<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from _______, 19__ to ______, 19__.
Commission File Number: 33-35580-D
INSTANT VIDEO TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer
as Specified in its Charter)
DELAWARE 84-1141967
(State or Other Jurisdiction of (I.R.S. Employer Identi-
Incorporation or Organization) fication Number)
500 SANSOME STREET, SUITE 503
SAN FRANCISCO, CALIFORNIA 94111
Address of Principal Executive Offices, Including Zip Code
(415) 391-4455
(Issuer's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
--- ---
There were 4,600,695 shares of the Issuer's $.00001 par value common stock
outstanding as of April 15, 1996.
<PAGE> 2
INSTANT VIDEO TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
Part I: Financial Information Page No.
- --------------------------------- --------
Item 1. Financial Information:
Unaudited Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995.................... 3-4
Unaudited Consolidated Statements of Operations -
Three and Nine Months Ended September 30, 1996 and 1995 .... 5
Unaudited Consolidated Statement of Cash Flows -
Three and Nine Months ended September 30, 1996 and 1995..... 6-7
Notes to Unaudited Consolidated Financial
Statements.................................................. 8
Item 2. Management's Discussion and Analysis
or Plan of Operation. . . . . . . . ...................... 9
Part II: Other Information. . . . . . . ............................. 11
- -----------------------------
Item 1. Legal Proceedings................................... 11
Item 2. Changes in Securities............................... 11
Item 3. Defaults Upon Senior Securities..................... 11
Item 4. Submission of Matters to a Vote
of Security Holders................................ 11
Item 5. Other Information................................... 11
Item 6. Exhibits and Reports on Form 8-K.................... 11
Signatures......................................... 13
SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this Report includes forward-looking statements
within the meaning of applicable securities laws that involve substantial risks
and uncertainties including, but not limited to, market acceptance of the
Company's products and new technologies, the sufficiency of financial resources
available to the Company, economic, competitive, governmental and technological
factors affecting the Company's operations, markets, services and prices, and
other factors described in this Report and in prior filings with the Securities
and Exchange Commission. The Company's actual results could differ materially
from those suggested or implied by any forward-looking statements as a result of
such risks.
<PAGE> 3
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
Assets
------ September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 7,168 $ 4,346
Prepaid expenses 53,474 25,161
-------- --------
Total current assets 60,642 29,507
-------- --------
Deferred costs 350,943 --
Property and equipment, net 52,022 50,176
Patents, net 130,323 143,991
Goodwill, net 3,613 5,362
Trademark, net 372 507
Deposits 9,312 9,312
-------- --------
$607,227 $238,855
======== ========
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity (Deficit)
- ----------------------------------------------
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Current liabilities:
Credit facility, related party $ 65,000 $ 28,750
Bank line of credit -- 250,000
Convertible notes payable 291,000 241,305
Notes payable, other -- 100,993
Deferred revenue 205,192 159,032
Accounts payable 308,055 322,280
Accrued payroll and taxes 64,281 226,059
Accrued interest 58,724 76,493
----------- -----------
Total current liabilities 992,252 1,404,912
----------- -----------
Convertible notes payable -- 141,000
----------- -----------
Shareholders' Equity (Deficit):
Preferred stock
Series D 9 9
Series E 5 5
Series F 15 --
Common stock 46 45
Additional paid-in capital 6,480,448 5,005,464
Accumulated deficit (6,865,548) (6,312,580)
----------- -----------
Net Shareholders' Equity (Deficit) (385,025) (1,307,057)
----------- -----------
$ 607,227 $ 238,855
=========== ===========
</TABLE>
<PAGE> 5
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------ ------------
1996 1995 1996 1995
--------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue $ 520,379 $ 169,130 $ 558,948 $ 204,890
--------- ----------- ----------- ---------
Costs and expenses:
Research and
development 35,700 -- 108,000 1,765
Project costs 210,000 75,000 650,000 75,000
Other general and
administrative 109,756 169,070 302,604 547,276
--------- ----------- ----------- ---------
355,456 244,070 1,060,604 624,041
--------- ----------- ----------- ---------
Net income (loss) from
operations 164,923 (74,940) (501,656) (419,151)
--------- ----------- ----------- ---------
Other income (expense)
Interest income 42 16 637 73
Interest expense (15,311) (20,692) (50,749) (57,132)
--------- ----------- ----------- ---------
(15,269) (20,676) (50,112) (57,059)
--------- ----------- ----------- ---------
Net income (loss)
before income taxes 149,654 (95,616) (551,768) (476,210)
Income taxes (800) -- (1,200) (1,600)
--------- ----------- ----------- ---------
Net income (loss) $ 148,854 $ (95,616) $ (552,968) $(477,810)
========= =========== =========== =========
Net income (loss)
per common share $ .04 $ (.02) $ (.12) $ (.12)
========= =========== =========== =========
</TABLE>
<PAGE> 6
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Consolidated Statement of Changes in Shareholders' Equity (Deficit)
for the years ended December 31, 1995 and six months ended June 30, 1996
<TABLE>
<CAPTION>
Common Stock Preferred Stock
----------------- ------------------ Additional Stock Total
Number of Number of Paid-In Accumulated Subscription Shareholders'
Shares Amount Shares Amount Capital Deficit Receivable Equity (Deficit)
--------- ------ --------- ------ ---------- ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1995 4,036,869 40 6,300,000 63 4,805,420 (5,855,947) (225,000) (1,275,424)
Collection of stock
subscription -- -- -- -- -- -- 255,000 255,000
Conversion of debt
to common stock 100,000 1 -- -- 99,999 -- -- 100,000
Stock issued for cash -- -- 100,000 1 99,999 -- -- 100,000
Conversion of preferred
stock to common 354,571 4 (4,964,000) (50) 46 -- -- --
Net Loss -- 1995 -- -- -- -- -- ( 456,633) -- ( 456,633)
--------- ----- --------- ----- --------- ---------- ------- ----------
Balance 4,491,440 $45 1,436,000 $14 $5,005,464 $(6,312,580) $ -- $(1,307,057)
Stock issued for cash -- -- 1,225,000 12 1,224,988 -- -- 1,225,000
Net income (loss) -- -- -- -- -- ( 701,822) -- ( 701,822)
--------- ----- --------- ----- --------- ---------- ------- ----------
Balance 4,491,440 $45 2,661,000 $26 $6,230,452 $(7,014,402) -- $( 783,879)
========= ===== ========= ===== ========= ========== ======= ==========
</TABLE>
<PAGE> 7
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (552,968) $(477,810)
Adjustments to reconcile net income (loss)
to net cash used in operating
activities:
Depreciation and amortization 34,749 31,100
Amortization of deferred revenue (558,840) (203,890)
Increase in prepaid expenses (28,313) (9,924)
Decrease in receivables -- 14,500
Increase in deferred costs (350,943) (139,122)
Decrease in accounts payable (14,225) (91,200)
Increase (Decrease)in accrued payroll
and taxes (161,778) 17,329
Increase (Decrease)in accrued interest
and taxes (17,769) 27,955
Collection of license fees 605,000 306,738
----------- ---------
Net cash used in operating activities (1,045,087) (524,324)
----------- ---------
Cash flows from investing activities:
Purchase of property and equipment (11,461) (31,211)
Patent acquisition (9,582) (37,385)
----------- ---------
Net cash used in investing activities (21,043) (68,596)
----------- ---------
</TABLE>
<PAGE> 8
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Unaudited Condensed Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
----------- ---------
<S> <C> <C>
Cash flows from financing activities:
Collection of stock subscription $ -- $ 225,000
Proceeds from sales of stock 1,475,000 100,000
Proceeds from debt -- 440,000
Repayment of debt (406,048) (98,560)
----------- ---------
Net cash provided by
financing activities 1,068,952 666,440
----------- ---------
Increase in cash and cash
equivalents 2,822 73,520
Cash and cash equivalents,
beginning 4,346 47,160
----------- ---------
Cash and cash equivalents, ending $ 7,168 $ 120,680
=========== =========
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
During 1995, debt of $100,000 was converted to common stock.
