EXHIBIT 10.27
DISTRIBUTION AGREEMENT
REALITY INTERACTIVE AND LASERMEDIA (DEUTSCHLAND) GMBH
________________________________________________________________________________
THIS AGREEMENT is made on October 9, 1996
BETWEEN Reality Interactive, Inc. a public company, incorporated in Minnesota
and having its registered office at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ and whose principal place of business is at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ (the "Company"), which expression
where the context so requires shall include its successors and assigns,
AND LaserMedia (Deutschland) GMBH, a public company registered in Germany and
having its registered office at ▇▇▇-▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇, ▇-▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
and whose principal place of business is at ▇▇▇-▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇, ▇-▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ (the "Distributor"),
WHEREBY IT IS AGREED as follows:
1 APPOINTMENT
The Company hereby appoints the Distributor (and the Distributor hereby
accepts the appointment) as its exclusive distributor in the territory
described in Schedule A hereto (the "Territory") for the promotion,
marketing and distribution of the products more particularly described in
Schedule B-1 hereto (the "Products"). Distributor shall have the right to
name and license resellers to distribute the Products as long as
Distributor and such reseller execute a distribution agreement in
substantially the same form as this Agreement.
If Distributor meets the revenue targets more particularly described in
Schedule G hereto (the Distributor Discount Schedule), Distributor can
maintain its exclusive appointment beyond calendar year 1997. If such
revenue targets are not met by Distributor then the appointment beyond
calendar year 1997 shall convert to a nonexclusive appointment subject to
termination in accordance with Clauses 2, 7 or 11.
Localization issues shall be covered in Schedule B-2.
2 PERIOD
Subject to the terms and conditions of the Agreement, this Agreement shall
continue in force until December 31, 1997 from the Effective Date of this
Agreement but subject to earlier termination in accordance with Clause 7 or
Clause 11.
This Agreement shall automatically continue after the end of the said
initial period for successive annual terms provided the parties agree to
an annual revision of the Business Plan attached as Schedule C on or before
December 31 preceding the renewal term, unless terminated by either party
by giving to the other not less than six months prior notice to expire at
the end of the said initial period or prior to the expiration of any
subsequent annual renewal term.
3 DISTRIBUTOR'S OBLIGATIONS
The Distributor agrees with the Company:
(a) To use its reasonable endeavours to promote, market and distribute the
Products in the Territory as part of the Distributor's range of interactive
multimedia products as more particularly described in the Business Plan
attached as Schedule C:
(i) To devote sufficient time, energy and expertise to market,
supply, deliver, install, set-up, commission, instruct customers
in the use of, provide contractual field support, warranties and
help-line facilities for the Products;
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(ii) To permit an audit of all records relating to revenues and
collections derived from the sale of Products;
(iii)Not to undertake representation of any software system which
may be competitive to or dilute efforts in the marketing etc of
the Products.
(b) To give the Company, upon the signing of this Agreement and calendar
monthly thereafter during the term of this Agreement, (1) a written but
non-binding forecast outlining the quantities of Products that the
Distributor proposes to sell during the next calendar month in the format
attached as Schedule D-1; (2) a written but non-binding forecast outlining
the quantities of Products that the Distributor proposes to sell during the
next 6 months in the format attached as Schedule D-2; and (3) a written
marketing report outlining Distributor's activities in the preceding month
and proposed activities for the subsequent month as well as other relevant
marketing information in the format attached as Schedule D-3. .
(c) To supply the Products at prices agreed with the Company, and to pay a
royalty based on a percentage of sales revenues received by the
Distributor as detailed in the Business Plan attached as Schedule C.
(d) For those Products localized into German, to be responsible for the
creation of the German packaging and to be responsible for the
manufacturing of the Products into final end user form; provided, however,
that German versions will not be sold to end users (except for beta release
purposes) until Company has been sent a full copy of the German version for
review and has had a chance to review such German version. Company will
review the German version within 7 business days of its receipt
(e) Not in any manner to pledge the credit of the Company or to receive any
money on behalf of the Company and not to make any warranty or other
representation regarding the Products other than as authorised by the
Company in writing from time to time.
(f) Upon the termination of this Agreement for any reason to return to the
Company and at the cost of the Distributor all materials supplied to the
Distributor by the Company relating to the Products including all magnetic
and optical materials embodying or containing the Products, and all
documentation forming part of or relating to or concerning the Products,
except that the Distributor shall be able to retail stocks of Products then
held or on order together with related documentation.
