the PC segment to store graphical
images in addition to electronic files. Management believes that
this trend can best be exploited through the enabling
characteristics of workgroup products, which will greatly enhance
INVU's target market.
Management believes that INVU enjoys an advantage over most competing
programs in that INVU can be sold to single users and departmental users (as
well as being sold company wide).
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Once successfully installed with a departmental user, INVU will
encourage resellers to "roll out" the product to other departments within the
same organization using the first installation as an internal reference site.
Management believes that there is considerable potential for additional sales to
existing customers.
INVU software has been designed for general office applications, which
can be utilized across a wide range of customers, from SOHO (small office home
office) markets to SME's (small to medium sized enterprises) to large
organizations. Management believes that this allows INVU to address a market
which is wide and varied in nature.
On-going research is important to INVU and the use of qualitative focus
groups is a technique deployed by the Company to assess customer needs and
receptivity. In addition, industrial psychology techniques have been employed by
INVU to establish customer perception of value.
The Company's objective is to establish itself as a leading supplier of
information and document management software in the world. In order to achieve
this, the Company is targeting its marketing efforts initially in the United
Kingdom and the United States on departmental users in organizations, retailers
for INVU SOLO, distributors and resellers.
INVU intends to maximize its internet presence for entry level product
sales. To that end, in November 1998, INVU finalized a distribution agreement
with Digital River, Inc. ("Digital River") to sell INVU SOLO on-line.
Management believes that, as the market matures, the purchase of
document management systems will become increasingly routine as buyers become
acquainted with both the technology and applications. In order to deal with the
increased demand, the Company intends to increase its number of distributors and
third party value added resellers. In addition, INVU SOLO will be downloaded
from the Company's web-site across the internet. Management considers both
branding and product positioning fundamental to attaining the market share
required to profitably meet its objective of being a leading supplier of
information and document management software.
The Product
INVU's business is the development and sale of document and information
management software programs which operate on networked PC and client server
systems and allow documents of any size to be stored on to computer memory and
retrieved instantly.
INVU software scans paper, creates, imports, manages and retrieves
documents. INVU software has many layers of sophistication, but management
believes it is comparatively simple to use and inexpensive. INVU SOLO was
released to distributors in December 1998 and sales to end users began in
January 1999. All other INVU products were released to distributors in September
1999 and sales to end users are expected in October 1999, except INVU WEBFAST,
which management anticipates will be released in early 2000.
The Company currently has five products. Each product addresses
different market segments.
INVU SOLO - single user information document management (aimed at
SOHO/RETAIL) INVU PRO - single user information document management
(advanced features) (SOHO/SME) INVU PRO NETWORK EDITION - multi-user
information document management (SME/ENTERPRISE WIDE) VIEWSAFE - fully
secure / encrypted information document management in single user and
multi-user versions. INVU WEBFAST - manage and find documents through a
web browser (ENTERPRISE/INTERNET)
NB - SOHO is Small Office/Home Office, SME is Small/Medium Enterprise.
Competition
The market for the Company's products is intensely competitive, subject
to rapid change and significantly affected by new product introduction and other
market activities of industry participants. The Company currently encounters
direct competition from a number of public and private companies such as Altris
Software, Inc., Key File Inc., Autodesk Inc., FileNet Corporation, PC Docs and
Caere Corporation. Virtually all of these direct competitors have significantly
greater financial, technical, marketing and other resources than the Company.
The Company also expects that direct competition will increase as a result of
recent consolidation in the software industry.
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The Company will need to rely on a number of systems consulting and
systems integration firms for implementation and other customer support
services, as well as for recommendation of its products to potential purchasers.
Although the Company seeks to maintain close relationships with these service
providers, many of these third parties have similar, and often more established,
relationships with the Company's principal competitors. If the Company is unable
to develop and retain effective, long-term relationships with these third
parties, the Company's competitive position would be materially and adversely
affected. Further, there can be no assurance that these third parties will not
market software products in competition with the Company in the future or will
not otherwise reduce or discontinue their relationship with, or support of, the
Company and its products.
Management believes that its products are targeted at markets where, to
date, few of the Company's larger and better established competitors have
secured significant market penetration. Although the Company believes that it
will compete favorably in these markets, there can be no assurance that the
Company can maintain its competitive position against current and any potential
competitors, especially those with greater financial, marketing, service,
support, technical and other resources than the Company.
Major Contracts
INVU Services has entered into (i) a Reseller Agreement (the "Reseller
Agreement"), dated as of March 16, 1998, by and between INVU Services and
Computer Associates Plc ("CA Plc"), and (ii) a Limited Manufacturing Agreement,
dated as of March 25, 1998, by and between INVU Services and Centura Software
Ltd. These contracts involve joint marketing, press releases, distribution and
the use of combined technologies. Both Computer Associates Plc and Centura
endorse INVU by use of their own logotypes on INVU materials and shrink-wrap
packaging containing the software. Both agreements include worldwide press
announcements and introductions to direct sales forces and third party
distribution.
On July 10, 1998, INVU Services and CA Plc executed a memorandum
confirming certain agreements between INVU Services and CA Plc with respect to
the bundling and marketing of INVU Service's products under the Reseller
Agreement. INVU Services and Computer Associates International, Inc. ("CA Inc.")
entered into a Gold Standard Reseller Agreement as of June 16, 1999 pursuant to
which INVU Services appointed CA Inc. as an authorized reseller of INVU PRO and
INVU PRO (network edition) on a non-exclusive basis for a term of 12 months,
renewable upon agreement of both parties and terminable upon 30 days written
notice by either party.
On October 27, 1998, INVU Services entered into a Distribution
Agreement by and between INVU Services and KOCH Media Limited ("KOCH"). KOCH is
a large European retail distributor and the agreement means that INVU SOLO has
access to major retail channels in the United Kingdom. INVU Services and CHS UK
Holdings Limited Incorporated ("DNSP") entered into a Distributor Agreement as
of July 1, 1999 pursuant to which INVU Services appointed DNSP the exclusive
distributor of INVU PRO, INVU PRO (network edition) and INVU WEBFAST for the
territory of England, Scotland and Wales.
On November 11, 1998, INVU Services and Digital River entered into an
agreement whereby INVU will market its suite of products using Digital River's
e-commerce technology. Under this agreement, Digital River will partner with
INVU to create the INVU Cyber Store, offering a secure environment for customers
to purchase and download INVU software via the World Wide Web. INVU Services
also entered into major value added reseller ("VAR") agreements with Elcom
Technical Services and Millenium Three Solutions Ltd. on March 18, 1999 and May
11, 1999 respectively.
Employees
As of October 1, 1999, the Company had 9 employees, all of whom were
full time, and a further four people on a consultancy or part-time basis.
Patents, Trademarks and Copyright
The Company's success is dependent in part upon proprietary technology.
At this time, the Company has not patented any aspect of its document management
systems technology in the United Kingdom, the United States or internationally.
The Company currently has no plans to file for and obtain patents domestically
or internationally. Even if the Company were to attain patent protection over
certain of its intellectual property, the rapidly changing technology in the
industry makes the Company's success largely dependent on the technical
competence and creative skills of its personnel.
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The Company relies on a combination of trade secret, copyright and
non-disclosure agreements to protect its proprietary rights in its software and
technology. There can be no assurance that such measures are or will be adequate
to protect the Company's proprietary technology. Furthermore, there can be no
assurance that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technology.
The Company's software will be licensed to customers under license
agreements containing provisions prohibiting the unauthorized use, copying and
transfer of the licensed program. Policing unauthorized use of the Company's
products will be difficult, and any significant piracy of its products could
materially and adversely affect the Company's financial condition and results of
operations.
In addition, the Company also relies on certain software that it
licenses from third parties, including software that is integrated with
internally developed software and used in the Company's products to perform key
functions. There can be no assurances that the developers of such software will
remain in business, or that they will otherwise continue to be available to the
Company on commercially reasonable terms. The loss of or inability to maintain
any of these software licenses could result in delays or reductions in product
shipments until equivalent software can be developed, identified, licensed and
integrated, which could adversely affect the Company's business, operating
results and financial condition.
The Company is not aware that any of its software products infringe the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not claim infringement by the Company with respect to its
current or future products. The Company expects that software product developers
will increasingly be subject to infringement claims. Any such claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
The Company claims a trademark on all of its products under common law
by using the "TM" symbol. The duration of such trademarks under United Kingdom
common law is the length of time the Company continues to use them.
The First Financing Transaction
As of February 2, 1999, pursuant to a financing transaction (the "First
Financing Transaction") among Montague and Zalcany Limited ("Zalcany"),
Mustardseed Estates Limited ("Mustardseed"), and Tomuro Limited, all companies
incorporated under English law, and Richard Harris and Roy Grainger Williams
(collectively, the "Lenders"), Montague transferred 2,400,000 shares of the
Common Stock to such purchasers in exchange for $1,000 and a loan facility for
the Company in the principal amount of $656,000.
The Second Financing Transaction
On August 23, 1999, the Company entered into that certain Investment
Agreement (the "Initial Investment Agreement"), among the Company, David Morgan,
John Agostini, and Paul O'Sullivan, on the one hand, and Alan David Goldman
("Goldman") and Vertical Investments Limited ("Vertical"), a company registered
in Jersey and beneficially owned by Daniel Goldman, on the other hand, as
supplemented by that certain Supplemental Agreement (the "Supplemental
Agreement" and, together with the Initial Investment Agreement, the "Final
Investment Agreement"), dated as of August 23, 1999, among the Company, David
Morgan, John Agostini, Paul O'Sullivan and INVU Services, on the one hand, and
Goldman, Vertical, and Tom Maxfield ("Maxfield", together with Goldman and
Vertical, collectively, the "Investors") on the other hand. Pursuant to the
terms of the Final Investment Agreement, the Investors agreed to advance certain
funds to the Company in the aggregate principal amount of $1,000,000 in shares
of $333,334, $333,333 and approximately $333,333 among Goldman, Vertical and
Maxfield, respectively, and the Company agreed to (1) pay in full any and all
amounts then outstanding pursuant to the First Financing Transaction and to
terminate such Agreement, (2) cause the Lenders to transfer to Montague 425,000
shares of the Common Stock then held by Lenders pursuant to the terms of the
First Financing Transaction (the "Transferred Shares"), and (3) cause Montague
to transfer 225,000 of such Transferred Shares to the Investors in equal shares
of 75,000 to each Investor.
The loans being made to the Company pursuant to the terms of the Final
Investment Agreement were evidenced by (1) that certain Loan Stock Instrument,
dated as of August 23, 1999, executed by the Company in favor of the Investors,
in the aggregate principal amount of $600,000 ("Loan Stock Instrument A"), and
(2) that certain Loan
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Stock Instrument, dated as of August 23, 1999, executed by the Company in favor
of the Investors, in the aggregate principal amount of $400,000 ("Loan Stock
Instrument B" and together with Loan Stock Instrument A, collectively, the "Loan
Stock Instruments"). Until the Loan Stock Instruments are redeemed pursuant to
their terms upon the occurrence of certain events described therein, the
outstanding principal and accrued but unpaid interest (1) under Loan Stock
Instrument A shall, at the option of the Investors, be converted into one share
of the Common Stock for each $.65 of outstanding principal and accrued but
unpaid interest converted, and (2) under the Loan Stock Instrument B shall, at
the option of Investors, be converted into one share of the Common Stock for
each $.50 of outstanding principal and accrued but unpaid interest converted.
Any amounts outstanding under Loan Stock Instrument A shall bear
interest at a rate of 6% per annum, payable in semi-annual installments in
arrears on January 1 and July 1 of each year accruing from day to day and
calculated monthly. In addition, Loan Stock Instrument A will be automatically
converted in the event that the Company is listed on the NASDAQ National Market
or the Official List of the London Stock Exchange or if the Company raises
additional capital of at least $4,000,000. Any amounts outstanding under Loan
Stock Instrument B shall bear interest at a rate of 8% per annum for the first
six months following the date thereof, 9% per annum for the following six month
period, and 10% per annum thereafter. All accrued but unpaid interest on the
Loan Stock shall be payable in semi-annual installments in arrears on January 1
and July 1 of each year. Loan Stock Instrument B will be automatically converted
in the event that the Company is listed on the NASDAQ National Market or the
Official List of the London Stock Exchange. If Loan Stock Instrument B is not so
converted, it can be redeemed at any time for a period of 12 months from August
23, 1999 at the election of the Company. If the Loan Stock Instruments are not
so converted, they may be redeemed upon 30 days notice by the Company or the
Investors on or after August 2002.
Pursuant to the terms of the Investor Agreement, the Investors shall
have the right to nominate one director of the Company, until the amounts
outstanding under the Loan Stock Instruments are redeemed or converted. Daniel
Goldman, the son of Goldman, is the nominee of the Investors.
The obligations of the Company under the Investor Agreement and the
Loan Stock Instruments have been guaranteed by INVU Services. Pursuant to the
Investment Agreement, the Company covenanted with the Investors to restrict
certain actions while any amounts remain outstanding under the Loan Stock
Instruments without the Investors' consent, which consent may not be
unreasonably withheld, including the following actions: the issuance of
additional Company Common Stock, except pursuant to the exercise of outstanding
warrants and options of the Company; the issuance of any new options to purchase
Company Common Stock; additional borrowings by the Company; capital expenditures
of the Company; paying off liabilities; granting security interests; and
acquiring other entities.
Name Change
On February 22, 1999, the Company's shareholders approved an amendment
to the Company's Articles of Incorporation changing the name of the Company from
"Sunburst Acquisitions I, Inc." to "INVU, Inc."
Change in Fiscal Year
As of January 15, 1999, the Company's Board voted to change the
Company's fiscal year end to January 31.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's executive offices are located in Blisworth,
Northamptonshire, England. The Company leases 2,200 square feet of space in a
facility as a tenant. The term of the lease is through June 1, 2002 and the
monthly rent is currently approximately $2,380.
ITEM 3. LEGAL PROCEEDINGS
At October 1, 1999, there were no legal proceedings initiated by or
against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters for submission to a vote of security holders
during the last fiscal year.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock is listed on the OTC Electronic Bulletin Board. The
following table indicates the quarterly high and low bid price for the Common
Stock on the OTC Electronic Bulletin Board for the fiscal year ending January
31, 1999 and for the two quarters and a current date in the third quarter of
the fiscal year ending January 31, 2000. Prior to the consummation of the
Exchange Agreement on August 31, 1998, there was no active public trading market
for the Common Stock. Such inter-dealer quotations do not necessarily represent
actual transactions, and do not reflect retail mark-ups, mark-downs or
commissions.
OTC ELECTRONIC
BULLETIN BOARD
BID PRICE
HIGH LOW
FISCAL 1999
1st Quarter $N/A $N/A
2nd Quarter $N/A $N/A
3rd Quarter (Sept. 1 - Oct. 31) $5.00 $0.97
4th Quarter $1.56 $0.375
FISCAL 2000
1st Quarter $3.00 $0.45
2nd Quarter $1.88 $1.38
On September 30, 1999, the bid price of the Common Stock as reported on
the OTC Electronic Bulletin Board was $1.56.
As of September 30, 1999, there were approximately 122 holders of
record of the Common Stock.
The Company has not declared or paid any cash or other dividends on the
Common Stock to date for the last two (2) fiscal years and in any subsequent
period for which financial information is required and has no intention of doing
so in the foreseeable future.
Recent Sales of Unregistered Securities
The following contains information for all securities that the Company
sold within the past fiscal year without registering the securities under the
Securities Act:
1. On August 31, 1998, the Company issued 26,506,552 shares of Common
Stock to the shareholders of INVU Plc in the Share Exchange. This
transaction was exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to Section 4(2) of
the Securities Act and Regulation D promulgated thereunder. Please
refer to "Description of Business -- The Share Exchange" for a
description of the Share Exchange.
2. In August 1998, in connection with the Share Exchange, all of the
holders of the outstanding shares of Preferred Stock converted their
shares of Preferred Stock into shares (the "Conversion Shares") of
Common Stock pursuant to the conversion ratio set forth in the
Preferred Stock terms and designations. The issuance of the Conversion
Shares was exempt from registration under the Securities Act pursuant
to the exemption set forth in Section 3(a)(9) thereunder.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following description of "Management's Plan of Operation"
constitutes forward-looking statements for purposes of the Securities Act and
the Exchange Act and as such involves known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. The words
"expect", "estimate", "anticipate", "predict", "believes", "plan", "seek",
"objective" and similar expressions
8
<PAGE>
are intended to identify forward-looking statements. Important factors that
could cause the actual results, performance or achievement of the Company to
differ materially from the Company's expectations include the following: 1) one
or more of the assumptions or other cautionary factors discussed in connection
with particular forward-looking statements or elsewhere in this Form 10-KSB
prove not to be accurate; 2) the Company is unsuccessful in increasing sales
through its anticipated marketing efforts; 3) mistakes in cost estimates and
cost overruns; 4) the Company's inability to obtain financing for general
operations including the marketing of the Company's products; 5) non-acceptance
of one or more products of the Company in the marketplace for whatever reason;
6) the Company's inability to supply any product to meet market demand; 7)
generally unfavorable economic conditions which would adversely effect
purchasing decisions by distributors, resellers or consumers; 8) development of
a similar competing product at a similar price point; 9) the inability to
successfully integrate one or more acquisitions, joint ventures or new
subsidiaries with the Company's operations (including the inability to
successfully integrate businesses which may be diverse as to type, geographic
area, or customer base and the diversion of management's attention among several
acquired businesses) without substantial costs, delays, or other problems; 10)
if the Company experiences labor and/or employment problems such as the loss of
key personnel, inability to hire and/or retain competent personnel, etc.; and
11) if the Company experiences unanticipated problems and/or force majeure
events (including but not limited to accidents, fires, acts of God etc.), or is
adversely affected by problems of its suppliers, shippers, customers or others.
All written or oral forward-looking statements attributable to the Company are
expressly qualified in their entirety by such factors. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with the
Consolidated Financial Statements, including the notes thereto.
The Company develops, markets and sells software (under the brand name
of INVU) for the electronic management of many types of information and
documents such as forms, correspondence, literature, faxes, technical drawings
and electronic files. Management believes that the INVU software is simple,
intuitive to use, and cost effective, yet powerful.
The Company's objective is to establish itself as a leading supplier of
information and document management software in the world. In order to achieve
this, the Company is targeting its marketing efforts initially in the United
Kingdom and the United States on departmental users in organizations for INVU
PRO, retailers for INVU SOLO, and distributors and resellers for INVU PRO.
Throughout the fiscal year, the Company continued to develop its
software products. Its first product INVU SOLO was released to distributors in
December 1998 and sales to the SOHO (small office/home office) market began in
January 1999. All other INVU products were released to distributors in September
1999 and sales to end users are expected in October 1999, except INVU WEBFAST,
which management estimates will be released in early 2000.
Results of Operations
The following is a discussion of the results of operations for the year
ended January 31, 1999, compared with the period February 18, 1997 (date of
inception) through January 31, 1998, and changes in financial condition during
the year ended January 31, 1999.
INVU, Inc. (formerly Sunburst Acquisitions I, Inc.) engaged in no sig-
nificant operations prior to the Share Exchange Agreement with INVU PLC on
August 31, 1999.
Net sales for fiscal year 1999 were $8,267, which compares to $1,972
sales for fiscal 1998. The low level of sales reflects the development stage of
the business and relate to sales of hardware and initial sales of software to
distributors. The net loss in fiscal 1999 was ($694,809), which significantly
exceeds the net loss of fiscal 1998 of ($217,153). The fiscal 1999 net loss was
due to: increased production, distribution and administrative expenses of
$698,149, which reflected the Company's investment in product development and
administrative infrastructure, together with transaction costs associated with
the Share Exchange and the launch of the INVU SOLO product.
In fiscal 1999, the Company incurred net interest expense of $6,419
compared with net interest expense of $4,108 for fiscal 1998. This increase in
interest expense was due to increased bank loan borrowings.
The tax rates for the years 1999 and 1998 are zero due to a net loss in
each period.
9
<PAGE>
The total current assets of the Company were $157,478 at January 31,
1999, an increase of $70,820, compared to $86,658 at January 31, 1998. Working
capital was negative $272,080 as of January 31, 1999, compared with positive
$47,467 as of January 31, 1998. These changes are due to the addition of
short-term credit facilities in 1999 and an increase of current maturities of
long-term obligations, following the procurement of substantial additional loan
funding.
Total assets of the Company were $237,239 at January 31, 1999, an
increase of $78,018, compared to $159,221 at January 31, 1998. The increase is
mainly attributable to inventory of pre-purchased software licenses prior to the
launch of the INVU SOLO product.
The total current liabilities of the Company increased by $390,367 from
$39,191 at January 31, 1998 to $429,558 at January 31, 1999. Long term
liabilities were $422,193 at January 31, 1999 compared to $48,388 at January 31,
1998. The current and long term liabilities increases are attributable to debt
incurred in order to finance the development of the products and the
infrastructure of the business.
Total stockholders' equity decreased by $686,154 during the year ended
January 31, 1999 from positive $71,642 at January 31, 1998 to a deficit of
$614,512 at January 31, 1999 as a result of the net loss for the year. The
Company is evaluating various financing options, including issuing debt and
equity to finance future development and marketing of products during the
transitional period between development and operational stages.
Financing Management's Plan of Operation
As of January 31, 1999, the Company had agreed to borrow $656,000 at an
annual interest rate of 8% by way of a secured short-term loan. See Item 1.
"Business - The First Financing Transaction." Further medium-term cash loans
were also being sought from various financing sources. These funds are to
finance ongoing operations and working capital while the Company is seeking to
conduct a public offering of Common Stock of the Company ("I.P.O."). Pursuant to
the Securities Act, the I.P.O. will be made only by means of a prospectus. The
Company has plans to raise $5,000,000 as a private placement with the I.P.O. to
be made later in 2000. On August 23, 1999, the Company raised $1,000,000 in a
private placement. See Item 1. "Business - The Second Financing Transaction."
The First Financing Transaction was repaid with the proceeds of the Second
Financing Transaction. The Company has retained an investment banker in the
United Kingdom that has agreed to use its best efforts to raise the $5,000,000
in the private placement and to act as brokers and corporate advisors with
respect to the I.P.O. Management estimates that the proceeds from such a private
placement would fulfill the Company's capital requirements for a period of up to
twenty-four (24) months. There can, however, be no assurance that additional
debt or equity financing will be available, if and when needed, or that, if
available, such financing could be completed on commercially favorable terms.
Failure to obtain additional financing, if and when needed, could have a
material adverse affect on the Company's business, results of operations and
financial condition. Please refer to Note C of the Consolidated Financial
Statements in conjunction with this paragraph regarding the Company's ability to
continue as a going concern.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, many companies' computer systems and/or
software may need to be upgraded or replaced to comply with such "Year 2000"
requirements. Significant uncertainty exists in the software industry concerning
the potential effects associated with such compliance.
The Company has reviewed its own software products and believes that
there will be no adverse impact with the Year 2000 date change. All INVU
products are designed to record, store, and process calendar dates occurring
before and after January 1, 2000 with the same full year accuracy (i.e. four
numeric characters instead of two).
An impact analysis has been completed that has identified no major risk
of failure within the Company's in-house computer systems, which include the
following:
-- The accounting and management information systems
-- The document management systems
This risk to the Company's business relates not only to the Company's
computer systems, but also to some degree to those of the Company's suppliers
and customers. The Company has developed a policy to ensure that all key
customers, suppliers and strategic partners operate and provide Year 2000
compliant systems and software. The returns of information from third parties
relating to Year 2000 compliance should be complete by Fall 1999. Also,
10
<PAGE>
there is a risk that existing and potential customers may not purchase the
Company's products in the future if the computer systems of such existing or
potential customers are adversely impacted by the Year 2000 date change.
Based on the information to date, the Company anticipates that it will
be able to complete its Year 2000 compliance review and make necessary
modifications prior to the end of 1999. However, the issue is complex and no
business can guarantee that there will be no Year 2000 problems. Some
commentators have stated that a significant amount of litigation will arise out
of Year 2000 compliance issues, and the Company is aware of a growing number of
lawsuits against other software vendors. Because of the unprecedented nature of
such litigation, it is uncertain to what extent the Company may be affected by
it. In addition, management believes that future purchasing patterns of
customers and potential customers have been affected by Year 2000 issues, with
many companies expending significant resources to correct their software systems
for Year 2000 compliance. These expenditures have reduced funds available to
purchase software products such as those offer by the Company.
To date, the Company has not created a separate budget for
investigating and remedying issues related to Year 2000 compliance, whether
involving the Company's own software products or the software or systems used in
its internal operations. There can be no assurances that Company resources spent
on investigating and remedying Year 2000 compliance issues will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
11
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Filed herewith beginning on page F-1 are the following audited
financial statements of the Company:
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..............................................................F-1
CONSOLIDATED BALANCE SHEETS.....................................................................................F-2
CONSOLIDATED STATEMENTS OF OPERATIONS...........................................................................F-3
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDERS' EQUITY......................................................F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS...........................................................................F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS......................................................................F-6
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
INVU, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of INVU, Inc. (a
development stage enterprise) and Subsidiaries as of January 31, 1999 and 1998
and the related consolidated statements of operations, deficit in stockholders'
equity and cash flows for the year ended January 31, 1999 and for the period
February 18, 1997 (date of inception) to January 31, 1998. 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
in the United States of America. 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 consolidated financial position of INVU, Inc. and
Subsidiaries as of January 31, 1999 and 1998 and the consolidated results of
their operations and their consolidated cash flows for the year ended January
31, 1999 and for the period February 18, 1997 (date of inception) to January 31,
1998 in conformity with generally accepted accounting principles in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company (a development stage enterprise) has experienced losses, is not
generating cash from operations and has a deficit in stockholders' equity. These
circumstances raise substantial doubt about the Company's ability to continue as
a going concern. The Company's plans with respect to these matters, including
plans to continue funding its development expenses, are described in Note C. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
GRANT THORNTON
Northampton, England
June 18, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
January 31, January 31,
1999 1998
$ $
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents - 44,997
Accounts receivable:
Trade, net 615 307
VAT recoverable and other 11,331 30,653
Inventories 126,590 -
Prepaid expenses 18,942 10,701
------------------ ---------------
TOTAL CURRENT ASSETS 157,478 86,658
EQUIPMENT, FURNITURE AND FIXTURES
Computer equipment 26,217 21,048
Vehicles 65,046 34,706
Office furniture and fixtures 29,938 29,213
------------------ ---------------
121,201 84,967
Less accumulated depreciation 41,440 12,404
------------------ ---------------
79,761 72,563
237,239 159,221
================== ===============
LIABILITIES
CURRENT LIABILITIES
Short-term credit facility 66,146 -
Current maturities of long-term obligations 209,517 19,490
Accounts payable 74,773 9,615
Accrued liabilities 79,122 10,086
------------------ ---------------
TOTAL CURRENT LIABILITIES 429,558 39,191
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 422,193 48,388
DEFICIT IN STOCKHOLDERS' EQUITY
Preferred Stock, no par value
Authorized - 20,000,000; no shares issued and outstanding
Common stock, no par value
Authorized - 100,000,000; issued and outstanding - 30,206,896 shares 288,355 288,355
Accumulated other comprehensive income 9,095 440
Accumulated deficit during the development stage (911,962) (217,153)
------------------ ---------------
(614,512) 71,642
237,239 159,221
================== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------
Feb 18, 1997 Feb 18, 1997
(date of Feb 1, 1998 (date of
inception) to to inception) to
Jan 31, 1999 Jan 31, 1999 Jan 31, 1998
$ $ $
<S> <C> <C> <C>
Revenues 10,239 8,267 1,972
Expenses:
Production cost 108,179 65,188 42,991
Distribution costs 121,599 81,421 40,178
Research and development costs 176,906 128,959 47,947
Administrative costs 507,353 422,581 84,772
----------------- ---------------- ----------------
Total operating expenses 914,037 698,149 215,888
Operating loss (903,798) (689,882) (213,916)
Other income (expense)
Interest, net (10,527) (6,419) (4,108)
Other 2,363 1,492 871
----------------- ---------------- ----------------
Total other expense (8,164) (4,927) (3,237)
----------------- ---------------- ----------------
Loss before income taxes (911,962) (694,809) (217,153)
----------------- ---------------- ----------------
Income taxes - - -
----------------- ---------------- ----------------
NET LOSS (911,962) (694,809) (217,153)
================= ================ ================
Weighted average shares outstanding:
Basic and Diluted 30,206,896 30,206,896 30,206,896
================= ================ ================
Net loss per common share:
Basic and Diluted (0.03) (0.02) (0.01)
================= ================ ================
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDERS' EQUITY
For the periods ended
-----------------------------------------------------------------------------------------------
Common Stock Preferred Stock Accumulated
Accum- other Compre-
ulated comprehen- hensive
Shares Amount Shares Amount deficit sive income Total Income
$ $ $ $ $ $
------- ------ ------ ------ ------- ----------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares issued:
February 1997, 176,000 176,000 288,640 - - - - 288,640
shares in exchange for
$288,640
Reclassification of $1.64
common stock (176,000) (288,640) - - - - (288,640)
Issuance of no par common
stock in connection with
reverse acquisition 28,696,552 288,355 - - - - 288,355
1,510,344 shares of common
stock issued at estimated
value 1,510,344 750,000 - - - - 750,000
Reverse acquisition
transaction costs (750,000) (750,000)
Comprehensive income:
Foreign currency
translation adjustment - - - - - 440 440 440
Net loss during the period - - - - (217,153) - (217,153) (217,153)
---------
Total comprehensive income (216,713)
------------------------- -------------------------------------- =========
Balance at January 31, 1998 30,206,896 288,355 (217,153) 440 71,642
Comprehensive income:
Foreign currency
translation adjustment - - - - - 8,655 8,655 8,655
Net loss during the year - - - - (694,809) - (694,809) (694,809)
---------
Total comprehensive income (686,154)
------------------------- -------------------------------------- =========
Balance at January 31, 1999 30,206,896 288,355 (911,962) 9,095 (614,512)
========================= =====================================
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended
---------------------
Feb 18, 1997 Feb 18, 1997
(date of (date of
inception) to inception) to
Jan 31, 1999 Jan 31, 1999 Jan 31, 1998
$ $ $
----------------------------------------------------------
<S> <C> <C> <C>
Net cash flows used in operating activities
Net loss during the period (911,962) (694,809) (217,153)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 41,819 29,390 12,429
Accounts receivable (11,776) 19,247 (31,023)
Inventories (128,134) (128,134) -
Prepaid expenses (19,065) (8,342) (10,723)
Accounts payable 75,724 65,953 9,771
Accrued liabilities 79,985 69,878 10,107
------------------- ----------------- -------------
Net cash used in operating activities (873,409) (646,817) (226,592)
Net cash flows used in investing activities -
acquisitions of property and equipment (87,110) (36,676) (50,434)
Cash flows used in investing activities:
Short-term credit facility 66,953 66,953 -
Borrowings on notes payable - net 621,257 579,619 41,638
Principal payments on capital lease (17,377) (8,911) (8,466)
Proceeds from issuance of stock 288,640 - 288,640
------------------- ----------------- -------------
Net cash provided by financing activities 959,473 637,661 321,812
Effect of exchange rate changes on cash 1,046 835 211
------------------- ----------------- -------------
Net increase/(decrease) in cash - (44,997) 44,997
Cash at beginning of period - 44,997 -
------------------- ----------------- -------------
Cash at end of period - - 44,997
=================== ================= =============
Supplemental disclosure of cash
flow information:
Cash paid during the period for
Interest 10,200 6,100 4,100
Income taxes - - -
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of significant accounting policies consistently applied in the
preparation of the accompanying consolidated financial statements follows.
NOTE A - COMPANY DESCRIPTION
INVU, Inc. (the Company) is a holding company which operates one subsidiary INVU
Plc, which is a holding company for two subsidiaries of its own, INVU Services
(Services) and INVU International Holdings Limited (Holdings). The Company was
incorporated under the laws of the State of Colorado, United States of America,
in February 1997. INVU Plc, Services and Holdings are companies incorporated
under English Law. The Company operates in one industry segment which includes
developing and selling software for electronic management of many types of
information and documents such as forms, correspondence, literature, faxes,
technical drawings and electronic files. Services is the sales, marketing and
trading company and Holdings holds the intellectual property rights to the INVU
software.
On August 31, 1998, Sunburst Acquisitions I, Inc. (a public development stage
enterprise) acquired all of the outstanding shares of INVU Plc in exchange for
restricted shares of common stock of Sunburst Acquisitions I, Inc. (the
Exchange) pursuant to a Share Exchange Agreement between Sunburst Acquisitions
I, Inc. and the principal shareholder of INVU Plc. Sunburst Acquisitions I, Inc.
exchanged 26,506,552 shares of common stock for all of INVU Plc's issued and
outstanding shares of common stock. For accounting purposes, the Exchange was
treated as a recapitalization of INVU Plc where INVU Plc is the accounting
acquirer. All periods have been restated to give effect to the recapitalization.
The historic statements from inception up to the Exchange are those of INVU Plc.
Proforma information is not presented as this combination is not considered to
be a business combination. In connection with the Exchange, the directors and
officers of the Company became the directors and officer of Sunburst
Acquisitions I, Inc. Also, Sunburst Acquisitions I, Inc. changed its name to
INVU, Inc. In connection with the Exchange, the Company issued 1,510,344 shares
of Common Stock of the Company to a consultant pursuant to a consulting
agreement for introducing INVU Plc and Sunburst Acquisitions I, Inc. The shares
were estimated to have a value of $750,000 and have been treated as a
transaction cost in connection with the Exchange. Immediately after the
Exchange, INVU Plc's former shareholders owned approximately 88% of the
outstanding common stock of Sunburst Acquisitions I, Inc. As of January 15, 1999
the Company's Board voted to change the Company's fiscal year end to January 31,
1999.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 DEVELOPMENT STAGE COMPANY
The Company is in the development stage as defined by Statement of
Financial Accounting Standard No. 7, "Accounting and Reporting by
Development Stage Enterprises" (SFAS No. 7).
2 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries INVU Plc, Services and Holdings. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
3 REVENUE RECOGNITION
The Company recognizes revenue in accordance with the provisions of
Statement of Position 97-2 "Software Revenue Recognition" (SOP 97-2) issued
by the American Institution of Certified Public Accountants ("ACIPA"). Fees
for services and maintenance are generally charged to customers separately
from the license of software. Revenues from license fees are recognized
upon product shipment when fees are fixed, collectability is probable and
the Company has no significant obligations remaining under the licensing
agreement. In instances where a significant vendor obligation exists,
revenue recognition is delayed until such obligation has been satisfied.
F-6
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For those licence agreements which provide the customers the right to
multiple copies in exchange for guaranteed amounts (including non
refundable advance royalties), license revenues are recognized at
delivery of the product master or the first copy. Per copy royalties on
sales which exceed the guarantee are recognized as earned.
Services revenue consists of training and consulting for which revenue
is recognized when the services are performed. Maintenance revenue
consists of ongoing support and maintenance and product updates for
which revenue is deferred and recognized ratably over the term of the
contract, normally twelve months.
In December 1998, the AICPA issued Statement of Position 98-9
"Modification of SOP 97-2, Software Revenue Recognition, With Respect
to Certain Transactions". SOP 98-9 amends SOP 97-2 to require
recognition of revenue using the residual method for certain
multiple-element arrangement transactions entered into in fiscal years
beginning after March 15, 1999.
The Company is currently assessing the effects of complying with SOP
98-9, and has not yet made a determination of the impact, if any, on
its financial position or results of operations.
4 SOFTWARE DEVELOPMENT COSTS
Software development costs are included in research and development and
are expensed as incurred. Statement of Financial Accounting Standard
No. 86 "Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed" (SFAS No. 86) requires the
capitalization of certain software development costs once technological
feasibility is established, which the Company defines as establishment
of a working model. The working model criteria is used because the
Company's process of creating software (including enhancements) does
not include a detailed program design. The capitalized cost is then
amortized on a straight-line basis over the estimated product life, or
on the ratio of current revenues to total projected product revenues,
whichever is greater. To date, the period between achieving
technological feasibility and the general availability of such software
has been short and software development costs qualifying for
capitalization have been insignificant. Accordingly, the Company has
not capitalized any software development costs.
5 EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures are stated at cost. Depreciation is
provided in amounts sufficient to relate the cost of depreciable assets
to operations over their estimated services lives. The straight line
method of depreciation is followed for financial reporting purposes.
The useful lives are as follows:
YEARS
-----
Computer equipment 4
Vehicles 4
Office furniture and fixtures 4
Expenditures for repairs and maintenance are charged to expense as
incurred and additions and improvements that significantly extend the
lives of assets are capitalized. Upon sale or retirement of depreciable
property, the cost and accumulated depreciation are removed from the
related accounts and any gain or loss is reflected in the results of
operations.
6 CASH
For the purpose of the consolidated statements of cash flows, the
Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
F-7
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7 INVENTORIES
Inventories consist of licensed goods and goods for resale and are
stated at the lower of FIFO (first-in, first-out) cost or market.
8 ADVERTISING COSTS
Advertising costs of $46,336, $63,429 and $17,093 for the year ended
January 31, 1999 and for the periods February 18, 1997 (date of
inception) to January 31, 1999 and 1998, respectively, have been
charged to expense as incurred.
9 INCOME TAXES
The Company utilizes the liability method of accounting for income
taxes. Under the liability method, deferred tax assets and liabilities
are determined based on differences between financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected
to reverse. An allowance against deferred tax assets is recorded when
it is more likely than not that such tax benefits will not be realized.
10 USE OF ESTIMATES IN FINANCIAL STATEMENTS
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
11 NET LOSS PER SHARE
The Company has adopted Statement of Financial Accounting Standard No.
128, "Earnings Per Share" (SFAS No. 128).
The Company's basic net loss per share amount has been computed by
dividing net loss by the weighted average number of outstanding common
shares. For the year ended January 31, 1999 and for the period of
February 18, 1997 (date of inception) to January 31, 1998 respectively,
no common stock equivalents were included in the computation of diluted
net earnings per share.
12 FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, trade receivables,
borrowings, trade payables and accrued liabilities. The carrying amount
of these instruments approximate the fair values because of their short
maturity. The fair value of non-current financial assets and
liabilities are estimated to approximate carrying value based on
considerations of risk, current interest rates and remaining
maturities.
13 FOREIGN CURRENCY TRANSLATION
The functional currency of the Company and its Subsidiaries is the
British pound sterling. The consolidated financial statements are
presented in US dollars using the principles set out in Statement of
Financial Accounting Standard No. 52 "Foreign Currency Translation"
(SFAS No. 52). Assets and liabilities are translated at the rate of
exchange in effect at the close of the period. Revenues and expenses
are translated at the weighted average of exchange rates in effect
during the period. The effects of exchange rate fluctuations on
translating foreign currency assets and liabilities into US dollars are
included as part of the accumulated other comprehensive income
component of stockholders' equity.
F-8
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14 NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement of Financial Accounting
Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133). This statement established accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. The Company is currently assessing the
effects of adopting SFAS No.133, and has not yet made a determination
of the impact on its financial position or results of operations. SFAS
No. 133 will be effective for the Company's first quarter of fiscal
year 2001.
NOTE C - GOING CONCERN
The Company's liabilities exceed its assets, and the Company has incurred losses
from operations primarily as a result of treating virtually all development
expenses since inception as current operating expenses. The Company is not
generating cash from operations. Operations to date have been funded principally
by equity capital and borrowings. The Company plans to continue to fund its
development expenses through additional capital raising activities, including
one or more offerings of equity and/or debt through private placements and/or
public offerings. The Company's ability to continue to develop its
infrastructure depends on its ability to raise other additional capital. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
The Company is still building its operational infrastructure. Additional capital
raised by the Company, if any, will be used for this purpose and to fund its
planned launch of operations within the United Kingdom and the United States.
NOTE D - INVENTORIES
Inventories consist of the following:
January 31, 1999 January 31, 1998
$ $
Licensed goods 118,080 -
Goods for resale 8,510 -
---------------- -----------------
126,590 -
================ =================
Licensed goods represent software licenses purchased by the Company which allow
the Company to manufacture and distribute a separate company's proprietary
software products in conjunction with and as an embedded component of the
Company's proprietary software. Goods for resale represent the finished
consolidated product to be sold to the end user.
NOTE E - SHORT-TERM CREDIT FACILITY
The Company has a (pound)40,000, 14.2% short-term credit facility with an
English bank. The credit facility is collateralized by all assets of the Company
and a limited personal guarantee by a director of the Company. The amount drawn
against the facility was $66,146 ((pound)40,000) at January 31, 1999. The amount
drawn is payable on demand at the bank's discretion.
F-9
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE F - LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
Long-term obligations at January 31, 1999 and January 31, 1998, consist of the
following:
<S> <C> <C>
January 31, January 31,
1999 1998
$ $
Non-interest bearing, unsecured loan from an individual, no 391,140 --
stated maturity date
8% note payable to corporate investors and individuals, payable in
six monthly installments commencing August
1999; installments determined by balance due at August 1999 190,325 --
4% above Libor rate (Libor rate was 5.75% and 7.25% at
January 31, 1999 and 1998, respectively) notes payable to an
English bank, monthly payment aggregating to(pound)500,
maturing in March 2002, collateralized by all assets of the
Company and a limited personal guarantee by a director 32,235 41,638
Capital lease for a vehicle, bearing interest at 16.9%
maturing in 2001 18,010 26,240
------- ------
631,710 67,878
Less current maturities 209,517 19,490
------- ------
422,193 48,388
======= ======
</TABLE>
Scheduled maturities of long-term obligation are as follows:
YEAR ENDING JANUARY 31, $
2000 209,517
2001 19,573
2002 9,840
2003 1,640
2004 -
Thereafter 391,140
------------
631,710
============
F-10
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company leases a vehicle under a noncancellable capitalized lease.
JANUARY 31, 1999 JANUARY 31, 1998
$ $
Vehicle 34,706 34,706
Less accumulated depreciation 6,941 361
--------- -----------
27,765 34,345
========= ===========
The following is a schedule by years of future minimum lease payments under the
capital lease together with the present value of the net minimum lease payments
as of January 31, 1999.
YEAR ENDING JANUARY 31, $
2000 10,304
2001 10,822
Thereafter -
----------
Total minimum lease payments 21,126
Less amount representing interest 3,116
----------
Present value of net minimum lease payments 18,010
==========
The scheduled net minimum lease payments to maturity are included in the
long-term obligation table above.
NOTE G - LEASE COMMITMENTS
The Company leases office space which expires in 2002. Rent expense totalled
approximately $17,200 and $13,000 at January 31, 1999 and for the period
February 18, 1997 (date of inception) January 31, 1998, respectively.
The future minimum rental commitments as of January 31, 1999 are as follows:
YEAR ENDING JANUARY 31, $
2000 28,185
2001 28,185
2002 28,185
Thereafter --
------
84,555
======
NOTE H - INCOME TAXES
The Company has adopted the provisions of Statement of Financial Accounting
Standards No 109 "Accounting for Income Taxes." Accordingly, a deferred tax
liability or deferred tax asset (benefit) is computed by applying the current
statutory tax rates to net taxable or deductible temporary differences between
pre-tax financial and taxable income.
Deferred tax benefits are recorded only to the extent that the amount of net
deductible temporary differences or carry forward attributes may be utilized
against current period earnings, offset against taxable temporary differences
reversing in future periods, or utilized to the extent of management's estimate
of future taxable income. Deferred tax liabilities are provided for on
differences between amounts reported for financial and tax basis accounting.
At January 31, 1999, due to the Company's cumulative losses since inception, a
loss carry forward of approximately $795,000, may be utilized in the future for
an indefinite period.
F-11
<PAGE>
INVU, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net deferred tax assets resulting from the loss carry forward have been offset
by a valuation allowance of equal amounts at January 31, 1999 and January 31,
1998 due to the uncertainty of realizing the net deferred tax asset through
future operations. The valuation allowances were approximately $159,000 and
$40,200 at January 31, 1999 and January 31, 1998 respectively. The valuation
allowance increased approximately $118,000 and $40,200 at January 31, 1999 and
1998 respectively. The effective tax differs from the statutory rate as a result
of the valuation allowance. Gross deferred tax liabilities were immaterial for
all periods.