During 1995, accrued interest of $8,000 was converted to a license fee.
<PAGE> 9
INSTANT VIDEO TECHNOLOGIES, INC. AND SUBSIDIARY
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1996
(1) Basis of Preparation and Presentation
The condensed consolidated financial statements included herein have
been prepared by Instant Video Technologies, Inc., and its Subsidiary
(the Company), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and include all
adjustments which are, in the opinion of management, necessary for a
fair presentation. The condensed consolidated financial statements
include the accounts of the Company. Certain information and footnote
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to SEC rules and regulations. The
Company suggests that these financial statements be read in
conjunction with the historical financial statements and the notes
thereto of Instant Video Technologies, Inc.
<PAGE> 10
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
On July 3 1996, Instant Video Technologies, Inc. ("Company") entered into
a strategic Marketing Alliance Agreement with Vyvx, Inc., a licensee of
Burstware(TM); (the Company licensed the Burstware Viewer(TM) to Vyvx pursuant
to a Memorandum of Understanding executed between the parties in January 1996).
By establishing this alliance, both Vyvx and the Company hope to capitalize on
their combined technological expertise, within the target market of post
production facilities located within the United States, selected cities in
Canada and Great Britain. Pursuant to this Marketing Alliance Agreement, the
Company was paid the amount of $250,000 for facilitation and administration of
the parties' joint marketing efforts.
Also on July 3, 1996, Vyvx entered into a Development and License
Agreement with the Company that provides for at least five additional technology
development projects to be developed by the Company for Vyvx during the next
twelve months. The Agreement provides that the Company will grant to Vyvx an
exclusive license for the first year of use of each completed product and a
non-exclusive license to use each product thereafter. The Agreement provides for
license fees in the minimum amount of $250,000 for each licensed product. The
Company has already begun to realize revenue in the amount of $70,000 from these
development related activities.
The third quarter marked significant financial growth for the Company with
the total year-to-date collection of license fees in the amount of $605,000.
This resulted in the Company's first quarterly profit. The Company received an
additional $250,000 capital from the sale of investment units consisting of
Series F Convertible Preferred Stock ("Series F Stock") and a warrant to
purchase one share of Common Stock, bringing the year-to-date proceeds to a
total of $1,475,000.
As a result of the Strategic Marketing Alliance with Vyvx, Inc., continued
licensing revenue, and capital received from its financing activities, the
Company expects to be able to fund its accelerated marketing and development
costs for the next twelve to eighteen months.
In July, 1996, the Company filed an additional patent for Burstware(TM)
with the United States Patent and Trademark Office.
Additional technical staff has been, and will be added in order to
facilitate product development, sales, and marketing requirements. The Company
also expects to expand its human resources on an administrative and operational
level as the Company's growth permits.
Results of Operations
During the three month period ending September 30 1996, the Company
received revenue in the form of license fees in the amount of $394,000, and it
realized revenue in the amount of $520,379. Of the $520,379 in revenue realized,
$11,629 represented deferred licensing revenue from prior years, and $114,750
represented deferred licensing revenue from prior quarters during 1996. The
total amount of revenue received during the three month period ending September
30, 1996, was realized during this same period. Deferred revenue was realized as
a result of the completion and delivery of deliverables of Burstware(TM)
licensed products paid for during previous quarters. During the three month
period ending September 30, 1995 the Company received revenue in the amount of
$122,534, of which it realized $169,130. Certain revenues received in 1995 and
1996 were license fees from agreements entered into in 1994.
<PAGE> 11
During the nine month period ending September 30, 1996, the Company
received revenue in the amount of $605,000, of which it realized $558,948.
During the nine month period ending September 30, 1995, the Company received
revenue in the amount of $194,534, of which it realized revenue in the amount of
$204,890. The substantial increase in revenues received in 1996 resulted from
license fees received pursuant to a license agreement with The Mill, which was
entered into in August 1995, and license fee payments pursuant to Memorandums of
Understanding with Vyvx, Inc., dated January 29, 1996, and July 3, 1996.
Costs and expenses during the three month period ending September 30,
1996, totaled $355,456 as compared to $244,070 during the three month period
ending September 30, 1995. The increase was primarily due to costs associated
with the development and marketing of Bustware(TM) products and applications.
For the nine month period ending September 30, 1996, costs and expenses totaled
$1,060,604 as compared to $624,041 for the nine month period ending September
30, 1995. The increase in expenses during the nine month period ending September
30, 1996 was a result of increased development, marketing and administrative
costs associated with Burstware(TM) products and applications.
The Company realized net income after tax in the amount of $148,854 during
the three month period ending September 30, 1996, as compared to a net loss of
($95,616) during the three month period ending September 30, 1995. For the nine
month period ending September 30, 1996, the net loss after tax was ($552,968) as
compared to a net loss of ($477,810) during the nine month period ending
September 30, 1995. The net income was a result of the increase in the
collection of license fees in the amount of $394,000, and the realization of
deferred revenue in the amount of $114,750 from prior periods in 1996, during
the three month period ending September 30, 1996.
Liquidity and Capital Resources
As of September 30, 1996, the Company had a working capital deficit of
($931,610) as compared to a working capital deficit of ($1,375,405) at December
31, 1995. The decreased deficit was primarily due to the increase in cash
resulting from revenue and financing.
Cash used in operating activities totaled $1,045,087 during the nine month
period ending September 30, 1996, as compared to cash used in operating
activities of $524,324 during the nine month period ending September 30, 1995.
The increase was primarily a result of an increase in deferred costs related to
the development of Burstware(TM) and the paydown of a substantial portion of the
Company's current liabilities.
Cash flow provided by financing activities during the nine month period
ending September 30, 1996, was $1,068,952 as compared to $666,440 during the
nine month period ending September 30, 1995. The increase was primarily due to
the receipt of proceeds from the sale of investment units consisting of Series F
stock and warrants to purchase Common Stock.
During 1996, the Company has received $1,475,000 from the private sale of
investment units consisting of Series F Stock and warrants to purchase Common
Stock. In addition, in January 1996, the Company entered into a license
agreement pursuant to which the Company is to receive a fee in the amount of
$250,000 during 1996. In July, the Company entered into a Development and
License Agreement that provides for at least five development and license
projects, and provides for license fees in the amount of $250,000 each. Based on
these activities, the Company believes that it will have sufficient cash
available for operations for the next twelve to eighteen months.
The Company presently has no commitments for material capital
expenditures.
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
During the quarter ended September 30, 1996, the Company raised an
additional $250,000 from a private placement (pursuant to Section 4(2) of the
Securities Act of 1933, as amended and Regulation D promulgated thereunder) of
250,000 investment units at the price of $1.00 per unit (each unit consists of 1
share of Series F Stock and a warrant to purchase one share of Common Stock).
Each share of Series F Stock may be converted into one share of the Company's
Common Stock. The exercise price of the Common Stock Purchase Warrants is $1.00
per share. The document evidencing this financing includes provisions that,
among other matters, give the investors the right to appoint two directors to
the Board of Directors, certain registration rights, and the right of first
refusal on financing offerings by the Company during the twelve (12) months
following the closing of the financing.
Investors in Series F stock consisted of individual accredited investors
as well as institutional investors. Finders' fees in the amount of 100,000 units
to one finder, and $32,500 to another finder, were paid.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
In July 1996, the Company introduced an alpha test of its Internet
demonstration of Burstware Sockets(TM) featuring an audio clip from the world
renowned rock band U2. Alpha test software is being designed to operate with PC
computers and computer modems. This alpha test has been designed to demonstrate
the viability of Burstware Sockets(TM) as an Internet product for the
distribution of audio in faster-than-real-time.
