EXHIBIT 10.5
Group A
INVU INC.
ENTERPRISE MANAGEMENT INCENTIVE
SHARE OPTION AGREEMENT
THIS AGREEMENT IS MADE the 14th day of September, 2001
BETWEEN
1. INVU Inc., a company incorporated under the laws of the State of
Colorado, United States of America and having its United Kingdom office
at Blisworth Hill Farm, Stoke Road, Blisworth Northants NN7 3DB ("the
Company");
2. INVU Services Limited (Registration No. 3319922) a company incorporated
under the laws of England and having its registered office at Blisworth
Hill Farm, Stoke Road, Blisworth Northants NN7 3DB ("the Employer");
and
3. .................................................("the Option-holder").
WHEREAS:
(A) This Agreement sets out the terms on which the Board grants an Option
to the Option-holder to acquire shares of Common Stock in the Company.
(B) Shares acquired on the exercise of this Option are subject to the
Articles of Incorporation of the Company.
(C) The terms and conditions of this Agreement are intended to satisfy the
requirements of Schedule 14 of Finance Act 2000.
(D) The Company is carrying on a Qualifying Trade.
(E) The Option-holder does not have a material interest within the meaning
of paragraph 31 of Schedule 14.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION AND CONSTRUCTION
1.1 Definitions
In this Agreement except where the context otherwise requires the
following expressions shall have the following meanings:
"Act" the Income and Corporation Taxes Act 1988;
"Agreement" this Share Option Agreement made between the
Company, the Employer and the Option-holder;
"Applicable Laws" the requirements applicable to Stock Options
under U.S. state corporate laws, U.S.
federal and state securities laws, the
Internal Revenue Code of 1986, as amended,
any stock exchange or quotation system on
which shares are listed or quoted and the
applicable laws of any foreign country or
jurisdiction where Options are, or will be
granted;
"Auditors" the auditors for the time being of the
Company or, such other auditors as the Board
may appoint for the exclusive purposes of
this Agreement;
"Board" the board of directors of the Company or a
duly appointed committee of the board;
"Committed Time" the meaning given to it by paragraph 29 of
Schedule 14;
"Control" the meaning given to it by section 840 of
the Act;
"Date of Grant" the date on which an Option is granted;
"Director" a member of the Board for the time being,
but does not include an officer who is not a
member of the Board;
"Employer" INVU Services Limited registered in England
with number 3319922;
"Exercise Price" the price at which the Option-holder may
acquire a Share on the exercise of his
Option as determined by the Board;
"Group" the Company and its Subsidiaries and "member
of the Group" shall be construed
accordingly;
"Market Value" the market value determined in accordance
with paragraph 66 of Schedule 14;
"NICs" means National Insurance contributions;
"Option" a subsisting right granted pursuant to this
Agreement to acquire Shares;
"Option Gain" a gain realised upon the exercise,
assignment or release of this Option, being
the amount that is chargeable to income tax
under section 135 of the Taxes Act;
"Option-holder" the holder of an Option or, where the
context admits or requires, his legal
personal representatives;
"Option Tax Liability" any liability of the Company or Employer to
account to the Inland Revenue for any amount
of, or representing, income tax or NICs on
any Option Gain;
"Personal Representatives" the legal personal representatives of the
deceased Option-holder (being either the
executors of his will to whom a valid grant
of probate has been made or, if he dies
intestate, the duly appointed
administrator(s) of his estate) who have
produced to the Company evidence of their
appointment as such;
"Qualifying Option" the same meaning as in paragraph 1 of
Schedule 14;
"Qualifying Trade" the same meaning as in paragraph 18 of
Schedule 14;
"Schedule 14" Schedule 14 of the Finance Act 2000;
"Secondary NICs" Secondary Class 1 National Insurance
Contributions;
"Shares" shares of Common Stock in the Company
complying with the conditions of paragraph
38 of Schedule 14;
"Subsidiary" a company within the meaning given to it by
section 736 of the Companies Act 1985 and
under the Control of the Company; and
"Working Time" the same meaning as in paragraph 29(6) of
Schedule 14.
