EXHIBIT 10.14
DATED 1999
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INVU, INC.
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LOAN STOCK INSTRUMENT
CONSTITUTING US$400,000 INTEREST BEARING
CONVERTIBLE LOAN STOCK 1999 - 2002
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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, Xxxxxxxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxxxxxx XX0 0XX ("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
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1.1 In this Instrument the following expressions shall have the following
meanings unless the context otherwise requires:
"Act" the U.K. Companies Xxx 0000 (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 Xxx
0000 or the admission of such Common Shares to the
Nasdaq National Market of The Nasdaq Stock Market,
Inc;
"Investment the Investment Agreement of even date between the
Agreement" Company, the Investor and Xxxxx Xxxxxx, Xxxx
Xxxxxxxx, Xxxx X'Xxxxxxxx and INVU Services Limited
(Company number 3319922);
"Investor" Xxxx Xxxxx Xxxxxxx of 00 Xxxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxx xxxx Xxxx XX0 0XX and Vertical
Investments Limited (Company number: 71185) of
Xxxxx Xxxxx, Xxx Xxxx, Xx. Xxxxxx, Xxxxxx, Xxxxxxx
Xxxxxxx, XX0;
"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 Xxx 0000 shall bear the same
respective meanings in this Instrument.
2. AMOUNT OF LOAN STOCK
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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
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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
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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
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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:
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.
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 Xxx Xxxxxxxx.
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
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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
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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;
(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
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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 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
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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
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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
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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.
12. NON-TRANSFERABILITY OF LOAN STOCK
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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 Xxx
Xxxxxxxx, 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
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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
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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.
15. LAW
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This Instrument shall be governed by and construed in accordance with
English law.
16. WAIVER
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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.
SCHEDULE
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Form of Loan Stock Certificate
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INVU, Inc.
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Certificate No Nominal Amount of Loan Stock
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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
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Director
EXECUTED as a DEED and DELIVERED )
by INVU, INC. acting by its two directors/ )
director and secretary )
Director
Director/Secretary