As of September 12, 1996, the Company's Burstware(TM) technology had been
selected and publicly presented as the enabling software to facilitate
video-on-demand and instant video transmission services for The Business Channel
LLC, a recent joint venture between The Williams Companies Inc., and the Public
Broadcasting Service (PBS). Currently, two of the four development projects,
that are in process pursuant to the Development and License Agreement with Vyvx,
Inc., a wholly owned subsidiary of The Williams Companies Inc., are planned for
use in conjunction with the video transmission services for The Business Channel
LLC.
During the third quarter of 1996, the Company entered into a Settlement
Agreement with Mr. Bennett Johnston regarding finder's and consulting fees
related to the Series F Financing referred to hereinabove. Mr. Johnston
introduced one of the institutional investors in said financing to the Company.
As a result of this introduction, the Settlement Agreement provides, among other
things, that Johnston shall receive the amount of $32,500 as a finder's fee
resulting from the investment of said institutional investor. Moreover, Johnston
shall receive deferred consulting fees pursuant to a Consulting Agreement
entered into between Johnston and the Company dated April 1994. The Settlement
Agreement provides for the payment of all fees described herein with an initial
cash payment of $42,500 and monthly payments thereafter in the the amount of
$5,000 each (for an aggregate of $80,000 of such additional cash payments).
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K.
The Company filed a Report on Form 8-K dated January 31, 1996,
reporting information under Item 5. - Other Events.
<PAGE> 14
SIGNATURES
In accordance with the Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
INSTANT VIDEO TECHNOLOGIES, INC.
Date: January 15, 1997 By /s/ GARY R. FAMILIAN
----------------------------------
Gary R. Familian, President, Chief
Executive Officer, and Treasurer
<PAGE> 15
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 3. EXHIBITS.
Exhibit Description Location Sequential
- ------- ----------- -------- ----------
No. Page No.
- --- --------
3.1 Articles of Incorporated by reference to --
Incorporation and Exhibit Nos. 3.1 and 3.2 to
Bylaws Registrant's Form S-18
Registration Statement (No.
33-35580-D)
3.2 Bylaws, as amended Incorporated by reference to --
Exhibit No. 3.2 to
Registrant's Form SB-2
Registration Statement (No.
33-69914)
3.3 Certificate of Incorporated by reference to --
Amendment to Exhibit No. 3.3 to
Certificate of Registrant's Form SB-2
Incorporation filed Registration Statement (No.
August 19, 1992 33-69914)
3.4 Statement Incorporated by reference to --
Establishing Series D Exhibit No. 3.4 to
Preferred Stock Registrant's Form SB-2
Registration Statement (No.
33-69914)
3.5 Statement Incorporated by reference to --
Establishing Series E Exhibit No. 3.5 to
Preferred Stock Registrants Form 10-KSB for
year ended December 31, 1994
3.6 Statement Incorporated by reference to --
Establishing Series F Exhibit No. 3.6 to
Preferred Stock Registrants Form 10-KSB for
year ended December 31, 1995
10.1 Amended Plan of Incorporated by reference to --
Agreement and Exhibit No. 10 to
Reorganization Among Registrant's Current Report
Catalina Capital on Form 8-K dated August 17,
Corp., Explore 1992.
Technology, Inc. and
certain officers,
directors and
shareholders of
Catalina Capital
Corp. and Explore
Technology, Inc.
10.2 Employment Agreement Incorporated by reference to --
with Wayne Van Dyck Exhibit No. 10.2 to
Registrant's Report on Form
10-KSB for the
period ended December 31, 1992.
10.3 Employment Agreement Incorporated by reference to --
with Richard Lang Exhibit No. 10.3 to
Registrant's Report on Form
10-KSB for the
period ended December 31, 1992.
10.4 Repurchase Option Incorporated by reference to --
Agreement with Exhibit No. 10.4 to
Richard Lang Registrant's Report on Form
10-KSB for the period ended
December 31, 1992.
10.5 Repurchase Option Incorporated by reference to --
Agreement with Lisa Exhibit No. 10.5 to
Walters Registrant's Report on Form
10-KSB for the period ended
December 31, 1992.
10.6 Repurchase Option Incorporated by reference to --
Agreement with Peter Exhibit No. 10.6 to
Spiess Registrant's Report on Form
10-KSB for the period ended
December 31, 1992.
<PAGE> 16
10.7 License Agreement Incorporated by reference to --
with Singularity Exhibit No. 10.6 to
Corporation Registrant's Report on Form
10-KSB for the period ended
December 31, 1992.
10.8 Amended 1992 Stock Incorporated by reference to --
Incentive Plan Exhibit 10.8 to Registrant's
Report on Form 10-KSB for the
year ended December 31, 1993
10.9 Office Lease for 500 Incorporated by reference to --
Sansome Street Exhibit No. 10.6 to
Registrant's Report on Form
10-KSB for the period ended
December 31, 1992.
10.10 Settlement Agreement Incorporated by reference to --
with Wayne Van Dyck Exhibit 10.10 to Registrant's
and Promissory Note Report on Form 10-KSB for the
to Wayne Van Dyck, as year ended December 31, 1993
amended
10.11 Master License Incorporated by reference to --
Agreement with Burst Exhibit 10.11 to Registrant's
Communications Pty Report on Form 10-KSB for the
Ltd. year ended December 31, 1993
10.12 License Agreement Incorporated by reference to --
with VI-FACTS, Inc. Exhibit 10.12 to Registrant's
Report on Form 10-KSB for the
year ended December 31, 1993
10.13 Consulting Agreement Incorporated by reference to --
with Gary R. Familian Exhibit 10.13 to Registrant's
Report on Form 10-KSB for the
year ended December 31, 1993
10.14 Memorandum of Incorporated by reference to --
Understanding with Exhibit 10.14 to Registrant's
525 Post Production Report on Form 10-KSB for the
Company year ended December 31, 1993
10.15 Third Amendment to Incorporated by reference to --
Lease for 500 Sansome Exhibit 10.15 to Registrant's
Street Report on Form 10-KSB for the
year ended December 31, 1993
10.16 Credit Facility with Incorporated by reference to --
Draysec Finance Exhibit 10.16 to Registrant's
Limited Report on Form 10-KSB for the
year ended December 31, 1993
10.17 Promissory Note to Incorporated by reference to --
Draysec Finance Exhibit 10.17 to Registrant's
Limited Report on Form 10-KSB for the
year ended December 31, 1993
10.18 Amendment to Master Incorporated by reference to --
License Agreement Exhibit 10.18 to Registrant's
with Burst Report on Form 10-KSB for the
Communications Pty year ended December 31, 1994
Ltd.