1.2 Construction
1.2.1 Where the context so admits, any reference in this Agreement:-
(a) to the singular number shall be construed as if it referred
also to the plural number and vice versa;
(b) to the masculine gender shall be construed as though it
referred also to the feminine gender;
(c) to a statute or statutory provision shall be construed as if
it referred also to that statute or statutory provision as for
the time being amended or re-enacted;
(d) to the Act or to any provision of the Act shall be construed
as if it referred also to the act or statutory provision
repealed by and corresponding to the Act; and
(e) to Clauses are to clauses of this Agreement.
1.2.3 The headings of this Agreement are for reference purposes only and
shall not affect the meaning or construction of the Agreement.
1.2.4 If any question, dispute or disagreement occurs pertaining to the
interpretation of this Agreement, the decision of the Board shall be
final and binding upon all parties except as regarding any matter
required to be determined by the Auditors.
1.2.5 In any matter in which they are required to act, the Auditors shall be
deemed to be acting as experts and not as arbitrators and the
Arbitration Act 1996 shall not apply.
1.3 This Agreement and any Option granted under it shall be governed by and
construed in accordance with English law.
1.4 The Interpretation Act 1978 as modified or re-enacted from time to time
shall apply to this Agreement.
2. GRANT OF SHARE OPTION
2.1 The Company hereby grants to the Option-holder an Option to acquire
Shares in the Company in accordance with the provisions of Schedule 14
of the Finance Act 2000.
2.2 This Option is granted on the date and year first above written.
2.3 The numbers of Shares that are subject to this Option
are..................Shares which will be fully paid up (when issued).
2.4 The Market Value of each Share under this Option on the date and year
first above written is U.S.$00.19 (nineteen cents).
2.5 The Exercise Price per Share shall be US $0.50.
2.6 The total monetary value of this Option shall be determined by the
exchange rate of the United States Dollar to the United Kingdom
Sterling as published in "The Times" newspaper on the date and year
first above written.
3. EXERCISE OF OPTION
3.1 Subject to Clause 4, this Option shall vest and be exercisable in whole
or in part, according to the following schedule:
(a) 25% of the shares subject to this Option shall vest twelve
months after the Date of Grant; and
(b) the balance of the shares subject to this Option shall vest at
the annual rate of 25% on the second, third and fourth
anniversary of the Date of Grant, respectively.
3.2 Notwithstanding any other clause, this Option shall, to the extent that
it remains unexercised at the tenth anniversary of the Date of Grant,
lapse and shall cease to be exercisable.
3.3 Subject to Clause 4, the number of Shares over which Options may be
exercisable by the Option-holder shall relate to, and be limited by,
the number of Shares that have vested on the Option-holder in
accordance with Clause 3.1; save that the Board may in its discretion
permit the Option-holder to exercise all Shares in respect of this
Option that may not have otherwise become vested on the Option-holder,
within a period of time, being a period of not less than seven days and
not more than 40 days from the date of termination of the
Option-holder's employment, as determined by the Board.
4. PERFORMANCE TARGET
4.1 Subject to Clause 4.4, to the extent that any number of Shares would
have vested on a vesting date in accordance with Clause 3.1 above, such
shares shall not be treated as having vested and shall not be
exercisable unless the following performance targets are achieved:
Vesting Date Group Fiscal Target for the Vested Shares
Trading Period (cumulative)
---------------------------------- ---------------------------------- -----------------------------------
Year to 31 January 2002 Breakeven Point 25%
---------------------------------- ---------------------------------- -----------------------------------
Year to 31 January 2003 Net Profit of 5% of sales. 50%
---------------------------------- ---------------------------------- -----------------------------------
Year to 31 January 2004 Net Profit of 5% of sales. 75%
---------------------------------- ---------------------------------- -----------------------------------
Year to 31 January 2005 Net Profit of 5% of sales. 100%
---------------------------------- ---------------------------------- -----------------------------------
(a) Breakeven Point is achieved when the Group generates enough
revenue to cover its fixed and variable costs, before net
interest payable, depreciation and amortisation, for the year
ending 31 January 2002 as determined by the Auditors; and
(b) Sales are for the relevant year ending on 31 January in each
of the three years to 2005.