(g) Not to modify, amend or in any other way interfere with the Products or
any names, notices or copyright marks which may appear therein except as
may be required to correct errors which may appear in the textual material
associated with or forming a part of the Products from time to time, and in
the event such an alteration is made to notify the Company of the
alteration promptly.
(h) To co-operate with the Company or its nominees in the instruction and
training of the employees of the Distributor in connection with (i) the
procedures necessary to enable them to comply with the requirements of this
Agreement, and (ii) the operation and use of the Products. Distributor
shall be required, at its own expense, to have a person responsible for
customer support attend training on Company's Products for the purposes of
performing customer support. What constitutes "training" for this Clause
shall be agreed to between the parties.
(i) Not without written authority from the Company to copy or reproduce the
Products or any part thereof and upon the termination of this Agreement to
return to the Company and at cost of the Company all brochures, pamphlets
and materials supplied to the Distributor by the Company relating to the
Products.
(j) Not to modify, amend or in any other way interfere with the Products or
any names, notices or copyright marks which may appear thereon except as
may be required to correct errors which may appear in the textual material
associated with or forming a part of the Products from time to time, and in
the event such alteration is made to notify the Company of the alteration
promptly.
(k) To supply the Company with reseller and customer information as
reasonably requested by the Company including a complete list of registered
customers with all essential contact information.
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(l) To be responsible for and obtain any license, permits or other such
legal or regulatory requirements for importing the Products into the
Territory.
4 COMPANY'S OBLIGATIONS
The Company agrees with the Distributor:
(a) To supply the Distributor with such information, know-how and technical
data concerned with the Products as is reasonably necessary or appropriate,
in the opinion of the Company, to the Distributor's activities in supplying
the Products in the Territory and which shall come into the Company's
possession or control and which the Company is free to disclose.
(b) In the Company's sole discretion, to make its sales and technical
support personnel (or those of its nominees) available to the Distributor
by telephone or otherwise.
(c) To give serious consideration to any modifications to the Products
suggested by the Distributor without being under any obligation to
incorporate any such modifications into the Products.
(d) To supply the Distributor with examples in English of publicity
materials, catalogues and price lists available to the Company from time to
time as the Distributor shall reasonably require and the Distributor shall
be entitled to reproduce the same or parts thereof in its own publicity and
other materials.
(e) Upon termination of this Agreement for any reason, the Company shall if
so required by the Distributor fulfill any orders for the Product from the
Distributor outstanding at the date of termination.
5 SHIPPING, CUSTOMS, TITLE, LIMITATION, WARRANTIES
(a) Risk of loss or damage to the Products shall pass to the Distributor
upon delivery to the carrier as specified by Distributor. Company will not
ship orders without Distributor's delivery and carrier instructions.
Distributor shall be responsible for cost of shipping any ordered Products.
Order procedures, payment procedures and payment terms shall be more
particularly described in Schedule
(b) The Company hereby excludes to the maximum extent permitted by law any
liability arising in tort, contract or otherwise for:
(i) Consequential loss or damage caused by or arising out of the use
of the Products or occurring in respect of the Products;
(ii) Loss, injury or damage due to fair wear and tear, or to negligent
or improper installation, use, maintenance, storage or handling of the
Products on the part of any person, firm or company other than the
Company and its employees.
(c) Under no circumstances shall either party be liable to the other for
any damages in excess of the aggregate amount of purchases that have
exchanged between the parties under this Agreement.
(d) Company authorises Distributor to pass through to its customers the
standard warranties as set forth in its standard license agreement attached
as Schedule E. All such warranty claims shall be made promptly in writing
and shall state the nature and details of the claim, the date the cause of
the claim was first observed and the registration number of the Products
concerned. All such warranty claims must be received by Company not later
than 15 days after the expiration of the warranty period for such customer
as provided to customer in Company's standard license Agreement. Company
shall have no obligations to Distributor or Distributor's resellers or
customers under this Clause if (1) the Products have not been properly
installed, used or maintained in accordance with Company's product
documentation; (2) the Products have been modified in any manner or are
used or combined with other products not supplied by Company and without
the prior written consent of Company; or (3) The Products have been
distributed to a customer with any warranties or representations oral or
written, made by Distributor beyond those expressly set forth in Company's
standard license agreement (Schedule E).