10.19 Amendment No. 1 to Incorporated by reference to --
Credit Facility with Exhibit 10.19 to Registrant's
Draysec Finance Report on Form 10-KSB for the
Limited year ended December 31, 1994
<PAGE> 17
10.20 Second Promissory Incorporated by reference to --
Note to Draysec Exhibit 10.20 to Registrant's
Finance Limited Report on Form 10-KSB for the
year ended December 31, 1994
10.21 Fourth Amendment to Incorporated by reference to --
Lease for 500 Sansome Exhibit 10.21 to Registrant's
Street Report on Form 10-KSB for the
year ended December 31, 1995
10.22 Employment Agreement Incorporated by reference to --
with Gary R. Familian Exhibit 10.22 to Registrant's
Report on Form 10-KSB for the
year ended December 31, 1995
10.23 Employment Agreement Incorporated by reference to --
with Richard A. Lang Exhibit 10.23 to Registrant's
Report on Form 10-KSB for the
year ended December 31, 1995
10.24 Employment Agreement Incorporated by reference to --
with Therese A. Webb Exhibit 10.24 to Registrant's
Stacy Report on Form 10-KSB for the
year ended December 31, 1995
10.25 Consulting Agreement Incorporated by reference to --
with Lisa Walters Exhibit 10.25 to Registrant's
Report on Form 10-KSB for the
year ended December 31, 1995
10.26 Letter Agreement with Incorporated by reference to --
The Mill (Facility) Exhibit 10.26 to Registrant's
Limited Report on Form 10-KSB for the
year ended December 31, 1995
10.27 Memorandum of Incorporated by reference to --
Understanding with Exhibit 10.27 to Registrant's
Vyvx, Inc. Report on Form 10-KSB for the
year ended December 31, 1995
10.28 Unit Purchase Incorporated by reference to --
Agreement pertaining Exhibit 10.28 to Registrant's
to Series F Report on Form 10-KSB for the
Convertible Preferred year ended December 31, 1995
Stock
10.29 Fifth Amendment to Incorporated by reference to --
Lease for 500 Sansome Exhibit 10.29 to Registrant's
Street Report on Form 10-QSB for the
quarter ended March 31, 1996
10.30 Sixth Amendment to Attached 18
Lease for 500 Sansome
Street
10.31 Development and Attached 21
License Agreement
with Vyvx, Inc. dated
July 3, 1996
10.32 Marketing Alliance Attached 30
Agreement with Vyvx,
Inc. dated July 3,
1996
10.33 Settlement Agreement Attached 38
with Bennett Johnston
11.1 Earnings per share Incorporate by reference
calculation for Exhibit 11.1 to Registrant's
December 31, 1995 report on form 10-QSB for the
and 1994 quarter ended March 31, 1996.
<PAGE> 18
21 Subsidiaries of the Incorporated by reference to --
Registrant Exhibit No. 22 to
Registrant's Report on Form
10-KSB for the period ended
December 31, 1992.
27 Financial Data Attached
Schedule
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
quarter ended September 30, 1996.
<PAGE> 1
Exhibit 10.30
SIXTH AMENDMENT TO LEASE
This Sixth Amendment to Lease (this "Sixth Amendment") is entered into
as of the 2nd day of August, 1996 by and between 500 SANSOME STREET COMPANY, a
limited partnership ("Landlord") and INSTANT VIDEO TECHNOLOGIES, INC., a
Delaware corporation ("Tenant"), based upon the following facts, understandings
and agreements:
A. Landlord and Tenant entered into a written lease (the "Lease") dated
February 15, 1993, whereby Landlord leased to Tenant and Tenant hired from
Landlord, certain premises on the fifth floor designated as SUITE 503
containing an aggregate of approximately 2,328 rentable square feet, of that
certain eight-story building known as 500 Sansome Street, San Francisco,
California (the "Leased Premises"). Landlord and Tenant entered into a First
Amendment to Lease (the "First Amendment") dated February 9, 1994, whereby
Tenant extended the Lease by an additional six (6) months terminating August
15, 1994, a Second Amendment to Lease (the "Second Amendment") dated June 9,
1994, whereby Tenant extended the Lease by an additional six (6) months
terminating February 15, 1995, a Third Amendment to Lease (the "Third
Amendment") dated January 13, 1995, whereby Tenant extended the Lease by an
additional six (6) months terminating August 15, 1995, a Fourth
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<PAGE> 2
Amendment to Lease (the "Fourth Amendment") dated June 12, 1995, whereby Tenant
extended the Lease by an additional six (6) months terminating February 15,
1996, and a Fifth Amendment to Lease (the "Fifth Amendment") dated February 13,
1996, whereby Tenant extended the Lease by an additional six (6) months
terminating AUGUST 15, 1996.
B. Landlord and Tenant now desire to further amend the Lease as
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
1. Definitions. All defined terms not otherwise defined herein shall
have the same meaning as in the Lease.
2. Amendment of Section 2. The first sentence of Section 2 is hereby
deleted and replaced with the following sentence:
Term. The term of this lease shall be extended for an additional SIX
(6) MONTHS commencing AUGUST 16, 1996, and terminating FEBRUARY 15, 1997.
3. Conflict. In the event of any conflict between the provisions of the
Lease, the First Amendment to Lease, the Second Amendment to Lease, the Third
Amendment to Lease, the Fourth Amendment to Lease, the Fifth Amendment to Lease
or this Sixth Amendment to Lease, the provisions of the Sixth Amendment to
Lease shall govern.
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<PAGE> 3
4. Ratification. The Lease as modified by this Sixth Amendment to Lease
is ratified in all respects.
IN WITNESS WHEREOF, the parties have executed this Sixth Amendment to
Lease as of the date first hereinabove written.
LANDLORD: 500 SANSOME STREET COMPANY,
a limited partnership
By: L&B INSTITUTIONAL PROPERTY
MANAGERS OF CALIFORNIA, INC.,
its managing agent
By: /s/ PAUL C. CHAPMAN
-------------------------------
Paul C. Chapman
Authorized Signatory
TENANT: INSTANT VIDEO TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ GARY R. FAMILIAN
---------------------------------
Name: Gary R. Familian
-------------------------------
Its: President / CEO
--------------------------------
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<PAGE> 1
EXHIBIT 10.31
DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement is made and entered into as of
July 3, 1996 (the "Effective Date") between INSTANT VIDEO TECHNOLOGIES, INC., a
Delaware corporation (hereinafter "IVT") and VYVX, INC., a Delaware corporation
(hereinafter "Vyvx"), with reference to the following facts:
A. IVT is engaged in the design, development, and licensing of
interactive network technologies including certain software related to the
faster-than-real-time transmission of audio and video programming;
B. Vyvx is a developer and provider of network services to various
companies throughout the United States and is currently developing an Archive
Architecture System on which it intends to carry video, audio and multimedia
content material (the "Vyvx Network");
C. Vyvx desires to engage IVT's services to develop, with Vyvx's
cooperation, interactive network technology products and/or applications, upon
the terms and conditions set forth below, it being the intention of the parties
that IVT develop, and license to Vyvx at least five (5) technology products
and/or applications during the period from July 1, 1996 to July 1, 1997,
referred to in the product development schedule ("Product Development
Schedule"), attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEVELOPMENT SERVICES
1.1 Services
Pursuant to the terms and conditions set forth in this Agreement, IVT
agrees to use its commercially reasonable best efforts to develop interactive
network technology products and/or applications for Vyvx, as shall be selected
by Vyvx and agreed to by IVT pursuant to said Product Development Schedule, and
in accordance with such specifications as shall be mutually agreed to by Vyvx
and IVT (the "Licensed Products"). In addition to the terms and conditions set
forth herein, the development of each Licensed Product shall be subject to the
terms and conditions as set forth in a Technology Development Project Term
Sheet in a form attached hereto as Exhibit B ("Project Term Sheet"). It is
contemplated by the parties that a Memorandum of Understanding (a "Memorandum
of Understanding") shall be executed by the parties for each Licensed Product,
and that said document shall be similar to that certain Memorandum of
Understanding, dated January 29, 1996 relating the Burstware Viewer(TM), a copy
of which is attached hereto for reference.
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<PAGE> 2
1.2 COOPERATION BY VYVX
The development of the Licensed Products shall be the responsibility of
IVT with the cooperation and assistance of Vyvx. Said assistance shall be
provided by Vyvx at no cost to IVT, and shall include, but not be limited to
providing IVT with technical information owned or possessed by Vyvx which is
reasonably required for such development, and technical information and
specifications related to the Vyvx network. If said technical information
provided by Vyvx is deemed confidential then it shall be protected pursuant to
that certain non disclosure agreement executed by the parties, dated July 2,
1996.