4.2 Net profit for purposes of this Clause 4 means profit after deductions
of Directors' remuneration but before deductions for net interest
payable, depreciation, amortisation, Directors' bonuses and corporation
tax; and shall be computed in accordance with Schedule 4 of the
Companies Act 1985 as determined by the Auditors.
4.3 The basis of preparing the accounts and the accounting policies adopted
by the Group shall be applied consistently within the same accounts as
from one financial year to the next.
4.4 All Shares subject to this Option shall fully vest to the extent that
they remain unvested on the sixth anniversary of the Date of Grant, and
this Option has not otherwise been terminated.
5. ADJUSTMENT OF PERFORMANCE TARGET
5.1 Subject to Clause 5.2, the Board may make such adjustments where it
considers it fair and reasonable, including the imposition of entirely
different objective conditions to the performance target, provided that
such adjustments do not have the effect of making the performance
target more onerous than it was or they were immediately before the
circumstance in question, and such adjustment shall not be made unless
the Auditors (acting as experts and not as arbitrators) shall have
confirmed in writing to the Board that, in their opinion, they are fair
and reasonable.
5.2 For the purpose of Clause 5.1 the Board may adjust the performance
target on the occurrence of the following events:
(a) where the Board considers it fair and reasonable to adjust the
performance target or impose a different performance target;
(b) where event(s) mentioned in Clause 15 occur; and
(c) where event(s) specified at the time the Option was granted
occur.
6. NON-ASSIGNABILITY OF OPTION
6.1 The Option-holder is prohibited from transferring any of his rights
under this Agreement.
6.2 In the event of the Option-holder ceasing to be employed by the Group
by reason of his death, the Option may, notwithstanding Clauses 3 and
4, be exercised no later than one year after the date of death.
6.3 The terms of this Agreement shall be binding upon the Personal
Representatives, heirs, and successors of the Option-holder.
7. CESSATION OF EMPLOYMENT
7.1 If the Option-holder's employment with the Group terminates for any
reason whatsoever, this Option shall lapse unless otherwise expressly
provided herein.
7.2 If the Option-holder ceases to be employed by the Group:
(a) by reason of ill-health or injury or disability or (within the
meaning of the Employment Rights Act 1996) redundancy; or
(b) by reason of the company by which the Option-holder is
employed ceasing to be a member of the Group; or
(c) by reason of the undertaking in which the Option-holder was
being transferred to a transferee which is not a member of the
Group; or
(d) by reason of his wrongful dismissal by the company by which he
is employed or his terminating his employment as a result of
that company's conduct; or
(e) at a time when he has completed a minimum period of 5 years
employment with the Group
he may, subject to Clause 3.3 and notwithstanding Clauses 4 and 7.1,
exercise his Option at any time or from time to time within the period
of 40 days following the termination of his employment, and subject to
Clause 7.4 below, at the expiry of that period his Option shall lapse.
7.3 If the Option-holder ceases to be employed by the Group for any reason
other than that mentioned in clause 7.2, the Board may, subject to
Clause 3.3 and notwithstanding Clauses 4 and 7.1, permit him to
exercise all or part of his Option within 40 days of the termination of
his employment at any time, or from time to time, within such longer
period as the Board at its discretion shall determine, not being later
than the tenth anniversary of the date of this agreement. At the
expiration of that period the Option shall lapse.