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(e) THE WARRANTIES SET FORTH IN THIS CLAUSE AND IN COMPANY'S STANDARD
LICENSE AGREEMENT, SCHEDULE E ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY COMPANY, INCLUDING
WITHOUT LIMITATION ANY WARRANTY OR MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE AND ALL OBLIGATIONS OR LIABILITIES ON THE PART OF
COMPANY ARISING OUT OF OR IN CONNECTION WITH THE DISTRIBUTION, USE, REPAIR
OR PERFORMANCE OF THE PRODUCTS.
(f) THE SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF ANY AND ALL WARRANTIES
AND THE SOLE REMEDIES FOR COMPANY'S LIABILITY OF ANY KIND (INCLUDING
LIABILITY FOR NEGLIGENCE OR PRODUCTS LIABILITY) WITH RESPECT TO THE
PRODUCTS AND SERVICES COVERED BY THIS AGREEMENT AND ALL OTHER PERFORMANCE
BY COMPANY UNDER THIS AGREEMENT SHALL BE LIMITED TO THE REMEDIES PROVIDED
IN COMPANY'S STANDARD LICENSE AGREEMENT, ATTACHED HERETO AS SCHEDULE E.
6 INTELLECTUAL PROPERTY RIGHTS
(a) The Distributor shall have no right, title or interest in any patent
related to the Products or any trade ▇▇▇▇ or name used in connection with
the Products, or the copyright in the Products or in any drawing,
specification or other document relating to the Products except as provided
in Schedule B-2 and the Distributor agrees to enter into at the Company's
expense such license agreements in respect of such rights and interest as
the Company may reasonably request from time to time, and to cease any and
all use of such rights upon termination of this Agreement whatever the
cause or reason for such termination, except to the extent necessary to
enable the Distributor to dispose of any stocks of Products then remaining
or on order.
(b) The Company warrants the Company has all necessary rights to enable the
Company to enter into this Agreement and to grant to the Distributor the
distribution and other rights contained in this Agreement.
(c) The Company has no actual knowledge of any present claim by any third
party that the Products infringe any patents, registered designs, trade
marks, copyright or similar rights existing or registered in any of the
countries in the Territory.
7 TERMINATION
(a) This Agreement shall terminate upon expiry of any notice given under
Clause 2.
(b) Without prejudice to any other remedy that may be available for the
breach or nonperformance of any of the obligations herein contained, either
party shall be entitled immediately to terminate this Agreement forthwith
without compensation by notice to the other if the other shall:
(i) Commit a breach of any of its obligations hereunder and shall not
remedy such breach (if the same is capable of remedy) within thirty
(30) days of being required to do so by notice;
(ii) Pass a resolution, or have an order made, for its winding-up
(except for the purpose of and followed by an amalgamation or
reconstruction).
8 FORCE MAJEURE
The Company shall not be liable to the Distributor for any loss or damage
which may be suffered by the Distributor as a direct or indirect result of
the supply of the Products by the Company being prevented, hindered or
delayed, and the Distributor shall not be liable to the Company in respect
of any delay or failure by the Distributor in carrying out any of its
obligations hereunder, in either case by reason of war, riot, civil
disturbance, act of God, strike, lock-out, trade dispute or labour
disturbance, accident, breakdown of plant or machinery, fire, flood,
difficulty in obtaining workmen, materials or transport or any other
circumstances whatsoever outside the control of the party concerned.
9 MISCELLANEOUS
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(a) This Agreement is personal to the Distributor who shall not assign or
transfer to any other person, form or company any of its rights or
obligations hereunder.
(b) Each of the parties hereto is an independent contractor and nothing
herein contained shall be deemed to create a partnership, joint venture or
the relationship of principal and agent, between the parties.
10 WAIVER
The failure by either party to require strict performance by the other of
any provision hereof shall not waive or diminish the right of that party to
require strict performance of the provision thereafter nor shall any such
failure waive or diminish the right of the party to require strict
performance of any other provision hereof.