1.3 SCHEDULE
IVT will use commercially reasonable best efforts to accomplish the
development of the Licensed Products in the order, and commencing upon, the
dates as set forth in the Project Development Schedule. The parties shall have
the ability to change the order of, and/or substitute proposed Licensed
Products upon mutual agreement.
1.4 CONSIDERATION
Vyvx shall pay to IVT license fee(s) and additional consideration as
may be required and mutually agreed to by the parties as for each Licensed
Product. It being the intent and understanding of the parties that the license
fee for the initial twelve (12) month period following final deliverable of
each Licensed Product shall be in an amount of not less than $250,000.
Both parties shall use good faith best efforts to agree upon the terms
and conditions for any and all Licensed Products to be developed pursuant to
this Agreement. A Memorandum of Understanding relating to each Licensed Product
shall be executed by the parties no later than those dates date set forth on
the Project Development Schedule, and Vyvx shall pay to IVT upon each said
date, a non-refundable fee in the amount of $35,000, irrespective of whether
the parties are able to agree upon said terms and conditions by said date(s).
For example, a $35,000 payment shall be made by Vyvx to IVT on July 12, 1996.
In the event that the parties agree to the terms and conditions for the first
Licensed Product by July 12, 1996, or upon a date after July 12, 1996 as
mutually agreed to by the parties, said $35,000 payment shall be applied to the
license fee to be paid for said Licensed Product. In the event that the parties
are unable to agree upon said terms and conditions by July 12, 1996, and are
unable to agreed upon a date other than July 12, 1996, then the $35,000 payment
shall be paid by Vyvx to IVT without application.
1.5 OWNERSHIP OF LICENSED PRODUCTS
It is understood by and between the parties that both parties own
certain intellectual property rights to certain intellectual properties,
patents and/or inventions that it may utilize in the development of Licensed
Products. To the extent that said intellectual properties, patents and/or
inventions owned by one party are so utilized by the other party, the owning
party shall retain all right, title and interest therein. However, any entirely
new intellectual properties, patents and/or inventions which are developed
pursuant to this Agreement shall be jointly owned by IVT and Vyvx and any
license granted to third parties for use of said new
2
<PAGE> 3
intellectual properties, patents and/or inventions or sale of any interest
therein must be approved by both parties. Notwithstanding the foregoing and
anything contained herein to the contrary, Vyvx's use of the Licensed Products
shall be limited as set forth in Section 2 below.
2. LICENSE TO AND RESTRICTIONS ON USE BY VYVX
2.1 LICENSE
(a) Subject to, and in accordance with, the terms of this Agreement IVT
grants to Vyvx, and Vyvx accepts from IVT, a personal, nontransferable license
to use the Licensed Products and any related documentation provided by IVT (the
"Documentation") in connection with all operating environments on any and all
communications channels over which the Vyvx Network is a component. With
respect to Licensed Products consisting of software, IVT shall provide a copy
of all source code relating to such Licensed Products to Vyvx, which source
code shall be utilized only in connection with all operating environments on
any and all communications channels over which the Vyvx Network is a
component. Unless otherwise set forth in the relevant Project Term Sheet and/or
the relevant Memorandum of Understanding, the license granted hereunder shall
be nonexclusive and shall be for the 12-month period commencing upon the
delivery of the Licensed Product in question conforming to the specifications
set forth in the related Project Term Sheet and/or Memorandum of Understanding.
The parties agree to negotiate in good faith terms for exclusive licenses and
terms for licenses in excess of 12 months. The Memorandum of Understanding with
respect to each licensed product shall contain the specific terms and conditions
pursuant to which Vyvx customers using the Vyvx Network will be entitled to use
the Licensed Products.
(b) Vyvx will not use or permit the Licensed Products to be used in any
manner, directly or indirectly, which would enable any person or entity other
than Vyvx to use the Licensed Products, without IVT's prior written consent.
Vyvx shall not be entitled to license the Licensed Products to any other party
or to otherwise commercially exploit the Licensed Products without IVT's prior
written consent.
(c) Vyvx shall not be entitled to alter, modify, revise or enhance the
Licensed Products, whether directly or indirectly, without IVT's written
consent, which consent may be withheld in IVT's sole discretion.
2.2 REPRODUCTION OF LICENSED PRODUCTS AND DOCUMENTATION
(a) Vyvx shall not reproduce, in whole or in part, any Licensed
Products or Documentation which have been provided by IVT under this Agreement,
except for archive or emergency restart purposes or to replace a worn or
otherwise unusable copy.
(b) Vyvx shall not remove or destroy any proprietary markings or
legends placed upon or contained within the Licensed Products, Documentation or
any related materials, and all copies thereof shall contain such proprietary
markings or legends.
3
<PAGE> 4
3. LIMITED WARRANTY
IVT WARRANTS THAT THE LICENSED PRODUCTS WILL MEET THE SPECIFICATIONS SET FORTH
IN THE RELATED PROJECT DEVELOPMENT DESCRIPTIONS. EXCEPT FOR THE FOREGOING
WARRANTY, IVT WILL PROVIDE THE LICENSED PRODUCTS "AS IS", WITHOUT ANY
WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED, TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION. IVT
SPECIFICALLY MAKES NO REPRESENTATIONS REGARDING THE LICENSED PRODUCTS'
SUITABILITY FOR VYVX'S REQUIREMENTS, CAPACITY, INTERCONNECTIVITY, EXPANDABILITY
OR PERFORMANCE OR WITH RESPECT TO WHETHER THE LICENSE PRODUCTS INFRINGE ANY
INTELLECTUAL PROPERTY RIGHTS OR ANY THIRD PARTY.
4. LIMITATION OF LIABILITY
IN NO EVENT SHALL IVT OR VYVX BE LIABLE FOR ANY DAMAGES (INCLUDING ANY SPECIAL,
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES) ARISING OUT OF,
PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT OR THE USE OR INABILITY TO USE
THE LICENSED PRODUCTS, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFIT OR OTHER
MONETARY LOSS, LOSS OR INTERRUPTION OF DATA OR COMPUTER TIME, ALTERATION OR
ERRONEOUS TRANSMISSION OF DATA, UNAUTHORIZED ACCESS TO OR USE OF DATA PROCESSED
OR TRANSMITTED BY, TO, OR THROUGH THE LICENSED PRODUCTS, OR PROGRAM ERRORS,
EVEN IF IVT IS ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. IN
ADDITION, IVT'S LIABILITY WITH RESPECT TO ANY LICENSED PRODUCT, SHALL IN NO
EVENT EXCEED THE AMOUNT OF CONSIDERATION ACTUALLY RECEIVED BY IVT WITH RESPECT
TO THE DEVELOPMENT AND LICENSE OF SUCH LICENSED PRODUCT AND IVT'S AGGREGATE
LIABILITY SHALL IN NO EVENT EXCEED THE AGGREGATE AMOUNT OF CONSIDERATION
RECEIVED HEREUNDER.
4.1 INDEMNIFICATION
Each party hereby indemnifies and holds the other party (the
"Indemnified Party") harmless from any claims, losses, damages, costs and
expenses (including reasonable attorneys fees) for personal injury, property
damage or any other liability to the extent arising from (i) the negligence or
willful misconduct of the party providing the indemnification (the
"Indemnifying Party") or its employees.
5. TERMINATION
5.1 EVENTS OF TERMINATION
Either party has the right to terminate this agreement upon thirty (30)
days written notice. In the event that the Agreement is terminated by Vyvx,
then Vyvx shall be obligated to compensate IVT for all work performed up to and
including the effective date of said termination.
4
<PAGE> 5
5.2 MAINTENANCE OF CONFIDENTIALITY
Notwithstanding any termination of this Agreement, Vyvx shall continue
to be obligated to protect the confidentiality of the Licensed Products and
other IVT confidential information as set forth in the confidentiality
agreement, the even date herewith, entered into between the parties, attached
hereto and incorporated herein.