F-12
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Board of Directors currently consists of five (5) persons, David
Morgan, Paul O'Sullivan, John Agostini, Daniel Goldman and Tom Maxfield. The
following table sets forth information about all Directors and executive
officers of the Company and all persons nominated or chosen to become such:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED
NAME AND BUSINESS ADDRESS AGE OFFICE DIRECTOR
------------------------- --- ------ --------
<S> <C> <C> <C>
David Morgan 38 President, Chief Executive Officer, and 1998
The Beren Chairman of the Board of Directors
Blisworth Hill Farm
Stoke Road
Blisworth Northamptonshire NN7
3DB
Paul O'Sullivan 30 Director and 1998
The Beren Chief Technical Officer
Blisworth Hill Farm
Stoke Road
Blisworth Northamptonshire NN7
3DB
John Agostini 40 Director, Chief Finance Officer and 1999
The Beren Secretary
Blisworth Hill Farm
Stoke Road
Blisworth Northamptonshire NN7
3DB
Daniel Goldman 29 Non-Executive Director 1999
13 Fernville Road
Newcastle upon Tyne NE3 4HT
Thomas Maxfield 50 Non-Executive Director 1999
Marsden Hall
Lizard Lane
Marsden
Tyne & Wear NE34 7AD
</TABLE>
David Morgan (Chief Executive Officer) - Mr. Morgan is 38 years old and
graduated in 1982 from the University of Warwick with a Bachelor of Laws
degree, with honors. From 1982 to 1986, he was assistant to the Director of the
Industrial & Marine Division of Rolls Royce plc. From 1986 to 1991, he was
Group Commercial Manager of Blackwood Hodge plc, a worldwide distributor of
construction and earthmoving equipment. From 1991 to 1992, he was managing
director of Hunsbury Computer Services Ltd, a systems integrator and subsidiary
of Blackwood Hodge. From 1992 to 1995, he was Managing Director of the UK
subsidiary of Network Imaging Inc., an international software and systems
house. From 1995 to 1996, he was Managing Director of Orchid Ltd, a UK computer
software reseller. From 1997 to the present, he has been a Director of and the
Chief Executive Officer and of INVU Plc. Since the Share Exchange on August 31,
1998, he has been Chairman and Chief Executive Officer of the Company.
Paul O'Sullivan (Chief Technical Officer) - Mr. O'Sullivan is 30 years
old and graduated from the University of Birmingham with a Bsc (Honors) degree
in Computer Sciences in 1992. From September 1992 to January 1994
13
<PAGE>
he was a software engineer with British Telecom, and from January 1994 to
October 1995 was a senior systems analyst with Abbey National plc, a financial
institution. From October 1995 to May 1996 he was a senior system developer
with Orchid Limited, a UK computer software reseller. Between May 1996 and
November 1997 Mr. O'Sullivan was a consultant to British Telecom, Royal Bank of
Scotland and Pearl Assurance before joining INVU Plc in June 1998. Since the
Share Exchange on August 31, 1998, he has served as a Director and Chief
Technical Officer for the Company.
John Agostini (Chief Finance Officer) - Mr. Agostini is 40 years old,
and qualified as a chartered accountant with Grant Thornton in 1984. Since 1986
he has worked for various companies within the printing, construction, and
electronics industries, typically as a Finance / Commercial Director. From
December 1993 to October 1996, he held the position of Director of Finance and
Operations of Bizeq Limited, a security alarms distributor. From November 1996
to April 1997, Mr. Agostini served as European Financial Controller for Sunbeam
Europe Limited, a domestic appliance distributor. From April 1997 to February
1999, he served as Finance and Operations Director of the performance textiles
division of Porvair Plc. Mr. Agostini joined INVU in February 1999 as Chief
Finance Officer, Commercial Director and Secretary.
Daniel Goldman (Non Executive Director) - Mr. Goldman is 29 years old,
and works with emerging technology companies raising private equity finance and
also giving corporate finance advice. He has worked with a number of companies
in the fields of software and the internet, smart card technology, medical
devices and other areas of patented technology as a consultant. From January
1997 until June 1997, Mr. Goldman worked with Elderstreet Corporate Finance
Ltd., a venture capital fund specializing in the high-tech sector. From July
1997 through April 1998, Mr. Goldman worked with Alberdale & Co., a venture
capital fund specializing in the high-tech and healthcare sectors. From April
1998 until June 1999, he served as a Corporate Finance Executive with Shore
Capital Group Plc, an investment bank specializing in corporate finance. Mr.
Goldman is currently a non-executive director for a number of technology
companies. These include Boomerang Software Inc., an internet software
publishing company based in Boston. Mr. Goldman joined the Board of INVU Inc.
on May 13, 1999.
Tom Maxfield (Non Executive Director) - Mr. Maxfield is 50 years old.
He has a B.A. honors degree in modern languages. Between 1984 and 1997 he was a
main board director of The Sage Group plc, a supplier of PC accounting
software. His responsibilities included the development of a national reseller
network, creating and maintaining telesales and field sales operations, and the
creation of the company's retail sales channel. From 1997 to the present, Mr.
Maxfield has served as a director of Seaham Hall Limited, a property
development company. Mr Maxfield joined the Board of INVU Inc. on May 13, 1999.
The Company is not aware of any "family relationships" (as defined in
Item 401(c) of Regulation S-B promulgated by the Commission) among directors,
executive officers, or persons nominated or chosen by the Company to become
directors or executive officers.
Except as set forth above, the Company is not aware of any event (as
listed in Item 401(d) of Regulation S-B promulgated by the Commission) that
occurred during the past five years that are material to an evaluation of the
ability or integrity of any director, person nominated to become a director,
executive officer, promoter or control person of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities (the "10% Stockholders") to file reports of
ownership and changes of ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and 10% Stockholders of the Company are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
forms so filed.
The Company believes that, during the last fiscal year, the following
forms required to be filed under Section 16(a) were not filed: (i) Jay Lutsky,
an officer, director and 10% stockholder of the Company prior to the Share
Exchange, failed to file one Form 4 upon the conversion of shares of preferred
stock of the Company to shares of the Common Stock, and (ii) Michael R. Quinn,
an officer, director and 10% stockholder of the Company prior to the Share
Exchange, failed to file one Form 4 upon the conversion of shares of preferred
stock of the Company to shares of the Common Stock.
14
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following tables set forth the compensation paid by the Company to
its Chief Executive Officer during the fiscal year ended January 31, 1999. No
other executive officer earned in excess of $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
YEAR STOCK
NAME/PRINCIPAL ENDING OPTIONS OTHER ANNUAL
POSITION JANUARY 31 SALARY BONUS GRANTED COMPENSATION
-------- ---------- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
DAVID MORGAN/CEO 1999 $101,082 $ 0 0 $13,169
</TABLE>
No stock options were granted to any employee during the Company's last
fiscal year.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the close of business on
September 30, 1999, information as to the beneficial ownership of shares of the
Company Common Stock for all directors, each of the named executive officers
(as defined in Item 402(a)(2) of Regulation S-B promulgated by the Commission),
for all directors and executive officers as a group, and any person or "group"
(as that term is defined in Item 403 of Regulation S-B promulgated by the
Commission) who or which is known to the Company to be the beneficial owner of
more than 5% of the outstanding shares of Company Common Stock. In addition,
except as set forth below, the Company does not know of any person or group who
or which owns beneficially more than 5% of its outstanding shares of Company
Common Stock as of the close of business on September 30, 1999.
15
<PAGE>
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
-----------------------------------------
NUMBER OF PERCENTAGE (1)(2)
--------- -------------------
NAME OF BENEFICIAL OWNER SHARES
------------------------ ------
<S> <C> <C>
Montague Limited (3)(7) 24,095,280 79.77%
David Morgan (4)(5) * *
Martyn Doherty (4) * *
Paul O'Sullivan (6) * *
Peter Fraser (4) * *
John Agostini 0 0%
Daniel Goldman(7) 654,359 2.13%
Thomas Maxfield(8) 659,359 2.14%
Roy G. Williams (9) 1,725,920 5.7%
Officers and Directors as a Group (7 persons) 1,313,718 4.19%
<FN>
(1) Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial
ownership of any securities as to which such person, directly or
indirectly, through any contract, arrangement, undertaking, relationship or
otherwise has or shares voting power and/or investment power and as to
which such person has the right to acquire such voting and/or investment
power within 60 days. Percentage of beneficial ownership as to any person
as of a particular date is calculated by dividing the number of shares
beneficially owned by such person by the sum of the number of shares
outstanding as of such date and the number of shares as to which such
person has the right to acquire voting and/or investment power with in 60
days.
(2) Except as provided in footnote (1) above, based on 30,206,896 shares of
Common Stock outstanding as of September 30, 1999.
(3) Montague Limited ("Montague") is a company organized under Isle of Man law
with a business address of 34 Athol Street, Douglas, Isle of Man IM1 1RD
United Kingdom. The directors of Montague are Eammon Harkin and Barry John
Williams. The sole issued and outstanding share capital of Montague is
owned of record by an Isle of Man corporation related to the corporate
trustee of a discretionary trust (the "Trust"), the res of which includes
beneficial ownership of the capital stock of Montague and, therefore,
indirect beneficial ownership of 24,045,280 shares of Company Common Stock
that are held of record by Montague. Includes 232,000 shares of Common
Stock as to which Montague is the record owner, but Montague has agreed to
transfer such shares to certain consultants to the Company and to certain
directors of the Company for services rendered to the Company.
(4) Such person or persons are within a class of beneficiaries of the Trust,
with the exceptions of John Agostini, Daniel Goldman and Tom Maxfield. The
percentage of each such person's beneficial interest in the assets of the
Trust has not been determined at this time.
(5) David Morgan is President and Chief Executive Officer of the Company and is
a member of the Company's Board of Directors.
(6) Paul O'Sullivan is Vice President -- Chief Technical Officer of the Company
and is a member of the Company's Board of Directors.
(7) Includes 5,000 shares of Common Stock that Montague has agreed to transfer
to Mr. Goldman in connection with Mr. Goldman becoming a director of the
Company. Also includes shares of Common Stock that Vertical, which is owned
by Mr. Goldman, has the right to acquire upon conversion of Loan Stock
Instrument A and Loan Stock Instrument B (assuming that all accrued
interest has been paid). See "Item 1. Description of Business - The Second
Financing Transaction."
16
<PAGE>
(8) Includes 10,000 shares of Common Stock that Montague has agreed to transfer
to Mr. Maxfield in connection with Mr. Maxfield becoming a director of the
Company. Also includes shares of Common Stock that Mr. Maxfield, has the
right to acquire upon conversion of Loan Stock Instrument A and Loan Stock
Instrument B (assuming that all accrued interest has been paid). See "Item
1. Description of Business - The Second Financing Transaction."
(9) Pursuant to a Schedule 13G filed by Mr. Williams, Mr. Williams has the
following beneficial ownership with respect to shares of Common Stock. Mr.
Williams has sole voting and dispositive power over 659,780 shares of
Common Stock including 261,875 shares of Common Stock owned by Mustardseed
and has sole voting and power over such shares. Zalcany owns 1,066,140
shares of Common Stock. Zalcany is owned 50% by Mr. Williams and 50% by
Richard Harris. Mr. Williams and Mr. Harris share voting and dispositive
power with respect to such shares.
</FN>
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 2, 1999, Zalcany, a company affiliated with Roy G. Williams, a
principal stockholder of the Company, and other related parties made a loan to
the Company to fund the Company's current operations. Such loan was made in the
aggregate principal amount of approximately $656,000 and payment is due in six
installments, with the final installment due on August 2, 2000. The loan had an
annual interest rate of 8%. See "Item 1. Business - The First Financing
Transaction." As of August 23, 1999, Daniel Goldman, a director of the Company
and holder of all of the outstanding share capital of Vertical, Goldman, the
father of Daniel Goldman, and Thomas Maxfield, a director of the Company, made
a loan in the principal amount of $1,000,000 to the Company. See "Item 1.
Business - The Second Financing Transaction. The First Financing Transaction
was repaid with the proceeds of the Second Financing Transaction.
17
<PAGE>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit
------- ----------------------
2.1 Share Exchange Agreement dated as of May 19, 1998 by and between the
Company and Montague Limited, as amended by that certain First
Amendment to Share Exchange Agreement, dated as of July 23, 1998
(incorporated by reference from the Company's Current Report on Form
8-K dated May 19, 1998 and the Company's Amendment to Current Report on
Form 8-K/A dated July 23, 1998).
3.1 Articles of Incorporation of the Company filed on February 25, 1997
with the Secretary of State of the State of Colorado (incorporated by
reference to the Company's Registration Statement on Form 10-SB/A filed
August 29, 1997).
3.2* Amendment to the Articles of Incorporation of the Company filed on
February 22, 1999, with the Secretary of State of the State of Colorado
(Exhibit 3.2).
3.3 Bylaws of the Company (incorporated by reference to the Company's
Registration Statement on Form 10- SB/A filed August 29, 1997).
10.1 Agreement regarding Consulting Services dated as of May 15, 1998, by
and between the Company and Robert Jeffcock (incorporated by reference
from the Company's Current Report on Form 10-KSB for the fiscal year
ended April 30, 1998).
10.2* Consulting Agreement, dated as of December 15, 1998, by and between the
Company and Robert Jeffcock (Exhibit 10.2).
10.3* Limited Manufacturing Agreement, dated March 25, 1998, by and between
INVU Services Limited and Centura Software Corporation (Exhibit 10.3).
10.4*+ Reseller Agreement, dated March 26, 1998, by and between INVU Services
Limited and Computer Associates Plc and Memorandum Amendment dated July
17, 1998 (Exhibit 10.4).
10.5* Electronic Software Distribution Agreement, dated as of November 11,
1998, by and between INVU Services Limited and Digital River, Inc.
(Exhibit 10.5)
10.6* Distribution Contract dated as of October 27, 1998, by and between INVU
Services Limited and KOCH Media Limited (Exhibit 10.6)
10.7* Gold Standard Reseller Agreement, dated as of March 18, 1999, by and
between INVU Services Limited and Elcom Technical Services (Exhibit
10.7)
10.8* Distributor Agreement, dated May 11, 1999, by and between INVU Services
Limited and Millenium Three Solutions Ltd. (Exhibit 10.8).
10.9*+ Gold Standard Reseller Agreement, dated June 16, 1999, by and between
INVU Services Limited and Computer Associates International, Inc.
(Exhibit 10.9).
10.10* Distributor Agreement, dated July 1, 1999, by and between INVU Services
Limited and CHS UK Holdings Limited Incorporated (Exhibit 10.10).
10.11* Form of Warrant Agreement by and between the Company and Robert
Jeffcock (Exhibit 10.11).
10.12* Investment Agreement, dated August 23, 1999, among the Company, David
Morgan, John Agostini, Paul O'Sullivan, Alan David Goldman, and
Vertical Investments Limited (Exhibit 10.12).
18
<PAGE>
10.13* Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited (Exhibit
10.13).
10.14* Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited (Exhibit
10.14).
10.15* Supplemental Agreement, dated as of August 23, 1999, among the Company,
Vertical Investments Limited, Alan David Goldman, David Morgan, John
Agostini, Paul O'Sullivan, INVU Services Limited and Thomas Maxfield
(Exhibit 10.15).
21* Subsidiaries of the Company.
27* Financial Data Schedule.
*Filed herewith
+Confidential materials deleted and filed separately with the Securities and
Exchange Commission.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated May 19, 1998, on June
8, 1998 in connection with the execution of the Share Exchange Agreement and an
Amendment to Current Report on Form 8-K/A, dated July 23, 1998, on August 6,
1998 in connection with the execution of an amendment to the Share Exchange
Agreement. On September 15, 1998, the Company filed a Current Report on Form
8-K, dated August 31, 1998, in connection with the consummation of the Share
Exchange.
The Company filed Current Reports on Form 8-K, dated February 11, 1999, on
February 18, 1999 and March 12, 1999, describing changes to the Company's
certifying accountants and the resignation of the Company's certifying
accountants.
The Company filed a Current Report on Form 8-K, dated January 15, 1999, on
September 16, 1999 in connection with a change in the Company's fiscal year end
to January 31, 1999.
19
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this annual report on Form 10-KSB to be
signed on its behalf by the undersigned thereto duly authorized.
INVU, Inc.
(Registrant)
Date: October 15, 1999 By: /s/ David Morgan
---------------------------
David Morgan, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
annual report on Form 10-KSB has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE OFFICE DATE
--------- ------ ----
<S> <C> <C>
/s/ David Morgan
- --------------------------------------- President, Chief Executive Officer October 15, 1999
David Morgan and Chairman of the Board of
Directors (Principal Executive
Officer)
/s/ Paul O'Sullivan
- --------------------------------------- Director and Chief Technical October 15, 1999
Paul O'Sullivan Officer
/s/ Daniel Goldman
- --------------------------------------- Director October 15, 1999
Daniel Goldman
/s/ John Agostini
- --------------------------------------- Director and Chief Finance Officer October 15, 1999
John Agostini (Principal Financial Officer and
Chief Accounting Officer)
/s/ Tom Maxfield
- --------------------------------------- Director October 15, 1999
Tom Maxfield
</TABLE>
20
<PAGE>
INDEX TO EXHIBITS
(a) Exhibits
Exhibit
Number Description of Exhibit
- -------- ----------------------
2.1 Share Exchange Agreement dated as of May 19, 1998 by and between the
Company and Montague Limited, as amended by that certain First
Amendment to Share Exchange Agreement, dated as of July 23, 1998
(incorporated by reference from the Company's Current Report on Form
8-K dated May 19, 1998 and the Company's Amendment to Current Report on
Form 8-K/A dated July 23, 1998).
3.1 Articles of Incorporation of the Company filed on February 25, 1997
with the Secretary of State of the State of Colorado (incorporated by
reference to the Company's Registration Statement on Form 10-SB/A filed
August 29, 1997).
3.2* Amendment to the Articles of Incorporation of the Company filed on
February 22, 1999, with the Secretary of State of the State of Colorado
(Exhibit 3.2).
3.3 Bylaws of the Company (incorporated by reference to the Company's
Registration Statement on Form 10- SB/A filed August 29, 1997).
10.1 Agreement regarding Consulting Services dated as of May 15, 1998, by
and between the Company and Robert Jeffcock (incorporated by reference
from the Company's Current Report on Form 10-KSB for the fiscal year
ended April 30, 1998).
10.2* Consulting Agreement, dated as of December 15, 1998, by and between the
Company and Robert Jeffcock (Exhibit 10.2).
10.3* Limited Manufacturing Agreement, dated March 25, 1998, by and between
INVU Services Limited and Centura Software Corporation (Exhibit 10.3).
10.4*+ Reseller Agreement, dated March 26, 1998, by and between INVU Services
Limited and Computer Associates Plc and Memorandum Amendment dated July
17, 1998 (Exhibit 10.4).
10.5* Electronic Software Distribution Agreement, dated as of November 11,
1998, by and between INVU Services Limited and Digital River, Inc.
(Exhibit 10.5)
10.6* Distribution Contract dated as of October 27, 1998, by and between INVU
Services Limited and KOCH Media Limited (Exhibit 10.6)
10.7* Gold Standard Reseller Agreement, dated as of March 18, 1999, by and
between INVU Services Limited and Elcom Technical Services (Exhibit
10.7)
10.8* Distributor Agreement, dated May 11, 1999, by and between INVU Services
Limited and Millenium Three Solutions Ltd. (Exhibit 10.8).
10.9*+ Gold Standard Reseller Agreement, dated June 16, 1999, by and between
INVU Services Limited and Computer Associates International, Inc.
(Exhibit 10.9).
10.10* Distributor Agreement, dated July 1, 1999, by and between INVU Services
Limited and CHS UK Holdings Limited Incorporated (Exhibit 10.10).
10.11* Form of Warrant Agreement dated by and between the Company and Robert
Jeffcock (Exhibit 10.11).
10.12* Investment Agreement, dated August 23, 1999, among the Company, David
Morgan, John Agostini, Paul O'Sullivan, Alan David Goldman, and
Vertical Investments Limited (Exhibit 10.12).
10.13* Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited (Exhibit
10.13).
Index - 1
<PAGE>
10.14* Loan Stock Instrument, dated as of August 23, 1999, by the Company in
favor of Alan David Goldman and Vertical Investments Limited (Exhibit
10.14).
10.15* Supplemental Agreement, dated as of August 23, 1999, among the Company,
Vertical Investments Limited, Alan David Goldman, David Morgan, John
Agostini, Paul O'Sullivan, INVU Services Limited and Thomas Maxfield
(Exhibit 10.15).
21* Subsidiaries of the Company.
27* Financial Data Schedule.
*Filed herewith
+Confidential materials deleted and filed separately with the Securities and
Exchange Commission.
Index - 2
<PAGE>
EXHIBIT 3.2
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
SUNBURST ACQUISITIONS I, INC.
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the Corporation is Sunburst Acquisitions I, Inc.
SECOND: The following amendment was adopted by the Board of Directors
and Shareholders of the Corporation in the manner prescribed by the Colorado
Business Corporation Act on February 22, 1999:
ARTICLE I - THE NAME OF THE CORPORATION shall be amended to change the
name of the corporation to Invu, Inc. and to read as follows:
"The name of the corporation is Invu, Inc."
THIRD: The number of shares voted for the amendment was sufficient
for approval.
FOURTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: Not applicable.
FIFTH: The amendment does not affect a change in the amount of stated
capital.
1
<PAGE>
DATED: February 22, 1999
SUNBURST ACQUISITIONS I, INC.
By: /s/ David Morgan
--------------------------
David Morgan, President
ATTEST:
By: /s/
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
2
EXHIBIT 10.2
CONSULTING AGREEMENT
This Consulting Agreement, dated as of December 15, 1998 ("Agreement"),
by and between Sunburst Acquisitions, Inc., a Colorado corporation ("Company"),
and Robert Jeffcock ("Consultant").
WITNESSETH:
WHEREAS, Consultant previously introduced the Company to Invu, Plc, a
company organized under the laws of the Isle of Man ("Invu"), which introduction
resulted in a successful reverse acquisition of Invu by the Company;
WHEREAS, Consultant has knowledge and expertise which the Company
desires to retain for purposes of facilitating (i) a public offering of the
Company's Common Stock, no par value (the "Company Common Stock"), (ii) the
listing of the Company Common Stock on certain United States and European
securities exchanges, (iii) the sale of the Company Common Stock to potential
investors, (iv) the solicitation of business and sales opportunities for the
Company, including potential joint ventures; and (v) the achievement of any
other such objectives or pursuit of any other such opportunities that the
Company may choose, provided that the Consultant's assistance in the pursuit of
such other opportunities and objectives shall be mutually agreeable to Company
and Consultant;
WHEREAS, Consultant is willing to perform services for the Company and
its affiliates consistent with the foregoing; and
WHEREAS, the Board of Directors of the Company has determined that if
Consultant performs his duties under this Agreement and his engagement hereunder
is not terminated, the Company shall receive a value equal to or in excess of
the shares of Company Common Stock to be granted to the Consultant under this
Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the covenants and agreements set forth herein, the
receipt and sufficiency of which are acknowledged by the execution and delivery
hereof, the parties hereto agree as follows:
1. Appointment. Company appoints Consultant and Consultant accepts such
appointment and undertakes to advise and consult with Company and its affiliates
upon the terms and conditions set forth in this Agreement. For purposes of this
Agreement, the term "Company" refers to Sunburst Acquisitions, Inc. and such
affiliates.
2. Duties of Consultant.
2.1 General Duties. Consultant's duties and obligations
hereunder shall include: (a) recommending and negotiating with an
investment bank to (i) underwrite a public offering of the Company
Common Stock to raise approximately $4,000,000 by March 31, 2000 (the
"Public Offering"), (ii) facilitate the listing of the Company Common
Stock on the Nasdaq Small Capital Market, and (iii) assist the Company
in preparing applicable securities filings;
1
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(b) acting as liaison between the investment bank selected and Company
securities counsel, (c) providing introductions to potential investors
in the Company Common Stock; (d) once the Company Common Stock has been
admitted to trade on the Nasdaq Small Capital Market, obtaining a dual
listing for the Company Common Stock on either EASDAQ or the Euro NM;
(e) soliciting business and sales opportunities for the Company,
including potential joint ventures; (f) reporting to Company, as
reasonably needed, to fulfill Consultant's obligations regarding the
rendition of his consulting services; (g) performing such reasonable
duties at such times and in such manner as shall be mutually agreeable
to Company and Consultant, although at all times Consultant will retain
control over how such services are performed; and (h) observing and
complying with all lawful resolutions, regulations and directions from
time to time made or given by Company as long as such resolutions,
regulations and directions do not interfere with the manner in which
Consultant performs his duties.
2.2 Relationship of the Parties. In performing his services
under this Agreement, Consultant shall be an independent contractor
and, as between Company and Consultant, none of Company or its
affiliates shall be responsible for withholding, collection or payment
of income taxes or for other taxes of any nature on behalf of
Consultant or any agent of Consultant. Nothing contained in this
Agreement shall make Consultant the agent, employee, joint venturer or
partner of Company or provide Consultant with the power or authority to
bind Company to any contract, agreement or arrangement with any
individual or entity except with the prior written approval of such
entities.
2.3 Time Commitment. Consultant shall devote no less than an
average of three days per week to consulting activities performed on
behalf of the Company for the Term of this Agreement, unless otherwise
agreed in writing by the Company and the Consultant.
3. Nondisclosure and Confidentiality; Purchase or Sale of Securities.
Consultant understands that he has been exposed to, or may be exposed to
confidential information and trade secrets of Company, including, without
limitation, trade secrets, methods of operation, techniques, designs, processes,
technologies, compilations of information, past, present and prospective
customer lists, records, and specifications that are owned and commercially
beneficial to Company, including any compilation of various trade secrets or
data derived from such information (collectively, "Confidential Information"),
and that maintenance by Company of its proprietary Confidential Information to
the fullest extent possible is extremely important. Accordingly, Consultant
covenants that except pursuant to the fulfillment of Consultant's duties under
Section 2.1 of this Agreement or with the prior written consent of Company, he
shall at all times keep confidential and not divulge, furnish or make accessible
to anyone (except Company's authorized representatives), any Confidential
Information to which Consultant has been or shall become privy relating to the
business of Company or any of its affiliates, and that, similarly, Consultant
will not use such information for the benefit of any person or entity other than
Company at any time. The provisions of this Section 3 shall not apply to any
information to the extent (i) it is or shall become generally known to the
public, (ii) Consultant is required by law to disclose such information to any
person, or (iii) that agents of Consultant need such information to assist
Consultant with the performance of his duties hereunder. With respect to clause
(iii), however, Consultant agrees to indemnify Company to the extent any agent
of Consultant violates any provision contained in this
2
<PAGE>
Section 3. Upon termination of Consultant's appointment for any reason, or if
earlier required by Company, Consultant agrees to return to Company all copies
of any documents or items (in any media, including, without limitation,
electronic storage media) previously provided to Consultant and/or its agents
containing any Confidential Information. Consultant will not purchase or sell
Company Common Stock while in possession of Confidential Information, except
that Consultant may exercise his right to purchase Company Common Stock pursuant
to the exercise of Warrants which may be granted to him under the provisions of
Section 6.1 of this Agreement.
4. Noncompetition; Nonsolicitation.
(a) Consultant agrees that prior to the termination of this
Agreement and for a period of twenty-four (24) months after the termination of
this Agreement for whatever reason, Consultant shall not, without the prior
written consent of Company, directly or indirectly engage in, manage, operate,
join, control, or participate in the ownership, management, operation, or
control of, or be employed or engaged or act as a consultant to in any manner
by, any business competing in the Same or Similar Business as Company.
(b) Consultant further agrees that prior to the termination of
this Agreement and for a period of twenty-four (24) months after the termination
of this Agreement for whatever reason, not to solicit, hire, influence or
attempt to influence any employee of Company to terminate his/her employment or
other contractual relationship with Company for any reason including, without
limitation, working for a competitor. Additionally, Consultant agrees that
during the same time period Consultant will not directly or indirectly attempt
to solicit or conduct business with any person or entity that is a client,
customer or active prospect of Company at the time of the termination of this
Agreement if such business would be in competition with Company's business. The
terms "client," "customer" and "active prospect" include, but are not limited
to, any person or entity solicited or contacted by Consultant or Company or any
person or entity to whom services have been rendered by Consultant or Company
directly or indirectly during the twenty-four (24) years preceding the
termination of this Agreement.
(c) For purposes of this Section 4, the "Same or Similar
Business" as Company shall be defined as the information and document management
software business in the United Kingdom and the United States of America;
provided, however, that ownership of less than five percent (5%) of any class of
stock registered under the Securities Exchange Act of 1934, as amended, shall
not, in and of itself, constitute a violation of this Section 4.
(d) Consultant has carefully read and considered the
provisions of this Section 4 and, having done so, agrees that the restrictions
set forth in this Section contain reasonable limitations as to time,
geographical area, scope of activity to be restrained, and do not impose a
greater restraint than is necessary to protect the goodwill or other legitimate
business interests of Company. Consultant further understands and agrees that,
if at some later date, a court of competent jurisdiction determines that the
scope, duration or geographic area of any covenant set forth in this Section 4
is overbroad or unenforceable for any reason, these covenants shall be reformed
by the court and enforced to the maximum extent permissible under applicable
law.
3
<PAGE>
(e) If Consultant violates any restrictive covenant contained
in this Section 4, then the term of such restrictive covenant will be extended
by adding to it the number of days that Consultant's violation continues.
5. Term. The services of Consultant under this Agreement shall have
commenced on December 15, 1998 (the "Commencement Date") and shall continue
thereafter until December 15, 2000, unless earlier terminated as provided in
this Agreement (the "Term"). The provisions of Section 3 and Section 4 shall
survive the termination of this Agreement.
6. Compensation.
6.1 Compensation. As compensation for the consulting services
provided under this Agreement, Company shall transfer to Consultant (i) 50,000
shares of Company Common Stock on May 1, 1999 and, (ii) if this Agreement is not
earlier terminated, an additional 50,000 shares of Company Common Stock on
October 1, 1999. If, during the term of this Agreement, through the efforts of
the Consultant, the Company enters into an Underwriting Agreement with respect
to the Public Offering, he will receive Warrants to purchase 200,000 shares of
Company Common Stock at an exercise price of $0.50.
6.2 Expenses. Company shall reimburse Consultant for all
reasonable and ordinary out-of-pocket business expenses Consultant reasonably
incurs in the performance of his duties under this Agreement. Consultant will
receive the written approval of the President of Company for any related
expenses in excess of $200.
7. Termination. This Agreement may be terminated for cause by the
Company at any time.
8. Assignment. Neither party hereto may assign, without the other
party's prior written consent, this Agreement, or any right or obligation
hereunder, and any and all assignments without such prior written consent shall
be null and void.
9. Miscellaneous.
9.1 Notices. Any notice to be given hereunder is to be given
in writing by either party to the other and delivered or sent by prepaid airmail
post or facsimile transmission addressed to the address or the addresses set
forth opposite each party's name below or such other address as may be notified
by one party to the other for such purposes and shall be deemed to be served in
the case of airmail post three days after posting and in the case of facsimile
transmission immediately upon successful transmission.
9.2 Headings; Pronouns. The headings of the paragraphs of this
Agreement are for convenience of reference only and are not to be considered and
construed in this Agreement. When the context so requires in this Agreement, the
masculine gender includes the feminine and neuter, and the singular number
includes the plural, and vice versa.
4
<PAGE>
9.3 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
9.4 Governing Law; Venue. This Agreement shall be governed by
and construed in accordance with the laws of England and the parties agree to
submit themselves to the jurisdiction of England.
9.5 Counterparts. This Agreement may be executed in multiple
counterparts, all of which shall be deemed originals, but which counterparts
shall constitute one and the same instrument.
9.6 Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
assigns. Whenever a reference to any party is made herein, such reference shall
be deemed to include a reference to the heirs, executors, legal representatives,
successors and assigns of such party.
9.7 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof.
No variations, modifications or changes herein or hereof shall be binding upon
any party unless set forth in a document duly executed by or on behalf of such
party.
9.8 Amendments. This Agreement may not be modified, altered,
amended, waived or terminated orally, unless in writing signed by the parties
hereto.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and date above first written.
CONSULTANT:
/s/ Robert Jeffcock
ADDRESS: --------------------------------------
Apt. B42 Robert Jeffcock
Roc Fleuri
1 Rue Du Tenao
MC 98000 Monaco
COMPANY:
SUNBURST ACQUISITIONS, INC.
ADDRESS:
The Beren, Blisworth Hill Farm
Stoke Road By:
Blisworth, Northamptonshire NN7 3DB -----------------------------------
United Kingdom Name:
Fax: 011 44 1604 859902 ---------------------------------
6
EXHIBIT 10.3
CENTURA Agreement No. 98-OEM-7088-INVU-00
LIMITED MANUFACTURING AGREEMENT
(Signature Pages)
Preamble: The following are the signature pages of an agreement ("Agreement")
which consists of (i) the General Terms and Conditions and (ii) these Signature
Pages. The documents are referenced together by the contract number and are to
be taken together and not separately.
IN CASE OF CONFLICT BETWEEN THE TERMS AND CONDITIONS SPECIFIED IN THE SIGNATURE
PAGES BELOW AND THE GENERAL TERMS AND CONDITIONS, THE TERMS AND CONDITIONS OF
THESE SIGNATURE PAGES SHALL CONTROL.
Notational Convention: Provisions of the General Terms and Conditions shall be
referred to as "Section XY(z) GTC". Provisions of these Signature Pages shall be
referred to as "Item A.B(c) SP".
- --------------------------------------------------------------------------------
1. LICENSEE: For purposes of this Agreement, LICENSEE shall be the
following organization at the designated address:
Organization Name: INVU Services Limited
Organized under the laws of: England
Headquarters Address: The Beren, Blisworth Hill Farm
Stoke Road
Blisworth
Northamptonshire NN7 3DB
Telephone: 01604-859893 Fax: 01604-859902
2. Territory: Worldwide.
3. Effective Date of Agreement: March 25, 1998
4. Termination Date: March 24, 1999
5. Programs: *SQLBase Desktop 1 -machine pack,
Version 6.1.2
*SQLBase Desktop 1 -machine pack,
Version 7.0
(*collectively known as the "Desktop
Programs")
1
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**SQLBase Server (all commercially
available user levels as of the date
of execution of this Agreement),
Version 6.1.2
**SQLBase Server (all commercially
available user levels as of the date
of execution of this Agreement),
Version 7.0 (NT Only)
("collectively known as the "Server
Programs")
6. Initial Payment & Shipping Expenses:
(i) Payment: Upon execution of this Agreement and in consideration for
the rights granted in Section 2 GTC, LICENSEE irrevocably agrees to pay to
CENTURA the noncontingent, nonrefundable payment of (pound)77,000 (seventy-seven
thousand Pounds Sterling). This sum is immediately due and payable and shall be
remitted immediately upon execution of this Agreement. CENTURA will provide
LICENSEE with two (2) master copies of each of the Programs, from which the
authorized copies can be manufactured by LICENSEE.
(ii) Shipping Expenses: All prices for any Programs acquired from
CENTURA hereunder shall be F.O.B. point of origin and LICENSEE shall reimburse
CENTURA for any shipping expenses incurred under this Agreement.
7. License Fees: The payment of (pound)77,000 specified in Item 6 SP above
shall be considered a one-time payment in full for LICENSEE's right to
manufacture and distribute copies of the Programs as follows, subject to the
terms of this Agreement:
(a) Of such amount of (pound)77,000, an amount of (pound)60,000 shall
be considered a one-time payment in full for LICENSEE's right to manufacture and
distribute copies of the Desktop Programs to a maximum of six thousand (6,000)
PC Workstations for use in conjunction with and as an embedded component of
LICENSEE's "Invu SOLO" Application only;
(b) Of such amount of (pound)77,000, an amount of (pound)15,000 shall
be considered a one-time payment in full for LICENSEE's right to manufacture and
distribute copies of the Desktop Programs to a maximum of six hundred (600) PC
Workstations for use in conjunction with and as an embedded component of
LICENSEE's "Invu PRO" Application only; and
(c) The remaining (pound)2,000 shall be considered a one-time payment
in full for LICENSEE's right to manufacture and distribute copies of the Server
Programs to a maximum of one hundred (100) PC Workstations for use in
conjunction with and as an embedded component of LICENSEE's "Invu PRO (Network)"
Application only.
For purposes of this Agreement a "PC Workstation" shall mean any PC workstation
(i) on which the applicable Program (or components thereof) is/are manufactured
and distributed by LICENSEE to its internal and/or external customers and/or
(ii) any PC workstation that is concurrently connected at any one time to any
applicable Program manufactured and/or distributed
2
<PAGE>
by LICENSEE and/or (iii) that accesses any applicable Program manufactured
and/or distributed by LICENSEE subject to the terms of this Agreement.
LICENSEE shall have the right to make a reasonable number of copies of the
Programs solely for LICENSEE's demonstration and/or evaluation use with it's
Application at no charge to LICENSEE.
8. Application: For purposes of this Agreement the Application shall
mean LICENSEE's "Invu SOLO", "Invu PRO" and "Invu PRO (Network Edition) software
application products and by whatever name such products become known in the
future.
9. Other Terms:
(a) Grant of License Restriction (Desktop Programs): LICENSEE's use and
distribution of the Desktop Programs is strictly limited to use in conjunction
with and as an embedded component of LICENSEE's "Invu SOLO" and "Invu PRO"
Applications only; furthermore LICENSEE agrees that it shall not (nor permit any
third party to) access the following components of the Desktop Programs:
(i) Stored Procedures and Triggers
(ii) External Functions
(iii) SQI-Console (SQLCON*.EXE)
(iv) SQI-Talk (SQLTALK.EXE)
(v) Database Monitor (SSM.EXE)
(vi) Connectivity Administrator (CFGWI*.EXE)
(vii) SQLEdit (SQLEDIT.EXE)
(viii) ODBC (SQLODBW.DLL)
(ix) Views
(x) Partitioned Databases
(xi) Stored Commands.
(b) Grant of License Restriction (Server Programs): LICENSEE's use and
distribution of the Server Programs is strictly limited to use in conjunction
with and as an embedded component of LICENSEE's "Invu PRO (Network)" Application
only; furthermore LICENSEE agrees that it shall not (nor permit any third party
to) access the following components of the Server Programs:
(i) Stored Procedures and Triggers
(ii) External Functions
(iii) ODBC (SQLODBW.DLL)
(iv) Views
(v) Stored Commands.
3
<PAGE>
(c) Additional License Grant: CENTURA further grants LICENSEE the
right to distribute the manufactured copies of the Programs through its
resellers for further transfer to End Users and only for use in conjunction with
the Application.
(d) Additional PC Workstation Connections: During the term of this
Agreement, and provided that LICENSEE is in compliance with it's obligations
hereunder, LICENSEE shall be eligible to acquire the right to manufacture and
distribute additional copies of the Programs (over and above the number of
copies manufactured and distributed in Item 7 SP above), subject to the terms
and conditions of this Agreement.
In the event that LICENSEE wishes to acquire the rights to such additional
copies of the Programs, LICENSEE shall issue a purchase order (or equivalent
document acceptable to CENTURA), referencing the terms and conditions of this
Item 9(d) SP, for the applicable nonrefundable, noncontingent amount in License
Fees for such additional PC Workstation connections, in accordance with the
following License Fee Schedule and subject to a minimum order value of
(pound)50,000 (fifty thousand Pounds Sterling).
License Fee Schedule
- --------------------
License & Application Per PC Workstation
- --------------------- ------------------
License Fee Due CENTURA
----------------------
Desktop for Invu SOLO (pound)10 (Ten Pounds Sterling)
Desktop for Invu PRO (pound)25 (Twenty-five Pounds Sterling)
Server for Invu PRO (Network) (pound)20 (Twenty Pounds Sterling)
Amounts due under this Item 9(d) SP shall be immediately due and payable to
CENTURA and paid net thirty (30) days from CENTURA's invoice date. Upon
acceptance of each applicable purchase order (or equivalent document) by CENTURA
the rights to the applicable additional PC Workstation connections shall be
deemed granted by CENTURA.
(e) Gold Support: Upon execution of this Agreement, and in consideration for the
provision of Gold Support ("Gold Support") by CENTURA during the period
commencing March 25, 1998 and ending March 24, 1999 ("Support Period"), LICENSEE
irrevocably agrees to pay CENTURA Gold Support fees in the amount of
(pound)7,500 (seven thousand five hundred Pounds Sterling). Such amount shall be
due and payable in four (4) instalments, as follows:
(i) (pound)1,875 due on or before March 25, 1998
(ii) (pound)1,875 due on or before June 25, 1998
(iii) (pound)1,875 due on or before September 25, 1998; and
(iv) (pound)1,875 due on or before December 21, 1998.
4
<PAGE>
As of the date of execution of this Agreement, Gold Support comprises the
following support services.
- -- Multiple designated support contacts and one management contact at LICENSEE
site
- -- Queued access to a team of Technical Support Engineers
- -- Target response time to telephone calls of:
1 working hour maximum for priority one calls
1.5 working hours maximum for priority two calls
2 working hours maximum for lower priority calls
- -- 8.00 a.m. to 5.00 p.m. GMT and 9.00 a.m. to 6.00 p.m. CET service on Monday
- Thursday
- -- 8.00 a.m. to 4.00 p.m. GMT and 9.00 a.m. to 5.00 p.m. CET service on Friday
- closed on public holidays
- -- Quarterly conference call review of customer activity and product alerts
- -- Quarterly call tracking reports
- -- Eligibility to a fifteen percent (15%) discount from the list price of
training courses scheduled directly by CENTURA and booked directly with
CENTURA
- -- Access to open support cases through CENTURA Web Site.
Provided, however, that CENTURA reserves the right to modify the Gold Support
offerings specified herein at CENTURA's sole discretion.
(f) Grant of License (Payment): Upon execution of this Agreement, Section 2 GTC
is hereby modified by adding the following after the word "Pages" in line
eleven:
"Notwithstanding the foregoing, should LICENSEE fail to pay to CENTURA
the License Fees due under Item 6 SP, all rights granted to LICENSEE in
this Section 2 shall be immediately canceled by CENTURA and any copies
made by LICENSEE of the Programs shall be destroyed by LICENSEE at such
time."
(g) Representations and Warranties by CENTURA to LICENSEE. CENTURA represents
and warrants to and for the benefit of LICENSEE that to the best of CENTURA's
knowledge, the Programs do not infringe any patent, copyright, trade secret or
any other proprietary right of any third party.
(h) Replacement of Section 7 GTC ("CENTURA's Liability") of the Agreement: Upon
execution of this Agreement, Section 7 GTC is hereby deleted and replaced with
the following:
"7. Liability:
(a) Limitation of Liability. EXCEPT AS SET FORTH IN SECTION 8(b) GTC,
EACH PARTY'S LIABILITY ARISING OUT OF THIS AGREEMENT FOR THE USE OR
5
<PAGE>
DISTRIBUTION OF ANY PROGRAM SHALL BE LIMITED TO (pound)100,000 (ONE HUNDRED
THOUSAND POUNDS STERLING) UNDER THE TERMS OF THIS AGREEMENT.
(b) Exclusion Of Consequential And Other Damages. IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE,
NOR WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, HOWEVER CAUSED, WHETHER FOR A
BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT THE OTHER PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE ESSENTIAL PURPOSE OF
THIS SECTION IS TO LIMIT THE POTENTIAL LIABILITY OF CENTURA AND LICENSEE ARISING
OUT OF THIS AGREEMENT."
(i) Replacement of Section 8 GTC ("INDEMNITY") of the Agreement: Upon execution
of this Agreement, Section 8 GTC is hereby deleted and replaced with the
following:
"8. Indemnity:
(a) Indemnity by LICENSEE: LICENSEE SHALL INDEMNIFY, DEFEND AND HOLD
CENTURA HARMLESS FROM AND AGAINST ANY CLAIMS OR LAWSUITS, INCLUDING REASONABLE
ATTORNEY'S FEES, THAT ARISE OR RESULT FROM THE USE, SALE OR DISTRIBUTION OF THE
APPLICATION BY LICENSEE, ANY END USER OF LICENSEE OR ITS RESELLERS, OR ANY
CLAIMS BROUGHT BY LICENSEE'S RESELLERS OR ANY END USER OF LICENSEE OR ITS
RESELLERS.
(b) Indemnity by CENTURA: CENTURA SHALL FULLY INDEMNIFY, DEFEND AND
HOLD LICENSEE HARMLESS FROM AND AGAINST ANY CLAIMS OR LAWSUITS, INCLUDING
REASONABLE ATTORNEY'S FEES, ASSOCIATED WITH ANY CLAIM OR SUIT FOR INFRINGEMENT
OF ANY COPYRIGHT, PATENT, TRADE SECRET OR ANY OTHER PROPRIETARY RIGHT OF ANY
THIRD-PARTY AS A RESULT OF THE LICENSES GRANTED TO LICENSEE HEREUNDER."
IN WITNESS WHEREOF, the parties hereby confirm that this Agreement is effective
at the date set forth above and that all terms and conditions have been agreed
to:
LICENSEE: CENTURA:
Signature: Signature:
------------------------ -------------------------
Name: Name:
------------------------ -------------------------
Title: Title:
------------------------ -------------------------
Date: Date:
------------------------ -------------------------
6
<PAGE>
CENTURA Agreement No. 98-OEM-7088-INVU-00
LIMITED MANUFACTURING AGREEMENT
(General Terms and Conditions)
Preamble: The following are the general terms and conditions of an agreement
("Agreement") which consists of (i) these General Terms and Conditions and (ii)
the Signature Pages. The documents are referenced together by the contract
number and are to be taken together and not separately.