7.4 If the Option-holder, while continuing to hold an office or employment
with the Group is to be transferred to work in another country and the
Board determines that as a result of that transfer either he will
suffer a tax disadvantage upon exercising his Option(s) or he will
become subject to restrictions on his ability to exercise his Option or
to deal in the Shares obtained upon exercise of his Option, the
Option-holder may, subject to Clause 3.3 and notwithstanding Clauses 4
and 7.1, at the discretion of the Board, exercise his Option in whole
or in part in the period commencing three months before and ending 40
days after the date of transfer (but so that any exercise before the
date of transfer shall be conditional upon such transfer taking place).
Upon the expiry of such period, the Option to the extent unexercised,
shall cease to be exercisable under this Clause 7.4 and shall be
exercisable at such other times as provided in this Agreement.
8. CHANGE OF CONTROL
8.1 If as a result of either:
(a) a general offer to acquire the whole of the ordinary share
capital which is made on condition such that if satisfied, the
person making the offer will have Control of the Company; or
(b) a general offer to acquire all the Shares of the Company
(other than those which are already owned by him and/or any
person acting in concert with him)
the Company shall come under the Control of any person (or persons
acting in concert), the Option-holder may, except where Clause 11
applies, subject to Clause 3.3 and notwithstanding Clauses 4 and 7.1,
exercise his Option at any time and from time to time within the period
of 40 days following such change of Control or, as the case may be, the
making of such offer. On the expiration of this period this Option
shall lapse and cease to be exercisable.
8.2 If any such offer is made as is mentioned in Clause 8.1 or the Board
becomes aware that any such offer has been made, the Board may,
notwithstanding Clauses 4 and 7.1 and except where Clause 11 applies,
give notice to the Option-holder inviting him to exercise this Option
in respect of all Shares which have vested, conditional upon, and with
effect from the date the notice is given, and on the expiration of the
stipulated period this Option shall lapse and cease to be exercisable.
8.3 In the event that the acquiring company refuses to assume this Option
as provided in Clause 11.1, the Shares subject to this Option shall at
the discretion of the Board and notwithstanding Clauses 3 and 4 become
fully vested. In this circumstance the Board shall notify the
Option-holder in writing to exercise this Option within a period of
time, being a period of not less than seven days and not more than 40
days from the date of such notice, and on the expiration of the
stipulated period this Option shall lapse and cease to be exercisable.
9. COMPANY LIQUIDATION
9.1 If an effective resolution is passed for the voluntary winding-up of
the Company, the Option-holder may, subject to Clause 3.3 and
notwithstanding Clauses 4 and 7.1, exercise his Option within the
period of 40 days after the adoption of the resolution by the
shareholders, which exercise may be conditional on the consummation of
such liquidation, and at the end of that period the Option shall,
subject to Clause 11, lapse.
9.2 Where the Option-holder exercises his Option in accordance with Clause
9.1, he shall be entitled to share in the assets of the Company with
existing holders of Shares in the same manner as he would have been
entitled had the shares been registered in his name before the
resolution was passed.
9.3 Subject to Clauses 9.1 and 11, this Option, insofar as not already
exercised, shall automatically lapse in the event of an effective
resolution being adopted by the shareholders and the consummation of
such liquidation by the Company.
10 DEMERGER
10.1 If notice is given to shareholders of the Company of a proposed
demerger of the Company or of any Subsidiary, the Board may give notice
to the Option-holder that this Option may then be exercised in respect
of such proportion of the Shares as the Board may specify within such
period (not exceeding 30 days) save that:
(a) no such notice shall be given unless the Auditors have
confirmed in writing to the Board that the interests of the
Option-holder would or might be substantially prejudiced if
before the proposed demerger has effect the Option-holder
could not exercise his Option and be registered as the holder
of the Shares; and
(b) the proportion of the Shares which is so specified by the
Board shall be the same as that specified in relation to all
other rights to acquire Shares granted at the same time as was
this Option.