6. GENERAL PROVISIONS
6.1 OTHER PROGRAMS
Subject to the provisions of Section 1.5 hereinabove, Vyvx understands
and agrees that IVT may market new or different computer programs which use
part of the function of the Licensed Products. Nothing contained in this
Agreement gives Vyvx any rights with respect to such new or different computer
programs.
6.2 GOVERNING LAW; ATTORNEYS FEES
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, (except that body of laws controlling
conflicts of law). The parties agree that any litigation regarding this
Agreement shall be filed in and heard by the state or federal courts with
jurisdiction to hear such disputes in San Francisco county, California or the
State of Oklahoma, and the parties hereby submit to the personal jurisdiction
of such courts. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorney's fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
6.3 PUBLIC PRONOUNCEMENTS
The parties shall jointly develop a press release announcing this
Agreement. Except as otherwise provided by law, all press releases and public
pronouncements concerning this Agreement shall be subject to the review and
approval of both parties.
6.4 OTHER PROVISIONS
(a) Neither party shall assign or otherwise transfer the Agreement or
any interest herein without the prior express written consent of other party
unless that party shall be a parent of a party or a subsidiary of The Williams
Companies, Inc. Any such purported assignment or transfer without the prior
express written consent shall be null and void. This Agreement shall be binding
upon the parties hereto, their successors and permitted assigns.
5
<PAGE> 6
(b) The parties agree that this Agreement, together with any addenda or
exhibits attached hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof, supersede all prior agreements or
understanding, whether written or oral and may be amended from time to time in
writing by mutual agreement of the parties. No party shall be bound by any
change, alteration, amendment, modification or attempted waiver of any of the
provisions hereof unless in writing and signed by an authorized officer of the
party against whom it is sought to be enforced.
(c) Nothing contained in the Agreement shall be construed as creating a
joint venture, partnership, limited partnership, agency and/or employment
relationship between or among the parties hereto and the parties acknowledge
that no other facts or relationship exist that would create any such
relationship between them. IVT is and will be treated as an independent
contractor.
(d) Unless otherwise provided herein, any notice required or permitted
under this Agreement must be given in writing and shall be deemed to have been
effectively given upon personal delivery to the party to be notified, by
confirmed facsimile or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party below or at such other address
as such party may designate by 10 days advance written notice to all other
parties given in conformity with this Section.
(e) In the event that any provision of this Agreement shall be deemed
to be illegal or otherwise unenforceable, such provision shall be severed and
the balance of the Agreement shall continue in full force and effect.
(f) This Agreement may be originally executed in one or more
counterparts, each of which shall be deemed an original.
(g) All rights and remedies of Sections 1.5, 3, 4, 5 and 6, and
any other provision which by its terms is intended to survive, shall survive any
termination of this Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, the undersigned have executed this Development and
License Agreement as of the day and year first above written.
INSTANT VIDEO TECHNOLOGIES, INC. VYVX, INC.
a Delaware corporation a Delaware corporation
By: /s/ GARY R. FAMILIAN By: /s/ WES NICHOLS
----------------------------- ----------------------------------
Name: Gary R. Familian Name: Wes Nichols
--------------------------- --------------------------------
Title: President/CEO Title: Director Advanced Technologies
-------------------------- -------------------------------
Address: Address:
500 Sansome Street, Suite 503 Tulsa Union Depot, 111 E. 1st St.
San Francisco, California 94111 Tulsa, Oklahoma 74103
Facsimile: 415-391-3392 Facsimile: 918-588-5761
with a copy to:
Vyvx General Counsel
4100 Bank of Oklahoma Tower
1 Williams Center
Tulsa, Oklahoma 74172
Facsimile: 918-588-3005
7
<PAGE> 8
EXHIBIT A
PRODUCT DEVELOPMENT SCHEDULE
LICENSE PRODUCTS AGREEMENT DATE
1. Augmentation package for the Burstware July 12, 1996
Viewer(TM) consisting of play and write to disk
and additional video output devices such as
AVI, MPEG2.
2. Augmentation package for the Bursware August 15, 1996
Viewer(TM) consisting of "low rate" video output
devices such as ISDN 128K.
3. Augmentation package for the Bursware November 15, 1996
Viewer(TM) consisting of "off-set" repositioning
to start any clip, at any point, at any time, and to
include a "common" control panel
incorporating full VCR functionality for the
Burstware Viewer(TM), a streamer, and the
Netscape Browser.
4. Augmentation package for the Bursware February 1, 1997
Viewer(TM) that enables the Bursware Viewer(TM)
to be utilized without a Real Magic Video
Board.
5. Technology that enables a Burstware(TM) enabled May 1, 1997
server to talk to a streamer (server-to-server
Burstware(TM) functionality)
OPTIONAL LICENSE PRODUCTS
6. A technology application for the Vyvx Network
based upon IVT's Burstware NFS(TM).
7. An technology application for the Vyvx
Network based upon IVT's Burstware
Sockets(TM).
8
<PAGE> 9
EXHIBIT B
TECHNOLOGY DEVELOPMENT PROJECT
TERM SHEET
1. PRODUCT NAME AND DESCRIPTION:
2. PROPOSED DELIVERABLES AND DELIVERY SCHEDULE:
3. DEVELOPMENT AND INITIAL LICENSE FEE PAYMENT AMOUNTS AND SCHEDULE:
4. ADDITIONAL LICENSE TERMS (IF ANY):
5. ADDITIONAL TERMS (IF ANY):
INSTANT VIDEO TECHNOLOGIES, INC. VYVX, INC.
a Delaware corporation a Delaware corporation
By: By:
---------------------------- ------------------------------
Name: Name:
-------------------------- ----------------------------
Title: Title:
------------------------- ---------------------------
Dated: , 1996 Dated: , 1996
------------------- ---------------------
9
<PAGE> 1
EXHIBIT 10.32
MARKETING ALLIANCE AGREEMENT
This Marketing Alliance Marketing Agreement is made and entered into as
of July 3, 1996 (the "Effective Date") between INSTANT VIDEO TECHNOLOGIES,
INC., a Delaware corporation (hereinafter "IVT") and VYVX, INC., a Delaware
corporation (hereinafter "Vyvx"), with reference to the following facts:
A. IVT is engaged in the design, development and licensing of
interactive network technologies including certain software related to the
faster-than-real-time transmission of audio and video programming generally
referred to by IVT as Burstware(TM) ("Burstware");
B. Vyvx is a developer and provider of network services to various
companies throughout the United States and is currently developing an Archive
Architecture System on which it intends to carry video content material (the
"Vyvx Network");
C. The parties desire to enter into a marketing alliance, the purpose of
which is to expand the licensing of Burstware and connectivity to the Vyvx
Network upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual convenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Establishment of Marketing Alliance
(a) General. IVT an Vyvx hereby agree to cooperate with each
other in the marketing of licenses of Burstware and of connectivity to the Vyvx
Network in the post-production, television, film and music industries for sale
to those identified customers ("Target Accounts") within the territory (the
"Territory") indicated in Exhibit A attached hereto (such Target Accounts,
within such industries and the Territory, are hereinafter referred to as the
"Field of Use"). The parties may, from time to time, during the term of this
Agreement (the "Term") add to the Territory and list of Target Accounts as the
parties may mutually agree.