Notational Convention: Provisions of these General Terms and Conditions shall be
referred to as "Section XY(z) GTC". Provisions of the Signature Pages shall be
referred to as "Item A.B(c) SP".
- --------------------------------------------------------------------------------
1. PURPOSE OF THIS AGREEMENT: This Agreement is between Centura Software Limited
("CENTURA"), an English corporation, with offices at Lunar House, Fieldhouse
Lane, Marlow, Bucks SL7 ILW and the organization as specified in the Signature
Pages ("LICENSEE"). This Agreement grants to LICENSEE certain rights to
manufacture and distribute CENTURA's proprietary software products specified on
the Signature Pages ("Programs") subject to the payments, terms and conditions
specified below.
2. Grant of License: In consideration for the payments specified In Sections 3
and 4 GTC and the other applicable provisions of this Agreement, CENTURA grants
to LICENSEE, during the term of this Agreement, the limited and nonexclusive
right and license to manufacture and distribute copies of the Programs only (a)
in the geographic region specified on the Signature Pages ("Territory") and (b)
for use solely in conjunction with and as an embedded component of LICENSEE's
application software product specified on the Signature Pages ("Application").
Such license may be further limited as specified on the Signature Pages.
LICENSEE's distribution of the Programs (for use solely in conjunction with and
as an embedded component of the Application) is subject to the following
requirements:
(i) LICENSEE shall affix a valid copyright notice on such
Application;
(ii) LICENSEE must affix the CENTURA copyright notice In the "About
Box" or startup screen of the Application; other rights to use
CENTURA's name, logo or trademarks may be granted by separate
agreement.
3. License Fees: LICENSEE agrees to pay the License Fees (including initial
commitment or payments) specified on the Signature Pages.
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4. Payment: All payments under this Agreement shall be made in U.S. dollars or
other currency as CENTURA may designate. The terms of any payment shall be as
specified In the Signature Pages and subject to credit availability from
CENTURA, at CENTURA's sole discretion.
5. Records and Review: LICENSEE shall keep accurate records necessary to verify
compliance with the licensing and payment terms of this Agreement, along with
reasonable detail. LICENSEE shall, with reasonable advance notice, make such
records available to CENTURA for inspection and copying during normal business
hours.
6. Support: Unless otherwise specified in the Signature Pages or by separate
agreement, CENTURA shall have no obligation to provide support or Program
updates or upgrades to LICENSEE.
7. CENTURA's Liability: CENTURA'S LIABILITY UNDER THIS AGREEMENT IS STRICTLY
LIMITED TO THE AMOUNT PAID TO CENTURA HEREUNDER.
8. Indemnity: LICENSEE SHALL INDEMNIFY, DEFEND AND HOLD CENTURA HARMLESS FROM
AND AGAINST ANY CLAIMS OR LAWSUITS, INCLUDING REASONABLE ATTORNEY'S FEES, THAT
ARISE OR RESULT FROM THE USE OR DISTRIBUTION OF THE APPLICATION.
9. Term of Agreement: This Agreement shall commence on the Effective Date
specified on the Signature Pages and shall expire on the date specified In the
Signature Pages. Provided, however, either party may terminate this Agreement
for a material breach of this Agreement If at the end of a thirty (30) day
period after providing the other party written notice specifying a material
breach, the breaching party has not cured such breach.
10. CENTURA's Reservation of Rights and Remedies: In addition to any specific
right or remedy provided for in this Agreement, CENTURA reserves all other
rights and remedies available in law or equity.
11. Amendments: This Agreement may not be amended, modified, released or
discharged, amended or modified in any manner, or any term or breach waived
except by an instrument in writing signed by a duly authorized official of
LICENSEE and CENTURA.
12. Sale or Assignment: LICENSEE may not assign, transfer or delegate any of its
rights or duties under this Agreement without the prior written consent of
CENTURA.
13. Entire Agreement: This Agreement, together with any attachments or
specifically referenced documents or licenses, sets forth the entire agreement
between CENTURA and LICENSEE with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings, promises and
representations made by either party to the other concerning the subject matter
hereof and the terms hereof.
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14. Taxes: All charges In this Agreement are exclusive of U.K. Value Added Tax.
15. Supplementary Terms: The terms and conditions of this Agreement supplement
the terms and conditions specified in the CENTURA Software Corporation Software
License Agreement which governs the use by LICENSEE of the Programs.
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Synergy Partner Agreement
1. Purpose: This Agreement is between Centura Software Limited "Centura")
located at Lunar House, Globe Park, Marlow, Sucks, SL7 1LW England and the
company listed below. Centura appoints company as a "Partner" under the Centura
Synergy Partner Program in the Territory subject to the terms and conditions
below:
Mark Woolley
Invu Services Limited
The Boren
Blisworth Hill Farm
Stoke Road
Blisworth
Northamptonshire
___7 3DB
Tel: 01504 859893
Fax: 01604 859902
Additional Authorized Location(s):
- ---------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
Phone:
----------------------------------
Fax:
----------------------------------
Contact:
----------------------------------
2. Definitions:
2.1 "End User" shall mean a customer of Partner who acquires (and has proof of)
a valid license to use the Programs for personal or internal business purposes
(and not for transfer to others) in accordance with the terms of the Centura
Software License Agreement.
2.2 "Centura Software License Agreement" shall mean the license agreement
between the End User and Centura which accompanies each Program.
2.3 "List Price" shall mean Centura's suggested list price in the Territory for
a single copy of a Program. Such prices are listed in Centura's Territory Price
List(s) or other pricing documents as generally published by Centura from time
to time during the term of this Agreement Centura reserves the right to modify
or change the List Price upon 30 days written notice to Partner.
2.4 "Marks" shall mean the trademarks, service marks and logos of Centura and/or
its licensors.
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2.5 "Program(s)" shall mean only the commercially available software program(s)
in object code form as listed in Centura's Price List(s) except those programs
that Centura may denote from time to time as not available under the Centura
Synergy Partner Program (e.g., SQLHost).
2.6 "Authorized Location(s)" shall mean an additional authorized sales office(s)
of Partner whose principal business shall be to order and acquire the Programs
and distribute the Programs to End Users, as more specifically set forth in
Section 6 below.
2.7 "Territory" shall mean the United Kingdom and Republic of Ireland only.
2.8 "Trademark Use Policy" shall mean the written policies, as amended by
Centura from time-to-time, for the proper usage of the Marks.
2.9 "Upgrade(s)" shall mean any modification of the Programs which is denoted by
Centura (i) by changing a number to the left of the first decimal point in the
then current version number, e.g., a change from version 4.1 to 5.0. and (ii) as
a "version upgrade" in Centura's Price List(s).
3. Partner Added Value Criteria: Partner represents that it satisfies one or
more of the following added value criteria In connection with the Centura
Programs and will continue to satisfy such criteria during the term of this
Agreement: (i) installation support: (ii) consulting/professional services;
(iii) application software; and/or (iv) training/education. Partner's failure to
continue to satisfy such added value criteria during the term of this Agreement
will be grounds for termination of this Agreement pursuant to Section 18.
4. Partner Benefits: During the term of this Agreement and provided that Partner
is current on its commitments and obligations under this Agreement. Centura
shall provide Partner with the benefits as specified in Attachment I hereto, as
may be modified by Centura from time to time with written notice to Partner.
5. Term: This Agreement shall commence on the date when both parties have signed
this Agreement and shall have an initial term of one (1) year, unless terminated
under Section 18. Thereafter, it may be renewed for an additional one (1) year
period upon mutual written agreement between the parties to appropriate terms
and conditions, and subject to payment by Partner of the then-current fees and
charges as may be specified by Centura, and provided that the parties comply
with all material obligations hereunder during the initial term.
6. License Grant: Centura hereby grants Partner during the term of this
Agreement only the following nonexclusive rights in the Territory:
(a) To transfer the Programs and Upgrades to its End User
customers for their Own use.
(b) To order and acquire the Programs and Upgrades from one of
Centura's authorized distributors as designated by Centura
from time-to-time. [Note: The Programs and
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Upgrades acquired from Centura's authorized distributors will
be subject to prices and terms as made available by such
distributors].
(c) To distribute the Programs and Upgrades in unaltered form in
the original sealed package manufactured by Centura for use by
Partners End Users under. the terms and conditions of the
Centura Software Corporation Software License Agreement that
accompanies each Program and/or Upgrade..
(d) To use, in unaltered form, the Marks solely to promote the
distribution of the Programs.
7. License Restrictions and Conditions: The rights and licenses granted
in Section 6 are restricted by, or conditioned upon the following:
(a) Centura and/or its licensors shall retain all and sole right, title
and interest in and to the Programs.
(b) Partner shall not, nor shall Partner cause or permit a third party
to, copy, manufacture, adapt, rent, lease, lend, trade-in, create derivative
works from, translate, reverse engineer, disassemble or decompile or otherwise
modify the Programs.
(c) All Programs, when provided to an End User by Partner under this
Agreement, must be contained in the original sealed package manufactured by
Centura and must be accompanied by the appropriate Centura Software License
Agreement.
(d) The use of the Marks by Partner shall strictly adhere to the terms
and conditions of Centuries Trademark Use Policy.
(e) During the term of this Agreement and within fifteen (15) days of
the end of each calendar quarter, Partner shall report to Centura in ______ the
value of Partner's net purchases from Centura's authorized distributor(s) during
the previous calendar quarter.
8. Fees, Payments and Credit Terms:
8.1 Partner Program Fee: NOT APPLICABLE
8.2 Payments: Terms of payment for order placed by Partner with Centura shall be
net 30 days from Centura's invoice date. Delinquent payments shall be subject to
a 1.5% per month service charge.
8.3 Credit Terms: Centura may offer to provide credit to Partner in amounts and
at times to be determined and/or limited in Centura's sole discretion. Should
Partner be in excess of any credit limit determined by Centura or should Partner
give Centura any cause to question its credit worthiness. Centura shall not be
obligated to accept or fulfill orders submitted by Partner.
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Partner agrees to provide Centura with credit information prior to the execution
of this Agreement and thereafter upon Centura's reasonable request.
8.4 Shipping Expenses: All prices for orders placed with Centura hereunder are
FOB Centura's point of origin, and Partner shall: (i) reimburse Centura for any
shipping expenses incurred by Centura, and (ii) bear the risk of loss damage or
theft for goods in transit to Partner.
9. Order Targets: During the initial term of this Agreement, Partner shall use
reasonable endeavors to place orders for packaged versions of the Programs as
follows, measured by net purchase price from Centura's authorized distributors:
NOT APPLICABLE.
10. Training: Partner certifies that, within three (3) months of the Effective
Date of this Agreement, at least one (1) Partner salesperson and one (1) Partner
technical engineer shall undergo Centura product training through attendance of
a Centura reseller training course. This initial training for two Partner
personnel shall be offered at no additional charge by Centura, as outlined in
"Benefits of the Synergy Partner Program"in Attachment 1 to this Agreement.
Further training may be provided to Partner at the applicable list prices
offered by Centura at such time.
11. Marketing Funds: During the term of this Agreement, Partner shall use
reasonable efforts to allocate a minimum of three percent (3%) of its net
revenues from the sale of the Programs towards the marketing of the Centura
product line. Such marketing may be supported by Centura in the form of joint
campaigns which may be partially funded by Centura, at Centura's sole discretion
and by separate mutual arrangement between the parties on a case by case basis.
12. Rights Outside the UK and Republic of Ireland: The rights provided to
Partner under this Agreement apply only in the UK and Republic of Ireland.
Rights may be granted outside this Territory by separate addendum to this
Agreement, provided that Partner acknowledges that additional conditions or
restrictions may apply to its exercise of rights under such separate addendum.
13. Confidentiality: Centura and Partner agree that each of them shall, during
the term of this Agreement and for three (3) years thereafter, take all steps
which are reasonable to safeguard the confidentiality of, and proprietary rights
to. the confidential information ("Confidential Information") of the other party
which may be disclosed hereunder (including, but not limited to, product plans,
designs, business plans, technical specifications, research, customer or
financial data) and shall not, without the prior written consent of the other
party, (i) use such Confidential Information for its own benefit or the benefit
of any third party except for purposes expressly provided for in this Agreement,
or (ii) disclose such Confidential Information to any third party; provided.
however, that this provision shall not be construed to restrict the disclosure
of information which (a) is publicly known at the time of its disclosure to a
party, (b) is lawfully received by a party from a third party not bound in a
confidential relationship to Centura or Partner, (c) was already known by
Centura or Partner prior to entering into this Agreement or (d) is required by
law to be disclosed.
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14. Proprietary Rights: Partner agrees to respect the trademarks, service marks,
copyrights and other proprietary rights of Centura an Centura Software
Corporation and shall take no action which would adversely affect or interfere
with such rights or (ii) disparage such rights. Any violation of this provision
will subject Partner to immediate termination of this Agreement.
15. Representations and Indemnification by Partner:
15.1 Partner represents and warrants to Centura that it has the full power and
authority to enter into this Agreement and that it shall make no representation
and or warranty to its End Users regarding the use of the Programs except as may
be contained in the documentation published by Centura or in the Centura
Software License Agreement.
15.2 Partner shall indemnify and hold Centura harmless from any claim, action or
other liability whatsoever resulting from the use of the Programs by End Users
(except as permitted by the Centura Software License Agreement) or from
representations made by Partner to its End Users in breach of Section 15.1
above.
15.3 Partner shall be responsible for supporting End Users unless the End User
purchases directly from Centura.
16. Representations and Warranties by Centura:
16.1 Representations and Warranties: Centura represents and warrants to Partner
that: (i) Centura has the full power and authority to enter into this Agreement,
and (ii) End Users shall receive the full benefit of the warranties and
representations of Centura as specified in the Centura Software License
Agreement.
16.2 WARRANTY DISCLAIMER: THE PROGRAMS, SUPPORT PLANS AND UPGRADES ARE OFFERED
"AS IS" WITH ALL FAULTS AND, EXCEPT AS SPECIFIED IN SECTION 16.1 ABOVE, CENTURA
MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED CONCERNING THE SAME,
INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. IT IS EXPRESSLY AGREED THAT CENTURA SHALL NOT BE LIABLE, OR IN ANY WAY
RESPONSIBLE FOR THE COMMERCIAL SUCCESS OF THE PROGRAMS, SUPPORT PLANS AND
UPGRADES OR ANY ENHANCEMENTS THEREOF.
17. Liability and Exclusion of Damages:
17.1 Limitation of Liability: CENTURA'S LIABILITY ARISING OUT OF THIS AGREEMENT
SHALL BE LIMITED TO THE AMOUNT PAID BY PARTNER TO CENTURA UNDER THE TERMS OF
THIS AGREEMENT.
17.2 Exclusion of Damages: IN NO EVENT SHALL CENTURA BE LIABLE FOR COSTS
OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE, NOR WILL CENTURA BE LIABLE FOR
SPECIAL, CONSEQUENTIAL, OR OTHER INDIRECT DAMAGES,
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HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND
WHETHER OR NOT CENTURA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE
ESSENTIAL PURPOSE OF THIS SECTION IS TO LIMIT THE POTENTIAL LIABILITY OF CENTURA
ARISING OUT OF THIS AGREEMENT.
18. Termination/Expiration: Either party may terminate this Agreement for a
material breach of this Agreement if, at the end of a thirty (30) day period
after providing the other party written notice specifying a material breach, the
breaching party has not cured such breach. Centura may terminate this Agreement
without notice if Partner fails to pay Centura any fee specified in this
Agreement. Upon the expiration or termination of this Agreement for any reason,
Partner agrees to immediately destroy (and provide Centura written confirmation
that the same has been done): (i) all Programs acquired from Centura under any
NFR License, and (ii) all materials which contain the Confidential Information
of Centura.
19. Miscellaneous Provisions:
19.1 Centura's Reservation of Rights and Remedies: In addition to any specific
right or remedy provided for in this Agreement, Centura reserves all other
rights and remedies available by law.
19.2 Sale or Assignment: Partner may not assign, transfer or delegate any of its
rights or duties under this Agreement without the prior written consent of
Centura.
19.3 Force Majeure: Neither party shall be liable for any delays in the
performance of any of its obligations hereunder (other than the obligation to
pay money ) due to causes beyond its reasonable control, including but not
limited to, fire, strike, war, riots, acts of any civil or military authority,
judicial action, acts of God, or other casualty or natural calamity for so long
as and to the extent that the effects of such circumstance continue.
19.4 Governing Law: This Agreement shall be construed and enforced in accordance
with the laws of England.
19.5 Taxes: All charges in this Agreement shall be subject to U.K. Value Added
Tax.
19.6 Severability: The invalidity or unenforceability of one or more provisions
of this Agreement shall not affect the validity or enforceability of any of the
other provisions, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were omitted.
19.7 Headings: The Section headings in this Agreement are included for
convenience only and are not to be used in interpreting this Agreement.
19.8 Notices: Required notices under this Agreement shall be deemed delivered
when (i) personally delivered, (ii) faxed with confirmation to a designated fax
number, or (iii) upon signed receipt when delivered by certified or registered
mail. Such notices shall be sent to other
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party in writing at its address set forth an the first page of this Agreement or
to such other address as such party shall designate by written notice.
19.9 Conflicts and Additions: In the event of any conflict between the terms of
this Agreement and the terms of any Partner document or other writing exchanged
between the parties (e.g., Partner's purchase order), the terms of this
Agreement shall control. In the event that any term contained in any such
writing attempts to add to the terms of this Agreement, such additional term(s)
shall not be effective unless such writing is signed by both Centura and
Partner.
19.10 Export Administration: Partner shall not export the Programs in contraven-
tion of U.S. or other applicable laws of any jurisdiction.
19.11 Counterparts and Exchanges by Fax: This Agreement may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument. The
exchange of a fully executed Agreement (in counterparts or otherwise) by fax
shall be sufficient to bind the parties to the terms and conditions of this
Agreement.
19.12 Entire Agreement Waivers: This Agreement sets forth the entire agreement
between Centura and Partner with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings, promises,
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto. This Agreement may not be released,
discharged, amended or modified in any manner or any term or breach waived
except by an instrument in writing signed by both Centura and Partner.
In the event that Partner and Centura are currently (as of the date of execution
of this Agreement) operating under a previous agreement of similar scope to this
Agreement (i.e. a "partner" agreement, but not an OEM or other license agreement
whose scope is not similar to this Agreement), this Agreement shall supersede
and terminate such previous agreement.
19.13 Parties Independent: In making and performing this Agreement, the parties
act and shall act at all times as independent contractors and nothing contained
in this Agreement shall be construed or implied to create an agency, partnership
or employer and employee relationship between Partner and Centura or between any
party hereto and any officer or employee of the other party, At no time shall
any party make commitments or incur any charges or expenses for or in the name
of the other party.
- --------------------------------------------------------------------------------
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The parties confirm that all the above terms and conditions have been agreed to:
For Centura For Partner
- ----------- -----------
Signature: Signature:
------------------------- ------------------------------
Name: Name:
------------------------- ------------------------------
Title: Title:
------------------------- ------------------------------
Date: Date:
------------------------- ------------------------------
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Attachment I
Benefits of the Synergy Partner Program
During the term of this Agreement and so long as Partner is in compliance with
the terms and obligations of this Agreement, Partner shall be entitled to the
following:
(a) To use the designation "Centura Synergy Partner" and associated logo,
such logo to be provided to Partner by Centura in electronic form.
(b) Provision by Centura of a two-day Centura reseller training course for
attendance by two of Partner's personnel as specified in Section 10 to
this Agreement.
(c) Attendance at Centura Partner briefings and training days.
(d) Access to Centura's "Partner-Only" web-site at "synergy.net", for which
Centura will provide a logon-ID and password. As soon as made available
by Centura, market exposure to Partner's web-site via hotlinks with
synergy.net.
(e) Marketing and sales support from Centura which may include, at
Centura's discretion, Centura's assistance in the conducting of sales
seminars and other events.
(f) Regular provision by Centura to Partner of marketing materials and
qualified sales leads.
(g) Entry in the Centura Partner catalogue, published bi-annually by
Centura.
(h) Access (at Centura's discretion) to a Centura corporate sales executive
and/or pre-sales consultant for the purpose of assisting with Partner's
major corporate sales activities.
(i) Access to pre-release or beta versions of the Programs subject to the
terms of the applicable Centura Software Corporation beta program
agreement.
(j) To participate in Centura product promotions; access to online informa-
tion service.
(k) Other benefits as may be made available from Centura from time-to-time.
1
EXHIBIT 10.4
RESELLER AGREEMENT
------------------
between
COMPUTER ASSOCIATES PLC ("CA")
------------------------------
of Computer Associates House, 183/187 Bath Road, Slough, Berkshire, SL1 4AA
---------------------------------------------------------------------------
and
INVU SERVICES LIMITED (THE "RESELLER")
--------------------------------------
of The Beren, Blisworth Hill Farm, Stoke Road, Blisworth,
---------------------------------------------------------
Northamptonshire NN7 3DB
------------------------
with effect from 16 March 1998 (the "Effective Date")
-------------
THE PARTIES AGREE AS FOLLOWS:
1. SCOPE AND DEFINITIONS
- ------------------------
1.1 SCOPE OF AGREEMENT
This Agreement provides for the marketing and distribution by Reseller of
the CA software products ("Products" as defined below) identified on one or
more Commercial Terms Schedules ("Commercial Terms") attached to this
Agreement or subsequently executed by both parties referencing this
Agreement. The parties may, but shall be under no obligation to, execute
multiple Commercial Terms Schedules to provide for the distribution by
Reseller of more than one line of CA software products.
1.2 DEFINITIONS
"Demonstration Software" means the Products used internally by Reseller on
the computer(s) listed in the applicable Schedules(s) for demonstration
purposes. Demonstration Software includes any Maintenance Releases and New
Versions thereto provided by CA to Reseller under this Agreement.
"Documentation" means technical manuals relating to the end use of
the Products.
"End User" means a third party licensed to use the Products internally
and not for redistribution.
"End User Agreement" means CA's then standard form license agreement
pursuant to which an End User may use a Product distributed by Reseller
pursuant to this Agreement.
"First Level Support" means a level of technical support that shall be
substantially similar to CA's first level support services as described in
CA's then current Client Support Handbook.
"Maintenance Releases" means product temporary fixes, error corrections,
work-arounds or other maintenance tapes and corrections made available by
CA to supported End Users of the Products, but does not include (i) New
Versions or (ii) new products available from CA for an additional fee.
"New Versions" means a new version of the Products containing new features
or functions as well as error corrections.
** [Confidential Treatment] indicates portions of this document have been
deleted from this document and have been separately filed with the Securities
and Exchange Commission.
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"Operating Environments" means the hardware platform and operating system
combinations that correspond to specific versions of the Products generally
available from CA.
"Products" means all or any portion of the software products specified in
the Commercial Terms on the Operating Environments specified, together with
related Documentation and all corrections, Maintenance Releases and New
Versions thereof. If more than one Commercial Terms Schedule is executed by
the parties referencing this Agreement, "Products" shall refer collectively
to the software products listed in all Commercial Terms Schedules.
"Second Level Support" means technical support for the Products provided by
CA to Reseller as set forth in Section 4.2 of this Agreement.
"Target Market" means the United Kingdom and the Republic of
Ireland.
"Term" means the period set forth in Section 6.1 of this Agreement.
"Upgrade" means any change in the usage of the Products including, without
limitation, the transfer of Products to a computer in a higher price as
determined in accordance with CA's then current price list.
2. APPOINTMENT AND GRANT OF LICENSES
- ------------------------------------
2.1 APPOINTMENT
During the Term and subject to the terms and conditions of this Agreement,
CA hereby grants to Reseller, and Reseller hereby accepts, the
non-exclusive right and license to distribute the Products to End Users in
the European Community. The Products shall be distributed by Reseller under
CA's trademarks and in the same packaging as supplied by CA to Reseller. CA
reserves the right to establish or appoint any number of other resellers,
private labellers, distributors, dealers or third parties, in any area for
any purpose and the right to otherwise grant licenses to use the Products,
directly or indirectly, to end users. CA reserves the right to review and
update the Products subject to this Agreement and the supported Operating
Environments at any time upon 30 days notice to Reseller.
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2.2 DEMONSTRATION LICENSES
Reseller may acquire Demonstration Software in accordance with the terms
and conditions set forth in the Commercial Terms. Reseller must complete
CA's then standard Schedule and deliver such Schedule to CA for each copy
of the Demonstration Software acquired by Reseller under this Agreement.
Demonstration Software may not be used by Reseller for production purposes
or transferred or sub-licensed to any third party.
2.3 DISTRIBUTION LIMITATIONS
a) Reseller shall not have any right to establish or appoint any resellers
or dealers of the Products. Except as agreed by CA in writing, Reseller
shall not allow any third party to sub-license, copy, assign, transfer or
distribute the Products.
b) Save as explicitly permitted by applicable legislation, and except as
specifically permitted in this Agreement, Reseller shall not (nor shall it
permit any third party to):
(i) copy or manufacture the Products or any portion thereof save where
the Products are sub-licensed pursuant to Clause 3.2(b);
(ii) translate, modify, adapt, enhance, extend, decompile, dissemble or
reverse engineer the Products; or
(iii) use the Products to provide any facility management or bureau
service or otherwise use the Products to process the data of any third
party.
Reseller may provide other software products and services in combination
with the products, provided that save where the Product is sub-licensed
pursuant to Clause 3.2(b), no non-CA products shall be placed on Product
diskettes, tapes or other media. The documentation for any such non-CA
products may not be included in the Documentation of the Products.
c) Reseller agrees not to export or disclose, directly or indirectly, the
Products or related technical information, or materials (or any direct
product thereof) without the prior written consent, if required, of the
Office of Export Administration of the US Department of Commerce. Reseller
agrees to comply with any other applicable export laws and regulations.
d) Reseller agrees not to specifically direct its marketing and advertising
activity in connection with the Products outside of the Target Market.
3. OBLIGATIONS OF THE RESELLER
- ------------------------------
3.1 MARKETING
Reseller shall use reasonable efforts to actively promote the Products, and
shall maintain the formal name of the Products (with appropriate trademark
designations) in all advertising and other printed materials relating to
the Products. CA reserves the right to require Reseller to furnish to CA in
advance for review and approval any and all promotional, advertising and
other materials which refer to the Products or which use or display any
trademark, service mark, logo or trade name of CA. CA also reserves the
right to require Reseller to discontinue use of any promotional,
advertising or other materials referring to CA or the Products.
3.2 END USER AGREEMENTS
a) Save as provided for in 3.2 b) below, Reseller shall not deliver any
Product to any End User without the concurrent delivery of:
(i) the then current End User Agreement for the Product
(ii) CA's then current registration form for the Product.
The current versions of the End User Agreement and registration form have
been provided by CA to Reseller. Reseller shall promptly notify CA of any
and all material breaches of the End User Agreement that may or should come
to its attention and will assist CA in all steps necessary to terminate any
breached license if the breach is not curable or if it is not cured
promptly after notice.
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b) Where the Products are to be supplied to an End User in embedded form
integrated into an application not proprietary to CA then Reseller may
sub-license the Products pursuant to a written sub-license agreement
containing provisions that; (i) prohibit title to the Products from passing
to the End User; (ii) license only object code to the End User and prohibit
reverse engineering, disassembly or decompilation except to the extent
permitted by applicable law; (iii) prohibit transfer or duplication of the
Products except for temporary transfer in the event of CPU malfunction or
the making of back-up copies to the minimum amount permitted by applicable
law; (iv) prohibit use of the Products outside the scope of the application
within which it is embedded, or for application development purposes; (v)
limit use of the Products to the End User's internal business purposes and
prohibit sub-licensing, timesharing, rental, facility management or service
bureau usage of the Products; (vi) include appropriate terms restricting
the licensed computers and maximum number of Users to those specified in
the applicable order form; (vii) disclaim CA's liability for all direct,
indirect, incidental or consequential damages; (viii) require the End User
to discontinue use and destroy or return all copies of the Products on
termination of the sub-license agreement; (ix) restrict publication of
distribution results of any benchmark tests run on the Products; and (x)
permit Reseller to comply with all other requirements of this Agreement.
3.3 ORDERS
a) Prior to distributing any Products to any End User, Reseller shall place
an order with CA on CA's then standard form. Reseller shall provide CA with
such information as CA may require about how a prospective End User
proposes to use the Products, including but not limited to, the power
rating of the CPU(s) on which the Products will be operated, the make,
model and serial number of the CPU on which the Products will be used
and/or the number and type of authorized users on such forms. Reseller
shall not deliver the Products to any End User unless the version of the
Products delivered has been authorized by CA for the Usage identified by
the End User. Reseller understands and agrees that CA may delay or withhold
issue of authorization keys for the Products in the event Reseller or its
End User fails to provide the necessary information to issue the
authorization key. No provisions in Reseller's purchase orders, license
agreements or in any other business forms employed by Reseller shall add to
or supersede the terms and conditions of this Agreement, which shall
exclusively govern the relationship of the parties.
b) All orders for the Products (or any Upgrade) shall be pursuant to a
written request on CA's standard form, and subject to acceptance by CA at
its principal place of business. In addition to any other right or remedy,
CA may, at its option, refuse any order placed by Reseller, cancel any
accepted order or delay shipment thereof, if Reseller is delinquent in any
payments to CA or if Reseller is otherwise in breach of this Agreement. CA
reserves the right to issue only temporary authorization keys until payment
for the license has been received.
c) Upon receipt of orders from Reseller that comply with all requirements
of this Agreement, CA will, unless Reseller is delinquent in its payments
or in breach of its agreements with CA, make reasonable efforts to fill all
orders for the Products and issue associated authorization keys to Reseller
or its End Users. CA shall not be liable to Reseller, or to any person, for
CA's failure to fill any orders, or for any delay in delivery or error in
filing any orders for any reason whatsoever. CA shall have no obligation to
export any Products from the United Kingdom or Republic of Ireland.
d) For the avoidance of doubt, any supply of the Products to an End User,
regardless of any existing license held by such End User, shall be subject
to the prior supply of the Products from CA and payment of the associated
fees.
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3.4 REPRESENTATIONS
Reseller shall not make
(i) any representation or warranty whatsoever on behalf of CA;
(ii) any representation or warranty concerning the quality, performance
or other characteristics of the Products other than those which are
consistent in all respects with, and do not expand the scope of, the
warranties set forth in this Agreement; or
(iii) any commitment to modify any of the Products.
4. CUSTOMER SUPPORT AND UPDATES
- --------------------------------
4.1 RESELLER FIRST LEVEL SUPPORT
If Reseller is authorized by CA (in the Commercial Terms) to provide First
Level Support for all or any of the Products, Reseller shall ensure that
the number of employees specified in the Commercial Terms complete the
required minimum training for each of the Products and Operating
Environments as necessary to be certified by CA as an authorized provider
of First Level Support Services. If Reseller provides First Level Support,
it shall provide First Level Support substantially similar to that
described in CA's Client Support Handbook. CA may provide First Level
Support and other support services directly to End Users, but shall not
have any obligation to do so unless the End User has entered into a
maintenance agreement directly with CA. If CA directly supports an End
User, CA shall be entitled to retain the full amount of maintenance revenue
received from such End User.
4.2 SECOND LEVEL SUPPORT
CA shall provide Reseller with Second Level Support (in accordance with
CA's then current Support Handbook) for Products properly licensed to
Reseller's End Users purchasing First Level Support Services from Reseller
for the fees set forth in the Commercial Terms and provided that Reseller
follows the following procedures:
a) Qualified, trained Reseller technical staff shall review all
reported errors to determine if the error occurs in the Products or in
other hardware or software products not supplied by CA. If Reseller
determines that the error occurs in the Products, Reseller may then
submit the error to CA; and
b) Reseller shall submit detailed descriptions of any reported errors.
If CA is not able to replicate the error, Reseller shall provide any
additional information required by CA (which may include a sample
program enabling replication of the error). Reseller will also make its
personnel available to assist in problem identification and resolution;
and
c) CA shall provide Reseller with Maintenance Releases made generally
available by CA during the Term of this Agreement. Reseller shall be
responsible for distributing Maintenance Releases to End Users only for
computers properly licensed and under a current support contract; and
d) CA may provide Reseller with New Versions made generally available
by CA during the Term of this Agreement on the terms and conditions set
forth in the Commercial Terms. Reseller may distribute new Versions
only to End Users.
5. LICENSE AND UPGRADE FEES
- ----------------------------
5.1 LICENSE FEES
The price charged by CA to Reseller for licenses of the Products acquired
by Reseller from CA during the Term shall be the then prevailing CA
suggested list price for the version of the Product (or Upgrade) ordered by
Reseller, less the discount then available to Reseller under the Commercial
Terms. Alternatively, Reseller may elect to acquire Product licenses from a
distributor of the Products that is authorized by CA to distribute the
Products to CA Resellers ("Authorized Distributor"). If Reseller elects to
purchase Product licenses from an Authorized Distributor, the prices,
payment and shipment terms and other commercial terms shall be agreed
between Reseller and the Authorized Distributor. The price payable by
Reseller (for licenses purchased from CA) includes delivery charges within
the United Kingdom or Republic of Ireland.
5
<PAGE>
5.2 SUPPORT FEES
Reseller shall pay the applicable fees for Second Level Support and/or New
Versions as set forth in the Commercial Terms.
5.3 UPGRADE FEES
For each Upgrade sold by Reseller, Reseller shall order the Upgrade from CA
and pay the Upgrade fee set forth in the Commercial Terms.
5.4 PROGRAM FEES
Reseller agrees to pay the program fees set forth in the Commercial Terms
as well as any fees due to CA under the Commercial Terms for training,
education and other services provided by CA to Reseller.
6. GENERAL TERMS AND CONDITIONS
- --------------------------------
6.1 TERM OF AGREEMENT
"Term" shall mean the Initial Period together with any agreed renewal
periods. The Initial Period of this Agreement shall commence on the
Effective Date and shall continue for a period of ____________ (12 months
if left blank) from such date, unless sooner terminated as hereinafter
provided. After the Initial Period, this Agreement may be renewed on an
annual basis if mutually agreed by both parties in writing prior to the end
of the Initial Period and subject to Reseller's payment of the applicable
renewal fees set forth in the Commercial Terms.
6.2 RECORDS AND REPORTS
During the Term and for a period of at least five years following
termination of this Agreement, Reseller shall keep full, true and accurate
records and accounts in accordance with generally accepted accounting
practices to show the amount of license and support fees payable to CA
under this Agreement. These records and accounts shall include, at a
minimum, for each Product distributed:
(i) the End User name and address and company registration
number;
(ii) the date of shipment, Products shipped and brand and model of the
licensed computer;
(iii) the number of users licensed;
(iv) a copy of each End User order; and
(v) records concerning Product support provided to End Users and the
terms of such support contracts.
CA shall have the right, on notice to Reseller, to examine such records or
to have such records examined by CA's designated accountants during normal
business hours to determine Reseller's compliance with the terms of this
Agreement. CA shall bear the expenses of the audit; however, in the event
any such audit reveals that Reseller has understated the amount of fees
that it is obligated to pay under this Agreement by more than five percent
(5%) of the amount reported during the period audited. Reseller shall pay,
in addition to any other fees contractually due, all reasonable costs
associated with the audit. Such audit right shall survive the termination
of this Agreement for a period of five years.
6.3 PAYMENTS
a) Terms of payment on all invoices from CA shall be net thirty (30) days.
All payments shall be made to CA's address for payment indicated on CA's
invoice to Reseller or such other address as advised by CA on at least 10
days written notice. If any payment due under this agreement shall be
overdue, without prejudice to any other rights of CA (including without
limitation, the suspension of support services) CA shall have the right to
charge and the Reseller hereby
6
<PAGE>
agrees to promptly pay interest on such sums against CA's invoice(s) at the
rate of 2% per month (or part thereof) compounded for the entire overdue
period, after, as well as before any judgment.
b) All prices listed in the Commercial Terms are exclusive of all taxes,
including sales, use or value added taxes where applicable. Upon
presentation of invoices by CA, Reseller shall pay any and all applicable
tariffs, duties or taxes (other than franchise and income taxes for which
CA is responsible) imposed or levied by any government or agency. Any
claimed exemption from such tariffs, duties or taxes must be supported by
proper documentary evidence delivered to CA.
6.4 PROPRIETARY INFORMATION AND NON-DISCLOSURE
a) CA (or its licensors) retains ownership of all intellectual property
rights (including patents, copyrights and trademarks) in and relating to
the Products. The Products, the Documentation and other proprietary
information provided by CA to Reseller hereunder contain and constitute
trade secrets, information and data proprietary to and copyrighted by CA.
Neither Reseller or its employees shall cause or allow such information or
data to be disclosed to third parties or duplicated except as expressly
allowed in this Agreement. Any customizations, enhancements, improvements,
translations, derivative works or other modifications of the Products made
by Reseller shall belong to CA and CA shall have all right, title and
intellectual property interest to such work. CA shall have no obligation to
support any customizations, extensions or modifications made to the
Products by any third party unless otherwise agreed by CA in writing.
b) Reseller acknowledges and agrees that the unauthorized disclosure, use
or copying of the Products may cause CA serious financial loss.
Accordingly, in the event of any unauthorized disclosure, use or copying of
the Products, Reseller agrees that CA shall have the right to obtain
injunctive or other equitable relief.
c) Reseller may use the trademarks, trade names, service marks and logos
that relate to CA or the Product (the "Marks") solely in connection with
this Agreement provided that Reseller clearly identifies CA's ownership of
such Marks. The Marks remain the exclusive property of CA and Reseller will
not register the Marks or take any action that jeopardizes CA's proprietary
rights in the Marks. Reseller agrees to cooperate with CA's instructions
and quality control procedures relating to the Marks and shall only use the
Marks in unaltered form. CA reserves the right to require Reseller to
discontinue use of any advertising or marketing materials relating to CA,
the Marks or the products.
6.5 LIMITED WARRANTY
a) Both parties represent and warrant that they have the right to enter
into this Agreement. CA warrants that the then current, unmodified version
of the Products will substantially perform the functions or generally
conform to the then current version of their published Documentation. If it
is determined that the Products do not perform as warranted, CA's only
responsibility will be to use reasonable efforts, consistent with industry
standards, to cure the defect. CA does not represent that the Products are
error free or will satisfy all of Reseller's or its End User's
requirements. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES. TO THE
MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, ALL OTHER WARRANTIES,
CONDITIONS AND REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, VERBAL,
STATUTORY OR OTHERWISE, AND WHETHER ARISING UNDER THIS AGREEMENT OR
OTHERWISE ARE HEREBY EXCLUDED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OR CONDITIONS OF QUALITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CA SHALL NOT BE BOUND BY OR LIABLE FOR ANY
REPRESENTATIONS OR WARRANTIES, WHETHER WRITTEN OR ORAL, WITH RESPECT TO THE
PRODUCTS MADE BY RESELLER OR ITS AGENTS, EMPLOYEES OR REPRESENTATIVES.
7
<PAGE>
b) Except for the Indemnification set forth below in Section 6.6, CA's
maximum liability for damages under this Agreement (regardless of the form
of action, whether in contract or tort) shall not exceed the amount paid by
Reseller to CA for the Products or services as to which the claim relates.
c) IN NO EVENT SHALL CA BE LIABLE TO RESELLER OR ANY OTHER PARTY, WHETHER
IN CONTRACT OR TORT, FOR ANY INCIDENTAL, DIRECT, INDIRECT, SPECIAL, OR
CONSEQUENTIAL LOSS OR DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF
PROFITS, REVENUE OR DATA), THAT MAY ARISE FROM THE USE, OPERATION OR
MODIFICATION OF THE PRODUCT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
LOSS OR DAMAGES BEING INCURRED.
d) The foregoing limitations on liability shall not apply to any liability
for damages arising from death or personal injury to the extent that such
is due to the negligence of CA, its employees or authorized agents.
6.6 INDEMNIFICATION
a) CA, at its expense, shall defend any action brought against Reseller to
the extent that it is based on a claim that any Product infringes a third
party's copyright or a patent duly issued in the United Kingdom or Republic
of Ireland. CA shall pay all damages and costs finally awarded against
Reseller in such action, provided that CA is notified in writing of the
existence of such claim against Reseller within seven (7) days of
Reseller's first learning of the same; and provided that CA is given full
authority to control the defense, costs and settlement of the claim and
that CA receives reasonable co-operation and assistance from Reseller. CA
will not be obliged to defend or otherwise indemnify Reseller in any
lawsuit or as to any claim which arises from or relates to any combination
of the Product with another product not supplied by CA, or if such claim is
based upon a use of the Product for a purpose for which is was not designed
or if the Product has been modified by any party other than CA. In lieu of
the foregoing indemnification obligations, CA shall have the operation, at
its expense, either to procure for an End User the right to continue using
the Product or to replace or modify the Product so that it is no longer
infringing, or, if such options are not reasonably available, to refund to
Reseller the amount actually paid by Reseller to CA for the Product. The
foregoing states the entire obligation of CA with respect to the
infringement of intellectual property rights of any third party.
b) Reseller shall indemnify and hold CA harmless from and against all
claims, judgments, awards, costs, expenses, damages and liabilities
(including reasonable attorneys' fees) of whatsoever kind and nature that
may be asserted, granted or imposed against CA directly or indirectly
arising from or in connection with
(i) any claims that any software supplied by Reseller (other than any
unmodified Products provided by CA) infringes any third party
intellectual property rights;
(ii) any misrepresentation made by Reseller regarding CA or the
Products; and
(iii) any warranty, condition, representation, guarantee or indemnity
granted by Reseller with respect to the Products in addition to the
limited warranty specified in the Section 6.5 of this Agreement titled
"Limited Warranty."
6.7 DEFAULT AND TERMINATION
a) If this Agreement expires or is terminated by either party, for any
reason, Reseller will immediately pay all sums due and owing to CA.
b) Either party may terminate this Agreement, with or without cause, on
thirty (30) days written notice to the other party.
c) If Reseller fails to pay any sum of money due and owing under this
Agreement within ten (10) days of written notice thereof from CA, CA shall
have the right to terminate this Agreement without further
8
<PAGE>
notice to Reseller. If either party breaches any of the terms, conditions
or provisions of this Agreement, and fails to cure such breach within
thirty (30) days after written notice thereof, the other party shall have
the right to terminate this Agreement without any further notice.
d) This Agreement may be immediately terminated by CA if:
(i) Reseller violates any of the conditions of Section 6.4;
(ii) Reseller shall cease business, commence bankruptcy proceedings or
have bankruptcy proceedings commenced against it, be adjudged bankrupt
or insolvent or commit any other act of bankruptcy;
(iii) there is a sale or transfer, whether by operation of law or
otherwise, of the direct or indirect control of Reseller; or
(iv) there is an attempt by Reseller to assign this Agreement or any
right or obligation hereunder without CA's prior written consent.
e) In the event of a party's uncured breach of this Agreement, the
nonbreaching party may, in addition to the right to withhold its
performance under and/or terminate this Agreement, avail itself of all
other rights, remedies and causes of action available at law, in equity or
otherwise, against such party for damages as a result of such breach.
Unless otherwise provided in this Agreement, remedies shall be cumulative
and there shall be no obligation to exercise a particular remedy.
f) Except as set forth below in Section 6.7(g), upon expiration or
termination of this Agreement, Reseller shall immediately return to CA, at
Reseller's expense, all copies of the Product not yet distributed, all
demonstration copies of the Product, all Documentation and all Product
brochures, marketing collateral and materials, together with a certified
statement by a duly authorized officer of Reseller stating that all such
Products and materials and any other confidential information of CA have
been returned to CA.
g) In the event of any termination of this Agreement (other than
termination by CA under Sections 6.7(c) or (d) above), Reseller shall be
entitled to:
(i) retain one Development Software license solely for purposes of
providing support to End Users for the remainder of any then current
support contracts; and
(ii) to distribute, for a period not to exceed ninety (90) days, any
Products already paid for and held in its inventory as of the
termination date, subject to its continuing compliance with all terms
of this Agreement, including, but not limited, to the requirements of
Section 3.
h) Any expiration or termination of this Agreement shall not prejudice,
limit or restrict any other rights or remedies either party may have
arising prior to such expiration or termination. CA shall be under no
obligation to refund any amounts paid to CA by Reseller for any
undistributed copies of the Product held by Reseller upon any expiration or
termination of this Agreement, including, without limitation any copies of
the Product returned by Reseller to CA pursuant to Section 6.7(f) above,
except in the event that CA terminates this Agreement without cause under
Section 6.7(b).
i) In addition to this Section 6.7, Sections 6.4, 6.5 and 6.6 shall survive
termination of this Agreement.
6.8 MISCELLANEOUS
a) This Agreement shall be governed and construed in accordance with English Law
and the Reseller hereby submits to the exclusive jurisdiction of the English
Courts in connection with the determination of all disputes arising under this
Agreement.
b) Each provision of this Agreement is severable from the entire Agreement, and
in the event that any provision is declared invalid or unenforceable, that
9
<PAGE>
provision shall be amended if possible to be enforceable, but in any event, the
remaining provisions hereof shall remain in effect.
c) All notices and demands of any kind or nature which any party to this
Agreement may be required or may desire to serve upon any other in connection
with this Agreement shall be in writing to the addresses shown on page 1 of this
Agreement. Any party hereto may from time to time, by notice in writing served
upon the other parties as aforesaid, designate a different mailing address or a
different person to which following such service all further notice or demands
are thereafter to be addressed.
d) The parties shall be deemed for all purposes to be independent contractors.