11 ALTERATIONS
If any governmental or other authority (including without limitation the
Commission of the European Communities)(hereinafter together called the
"Authority") requires any alteration (hereinafter called the "Alteration")
to be made to this Agreement or to any agreement made under this Agreement
as a condition of granting approval, clearance or exemption of this
Agreement or to any agreement made under this Agreement, then the parties
hereto shall within one month of both parties having notice of the
Alteration confer together for the purpose of making the Alteration and any
other alteration, change or other action which they consider necessary
(hereinafter called the "Consequential Alterations"). In the event that
either party shall not agree to the Alteration or the Consequential
Alterations within two months from the date on which both parties had
notice of the Alteration, then either party shall be entitled to terminate
this Agreement or any agreement made under this Agreement by giving not
less than one month's notice to the other party.
12 ENTIRETY OF AGREEMENT
Except as provided in this Agreement and Schedules A to G inclusive hereto
embody the entire understanding between the parties with respect to the
distribution of the Products in the Territory to the entire exclusion of:
(a) Any term or conditions appearing on or referred to in the Distributor's
orders or the Company's acknowledgment thereof.
(b) Any prior understanding, agreement, representation, warranty or dealing
by or between the parties in such respect.
The parties hereby confirm that there is no agreement, expressed or
implied, which is in contradiction to this Agreement. No modification or
addition to this Agreement shall be binding unless made in writing and
signed on behalf of each party hereto by a duly authorised representative.
13 CONFIDENTIALITY
The Distributor shall at all times during the continuance of this Agreement
and after its termination:
(a) Use its best endeavours to keep all Restricted Information confidential
and accordingly not to disclose any Restricted Information to any other
person.
(b) Not use any Restricted Information for any purpose other than the
performance of the obligations under this Agreement.
(c) Any Restricted Information may be disclosed by the Distributor to:
(i) Any customers or prospective customers;
(ii) Any governmental or other authority or regulatory body;
(iii) Any employees of the Distributor or for any aforementioned
persons;
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to such extent only as is necessary for the purposes contemplated by
this Agreement, or as is required by law and subject in each case to
the Distributor using its best endeavours to ensure that the person in
question keeps the same confidentiality and does not use the same
except for the purposes for which the disclosure is made.
(d) Any Restricted Information may be used by the Distributor for any
purpose, or disclosed by the Distributor to any other person, to the extent
only that:
(i) It is at the date hereof, or hereafter becomes public knowledge
through no fault of the Distributor (provided that in doing so the
Distributor shall not disclose any Restricted Information which is not
public knowledge);
(ii) It can be shown by the Distributor, to the reasonable
satisfaction of the Company, to have been known to it prior to its
being disclosed by the Company to the Distributor.
(e) In this clause Restricted Information means any information which is
disclosed to the Distributor by the Company pursuant to or in connection
with this Agreement (whether orally or in writing, and whether or not such
information is expressly stated to be confidential or marked as such).
14 NOTICES
(a) Any notice required or authorised to be given hereunder shall be in
writing and shall be served by facsimile or first class prepaid airmail
letter and shall (unless a different address is notified in writing by one
party to the other by due notice under this Clause) be addressed in the
case of the Company to:
REALITY INTERACTIVE, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
FAX: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
TEL: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
marked for the attention of the Director of International Sales with a
copy to the Chief Financial Officer
And in the case of the Distributor to:
LASERMEDIA (DEUTSCHLAND) GMBH
▇▇▇-▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇, ▇-▇▇▇▇▇ ▇▇▇▇
FAX: ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ (in care of LaserMedia GMBH)
TEL: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇
marked for the attention of the Director of Sales & Marketing with a
copy to the Chief Financial Officer
(b) Any such notice shall be deemed to be served, in the case of a
facsimile, at the opening of office hours of the recipient party on the
next working day of the recipient party after the day of dispatch and , in
the case of first class prepaid letter, five days after the date of proved
posting.
15 PROPER LAW
The construction, validity and performance of this Agreement shall be
governed by and construed in all respects by the laws of the state of
Minnesota and the parties hereby submit to the nonexclusive jurisdiction
of the Minnesota state or federal courts.