11. REPLACEMENT OPTION
11.1 Subject to Clause 11.2, where another company ("the acquiring company")
obtains control, within the meaning of paragraph 59(2)(a) of Schedule
14, of the Company, the Option-holder may with the consent of the
Company and the agreement of the acquiring company release his rights
under this Option ("the Old Option") in consideration of the grant to
him of an Option ("the New Option") which is equivalent but relate to
shares in the acquiring company.
11.2 The conditions and requirements of paragraphs 62 and 63 of Schedule 14
must be met before a New Option can be granted under Clause 11.1.
11.3 If the Option-holder does not wish to release his rights under this
Option in consideration of the grant to him of a New Option, he shall
within 10 days of the date of the invitation to release his rights
under this Option, give notice of such refusal ("the Refusal Notice")
to the Company. The Board in its sole discretion may, within 10 days of
the receipt of the Refusal Notice give a written notice ("the
Cancellation Notice") to the Option-holder, cancelling all or any
portion of the Option that remains un-exercised, effective on the
latter of:
(a) the period within which the Option-holder could have accepted
the invitation of the acquiring company to accept the New
Option, or
(b) the period ending 10 days from the date of the Cancellation
Notice ("the Acceptance Periods").
Upon receipt of the Cancellation Notice, the Option-holder may, subject
to Clause 3.3 exercise his Option at any time or from time to time
within the Acceptance Periods. This Option shall lapse and cease to be
exercisable at the end of the Acceptance Periods.
12. CHANGES TO THE CLASS OR RIGHTS OF SHARES
If notice is duly given of a shareholders' meeting at which a
resolution will be proposed where, in the opinion of the Auditors, the
class of shares for the time being constituting Shares will be
materially altered; or the rights attaching to shares which for the
time being constitute Shares will be altered so that such shares will
cease to be Shares, an Option shall, subject to Clause 3.3 and
notwithstanding Clauses 4 and 7.1, be exercisable (but so that any
exercise under this Clause shall be conditional upon the resolution
being passed) at any time thereafter until such resolution is duly
passed or defeated or the shareholders' meeting concluded or adjourned
indefinitely, whichever shall occur first. If such a resolution is
passed an Option shall, to the extent unexercised, thereupon lapse.
13. PROCEDURE ON EXERCISE
13.1 Where an Option is exercisable, the Option-holder may subject to Clause
3.3 exercise it in whole or in part.
13.2 The Option-holder shall exercise his Option by giving notice in writing
to the Board (a "Notice of Exercise") in the form of the draft in
Appendix A to this Agreement accompanied by payment in full at the
Exercise Price together with any required taxes and such other
documents as the Board may determine.
13.3 An Option shall be deemed to have been exercised on the date on which
the Notice of Exercise, payment and documents are received at the
registered office of the Company or other office as specified by the
Board.
13.4 Subject to Applicable Laws, such consents or other required action of
any competent authority under regulations or enactments for the time
being in force as may be necessary and subject to compliance with the
terms of the Option, the Board shall within 30 days of the date of
exercise either issue and allot to the Option-holder the number of
Shares specified in the Notice of Exercise or procure the transfer to
him of those Shares.
14. LOSS OF OFFICE
The grant of an Option subject to these Clauses is a matter entirely
separate from, and shall not affect the Option-holder's pension rights
and terms of employment and, in particular (but without limitation), if
the Option-holder shall for any reason cease to be employed by the
Group or to be entitled to exercise his Option, he shall not be
entitled to any compensation by reference to the rights granted to, or
the benefits capable of being received by, him under this Agreement or
for any loss or diminution in value of such rights or benefits.
15. VARIATION OF CAPITAL
15.1 In the event of any capitalization issue by the Company, or any offer
or invitation made by way of rights, or any consolidation, subdivision
or reduction of its share capital or any other variation of its share
capital, the Board may adjust in such manner as it may decide to be
appropriate the number and nominal amount of Shares subject to this
Option (including any Option which has been exercised but in respect of
which Shares have not been issued and allotted), the Exercise Price
and, subject to Clause 15.2 the Board's decision shall be final and
binding on the Option-holder.