(b) Scope of the Alliance. IVT shall be authorized and
responsible for the management of the cooperative marketing arrangement
contemplated by this Agreement (the "Alliance"). In this regard, the parties
mutually agree to work together to accomplish certain milestones as set forth on
Exhibit B attached hereto (the "Milestones"). IVT shall be responsible for
providing and managing the human resources necessary to accomplish the
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<PAGE> 2
Milestones. Said human resources may include additional individuals to be
provided by Vyvx as designated by Vyvx in its discretion, which individuals
shall be solely under the control and management of Vyvx. Both parties
acknowledge that there is no assurance that any of the Milestones will be
accomplished and that the failure to accomplish any or all of the Milestones
shall not constitute a default under this Agreement. Notwithstanding the
foregoing, both parties will use commercially reasonable efforts to exploit
Burstware products and applications and to promote connectivity to and
transmission on the Vyvx Network within the field of use in order to accomplish
the Milestones.
(c) Independent Contractor. Each party's relationship with the other
during the Term will be that of an independent contractor. Neither party will
have, nor will represent that it has, any authority to bind the other party, to
assume or create any obligation, express or implied, to enter into any
agreements, or to make any warranties or representations, on behalf of the other
party or in the other party's name other than as expressly authorized herein.
Furthermore, each party shall be free to determine the prices for its respective
products and services independently.
2. Additional Obligations of Vyvx.
(a) Payment. In consideration of IVT's agreement to manage and staff the
Alliance, upon the execution and delivery of this Agreement, Vyvx shall provide
IVT with a one-time non-refundable payment in the amount of Two Hundred Fifty
Thousand Dollars ($250,000).
(b) Marketing, Advertising and Technical Information. Vyvx will provide
IVT with marketing and technical information concerning the Vyvx Network and IVT
will provide Vyvx with marketing and technical information concerning Burstware.
In addition, each party may provide the other upon mutual agreement with such
other sales aids as may be reasonably necessary to accomplish the objective of
the Alliance.
(c) Cooperation. Vyvx shall cooperate with IVT's efforts in connection
with the Alliance. Such cooperation shall include, without limitation, the
timely response to all questions arising from IVT or potential customers
relating to the Vyvx Network. Similarly, IVT shall cooperate with Vyvx's efforts
in connection with the Alliance. Such cooperation shall include, without
limitation, the timely response to all questions arising from Vyvx or potential
customers relating to Burstware.
3. No Commissions. Vyvx shall be entitled to retain all consideration
received by it related to the sale of Vyvx Network-related services. IVT shall
be entitled to retain all consideration received by it related to the sale or
license of
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<PAGE> 3
Burstware. Neither party shall be entitled to any commissions or other
compensation hereunder in connection with revenues generated from the license
or sale of the other party's products or services.
4. Records and Reports.
(a) Reports. IVT shall provide Vyvx with periodic reports
(which may be in written or oral form) which shall keep Vyvx informed as to the
Alliance's activity and the status of the Alliance's progress.
(b) Records. IVT will create an electronic database of
information relating to IVT's performance of its obligations under this
Agreement, and will permit on-line examination thereof by Vyvx personnel at all
reasonable times during the Term and for two (2) years subsequent thereto.
5. Indemnification; Limitation of Liability. Each party hereby
indemnifies and holds the other party (the "Indemnified Party") harmless from
any claims, losses, damages, costs and expenses (including reasonable attorneys
fees) for personal injury, property damage or any other liability to the extent
arising from (i) the negligence or willful misconduct of the party providing
the indemnification (the "Indemnifying Party") or its employees or (ii) the
infringement or misappropriation of any intellectual property rights of a third
party by the Indemnifying Party.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES ARISING OUT OF, PURSUANT TO OR
IN CONNECTION WITH THIS AGREEMENT.
6. Proprietary Rights. During the Term, each party is authorized by
the other (the "Authorizing Party") to use the trademarks and logos used by
Authorizing Party for its products and services in the course of the
advertisement and promotion of such products and services hereunder; provided,
however, that the Authorizing Party shall be provided with copies of any such
uses in advance. Neither party shall obtain any ownership right in the other
party's trademarks and logos by virtue of the foregoing authorization and, upon
expiration or termination of this Agreement, each party will cease all display,
advertising and use of the Authorizing Party's trademarks, logos and
designations. The parties shall, in using such trademarks or logos, reproduce
such trademarks and logos accurately and faithfully.
7. Duration and Termination of Agreement.
(a) Term. This Term of this Agreement shall be from the Effective
Date (as set forth in the first paragraph of this Agreement) until September
15, 1996, unless extended upon such terms and conditions (including, the
payment of additional consideration to IVT) as may be agreed to in writing by
the
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<PAGE> 4
parties. Notwithstanding the provisions of this Agreement, the Term of this
Agreement may be terminated prior to September 15, 1996 as set forth below.
(b) Termination for Cause. Either party may terminate this Agreement at
any time prior to September 15, 1996 in the event that the other party fails
to perform any material obligation or is in default with respect to any
material term or condition undertaken under this Agreement and such failure or
default continues unremedied for a period of fifteen days following written
notice thereof.
(c) Termination By Mutual Consent. This Agreement may be terminated
at any time by the mutual written consent of the parties.
(d) Automatic Termination. This Agreement terminates automatically,
with no further act or action of either party, if a receiver is appointed for
either party or its property, either party makes an assignment for the benefit
of its creditors, any proceedings are commenced by, for or against either party
under any bankruptcy, insolvency or debtor's relief law, either party is
liquidated or dissolved or the assets of either party are nationalized.
(e) Survival. The parties' respective rights and obligations under
Sections 4, 5, 6, 8 and 9 shall survive expiration and/or termination of this
Agreement.
8. Public Pronouncements. The parties shall jointly develop a press
release announcing the formation of the Alliance. Except as otherwise provided
by law, all press releases and public pronouncements concerning the Alliance
shall be subject to the review and approval of both parties.
9. General.
(a) Assignment. This Agreement shall not be assignable by either party
without the prior written consent of the other, except that either party may
assign this Agreement to its parents or wholly-owned subsidiaries of its
parent.
(b) Notices. All notices and demands hereunder shall be in writing
and shall be served by personal service, by confirmed facsimile, by
nationally-recognized overnight courier, or by certified or registered mail,
return receipt requested, 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).
(c) Governing Law and Choice of Forum. This Agreement shall be governed
by and construed in accordance with the laws of
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<PAGE> 5
the State of Delaware, (except that body of laws controlling conflicts of law).
The parties agree that any litigation regarding this Agreement shall be filed
in and heard by the state or federal courts with jurisdiction to hear such
disputes in San Francisco County, California or the State of Oklahoma, and the
parties hereby submit to the personal jurisdiction of such courts.
(d) Entire Agreement. This Agreement, together with any confidentiality
agreements between the parties, constitutes the entire Agreement between the
parties pertaining to the subject matter hereof, and supersedes in their
entirety any and all written or oral agreements previously existing between the
parties with respect to such subject matter.
(m) Attorneys' Fees. In the event any litigation is brought by either
party in connection with this Agreement, the prevailing party in such
litigation shall be entitled to recover from the other party all the costs,
attorneys' fees and other expenses incurred by such prevailing party in the
litigation.