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SCHEDULE A
THE TERRITORY
"Territory" shall include:
Germany, German speaking portion of Switzerland and Austria
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SCHEDULE B-1
THE PRODUCTS AND US RETAIL PRICE LIST
"Products" shall include the following:
ISO 9000 Registration Series (5 titles) and the QS 9000 Series (4 titles) and
such versions localized into German
US RETAIL PRICE FOR THE AMERICAN VERSION OF THE PRODUCTS:
PRODUCT NAME US PRICE
ISO 9000 Series (5 CD Set) $4,995.00
Title 1 $ 99.00
Title 2 $1,295.00
Title 3 $1,795.00
Title 4 $1,795.00
Title 5 $ 895.00
QS 9000 Series (4 CD Set) $3,595.00
Title 1 $ 995.00
Title 2 $ 995.00
Title 3 $ 995.00
Title 4 $ 995.00
All the above US Retail Prices are in US dollars.
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SCHEDULE B-2
GERMAN LOCALIZATION OF QS 9000
October 7, 1996
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Operations Manager
Futuremedia
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇
TEL: ▇▇-▇▇▇▇-▇▇▇-▇▇▇
FAX: ▇▇-▇▇▇▇-▇▇▇-▇▇▇
Re: Letter Agreement regarding German Localization of QS 9000
Dear ▇▇▇▇▇▇:
This letter is meant to confirm our mutual understanding concerning the
development of the German version of Reality's four CD-ROM Series QS 9000
product ("QS"). Please review the letter agreement and indicate your acceptance
of the letter agreement by signing the signature block at the end of the letter.
Reality Interactive ("RII") and Futuremedia PLC (FM) agree as follows:
1. LOCALIZATION RIGHTS; DISTRIBUTION RIGHTS TO BE SEPARATELY NEGOTIATED WITH
LASERMEDIA.
RII hereby grants FM the right to develop a high quality German language version
of QS ("German Version"). Distribution rights with respect to the German Version
shall be dealt with in the International Distribution Agreement with FM'S
subsidiary company, LaserMedia Gmbh to be negotiated separately.
2. SCOPE OF LOCALIZATION.
FM agrees to perform all work to create the German Version including but not
limited to translations of text, replacement of graphic elements, authoring,
video production and editing and product management. RII understands that much
of the work will actually be performed by subcontractors.
3. RII TO PROVIDE REASONABLE SUPPORT TO FM.
RII agrees to provide support for FM'S localization efforts including but not
limited to providing (1) all necessary source materials to enable FM to create
the German Version; and (2) reasonable access to technical personnel to help FM
in dealing with source code issues. Reasonable access shall mean at least one
trip to the UK by a technical person from RII for a week. All expenses for this
trip shall be borne by RII.
4. MONETARY RESOURCE ALLOCATION BETWEEN RII AND FM.
The parties contemplate a combined investment of 150,000 pounds in order to
develop the German Version. The attached Schedule A apportions the respective
investments of the parties. The parties shall each bear one-half of the
combined investment. RII shall provide its share of the investment according to
Schedule A and shall front 35,000 pounds of FM's investment as also indicated
in Schedule A.
FM shall repay the 35,000 pounds to RII from the initial sales of the first 11
copies of the German Version. If FM has not repaid the 35,000 pound amount in
full by March 31, 1997, RII shall invoice FM for such remaining amount and FM
shall pay such amount via wire transfer within 30 days of such invoice.
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5. OWNERSHIP OF THE INTELLECTUAL PROPERTY RIGHTS OF THE GERMAN VERSION;
DISTRIBUTION RIGHTS.
RII shall have all right, title and interest in and to the underlying American
Version of the QS 9000 product subject to each party having a joint ownership
interest in the German Version. The distribution rights granted to LaserMedia in
the Distribution Agreement between RII and LaserMedia to be separately
negotiated.
If Futuremedia agrees to the terms of this letter agreement, please sign below
and fax back a copy to ▇▇▇▇▇ ▇▇▇▇▇, Director of International Sales, at +1
▇▇▇-▇▇▇-▇▇▇▇.