This Agreement shall not constitute either party to be the employee, legal
representative or agent of the other, nor shall either party have the right or
authority to assume, create, or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the other
party.
e) No waiver by either party of any default shall operate as a waiver of any
other default or of a similar default on a future occasion. No waiver of any
term or condition shall be effective unless in writing and signed by the party
against whom enforcement of the waiver is sought. Neither party shall be
responsible for any failure to perform any obligation hereunder (except a
failure to pay) due to causes beyond its reasonable control.
f) This Agreement (including any attached Exhibits and subsequently executed
Commercial Terms Schedules referencing this document) is the complete and
exclusive statement of the understanding between the parties and supersedes all
prior agreements and representations between them relating to the subject matter
of this Agreement. The following order of precedence shall control in the event
of a conflict between the terms and conditions of this Agreement and the terms
and conditions of any Commercial Terms Schedule:
(i) the Commercial Terms Schedule for the applicable produce; and
(ii) the terms of this Agreement.
Amendments to this Agreement shall not be effective unless they are in writing
and signed by authorized representatives of both parties. The Reseller may not
assign this Agreement or any of its rights, interest or obligations hereunder.
CA may assign or charge all or any of its rights, or interests or obligations
under this Agreement to any third party, provided that the obligations of CA
under this Agreement continue to be carried out either by CA or such third
party.
10
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ON BEHALF OF THE RESELLER: ON BEHALF OF COMPUTER ASSOCIATES PLC:
Signed: /s/ David Morgan Signed: /s/ Mark Marrow
Name: David Morgan Name: Mark Marrow
Title: Chief Executive Title: Senior Vice President
Date: 25/3/98 Date: 3/26/98
11
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COMPUTER ASSOCIATES PLC
- --------------------------------------------------------------------------------
COMMERCIAL TERMS SCHEDULE (JASMINE)
This Commercial Terms Schedule, effective 16/03/1998 (the "Effective Date") is
attached and incorporated by reference into Reseller Agreement No. R102641
between CA and Reseller. Capitalized terms not defined in this Commercial Terms
Schedule shall have the same meaning as in the Reseller Agreement.
1. PRODUCTS AND OPERATING ENVIRONMENTS
- ---------------------------------------
The Products are CA-Jasmine and shall include only object code software products
generally available from CA on the Operating Environments supported by CA and
shall not include beta, pre-release or other special release products. No right
to use or distribute the source code version of the Products or any mainframe
versions thereof is granted by CA to Reseller under this Schedule. Where
Reseller distributes and supports runtime Products incorporated within or for
use with an application, the application name and description shall be as
follows:
- --------------------------------------------------------------------------------
2. BUSINESS PARTNER PROGRAMME FEES
- -----------------------------------
A. Upon executive of this Schedule, Reseller agrees to pay CA an initial program
fee of (pound)**[Confidential Treatment Requested] for any entry into the
Business Partner Programme (the "BPP") at the Gold Programme level which shall
entitle Reseller to receive:
1. **[Confidential Treatment Requested] Demonstration Software license(s) (on if
not specified) for the Products and additional Demonstration Software licenses
upon completion by Reseller sales and technical staff of the Accreditation
Program as set forth below; and
2. Sales and marketing training at a CA training facility as then specified by
CA's training services department.
3. Technical training at a CA training facility as then specified.
B. Upon any renewal of this Schedule, the then current annual renewal fee shall
be payable by Reseller to CA which covers availability of annual Support
Services from CA for Reseller's Demonstration Software licenses and New Versions
of the Demonstration Software made generally available by CA during the Term.
C. Reseller shall bear its own travel and subsistence expenses in connection
with all such training.
3. PRODUCT PRICES
- -----------------
A. The price charged by CA to Reseller for the Products shall be CA's then
prevailing suggested list price for the version of the Products (or Upgrade)
ordered by Reseller, less a discount of: **[Confidential Treatment Requested]
percent.
B. New Versions of the Products generally available from CA are available as
part of the Support Services available from CA to Reseller or its End User.
C. First Level Support Services for the Products shall be provided by Reseller
to End Users. CA shall make available to Reseller Second Level Support Services
for which Reseller shall pay to CA an annual Second Level Support Fee per End
User of **[Confidential Treatment Requested]% of CA's then prevailing list price
for the version of the Products. On each anniversary of the Effective Date
hereof, or upon request, Reseller shall report the Second Level Support Fees due
to CA using CA's then current form. Such fees shall be due upon report. CA shall
have no obligation to provide support for Products that are modified or altered
by any party other than CA.
4. TRAINING AND CERTIFICATION REQUIREMENTS
- ------------------------------------------
Reseller acknowledges that proper usage, sales and marketing of the Products is
largely dependent on appropriate training of Reseller's sales and technical
staff. Reseller agrees to implement the minimum training requirements as then
defined by CA's training services department to ensure sufficient technical
knowledge of the Products by its staff.
A. Initial Accreditation requires Reseller to complete the following: (1) At
least one employee must attend the then specified Product sales and marketing
training, and (2) upon completion of such training, the employee must
successfully complete the applicable Accreditation Test (for the then current
testing fee).
B. In the event that trained staff are reassigned to other duties or leave the
employ of Reseller, Reseller shall promptly cause other employees to undergo the
necessary minimum training programs.
5. END USER LICENSING
- ---------------------
Save as provided for by clause 3.2(b) of the Reseller Agreement, for any and all
Products not packaged by CA with a shrink-wrap license agreement, Reseller shall
require the End User to enter into CA's standard end user license agreement and
schedule prior to supply of any Products to the End User. Reseller shall ensure
that all End Users are properly licensed by either shrink-wrap or signed license
agreement as set forth in this Schedule. Reseller is not appointed as an agent
of CA and is not authorized to make any contracts or commitments on behalf of
CA.
ON BEHALF OF INVU SERVICE LIMITED: ON BEHALF OF COMPUTER ASSOCIATES PLC:
Signed: /s/ David Morgan Signed: /s/ Mark Marrow
--------------------------- ----------------------------
Name: David Morgan Name: Mark Marrow
--------------------------- ----------------------------
Title: Chief Executive Title: Senior Vice President
--------------------------- ----------------------------
Date: 25/3/98 Date: 3/26/98
--------------------------- ----------------------------
<PAGE>
COMPUTER ASSOCIATES PLC
- --------------------------------------------------------------------------------
COMMERCIAL TERMS SCHEDULE (CA-INGRES)
This Commercial Terms Schedule, effective 16/03/1998 (the "Effective Date") is
attached and incorporated by reference into Reseller Agreement No. R102641
between CA and Reseller. Capitalized terms not defined in this Commercial Terms
Schedule shall have the same meaning as in the Reseller Agreement.
1. PRODUCTS AND OPERATING ENVIRONMENTS
- ---------------------------------------
The Products are CA-Ingres and shall include only object code software products
generally available from CA on the Operating Environments supported by CA and
shall not include beta, pre-release or other special release products. No right
to use or distribute the source code version of the Products or any mainframe
versions thereof is granted by CA to Reseller under this Schedule. Where
Reseller distributes and supports runtime Products incorporated within or for
use with an application, the application name and description shall be as
follows:
- --------------------------------------------------------------------------------
2. BUSINESS PARTNER PROGRAMME FEES
- -----------------------------------
A. Upon executive of this Schedule, Reseller agrees to pay CA an initial program
fee of (pound) **[Confidential Treatment Requested] for any entry into the
Business Partner Programme (the "BPP") at the Gold Programme level which shall
entitle Reseller to receive:
1. **[Confidential Treatment Requested] Demonstration Software license(s) (on if
not specified) for the Products and additional Demonstration Software licenses
upon completion by Reseller sales and technical staff of the Accreditation
Program as set forth below; and
2. Sales and marketing training at a CA training facility as then specified by
CA's training services department.
3. Technical training at a CA training facility as then specified.
B. Upon any renewal of this Schedule, the then current annual renewal fee shall
be payable by Reseller to CA which covers availability of annual Support
Services from CA for Reseller's Demonstration Software licenses and New Versions
of the Demonstration Software made generally available by CA during the Term.
C. Reseller shall bear its own travel and subsistence expenses in connection
with all such training.
3. PRODUCT PRICES
- -----------------
A. The price charged by CA to Reseller for the Products shall be CA's then
prevailing suggested list price for the version of the Products (or Upgrade)
ordered by Reseller, less a discount of: **[Confidential Treatment Requested]
percent.
B. New Versions of the Products generally available from CA are available as
part of the Support Services available from CA to Reseller or its End User.
C. First Level Support Services for the Products shall be provided by Reseller
to End Users. CA shall make available to Reseller Second Level Support Services
for which Reseller shall pay to CA an annual Second Level Support Fee per End
User of **[Confidential Treatment Requested]% of CA's then prevailing list price
for the version of the Products. On each anniversary of the Effective Date
hereof, or upon request, Reseller shall report the Second Level Support Fees due
to CA using CA's then current form. Such fees shall be due upon report. CA shall
have no obligation to provide support for Products that are modified or altered
by any party other than CA.
4. TRAINING AND CERTIFICATION REQUIREMENTS
- ------------------------------------------
Reseller acknowledges that proper usage, sales and marketing of the Products is
largely dependent on appropriate training of Reseller's sales and technical
staff. Reseller agrees to implement the minimum training requirements as then
defined by CA's training services department to ensure sufficient technical
knowledge of the Products by its staff.
A. Initial Accreditation requires Reseller to complete the following: (1) At
least one employee must attend the then specified Product sales and marketing
training, and (2) upon completion of such training, the employee must
successfully complete the applicable Accreditation Test (for the then current
testing fee).
B. In the event that trained staff are reassigned to other duties or leave the
employ of Reseller, Reseller shall promptly cause other employees to undergo the
necessary minimum training programs.
5. END USER LICENSING
- ---------------------
Save as provided for by clause 3.2(b) of the Reseller Agreement, for any and all
Products not packaged by CA with a shrink-wrap license agreement, Reseller shall
require the End User to enter into CA's standard end user license agreement and
schedule prior to supply of any Products to the End User. Reseller shall ensure
that all End Users are properly licensed by either shrink-wrap or signed license
agreement as set forth in this Schedule. Reseller is not appointed as an agent
of CA and is not authorized to make any contracts or commitments on behalf of
CA.
ON BEHALF OF INVU SERVICE LIMITED: ON BEHALF OF COMPUTER ASSOCIATES PLC:
Signed: /s/ David Morgan Signed: /s/ Mark Marrow
--------------------------- ----------------------------
Name: David Morgan Name: Mark Marrow
--------------------------- ----------------------------
Title: Chief Executive Title: Senior Vice President
--------------------------- ----------------------------
Date: 25/3/98 Date: 3/26/98
--------------------------- ----------------------------
<PAGE>
10 July 1998
MEMORANDUM
----------
Further to correspondence and discussions between Computer Associates ("CA") and
INVU ("INVU") and further to an Agreement between CA and INVU dated 16 March,
1998, CA and INVU have jointly agreed to bundle and market certain products. As
a result of this agreement, a number of actions were confirmed between CA and
INVU.
1. The first bundle to be established will be INVU PRO Network Edition and
INGRES II. The technical integration was seen as being straightforward and
will be achieved in a short space of time. CA stated that the
administration of the INGRES database was designed to be low level
maintenance, but it was recommended that end users attend a database
administrator's course as a minimum. This recommendation will be
implemented in any sales and support package through distribution channels
to end-users.
2. The second bundle to be established will be INVU PRO Network Edition and
JASMINE. The technical integration will take longer than INGRES II, due to
the advanced architecture of the JASMINE database, and the way in which
INVU will locate and retrieve objects. CA and INVU agreed that INVU was an
ideal product to take advantage of the JASMINE database and JASMINE will
provide the database methodology for the next generation of INVU. Following
successful bundling and establishing of the INVU/INGRES II product, INVU
and CA will contribute resource to combine INVU PRO and JASMINE. In the
meanwhile, both CA and Centura agreed to liaise with Centura to ascertain
the method and manner of providing the requisite links between INVU and
JASMINE.
3. Distribution & Routes to Market
-------------------------------
CA and INVU agreed to cooperate on establishing and supporting distributors
to sell the bundled products. CA and INVU agreed that they would make joint
presentations to distributors nominated by CA and INVU.
CA stated that, at present distributions relationships were undergoing
changes following reorganization of the Cheyenne channels. It was,
therefore, felt prudent to focus on the distribution relationships
currently being developed by INVU, and CA's distribution channel to follow.
Distributors would be engaged and contracted with during September/October
1998 and it was proposed that three had been selected, Dicom, Paperlink and
Ideal. Ilion, Sphinx Level V and Computer 2000 may be added to this list
shortly.
In addition, Value Added Resellers will be courted and recruited.
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<PAGE>
CA and INVU agreed to use a marketing fund to produce an initial run of 500
promotional bundles of INVU and INGRESII. This will probably be in the form
of a shrink-wrapped CA/INVU box with the product and documentation
inserted. The box will have a joint CA/INVU logotype presentation. INVU
agreed to provide artwork, samples and documentation to CA by 10 August
1998 for design and production.
Presentations to distributors and the shrink-wrapped bundle product will be
targeted for the second week in September.
CA stated that representatives from their marketing department would visit
INVU shortly to coordinate actions. CA and INVU agreed that by
November/December 1998, the bundled end user sales levels should reach an
annualized rate of (pound) **[Confidential Treatment Requested]. 1998
targets should be set at (pound) **[Confidential Treatment Requested].
4. Joint Advertising and Public Relations
--------------------------------------
CA and INVU will agree a joint press release by 20 July 1998. INVU are to
provide CA with appropriate comments and quotes. CA will arrange
distribution of the press release in general, but, specifically, INVU will
include the press release on their web page.
The press release will be distributed to the direct sales force of CA.
The bundling deal will be e-mailed to all CA direct sales force.
INVU will be included in the CA partner directory.
INVU will place national adverts during the course of September, and CA
agreed that their logo and presence will be present on the adverts.
5. Pricing
-------
It was agreed that both bundles for INVU/INGRESII and INVU/JASMINE would be
at a **[Confidential Treatment Requested] user level and at a list price of
(pound) **[Confidential Treatment Requested].
It was agreed that distributor will receive a discount level of
**[Confidential Treatment Requested]% depending on volumes. Of the (pound)
**[Confidential Treatment Requested] sell price to distributors, CA will
receive (pound) **[Confidential Treatment Requested] and INVU will receive
(pound) **[Confidential Treatment Requested].
INVU will provide distributors with the products and provide product
support. Second line support on INGRES II and JASMINE will be provided by
CA via INVU.
It was agreed by CA and INVU that this pricing level is unprecedented in
this market, with nearest competitors being firmly placed in the (pound)
**[Confidential Treatment Requested] level.
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<PAGE>
6. Territory
---------
CA and INVU agreed that the UK will be the principal territory to be
attacked in the first instance. Further European territories will be
identified and CA agreed to identify further distribution in identified
countries in Europe in the short term.
7. Confidentiality
---------------
CA and INVU agree to keep all details of this joint marketing arrangement
confidential.
FOR AND ON BEHALF OF FOR AND ON BEHALF OF
COMPUTER ASSOCIATES PLC INVU SERVICES LIMITED
John McCavanaugh David Morgan
- --------------------------- ---------------------------
Name
European Channel Dev. Mgr. CEO
- --------------------------- ---------------------------
Title
/s/ John McCavanaugh /s/ David Morgan
- --------------------------- ---------------------------
Signature
July 17, 1998 July 17, 1998
- --------------------------- ---------------------------
Date
3
<PAGE>
CA Agreement No. ______________
DEVELOPMENT LICENSE AGREEMENT
1. Computer Associates International, Inc., a Delaware corporation having
offices at One Computer Associates Plaza, Islandia, NY 11788-7000 ("CA")
grants to INVU Services Ltd., an English corporation having offices at The
Beren, Blisworth Hill Farm, Stoke Road, Blisworth Northamptonshire, NN7BDB
("Company"), and Company accepts from CA, a non-exclusive,
non-transferable, limited-use license to use and operate the CA software
products ("Licensed Program(s)"), ordered by Company in Appendix A, solely
on the computers of Company located at the Development Site set forth in
Appendix A (the "Development Site") solely to:
(a) Implement the Development Project as described in Appendix C (the
"Development Project"); and
(b) Demonstrate to potential customers the use of the License Program(s)
and the Company's products ("Company Product") as listed in Appendix
A, in accordance with the Development Project. CA will provide
authorization keys for a maximum of ten (10) demonstration copies
(subject to certification as set forth below and upon receipt of
written notification of the location, make, model, serial number and
IP address and any other information necessary for CA to issue the
authorization key) for each computer system on which such
demonstration copies of the Licensed Program(s) are installed.
2. (a) CA grants to Company a non-exclusive, non-transferable, personal right
to use the CA trademarks, servicemarks, tradenames and logos, depicted
on Appendix B attached (the "Marks") solely in conjunction with the
Company Product in the manner set forth in the guidelines attached as
Appendix B and subject to the terms and conditions of this Agreement,
including the certification by CA as set forth below.
(b) All Marks remain the exclusive property of CA. Company will take no
action which jeopardizes CA's proprietary rights in the Marks. Company
shall follow CA's guidelines relating to the Marks and use the Marks
in unaltered form. CA shall require Company to submit all advertising
and marketing material referencing CA or the Marks to CA for advance
review and approval, and CA may require Company to discontinue use of
any advertising or marketing materials relating to CA, the Marks or
the Licensed Program(s).
3. CA agrees to provide Company with the opportunity to participate in its
marketing and sales promotions, subject to the conditions and requirements
of each individual promotion and CA's exclusive approval.
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<PAGE>
4. (a) Upon execution of this Development License Agreement, Company shall be
appointed as a nonexclusive Premier Development Partner.
(b) In a twelve-month period, CA agrees at its option to match every $
**[Confidential Treatment Requested] spent by Company on each Licensed
Program(s), up to a limit set within CA's sole discretion, to
advertise and market the integration between each of Licensed
Program(s) and the Company Product. Company must provide CA with
verified advertising and marketing expenses within forty-five (45)
days of the end of each fiscal quarter (June 30, September 30,
December 31, and March 31) in which such expenses were made in order
for such funds to be matched by CA. CA shall be entitled to withdraw
this offer at any time in its sole discretion or in the event Company
fails to comply with the terms of this Agreement or any related
Addendum.
(c) Company shall retain for a period of three (3) years after the date of
payment records evidencing its advertising and marketing activities
regarding the Company Product and the Licensed Program(s) and its
entitlement to matching fees, the billings therefore, the calculation
of its eligibility for matching fees, and any other accounting records
relevant for such services. During this three-year period, CA or its
designated representative shall have the right to examine and audit,
at its own expense, such records during normal business hours, upon
ten (10) business days notice to Company. CA shall bear the expenses
of such audit; however, in the event any such audit reveals that
Company has overstated the amount of matching fees that it is eligible
to receive under this Agreement by more than **[Confidential Treatment
Requested]% of the amount reported during the period audited, Company
shall repay CA such overstated amount, in addition to any other fees
contractually due, and pay all reasonable costs associated with the
audit.
5. Without the prior written consent of CA, Company shall not:
(a) copy in whole or in part the Licensed Program(s), except for normal
back-up and archive purposes;
(b) modify, reverse compile, reverse engineer or reverse assemble all or
any portion of the License Program(s);
(c) distribute, market, rent, lease, transfer, assign, or sublicense the
Licensed Program(s) to third parties or use the Licensed Program(s)
for the benefit of third parties;
(d) export the Licensed Program(s) in violation of United States laws and
regulations or other applicable laws or regulations;
(e) perform, publish or release benchmarks or other comparisons without
CA's prior written consent;
2
<PAGE>
(f) use the Licensed Program(s) for any development activities or for any
purpose other than as agreed to in this Agreement; or
(g) use the Licensed Program(s) to develop nor shall Company market any
conversion utility or aid specific to the Licensed Program(s) enabling
users to convert from the Licensed Program(s) to an alternative
product.
6. Company's right to use the Marks is contingent on the testing and
verification by CA that the Company Product is integrated with the Licensed
Program(s) in accordance with the Development Project (referred to herein
as "Certification") and Company's continued compliance with the following:
(a) that Company has tested the Development Project and has verified to CA
the successful completion of the Development Project. Upon request,
Company agrees to provide to CA any such test results for its review;
(b) that upon receipt of any subsequent versions or releases (excluding
bug fixes, patch tapes or other such maintenance releases) of the
Licensed Program(s) from CA, Company shall ensure that the Company
Product remains integrated with the Licensed Program(s); and
(c) that CA may test each release of the Company Product to confirm the
successful integration of the Company Product with the Licensed
Program(s). CA shall be entitled to withdraw Certification and
Company's right to use the Marks immediately on notice to Company in
the event that the Company Product fails Certification at any time or
Company fails to comply with the terms of this Agreement.
Company and CA shall each be responsible for bearing its own respective
costs and expenses in connection with the testing and Certification of the
Company Product.
7. CA will provide upgrades, enhancements, new releases and new versions to
the Licensed Program(s) as they become generally available and maintenance
for the Licensed Program(s), including but not limited to, hotline
telephone support services under CA's current support policies. CA shall
not support nor be obligated to provide support for the Company Product or
the Development Project.
8. CA shall retain all title, copyright, patent, trademark, trade secret and
other intellectual property rights in or relating to the Licensed
Program(s) and Marks, and any related copies, partial copies, compilations,
modifications, derivative works or translations thereto. Company and its
employees shall keep the Licensed Program(s) strictly confidential and will
not disclose, permit access or otherwise distribute the Licensed Program(s)
to anyone except its authorized employees. All rights not expressly granted
in this Agreement are reserved by CA.
3
<PAGE>
9. This Agreement shall remain in effect for thirty (30) days from the date
hereof and shall be renewed automatically thereafter for a term of thirty
(30) days until terminated by either party upon written notice given not
less than ten (10) days prior to the end of the original or any renewed
term hereof. Upon termination or expiration, Company shall cease use of all
copies of the Licensed Program(s) and the Marks, return the original and
all copies of the Licensed Program(s) and documentation to CA, and certify
to CA in writing that all copies thereof have been destroyed and deleted
from any computer libraries or storage devices and are no longer in use by
Company.
Section 2(b), 4(c), 5, 6, 8, 11, 12 and 13 shall survive termination of
this agreement.
10. (a) Company provides CA with its consent and authorization and grants CA
the right to include a hyperlink: (i) to Company's website from CA's
internet site and/or intranet site, as determined within CA's sole
discretion; or (iii) in CA's Development Partner CD.
(b) Company grants CA a worldwide, nonexclusive right and license to
distribute, combine, copy, use, and duplicate Company's trademark,
servicemark, tradename, or logo: (1) for such hyperlinks; or (ii) in
CA's Development Partner brochure solely in accordance with this
Agreement or related Addendum. Company grants to CA the right to use
the marketing materials provided by Company or created with Company in
CA's Development Partner brochure.
(c) CA provides Company with its consent and authorization and grants
Company the right to include a hyperlink to CA's web page from
Company's web page. Company agrees that it shall hyperlink to CA's web
page during the term of this Agreement.
(d) CA grants Company, and Company accepts, a worldwide, nonexclusive
right and license to distribute, combine, copy, use, and duplicate its
trademark, tradename, servicemark or logo for such hyperlink solely in
accordance with this Agreement or related Addendum.
11. (a) Company acknowledges and agrees that CA does not support and has not
reviewed the contents of Company's World Wide WebSite. Company agrees
that it is fully responsible for the content posted at its URL address
on its World Wide Web Site.
(b) CA acknowledges and agrees that Company does not support and has not
reviewed the contents of cai.com. CA agrees that it is fully
responsible for the content posted on cai.com subject to the
applicable disclaimers.
12. Company will defend, indemnify and hold harmless and defend CA against any
and all claims, judgments, awards, costs, expenses, damages and all
liabilities (including reasonable attorney's fees), which arise out of or
relate to:
4
<PAGE>
(a) the Company Product, from end users of the Company Product alleging
that the Company Product is not integrated with the Licensed
Program(s), or a claim of negligent referral by CA regarding the
Company Product.
(b) Company's advertisements or marketing, consented to an for which CA
paid matching fees, or used in accordance with this Agreement,
including Company's negligence or other failure under this Agreement:
(i) In obtaining consent of any nature, other than with respect to
materials furnished by CA, whatsoever; or
(ii) In protecting CA against claims for the unauthorized use of names
or likeness of any person, libel, slander, defamation,
disparagement, piracy, plagiarism, unfair competition, idea
misappropriation, infringement of copyright, title, slogan, or
other property rights, and any invasion of the right of privacy.
13. THE LICENSED PROGRAM(S) IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KING,
CA DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
IN NO EVENT WILL CA BE LIABLE TO COMPANY OR OTHER PARTY FOR ANY LOSS OR
INDIRECT, OR INCIDENTAL, OR CONSEQUENTIAL LOSS OR DAMAGE WHICH MAY ARISE
FROM THE USE, OPERATION, OR MODIFICATION OF THE LICENSED PROGRAM(S) OR
MARKS.
14. Company may not assign or transfer its rights or delegate its duties under
this Agreement. Any change of control of 51% of the ownership or interest
or transfer to a successor corporation of Company shall terminate this
Agreement. Any prohibited assignment shall be null and void.
15. This Agreement represents the entire agreement between the parties,
supersedes all prior understandings of the parties, both written or oral,
and may be amended only by a written agreement signed by authorized
representatives of CA and Company.
COMPUTER ASSOCIATES INVU SERVICES LTD.
INTERNATIONAL, INC.
By: /s/ Tommy Bennett By: /s/ David Morgan
----------------------- --------------------
Name: Tommy Bennett Name: David Morgan
--------------------------- -----------------------
Title: SVP Title: Chief Executive
-------------------------- -----------------------
Date: 11/23/98 Date: 11/11/98
-------------------------- -----------------------
5
<PAGE>
APPENDIX A
DEVELOPMENT LICENSE ORDER FORM FOR COMPUTER ASSOCIATES
DEVELOPMENT PARTNER PROGRAM(S)
<TABLE>
<CAPTION>
<S> <C>
Company Name & Address: INVU Services Ltd., The Beren, Blisworth Hill
Farm Stoke Road, Blisworth Northamptonshire
NN73DB
Referenceable License Agreement Number:
Company Product: INVU Pro Network
Company Phone #: 44-1604 859-893
Development Site (if different than above):
Development Site ID:
Technical Contact: David Morgan Phone #: 44-1604859 893 Fax #: 44 1604 859 902
Business Contact (if different than above):_____________ Phone #:_________ Fax #:_______
Shipping Required? (Circle one) YES NO String (or key) only? YES NO
Shipping Address (if different than above):
Effective Date of this Order: 11/11/98
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Licensed Product Release Media Operating Serial CPU
Program(s) Code Number Type System Number Model
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INGRES II ENT IN2ENT99000 2.0 CD ROM NT/Solaris Dev-Partner Generic
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMPUTER ASSOCIATES INVU SERVICES LTD.
INTERNATIONAL, INC.
By: /s/ John McCavanaugh By: /s/ David Morgan
------------------------- -----------------------
Name: John McCavanaugh Name: David Morgan
--------------------------- -------------------------
Title: European Channel Dev. Mgr. Title: CEO
-------------------------- -------------------------
Date: July 17, 1998 Date: July 17, 1998
--------------------------- -------------------------
<PAGE>
APPENDIX B
CA Licensed Program(s) trademark, tradenames and logos:
CA Usage guidelines:
The CA logos and Marks shown above are marks that may be used by authorized
development partners only to signify that their products are compatible with the
Licensed Program.
CA will provide authorized development partners with camera-ready artwork of the
CA logos. You may not alter this artwork in any way. You may not combine the
logos with any other feature including, but not limited to, other logos, words,
symbols, graphics, photos, slogans, numbers, design features or symbols.
You may not display the CA logos or other CA Marks on packaging, documentation,
collateral or advertising in a manner which suggests that "CA," "Computer
Associates," or the above logos cannot be larger or more prominent than your
product name, trademark, logo or tradename.
<PAGE>
APPENDIX C
Development Project:
The Company agrees to develop an interface between the Company's INVU Pro
Network and the Licensed Program(s).
INVU provides seamless integration with Ingres II via C-API and Ingres Net. INVU
provides all application logic and user interfaces, while Ingres II provides the
repository for INVU information.
EXHIBIT 10.5
Electronic Software Distribution Agreement
This Agreement is made and entered into on (date) 11/11/98 by and between
Digital River, Inc., its successors or assigns, 5198 West 76th Street, Edina,
Minnesota, 55439 ("DR") and
(company name) INVU Services Ltd. located at
(address)The Beren, Blisworth, Northampton an
(state & zip) English corporation (hereafter referred to as "Vendor"),
with its principal office at (address) .
----------------------------
BACKGROUND
a. Vendor is the Owner of all rights (or has a license to sell) to the
Software as defined hereunder.
b. Vendor desires to enter into an Agreement with DR to allow DR to distribute
the Software.
c. DR desires to obtain the right to distribute the Software.
NOW THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
a. Software: the executable object code for Vendor's software identified on
Exhibit B, including all subsequent versions thereof provided to DR
pursuant to this Agreement.
b. Documentation: all computer readable and/or printed instructions, manuals
and other materials normally provided from time to time by Vendor to End
Users for use of the Software, that are identified on exhibit B, and all
subsequent versions thereof provided to DR pursuant to this Agreement.
c. End-User License Agreement ("EULA"): the computer readable license
agreement provided by Vendor that governs the use of the Product by End
Users, and which is to be included with each copy of the Product sold by DR
hereunder.
d. DR Materials: computer readable materials provided by DR for inclusion in
an electronic package containing the Software, Documentation, and EULA,
which materials have been approved by Vendor.
e. Product: a copy of the Software, Documentation, EULA and DR Materials, if
any, packaged in computer readable form together for electronic delivery on
www.digitalriver.com (or equivalent) and/or in tangible packaged form for
delivery in accordance with this Agreement.
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<PAGE>
f. End User: person(s) or entity(ies) that acquire a Product for use rather
than resale or distribution.
g. Vendor Trademarks: the trademarks, trade names, and logos used by Vendor
and identified on Exhibit B.
h. Territory: all countries in the world except (i) countries to which export
or re-export of any Product, or the direct products of any Product is
prohibited by United States law without first obtaining the permission of
the United States Office of Export Administration or its successor, and
(ii) countries that may be hereafter explicitly excluded pursuant to the
terms of this Agreement.
i. Dealer: person(s) or entity(ies) that resell the Product.
2. LICENSE
a. Vendor hereby grants DR, within the Territory, a license and right to:
1. Reproduce and distribute the Product in computer readable form to the
End User and/or Dealer as indicated on Exhibit 13;
2. Package the Product in a computer readable manner reasonably specified
by Vendor,
3. Utilize the Vendor Trademarks in connection with the replication of
the Product, packaging and distribution of the Product, in a manner
reasonably specified by Vendor; and
4. Distribute in tangible form the Product to the End User and/or Dealer
as indicated on Exhibit B.
b. The rights granted to DR pursuant to this Agreement shall be deemed to
include the right to designate and sell to Dealers which re-sell the
Product to the End User.
c. DR acknowledges that the Software and Documentation are the property of
Vendor or its licensors and that DR has no rights in the foregoing except
for encryption software supplied by DR, if any, and those expressly granted
by this Agreement.
3. VENDOR'S GENERAL OBLIGATIONS
a. Vendor shall deliver the current version of the Product to DR immediately
following execution of this Agreement. Vendor will provide DR with:
(i)copies of the Software on master diskettes, (ii) Product specification
information in a single file, self extracting archive format, or in another
mutually agreeable computer readable form that can be reproduced by DR,
(iii) Documentation in a computer readable form mutually agreeable
2
<PAGE>
to the parties that can be reproduced by DR, and (iv) all the items and
materials specified in the "Requirements Checklist" on Exhibit A.
b. Vendor shall provide DR with computer readable copies and/or tangible
packaged Products containing all new releases, updates, or revisions of the
Software and Documentation within a reasonable time after each such release
is made generally available by Vendor. Vendor will notify DR of its plans
for each new release, update or revision of the Product within a reasonable
period of time prior to such release.
c. Vendor will provide a hypertext link to www.digitalriver.com (or
equivalent) on Vendor's World Wide Web Home Page (the "Link") where Product
may be purchased by End-User from DR. Vendor agrees to prominently display
the Link and to use reasonable efforts to promote the Link on Vendor's
World Wide Web Home Page. Vendor agrees that no other hypertext link for
sale of the Products will be placed on the Vendor's World Wide Web Home
Page or elsewhere on Vendor's Websites without the prior written consent of
DR.
d. If Vendor makes any modifications, updates, or enhancements (the
"Improvements") to the Product, Vendor will offer the Improvements for
distribution by DR on terms substantially equivalent to those provided in
this Agreement. In the event that Vendor develops or acquires any new
products, Vendor agrees to give DR the Tight of first refusal for
distribution of these products on Vendor's World Wide Web Home Page and as
provided for the Products in this Agreement.
e. Vendor will furnish a EULA in computer readable form to DR which is to be
included with each copy of the Product sold by DR hereunder. Vendor's
linking of its World Wide Web Home Page to www.digitalriver.com (or
equivalent) shall constitute approval of the EULA DR is delivering as part
of the Product.
f. Vendor will provide all support and be fully responsible for all warranty
obligations relating to the Product. Such support and warranty shall be
provided in accordance with Vendor's then-current published software
support policy, or, in the absence of such a policy in a reasonable manner.
g. Vendor will provide DR, without charge, such technical information, current
maintenance documentation, and telephone assistance as is necessary to
enable DR to effectively reproduce, electronically package, and distribute
the Products by any means outlined herein.
4. WARRANTIES
a. Vendor represents that it has the right and authority to enter into this
Agreement and to grant DR the rights to the Software and Documentation
granted in this Agreement.
b. Vendor warrants to DR that the Vendor has all rights, title, and interest
in the Product or has obtained the right to grant the licenses set forth in
this Agreement. As of the execution
3
<PAGE>
date of this Agreement, Vendor represents that to the best of Vendor's
knowledge the Product does not infringe upon or misappropriate the
proprietary rights of any third party.
c. DR represents that it has the right and authority to enter into this
Agreement.
d. DR represents and warrants that it will use its best efforts to accurately
replicate the Product. DR represents and warrants that except for
encryption software, if any, supplied by DR, all Products distributed by DR
will not be altered in any way.
5. PAYMENTS
a. Vendor agrees to pay DR the Initialization Fee specified on exhibit B.
Vendor agrees to allow DR to offset the unpaid Initialization Fee against
any or all other amounts owing to Vendor by DR under this agreement. If the
net sales from Vendor's World Wide Web Home Page through DR exceed
$1,000.00 in the first complete calendar month of operation, then DR will
waive the Initialization fee. Products available from Vendor will be
installed on DR's server upon fulfillment of other obligations pursuant to
this Agreement. The Initialization Fee includes normal price changes and
version updates. All programming and other changes made after initial site
setup excluding normal price changes and version updates will be charged to
Vendor at $100.00 per hour ("Site Maintenance"). Vendor agrees to pay the
billed Site Maintenance charges within 30 days from the date of billing. In
the event that Site Maintenance is not paid for within 30 days of billing,
Vendor agrees to allow DR to offset the unpaid Site Maintenance against any
or all other amounts owing to Vendor by DR under this Agreement.
b. For each copy of a Product sold and delivered to an End User DR will
purchase the Product from Vendor as follows:
1. For each copy of a Product sold and delivered to an End User generated
off Vendor's web site, DR will purchase the Product at a cost equal to
the percent of the selling price outlined on exhibit B (the "% Cost").
Example: if the selling price of a Product is $100 and the % Cost on
Exhibit B is 80% then DR will purchase each copy of such Product sold
at $80.
2. For each copy of a Product sold and delivered to an End User,
generated other than from Vendor's web site, DR will purchase the
Product at a cost equal to the cost outlined as the Distribution Cost
on Exhibit B. Vendor agrees not to sell the Product to any others for
less than the Distribution Cost outlined on Exhibit B. Vendor agrees
to notify DR promptly of any reductions in the Distribution Cost.
3. For purposes of this Agreement the combination of the % Cost and
Distribution Cost outlined in 5b.1. and 5b.2. shall be referred to as
the "Total Purchase Price".
c. No Total Purchase Price shall be due for copies of the Product returned to
DR for refund in accordance with the EULA and accompanied by an executed
letter of destruction from
4
<PAGE>
the End-User, or because of defects or errors, regardless of source. No
Total Purchase Price shall be due in the case of credit card chargebacks,
unauthorized returns, or credit card fraud. DR will use reasonable efforts
to prevent such events and to recover funds in the case of fraud.
d. Within thirty (30) days after the end of each month, DR will remit payment
to Vendor of the Total Purchase Price due for the immediately preceding
month. DR will provide Vendor with a report (the "Report"), specifying the
number of copies of the Product that DR has shipped, or has requested the
Vendor to ship, as applicable, during the immediately preceding month and
the calculation of the Total Purchase Price due to Vendor in connection
therewith.
e. DR will provide to Vendor within thirty (30) days after the end of each
month, a report for the immediately preceding month showing the name,
address, phone number, e-mail address and certain other customer data along
with the quantity of the Product purchased by each End User that purchased
the Product from DR.
f. DR agrees to maintain adequate books and records relating to the
distribution of the Product to End Users and Dealers. Such books and
records shall be available at the principal office of DR for inspection by
Vendor or its representative during normal business hours, for the purpose
of determining the accuracy of the Total Purchase Price paid to Vendor for
the 12 months immediately preceding the start of the audit, in accordance
with the terms of this Agreement. Vendor shall have the right to conduct
such an audit upon twenty (20) days advance written notice not more than
twice each year. In the event that such an audit discloses an underpayment
of the Total Purchase Price which is greater than five percent (5%), then
DR shall pay the reasonable costs of such audit, otherwise Vendor shall pay
the costs of such audit.
g. Any payment or part of a payment hereunder, which is not paid when due
shall bear interest at the rate of 1.5% per month from its due date until
paid.
h. In addition, Vendor and DR agree to the Marketing payments listed on
Exhibit E, if any.
6. TANGIBLE DELIVERY OF PRODUCTS
a. The following provisions will apply to any Products listed on Exhibit B
which are to be delivered in tangible form by DR:
1. The Vendor shall provide DR with an inventory of the Products to be
held on consignment and used by DR to fulfill orders for the Products.
DR shall be responsible for the delivery of the Products to the End
User at a location or locations designated by the End User.
2. The Products shall be delivered to DR prepackaged and ready for
shipment and delivery to the End User. The Vendor shall be solely
responsible for the shipment
5
<PAGE>
of the Products to DR and shall be solely responsible for all costs
and expenses associated with any such shipments. The Vendor shall bear
the entire risk of loss of or damage to the Products during shipments
to or from DR.
3. Within fifteen (15) days after the date of this Agreement, the Vendor
shall provide DR with such consigned quantities of the Products as may
be mutually agreed upon in writing by DR and the Vendor. On a periodic
basis, DR shall provide an inventory detail to Vendor showing the
current inventory of the Products. Periodically, DR will issue
consignment purchase orders for the estimated needs of Product to be
physically shipped. The Vendor shall be responsible for making prompt
delivery of the Products to DR.
4. All shipments of Product to DR will be clearly labeled with DR's
purchase order number on the outside of the box. If DR is tracking
serial numbers for the Products, Vendor will provide with each
shipment of Product a complete list of the serial numbers of the
Product enclosed in each box.
5. DR shall have no liability of any kind whatsoever as a result of any
delay in the delivery of the Products by the Vendor, or the delivery
of the Products to DR in non-conforming condition. Upon the
termination of this Agreement, at the Vendor's sole cost and expense,
the unsold inventory of the Products shall be returned to the Vendor.
7. CONFIDENTIALITY
a. Each party agrees that all binary code, inventions, algorithms, know-how,
ideas, and all other business, technical and financial information it
obtains from the other are the confidential property of the disclosing
party ("Confidential Information"). Except as expressly and unambiguously
allowed herein, the receiving party will hold in confidence and not use or
disclose any Confidential Information and shall similarly bind its
employees and agents. The receiving party shall not be obligated under this
Section 7 with respect to information the receiving party can document:
1. is or has become readily available to the public through no fault of
the receiving party or its employees or agents, or
2. is received without restriction from a third party lawfully in
possession of such information and lawfully empowered to disclose such
information; or
3. was rightfully in the possession of the receiving party without
restriction prior to its disclosure by the disclosing party.
4. is independently developed by the receiving party by its employees or
agents without access to the other party's similar Confidential
Information.
6
<PAGE>
Each party's obligations with respect to Confidential information shall continue
for the shorter of three (3) years from the date of termination of this
Agreement or until one of the above enumerated conditions becomes applicable.
Each party acknowledges that its breach of this Section 7 would cause
irreparable injury to the other for which monetary damages are not an adequate
remedy. Accordingly, a party will be entitled to injunctive relief and other
equitable remedies in the event of a breach of the terms of this Agreement.
b. DR agrees not to: (i) disassemble, decompile or otherwise reverse engineer
the Software or otherwise attempt to learn the source code, structure,
algorithms or ideas underlying the Software; (ii) take any action contrary
to EULA except as allowed under this Agreement.
8. VENDOR TRADEMARKS
a. DR acknowledges that the Vendor Trademarks are trademarks owned or licensed
solely and exclusively by Vendor. DR agrees to use the Vendor Trademarks
only in the form and manner and with appropriate legends as prescribed by
Vendor. All use of Vendor Trademarks shall inure to the benefit of Vendor.
b. DR shall not remove, alter, cover or obfuscate any copyright notice or
other proprietary rights notice placed in or on the Products by Vendor.
9. INDEMNIFICATION
a. Vendor shall defend, indemnify, and hold DR harmless from and against any
and all liabilities, losses, damages, costs, and expenses (including,
without limitation, reasonable legal fees and expenses) associated with or
incurred as a result of any claim, action, or proceeding instituted against
DR arising out of or relating to the acts or failure to act of the Vendor,
or any of its affiliated companies, agents, employees or other related
parties under this Agreement including, without limitation, actions,
claims, or proceedings related to: (i) Vendor's performance of its rights
and obligations under this Agreement, (ii) the breach by Vendor of any of
the terms of this Agreement or any of the representation and warranties
contained herein; or (iii) the actual or alleged infringement of any
intellectual property rights arising out of Electronic Distributor's
duplication, sale, distribution, or other use of the Product pursuant to
this Agreement.
b. DR shall indemnify and hold Vendor harmless from and against any and all
liabilities, losses, damages, costs and expenses (including reasonable
legal fees and expenses) associated with any claim or action brought
against Vendor that may arise from DR's improper or unauthorized
replication, packaging, marketing, distribution, or installation of the
Product, including claims based on representations, warranties, or
misrepresentations made by DR, or any other improper or unauthorized act or
failure to act on the part of DR.
7
<PAGE>
c. If either Vendor or DR receives notice or knowledge of a claim as described
in 9.a. or 9.b. above, it will promptly notify the other party in writing
and give the other party all necessary information and assistance and the
exclusive authority to evaluate, defend, and settle such claim.
10. LIMITATION OF LIABILITY
The total liability of DR (including its subcontractors and dealers) for all
claims, whether in contract, tort (including negligence and product liability)
or otherwise, arising out of, connected with, or resulting from the distribution
of the Product or any other terms of this agreement shall not exceed the net
amount realized by DR hereunder. IN NO EVENT SHALL DR BE LIABLE FOR ANY LOSS OF
DATA, LOST PROFITS, OR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR
EXEMPLARY DAMAGES, EVEN IF DR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY PROVIDED HEREIN.
11. TERM AND TERMINATION
a. This Agreement will continue in effect for two (2) years from the date
hereof ("Initial Term"). This Agreement will be automatically renewed for
successive additional one (1) year terms ("Renewal Term") unless terminated
by either party upon ninety (90) days written notice prior to the
expiration of the Initial Term or any Renewal Term.
b. This Agreement may be terminated by a party "for cause" immediately by
written notice upon the occurrence of any of the following events: (i.) If
the other party ceases to do business, or otherwise terminates its business
operations (except as permitted under Section 12.a.) or (ii.) If the other
shall fail to promptly secure or renew any license registration, permit,
authorization or approval for the conduct of its business in the manner
contemplated by this Agreement or if any such license, registration,
permit, authorization or approval is revoked or suspended and not
reinstated within thirty (30) days. (iii) If the other materially breaches
any provision of this Agreement and fails to fully cure such breach within
thirty (30) days of written notice describing the breach, or (iv.) If the
other party becomes insolvent or seeks protection under any bankruptcy
laws, creditor's arrangement, composition or comparable proceeding, or if
any such proceeding is instituted against the other and not dismissed
within ninety (90) days.
c. Upon termination of this Agreement for any reason, DR will immediately
cease distribution of the Products. DR shall remit all Total Purchase
Prices due to Vendor within sixty (60) days of such termination, less a
reasonable reserve for estimated returns.
d. Termination by either party will not affect the rights of any End User
under the terms of the EULA.