(i) Severability. In the event any of the provisions of this Agreement
shall be held by a court to be unenforceable, the other provisions of this
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
INSTANT VIDEO TECHNOLOGIES, INC. VYVX, INC.
a Delaware corporation a Delaware corporation
By: /s/ GARY R. FAMILIAN By: /s/ WES NICHOLS
----------------------------- ----------------------------------
Name: Gary R. Familian Name: Wes Nichols
--------------------------- --------------------------------
Title: President/CEO Title: Director Advanced Technologies
-------------------------- -------------------------------
Notice Address: Notice Address:
500 Sansome Street, Suite 503 Tulsa Union Depot, 111 East 1st St.
San Francisco, CA 94111 Tulsa, Oklahoma 74103
facsimile: 415-391-3392 facsimile: 918-588-5761
Attention: Theresa A. Stacy Attention: Wes Nichols
with a copy to:
Vyvx General Counsel
4100 Bank of Oklahoma Tower
1 Williams Center
Tulsa, Oklahoma 74172
facsimile: 918-588-3005
-5-
<PAGE> 6
EXHIBIT A
Territory
- ---------
California
New York
United Kingdom
Such areas of Canada as shall be mutually
agreed upon in writing by the parties
Target Accounts
- ---------------
Sohonet
525 Post Production
The Post Group
GTE Entertainment
Showtime Network
Todd-AO
Sony Music Studios (post-production facilities)
U2 1997 World Tour
-6-
<PAGE> 7
EXHIBIT B
Milestones
1. Connectivity from the Mill (post-production facility and participant
of Sohonet, located in London, England) to selected post-production
facility(ies) located in Hollywood, California. Target Date: July 15, 1996
2. Execution of two 10-User Burstware(TM) site licenses and
corresponding connectivity to the Vyvx Network with 525 Post Production Company
and the Post Group. Target Date: September 1, 1996
3. Execution of a 10-User Burstware(TM) site license and corresponding
connectivity to the Vyvx Network to at least one of the following: GTE
Entertainment, Showtime Network, Todd-AO, Sony Music Studios (post-production
facilities). Target Date: September 1, 1996
4. Written agreement outlining definitive objectives regarding the goal
of the Alliance with respect to the licensing of Burstware(TM) and
corresponding connectivity to the Vyvx Network in conjunction with U2's 1997
World Tour. Target Date: September 15, 1996
<PAGE> 1
EXHIBIT 10.33
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made and entered into
as of October __, 1996, by and between Instant Video Technologies, Inc., a
Delaware corporation ("IVT") and Bennett Johnston ("Johnston"), with reference
to the following facts:
A. Johnston and IVT are parties to that certain Consulting Agreement
dated April 26, 1994 and Modifications #1 through #3 thereto (collectively, the
"Consulting Agreement").
B. The Company has also issued to Johnston a Promissory Note dated
September 13, 1994 (the "Existing Note") in the principal amount of $25,000 in
exchange for a $25,000 loan to the Company by Johnston. A copy of the Existing
Note is attached as Exhibit B hereto.
C. Johnston has made claims upon IVT concerning its obligations
pursuant to the Consulting Agreement and otherwise, certain of which claims
have been disputed by IVT.
D. IVT and Johnston now desire to settle, on mutually agreeable terms,
all disputes and claims existing between them arising out of any and all of
their dealings prior to the date hereof, regardless of when accruing,
including, without limitation, claims which have been alleged or which could
have been alleged relating to the Consulting Agreement, upon the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions hereinafter contained, Johnston and IVT agree as
follows:
1. Mutual General Release. Johnston, on the one hand, and IVT, on the
other hand, shall execute, and hereby agree to be bound by, the terms of a
Mutual General Release (the "Release"), in the form annexed hereto as Exhibit A
and by this reference made a part hereof. Said Release shall be executed and
delivered concurrently with the execution and delivery of this Agreement, in
duplicate counterparts by Johnston; and IVT, each of which shall be deemed an
original.
2. Consideration.
(a) Initial Cash Consideration. IVT shall pay to Johnston,
concurrently with the execution and delivery of this Agreement, the sum of
$42,500 in cash.
(b) Additional Cash Payments. In addition to the payment
referred to in subparagraph (a) above, IVT shall, commencing on the one-month
anniversary of this Agreement, make 16
1
<PAGE> 2
successive monthly payments to Johnston in the amount of $5,000 each (for an
aggregate of $80,000 of such additional cash payments)
(c) Delivery of Promissory Notes. IVT shall deliver to Johnston,
concurrently with the execution and delivery of this Agreement, two separate
promissory notes, the first of which shall be in the principal amount of $6,000
and shall be dated as of August 19, 1994 with a maturity date of August 19,
1997 and the second of which shall be in the principal amounts of $10,000 and
shall be dated as of February 24, 1994 with a maturity date of February 24,
1998, which Promissory Notes shall be in substantially the same form as the
Existing Note (except as set forth above and except that Sections 2, 3.3 and
5.5 of the Existing Notes shall be deleted).
(d) Existing Note Obligations. IVT hereby agrees to honor its payment
obligations under the Existing Note.
(e) Additional Contingent Compensation. In addition, IVT agrees to pay
Johnston an amount equal to 5% of the first $1 million, 4% of the second $1
million, 3% of the third $1 million, 2% of the fourth $1 million and 1% of any
amounts exceeding $5 million of equity investment in IVT made by Itochu
Technology, Inc. on or before February 26, 1997. IVT shall provide Johnston with
written notice of any such investment within 7 days of its receipt of same.
Johnston acknowledges and agrees that IVT has made no representations concerning
the likelihood of any such investment being made in IVT, that there can be no
assurance that any such investment will be made and that IVT may accept or
reject any such investment (if offered) in its sole and absolute discretion.
3. No Disparagement. Johnston and IVT each agree that they shall not make
any specific or implied statement, written or oral, or otherwise engage in any
communication which disparages the other (or any of them or their respective
officers, directors, employees, agents or business practices).
4. Covenant Not to Sue. Johnston on the one hand, and IVT on the other,
agree that they will not bring, commence, institute, maintain or prosecute
any action or other proceeding against the other(s), its or their agents,
representatives, heirs, directors, officers, attorneys, employees, servants,
affiliates, subsidiaries, stockholders, predecessors, successors and
assigns, either affirmatively or by way of cross-complaint or counterclaim,
on any alleged claims, demands, liabilities, causes of action, suits, debts,
liens, contracts, agreements, promises, losses, damages, costs or expenses that
are barred by the Release to be executed pursuant to Paragraph 1 hereof,
including statements or representations made in securing this Agreement,
provided that this covenant not to sue shall not extend to any action arising
out of a breach of the terms of this Agreement.
2
<PAGE> 3
5. Breach or Default. In the event of any breach or default of this
Agreement by Johnston or IVT, the non-breaching party or parties shall have all
rights and remedies provided by law and equity to enforce this Agreement
including, without limitation, an action for damages and a suit to obtain
specific performance of the terms of this settlement.
6. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7. Integration and Modification. This Agreement and the Exhibits
attached hereto and made a part hereof constitute the entire agreement and
understanding among Johnston and IVT as to the subject matter hereof, and merge
all prior discussions, negotiations and agreements, written or oral, express or
implied, respecting the subject matter hereof. It is expressly understood and
agreed that this Agreement may not be altered, amended, modified, or otherwise
changed in any respect except in a writing duly executed by the party or
parties to be charged.
8. No Reliance on Other Representations. In entering into this
Agreement, Johnston and IVT have each been advised by legal counsel and have
performed an independent investigation of all facts and circumstances deemed
relevant by such party to an evaluation of this settlement. Each party
represents and warrants that in entering into this Agreement, he or it is
relying solely and exclusively on such independent investigation and the advice
of counsel, and is not relying on any inducements, promises, warranties or
representations not expressly set forth herein.
9. Successors and Assigns. This Agreement and the Release shall inure
to the benefit of, and shall be binding on, Johnston and IVT and each of them
and their respective agents, representatives, heirs, partners, directors,
officers, attorneys, employees, servants, affiliates, subsidiaries,
stockholders, predecessors, successors, assigns, successors in title, and
successors in interest, if any.
10. Governing Law and Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, excluding
that body of law applicable to choice of law. In the event any provision of
this Agreement or the application of any of its provisions shall be held by a
Court of competent jurisdiction to be contrary to law, the remaining provisions
of this Agreement shall remain in full force and effect.
11. Counterparts. This Agreement may executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. This
3
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Settlement Agreement as of the date and year first above written.
JOHNSTON:
/s/ BENNETT JOHNSTON
- --------------------------------
IVT:
INSTANT VIDEO TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ GARY R. FAMILIAN
-----------------------------
Gary R. Familian, President
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