Sincerely,
REALITY INTERACTIVE
BY: /S/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
Accepted by FUTUREMEDIA PLC
/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
(Signature)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------
(Name Printed)
Operations Director
-------------------
(Title)
DATE: 20 October, 1996
----------------
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German Localization.xls
SCHEDULE A
Pounds USDollars
------ ---------
Exchange Rate: 1 pound equals 1.54 USD
Total Investment 150,000 $ 231,000
External 110,000 $ 169,400
FM 28,000 $ 43,120
RII 12,000 $ 18,480
Allocation FM 50% 75,000 $ 115,500
RII 50% 75,000 $ 115,500
RII Cash Contribution 110,000 $ 169,400
FM Owes RII 35,000 $ 53,900
Pay out of the $169,400 as follows:
Pounds USDollars
------ ---------
3rd Party Translation Week of Oct 7 26,000 $ 40,000
3rd Party Video Production & Week of Oct 21 60,000 $ 92,400
Graphic/Text Work
3rd Party Graphic Changes Week of Dec 9 20,000 $ 30,800
3rd Party Debug/Reprogram Week of Dec 23 4,000 $ 6,160
Total 110,000 169,400
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SCHEDULE C
BUSINESS PLAN CONTAINING
DISTRIBUTOR AND ROYALTY PAYMENTS TO THE COMPANY
LaserMedia's Business Plan Outline for Reality Interactive
I. Company Information
A. Contact information (e.g. address, phone, fax, email, website)
Lasermedia GmbH, ▇▇▇-▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇, ▇-▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Phone: ▇▇-▇▇▇▇-▇-▇▇-▇▇-▇
Fax: ▇▇-▇▇▇▇-▇-▇▇-▇▇-▇▇
Email Address: ▇▇▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
1. Key contact between the company and Reality Interactive
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇: responsible for the relationship
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇: strategic
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇: Marketing
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇: Sales
▇▇▇▇▇▇▇▇ ▇▇▇▇▇: Administration and finance
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇: pre- and post-sales support
B. Company Background
1. History
1989 Founded by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇; GmbH in 1991
Company Launch was during launch of SPC product in February 1990
3 major projects:
$1M DM w/Volkswagen in 1991
$1.7M DM w/Deutsche Telekom in 1994
$2M DM w/Post Office in 1993
Exclusive supplier relationship w/Volkswagen for multimedia
2. Structure of Organization
One legal organization: LaserMedia (Deutschland) GmbH; focussed on packaged
software distribution business. The parent company is Futuremedia PLC;
functionally the business runs independently from Futuremedia. LaserMedia is
also able to provide customized products, using free lancers.
Management Structure:
General Management: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Marketing Manager: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇
Finance and Account Manager: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. # of employees: 6 fulltime and 2 contractors
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4. Branches
Cologne (head office)
In Cologne, in October 1995 launched, 50/50 JOINT VENTURE TRAINING CENTER (3
PRIVATE PARTIES IN THE TRAINING BUSINESS)
II. Financial Information
A. Revenue for Last 2 years
FY 95: 6.8 M DM (big deal in December 1994)
FY 96: 3.8 M ▇▇
▇. Key Changes in Financial Strategy
FY 96 was a disappointing year. In FY 97 new products contribute to make the
turnaround, such as ISO 9000 new version, crane operator, Quest + Desiger's
Edge, Financial Planning Analysis.
C. Banking References
Commerzbank, Koln
D. Accounting Firm
Ernst & Young, Dusseldorf
E. Public or Private
LaserMedia GmbH is 100% owned by LaserMedia International which is 100% owned
by Futuremedia PLC (the UK company).
38
III. Sales
A. Staffing
1. Head Sales Manager: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
2. Organization of Sales Team
a. Number: 3 people actively selling
b. How Allocated
i. Direct Major Accounts (3)
ii. Telesales (1)
iii. Indirect
-Switzerland reseller,
-open learning center channel
3. Sales Strategies (by product) QS-9000
a. Direct.
i. Target Customers: Automobile Manufacturers (current customers), automobile
manufacturers (not current customers), automotive suppliers (current and non
current customers), Quality Management Associations
Key customers: Ford, Volkswagon, Mercedes, Audi, BMW, Porsche, ▇▇▇▇▇,
Mannesman, Bosch, Siemans, ABB, Akzo, Boge (part of Mannesman), ▇▇▇▇▇▇▇
Controls, Dow Chemical, Dunlop, Eaton, ▇▇▇▇▇▇▇ and Sachs (shock absorbers),
TRW, Karman, Krupp, MAN, Philips, Skoda (Czech manufacturer), Unikellar
(upholstery and interior)
The plan is for one-off sales of QS to get sales started immediately with the
american version of QS-9000; larger sales and company licenses to be made as
soon as the project is available in German.