8
<PAGE>
12. GENERAL PROVISIONS
a. This Agreement may not be assigned by Vendor or by operation of law to
any other person, persons, firms, or corporations without the express
written approval of DR. DR shall be entitled to assign this Agreement
in the event of a merger, acquisition, joint venture, or a sale of
substantially all of its assets, or any similar transaction.
b. All notices and demands hereunder shall be in writing and shall be
served by personal service or by mail at the address of the receiving
party set forth in this Agreement (or at such different address as may
be designated by such party by written notice to the other party). All
notices and demands by mail shall be certified or registered mail,
return receipt requested, or by nationally-recognized private express
courier, and shall be deemed given upon the earlier of; receipt or 5
days after mailing.
c. This Agreement shall be governed by and construed in accordance with
the substantive laws of the State of Minnesota.
d. Each party is acting as an independent contractor and not as an agent,
partner, or joint venture with the other party for any purpose. Except
as provided in this Agreement, neither party shall have the right,
power, or authority to act or to create any obligation, express or
implied, on behalf of the other.
e. The indemnification and confidentiality obligations set forth in the
Agreement and any other provision which by its sense and context is
appropriate, shall survive the termination of this Agreement by either
party for any reason.
f. The titles and headings of the various sections and paragraphs in this
Agreement are intended solely for convenience of reference and are not
intended for any other purpose whatsoever, or to explain, modify or
place any construction upon or on any of the provisions of this
Agreement.
g. No provisions in either party's purchase orders, or in any other
business forms employed by either party mill supersede the term and
conditions of this Agreement, and no supplement, modification, or
amendment of this Agreement shall be binding, unless executed in
writing by a duly authorized representative of each party to this
Agreement.
h. The parties have read this Agreement and agree to be bound by its
terms, and further agree that it constitutes the complete and entire
agreement of the parties and supersedes all previous communications,
oral or written, and all other communications between them relating to
the license and to the subject hereof. No representations or statements
of any kind by either party, which are not expressly stated herein,
shall be binding on such party.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
DIGITAL RIVER, INC. VENDOR
Company:
------------------------------
Signature: Signature:
------------------------ ------------------------------
Name & Title: Name & Title:
------------------- -------------------------
Date: Date:
----------------------------- -----------------------------------
The rest of this page is intentionally blank.
10
<PAGE>
EXHIBIT A
REQUIREMENTS CHECKLIST
The "checklist" of items needed to complete the process are:
1) Executed Distribution Agreement
2) If Product will be delivered electronically, DR requires the "net
deliverable" Master copy of the program in a compressed, self-extracting
form. This file needs to include all information the end-user needs such as
applicable end user license agreement(s) and online documentation and help
files.
3) A range of 100 license numbers electronically if the Product is serialized
(.txt file).
4) Marketing Materials.
Text - Vendor must deliver this in a txt file with the information
clearly delineated. All Maximum Character lengths INCLUDE spaces.
Product Name (30 char. max.), Product Description (50 char. max.),
Sales Pitch (255 char.max.), Product Detail (2,000 char. max.)
Graphics - Product Picture .jpg or .gif, Trademarks/logos (gif file).
Vendor must include any and all computer-readable product
specification sheets, collateral, or other information you deem
appropriate (html., .pdf, .gif or .txt file).
5) Trial versions of the Products if available.
6) If not completed by Vendor, Product may need to be converted for electronic
distribution by DR. Product conversion includes packaging the Product,
inclusion in the dealer network on-line catalogs, posting of product
information provided by vendor in HTML format and other marketing
activities which may be added from time to time. The cost for such
conversion is $____________ per Product, and is payable by Vendor. Payment
is due upon execution of this Agreement by Vendor.
DR may at its option publish this list or any revisions or changes to it on its
web page. In this event, Vendor will be given the URL of the page containing the
revised data.
11
<PAGE>
EXHIBIT B
PRODUCTS & FEES
Initialization Fee $500.00
% Cost - For each copy of a Product delivered to an End User generated off
Vendor's web site, DR will purchase the Product at a cost equal to the percent
of the selling price (the "% Cost"). Example: if the selling price of a Product
is $100 and the % Cost is 80% then DR will purchase each copy of Product sold at
$80.
Distribution Cost - For each copy of a Product delivered to an End User
generated other than from Vendor's WWW Home Page, DR will purchase the Product
at a cost equal to the Distribution Cost (the "Distribution Cost").
Advertised Price - The price at which the Product mill be initially sold on the
Vendors WWW Home Page.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Digital (D) End-User (E)
Vendor Tangible (T) Advertised % Dealer (D) Distribution
Product Name Part # Both (B) Price Cost Both (B) Cost
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Total Electronic Conversion Fee due DR ($__________ per Product): $__________
</TABLE>
12
<PAGE>
EXHIBIT C
PRODUCT INFORMATION
<TABLE>
<CAPTION>
Please fill out the following template for each Product
<S> <C>
Product Name: INVU SOLO
Vendor Name (up to 36 characters): INVU
Product Description: Information and Document Management
Weight of Product for physical Shipment: 230 grams
Does this Product include electronic documentation? (Y/N) Yes
Does this Product include online help? (Y/N) No
Does this Product have a demonstration version? (Y/N) Yes
If yes, what differentiates the demo from the real Product? 30 Day Evaluation
What is the platform for this Product? (Mac, Win 3.X, Win95, NT or UNIX) 95/98/NT
What is the advertised price of this Product? $99.00/$165.00
What, if any, is the vendor part number of this product? 1040
Is this Product serialized? (Y/N) Yes
Does this Product have an export ban? (Y/N) No
If yes, to which countries is export restricted or banned?
</TABLE>
13
<PAGE>
EXHIBIT E
Marketing Development Funds - Coop Advertising
If this exhibit is attached, and initialed by DR and Vendor in the space
provided, then the terms herein shall become an addition to the Payments section
of the Agreement as provided in 5h. of the Agreement. Nothing in this Exhibit E
is intended to change the other obligations or responsibilities contained in the
Agreement.
DR will accrue a coop advertising allowance ("COOP") in an amount equal to eight
percent (8%) of the Total Purchase Price for sales of Vendor's Products. Such
allowance may be used to fund advertising, channel marketing and promotions for
Vendor's Product by DR including, but not limited to, purchasing links to
banners from focussed Internet web sites. Vendor agrees to allow DR to offset
this COOP against any or all other amounts owing to Vendor by DR under this
Agreement.
*DR will receive Marketing Development Funds (MDF) in an amount of $___________.
The funds may be used to fund advertising, channel marketing and promotions for
Vendor's Product by DR including, but not limited to, purchasing links to
banners from focussed Internet Web sites. Vendor agrees to allow DR to offset
this MDF against any or all other amounts owing to Vendor by DR under this
Agreement.
DR agrees that all Marketing Development Funds and/or Coop Advertising received
from Vendor will be used to promote the sales of Vendor's Products.
Please initial in the space below:
DR
-----------------------------
Vendor
----------------------------
14
EXHIBIT 10.6
KOCH
Distribution
Standard Distribution Contract (including Appendix)
Delivery Conditions for Delivering Merchandise to the Central Depot In
Basingstoke
Cost Summary for Services at the Central Depot In Basingstoke
Product Information Leaflet for Distribution Partners
Who is Who at KOCH Media
Confirmation of Use of Intellectual Property
- --------------------------------------------------------------------------------
STRICTLY CONFIDENTIAL
- --------------------------------------------------------------------------------
<PAGE>
Page 2
Standard Distribution Contract
- ------------------------------
Concluded between:
Supplier whose name and address are indicated in the Appendix,
------------------
- --------------------------------------------------------------------------------
hereinafter referred to as the "Supplier", and KOCH Media Limited, Thomas House,
Hampshire International Business Park, Basingstoke, Hampshire, RG248WH, England
hereinafter referred to as "KOCH", is hereby agreed as follows:
1. Object of contract
------------------
The object of this contract is all of the Supplier's products that are described
in greater detail in the Appendix under "Product(s)". This range of products
shall be referred to hereinafter as the PRODUCTION. For the duration of this
contract, the Supplier entrusts KOCH with distribution rights as defined in
greater detail under "Distribution rights" in the Appendix. KOCH undertakes to
publicize and to market the PRODUCTION within the framework of this distribution
contract, or let it be publicized and marketed through its distribution
companies and incorporate it into the distribution program in the territory
covered by the contract as has been agreed.
In the event that there should be definite indications, or that any should turn
up in the course of KOCH's distribution, to the effect that the publicizing
and/or the distribution of a product offends morals, laws or the rights of third
parties, KOCH retains the right not to publicize the product and/or to
discontinue the distribution thereof.
2. Relationship at law
-------------------
The Supplier nominates KOCH as his distribution partner for the duration of this
contract in the territory covered by the contract as laid out in the appendix.
The distribution rights conferred here include in particular the right to the
sale of data media, the right of public offering for the purpose of sale, the
right of advertising the data media in all the media (TV, radio, press, etc.)n
as well as the right to non-commercial public demonstration.
If the Supplier grants KOCH full or limited exclusivity in the territory covered
by the contract, he guarantees at the same time, within the framework of the
exclusivity granted, not to offer any third party the aforementioned PRODUCTION
for sale, distribution or on any other commercial basis that would infringe on
the distribution rights conferred on KOCH and/or could lessen the sales
potential of the PRODUCTION.
It is the Supplier's responsibility to ensure that, for the duration of this
distribution contract, he owns all the utilization rights to the PRODUCTION that
are necessary for concluding this contract with KOCH.
If nothing is stipulated to the contrary in the Appendix, the distribution
rights bestowed herewith on KOCH shall extend to the computer trade, the
multimedia trade, the book trade, the music trade, department stores, chain
trade, markets, wholesalers, mail-order houses, on-line networks, lenders and
the dub-and end-user businesses in the distribution region.
<PAGE>
Page 3
3. Obligations of the Supplier
---------------------------
The Supplier shall inform KOCH immediately and fully in each case regarding new
products planned, and shall submit the following in writing:
o title or name of the product
o catalogue number, EAN barcode number, ISBN number (if any)
o minimum system requirements
o recommended retail price including VAT (in all relevant
countries/currencies)
o date of delivery to the KOCH central depot in Basingstoke
o 3 or 4 key sales words
o brief description of product in telegram style (4 or 5 sentences)
o the front cover (booklet or front side of box) in the original or as e-mail
or photocopy
o an intellectual-property utilization form, filled in (confirmation
regarding the use or non-use of copyrighted works). The form is included
with this contract.
The Supplier undertakes to remain constantly in a position to deliver the
PRODUCTION so long as the contract relationship is in force, and to process each
order without delay, in any event within ten days at the latest.
If the parties in a particular case do not agree otherwise, the Supplier
undertakes to deliver the products in sealed cellophane or plastic foil. If this
is not done and KOCH has to carry out the shrink-wrapping, then the Supplier
shall bear the resultant expense (of the enclosed cost summary).
If the parties have not agreed otherwise in the Appendix, KOCH may use free
copies to a reasonable extent for sales-promotion and marketing purposes. KOCH
will provide the Supplier with information regarding the use of free copies on
request.
For the period of this contract, the Supplier undertakes to maintain a technical
support service for all the products being marketed by KOCH. This service shall
deal with queries in writing and by telephone from end users during normal
office hours and reply to them promptly.
4. Promotion - Advertising
-----------------------
If not otherwise agreed in the Appendix, the Supplier will undertake marketing,
advertising and promotion, KOCH will provide relevant support and advice to the
best of its ability.
5. Prices and Transport
--------------------
The PRODUCTION is taken by KOCH on a consignment basis. The merchandise remains
the property of the Supplier until KOCH has sold the merchandise and invoiced
its customers. KOCH is entitled to assign the PRODUCTION to its customers on a
consignment basis, whereby the property rights of the Supplier to the
consignment merchandise remain unaffected. KOCH may also buy the merchandise
without any customer order. KOCH is responsible for insuring the merchandise as
soon as it is delivered in the depot. In the event of fire, water damage or
theft, KOCH shall reimburse the manufacturing costs of the merchandise in
question (without author
<PAGE>
Page 4
royalties, licenses, etc.). The latter must be documented by the Supplier by
means of invoices from his suppliers (pressing plant, printing office).
The parties shall agree a distribution margin or a price at which KOCH shall buy
in, as laid down in the Appendix. If not agreed otherwise in the Appendix, the
end-sale prices of the PRODUCTION published by the Supplier shall apply.
If changed market conditions during the period of this contract should
necessitate a price adjustment, the Supplier is permitted to do this. The
Supplier must inform KOCH of the new prices in writing. A price increase can
come into effect no earlier than the beginning of the month after the next. This
is calculated from the time the information reaches KOCH in writing. A price
decrease, however, shall take immediate effect. In the event of a price
decrease, the Supplier shall give KOCH's customers full price protection of
their stock during the validity of the contract, if they so wish.
The merchandise shall be delivered as agreed in the Appendix, Supplier
undertakes to abide by the delivery conditions for the delivery of merchandise
to the KOCH central depot. The current terms are appended to this contract.
With respect to products that are delivered in sierra boxes or similar, Supplier
undertakes to supply to KOCH replacements at no cost if requested by KOCH to do
so, this normally in the event that the products have become unsalable as a
result of damage to the packaging. The costs accruing to KOCH for repackaging
the returned merchandise shall be charged to the Supplier in each case in
accordance with the outlay (cf. the current cost summary in the Appendix).
KOCH is responsible for stock managing the depot. Should there be excess stock
in regard to the merchandise covered by this contract with respect to the sales
volume made, then the depot management can send it back to the Supplier at the
latter's expense after giving advance notice. If the Supplier does not agree to
excess stock being returned, then KOCH can charge storage fees for it (cf. the
current cost summary in the Appendix). If the Supplier wants to have the
merchandise destroyed by KOCH instead of being sent back, then KOCH's relevant
fees apply (cf. the current cost summary in the Appendix).
Discrepancies of the depot stock (which shall be calculated on an annual basis
on December 31st of each year of the contract) of up to +/-3% (based on net
adjustment/total stocks over that year) shall be allowed and will not be charged
by the one party to the other, no other calculation of adjustments may be made
during the year, and the net aggregate of all products will be the basis for the
% variance. Larger discrepancies shall be charged at the Supplier's
manufacturing costs of the relevant merchandise (not including author royalties,
licenses etc.), such a charge must be made within 30 days to be valid. The
latter must be documented by the Supplier by means of invoices from his
suppliers (pressing plant, printing office).
The foregoing shall only apply so long as Supplier has supplied to KOCH within 7
days of every month end, a report showing by product, quantities that have been
sent to KOCH for storage in that month. This used as the basis for agreeing the
stock and sales report that is issued by KOCH to Supplier.
<PAGE>
Page 5
If the Supplier demands that KOCH returns certain products, KOCH hall take steps
to do so immediately (cf. the enclosed cost summary). In normal circumstances,
if the return is due to a complete recall this shall take three to four months.
Products that are being allowed to run out according to the Supplier's
notification will not be rendered resalable when prepared for return, but will
be booked to the Supplier's depot stocks irrespective of their condition.
6. Conditions of payment
---------------------
In each case, by the 15th of each month, KOCH shall send a stock and sales
report showing stock reconciliation details per product stored, and sales
information for the net sales invoiced in the previous calendar month, after
deducting for authorized, received and anticipated returns. Accounting and
payment shall take place as described in the Appendix. If it should arise that
the sales account is negative (more returns than sales), then the same payment
conditions apply correspondingly for the Supplier's payments to KOCH.
As soon as the Euro can be used in the business world, KOCH reserves the right
to convert the account and payment to the Supplier to Euros at any time after
giving written notice.
7. Assignment prohibition
----------------------
Claims against KOCH arising from this contract cannot be assigned without prior
written consent.
8. Expiry and extension of contract
--------------------------------
The duration of the trial period of this contract is given in the Appendix. This
contract is conducted first for the duration of the "initial period". It shall
be extended automatically on each occasion by the period of time of the
"subsequent period" that is given in the Appendix, unless one of the contract
parties shall give notice of termination of the contract by registered letter 90
days before expiry of the contract.
If there are definite indications that the financial situation of one party has
deteriorated to the point that he can no longer meet his contractual
obligations, then in such case the other party to the contract shall have the
opportunity of threatening termination by setting out his misgivings in writing
and setting a deadline of 30 days for response. The first party can either
refute the expressed misgivings within the set deadline in writing, or can
provide security. If this does not take place, the contract is deemed to have
been terminated with immediate effect.
If the Supplier repeatedly and over an extended period does not deliver or does
not deliver on time a number of products, or if the Supplier has not offered any
new products for at least six months, KOCH has the right to threaten termination
by setting out the reasons in writing and setting a deadline of 30 days. The
Supplier can refute the grounds for termination within the set deadline or can
put the matter right. If this does not take place, KOCH can declare the contract
terminated with immediate effect.
In the event of termination of the contract, the parties shall reconcile their
accounts with one another. After final settlement of the accounts KOCH will make
the Supplier's remaining merchandise available for collection. The Supplier
shall take back the merchandise at his own
<PAGE>
Page 6
expense. KOCH is entitled to accept returns within a year following termination
of the contract and the charge the Supplier for same at the accounting price.
The Supplier can recall the merchandise from KOCH at any time at his own
expense. KOCH is entitled to retain 10% of the turnover of the last twelve
months as a reserve fund for such returns when the contract is terminated
(taking into account any other sums set aside for returns), whereby this reserve
fund shall be set against incoming returns, and the outstanding amount shall be
dealt with one-half at a time, six months and twelve months after termination of
the contract.
9. Defects in the product/Liability of the Supplier
------------------------------------------------
The Supplier hereby declares and guarantees:
o that all products of the PRODUCTION have been tested several times on
Windows 95 and all subsequent Windows operating systems and run flawlessly
thereon;
o that all products of the PRODUCTION are compatible with the year 2000 and
that this property has been exhaustively tested in each case;
o that all products of the PRODUCTION are dispatched to KOCH only after
thorough technical testing. The testing must test in particular for freedom
from viruses (including micro-viruses);
o that each product packaging contains a reference to the Supplier's
technical service;
o that the products and the packaging thereof in each case (booklet, inlay
card, etc.) absolutely conform to the laws concerning fair trading and
indeed do not violate any legislation in the territory covered by the
contract;
o that he has reimbursed or will reimburse the services of all the parties
involved in the PRODUCTION, and that there are no third-party rights of any
kind on the PRODUCTION that can be lawfully pressed against KOCH;
o that should the PRODUCTION need to be classified by the ELSPA or VSC trade
bodies then Supplier should ensure the relevant classification is printed
on all necessary materials (including box work, posters, etc.).
The sale price to be paid by KOCH includes all rights needful for the sale of
the products, in particular all copyrights and rights for use of film, picture,
audio, text, animation and interactive elements. The latter include in
particular any fees payable to copyright collection agencies and publishers. The
Supplier shall check out the copyrights carefully and assure or clear up all
transferred rights in writing.
KOCH reserves the right to require of the Supplier a copy of the
confirmation/release with regard to the utilization of protected works by the
relevant copyright collection agencies. If the Supplier does not meet this
demand within 14 days, KOCH reserves the right to withhold payments from the
Supplier, irrespective of their being due, as a guarantee against possible
copyright fees or damage claims, until the written release/confirmation is
presented or the matter is resolved in some other manner.
The Supplier is liable for damages claims against KOCH in the event of the
PRODUCTION and the rights transferred in the present distribution contract being
defective. These damages include in particular any court costs, enforcement
costs and the cost of legal representation and/or advice,
<PAGE>
Page 7
but do not include any consequential, special, or economic losses claims or
damages howsoever caused.
If in a particular case the parties shall have agreed a definite delivery
deadline (e.g. because of advertising on the part of the customer) and the
Supplier does not meet same, then KOCH shall charge back to the Supplier all the
direct and indirect expenses incurred.
If a product should have to be recalled from the market (e.g. on account of
legal or material defects), then KOCH will charge a standard price of GBP 0.30
per unit and GBP 4.00 per customer delivery for such a recall, to cover freight
costs and handling. The merchandise will then lie in the central depot ready for
collection or destruction.
10. Confidentiality
---------------
The parties undertake to remain silent about all business and operational
matters that become known to them within the framework of this contract, in
particular stock or sales reports, statistics, customer lists, etc. This applies
irrespective of whether the matter in question is explicitly designated as
confidential or not. The obligation to confidentiality also applies with respect
to associated concerns and remains in force for a year beyond the end of the
contractual relationship.
This does not apply to such characteristics and details,
o as were already in the possession of the other party in written form before
entry into the contractual negotiations for the present contract; or
o as have been made public without the illicit commission or omission of the
other party; or
o as a party is obliged by legal regulations to communicate to the
authorities or other third parties.
11. Ancillary agreements, legal system, place of jurisdiction
---------------------------------------------------------
This contract, in accordance with the intentions of the parties, shall have
validity also for the legal assigns on both sides. The Appendices and enclosures
attached to this contract are integral components thereof. Amendments and
additions to this contract and/or to the enclosures and Appendices must be
executed in writing. This applies also to a renunciation of the requirement for
the written form. No verbal agreements have been made. The use of the General
Business Conditions is expressly ruled out by both parties. If one of the terms
of the contract should turn out to be wholly or partially invalid, the remaining
terms shall not be affected thereby. The invalid term shall be interpreted
according to its sense and replaced by a new regulation that achieves the
commercial purpose of the invalid term as much as possible. British Law applies
to this contract. The place of jurisdiction for any possible disputes is agreed
to be the court that has competence for KOCH. Interim legal protection can
likewise be requested only at the court named, even when the claim is directed
against a distribution company of the KOCH concern.
____________ on ____________ (Place/Date) ____________ on ____________
<PAGE>
Page 8
____________________ (Supplier's company) KOCH Media Limited
represented by represented by
____________________ (Signature) ___________________________
(Name and title Mr. Craig McNicol
of person signing) Commercial Director
Enclosures:
Appendix
Delivery Conditions for Delivery of Merchandise at the Central Depot in
Basingstoke Current Cost Summary for Services at the Central Depot in
Basingstoke Product Information Leaflet for Distribution Partners 1998 Annual
Schedule of the Distribution Meetings Who is Who at KOCH Media Form for
Conformation of Use of Intellectual Property
<PAGE>
Page 9
Appendix
- --------
Supplier: INVU Services Ltd.
The Beren
Blisworth Hill Farm
Stoke Road
Blisworth
Northants NN7 3DB
Tel 01604 859893
Fax 01604 859902
Product(s): CD-ROMs, DVDs ... as well as any of the Supplier's
CD-ROM or DVD products that the parties shall in
future jointly determine.
Territory: United Kingdom and Southern Ireland
Distribution Rights: NON-EXCLUSIVE DISTRIBUTION RIGHTS
Rebate rate: KOCH settles with the Supplier at a discount of
57% of the UK recommended retail price excluding VAT
in respect of net sales.
Delivery: The merchandise shall be delivered free of charge to
KOCH Media Limited, Thomas House, Hampshire
International Business Park, Basingstoke, Hampshire,
RG24 8WH, England. If fees or expenses to KOCH should
arise from the delivery of the merchandise, they will
be charged back to the Supplier.
Payment: within 30 days net from the date of the sales account
(or at KOCH's discretion) with 3% discount if paid
within 15 days.
Initial period: one year from signing
Subsequent period: one year
The Product Group of the Supplier is ________________
The Account Number of the Supplier is _______________
____________ on ____________ (Place/Date) ____________ on ____________
____________________ (Supplier's company) KOCH Media Limited
represented by represented by
<PAGE>
Page 10
____________________ (Signature) ___________________________
(Name and title of Mr. Craig McNicol
person signing) Commercial Director
Product Information Leaflet for Distribution Partners
- -----------------------------------------------------
A flow of information between manufacturer and distributor is essential for
success in joint business ventures. Therefore we request you as Supplier to
discuss the following leaflet in detail internally with all the staff involved.
We go to great lengths to offer our customers a first class service and in order
to do so, we place our trust in the reliability of our Suppliers. Therefore
please adhere strictly to the procedure given below.
Prompt transmission of complete information on new products is an absolute
prerequisite for them to be presented in distribution meetings. Delays and
partial information just mean postponement of release.
A. Prior information
-----------------
We request quarterly transmission of release plans, if possible for the
following six months in every case. These plans should contain:
o Name of product and brief description
o Recommended sale price
o Target group, marketing
o Target release date
B. Data and information on the new items
-------------------------------------
If all the data pertaining to a new product reaches our Basingstoke office NO
LATER THAN 7 DAYS before the monthly distribution meeting, we will include it in
the next meeting (cf. the annual schedule of our distribution meetings). We
regret that incomplete data or anything that arrives late cannot be included.
B.1. Data for preparation of publication
-----------------------------------
o Name of product
o Catalogue number (if any)
o EAN-Barcode-Number
o ISBN-Number (if any)
o Recommended sale price in UK
o Date of release (please give a realistic estimate)
For each and every product, we compile a product sheet (A4) that contains the
above data and the booklet, as well as 3 or 4 key selling points and a brief
description of the product in telegram style in 4 or 5 sentences.
<PAGE>
Page 11
B.2. Documentation for the distribution meeting
------------------------------------------
o 30 Booklets or 4-colour copies of the booklet's print page
o 30 Promotional samples (if any)
o Product sheets (as many as 4000, if there are any)
1998 Annual Schedule of Distribution Meetings
- ---------------------------------------------
Distribution meetings at which the distribution staff of all of our sales
divisions (Hardware, Software, Manufacturing) are present take place once a
month. Distribution partners are invited to give a presentation, particularly
when the nature and compass of new products indicate that a personal appearance
would be useful and the time scheduling allows a presentation, as well as when
subjects of a general nature have to be discussed at this forum.
Because experience shows that the agendas of our distribution meetings have to
be kept extremely brief, we request in advance that the agreed schedule should
be strictly adhered to. Normally, because of time being so short, we do not give
demonstrations of individual products.
January Fri, 30.1.98
February Fri, 27.2.98
March Thu, 27.3.98
April Fri, 30.4.98
May Wed, 29.5.98
June Fri, 26.6.98
July Fri, 31.7.98
August Wed, 26.8.98
September Wed, 23.9.98
October Wed, 21.10.98
November Wed, 25.11.98
December Wed, 16.12.98
<PAGE>
Page 12
Who is Who at KOCH Media
- ------------------------
In alphabetical order:
- ---------------------
Shirley Andrews Warehouse Supervisor - Goods In and Returns
Tanya Barter Administration Manager
Lance Brown Sales Director
Emily Griffiths Sales and Marketing Support
Andrew Harbor Hardware Sales Manager
Martin McElroy Warehouse Supervisor - Dispatch
Craig McNicol Commercial Director
Paul Nicholls National Account Manager
Sharonne Nolan Administration Assistant
Danny Richards Warehouse Manager
Heather Robinson Internal Software Sales Manager
Victoria Taylor Finance
Parminder Uppal Marketing Manager
Steve Wilson MIS Manager
In topical order:
- ----------------
Contracts, strategic issues Craig McNicol
As well Director responsible for:
Accounts Payable, and Stock and Sales Report Queries Victoria Taylor
Product Database, Purchase and Sales Order Entry Tanya Barter
Warehouse and Shipping Danny Richards
Sales, Label Management Lance Brown
As well as Director responsible for:
Marketing Parminder Uppal
<TABLE>
<CAPTION>
Offices:
- -------
<S> <C>
Office England: Thomas House, Hampshire Intnl Business Park, Basingstoke RG24
8WH, Tel 01256 707 767, Fax 01256 707 377
Office Munich: Lochharner Str. 8, D-82152 Pianegg/Monchen, Tel 089 857 95-120
Fax 089 857 95-160
Office Heiligenhaus: Sodring 121, D-42579 Heiligenhaus, Tel 02056 53 020, Fax 02056
58 0220
Office Vienna: Tivoligasse 25, A-1120 Wien, Tel 01 815 0626-0 Fax 01 815 0626-
16
Office Switzerland: Poststrabe 10, CH-9201 Gossau Tel 071 388 6868 Fax 071 388
8888
<PAGE>
Page 13
Head Office: Gewerbegebiet, A-6600 Hofen, Osterreich, Tel 05672 606 Fax
05672 65581
</TABLE>
<PAGE>
Page 14
Confirmation of Use of Intellectual Property
- --------------------------------------------
- --------------------------------------------------------------------------------
Company
- --------------------------------------------------------------------------------
Street Locality/Post code
Intellectual property utilisation on audio-visual data media (e.g. CD-ROM, DVD
etc.)
- --------------------------------------------------------------------------------
Title of product Catalogue number
- --------------------------------------------------------------------------------
Manufacturer Pressing plant
Please check as appropriate:
o We hereby confirm that no copyrighted works (e.g. music, pictures or
text) have been used in the above product. We understand use of
Intellectual property to mean the utilisation not only of complete
works but also of excerpts of works, where the length of the excerpt is
not significant (so long as it is not exceptionally permitted by law).
The utilisation comprises every technical manner of use of intellectual
property.
We are aware that, in the event of use of intellectual property, only
the competent utilisation companies (copyright protection agency) can
definitively determine whether or not the work or excerpt being used
falls within the remit of a particular utilisation company and thus
incurs a license fee. We are also aware that use of intellectual
property without permission can give rise to legal action resulting in
damages and injunctions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We hereby give our assurance that all copyrighted works that are used in the
above-named products have been properly acknowledged and the relevant licenses
have been or will be paid. We undertake moreover to present the
confirmations/releases of the utilisation companies if so requested by KOCH
Media.
<PAGE>
Page 15
_______________ on _______________ ___________________________________
Place Date Signature
EXHIBIT 10.7
GOLD STANDARD RESELLER AGREEMENT
Agreement between INVU Services Limited (hereby referred to as INVU) and
Elcom Technical Services
(Hereby referred to as Elcom)
Date: 18th March 99 Our Ref: MPW/AF ELCOM
OVERVIEW
INVU is pleased to appoint ELCOM as an Authorized Gold Standard Reseller with
effect from 18th March 99. This appointment is for the INVU range of products,
as specified in appendix A.
This appointment entitles ELCOM to represent itself as an Authorized Reseller
for INVU and an Authorized Reseller of the relevant INVU range.
In accordance with this appointment, ELCOM agrees to use all reasonable
endeavors to promote and sell the INVU range of products.
TERMS
1. INVU grant, and ELCOM accepts this nonexclusive appointment as an
Authorized Reseller for the specified product(s) from INVU for a period
of 12 months from 18th March 99, renewable on termination for a 12
month period, subject to agreement from both parties.
2. ELCOM agrees to provide qualified and competent sales and marketing
staff, and to use all reasonable endeavors to maximize the sales
opportunities for the INVU range.
3. INVU agrees to pass sales leads to ELCOM subject to availability. INVU
also agree to inform ELCOM regarding Trade Shows, promotional material,
press releases and other relevant marketing materials and activities in
a timely fashion. ELCOM undertake to advise INVU on a monthly basis as
to the progress and follow-up of all leads and customer contacts
relevant to INVU products. ELCOM also undertake and provide a ninety
day rolling forecast of business relevant to INVU.
4. All reasonable quantities of sales literature, marketing materials and
the like, required in the normal course of business for promoting,
selling and marketing of product from INVU will be supplied free of
charge.
1
<PAGE>
5. INVU will provide two places on INVU technical training courses free of
charge to ELCOM personnel.
6. ELCOM must ensure at all times that it employs two technical staff who
have attended the INVU one day technical authorization course.
7. ELCOM will provide a first line support service to all its clients on
INVU products. This service will handle the initial customer call, and
resolve any issues which could normally expect to be resolved by staff
who have had the INVU training. INVU will not handle support calls from
ELCOM clients directly.
8. ELCOM will be permitted to use the Authorized Dealer hot line technical
support facility for its own second line support needs. Full online
access will also be available to the INVU web site support page for
access to new releases, bug clearances, and technical updates. ELCOM
must purchase their own modem and connectivity means to enable access
to the web site.
9. INVU retains the right to charge ELCOM for support and management time
spent in answering support calls and onsite visits which should have
been resolved by trained ELCOM staff. Standard INVU charging rates are
available on request.
10. INVU product sold through ELCOM will be covered by the INVU product
warranties set out in the INVU software license.
11. ELCOM will maintain a working demonstration system for the nominated
INVU products at all times. INVU will provide, free of charge, a
"Demonstration Product," comprising one item of INVU software. INVU
undertakes during the continuation of this agreement to maintain the
software content "Demonstration Product" to the latest specification at
all times at no additional cost to the dealer. It is the responsibility
of ELCOM to provide, at their own cost, whatever hardware as is
necessary to run the demonstration system.
12. Product supplied to ELCOM by INVU will at 36% discount from INVU's
published United Kingdom recommended retail price list. Product shown
on rolling 90 day forecasts will normally be shipped within one working
day of receipt of order. Product not shown on 90 day rolling forecasts
may be subject to delivery delays, normally not exceeding five days.
13. Gold Standard Resellers must achieve a minimum spend with INVU of
(pound)25,000 per calendar quarter. This achievement will be reviewed
by the INVU account manager in the month following the end of quarter,
and failure to achieve the minimum level will lead to suspension of
this contract. Supply of INVU product will then only be made on the
standard registered VAR terms of 25% discount, and the VAR will have no
access to INVU leads, marketing activities and materials.
2
<PAGE>
14. Payment of all INVU invoices will be on strict twenty-one day terms.
Failure to meet these terms on any invoice will constitute a material
breach of the agreement, and will lead to an immediate charge of the
extra 11% discount on the invoice value which is given solely to Gold
Standard VARs. Reconstitution of the normal 36% terms will only be by
agreement with INVU.
15. INVU reserves the right to amend the United Kingdom recommended retail
price list at any time subject to 30 days notice in writing.
16. ELCOM will only sell INVU products to genuine end user clients for use
on hardware configurations which belong to them. ELCOM will not supply
the range of INVU products to resellers who are not authorized by INVU.
17. For the term of this agreement, ELCOM is appointed as a Gold Standard
Authorized Reseller. If the contract is terminated for any reason,
ELCOM must stop use of these terms immediately.
18. This agreement is governed and construed in accordance with the laws of
England.
Two copies of the agreement should be signed by an authorized signatory for the
company, and returned to INVU. The agreement is not deemed to be in place until
INVU have countersigned the agreement and returned it.
FOR AND ON BEHALF OF ELCOM
Signature
-----------------------------------
Name
-----------------------------------
Position
-----------------------------------
Date
-----------------------------------
FOR AND ON BEHALF OF INVU SERVICES LIMITED
Signature
-----------------------------------
Name
-----------------------------------
Position
-----------------------------------
Date
-----------------------------------
3
<PAGE>
Competitors
- -----------
The market has a wide range of competitors who tend to occupy disparate and
niche areas. Filenet, Filenet Watermark, PC Docs, Optika and Documentum are some
of the better known, but none of these have attained brand level penetration.
Without exception, these competing technologies are complex and expensive,
keeping them beyond the reach of the high volume SME market. The closest
competitor to INVU SOLO is Watermark which offers its standalone product at
c.US$350.00 per license.
INVU SOLO retails at US$100.00, but includes an embedded full relational
database. This given INVU SOLO an extremely powerful ability to store thousands
of documents with fast retrieval times. Watermark does not have this ability and
has resultant performance degradation. INVU SOLO is, also, easier to use and has
its own fax capability, and extensive leading-edge functionality.
INVU has major price-performance advantages over its competitors in the
multi-user and internet environment. By virtue of a joint technology marketing
agreement with Computer Associates, a 25-user license can be offered at under
US$5,000.
The competitors mentioned above are all in excess of US$35,000. With the huge
brand credibility and distribution routes offered by Computer Associates, INVU
expects to make major market inroads.
4
EXHIBIT 10.8
DISTRIBUTOR AGREEMENT
Agreement between INVU Services Limited (hereby referred to as INVU) and
Company Name: Millennium Three Solutions Ltd (hereby referred to as MTS)
Date: 11/06/99
OVERVIEW
INVU Services Limited is pleased to appoint MTS as a distributor with effect
from 11/05/99. This appointment is for the INVU range of products as specified
in appendix A.
This appointment entitles MTS to represent itself as an authorized distributor
for INVU Services Limited and an authorized distributor of the relevant INVU
range, the territory to exclusively and solely cover Ireland, Germany,
Scandinavia (Sweden, Norway, Finland) and non-exclusively in the United States
of America and Italy.
In accordance with this appointment, MTS agrees to use all reasonable endeavors
to promote and sell the INVU range of products.
TERMS
1. INVU Services Limited grants, and MTS accepts, this exclusive appointment
as an authorized distributor for the specified product(s) from INVU
Services Limited for a period of 12 months from 11/05/99, renewable on
termination for a further 12 month period, subject to agreement from both
parties.
2. MTS agrees to provide qualified and competent sales and marketing staff,
and to use all reasonable endeavors to maximize the sales opportunities for
the INVU range.
3. INVU Services Limited agrees to pass sales leads from the territory to MTS.
INVU Services Limited also agrees to inform MTS regarding trade shows,
promotional material, press releases and other relevant marketing materials
and activities in a timely fashion. MTS undertakes to advise INVU Services
Limited on a monthly basis as to the progress and follow up of all leads
and customers contacts relevant to INVU Services Limited products. MTS also
undertakes to provide a 90 day rolling forecast of business relevant to
INVU Services Limited. Prior to commencement of this Agreement, INVU
Services Limited and MTS will agree a 12 month forecasted sales plan and
appropriate stocking levels.
1
<PAGE>
4. All normal quantities of sales literature, marketing materials and the like
where available. required in the normal course of business for promoting,
selling and marketing of products from INVU Services Limited will be
supplied free of charge.
5. MTS must ensure at all times that it employs technical and sales staff
which are reasonably sufficient to fulfil sales and business plans and
provide high levels of service to the customer.
6. MTS will provide a first line support service to all its clients of INVU
Services Limited products. This service will handle the initial customer
call, and resolve any issues which could normally expected to be resolved
by staff of reasonable technical competence. INVU Services will not handle
support calls from MTS client directly.
7. INVU Services will provide second line support and will implement a web
site service for access to new releases, bug clearances and technical
updates.
8. INVU Services Limited retains the right to charge MTS for support and
management time spent in answering support calls and onsite visits which
should have been resolved by MTS staff. Standard INVU Services Limited
charging rates are available on request.
9. MTS will provide details of all sales of INVU Services Limited products.
Including sales value, customer name, number of licences and support
contracts. INVU Services Limited agrees to keep confidential all such
information during the course of this Agreement.
10. MTS will maintain a working demonstration system for the nominated INVU
Services Limited products at all times. INVU Services Limited will provide
demonstration software free of charge. INVU Services Limited undertakes
during the continuation of this agreement to maintain the software content
of the demonstration product to the latest specification at all times at no
additional cost to MTS. It is the responsibility of MTS to provide, at
their own cost, whatever hardware that is necessary to run the
demonstration configuration.
11. Product supplied to MTS by INVU Services Limited will be at 50% discount
from INVU Services Limited's' published UK recommended retail price list.
12. As an exclusive distributor MTS must achieve minimum spend with INVU
Services Limited as specified in appendix B. This achievement will be
reviewed monthly between MTS and INVU Services Limited and failure to
achieve minimum levels may lead to suspension of the contract and/or loss
of exclusivity. However, such suspension or loss of exclusivity will be
subject to INVU Services Limited giving 30 days notice to MTS in order to
give opportunity to MTS to achieve spend levels.
13. Payment for all INVU Services Limited products shall be made prior to
shipment.
2
<PAGE>
14. INVU Services Limited reserves the right to amend the United Kingdom
recommended retail price list at any time subject to 30 days notice in
writing.
15. INVU Services Limited may be approached directly for OEM level agreements.
INVU Services reserve the right to supply the products directly to such
OEM's subject to proper discussions with MTS.
16. The products at all times remain the intellectual property of INVU Services
Limited and source code and any amendments thereto remain the sole property
of INVU Services Limited. Unless otherwise agreed in writing on a case by
case basis, MTS shall not copy or replicate the products. In addition, MTS
shall procure that any third parties, customers, employees and/or
contractor agree in writing to acknowledge ownership of the software and
products.
17. MTS whilst enjoying exclusivity agree not to provide any products or
services which compete directly or indirectly with the product range set
out in appendix A.
18. Neither party shall be liable to the other party for any special,
consequential and/or economic losses, damages and/or claims howsoever
caused.
19. This agreement shall be governed and construed in accordance with the laws
of England.
FOR AND ON BEHALF OF FOR AND ON BEHALF OF MTS
INVU SERVICE LIMITED
Signature Signature
------------------------- -------------------------
Name Name
------------------------- -------------------------
Position Position
------------------------- -------------------------
Date Date
------------------------- -------------------------
3
<PAGE>
APPENDIX A - INVU SERVICES LIMITED PRODUCTS COVERED BY THIS
AGREEMENT
INVU SOLO
INVU PRO
INVU PRO (Network Edition)
INVU Viewsafe
INVU Webfast
4
<PAGE>
APPENDIX B - MTS SPEND ACHIEVEMENT
TOTAL
-----
Quarter 1
- ---------
Quarter 2
- ---------
Quarter 3
- ---------
Quarter 4
- ---------
5
EXHIBIT 10.9
GOLD STANDARD RESELLER AGREEMENT
Agreement between INVU Services Limited (hereby referred to as INVU) and
Computer Associates International, Inc.
(Hereby referred to as CA)
Date: June 16, 1999 Our Ref: MPW/CAGPS
OVERVIEW
INVU is pleased to appoint CA as an Authorized Gold Standard Reseller
with effect from June 16, 1999. This appointment is for the INVU range of
products, as specified in Appendix A.
This appointment entitles CA to represent itself as an Authorized
Reseller for INVU and an Authorized Reseller of the relevant INVU range.
In accordance with this appointment, CA agrees to use all reasonable
endeavors to promote and sell the INVU range of products.
TERMS
1. INVU grant, and CA accepts this non-exclusive appointment as an
Authorized Reseller for the specified product(s) from INVU for a period
of 12 months from June 16, 1999, renewable on termination for a 12
month period, subject to agreement from both parties.
2. CA agrees to provide qualified and competent sales and marketing staff,
and to use all reasonable endeavors to maximize the sales opportunities
for the INVU range.
3. INVU agrees to pass sales leads to CA subject to availability. INVU
also agree to inform CA regarding Trade Shows, promotional material,
press releases and other relevant marketing materials and activities in
a timely fashion. CA undertake to advise INVU on a monthly basis as to
the progress and follow up of all leads and customer contacts relevant
to INVU products. CA also undertake to provide a ninety day rolling
forecast of business relevant to INVU.
4. All reasonable quantities of sales literature, marketing materials and
the like, required in the normal course of business for promoting,
selling and marketing of product from INVU will be supplied free of
charge.
5. INVU will provide two places on INVU's technical training courses free
of charge to CA personnel.
** [Confidential Treatment] indicates portions of this document that have
been deleted from this document and have been separately filed with the
Securities and Exchange Commission.
1
<PAGE>
6. CA must ensure at all times that is employs two technical staff who
have attended the INVU one day technical authorization course.
7. CA will provide a first line support service to all its clients on INVU
products. This service will handle the initial customer call, and
resolve any issues which could normally be expected to be resolved by
staff who have had the INVU training. INVU will not handle support
calls from CA clients directly.
8. CA will be permitted to use the Authorized Dealer not line technical
support facility for its own second line support needs. Full online
access will also be available to the INVU web site support page for
access to new releases, but clearances, and technical updates. CA must
purchase their own modem and connectivity means to enable access to the
web site.
9. INVU retains the right to charge CA for support and management time
spent in answering support calls and onsite visits which should have
been resolved by training CA staff. Standard INVU charging rates are
available on request.
10. INVU product sold through CA will be covered by the INVU product
warranties set out in the INVU software license.
11. CA will maintain a working demonstration system for the nominated INVU
products at all times, INVU will provide, free of charge, a
"Demonstration Product", comprising one item of INVU software. INVU
undertakes during the continuation of this agreement to maintain the
software content "Demonstration Product" to the latest specification at
all times at no additional cost to the dealer. It is the responsibility
of CA to provide, at their own cost, whatever hardware as is necessary
to run the demonstration system.
12. Product supplied to CA by INVU will be at **[Confidential Treatment
Requested]% discount from INVU's published United Kingdom recommended
retail price list. Product shown on rolling 90 day forecasts will
normally be shipped within one working day of receipt of order. Product
not shown on 90 day rolling forecasts may be subject to delivery
delays, normally not exceeding five days.