15.2 No adjustment shall be made pursuant to Clause 15.1 unless and until
the Auditors (acting as experts and not as arbitrators) shall have
confirmed in writing to the Board that the adjustment is, in their
opinion, fair and reasonable.
15.3 If any adjustment is made pursuant to this Clause 15, the Company shall
notify the Option-holder of the adjustment as soon as practicable after
its decision.
16. SECONDARY CLASS 1 NATIONAL INSURANCE LIABILITY
The Option-holder hereby agrees with the Company and undertakes to the
Employer to bear the whole of any Secondary NICs that may arise in
respect of any Option Gain if this Option ceases to be a Qualifying
Option for any reason whatsoever.
17. OPTION-HOLDERS' TAX INDEMNITY AND RECOVERY OF SECONDARY NICS
17.1 The Option-holder shall indemnify the Employer against any Option Tax
Liability.
17.2 The Company may refuse to allot and issue any Shares under this
Agreement unless and until the Option-holder has paid to the Employer
any such sum as is, in the opinion of the Employer, sufficient to
indemnify the Employer in full against any Option Tax Liability or the
Option-holder has made such other arrangement as, in the opinion of the
Employer will ensure that the total Option Tax Liability will be
recovered from the Option-holder within such period as the Employer may
determine.
17.3 In order to meet the Option-holder's obligations under Clause 16 and
17.1, the Employer may also take any or all the following actions:
(a) accept a payment from the Option-holder;
(b) withhold some of the Option-holder's stock option gains; and
(c) dispose of the Option-holder's shares sufficient to meet the
liabilities;
18. OPTION HOLDER
18.1 The Option-holder agrees that the vesting of Shares pursuant to Clauses
3 and 4.4 is subject to continuing employment with the Group.
18.2 The Option-holder agrees that this Option and the transactions
contemplated hereunder does not constitute an express or implied
promise of continued employment with the Group.
18.3 The Option-holder confirms to the Company that his Committed Time
amounts to at least 25 hours a week or, if less, 75% of his Working
Time.
18.4 The Option-holder acknowledges receipt of a copy of this Agreement
including Appendix A.
18.5 The Option-holder hereby accepts this Option subject to all of the
terms and provisions thereof.
18.6 The Option-holder declares that he has reviewed this Agreement in its
entirety, has had an opportunity to obtain advice of Counsel prior to
executing this Agreement and fully understands all the provisions of
this Agreement including the Schedule.
18.7 The Option-holder further agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions
arising under this Agreement.
18.8 The Option-holder also agrees to notify the Company upon any change in
his residential address.
IN WITNESS OF WHICH this document has been duly executed as a deed and has been
duly delivered on the day and year first above written
- --------------------------------- ------------------------------------
Signed by and on behalf of the Signed by and on behalf of the
Company Employer
- ----------------------------------
Option-holder
- ---------------------------------- Name:
in the presence of (witness) -------------------------------
Address:
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APPENDIX A
INVU INC. ENTERPRISE MANAGEMENT INCENTIVES
NOTICE OF EXERCISE OF OPTION
TO: The Company Secretary
INVU Inc. ("the Company")
1. I hereby exercise my Option to acquire..................Shares of
Common Stock in the Company at the Exercise Price stated in clause 2.5
of the Agreement dated [...] day of.............. 2001.
2. Please allot or transfer the said shares, which are to be registered in
my name. I accept and agree that the said shares are subject to the
Agreement and the Articles of Incorporation of the Company.
3. I hereby deliver to the Company U.S.$................ being the
aggregate Exercise Price of the total number of shares in respect of
which the Option is being exercised.
4. The said shares are being acquired as beneficial owner/personal
representative of the Option-holder and not as trustee or nominee for
any other person.
5. Please issue a share certificate to me at the address shown below. I
agree that any documents sent to me by ordinary post will be at my own
risk.
Signature: ...................................
Address: .....................................
.....................................
.....................................
.....................................
Date: .....................................