13. Gold Standard Resellers must achieve a minimum spend with INVU of US $
**[Confidential Treatment Requested] per calendar year. This achieve-
ment will be reviewed by the INVU account manager in the month follow-
ing the end of quarter, and failure to achieve the minimum level will
lead to suspension of this contract. Supply of INVU product will then
only be made on the standard registered VAR terms of **[Confidential
Treatment Requested]% discount, and the VAR will have no access to INVU
leads, marketing activities and materials.
14. INVU reserves the right to amend the United Kingdom recommended retail
price list at any time subject to 30 days notice in writing.
15. CA will only sell INVU products to genuine end user clients for use on
hardware configurations which belong to them. CA will not supply the
range of INVU products to resellers who are not authorized by INVU.
2
<PAGE>
16. For the term of this agreement, CA is appointed as an Gold Standard
Authorized Reseller. If the contract is terminated for any reason, CA
must stop use of these terms immediately.
17. This agreement is governed and construed in accordance with the laws of
England.
Two copies of the agreement should be signed by an authorized signatory
for the company, and returned to INVU. The agreement is not deemed to be in
place until INVU have countersigned the agreement and returned it.
FOR AND ON BEHALF OF COMPUTER ASSOCIATES INTERNATIONAL, INC.
Signature /s/ Michael [Peckham]
--------------------------------
Name Michael [Peckham]
--------------------------------
Position Senior Vice President
--------------------------------
Date 6/25/99
--------------------------------
FOR AND ON BEHALF OF INVU SERVICES LIMITED
Signature /s/ David Morgan
--------------------------------
Name D. Morgan
--------------------------------
Position President & CEO
--------------------------------
Date 26/5/99
--------------------------------
3
<PAGE>
APPENDIX A - INVU PRODUCTS COVERED BY THIS AGREEMENT
INVU PRO
INVU PRO (Network Edition)
4
<PAGE>
ADDENDUM TO RESELLER AGREEMENT
FOR
PRODUCTS ("Agreement")
DATED JUNE 16, 1999 BY AND BETWEEN
INVU SERVICES LIMITED ("Invu")
AND
COMPUTER ASSOCIATES INTERNATIONAL, INC. ("Reseller")
The Agreement dated June 16, 1999, as amended with certain deletions
shown thereon, and all Supplements referring thereto, are hereby modified as
follows below. Any reference to the Agreement shall mean the Agreement as
modified by this Addendum. In the event of any inconsistency between the terms
of the Agreement, any Supplemental and this Addendum, this Addendum shall govern
and control unless expressly agreed by the parties.
1. Computer Associates International, Inc. shall be deemed to include
Computer Associates International, Inc., its parent company , and all
affiliates, subsidiaries, and divisions controlling, controlled by, or under
common control with, Computer Associates International, Inc.
("Reseller"), wherever located on a worldwide basis.
2. All licenses granted to Reseller pursuant to the Agreement shall be
worldwide, perpetual, fully paid-up, and non-exclusive licenses. Reseller
acknowledges that, from time to time, Reseller may purchase licenses from Invu
from nominated distributor.
3. All software licenses granted and services to be delivered to
Reseller shall be installed by Invu and shall be subject in all respects to a
sixty (60) day warranty period set forth herein. Notwithstanding warranties set
out in Clause 8 below, Invu warrants that the licenses granted shall be free
from defects in materials and workmanship. In the event that such defects occur,
then Invu shall replace/repair at Invu's option the said licenses.
4. Reseller may make copies of the Products for archival and back-up
purposes and use such archival or back-up copies on a system other than as the
license provides herein or at an installation site other than that identified in
the applicable Supplement for the purposes of conducting testing of the disaster
recovery plan's procedures and effectiveness and during any period subsequent to
the occurrence of an actual disaster during which the Reseller cannot operate
the Products.
5. At any time that Reseller shall elect, Reseller shall be entitled to
contract with a third party to provide outsourcing or third-party processing
services respecting the Products. Should any Products be used in such manner,
Invu shall cooperate with Reseller in providing such third party with access to
the Products as soon as practicable.
6. All payment terms shall be Net 30 days from the date of invoice. Any
invoiced amount which is not the subject of a bona fide dispute and not paid on
or before the due date may be subject to a reasonable service charge, but no
payment of late fees or interest shall be due. If Reseller shall fail to pay an
undisputed invoice, Reseller shall pay all of Invu's actual out-of-pocket costs
and
1
<PAGE>
expenses (including reasonable attorney's fees) if payment is rightfully due to
Invu and legal action is required to collect outstanding balances.
7. Invu represents and warrants that the pricing granted to Reseller
represents the best price currently available from Invu. In the event that Invu
reduces its prices generally during a period within five (5) years from the date
hereto, Invu will notify Reseller and permit Reseller to receive the benefits of
such preferential pricing. For a period of ten (10) days from the date of
license, the maintenance fees for the Products shall not increase more than
**[Confidential Treatment Requested] percent from the maintenance fees paid by
Reseller in the previous year. In addition, for a period of ten (10) years from
the date of license, the maintenance rate of **[Confidential Treatment
Requested] percent shall remain fixed and shall not increase in any respect. Any
future purchase of goods or services from Invu will be subject to the same
preferential pricing provided to Reseller hereunder.
8. Support and maintenance services for Products shall at all times
consist of support, updates and fixes as they become available. Major new
releases will be subject to further charges, which will be re-sold by the
Reseller to the end-users. Support and maintenance services will at all times
include (a) telephone consultation on use of the Products and error diagnosis,
isolation and correction via remote telephone support or e-mail as applicable,
dial-in access during standard support hours; (b) the furnishing of available
error or defect problem solutions on a timely basis, (c) an error or defect
reporting service; and (d) technical bulletins and written updates. Reseller may
initiate on-site support subject to availability at additional charges, but
there shall be no charge for on-site maintenance services, if Invu's services
pursuant to this agreement fail to remedy the defective operation of these
Products.
In the event that Invu shall have ceased providing maintenance services
to Reseller, Invu shall deliver a copy of the source code for the Products.
Reseller will, however, only use such copy of the source code internally to
support the Products.
Invu warrants that, for as long as Reseller is entitled to receive
maintenance from Invu for the Products, the Products shall perform substantially
in accordance with the corresponding technical specifications set forth in the
user's manual provided by Invu with the Products on the Equipment recommended by
Invu and set forth on the Supplemental or other Order. Invu's sole obligation
under this warranty shall be limited to using its reasonable efforts to correct
such defects and supply Reseller with a corrected version of such Products as
soon as practicable after Reseller has notified Invu of such defects. In the
event that Invu shall be unable to cause the Products to operate following
notification of the defect by Customer, Reseller shall be entitled to terminate
this license with respect to such Products and be entitled to receive a refund
of all fees paid hereunder. However, neither party shall be liable to the other
party for any consequential, special, indirect and/or economic losses, costs,
claims and/or damages howsoever caused.
9. Either party may terminate this Agreement or any particular license
granted hereunder upon thirty (30) days written notice. Immediately upon
termination of this Agreement and/or any particular license for reasons other
than Invu's breach, Reseller shall return or destroy all Products and
Documentation (provided under such terminated licenses) and all copies thereof
in any form (including translations and compilations), whether partial or
complete, and whether or not modified or merged into other Products made by
Customer. If requested by Invu (and only if Invu is not in
2
<PAGE>
breach), Reseller shall certify in writing as to the return or destruction of
such Products and Documentation and all copies thereof. Invu shall have the
right to use reasonable means to verify Customer's actual compliance with such
certification.
10. Reseller and Invu agree not to disclose to any third party any
Confidential Information disclosed to it by the other party without the prior
written consent of the disclosing party. Each party further agrees to take the
same care with the other's Confidential Information as it does with its own, but
not less than a reasonable standard of care. Each party agrees to take
appropriate action by instruction or agreement with all persons who are
permitted access to Confidential Information. Reseller shall limit access to the
Confidential Information of Invu to those persons having a need to know such
information in order to exercise or perform Customer's rights and obligations
under this Agreement.
11. The terms set forth herein shall not be interpreted or construed to
prevent or restrict Reseller from participating in any manner in the creation,
development or distribution of type of computer software or program with similar
functions or features competitive to the Products licensed hereunder.
12. This Agreement shall be governed by, and construed in accordance
with, the laws of England.
13. This Agreement is not assignable by either party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed; except that consent shall not be necessary in the event of
Reseller's assignment to any affiliate, subsidiary or division. Except as set
forth above, any attempt to assign any of the rights, duties, or obligations of
this Agreement without such consent shall be void and no effect. Only upon
obtaining Reseller's prior written consent in each instance, Invu shall be
entitled to fulfill any of its obligations under this Agreement through the
services of any independent party.
14. This Agreement can be modified only by a written agreement signed
by persons duly authorized to sign agreements on behalf of Reseller and Invu.
15. Invu represents and warrants that the Products will operate before,
during and after January 1, 2000, with no adverse effects or consequences to the
operation of the Products due to the change in century.
16. Invu represents and warrants that the Products will operate in
accordance with all currencies worldwide, including Euro conversions with no
adverse effects or consequences to the operation of the Products due to the
change of currencies or phased implementation of the Euro.
17. Invu represents and warrants that the Products do not and will not
contain any disabling codes, viruses,, or other mechanisms which will cause the
interruption or impairment of Reseller's operations of the Products. In the
event such codes are discovered, Invu will promptly remove them or consent to
the issuance of a temporary restraining order to prevent their operation.
The Effective Date of the Agreement is June 16, 1999.
3
<PAGE>
VENDOR COMPUTER ASSOCIATES INTERNATIONAL INC.
INVU SERVICES LIMITED
BY: /s/ David Morgan BY: Michael [Peckham]
----------------------- -----------------------------
TITLE: President & CEO TITLE: Senior Vice President
----------------------- -----------------------------
NAME: D. Morgan NAME: Michael [Peckham]
----------------------- -----------------------------
DATE: 26/5/99 DATE: 6/25/99
----------------------- -----------------------------
4
EXHIBIT 10.10
DISTRIBUTOR AGREEMENT
Agreement between: INVU Service Ltd Incorporated in England with registered
number 3319922, having its registered office at City Tower, Level 4, 40
Basinghall Street, London EC2V 5DE (hereby referred to as INVU) and
Company Name: CHS UK Holdings Limited Incorporated in England with registered
number 03642647, having its registered office at Copse Road, St. Johns Woking
Surrey GU21 1st (hereby referred to as DNSP)
Date: 1/07/99
OVERVIEW
INVU is pleased to appoint DNSP as an executive distributor with effect from
1/07/99. This appointment is for the INVU range of products as specified in
Appendix A ("INVU Product(s)").
This Appointment entitles DNSP to represent itself as INVU only authorized
Distributor for INVU Products for the territory of England, Scotland and Wales
(the "Territory").
In accordance with this appointment, DNSP agrees to use all reasonable endeavors
to promote and sell INVU's Products.
TERMS
1. INVU grants, and DNSP accepts, this appointment as INVU's exclusive
distributor for the Territory, for INVU Products for a period of 6 months
from 1/07/99 such exclusivity will be reviewed on 1/10/99. This agreement
shall be automatically renewed for successive renewal terms of (12) months
each, unless terminated otherwise upon written notice in accordance with
section 20. INVU agrees not to appoint any other person to act as a
distributor for INVU Products within the Territory during the course of
this agreement. INVU reserves the right to continue to sell directly to
end-users within the Territory.
2. DNSP agrees to provide qualified and competent sales and marketing staff,
and to use its reasonable endeavors to maximize the sales opportunities for
INVU Products.
3. Resellers will be recruited under a reseller accreditation scheme.
Accreditation will be charged at (pound)1250.00. DNSP will receive 50%
discount. Accreditation involves three days training and provision of a
full working 5-user license for Internal use. Accredited resellers receive
30% discount off INVU products. Non-accredited resellers receive 20%
discount off INVU products but are only entitled to supply product only,
and are not authorized to install and/or train.
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4. INVU agrees to pass sales leads from the Territory to DNSP. INVU also
agrees to inform DNSP regarding trade shows, promotional material, press
releases and other relevant marketing materials and activities in a timely
fashion. DNSP undertakes to advise INVU on a monthly basis as to the
progress and follow up of all leads and customers contacts relevant to INVU
Products. DNSP also undertakes to provide a 90 days rolling forecast of
business relevant to INVU. Prior to commencement of this Agreement, INVU
and DNSP will agree a 12 months forecasted sales plan. Upon execution of
this Agreement and not later than July 31, 1999, DNSP will purchase from
INVU stock (in a mix to be agreed) to the value of (pound)25000 (the "Stock
Mix"), payable within 90 days from the date of invoice. In the event that
INVU Product(s) supplied by INVU are returned to DNSP by customers for any
reason whatsoever included but not limited to non-conformity to INVU's
Product(s)' specifications, material defects, non-compatibility with other
software applications, lack of features, or failure to meet the particular
purpose for which they were bought, DNSP shall be entitled to return all or
part of the Stock Mix to INVU for full credit at the price invoiced and
INVU shall repay any sums paid by DNSP under this Agreement forthwith on
demand and indemnity DNSP against all costs, expenses, losses and
liabilities incurred by DNSP in connection with the Agreement.
5. All reasonable quantities of sales literature, marketing materials and the
like, required in the normal course of business from time to time by DNSP
for promoting, selling and marketing of INVU Products from INVJ will be
supplied free of charge.
6. DNSP must ensure at all times that it employs qualified technical support
and sales staff which are reasonably sufficient to fulfil sales and
business plans, attend customers' needs and effectively support INVU
Products.
7. DNSP will provide a first line support service to all its clients of INVU
Products. This service will handle the initial customer call, and resolve
any issues, which could normally be expected to be resolved by staff of
reasonable technical competence. INVU Services will not handle support
calls from DNSP clients directly. Support is charged to the end user at 20%
of license fee per annum. DNSP receive 50% discount. In addition, INVU will
provide an upgrade assurance service to end users at a further 10% of
license fee per annum. DNSP receive 30% discount.
8. INVU Services will provide second line support and will implement a web
site service for access to new releases, bug clearances and technical
updates.
9. INVU shall provide free of charge reasonable training to DNSP technical
support staff on INVU Product(s) and any INVU Product(s) new version and/or
upgrade, as required by DNSP.
10. DNSP will provide details of all sales of INVU Products. Including sales
value, customer name, number of licenses and support contracts. INVU agrees
to keep confidential all such information and to limit the disclosure of
such information to INVU's employees on a need to know basis during the
course and for two years following termination of this agreement.
2
<PAGE>
11. DNSP will maintain a working demonstration system for the nominated INVU
Products at all times. INVU will provide with demonstration software free
of charge. INVU undertakes during the continuation of this agreement to
maintain the software content of the demonstration product to the latest
specification at all times at no additional cost to DNSP. It is the
responsibility of DNSP to provide, at their own cost, whatever hardware
that is necessary to run the demonstration configuration.
12. INVU Product(s) supplied to DNSP by INVU will be at 50% discount from
INVU's published UK recommended retail price list.
13. In addition, INVU agrees to hold a further credit of 2.5% to DNSP's account
in a joint marketing fund. DNSP will submit marketing projects to INVU for
approval in order to utilize the marketing fund.
14. As an exclusive distributor DNSP must achieve sales forecasts with INVU as
specified in appendix B. This achievement will be reviewed monthly between
DNSP and INVU and failure to achieve minimum levels may lead to suspension
of the contract. However, such suspension will be subject to INVU's giving
30 days notice to DNSP in order to give opportunity to DNSP to achieve
spend levels.
15. Payment for all INVU Products shall be due and payable thirty days from the
date of invoice. Invoices shall be dated and mailed on or after the date of
shipment. Credit limit will be agreed from time to time by both parties and
may be revised by INVU upon 30 days written notice.
16. INVU reserves the right to amend the United Kingdom recommended retail
price list at any time subject to 30 days notice in writing. In the event
of a price decrease, INVU shall apply such price decrease to all INVU
Products ordered but not yet shipped at the time of the price decrease. In
addition DNS shall receive a credit for the difference between the old and
new price for INVU Products still held in inventory. In the event of a
price increase, INVU will apply such increased price to all orders received
by INVU after the price increase effective date.
17. INVU shall notify DNSP of the release of new versions of any INVU's
Product(s). In the event of such release DNSP may return to INVU all and
any units of old version of an INVU Product held in inventory that was
originally purchased from and invoiced by INVU. Upon receipt of the
returned INVU Product(s), together with copies of the invoices identifying
the returned INVU Product(s), INVU shall issue a credit against future
purchases for the amount paid by DNPS for INVU Product(s) returned to INVU.
18. INVU Product(s) at all times remain in intellectual property of INVU and
source code and any amendments thereto remain the sole property of INVU.
Unless otherwise agreed in writing on a case by case basis, DNSP shall not
copy or replicate the products. In addition, DNSP shall procure that any
third parties, customers, employees and/or contractor agree in writing to
acknowledge ownership of the software and products. INVU warrants that (i)
INVU products do not infringe any copyright enforceable in the United
States of America or in the Territory, and (ii) that INVU product name(s)
or trade mark do not infringe any
3
<PAGE>
trademark rights enforceable in those jurisdictions. INVU agrees to held
DNSP harmless and defend DNSP from and against any and all damages, costs
expenses, including reasonable legal fees, incurred in connection with a
claim which would constitute a breach of the warranties set forth in
section 18. INVU's obligations under section 18 shall survive the
expiration or termination of this agreement.
19. INVU warrants that the INVU Product(s) if supplied will, at the time of
delivery to the end-users, be free from defects in materials, be of
merchantable quality, be Year 200 compliant and be conformed to INVU's
applicable standard specifications. INVU's Product(s) supplied by INVU
which do not conform with the above warranty shall be returned to INVU for
full credit at the price invoiced.
20. This Agreement may be terminated by either party without cause upon 30 days
written notice. INVU shall upon termination repurchase all unsold stocks of
INVU Product(s) fully paid for by DNSP at a price no less than the price
paid for such products by DNSP.
21. Neither party shall be liable to the other party for any special,
consequential and/or economic losses, damages and/or claims howsoever
caused.
22. Any notice given under this Agreement to DNSP shall be sent to Unit 4,
Great West Plaza, Riverbank Way, Brentford, Middlesex, TW8 9RE.
23. This agreement shall be governed and construed in accordance with the laws
of England and Wales.
FOR AND ON BEHALF OF FOR AND ON BEHALF OF
INVU CHS UK Holding Limited
Signature Signature
Name Name
Position Position
Date Date
4
<PAGE>
APPENDIX A - INVU PRODUCTS COVERED BY THIS AGREEMENT
INVU PRO
INVU PRO (Network Edition)
INVU Webfast
5
<PAGE>
APPENDIX B - DNSP Sales Forecasts
Forecast of INVU Document Management Sales
------------------------------------------
September 1999 to February 2000
-------------------------------
DNSPaperlink is looking to take INVU Services Ltd. INVU Document Management
Software as a distribution software product. DNSPaperlink has proven, through an
existing network of some 3,000 dealers that it can successfully place product
into the market. These dealers address a wide range of end users, from the small
home office, through to large National and International customers. Many of
these dealers are already aware of Document Management and are either currently
actively selling it as a major production item or recognize it to be a product
that will bring substantial revenue in the near future and are looking to take
the right version on board.
By introducing INVU to these dealers we can tap a large market for this product.
There are specific reasons as to why INVU would be attractive to these dealers.
These reasons are that INVU is able to offer specific functions as standard
which are not found in many other Document Management/Imaging systems. These
features include:
Internet, Extranet and Intranet Access is available.
Boolean Search Facility of documents.
High Levels of security protection.
For this reason I feel it would be possible to not only sign up dealers to sell
INVU who are new to selling Document Management/Imaging systems, but also to
convert existing dealers who are currently selling a rival Document
Imaging/Management system.
To be able to seriously develop the market, it is suggested keeping the number
of dealers authorized to sell INVU comparatively small. The reason for this is
that Document Management products require a certain level of knowledge as to how
this software will integrate into the overall business model of the company
requiring it. A period of consultancy will also be needed to ensure the
requirements of the customer can and will be met, as well as a full installation
service for the software. Document Management/Document Imaging is a solution
sell, not an off the shelf shrink wrapped solution, and the average dealer does
not have this level of expertise in house to enable them to sell this service to
his clients. Therefore I would have thought that we would need to look for:
A channel of up to 50 Gold Partners
A maximum of 100 other dealers.
The differentiation between these two categories would be that a GOLD Partner
would be a dealer whose main business is Document Management. They understand
the product and would be purchasing INVU on a regular monthly basis and has made
a specific comment to sell INVU. The
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<PAGE>
other dealers are those who see Document Management as the way forward, but do
not yet have the required expertise in house to sell it. They are however
willing to work with us to build up this knowledge to a level where they can
confidently consult on the product and would be in a position to buy INVU every
month. Over the period of a year to 18 months, the actual number of and specific
dealers within each of these groups would change, some leaving the market for
whatever reason from both categories, and with dealers moving up into the GOLD
Partner status with other new ones joining from below.
To achieve this we need to actively promote the INVU product and Document
Imaging in general. The end user base needs to be educated into Document Imaging
and only companies such as INVU Services Ltd., Fujitsu and Microsoft can
effectively do this.
We would also look to encourage dealers to incorporate INVU within their own
software or solution product. Currently we have a number of dealers who could do
this, some having identified specific markets for their own software, having
already front ended it with an imaging product. We should look to give them
assistance in changing to INVU, by offering to work closely with the
manufacturer to assist in developing front-end integration, ideally at no cost
to themselves. The reason being that I believe INVU offers considerable
advantages over their current offering. However, more needs to be known about
INVU before we can definitely say this is possible. Some typical applications
include:
Pensions Software specifically of companies with 5,000-personnel 2 dealers
Specific Police Applications 2 dealers
General Applications 2 dealers
Healthcare Applications 2 dealers
Banking Applications 2 dealers
These can lead to large orders but there can also be long time frames between
orders. However, such accounts should be encouraged due to the potential and a
priority will be to visit and discuss the situation with each of these accounts,
as well as finding new vertical market specialists. However, we would need
assistance with ensuring INVU will integrate into their specific applications.
Targets
It is very difficult to break INVU down and say we should expect this each
month, the sale is extended and each project has a different mixture of
requirements. However, the following should be achievable figures:
7
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Month Licenses Units RRP Buy Price Total Buy
value
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
September Single Seat 5 (pound)260.00 (pound)130.00 (pound)660.00
- -----------------------------------------------------------------------------------------------------------------------------
5 User 6 (pound)1,030.00 (pound)619.00 (pound)3,090.00
- -----------------------------------------------------------------------------------------------------------------------------
10 User 2 (pound)1,810.00 (pound)905.00 (pound)1,810.00
- -----------------------------------------------------------------------------------------------------------------------------
15 User 2 (pound)2,580.00 (pound)1,290.00 (pound)2,580.00
- -----------------------------------------------------------------------------------------------------------------------------
20 User (pound)0.00 (pound)0.00 (pound)0.00
- -----------------------------------------------------------------------------------------------------------------------------
25 User 2 (pound)4,125.00 (pound)2,062.50 (pound)4,125.00
- -----------------------------------------------------------------------------------------------------------------------------
(pound)12,255.00
- -----------------------------------------------------------------------------------------------------------------------------
October Single Seat 10 (pound)260.00 (pound)130.00 (pound)1,300.00
- -----------------------------------------------------------------------------------------------------------------------------
5 User 3 (pound)1,080.00 (pound)515.00 (pound)1,545.00
- -----------------------------------------------------------------------------------------------------------------------------
10 User 2 (pound)1,810.00 (pound)905.00 (pound)1,810.00
- -----------------------------------------------------------------------------------------------------------------------------
15 User 4 (pound)2,680.00 (pound)1,290.00 (pound)5,160.00
- -----------------------------------------------------------------------------------------------------------------------------
20 User 2 (pound)3,360.00 (pound)1,680.00 (pound)3,360.00
- -----------------------------------------------------------------------------------------------------------------------------
25 User 6 (pound)4,125.00 (pound)2,062.50 (pound)12,376.00
- -----------------------------------------------------------------------------------------------------------------------------
(pound)25,550.00
- -----------------------------------------------------------------------------------------------------------------------------
November Single Seat 15 (pound)260.00 (pound)130.00 (pound)1,960.00
- -----------------------------------------------------------------------------------------------------------------------------
5 User 4 (pound)1,030.00 (pound)515.00 (pound)2,060.00
- -----------------------------------------------------------------------------------------------------------------------------
10 User 4 (pound)1,810.00 (pound)906.00 (pound)3,520.00
- -----------------------------------------------------------------------------------------------------------------------------
15 User 6 (pound)2,580.00 (pound)1,290.00 (pound)7,740.00
- -----------------------------------------------------------------------------------------------------------------------------
20 User 4 (pound)3,380.00 (pound)1,680.00 (pound)6,720.00
- -----------------------------------------------------------------------------------------------------------------------------
25 User 6 (pound)4,125.00 (pound)2,062.50 (pound)12,375.00
- -----------------------------------------------------------------------------------------------------------------------------
(pound)34,465.00
- -----------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Month Licenses Units RRP Buy Price Total Buy
Price
- ------------------------------------------------------------------------------------------------------------------------------
December Single Seat 10 (pound)260.00 (pound)130.00 (pound)1,300.00
- ------------------------------------------------------------------------------------------------------------------------------
5 User 4 (pound)1,030.00 (pound)515.00 (pound)2,060.00
- ------------------------------------------------------------------------------------------------------------------------------
10 User 4 (pound)1,810.00 (pound)905.00 (pound)3,620.00
- ------------------------------------------------------------------------------------------------------------------------------
15 User 4 (pound)2,580.00 (pound)1,280.00 (pound)5,180.00
- ------------------------------------------------------------------------------------------------------------------------------
8
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- ------------------------------------------------------------------------------------------------------------------------------
Month Licenses Units RRP Buy Price Total Buy
Price
- ------------------------------------------------------------------------------------------------------------------------------
20 User 5 (pound)3,360.00 (pound)1,680.00 (pound)8,400.00
- ------------------------------------------------------------------------------------------------------------------------------
25 User 6 (pound)4,125.00 (pound)2,062.50 (pound)12,375.00
- ------------------------------------------------------------------------------------------------------------------------------
(pound)32,915.00
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
January Single Seat 20 (pound)260.00 (pound)130.00 (pound)2,600.00
- ------------------------------------------------------------------------------------------------------------------------------
5 User 12 (pound)1,060.00 (pound)615.00 (pound)6,180.00
- ------------------------------------------------------------------------------------------------------------------------------
10 User 6 (pound)1,810.00 (pound)905.00 (pound)5,430.00
- ------------------------------------------------------------------------------------------------------------------------------
15 User 8 (pound)2,580.00 (pound)1,290.00 (pound)10,320.00
- ------------------------------------------------------------------------------------------------------------------------------
20 User 8 (pound)3,360.00 (pound)1,680.00 (pound)13,440.00
- ------------------------------------------------------------------------------------------------------------------------------
25 User 6 (pound)4,125.00 (pound)2,062.50 (pound)16,500.00
- ------------------------------------------------------------------------------------------------------------------------------
(pound)54,470.00
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
February Single Seal 25 (pound)260.00 (pound)130.00 (pound)3,250.00
- ------------------------------------------------------------------------------------------------------------------------------
5 User 18 (pound)1,030.00 (pound)515.00 (pound)9,270.00
- ------------------------------------------------------------------------------------------------------------------------------
10 User 8 (pound)1,810.00 (pound)905.00 (pound)7,240.00
- ------------------------------------------------------------------------------------------------------------------------------
15 User 10 (pound)2,580.00 (pound)1,290.00 (pound)12,900.00
- ------------------------------------------------------------------------------------------------------------------------------
20 User 10 (pound)3,360.00 (pound)1,680.00 (pound)16,800.00
- ------------------------------------------------------------------------------------------------------------------------------
25 User 8 (pound)4,125.00 (pound)2,062.50 (pound)16,500.00
- ------------------------------------------------------------------------------------------------------------------------------
(pound)65,960.00
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Promotions
Dealers are no different to anyone else and are always interested in "what's in
it for me". Promotions are always of interest to dealers, but we must remember
that we need to address two different aspects of the dealership. We can
encourage sales by directing promotions aimed at the sales people, in that they
get something for selling the product. I believe that every salesman who sells
the product should be rewarded. If the promotion is based upon the dealer who
produces the greatest revenue over a period of time, interest can be lost by the
smaller dealerships as they would believe they would not be able to compete
against the larger and more well established dealerships.
Therefore, I believe a points system should be introduced for each license size
sold, which would equate to a points value for Red Letter day prizes. This way
every one should be encouraged to sell the product. As a Document Management
solution is usually an extended sale, I would suggest promotions be of at least
six months duration to take this into account. It will also encourage the
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sales people to go for the longer cycle of sales and still be rewarded. To pay
for the prizes, it would be possible for both INVU and DNSPaperlink to set aside
say (pound)1 per point from each product. A suggested points scheme would be:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Product Points 6 Months Points Total Contribution
Projection
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 Single User 1 85 (pound)170.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 5 User 2 47 (pound)188.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 10 User 3 26 (pound)156.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 15 User 5 34 (pound)340.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 20 User 7 29 (pound)406.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 25 User 8 36 (pound)576.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 WebFast 10 4 (pound)90.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The total combined contribution based on the above figures from both INVU
Services Ltd. and DNSPaperlink, would be (pound)1,916.
The same basis but different points rating would yield:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Product Points 6 Months Points Total Contribution
Projection
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 Single User 2 85 (pound)340.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 5 User 4 47 (pound)376.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 10 User 6 26 (pound)312.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 15 User 8 34 (pound)544.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 20 User 10 29 (pound)580.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 25 User 12 36 (pound)864.00
- ----------------------------------------------------------------------------------------------------------------
INVU Pro 4.0 WebFast 20 4 (pound)160.00
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
This point scheme would require a total combined contribution of (pound)3.176.
With the need to split this between a number of people, I feel this is more like
the figure we need to be looking at, although personally I think that a total
contribution of (pound)2,000 per company would not be excessive over the six
month period.
These promotions reward the sales people, probably in most peoples estimation
the right ones to reward. However, all such promotions have to be agreed by the
dealer principles before they can be
10
<PAGE>
put into place, and they also will ask, "What's in it for me?" Therefore I
believe that running alongside any promotion for the sales people should be one
for the dealer principle, to encourage him to take the production.
This could be in the form of extra margin on product for a specific time period,
or an advertising campaign targeted at his end users (Standard marketing
leaflets with his dealer name and number printed on nit, mailed to his mailing
list), or assistance in some other way to generate business. Whatever form it
takes, the dealer will want to see additional margin coming in Alternative
options include seminars.
Seminars
Seminars would be arranged with individual dealers, targeting their own data
base and tailored to the specific requirements of the dealer. They may for
example target a vertical market only. If required, manufacturers could be
brought in as well. Where geographically possible manufacturers' offices would
be used to hold them, thus keeping costs down, but at the same time showing a
close relationship between DNSPaperlink and the manufacturer.
In the extreme areas, seminars would be a more cost-effective solution than
individual dealer visits. One held in either Edinburgh or Glasgow would cover a
large proportion of Scotland. Dublin would be suitable for Ireland. Guernsey and
Jersey would need individual visits due to their size. These seminars, as
distinct from the promotional seminars offered to dealers, should be used to
advise the dealers of the full product range used within a Document
Image/Management structure, from scanners through software to RAID and CD
Libraries and COLD products. Manufacture support can also be given at these
seminars and would encourage attendance. By showing a full product range it will
show the dealers were able to fully support them at every step of the way. Also,
whilst they may not be interested in one of the products being discussed,
sitting through a talk on that product could well show them the opportunities
being missed by not introducing it to their customers.
Conclusion
To summarize, DNSPaperlink believes that it is well positioned to sell INVU
Services Ltd. INVU Document Management software. The reasons being, our
recognized history in the Document Management field, an extensive network of
dealers, an active policy of giving seminars and working with dealers to promote
product locally.
We believe with the plans outlined above, a serious commitment to the product is
shown, together with understanding how the Software should be promoted.
With both internal and external sales teams, in house technical and consultancy
specialists, DNSPaperlink is fully committed to the success of this product.
11
EXHIBIT 10.11
THIS WARRANT, AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED
("SECURITIES ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
(i) UNLESS THE SHARES ARE REGISTERED UNDER THE SECURITIES ACT AND THE SECURITIES
ACT OF ANY STATE APPLICABLE TO SUCH SALE, OR (ii) THE PROPOSED SELLER PROVIDES
THE COMPANY WITH AN OPINION OF COUNSEL THAT THE SECURITIES ARE BEING SOLD IN A
TRANSACTION WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES ACTS AND THE COMPANY IS SATISFIED THAT
NO REGISTRATION STATEMENT IS THEN REQUIRED AND THAT THIS WARRANT AND THE
UNDERLYING SECURITIES MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
MANNER CONTEMPLATED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY STATE
SECURITIES ACT.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
INVU, INC.
Warrant to Purchase
VOID AFTER 5:00 P.M.
[3rd anniversary of issue date]
FOR VALUE RECEIVED, Invu, Inc., a corporation organized under the laws
of Colorado (the "Company"), promises to issue in the name of, and sell and
deliver to Robert Jeffcock, Apt. B42, Roc Fleuri, 1 Rue Du Tenao, MC 98000
Monaco (the "Holder"), a certificate or certificates for an aggregate of 200,000
shares (the "Shares") of common stock, of the Company ("Common Stock") par value
$.01 per share, at any time [after the issue date], and prior to 5:00 P.M.,
London, England Time [and on or before the third anniversary of the issue date
of this Warrant] (the "Expiration Date"), upon payment therefor of $0.50 per
share in lawful funds of the United States of America (the "Basic Exercise
Price") or pursuant to an alternative means of exercise detailed in Section 1 of
this Warrant. This applicable Basic Exercise Price, until such adjustment is
made and thereafter as adjusted from time to time, is called the "Exercise
Price."
1. Exercise of Warrant. In case the Holder of this Warrant shall desire
to exercise this Warrant in whole or in part, the Holder may either: (i)
surrender this Warrant, with the form of exercise notice on the last page hereof
duly executed by the Holder, to the Company accompanied by payment of the
Exercise Price of $0.50 per share, subject to adjustment as noted herein, or
(ii) in lieu of a cash exercise of this Warrant, the Holder may elect to receive
Common Stock equal to the value of this Warrant (or the portion hereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election, in which event the Company shall issue to
the Holder a number of shares of the Common Stock computed using the following
formula:
X = Y (A-B)
-------
A
1
<PAGE>
Where X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock purchasable
under this Warrant
A = the fair market ("Fair Market Value") value of one
share of the Common Stock
B = the Exercise Price
For purposes of this Section 1, if shares Common Stock are listed on a national
stock exchange or the NASDAQ Stock Market, the Fair Market Value per share of
the Common Stock shall be deemed to be the closing price of the Common Stock for
the Measuring Period (as hereinafter defined). However, if the shares of Common
Stock are then publicly traded but not quoted on a national stock exchange or
the NASDAQ Stock Market, the Fair Market Value per share of the Common Stock
shall be the mean of the closing bid and ask price of the Common Stock for the
Measuring Period. If the Common Stock is not publicly traded, the Fair Market
Value per share of Common stock shall be determined by the Board of Directors of
the Company in its reasonable discretion.
The Measuring Period shall be the ten (10) consecutive trading days
prior to the date of the exercise of the Warrants.
2. Registration Rights.
-------------------
(a) If the Company at any time proposes to file a registration
statement to register any of its securities under the Securities Act (except for
a registration filed in connection with an employee benefit plan, a transaction
relating to a merger or business combination, a transaction relating to an
exchange offer, a transaction relating to an acquisition of assets or
securities, or a transaction otherwise described in Rule 145 of the Securities
Act), whether or not for sale for its own account, it will each such time give
prompt written notice to the Holder of its intention to do so. Upon the written
request of a Holder, which request shall specify the number of the Shares
intended to be disposed of by the Holder, made as promptly as practicable and in
any event within ten (10) days after the receipt of any such notice, the Company
will use reasonable efforts to effect the registration under the Securities Act
of all the Shares that the Company has been so requested to register by the
Holder (a "Piggy-Back Registration").
(b) If the managing underwriter of any underwritten offering shall
deliver a written statement to the Holder that in such underwriter's opinion the
total number of Shares requested to be included in such registration would have
a material adverse effect on such offering, then the Company will include in
such registration only such number of shares of Common Stock that the Company is
so advised can be sold in (or during the time of) such offering without having a
material adverse effect on such offering, first, all securities proposed by the
Company to be sold for its own account and shares proposed to be sold by persons
with demand registration rights and second, the Shares requested to be included
in such registration by the Holder pursuant to this Agreement and other holders
with piggy-back registration rights.
(c) The Company shall not be obligated to include any Shares in any
registration statement filed for the benefit of any person or entity other than
the Company or the Holder wherein rights granted by the Company prohibit such
inclusion.
2
<PAGE>
3. Stock Dividends; Reclassification; Reorganizations; Anti-Dilution
Provisions. This Warrant is subject to the following further provisions:
a. In case, prior to the expiration of this Warrant by
exercise or by its terms, the Company shall issue any shares of its
Common Stock as a stock dividend or subdivide the number of outstanding
shares of Common Stock into a greater number of shares, then in such
case, the number of shares of Common Stock issuable upon exercise of
this Warrant shall be proportionately increased and the Exercise Price
shall be proportionately decreased, and conversely, in the event the
Company shall contract the number of outstanding shares of Common Stock
by combining such shares of Common Stock into a smaller number of
shares of Common Stock then, in such case the number of shares of
Common Stock issuable upon exercise of this Warrant shall be
proportionately decreased and the Exercise Price shall be
proportionately increased. If the Company shall, at any time during the
life of this Warrant, declare a dividend payable in cash on its Common
Stock and shall at substantially the same time offer to its
stockholders generally a right to purchase new shares of Common Stock
from the proceeds of such dividend or for an amount substantially equal
to the dividend, all shares of Common Stock so issued shall for the
purpose of this Warrant be deemed to have been issued as a stock
dividend. Any dividend paid or distributed upon the Common Stock in
shares of any other class of securities convertible into shares of
Common Stock or any other securities shall be treated as a dividend
paid in Common Stock to the extent that shares of Common Stock are
issuable upon the conversion thereof.
b. For purpose of this Agreement, the term "Common Stock"
shall mean (i) the class of stock designated as Common Stock in the
Articles of Incorporation of the Company as such Articles of
Incorporation may be amended after the date hereof or (ii) any other
class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from
par value to no par value, or from no par value to par value.
c. In case of any consolidation of the Company with, or merger
of the Company with, or merger of the Company into, another corporation
(other than a consolidation or merger that does not result in any
reclassification or change of the outstanding Common Stock covered by
Section 3(b) hereof), the corporation formed by such consolidation or
merger shall execute and deliver to the Holder a supplemental warrant
agreement providing that the Holder of each Warrant then outstanding or
to be outstanding shall have the right thereafter (until the expiration
of such Warrant) to receive, upon exercise of such warrant, the kind
and amount of shares of stock and other securities and property
receivable upon such consolidation or merger, by a Holder of the number
of shares of Common Stock of the Company for which such Warrant might
have been exercised immediately prior to such consolidation or merger.
Such supplemental warrant agreement shall provide for adjustments that
shall be identical to the adjustments provided in the Section 3. The
above provision of this Subsection shall similarly apply to successive
consolidations or mergers.
d. Upon the occurrence of each event requiring an adjustment
of the Exercise Price or of the number of shares of Common Stock
issuable upon exercise of this Warrant in accordance with, and as
required by, the terms of this Section 3, the Company shall use its
3
<PAGE>
best efforts to forthwith cause either a firm of independent certified
public accountants (who may be the regular accountants for the Company)
or the Chief Financial Officer of the Company to compute the adjusted
Exercise Price or the adjusted number of shares of Common Stock
issuable upon exercise of this Warrant by reason of such event in
accordance with the provisions of this Section 3. The Company shall
forthwith mail to the Holder of this Warrant a copy of such
computation, which shall be conclusive and shall be binding upon such
Holder unless contested by such Holder by written notice to the Company
within 14 days after the mailing thereof by the Company.
e. In case,
(1) the Company shall make a record of the holders of
its Common Stock for the purpose of entitling them to receive
a dividend payable (whether payable in cash, securities,
property or in any other form); or
(2) the Company shall make a record of the holders of
its Common Stock for the purpose of entitling them to
subscribe for or purchase any shares of any class or to
receive any other rights; or
(3) the Company shall set a date for any
reclassification or other reorganization of the capital stock
of the Company, consolidation or merger of the Company with or
into another corporation, or conveyance of all or
substantially all of the assets of the Company; or
(4) the Company shall set a date for the voluntary or
involuntary dissolution, liquidation or winding up of the
Company:
then, in any such case, the Company shall mail to the Holder of this
Warrant at least 10 days prior to such record date or the date set for
any actions described in subparagraphs (d)(1) through (d)(3) above, a
notice advising such Holder of the date or expected date on which a
record is to be taken for the purpose of such dividend, distribution of
rights or the date on which such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding
up is to take place, as the case may be. Such notice shall also specify
the date or expected date, if any is to be fixed, as of which holders
of Common Stock of record shall be entitled to participate in said
dividend, distribution of rights, or shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance, dissolution, liquidation or winding up, as the case
may be. Each such written notice shall be given by certified mail,
postage prepaid, return receipt requested, addressed to the holder of
the Warrant at the address of such holder as shown on the books of the
Company.
f. In case the Company, at any time while this Warrant shall
remain valid and unexercised, dissolve, liquidate or wind up its
affairs or sell or dispose of all or substantially all of its assets,
securities or property, the Holder of this Warrant shall thereafter be
entitled to receive upon exercise hereof (in lieu of such shares of
Common Stock underlying this Warrant) and the same kind and amount of
any securities or assets as may be issuable,
4
<PAGE>
distributable or payable upon any such sale, dissolution, liquidation
or winding up with respect to such number of shares of Common Stock of
the Company as would otherwise have been issuable upon exercise of this
Warrant. The Company shall mail notice thereof by registered mail to
the Holder and shall make no distribution to the stockholders of the
Company until the expiration of ten (10) days from the date of such
mailing; provided, however, that in any such event if the Holder shall
not exercise this Warrant within ten (10) days from the date of mailing
such notice, all rights herein granted not so exercised within such ten
(10) day period shall thereafter become null and void. The Company
shall not, however, be prevented from consummating any such sale
without awaiting the expiration of such ten (10) day period, it being
the intent and purpose hereof to enable the Holder upon exercise of
this Warrant to participate in the distribution of the consideration to
be received by the Company upon any such sale or in the distribution of
assets upon any dissolution or liquidation of the Company.
g. The provisions of this Section 3 are for the purpose of,
and shall be to the effect that upon any exercise of this Warrant the
Holder shall be entitled to receive the same amount and kind of
securities and other property that it would have been entitled to
receive as the owner at all times subsequent to the date hereof the
number of shares of Common Stock issuable upon exercise of the Warrant.
h. The Company shall at all times reserve and keep available,
out of its authorized and unissued capital stock, solely for the
purpose of providing for the exercise, forthwith upon the request of
the Holder of the Warrant(s) then outstanding and in effect, such
numbers of shares of Common Stock as shall, from time to time, be
sufficient for the Shares upon such exercise of the Warrants. The
Company shall, from time to time, in accordance with the laws of the
State of Colorado, increase the authorized amount of its capital stock,
if at any time the number of shares of Common Stock remaining unissued
and unreserved for other purposes shall not be sufficient to permit the
exercise of all Warrants then outstanding and in effect.
i. The Company covenants and agrees that all Shares that may
be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be validly issued, fully paid and non-assessable,
and free from all taxes, liens and charges with respect to the issue
thereof (other than taxes in respect of any transfer occurring with
such issue). The Company further covenants and agrees that, during the
period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
4. Loss, Theft, Destruction or Mutilation. In case this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or in lieu of and substitution
of such Warrant so destroyed, lost or stolen, upon the Holder of such Warrant
filing the Company such evidence satisfactory to it that such Warrant has been
so mutilated, defaced, destroyed, lost or stolen and of the ownership thereof by
the Holder; provided, however, that the Company shall be entitled, as a
condition to the execution and delivery of such new Warrant, to
5
<PAGE>
demand indemnity satisfactory to it and payment of expenses and charges incurred
in connection with the delivery of such new Warrant, except that no bond shall
be required from the Holder. All Warrants so surrendered to the Company shall be
canceled.
5. Record Owner. At the time of the surrender of this Warrant, together
with the form of subscription properly executed and payment of the Exercise
Price, the person exercising this Warrant shall be deemed to be the Holder of
record of the shares of Common Stock deliverable upon such exercise, in whole,
or in part, notwithstanding that the stock transfer of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to such person. The Company will pay all costs with
respect to the issuance of this Warrant or the shares of Common Stock issuable
upon exercise hereof, or thereof.
6. Fractional Shares. No fractional Shares, fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon the exercise
of this Warrant. With respect to any fraction of a Share called for on such
exercise, the Holder may elect to receive, and the Company shall pay to the
Holder, an amount in cash equal to such fraction multiplied by the Exercise
Price. In the alternative, the Holder may elect to remit to the Company an
amount in cash equal to the difference between such fraction and one, multiplied
by the Exercise Price, and the Company will issue the Holder one share of Common
Stock in addition to the number of whole shares required by the exercise of the
Warrant; provided, however, that the Company shall not be obligated by the
operation of this Section 6 to issue Shares in the aggregate exceeding the
number of shares duly registered in accordance with the applicable federal and
state securities laws or as to which an exemption from registration has been
determined to be available.
7. Original Issue Taxes. The Company will pay all United States, state
and local (but not foreign) original issue taxes, if any, upon the issuance of
this Warrant or the Shares deliverable upon exercise hereof.
8. Mailing of Notices, etc. All notices, and other communications from
the Company to the Holder of this Warrant shall be mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, to the
Holder, at the address set forth in the records of the Company, or to such other
address furnished to the Company in writing from time to time by the Holder of
this Warrant. All notices from the Holder of this Warrant to the Company shall
be mailed to the Company at Invu, Inc., The Beren, Blisworth Hill Farm, Stoke
Road, Blisworth, Northamptonshire NN73DB, United Kingdom, Attn: David Morgan,
President.
9. Registration Under the Securities Act of 1933. This Warrant and the
Shares issuable upon exercise of this Warrant have not been registered under the
Securities Act or the securities acts of any state or foreign country by virtue
of the Registration Statement. This Warrant and all replacement Warrants and all
Shares issued upon exercise of the Warrant shall bear the following legend:
This Warrant, and the securities issuable upon the exercise of
this Warrant, have not been registered under the Securities
Act of 1933, as amended ("Securities Act"), and may not be
sold, transferred or otherwise disposed of unless (i) the
Shares are registered under the
6
<PAGE>
Securities Act and the securities act of any state applicable
to such sale, or (ii) the proposed seller provides the Company
with an opinion of counsel that the securities are being sold
in a transaction which is exempt from the registration
requirements of the Securities Act and any applicable state
securities acts and the Company is satisfied that no
registration statement is then required and that this Warrant
and the underlying securities may be sold, transferred or
otherwise disposed of in the manner contemplated without
registration under the Securities Act or any state securities
act.
10. Laws of the State of Colorado. This Warrant shall be governed by,
interpreted under and construed in all respects in accordance with the laws of
the State of Colorado, irrespective of the place of domicile or residence of any
party.
11. Entire Agreement and Modification. The Company and the Holder of
this Warrant hereby represent and warrant that this Warrant is intended to and
does contain and embody all of the understandings and agreements, both written
and oral, of the parties hereto with respect to the subject matter of this
Warrant, and that there exists no oral agreement or understanding, express or
implied, whereby the absolute, final and unconditional character or nature of
this Warrant be in any way invalidated or affected. A modification or waiver of
any of the terms, conditions or provisions of this Warrant shall be effective
only if made in writing and executed with the same formality as this Warrant.
This Warrant will become wholly void and of no effect and the rights
evidenced hereby will terminate unless exercised in accordance with the terms
and provision hereof at or before 5:00 P.M., London Time, on the Expiration
Date.
[Remainder of Page Intentionally Blank]
7
<PAGE>
IN WITNESS WHEREOF, the Company by its duty authorized officer has
executed this Warrant as of the ______ day of ________________, 1999.
Attest: Invu, Inc.
By:
-----------------------------------
David Morgan, President
8
<PAGE>
FORM OF EXERCISE
The undersigned hereby irrevocably elects to exercise the purchase
rights represented by this Warrant for, and to purchase thereunder, ___________
Shares of Invu, Inc., a Colorado corporation, and herewith (a) opts to makes
payment of $0.50 per share, at a total of $__________ therefor, or (b) requests
that his rights under the Warrant be exercised pursuant to the net exercise
provision of Section 1 of the Warrant, and requests that such Shares be issued
to:
- -----------------------------------
(Print Name)
- -----------------------------------
(Address)
- -----------------------------------
(Taxpayer Identification Number)
Dated: ____________________________ -----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
9
EXHIBIT 10.12
Dated__________________________________1999
(1) INVU, Inc.
- AND -
(2) VERTICAL INVESTMENTS LIMITED and
ALAN DAVID GOLDMAN
- AND -
(3) DAVID MORGAN, JOHN AGOSTINI and PAUL O'SULLIVAN
- AND -
(4) INVU SERVICES LIMITED
-------------------------------------
INVESTMENT AGREEMENT
-------------------------------------
<PAGE>
THIS AGREEMENT is made the day of , 1999.
---------- ---------------------------
BETWEEN:
(1) INVU, INC. a company organized and existing under the laws of the state of
Colorado (whose shares trade on the NASD OTC Bulletin Board) whose
principal place of business is at The Beren, Blisworth Hill Farm, Stoke
Road, Blisworth, Northamptonshire, NN7 3DB ("Company")
(2) ALAN DAVID GOLDMAN of 13 Fernville Road Gosforth Newcastle Upon Tyne NE3
4HT and VERTICAL INVESTMENTS LIMITED (Company number: 71185) a company
registered in Jersey whose registered office is at Eagle House, Don Road,
St. Helier, Jersey, Channel Islands JE1 (collectively, the "Investor");
(3) DAVID MORGAN 6 Andrews Close, Leire, Leicestershire, LE17 5ER, JOHN
AGOSTINI 19 Priors Park, Emmerson Valley, Milton Keynes, MK4 2BT and PAUL
O'SULLIVAN 23 Denton, Horton, Northampton, NN7 2BE (the "Executive
Directors");
(4) INVU SERVICES LIMITED (a company registered in England and Wales under
number 3319922, whose registered office is at c/o McFadden, Pilkington and
Ward, City Tower, Level 4, 40 Basinghall Street, London, EC2V 5DE (the
"Guarantor").
IT IS AGREED AS FOLLOWS:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following expressions shall, except where
the context requires otherwise, have the meanings shown next to
them:-
"Articles" the Articles of Incorporation of the Company.
"Board" the board of directors of the Company or a
duly constituted committee thereof.
"Completion" the date and time when the actions referred
to in Clause 2.1 and conditions required by
Clause 2.3 are taken and satisfied.
"Initial Public
Offering" the admission of any shares of Common Stock
of the Company or granting of permission of
any shares of Common Stock of the Company to
be dealt with on the Official List of London
Stock Exchange Limited or any other U.K.
recognized investment exchange as defined by
section 207 of Financial Services Act 1986,
including the admission of such shares on the
main board of The Nasdaq National Market of
The Nasdaq Stock Exchange, Inc.
1
<PAGE>
"Investor Director" the director to be appointed by the Investor
under the terms of Clauses 2.2 and 4.
"Lenders" collectively, Zalcany Limited, Tomuro
Limited, Mustardseed Estates Limited, Roy
Williams and Richard Harris
"Loan" the loan in the aggregate principal amount
of (pound)400,000 (approximately US
$650,000) made to the Guarantor by the
Lenders pursuant to an agreement dated
February 2, 1999.
"Loan Stock" together Loan Stock A and Loan Stock B.
"Loan Stock A" the US$600,000 interest bearing convertible
loan stock 1999 - 2002 created by Loan Stock
"A" Instrument.
"Loan Stock B" the US$400,000 interest bearing convertible
loan stock 1999 - 2002 created by Loan Stock
"B" Instrument.
"Loan Stock "A" the loan stock instrument in the form set out
Instrument" in Schedule 1.
"Loan Stock "B" the loan stock instrument in the form set out
Instrument" in Schedule 2.
"Loan Stock together the Loan Stock "A" Instrument and
Instruments" the Loan Stock "B" Instrument.
"Montague" Montague Limited
"Parties" the parties to this Agreement.
"Transferred the 425,000 shares of Common Stock, no par
Shares" value, of the Company which are to be trans-
ferred to Montague by the Lenders upon
redemption of the Loan pursuant to Section
2.1.2. hereof.
"Warranties" the agreements, obligations, warranties,
representations, covenants and undertakings
of the Executive Directors contained in this
Agreement, including without limitation all
such matters contained and set out in
Schedule 4.
1.2 References to statutes or statutory provisions shall be
construed as including references to any statutory
modification, consolidation, re-enactment or amendment
(whether before or after the date hereof) for the time being
in force, all statutory
2
<PAGE>
instruments or orders made pursuant thereto or any statutory
provisions of which they are consolidations, re-enactments,
modifications or amendments.
1.3 Except where the context otherwise requires words denoting the
singular include the plural and vice versa; words denoting any
gender include all genders; words denoting the whole include
any part thereof.
1.4 References to Clauses, Sub-Clauses or Schedules are references
to Clauses or SubClauses of or schedules to this Agreement.
1.5 Clause headings are for ease of reference only and do not
affect the construction of this Agreement.
1.6 References to any Party shall (where the context so admits)
include his personal representatives his estate or trustees in
bankruptcy.
1.7 Words denoting an obligation on a Party to do an act matter or
thing include an obligation to procure that it be done and
words placing a Party under a restriction include an
obligation not to permit infringement of the restriction.
2. INVESTMENT
----------
2.1 In consideration of the Investor advancing an aggregate of
US$1,000,000 to the Company pursuant to the Loan Stock
Instruments the Company will:
2.1.1 on the signing hereof, execute the Loan Stock Instruments to
create the Loan Stock and the Company shall issue to the
Investor the Loan Stock and shall enter the Investor's name in
the register to be maintained by the Company in relation
thereto and shall issue the certificates in respect thereof;
2.1.2 immediately following the signing of this Agreement redeem the
Loan; and
2.1.3 cause Montague to transfer to and register in the name of the
Investor, 225,000 of the Transferred Shares.
2.2 Mr. Daniel Goldman has previously been appointed as a member
of the Board by the existing members of the Board. The parties
hereby acknowledge that Mr. Daniel Goldman is the first
Investor Director.
3. WARRANTIES AND REPRESENTATIONS
------------------------------
The Executive Directors acknowledge that the Investor has
entered into this Agreement in full reliance on the material
representations made to the Investor by the Company and the
Executive Directors, and the Executive Directors jointly and
severally warrant to the Investor, contracting for themselves
and as trustees for the Company that:
3
<PAGE>
3.1 The written information supplied by the Company, the Company's
solicitors and the Executive Directors to the Investor in
connection with the negotiation of this Agreement are true and
remain true and accurate in all material respects and the
Executive Directors do not know of anything which make such
information given to the Investor misleading or which
materially adversely affects the financial or trading
prospects of the Company or any of its subsidiaries.
3.2 The Executive Directors have full power and authority to enter
into and perform this Agreement which constitutes, or when
executed will constitute, binding obligations on them.
3.3 The information in Schedule 3 relating to the Company is
accurate.
3.4 The Warranties are true and accurate and will continue to be
so on each day up to and including the day of Completion with
reference to the facts and circumstances from time to time
applying.
3.5 Each of the Executive Directors shall promptly disclose in
writing to the Investor any material event or circumstance
which arises, or becomes known to him, prior to Completion and
is inconsistent with the Warranties, or which would result in
the Warranties not being true and accurate in all material
respects at Completion, or which is likely to be reasonably
material to be known by an investor in the Company.
3.6 Each of the Warranties is without prejudice to any other
Warranty and, except where expressly stated otherwise, no
clause governs or limits the extent or application of any
other clause.
3.7 The rights and remedies of the Investor in respect of a breach
of the Warranties shall not be affected by Completion, by
investigations made by or on behalf of the Investor into the
affairs of the Company, by the Investor rescinding, or failing
to rescind, this Agreement, or failing to exercise or delaying
the exercise of any right or remedy under this Agreement.
4. INVESTOR DIRECTOR
-----------------
4.1 The Investor shall be entitled to demand and the Company and
the Executive Directors agree to on such demand (i) appoint
one person nominated by the Investor as a director of the
Company to act as the Investor Director and (ii) remove from
office any person so nominated and appointed and (subject to
such removal) to appoint another person nominated by Investor
and reasonably satisfactory to the Executive Directors acting
reasonably in his place.
4.2 The Investor's right under Clause 4.1 to appoint the Investor
Director will continue until such time as there are no monies
outstanding in respect of the loans granted pursuant to the
Loan Stock Instruments; or following conversion thereunder.
4
<PAGE>
4.3 Investor recognizes that the Board has a fiduciary duty to the
Company and the other shareholders of the Company.
4.4 The Company and the Executive Directors in their capacity as
directors and shareholders agree to procure that neither the
Company nor any of its subsidiaries shall carry out any of the
following acts without the Investor Director's prior written
consent, which consent shall not be unreasonably withheld:
4.4.1 any variation in the number of authorized or issued share
capital of the Company, except pursuant to any outstanding
warrants and options of the Company existing on the date
hereof and listed in Schedule 4 at Clause 2.3.1 or the
creation or the granting of any options or other rights to
subscribe for, or convert into shares, or the variation of the
rights of any shares;
4.4.2 the declaration or distribution of any dividend or other
payment out of the distributable profits on the Common Stock
during the period that the Investor holds Loan Stock;
4.4.3 the commencement of any voluntary winding up action;
4.4.4 the appointment or termination by the Company of the
employment of any employee whose salary is to be or is in
excess of (pound)50,000 per annum or any variation of the
remuneration or other benefits of any such employee;
4.4.5 the incurring of any borrowing or any other indebtedness or
liability in the nature of borrowing in excess of twice the
aggregate paid up or credited as paid up share capital and the
total of the amount standing to the credit of the reserves of
the Company and its subsidiaries including the share premium
account and the capital redemption reserve fund other than
pursuant to the existing banking facility agreements ("the
Facility Agreements") of the Company;
4.4.6 any capital expenditure of an aggregate amount greater than
(pound)50,000 in any one fiscal year;
4.4.7 any material change in the nature of the business or in any
material contracts;
4.4.8 the payment of any kind in settlement or reduction of any
liability of the Company or any subsidiary other than under
the Loan Stock Instruments and other than in the normal course
of trading or pursuant to the terms of the Facility Agreements
or interest payments on any other borrowings or indebtedness
permitted under Section 4.4.5 hereof;
4.4.9 the grant of any security in any material assets of the
Company or any subsidiary to a third party, except liens that
may arise by operation of law;
4.4.10 any acquisition, merger, consolidation or sale of, with or to
any other entity; or
5
<PAGE>
4.4.11 agree to do any of the foregoing.
5. COSTS AND FEES
--------------
The Company will pay all reasonable expenses incurred by the Investor
in relation to this Agreement (including reasonable solicitor's fees
and expenses incurred in connection with completing this transaction)
and any subsequent variation of the terms of this Agreement and in
particular the Loan Stock Instruments and shall pay all reasonable
fees, costs and expenses (including VAT where applicable) of all
professional advisers of the Investor in connection with the
transactions contemplated by this Agreement and any agreements referred
to herein. Such fees and expenses will be paid within 28 days of
completion of this Agreement.
6. NOTICES
-------
6.1 Any notice or other communication to be given under this
Agreement shall be in writing and shall be delivered
personally or sent by first class pre-paid post telex or
facsimile transmission. The addresses for service of the
Parties shall be the addresses stated at the beginning of this
Agreement, except that the address for service for Guarantor
shall be The Beren, Blisworth Hill Farm, Stoke Road,
Blisworth, Northamptonshire NN7 3DB (provided that any Party
may by written notice served in accordance with this Clause
substitute another address in England which shall then
become that Party's address for service).
6.2 All notices and other communications shall be deemed to have
been served as follows:-
(a) if personally delivered at the time of delivery;
(b) if posted at the expiration of 48 hours after the
envelope containing the same was delivered into the
custody of the postal authorities; and
(c) if communicated by telex or facsimile transmission
when a successful transmission report is received.
6.3 In proving such service it shall be sufficient to prove that
personal delivery was made or that the envelope containing
such notice or other communication was properly addressed and
delivered into the custody of the postal authorities as a
pre-paid first class letter or that the telex transmission was
made and the recipient's "answerback" received the same
transmission or that the facsimile transmission was made
evidenced by the relevant activity report.
6.4 The deemed service provisions set out in Clause 6.2 do not
apply to a notice served by post, if there is a national or
local suspension, curtailment or disruption of postal services
which affect the collection of such notice or if that notice
cannot reasonably be expected to be delivered within 48 hours
of posting, in which case the notice shall be served when
actually delivered.
6
<PAGE>
7. POST-COMPLETION COVENANTS
-------------------------
7.1 The Company covenants on behalf of itself and its subsidiaries
(and all references in this Section 7 to the "Company" shall
be deemed to include its subsidiaries) that following
Completion and so long as the Loan Stock is outstanding and
has not been converted into Common Stock:
7.1.1 The Company will promptly deliver notice to Investor, but in
any event within ten (10) days after the discovery of any
material adverse litigation, event or other circumstance
affecting the Company, and what actions the Company has taken
and/or proposes to take with respect thereto.
7.1.2 The Company will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes,
assessments, and governmental charges or levies imposed upon
the income, profits, property, or business of the Company;
provided, however, that any such tax, assessment, charge, or
levy need not be paid if the validity thereof shall currently
be contested in good faith by appropriate proceedings and if
the Company shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the
Company will pay all such taxes, assessments, charges, or
levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security
therefor. The Company will promptly pay or cause to be paid
when due, or in conformance with customary trade terms, all
other indebtedness incident to operations of the Company.
7.1.3 The Company will keep its properties in good repair, working
order, and condition, reasonable wear and tear excepted and
from time to time make all necessary and proper repairs,
renewals, replacements, additions, and improvements thereto;
and the Company will at all times comply with each provision
of all leases to which it is a party or under which it
occupies property if the breach of such provision would have a
material adverse effect.
7.1.4 To the extent and in the manner customary for companies in
similar businesses similarly situated, the Company will keep
its assets which are of an insurable character insured by
financially sound and reputable insurers against casualty loss
or damage in reasonable and adequate amounts, and the Company
will maintain, with financially sound and reputable insurers,
insurance against other hazards, risks, and liability to
persons and property.
7.1.5 The Company will keep true records and books of account in
which full, true, and correct entries will be made of all
dealing or transactions in relation to its business and
affairs in accordance with generally accepted accounting
principles as applied in the United States on a consistent
basis.
7.1.6 Except as otherwise provided in Section 6 of Schedule 4
attached hereto, the Company shall duly observe and conform to
all requirements of governmental authorities relating to the
conduct of its business or to its property or assets.
7
<PAGE>
7.1.7 The Company (this Clause 7.1.7 not applying to its
subsidiaries) will, from time to time, in accordance with the
laws of the state of its incorporation, use its best efforts
to cause an increase in the authorized amount of Common Stock
prior to such time as the failure to do so would cause the
number of shares of Common Stock remaining authorized and
unissued to be insufficient to permit conversion of the
outstanding Loan Stock.
7.1.8 The Company will not repurchase any Common Stock.
7.1.9 Except as otherwise provided in this Agreement, the Company
shall not engage in any transactions with any officer,
director, or key employee of the Company or any family member
of such persons: (i) on terms less favorable than the Company
would obtain in a transaction with an unrelated party; and
(ii) unless the prior approval of the Investor Director has
been obtained, which approval shall not be unreasonably
withheld.
8. SURVIVAL; INDEMNIFICATION
-------------------------
8.1 All statements contained in this Agreement, including the
Schedules or in any certificate or instrument delivered by or
on behalf of the parties pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the parties
hereunder. The representations and warranties made, and
indemnifications given, by the Company, the Executive
Directors and Investor in this Agreement shall survive the
date of this Agreement for a period of three years, except
that the representations and warranties in Sections 3, 4 and 7
shall survive the date of this Agreement until the expiration
of the relevant statute of limitations period.
8.2 Indemnification
---------------
The Company hereby agrees to indemnify and hold harmless
Investor and its affiliated parties' directors, officers,
managers, members, agents and employees (each, an "Investor
Indemnified Person") from and against and to pay any losses,
claims, damages or liabilities (or actions or proceedings in
respect thereof) ("Damages") to which such Investor
Indemnified Person may become subject as the result of any
misrepresentation, or breach of warranty or covenant made or
to be performed on the part of the Company or any Executive
Director under this Agreement (except as a direct result of
the gross negligence or willful misconduct of an Investor
Indemnified Person), and will reimburse any Investor
Indemnified Person for all expenses (including reasonable
counsel and expert fees) incurred in connection with any such
misrepresentation, breach of warranty or investigating,
preparing or defending any such action or proceeding, whether
pending or threatened, and whether or not such Investor
Indemnified Person is a party hereto. The Company, within a
reasonable time after receiving knowledge of any claims,
actions or proceedings in respect of any Damages by another
person or entity against the Investor Indemnified Person shall
(a) notify the Investor Indemnified Person in writing of the
preferences of the
8
<PAGE>
Company to assume the defense thereof, and (b) at its own
expense, retain counsel reasonably acceptable to the Investor
Indemnified Person to conduct such defense. In such defense,
the Investor Indemnified Person shall have the right to engage
separate counsel and to participate in the prosecution,
defense, compromise or settlement thereof or to conduct its
own defense in accordance with the terms of this Section 8.2.
The agreement of the Company in this Section 8.2 shall be in
addition to any liability the Company may otherwise have.
9. MISCELLANEOUS
-------------
9.1 This Agreement may be amended only by a written document
signed by all the parties.
9.2 No failure to exercise or delay in exercising or enforcing any
right or remedy under this Agreement shall constitute a waiver
thereof and no single or partial exercise or enforcement of
any right or remedy under this Agreement shall preclude or
restrict the further exercise or enforcement of any such right
or remedy. The rights and remedies provided in this Agreement
are cumulative and not exclusive of any rights and remedies
provided by law.
9.3 The invalidity, illegality or unenforceability of any
provision of this Agreement shall not affect the continuation
in force of the remainder of this Agreement.
9.4 Subject to Section 8 and Section 9.5 hereof the provisions of
this Agreement shall continue for so long as the loans granted
pursuant to the Loan Stock Instruments remain outstanding.
9.5 All provisions of this Agreement shall so far as they are
capable of being performed continue in full force and effect
notwithstanding completion of this Agreement.
9.6 The construction, validity and performance of this Agreement
shall be governed by the laws of England and the parties
hereto shall submit to the exclusive jurisdiction of the
English courts.
9.7 Time is of the essence in the performance of this Agreement
and the Loan Stock Instruments.
10. GUARANTEE AND INDEMNITY BY GUARANTOR
------------------------------------
10.1 In consideration of the Investor entering into this Agreement
the Guarantor hereby unconditionally and irrevocably
guarantees to the Investor the due and punctual performance
and observance by the Company and the Executive Directors of
all its obligations, commitments, undertakings, warranties,
indemnities and covenants under or pursuant to this Agreement
and the Loan Stock Instruments and agrees to indemnify the
Investor against all losses, damages, costs and expenses
(including legal costs and expenses) which the Investor may
suffer or incur through or arising from any breach by the
Company and/or the Executive Directors of such obligations,
commitments, warranties, undertakings, indemnities or
covenants (except resulting
9
<PAGE>
from the gross negligence or willful misconduct of Investor).
The Guarantor's liability as aforesaid shall not be released
or diminished by any arrangements or alterations of terms
(whether of this Agreement and/or the Loan Stock Instruments
or otherwise) or any forbearance, neglect or delay in seeking
performance of the obligations hereby imposed or any granting
of time for such performance.
10.2 If and whenever the Company and/or the Executive Directors
default for any reason whatsoever in the performance of any
obligation or liability undertaken or expressed to be under-
taken by it under or pursuant to this Agreement and/or the
Loan Stock Instruments, the Guarantor shall forthwith upon
demand unconditionally perform (or procure performance of) and
satisfy (or procure the satisfaction of) the obligation or
liability in regard to which such default has been made in the
manner prescribed by this Agreement and so that the same bene-
fits shall be conferred on the Investor as it would have
received if such obligation or liability had been duly per-
formed and satisfied by the Company and/or the Executive
Directors. The Guarantor waives any rights which it may have
to require the Investor to proceed first against or claim
payment from the Company and/or the Executive Directors to the
extent that as between the Company, the Executive Directors
and the Guarantor, the latter shall be liable as principal
debtor as if it had entered into all undertakings, agreements
and other obligations jointly and severally with the Company
and the Executive Directors.
10.3 This guarantee and indemnity is to be a continuing security to
the Investor for all obligations, commitments, warranties,
undertakings, indemnities and covenants on the part of the
Company and/or the Executive Directors under or pursuant to
this Agreement and/or the Loan Stock Instruments
notwithstanding any settlement of account or other matter or
thing whatsoever.
10.4 This guarantee and indemnity is in addition to and without
prejudice to, and not in substitution for any rights or
security which the Investor may now or hereafter have or hold
for the performance and observance of the obligations,
commitments, undertakings, covenants, indemnities and
warranties of the Company and/or the Executive Directors under
or in connection with this Agreement and/or the Loan Stock
Instruments.
10.5 In the event of Guarantor having taken or taking any security
from the Company and/or the Executive Directors in connection
with this guarantee and indemnity, the Guarantor hereby
undertakes to hold the same in trust for the Investor pending
discharge in full of all Guarantor's obligations under this
Agreement and/or the Loan Stock Instruments.
10.6 As a separate and independent stipulation, the Guarantor
agrees that any obligation expressed to be undertaken by the
Company and/or the Executive Directors under this Agreement
and/or the Loan Stock Instruments (including without limita-
tion, any moneys expressed to be payable under this Agreement
and/or the Loan Stock Instruments) which may not be enforce-
able against or recoverable from the Company and/or the
Executive Directors by reason of any legal limitation,
disability or incapacity or any other fact or circumstance
shall nevertheless be enforceable against
10
<PAGE>
or recoverable from Guarantor as though the same had been
incurred by Guarantor and Guarantor were sole or principal
obligor in respect thereof and shall be performed or paid by
Guarantor on demand.
10.7 The terms of this Section 10 shall continue for so long as the
loans granted pursuant to the Loan Stock Instruments remain
outstanding.
11
<PAGE>
SCHEDULE 1
----------
LOAN STOCK "A" INSTRUMENT
-------------------------
12
<PAGE>
SCHEDULE 2
----------
LOAN STOCK "B" INSTRUMENT
-------------------------
13
<PAGE>
SCHEDULE 3
----------
COMPANY DETAILS
---------------
Date of Incorporation:
Authorized share capital:
Issued share capital:
Registered office: The Beren, Blisworth Hill Farm, Stoke Road,
Blisworth, Northamptonshire NN7 3DB
Directors: David Morgan, Paul O'Sullivan, John
Agostini, Daniel Goldman, Tom Maxfield
Secretary: John Agostini
14
<PAGE>
SCHEDULE 4
----------
WARRANTIES
----------
All references in this Schedule 4 to the Company shall include its subsidiaries
except as clearly required to the contrary by the context.
1. ACCOUNTS
1.1 The Management Accounts
-----------------------
1.1.1 The Management Accounts of the subsidiaries have been prepared
in accordance with generally accepted accounting practice in
the United Kingdom consistently applied and the Management
Accounts of the Company (excluding the subsidiaries) have been
prepared on a consolidated basis in accordance with generally
accepted accounting practice in the United States consistently
applied.
1.1.2 The Management Accounts:
(a) give a true and fair view in all material respects of
the assets and liabilities of the Company at the
Management Accounts Date and its results of
operations for the period ended on that date;
(b) are in all material respects not affected by extra-
ordinary, exceptional or non-recurring items;
(c) properly reflect in all material respects the
financial position of the Company as at the
Management Accounts Date;
(d) fully disclose, provide or reserve for in all
material respects all liabilities and capital
commitments of the Company outstanding at the
Management Accounts Date, including without
limitation all actual, contingent, unquantified or
disputed liabilities; and
(e) provide or reserve for all tax liable to be assessed
on the Company, or for which it may be accountable in
respect of the period ended on the Management
Accounts Date.
1.1.3 The term "Management Accounts" refers to the operating profit,
loss and balance sheet of INVU Services Limited and the
"Management Accounts Date" refers to June 30, 1999.
1.2 Books and records
-----------------
All the accounts, books, ledgers, financial and other records of the
Company:
(a) are in its possession;
15
<PAGE>
(b) have been fully and accurately kept;
(c) do not contain material inaccuracies;
(d) show a true and fair view of its trading transactions
and its financial, contractual and trading position.
1.3 Position since the Management Accounts Date
1.3.1 Since the Management Accounts Date:
(a) the Company has carried on its business in the
ordinary and normal course;
(b) no loans or loan capital of the Company have been
repaid;
(c) the Company has not paid or declared any dividend nor
made any payment which is a distribution for tax
purposes;
(d) there has been no change in accounting methods or
practices by the Company affecting its assets,
liabilities or business;
(e) there has been no revaluation by the Company of any
of its assets, including without limitation, writing
off notes or accounts receivable;
(f) there has been no damage, destruction or loss
(whether or not covered by insurance) adversely
affecting the properties, business or prospects of
the Company; and
(g) there has been no other event or condition of any
character which in any one case or in the aggregate
has materially adversely affected, or any event or
condition known to the Company which it is reasonable
to expect will, in any one case or in the aggregate,
materially adversely affect in the future, the
condition (financial or otherwise), assets,
liabilities, working capital, reserves, earnings,
business or prospects of the Company.
2. CORPORATE MATTERS
-----------------
2.1 Directors
---------
The only directors and secretary of the Company are the persons whose
names are listed in relation to the Company in Schedule 3.
2.2 Options over the Company's capital
----------------------------------
2.2.1 Except as required by this Agreement and as otherwise set
forth in Section 2.3.1, there are no agreements or
arrangements in force which provide for the issue, allotment,
or transfer of, or grant to any person the right (whether
conditional or otherwise) to call for the issue, or allotment
of share or loan capital of the Company.
16
<PAGE>
2.3 Shares
------
2.3.1 The (i) authorized, issued and outstanding shares of capital
stock of the Company and (ii) authorized shares of capital
stock of the Company reserved for issuance upon exercise or
conversion of any outstanding options, warrants, subscriptions
or other rights or obligations to purchase or acquire any of
such shares, or upon conversion of any outstanding convertible
securities, are set forth on Schedule 2.3.1 hereto. All of
the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and non-
assessable, and have been offered, issued, sold, and delivered
by the Company in compliance with all applicable domestic and
foreign federal and state securities laws. Upon delivery in
accordance with the terms hereof, the Transferred Shares will
have been duly authorized and validly issued, and will be
fully paid and nonassessable, free of all preemptive and
similar rights. The Common Stock issuable upon conversion of
the Loan Stock has been duly reserved for issuance, and upon
issuance in accordance with the Loan Stock Instruments, will
be duly authorized and validly issued, fully paid and non-
assessable, free of all preemptive and similar rights.
2.3.2 No share or loan capital has been issued or allotted, or
agreed to be issued or allotted, by the Company since the
Management Accounts Date.
2.4 Company Articles of Incorporation and Bylaws provided to
--------------------------------------------------------
Investors; Company books and resolutions
----------------------------------------
2.4.1 Copies of the Company's Articles of Incorporation and Bylaws
are true and accurate and complete.
2.4.2 The Company's stockholders' register and other company books
have been properly kept and contain an accurate and complete
record of the matters with which they should deal.
2.4.3 There are no matters in any of the above-mentioned documents
which would restrict the Company from entering into any of the
agreements contemplated by this Agreement and the other
documents mentioned herein.
2.5 Documents filed
---------------
Except as set forth in clause 6 of this Schedule 4, all returns,
particulars, resolutions and documents required by relevant legislation
or other relevant authority to be filed have been duly filed and were
correct and the Company has complied with relevant legislation in
connection with its formation, the allotment or issue of shares,
debentures and other securities, the payment of dividends and the
conduct of its business.
17
<PAGE>
2.6 Investigations
--------------
No investigations or enquiries by, or on behalf of, a governmental or
other body in respect of the affairs of the Company are taking place or
to the knowledge of the Existing Directors pending.
2.7 Organization of the Company
---------------------------
The Company is duly incorporated, validly existing and in good standing
under the laws of the State of Colorado. The Company has full corporate
power and authority to own, lease and operate its properties and assets
and to carry on its business as now being conducted, and is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction (domestic, foreign or otherwise) in which property and
assets owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary.
2.8 Subsidiaries
------------
The following is a complete and accurate list of all of the
corporations, partnerships, joint ventures or other entities in which
the Company either owns capital stock or is a partner or is in some
other manner affiliated through an investment or participation in the
equity of such entity (each such wholly-owned or majority-owned entity,
a "Subsidiary"): INVU plc (Company number 3375359), INVU Services
Limited (Company number 3319922) and INVU International Holding Limited
(Company Number 03340939). The outstanding shares of such Subsidiaries
have been duly and validly authorized and issued, are fully paid and
nonassessable, and were issued pursuant to, and within the limitations
contained in, appropriate and effective permits and consents of each
governmental authority from whom any permit or consent was required by
law, and the outstanding shares owned by the Company are owned free and
clear of any claims, liens, pledges, options, charges, easements,
security interests, rights of way, encumbrance or other rights of third
parties (hereinafter referred to as "Encumbrances"). There are no
subscriptions, options, warrants, calls, commitments or other rights of
any kind outstanding for the purchase of, nor any securities
convertible or exchangeable for, any securities of the Subsidiaries.
Each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the jurisdiction of its formation,
with corporate power to own its properties and conduct its business as
now being conducted and is duly qualified and in good standing to
transact business in each jurisdiction where, by virtue of its business
carried on or properties owned, it is required to be so qualified.
18
<PAGE>
2.9 Authority
---------
2.9.1 The execution, delivery and performance of this Agreement and
the Loan Stock Instruments and the consummation of the trans-
actions contemplated hereby and thereby by the Company have
been duly authorized by all requisite corporate action, and no
other acts or other proceedings on the part of the Company or
its shareholders are necessary to authorize this Agreement and
the Loan Stock Instruments or the transactions contemplated
hereby and thereby. This Agreement and the Loan Stock
Instruments have been duly and validly executed by the Company
and (assuming the due authorization, execution and delivery of
this Agreement by Investor) constitutes the legal, valid and
binding obligation of the Company, enforceable against it in
accordance with its terms.
2.9.2 No registration with, consent or approval of, notice to, or
other action by, any governmental entity is required on the
part of the Company for the execution, delivery or performance
by the Company and the Executive Directors of this Agreement
and the documents referenced herein or where such
registration, consent, notice or approval is required the same
has been completed, except for filings on Form D pursuant to
the Securities Act of 1933, as amended (the "Securities Act")
in connection with the transactions contemplated hereby.
2.10 No Conflict; Consents
---------------------
Neither the execution and delivery by the Company of this Agreement or
the Loan Stock Instruments nor the consummation of the transactions
contemplated hereby or thereby nor compliance with any of the
provisions hereof or thereof will (i) conflict with or result in a
breach of any provision of its Articles of Incorporation or Bylaws,
(ii) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the creation of
any restriction or charge on the business of the Company or Encumbrance
upon any of its properties or result in being declared void, voidable,
without further binding effect or subject to amendment or modification
any of the terms, conditions or provisions of, any note, bond,
mortgage, indenture, deed of trust, any license, franchise, permit,
lease, contract, agreement or other instrument or commitment or
obligation to which the Company or any of its properties may be bound
or affected, (iii) violate any order, writ, injunction, decree,
judgment, ruling, law, rule or regulation applicable to the Company or
any of its properties, or (iv) require any consent, approval or
authorization of, or notice to, or declaration, filing or registration
with, any person or entity, except for filings required on Form D
pursuant to the Securities Act in connection with the transactions
contemplated hereby.
19
<PAGE>
3. TAX
---
3.1 Disputes
--------
3.1.1 No liability for taxation has arisen or accrued on the part of
the Company which remains undischarged.
3.1.2 The Company is not liable to pay any interest, penalty, fine
or sum of a similar nature in respect of tax.
3.2 Compliance with tax legislation
The Company has materially complied with all requirements imposed on it
by all relevant legislation relating to tax and in particular have
properly kept all records and documents so required to be kept, have
properly and punctually made all returns and provided all information
to the relevant tax authorities as required.
4. FINANCE
-------
4.0.1 Except for the Loan and the Existing Facilities, the Company
does not have any outstanding borrowings, overdrafts or
indebtedness of whatsoever nature.
4.0.2 The Company is not in default under any instrument or
agreement constituting any indebtedness.
5. TRADING
-------
5.1 Conduct of business in accordance with Articles of Incorpora-
-------------------------------------------------------------
tion
----
5.1.1 The Company has conducted its affairs in accordance with its
constitution from time to time in force and all other
documents to which it has been a party.
5.1.2 The Company is empowered and qualified to conduct its affairs
and carry on business in all jurisdictions in which it so
conducts.
5.2 Litigation, disputes and winding up
-----------------------------------
5.2.1 The Company nor, to the knowledge of Executive Directors, any
person for whose acts or defaults the Company may be
vicariously liable is engaged in civil or criminal litigation
or arbitration proceedings as plaintiff or defendant; there
are no such proceedings pending or, to the knowledge of the
Executive Directors, threatened, either by or against the
Company or such persons and there is nothing, to the knowledge
of the Executive Directors, which is likely to give rise to
such litigation or arbitration.
5.2.2 No order has been made, or petition presented or resolution
passed for the winding up of the Company; no distress,
execution or other process has been levied in respect
20
<PAGE>
of the Company which remains undischarged; and there is no
unfulfilled or unsatisfied judgment or court order outstanding
against the Company.
5.3 Compliance with legislation
---------------------------
Except as otherwise provided in Section 6.1 hereof, the Company has
conducted and is conducting its business in accordance with all
applicable laws and regulations, whether in the United Kingdom or
elsewhere. The Company has not received any written notice that it is
not in compliance with all such applicable laws and regulations, except
where the failure to be in such compliance would not have a material
adverse effect.
5.4 Licenses and consents
---------------------
The Company has obtained all necessary licenses and consents for the
proper carrying on of its business and such licenses and consents are
valid and subsisting and the Company is not in breach of any of such
licenses or consents.
5.5 Intellectual Property; Infringement
-----------------------------------
5.5.1 The Company owns or possesses adequate licenses or other
rights to use all patents, copyrights, trademarks, service
marks, trade names, domain names, technology and know-how (the
"Proprietary Rights") necessary to conduct its business as
currently conducted.
5.5.2 The Company is not obliged to pay a material royalty, grant a
material license, or provide other material consideration to
any third party in connection with its Proprietary Rights.
5.5.3 The Company's use of the Proprietary Rights does not infringe
or conflict with the rights of others, and the Company has not
received any notice of any such infringement or conflict with
respect to its use of the Proprietary Rights.
5.5.4 The discoveries, inventions, products or processes of the
Company do not, to the knowledge of the Company, infringe or
conflict with any right or patent of any third party, or any
discovery, invention, product or process which is the subject
of a patent application filed by any third party, known to the
Company, which could have a material adverse effect on the
Company.
5.5.5 No third party (including any current or former employee of or
consultant to the Company or any academic or governmental
organization) possesses any rights to any of the Proprietary
Rights of the Company which, if exercised, could enable such
third party to develop products or services competitive with
those of the Company or could have a material adverse effect
on the Company to conduct its business as currently conducted.
21
<PAGE>
5.6 Payments
--------
The Company has not, directly or indirectly, paid or delivered any fee,
commission or other sum of money or item or property, however
characterized, to any finder, agent, government official or other
party, in the United States or any other country, which is in any
manner related to the business or operations of the Company, which the
Company knows or has reason to believe to have been illegal under any
federal, state or local laws of the United States or any other country
having jurisdiction; and the Company has not participated, directly or
indirectly, in any boycotts or other similar practices affecting any of
its actual or potential customers and has at all times done business in
an open and ethical manner.
5.7 Dissolution; Bankruptcy
-----------------------
The Company has not taken any action nor, to the best of its knowledge,
have any other steps been taken or legal proceedings started against
the Company for its winding-up or dissolution or for it to enter into
any arrangement or composition for the benefit of creditors, nor, to
the Company's knowledge, have any steps been taken for the appointment
of a receiver, administrator, administrative receiver, trustee or
similar officer of it or any of its properties or other assets.
5.8 Year 2000 Compliance
--------------------
To the best of the Company's knowledge, none of the computer systems
owned or operated by the Company, and none of the computer systems
operated by any third party for the benefit of the Company, including
without limitation, any such mainframe computer systems, computer
networks and personal computer systems, and none of the computer-based
products or services provided by the Company to others, contains any
hardware, software or process which is incapable of recognizing and
correctly calculating dates on and after January 1, 2000, or which
would otherwise cause such computer systems, products or services to
fail to perform any of their intended functions in a proper manner in
connection with data containing any date on or after January 1, 2000
(the "Year 2000 Problem"), and, to the best of the Company's knowledge,
none of such computer systems, products or services will result in the
failure or disruption of any of the Company's business, operations,
financial reporting, tax reporting, inventory management, accounts
receivable systems, accounts payable systems, invoicing, delivery,
personnel management or records, benefits records or administration, or
any other records or systems, as a result of the Year 2000 Problem.
5.9 Third Party Year 2000 Compliance
--------------------------------
The Company believes it has taken all reasonable steps to assure that
all venders, distributors, customers, lenders and other third parties
for which a business failure or material business interruption would
have a material adverse effect on the Company ("Key Third Parties"),
have taken reasonable steps to confirm that the computer systems
operated by such Key Third Parties recognize and correctly calculate
dates on or after January 1, 2000 ("Year 2000 Compliant"), and that the
Key Third Parties have implemented reasonable procedures and
22
<PAGE>
systems to minimize the risk that they do business with parties whose
computer systems are not Year 2000 Compliant.
6. SECURITIES LAWS
---------------
6.1 The Company's Common Stock is registered under Section 12(g) of
the U. S. Securities Exchange Act of 1934 (the "1934 Act"), and
such registration has not been terminated and the Company's
reporting obligations thereunder have not been suspended and are
in effect. As of their respective dates, all documents filed by
the Company with the U.S. Securities and Exchange Commission (the
"SEC") pursuant to the 1934 Act and the Securities Act from and
after August 31, 1998 complied in all material respects with the
requirements of said acts and the rules and regulations of the
SEC thereunder and none of said documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein, or necessary to be made in light
of the statements contained therein. Since August 31, 1998 the
Company has made all filings required to be made by it with the
SEC except for the Company's 8K-A for [the financials regarding
the acquisition], 10-Q for the quarter ended October 30, 1998,
10K for the fiscal year ended January 31, 1999 and 10-Q for the
quarter ended April 30, 1999. The Company believes that (A) the
Company's (i) 8K-A for [the financials regarding the
acquisition], (ii) 8-K for the change in the Company's fiscal
year, (iii) 10-Q for the quarter ended October 30, 1998 and (iv)
10K for the fiscal year ended January 31, 1999, will be each
filed with the SEC in form and substance in compliance with said
acts and rules and regulations no later than August 31, 1999, and
(B) the Company's 10-Q for the quarter ended April 30, 1999 will
be filed with the SEC in form and substance in compliance with
said acts and rules and regulations no later than September 30,
1999.
6.2 Neither the Company nor the Common Stock is listed on any
exchange or securities market, whether domestic or foreign,
except that the Common Stock is traded on the OTC.
AS WITNESS the hands of the parties the day and year first above
written
EXECUTED as a DEED and DELIVERED )
by INVU, INC. acting by two directors/director ) Director
and Secretary ) Director/Secretary
EXECUTED as a DEED and DELIVERED )
by ALAN DAVID GOLDMAN )
in the presence of:- )
23
<PAGE>
EXECUTED as a DEED and DELIVERED )
by VERTICAL INVESTMENTS LIMITED ) Director
acting by two directors/director and secretary ) Director/Secretary
EXECUTED as a DEED and DELIVERED )
by INVU SERVICES LIMITED ) Director
acting by two directors/director and secretary ) Director/Secretary
24
EXHIBIT 10.13
DATED 1999
------------------------
INVU, INC.
------------------------------------
LOAN STOCK INSTRUMENT
CONSTITUTING US$600,000 INTEREST BEARING
CONVERTIBLE SECURED LOAN STOCK 1999 - 2002
-------------------------------------
<PAGE>
THIS INSTRUMENT is made the ______ day of ____________________ , 1999.
By INVU, INC. a company organized and existing under the laws of Colorado (who
shares trade on the NASD OTC Bulletin Board) whose principal office is at The
Beren, Blisworth Hill Farm, Stoke Road, Blisworth, Northamptonshire NN7 3DB
("the Company").
WHEREAS:
The Company has by resolution of its Board of Directors passed today created
US$600,000 interest bearing Convertible Loan Stock 1999 - 2002 to be constituted
by this Instrument.
NOW THIS INSTRUMENT witnesses and declares as follows:
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this Instrument the following expressions shall have the following
meanings unless the context otherwise requires:
"Act" the U.K. Companies Act 1985 (including any Statu-
tory modifications or re-enactment thereof for
the time being in force);
"Business Day" a day (other than a Saturday or Sunday) on which
banks are generally open for business in London;
"Certificate" a certificate for the Loan Stock issued in
accordance with Clause 8 and in the form set out
in the Schedule;
"Conversion Period" the period of 3 years from the date of this
Agreement;
"Common Shares" the shares of Common Stock of the Company, no
par value;
"Directors" the Board of Directors of the Company for the
time being;
"Initial Public the admission of any of the Common Shares of the
Offering" Company or granting of permission of any Common
Shares of the Company to be dealt with on the
Official List of London Stock Exchange Limited or
any other recognized investment exchange as
defined by section 207 of Financial Services Act
1986 or the admission of such Common Shares to
the Nasdaq National Market of The Nasdaq Stock
Market Inc.;
<PAGE>
"Investment the Investment Agreement of even date between the
Agreement" Company, the Investor and David Morgan, John
Agostini, Paul O'Sullivan and INVU Services
Limited (Company number: 3319922);
"Investor" Alan David Goldman of 13 Fernville Road,
Gosforth, Newcastle upon Tyne NE3 4HT and
Vertical Investments Limited (Company number:
71185) of Eagle House, Don Road, St. Helier,
Jersey, Channel Islands, JE1;
"Loan Stock" the US$600,000 interest bearing Convertible Loan
Stock 1999 - 2002 of the Company constituted by
this Instrument or as the case may be the amount
thereof for the time being issued and outstanding
(including accrued interest);
"Loan Stock "B" The loan stock instrument of even date constitut-
Instrument" ing US$400,000 interest bearing Convertible Loan
Stock 1999 - 2002 of the Company;
"Register" the register of the Loan Stock kept by the
Company pursuant to Clause 10.
1.2 Any statutory provision shall include a reference to such provision as
from time to time re-enacted, amended, extended or replaced.
1.3 A Clause or a Schedule is a reference to a clause of or a schedule to
this Instrument.
1.4 References to "redemption" include purchase and repayment and the
words "redeem" or "redeemed" shall be construed accordingly.
1.5 Save where the context otherwise requires in this Instrument words
importing the singular number shall include the plural and vice versa
and words importing one gender shall include all genders.
1.6 Headings in this Instrument are for ease of reference only and shall
not affect its interpretation.
1.7 Save as expressly provided in this Instrument any words and
expressions defined in the U.K. Companies Act 1985 shall bear the same
respective meanings in this Instrument.
<PAGE>
2. AMOUNT OF LOAN STOCK
--------------------
2.1 The principal amount of the Loan Stock is limited to US$600,000. The
Loan Stock shall be issued in denominations and integral multiples of
US$1 in nominal amount subject to and with the benefit of the
provisions of this Instrument.
2.2 The Loan Stock shall be issued for cash at such time or times and on
such terms as the Directors shall determine.
3. STATUS OF THE LOAN STOCK
------------------------
3.1 All the obligations and covenants contained in this Instrument shall
be binding on the Company and the Investor and all persons claiming
through them.
3.2 The Loan Stock shall rank pari passu equally and rateably and as
obligations of the Company, except with respect to secured debt of the
Company incurred with consent of the Investor Director (as defined in
the Investment Agreement) in accordance with the terms of the
Investment Agreement.
4. INTEREST
--------
Until such time as the Loan Stock is converted or redeemed in accordance
with the provisions of this Instrument the Company shall pay to the
Investor interest (after deduction of tax to the extent that the Company is
legally obliged to deduct the same) on the outstanding principal amount of
the Loan Stock at the rate of 6% (six per cent) per annum to accrue from
day to day and be calculated monthly and be payable by semi-annual
instalments in arrears on 1st January and 1st July in each year the first
such payment to be due on 1st January 2000 and apportioned accordingly.
5. CONVERSION OF LOAN STOCK
------------------------
5.1 Subject to the provisions of this Clause on the occurrence of any of
the events specified in Clause 5.2 ("the Events"), the Loan Stock (or
such proportionate amount as may be determined by the Investor in the
case of Clauses 5.2.2 and 5.2.3) shall be converted into Common Shares
at the rate of one Common Share for every US$0.65 of outstanding
principal and interest Loan Stock converted. For the avoidance of
doubt the right of conversion shall lapse in respect of and to the
extent that Loan Stock has been redeemed.
5.2 Conversion of the Loan Stock pursuant to Clause 5.1 will take place:
5.2.1 immediately prior to the consummation of an Initial Public
Offering;
5.2.2 immediately upon the investment of new equity capital in the
Company resulting in proceeds to the Company of at least US
$4,000,000; or
5.2.3 on the Investor giving 30 days notice to the Company at any time
that they wish to convert the Loan Stock pursuant to Clause 5.1.
<PAGE>
5.3 Upon such conversion the Company shall forthwith:
5.3.1 allot to the Investor the appropriate number of Common Shares;
5.3.2 register the name of the Investor in the register of
stockholders of the Company in respect of such Common Shares;
5.3.3 if any director of the company registers any of its shares
under the Securities Act of 1933, as amended (the "Securities
Act"), Investor shall have the right to register the same
number of shares owned by Investor on the same terms and con-
ditions as the director's share registration provided, however,
that any such shares of Common Stock requested by Investor to
be included in such registrations shall be subject to cutback
or exclusion (it being understood that all shares of Common
Stock requested to be registered by any director(s) and Investor
shall be cutback or excluded proportionately) as may be reason-
ably required by the managing underwriter based upon market
factors affecting the offering; and
5.3.4 issue the relative share certificate(s) to the Investor.
5.4 Upon such conversion the Company shall forthwith pay to the Investor
such sums as amount to all accrued interest up to the date of
conversion to the extent such interest has not been converted (after
deduction of any tax as aforesaid in respect of the Loan Stock).
5.5 The Common Shares issued pursuant to Clause 5.3 shall be duly
authorized, validly issued, fully paid and non-assessable shares of
Common Stock and shall carry the right to receive all dividends and
other distributions declared made or paid and shall rank pari passu in
all other respects and form one class with the existing ordinary share
capital of the Company and, subject to Clause 5.7 and the registration
requirement of Section 5 of the Securities Act (such requirements, the
"Registration Requirements"), shall not be subject to any restriction
or encumbrances.
5.6 Subject to the payment of interest pursuant to Clause 5.4, the
conversion of Loan Stock to Common Shares shall be in full
satisfaction and discharge of the outstanding principal and accrued
and unpaid interest in respect of the Loan Stock so converted.
5.7 The Investor shall not transfer or sell any of the Common Shares
acquired by virtue of conversion of Loan Stock hereunder, prior to the
earlier of:
5.7.1 12 months from the date hereof; or
5.7.2 6 months from the date of an Initial Public Offering;
<PAGE>
provided, however, that the Investor shall be permitted to
transfer all or a portion of the common shares to members of
Investor's immediate family and/or Tom Maxfield.
5.8 By acceptance of the Loan Stock Certificate, the Investor is
acknowledging that: Investor is acquiring the Loan Stock and the
Common Shares issuable upon conversion thereof for Investor's own
account, not as a nominee or agent, and not with a view to, or for the
resale or distribution of any part thereof, except in compliance with
the Registration Requirements. The Investor has no present intention
of selling, granting any participation in, or otherwise distributing
the same.
5.9 By acceptance of the Loan Stock Certificates, Investor acknowledges
that, because they have not been registered under the Securities Act,
the Loan Stock and the Common Shares issuable upon conversion thereof
must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from registration is available.
6. REDEMPTION OF LOAN STOCK
------------------------
6.1 All Loan Stock not converted in accordance with the provisions of
Clause 5 shall be redeemed by the Company at par together with accrued
interest (after deduction of any tax as aforesaid) to the Investor on
the anniversary of the date of this Agreement in the year 2002 upon
receipt of 30 days' written notice from the Company or the Investor to
the other or at any time thereafter on such notice.
6.2 Except as provided in clauses 6 and 7, the Company cannot redeem the
Loan Stock.
7. ACCELERATED REPAYMENT OF LOAN STOCK
-----------------------------------
7.1 The Loan Stock shall become immediately redeemable at par together
with any accrued and unpaid interest (after deduction of any tax
aforesaid):
(a) at the Investor's option, if the Company fails to repay any
interest on the principal amount of the Loan Stock within 14 days
after the due date for such payment;
(b) if the Company or any subsidiary of the Company ceases or
threatens to cease to carry on its business or a substantial part
of its business;
(c) if the Company or any subsidiary of the Company is (or is deemed
to be) unable to or admits inability to pay its debts as they
fall due or proposes or enters into any composition or other
arrangement for the benefit of its creditors generally;
<PAGE>
(d) if any order is made by any competent court or any resolution is
passed by the Company or any subsidiary of the Company for the
winding up or dissolution or for the appointment of a liquidator
of the Company or any subsidiary of the Company (except for the
purpose of a solvent amalgamation or reconstruction);
(e) if an encumbrancer takes possession or a receiver or
administrative receiver or manager is appointed of the whole or
any material part of the undertaking or assets of the Company or
any subsidiary of the Company or any distress or other process is
levied or enforced upon any of the material assets rights or
revenues of the Company or any subsidiary of the Company and any
such action is not lifted or discharged within 30 days;
(f) if any order is made by any competent court for the appointment
of an administrator in relation to the Company or any subsidiary
of the Company which is not lifted within 30 days;
(g) if the security constituted by any mortgage or charge upon the
whole or any material part of the undertaking or assets of the
Company or any subsidiary of the Company may be realized upon;
(h) if the Company or any subsidiary of the Company fails to perform
or observe any of the provisions of this Instrument, the
Investment Agreement, the Loan Stock B Instrument which is not
cured within 3 days of the receipt by the Company of notice by
the Investor of such failure; or
(i) at the Investor's option, if the Company fails to become current
with respect to all filings required to be made by it with the
United States Securities and Exchange Commission ("SEC") by
September 30, 1999, or if the Company becomes delinquent, at any
time, with respect to any filing required to be made by it with
the SEC and such delinquency is not cured within 30 days.
7.2 The Company shall forthwith give notice to the Investor of the
happening of any event mentioned in Clause 7.1 upon becoming aware of
the same.
8. CERTIFICATES
------------
8.1 The Company shall issue duly executed Certificates to the Investor in
accordance with the provisions of this Instrument.
8.2 If any Certificate is defaced worn out lost or destroyed the Company
may issue a new Certificate on such terms (if any) as the Directors
may require as to indemnity and evidence of defacement wearing out
loss or destruction. In the case of defacement or wearing out the
defaced or worn out Certificate shall be surrendered and cancelled
before the new Certificate is issued. In the case of loss or
destruction the person availing himself of the provisions of this
Clause shall also
<PAGE>
pay to the Company (if demanded) all expenses incidental to the
investigation of evidence of loss or destruction and the preparation
of any form of indemnity. There shall be entered in the Register
particulars of the issue of any new Certificate and any indemnity.
8.3 The Loan Stock shall be held subject to the provisions of this
Instrument and of the Certificate, which provisions shall be binding
on the Company and the Investor and all persons claiming through or
under them respectively.
9. PLACE OF PAYMENT
----------------
The principal amount of the Loan Stock or any part of the Loan Stock and
any accrued interest will be payable at the principal office of the Company
in the United Kingdom. All payments will be made in United States dollars
in immediately available funds.
10. REGISTER OF INVESTOR
--------------------
10.1 The Company shall at all times maintain a register at its registered
office or at such other place in England and Wales as it may from time
to time decide showing:
(i) the name(s) and address(es) of the holder(s) for the time being of the
Loan Stock;
(ii) the amount of Loan Stock held by each Investor;
(iii) the date of issue of the Loan Stock to each Investor;
(iv) the serial number of each Certificate issued for the Loan Stock and
its date of issue.
10.2 The Investor shall notify the Company of any change of its name or
address and the Company upon receiving such notification shall alter
the Register accordingly.
10.3 The Register shall at all times prescribed by law be open for
inspection by the Investor or their duly authorized representatives.
11. TITLE OF INVESTOR REGARDING LOAN STOCK
--------------------------------------
11.1 The Company shall recognize the registered holder of any Loan Stock as
the sole absolute owner thereof and as alone entitled to receive and
give effectual discharge for the monies comprised therein. The Company
shall not be bound to take notice or see to the execution of any trust
whether express implied or constructive to which any Loan Stock may be
subject and shall not be affected by any notice it may have whether
express or constructive of the right title interest or claim of any
other persons to or in such Loan Stock or monies.
11.2 The Investor shall be entitled to the principal amount of the Loan
Stock and accrued interest (after deduction of any tax aforesaid) free
from any equity set-off or cross-claim on the part of the Company
against the Investor.
<PAGE>
12. NON-TRANSFERABILITY OF LOAN STOCK
---------------------------------
The Loan Stock shall not be transferable by the Investor without the
prior written consent of the Company not to be unreasonably withheld or
delayed; provided, however, Investor shall be permitted to transfer all
or a portion of the Loan Stock to members of Investor's immediate
family and/or Tom Maxfield, so long as such transferee makes the
acknowledgments and representations set forth in Sections 5.8 and 5.9
to the Company.
13. ALTERATION OF THIS INSTRUMENT
-----------------------------
The provisions of this Instrument and the conditions on which the Loan
Stock are held may be altered abrogated or added to with the consent in
writing of the Company and the Investor.
14. NOTICES
-------
14.1 Any notice or other communication to be given under this Agreement
shall be in writing and shall be delivered personally or sent by fist
class pre-paid post telex or facsimile transmission. The addresses for
service of the Parties shall be the addresses stated at the beginning
of this Agreement (provided that any Party may by written notice
serviced in accordance with this Clause substitute another address in
England which shall then become that Party's address for service).
14.2 All notices and other communications shall be deemed to have been
served as follows:-
(a) if personally delivered at the time of delivery;
(b) if posted at the expiration of 48 hours after the envelope
containing the same was delivered into the custody of the postal
authorities; and
(c) if communicated by telex or facsimile transmission when a
successful transmission report is received.
14.3 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice or other
communication was properly addressed and delivered into the custody of
the postal authorities as a pre-paid first class letter or that the
telex transmission was made and the recipient's "answerback" received
the same transmission or that the facsimile transmission was made
evidenced by the relevant activity report.
14.4 The deemed service provisions set out in clause 14.2 do not apply to a
notice served by post, if there is a national or local suspension,
curtailment or disruption of postal services which affect the
collection of such notice or if that notice cannot reasonably be
expected to be delivered with 48 hours of posting, in which case the
notice shall be served when actually delivered.
<PAGE>
15. LAW
---
This Instrument shall be governed by and construed in accordance with
English law.
16. WAIVER
------
The Company hereby waives presentment, demand for payment or redemption,
notice of breach or default, dishonor or nonpayment, protest and notice of
protest and all other demands and notices in connection with the delivery,
acceptance, performance or enforcement of this Instrument.
IN WITNESS whereof this Instrument has been executed and delivered as a deed on
the date first above written.
<PAGE>
SCHEDULE
Form of Loan Stock Certificate
------------------------------
INVU, Inc.
----------
Certificate No Nominal Amount of Loan Stock
- -------------- ----------------------------
ISSUE of up to US$600,000 interest bearing Convertible Secured Loan Stock 1999 -
2002.
Created and issued pursuant to the Company's [Memorandum and Articles of
Association] and a Resolution of its Board of Directors passed on [ ].
THIS IS TO CERTIFY that [ ] of/ whose registered office
is at [ ] is/are the registered holder(s) of
US$[ ]of the interest bearing Convertible Loan Stock 1999 - 2002
which Loan Stock is constituted by an Instrument entered into by the Company on
and dated [ ] 1999 and is issued subject to the provisions contained
in that Instrument.
Interest is at the per annum rate of 6% (six per cent), shall accrue from day to
day, shall be calculated monthly and shall be payable by half yearly instalments
on 1st January and 1st July in each year.
The Loan Stock is convertible and redeemable in accordance with the terms and
conditions contained in the Instrument a copy of which is available from the
Company.
EXECUTED as a DEED and DELIVERED by INVU, INC. this _______ day of
_____________, 1999.
Director
Director/Secretary
<PAGE>
EXECUTED as a DEED and DELIVERED )
by INVU, INC. acting )
by its two directors/director and secretary )
Director
Director/Secretary
EXHIBIT 10.14
DATED 1999
-----------------------------------------------------------
INVU, INC.
------------------------------------
LOAN STOCK INSTRUMENT
CONSTITUTING US$400,000 INTEREST BEARING
CONVERTIBLE LOAN STOCK 1999 - 2002
-------------------------------------
<PAGE>
THIS INSTRUMENT is made the _____ day of ______________________________, 1999.
By INVU, INC., a company organized and existing under the laws of the State of
Colorado (whose shares trade on the NASD OTC Bulletin Board), whose principal
office is at The Beren, Blisworth Hill Farm, Stoke Road, Blisworth,
Northamptonshire NN7 3DB ("the Company").
WHEREAS:
The Company has by resolution of its Board of Directors passed today created
US$400,000 interest bearing Convertible Loan Stock 1999 - 2002 to be constituted
by this Instrument.
NOW THIS INSTRUMENT witnesses and declares as follows:
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this Instrument the following expressions shall have the following
meanings unless the context otherwise requires:
"Act" the U.K. Companies Act 1985 (including any Statutory
modifications or re-enactment thereof for the time
being in force);
"Business Day" a day (other than a Saturday or Sunday) on which
banks are generally open for business in London;
"Certificate" a certificate for the Loan Stock issued in accord-
ance with Clause 8 and in the form set out in the
Schedule;
"Common Shares" the shares of Common Stock of the Company, no par
value.
"Conversion the period of 3 years from the date of this Agree-
Period" ment;
"Directors" the Board of Directors of the Company for the time
being;
"Initial Public the admission of any of the Common Shares or grant-
Offering" ing of permission of any Common Shares to be dealt
with on the Official List of London Stock Exchange
Limited or any other recognized investment exchange
as defined by section 207 of Financial Services Act
1986 or the admission of such Common Shares to the
Nasdaq National Market of The Nasdaq Stock Market,
Inc;
<PAGE>
"Investment the Investment Agreement of even date between the
Agreement" Company, the Investor and David Morgan, John
Agostini, Paul O'Sullivan and INVU Services Limited
(Company number 3319922);
"Investor" Alan David Goldman of 13 Fernville Road, Gosforth,
Newcastle upon Tyne NE3 4HT and Vertical
Investments Limited (Company number: 71185) of
Eagle House, Don Road, St. Helier, Jersey, Channel
Islands, JE1;
"Loan Stock" the US$400,000 interest bearing Convertible Loan
Stock 1999 - 2002 of the Company constituted by this
Instrument or as the case may be the amount thereof
for the time being issued and outstanding (including
accrued interest);
"Loan Stock "A" the loan stock instrument of even date constituting
Instrument" US$600,000 interest bearing Convertible Loan Stock
1999 - 2002 of the Company;
"Register" the register of the Loan Stock kept by the Company
pursuant to Clause 10.
1.2 Any statutory provision shall include a reference to such provision as
from time to time re-enacted, amended, extended or replaced.
1.3 A Clause or a Schedule is a reference to a clause of or a schedule to
this Instrument.
1.4 References to "redemption" include purchase and repayment and the
words "redeem" or "redeemed" shall be construed accordingly.
1.5 Save where the context otherwise requires in this Instrument words
importing the singular number shall include the plural and vice versa
and words importing one gender shall include all genders.
1.6 Headings in this Instrument are for ease of reference only and shall
not affect its interpretation.
1.7 Save as expressly provided in this Instrument any words and
expressions defined in the U.K. Companies Act 1985 shall bear the same
respective meanings in this Instrument.
<PAGE>
2. AMOUNT OF LOAN STOCK
--------------------
2.1 The principal amount of the Loan Stock is limited to US$400,000. The
Loan Stock shall be issued in denominations and integral multiples of
US$1 in nominal amount subject to and with the benefit of the
provisions of this Instrument.
2.2 The Loan Stock shall be issued for cash at such time or times and on
such terms as the Directors shall determine.
3. STATUS OF THE LOAN STOCK
------------------------
3.1 All the obligations and covenants contained in this Instrument shall
be binding on the Company and the Investor and all persons claiming
through them.
3.2 The Loan Stock shall rank pari passu equally and rateably and as
obligations of the Company, except with respect to secured debt of the
Company incurred with consent of the Investor Director (as defined in
the Investment Agreement) in accordance with the terms of the
Investment Agreement.
4. INTEREST
--------
4.1 Until such time as the Loan Stock is converted or redeemed in
accordance with the provisions of this Instrument the Company shall
pay to the Investor interest on the outstanding principal amount of
the Loan Stock at the rate of:
4.1.1 8% (eight per cent) per annum during the first six months
following the issue of the Loan Stock;
4.1.2 rising to 9% (nine per cent) per annum for the following six
month period; and
4.1.3 rising to 10% (ten per cent) per annum for the period
thereafter.
4.2 Interest shall accrue from day to day and be calculated monthly and be
payable by semi-annual installments in arrears on 1st January and 1st
July in each year.
5. CONVERSION OF LOAN STOCK
------------------------
5.1 Subject to the provisions of this Clause on the occurrence of any of
the events specified in Clause 5.2 ("the Events"), the Loan Stock (or
such proportionate amount as may be determined by the Investor in the
case of Clauses 5.2.2 and 5.2.3) shall be converted into Common Shares
at the rate of one Common Share for every US $0.50 of outstanding
principal Loan Stock converted. For the avoidance of doubt the right
of conversion shall lapse in respect of and to the extent that Loan
Stock has been redeemed.
5.2 Conversion of the Loan Stock pursuant to Clause 5.1 will take place:
<PAGE>
5.2.1 immediately prior to the consummation of an Initial Public
Offering;
5.2.2 at the option of the Investor, upon the investment of new equity
capital in the Company resulting in proceeds to the Company of
at least $4,000,000; and
5.2.3 on the Investor giving 30 days notice to the Company at any time
that they wish to convert the Loan Stock pursuant to Clause 5.1.
5.3 Upon such conversion the Company shall forthwith:
5.3.1 allot to the Investor the appropriate number of Common Shares;
and
5.3.2 register the name of the Investor in the register of
stockholders of the Company in respect of such Common Shares;
5.3.3 if any director of the Company registers any of its shares under
the Securities Act of 1933, as amended (the "Securities Act"),
Investor shall have the right to register the same number of
shares owned by Investor on the same terms and conditions as the
director's share registration provided, however, that any such
shares of Common Stock requested by Investor to be included in
such registrations shall be subject to cutback or exclusion (it
being understood that all shares of Common Stock requested to be
registered by any director(s) and Investor shall be cutback or
excluded proportionately) as may be reasonably required by the
managing underwriter based upon market factors affecting the
offering; and
5.3.4 issue the relative share certificate(s) to the Investor.
5.4 Upon such conversion the Company shall forthwith pay to the Investor
such sums as amount to all accrued interest up to the date of
conversion (after deduction of any tax as aforesaid in respect of the
Loan Stock).
5.5 The Common Shares issued pursuant to Clause 5.3 shall be duly
authorized, validly issued, fully paid and non-assessable shares of
Common Stock and shall carry the right to receive all dividends and
other distributions declared made or paid and shall rank pari passu in
all other respects and form one class with the existing ordinary share
capital of the Company and, subject to Clause 5.7 and the registration
requirements of Section 5 of the Securities Act (such requirements,
the "Registration Requirements"), shall not be subject to any
restriction or encumbrance.
5.6 Subject to the payment of interest pursuant to Clause 5.4, the
conversion of Loan Stock to Common Shares shall be in full
satisfaction and discharge of the outstanding principal in respect of
the Loan Stock so converted.
<PAGE>
5.7 The Investor shall not transfer or sell any of the Common Shares
acquired by virtue of conversion of Loan Stock hereunder, prior to the
earlier of:
5.7.1 12 months from the date hereof; or
5.7.2 6 months from the date of an Initial Public Offering;
provided, however, that the Investor shall be permitted to transfer
all or a portion of the Common Shares to members of Investor's
immediate family and/or Tom Maxfield.
5.8 By acceptance of the Loan Stock Certificate, the Investor is
acknowledging that: the Investor is acquiring the Loan Stock and the
Common Shares issuable upon conversion thereof for Investor's own
account, not as a nominee or agent, and not with a view to, or for the
resale or distribution of any part thereof except in compliance with
the Registration Requirements. The Investor has no present intention
of selling, granting any participation in, or otherwise distributing
the same.
5.9 By acceptance of the Loan Stock Certificate, Investor acknowledges
that, because they have not been registered under the Securities Act
the Loan Stock and the Common Shares issuable upon conversion thereof
must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from such registration is available.
6. REDEMPTION OF LOAN STOCK
------------------------
6.1 The Company may redeem the Loan Stock together with accrued interest
at any time during the period of 12 months from the date hereof.
6.2 All Loan Stock not converted in accordance with Clause 5 or redeemed
in accordance with Clause 6.1 shall be redeemed by the Company at par
together with accrued interest to the Investor on the anniversary of
the date of this Instrument in the year 2002 upon receipt of 30 days'
written notice from the Company or the Investor to the other or at any
time thereafter on such notice.
6.3 Except as provided in Clauses 6 and 7, the Company cannot redeem the
Loan Stock.
7. ACCELERATED REPAYMENT OF LOAN STOCK
-----------------------------------
7.1 The Loan Stock shall become immediately redeemable at par together
with any accrued and unpaid interest (after deduction of any tax
aforesaid):
(a) at the Investor's option, if the Company fails to repay any
interest on the principal amount of the Loan Stock within 14 days
after the due date for such payment;
<PAGE>
(b) if the Company or any subsidiary of the Company ceases or
threatens to cease to carry on its business or a substantial part
of its business;
(c) if the Company or any subsidiary of the Company is (or is deemed
to be) unable to or admits inability to pay its debts as they
fall due or proposes or enters into any composition or other
arrangement for the benefit of its creditors generally;
(d) if any order is made by any competent court or any resolution is
passed by the Company or any subsidiary of the Company for the
winding up or dissolution or for the appointment of a liquidator
of the Company or any subsidiary of the Company (except for the
purpose of a solvent amalgamation or reconstruction);
(e) if an encumbrancer takes possession or a receiver or
administrative receiver or manager is appointed of the whole or
any material part of the undertaking or assets of the Company or
any subsidiary of the Company or any distress or other process is
levied or enforced upon any of the material assets rights or
revenues of the Company or any subsidiary of the Company and any
such action is not lifted or discharged within 30 days;
(f) if any order is made by any competent court for the appointment
of an administrator in relation to the Company or any subsidiary
of the Company which is not lifted within 30 days;
(g) if the security constituted by any mortgage or charge upon the
whole or any material part of the undertaking or assets of the
Company or any subsidiary of the Company may be realized upon;
(h) if the Company or any subsidiary of the Company fails to perform
or observe any of the provisions of this Instrument, the
Investment Agreement or the Loan Stock "A" Instrument; or
(i) at the Investor's option, if the Company fails to become current
with respect to all filings required to be made by it with the
U.S. Securities and Exchange Commission ("SEC") by September 30,
1999 or if the Company becomes delinquent, at any time, with
respect to any filing required to be made by it with the SEC and
such delinquency is not cured within 30 days.
7.2 The Company shall forthwith give notice to the Investor of the
happening of any event mentioned in Clause 7.1 upon becoming aware of
the same.
8. CERTIFICATES
------------
8.1 The Company shall issue duly executed Certificates to the Investor in
accordance with the provisions of this Instrument.
<PAGE>
8.2 If any Certificate is defaced worn out lost or destroyed the Company
may issue a new Certificate on such terms (if any) as the Directors
may require as to indemnity and evidence of defacement wearing out
loss or destruction. In the case of defacement or wearing out the
defaced or worn out Certificate shall be surrendered and cancelled
before the new Certificate is issued. In the case of loss or
destruction the person availing himself of the provisions of this
Clause shall also pay to the Company (if demanded) all expenses
incidental to the investigation of evidence of loss or destruction and
the preparation of any form of indemnity. There shall be entered in
the Register particulars of the issue of any new Certificate and any
indemnity.
8.3 The Loan Stock shall be held subject to the provisions of this
Instrument and of the Certificate, which provisions shall be binding
on the Company and the Investor and all persons claiming through or
under them respectively.
9. PLACE OF PAYMENT
----------------
The principal amount of the Loan Stock or any part of the Loan Stock and
any accrued interest will be payable at the principal office of the Company
in the United Kingdom. All payments will be made in United States dollars
in immediately available funds.
10. REGISTER OF INVESTOR
--------------------
10.1 The Company shall at all times maintain a register at its registered
office or at such other place in England and Wales as it may from time
to time decide showing:
(i) the name(s) and address(es) of the holder(s) for the time being
of the Loan Stock;
(ii) the amount of Loan Stock held by each Investor;
(iii) the date of issue of the Loan Stock to each Investor; and
(iv) the serial number of each Certificate issued for the Loan Stock
and its date of issue.
10.2 The Investor shall notify the Company of any change of its name or
address and the Company upon receiving such notification shall alter
the Register accordingly.
10.3 The Register shall at all times prescribed by law be open for
inspection by the Investor or their duly authorized representatives.
11. TITLE OF INVESTOR REGARDING LOAN STOCK
--------------------------------------
11.1 The Company shall recognize the registered holder of any Loan Stock as
the sole absolute owner thereof and as alone entitled to receive and
give effectual discharge for the monies comprised therein. The Company
shall not be bound to take notice
<PAGE>
or see to the execution of any trust whether express implied or
constructive to which any Loan Stock may be subject and shall not be
affected by any notice it may have whether express or constructive of
the right title interest or claim of any other persons to or in such
Loan Stock or monies.
11.2 The Investor shall be entitled to the principal amount of the Loan
Stock and accrued interest (after deduction of any tax aforesaid) free
from any equity set-off or cross-claim on the part of the Company
against the Investor.
12. NON-TRANSFERABILITY OF LOAN STOCK
---------------------------------
The Loan Stock shall not be transferable by the Investor without the prior
written consent of the Company not to be unreasonably withheld or delayed;
provided, however, Investor shall be permitted to transfer all or a portion
of the Loans Stock to members of Investor's immediate family and/or Tom
Maxfield, so long as such transferee makes the acknowledgments and
representations set forth in Sections 5.8 and 5.9 to the Company.
13. ALTERATION OF THIS INSTRUMENT
-----------------------------
The provisions of this Instrument and the conditions on which the Loan
Stock are held may be altered abrogated or added to with the consent in
writing of the Company and the Investor.
14. NOTICES
-------
14.1 Any notice or other communication to be given under this Agreement
shall be in writing and shall be delivered personally or sent by fist
class pre-paid post telex or facsimile transmission. The addresses for
service of the Parties shall be the addresses stated at the beginning
of this Agreement (provided that any Party may by written notice
serviced in accordance with this Clause substitute another address in
England which shall then become that Party's address for service).
14.2 All notices and other communications shall be deemed to have been
served as follows:
(a) if personally delivered at the time of delivery;
(b) if posted at the expiration of 48 hours after the envelope
containing the same was delivered into the custody of the postal
authorities; and
(c) if communicated by telex or facsimile transmission when a
successful transmission report is received.
14.3 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice or other
communication was properly addressed and delivered into the custody of
the postal authorities as a pre-paid first class letter or that the
telex transmission was made and the
<PAGE>
recipient's "answerback" received the same transmission or that the
facsimile transmission was made evidenced by the relevant activity
report.
14.4 The deemed service provisions set out in clause 14.2 do not apply to a
notice served by post, if there is a national or local suspension,
curtailment or disruption of postal services which affect the
collection of such notice or if that notice cannot reasonably be
expected to be delivered with 48 hours of posting, in which case the
notice shall be served when actually delivered.
15. LAW
---
This Instrument shall be governed by and construed in accordance with
English law.
16. WAIVER
------
The Company hereby waives presentment, demand for payment or
redemption, notice of breach or default, dishonor or nonpayment,
protest and notice of protest and all other demands and notices in
connection with the delivery, acceptance, performance or enforcement
of this Instrument.
IN WITNESS whereof this Instrument has been executed and delivered as a
deed on the date first above written.
<PAGE>
SCHEDULE
--------
Form of Loan Stock Certificate
------------------------------
INVU, Inc.
----------
Certificate No Nominal Amount of Loan Stock
- -------------- ----------------------------
ISSUE of up to US$400,000 interest bearing Convertible Loan Stock 1999 - 2002.
Created and issued pursuant to the Company's constitution and a Resolution of
its Board of Directors passed on [___________].
THIS IS TO CERTIFY that [______________________] of/ whose registered office is
at [____________________] is/are the registered holder(s) of
US$[_________________] of the interest bearing Convertible Loan Stock 1999 -
2002 which Loan Stock is constituted by an Instrument entered into by the
Company on and dated [______________] 1999 and is issued subject to the
provisions contained in that Instrument.
Interest is at the per annum rate of 8% (eight per cent) during the first six
months from the date of this Certificate, rising to 9% per annum for the
following six month period, rising to 10% per annum thereafter and interest
shall accrue from day to day, shall be calculated monthly and shall be payable
by half yearly installments on 1st January and 1st July in each year.
The Loan Stock is convertible and redeemable in accordance with the terms and
conditions contained in the Instrument a copy of which is available from the
Company.
EXECUTED as a DEED and DELIVERED by INVU, INC. this ____ day of
___________________, 1999
- -----------------------------------
Director
<PAGE>
EXECUTED as a DEED and DELIVERED )
by INVU, INC. acting by its two directors/ )
director and secretary )
Director
Director/Secretary
EXHIBIT 10.15
Dated 1999
--------------------------------------------------------------
(1) INVU INC
- and -
(2) VERTICAL INVESTMENTS LIMITED
- and -
(3) ALAN DAVID GOLDMAN
- and -
(4) DAVID MORGAN, JOHN AGOSTINI and PAUL O'SULLIVAN
- and -
(5) INVU SERVICES LIMITED
- and -
(6) TOM MAXFIELD
-------------------------------------
SUPPLEMENTAL AGREEMENT
-------------------------------------
Teacher Stern Selby
37/41 Bedford Row
London WC1R 4JH
Tel: 0207 242 3191
Fax: 0207 242 1156
Email: [email protected]
Ref: ALPHA/VERTICAL-SUPPLEMENTAL AGREEMENT
<PAGE>
THIS SUPPLEMENTAL AGREEMENT is made the day of 1999
BETWEEN:-
(1) INVU INC a company organized and existing under the laws of the state
of Colorado (whose shares trade on the NASD OTC Bulletin Board) whose
principal place of business is at The Beren, Blisworth Hill Farm, Stoke
Road, Blisworth, Northamptonshire, NN 17 3DB (the "Company").
(2) VERTICAL INVESTMENTS LIMITED (Company number: 71185) a company
registered in Jersey whose registered office is at Eagle House, Don
Road, St Helier, Jersey, Channel Islands JE1 ("Vertical Investments")
and ALAN DAVID GOLDMAN of 13 Fernville Road, Gosforth, Newcastle upon
Tyne NE3 4HT ("Mr Goldman") (together the "Investor").
(3) DAVID MORGAN of 6 Andrews Close, Leire, Leicestershire LE17 5ER, JOHN
AGOSTINI of 19 Priors Park, Emmerson Valley, Milton Keynes MK4 2BT and
PAUL O'SULLIVAN of 23 Denton, Horton, Northamptonshire NN7 2BE (the
"Executive Directors").
(4) INVU SERVICES LIMITED (a company registered in England and Wales under
number 3319922), whose registered office is c/o McFadden Pilkington and
Ward, City Tower, Level 4, 40 Basinghall Street, London EC2V 5DE (the
"Guarantor").
(5) TOM MAXFIELD of [ ] ("Mr Maxfield")
WHEREAS:-
(A) This Agreement is supplemental to the Investment Agreement made between
Parties (1) to (4) dated l7th August 1999 (the "Investment Agreement")
whereby the Investor advanced an aggregate of US$1,000,000 (the
"Investment") to the Company.
(B) The Parties acknowledge that it was always the intention that one third
of the Investment be advanced to the Company by Mr Maxfield. The
Parties now agree that one third of the Investment should be considered
made by Mr Maxfield as, if he were a party to the Investment Agreement,
on the terms and conditions set out in this Agreement.
IT IS AGREED AS FOLLOWS:-
1. DEFINITIONS AND INTERPRETATIONS
1.1 In this Agreement except as otherwise provided or where the context
requires otherwise, words and expressions shall have the same meanings
as given to them in the Investment Agreement.
1
<PAGE>
1.2 References to statutes or statutory provisions shall be construed as
including references to any statutory modification consolidation
re-enactment or amendment (whether before or after the date hereof) for
the time being in force all statutory instruments or orders made
pursuant thereto or any statutory provisions of which they are
consolidations re-enactments modifications or amendments.
1.3 Except where the context otherwise requires words denoting the singular
include the plural and vice versa; words denoting any gender include
all genders; words denoting the whole include any part thereof.
1.4 References to Clauses Sub-Clauses or Schedules are references to
clauses or sub-clauses of or schedules to this Agreement.
1.5 Clause headings are for ease of reference only and do not affect the
construction of this Agreement.
1.6 References to any Party shall (where the context so admits) include his
personal representatives his estate or trustees in bankruptcy.
1.7 Words denoting an obligation on a Party to do an act matter or thing
include an obligation to procure that it be done and words placing a
Party under a restriction include an obligation not to permit
infringement of the restriction.
2. AGREEMENT
---------
2.1 In consideration of the obligations and agreements of Mr Maxfield in
clause 3 the Parties agree that any reference to "Investor" in the
Investment Agreement shall be deemed to include Mr Maxfield and all
obligations, warranties, conditions or other covenants given to or by
the Investor in the Investment Agreement shall also apply as if they
were also given by or to Mr Maxfield as if he were an original party to
the Investment Agreement.
2.2 For the avoidance of doubt the obligations under and the benefits
accruing to the Investors under the Investment Agreement and the Loan
Stock instruments shall be borne by Mr Goldman, Vertical Investments
and Mr Maxfield in three equal proportions.
2.3 Subject to clauses 2.1 and 2.2 the Investment Agreement shall continue
in full force and effect.
3. OBLIGATIONS OF TOM MAXFIELD
---------------------------
3.1 Upon the signing of this Agreement Mr Maxfield shall pay to Mr Goldman
the sum of (pound)207,451.66 which shall represent one third of the
Investment.
2
<PAGE>
3.2 Mr Maxfield agrees to comply with the terms of the Investment Agreement
in so far as they relate to the Investor, as if he were an original
party to the Investment Agreement.
3.3 Pursuant to clause 12 of the Loan Stock Instruments Mr Maxfield
acknowledges that:-
3.3.1 by acceptance of the Loan Stock Certificate, he is acquiring
the Loan Stock and the Common Shares issuable upon conversion
thereof for his own account, not as a nominee or agent, and
not with a view to, or for the resale or distribution of any
part thereof except in compliance with the Registration
Requirements and that he has no present intention of selling,
granting any participation in, or otherwise distributing the
same.
3.3.2 that by acceptance of the Loan Stock Certificate, he
acknowledges that, because he has not been registered under
the Securities Act the Loan Stock and the Common Shares
issuable upon conversion thereof must be held indefinitely
unless subsequently registered under the Securities Act or any
exemption from such registration is available.
3.4 Mr Maxfield acknowledges that Daniel Goldman is and will remain for the
time being the first Investor Director.
3.5 Mr Maxfield hereby indemnifies and shall keep indemnified Mr Goldman
and Vertical Investments against any costs, claims, demands, expenses
or any other loss incurred by them prior to the date of this Agreement
in connection with the one third of the Investment being transferred to
Mr Maxfield.
4. COMPLETION
----------
4. The Patties agree to use their best endeavours, to procure that follow-
ing the signing of this Agreement:-
4.1 the Company shall issue to Mr Goldman, Vertical Investments and Mr
Maxfield the following Loan Stock Certificates:-
INVESTOR NAME LOAN STOCK "A" LOAN STOCK "B"
Mr. Goldman US$200,000 US$133,334
Vertical Investments US$200,000 US$133,333
Mr Maxfield US$200,000 US$133,333
and shall update the register to be maintained by the Company in relation to the
Loan Stock.
3
<PAGE>
4.2 Vertical Investments agrees to transfer 75,000 of the Transferred
Shares to Mr Maxfield by executing the appropriate stock transfer form
and delivering the same to the authorized transfer agent and the
Company agrees thereafter to enter Mr Maxfield's name in its register
of members.
5. COSTS
-----
Pursuant to Clause 5 of tile Investment Agreement the Company will pay
all reasonable expenses (including reasonable solicitors' fees and
expenses) incurred by Mr Goldman and Vertical Investments in relation
to this Agreement. The other Parties shall bear their own costs.
6. NOTICES
-------
6.1 Any notice or other communication to be given under this Agreement
shall be in writing and shall be delivered personally or sent by first
class pre-paid post telex or facsimile transmission. The addresses for
service of the Parties shall be the addresses stated at the beginning
of this Agreement, except that the address for service for the
Guarantor shall be The Beren, Blisworth Hill Farm, Stoke Road,
Blisworth, Northamptonshire, NN17 3DB (provided that any Party may by
written notice served in accordance with this Clause substitute another
address in England which shall then become that Party's address for
service).
6.2 All notices and other communications shall be deemed to have been
served as follows:-
(a) if personally delivered at the time of delivery;
(b) if posted at the expiration of 48 hours after tile envelope
containing the same was delivered into the custody of the
postal authorities; and
(c) if communicated by telex or facsimile transmission at the
time of transmission.
6.3 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice or other
communication was properly addressed and delivered into the custody of
the postal authorities as a pre-paid first class letter or that the
telex transmission was made and the recipient's "answerback" received
the same transmission or that the facsimile transmission was made
evidenced by the relevant activity report.
6.4 The deemed service provisions set out in Clause 6.2 do not apply to a
notice served by post if there is a national or local suspension,
curtailment or disruption of postal services which affect the
collection of such notice or if that notice cannot reasonably be
expected
4
<PAGE>
to be delivered within 48 hours of positing, in which case the notice
shall be served when actually delivered.
7. GOVERNING LAW
-------------
The construction, validity and performance of this Agreement shall be
governed by the laws of England and the Parties submit to the exclusive
jurisdiction of the English courts.
8. MISCELLANEOUS
-------------
8.1 No failure to exercise or delay in exercising or enforcing any right or
remedy under this Agreement shall constitute a waiver thereof and no
single or partial exercise or enforcement of any right or remedy under
this Agreement shall preclude or restrict the further exercise or
enforcement of any such right or remedy. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any
rights and remedies provided by law.
8.2 The invalidity, illegality or unenforceability of any provision of this
Agreement shall not affect the continuation in force of the remainder
of this Agreement.
8.3 All provisions of this Agreement shall so far as they are capable of
being performed continue in full force and effect notwithstanding
completion of this Agreement.
8.4 This Agreement may be amended only by a written document signed by all
the parties.
8.5 This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original but all the
counterparts shall together constitute one and the same instrument.
Executed and delivered by the Parties as a Deed on the date first above written.
5
<PAGE>
EXECUTED as a DEED and DELIVERED )
by INVU INC acting by two directors/director )
and Secretary )
Director
Director/Secretary
EXECUTED as a DEED and DELIVERED )
by ALAN DAVID GOLDMAN )
in the presence of.- )
EXECUTED as a DEED and DELIVERED )
by VERTICAL INVESTMENTS LIMITED )
acting by two directors/director and Secretary )
Director
Director/Secretary
EXECUTED as a DEED and DELIVERED )
by DAVID MORGAN )
in the presence of:- )
EXECUTED as a DEED and DELIVERED )
by JOHN AGOSTINI )
in the presence of:- )
EXECUTED as a DEED and DELIVERED )
by PAUL O'SULLIVAN )
in the presence of:- )
EXECUTED as a DEED and DELIVERED )
by INVU SERVICES LIMITED acting by )
two directors/director and Secretary )
Director
Director/Secretary
EXECUTED as a DEED and DELIVERED )
by TOM MAXFIELD )
in the presence of:- )
6
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
The following is a list of all subsidiaries, the state or other
jurisdiction of incorporation or organization of each, and the names under
which such subsidiaries do business:
1. INVU Plc, a company incorporated under the laws of England, is a wholly
owned subsidiary of the Company.
2. INVU Services Limited, a company incorporated under the laws of England, is
a wholly owned subsidiary of INVU Plc and an indirect subsidiary of the
Company.
3. INVU International Holdings Limited, a company incorporated under the laws
of England, is a wholly owned subsidiary of INVU Plc and an indirect
subsidiary of the Company.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001035039
<NAME> INVU, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JAN-31-1999
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 615
<ALLOWANCES> 0
<INVENTORY> 126,590
<CURRENT-ASSETS> 157,478
<PP&E> 121,201
<DEPRECIATION> 41,440
<TOTAL-ASSETS> 237,239
<CURRENT-LIABILITIES> 429,558
<BONDS> 0
0
0
<COMMON> 288,355
<OTHER-SE> (902,867)
<TOTAL-LIABILITY-AND-EQUITY> 237,239
<SALES> 0
<TOTAL-REVENUES> 8,267
<CGS> 0
<TOTAL-COSTS> 698,149
<OTHER-EXPENSES> 1,492
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,419)
<INCOME-PRETAX> (694,809)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (694,809)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