Other modes of providing revenue:
rental sale
Hardware, after sales support
Sales Cycle
i. Made contract and established need/timescale (past customer, advertising,
referral, direct mail, seminar, channel partner, telemarketing)
ii. pre-qualifying prospect (early adopter, budget, authority, urgency,
management support, multimedia support, corporate vision)
iii. sent details; give price indication
iv. product demonstrated
v. formal proposal submitted
vi. budget approval confirmed
vii. key influencers involved
viii. LaserMedia shortlisted
ix. spend approved
x. verbal or written confirmation is received
xi. purchase order received
xii. LaserMedia accepts order
Sales process is tracked as a part of the database which shows complete
history included closed sales and tracking why sales did not close.
39
IV. Marketing
A. Staffing
1. Marketing Manager, Christiana
2. Organization of Marketing Team
Christiana is responsible for PR, manages strategic relationships,
representing the company externally at speaking engagements, success stories,
writing articles, organizing exhibitions, creates and defines mail shots,
product management (developing new marketing strategy for the product;
product management);
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is responsible for telemarketing; database management;
executes the mailings
a. Leads generation (mail shots and follow ups to targeted sectors with
actions)
b. Public relations (continuous press releases and articles)
c. Advertising (to be evaluated)
d. Product marketing (product literature, packaging)
e. Support for sales team
- proposal templates, pricing
- sales tools
- success stories, case studies
B. Key Strategies and Goals
Database of 10,000 contacts; address, contact info and general manager;
telemarketing investigates who are the key 4-6 managers for each customer
(CEO, Training, Quality, etc.); "Quality" is the main focus of business,
automobile suppliers.
1. Leads generation
a. mailshot to existing customer base (quality courses)
b. direct contact and presentation to the large automotive
companies (Ford, Opel, Mercedes, Volkswagen, Audi, etc.
(eventually presentation to the AKAB-CBT work group)
c. mailshots to the non customers of LaserMedia in the
automotive supplier industry
d. generating further leads from fairs as Qualifikation
(Oktober 96), Control (May 97) and eventually MTQ (November 96)
2. Public relations
a. one initial press release for the launch of 1st modules
b. further press releases to announce the launch of further modules
c. case studies to leading specialized magazines for quality as
QZ, Kontrolle, but also for training as Q-Magazin, etc.
d. speaking engagements to be defined when product availability
is established
3. Product Marketing
a. Preparation (packaging, broshures, demos-CDs)
b. Launch
-timetable
-event (press conference, speakers)
-advertising
-materials (special introductory offers)
-press release
4. Trade Shows and Conferences
40
Factors that accelerate decision making cycle:
-Multimedia training now
-Multimedia hardware
-Deadline/pressure
-Good relationship (will always buy almost any products)
b. Indirect sales
Swiss Distributor-Quality Consultant-part of the Distribution agreement is to
train and sell the quality products and 12 month forecasts; one day training
session; support as needed and when asked; access to leads database
41
SCHEDULE D-1
MONTHLY SALES FORECAST TEMPLATE
See attached spreadsheet templates for ISO 9000 and QS 9000 (These forecasts
are due between the 10th and 20th of every month.)
[Diagram of Excel-based Sales Forecasting Templates]
42
SCHEDULE D-2
6-MONTH ROLLING FORECAST
See attached spreadsheet templates for ISO 9000 and QS 9000 (These forecasts
are due between the 10th and 20th of every month.)
[Diagram of Excel-based Rolling Sales Forecast]
43
SCHEDULE D-3
QUARTERLY MARKETING REPORT
(This report is due between the 10th and 20th of December 1996, March 1997,
June 1997, September 1997 and December 1997.)
KEY MARKETING EVENTS THAT HAPPENED IN PREVIOUS QUARTER:
Trade Shows:
Press Releases:
Product Launches:
Public Relations Activities:
KEY MARKETING EVENTS FOR NEXT QUARTER:
Planned Trade Shows:
Planned Press Releases:
Planned Product Launches:
Planned Public Relations Activities:
IMPORTANT FUTURE MARKETING ACTIVITIES (MORE THAN ONE QUARTER AWAY):
Planned Trade Shows:
Planned Press Releases:
Planned Product Launches:
Planned Public Relations Activities:
Distributor Requests for Reality in the Unites States related to
Marketing/Marketing Support:
44
SCHEDULE E
LASERMEDIA'S STANDARD LICENSE AGREEMENT
[Standard License Agreement in German Language]
45
SCHEDULE F
PURCHASE ORDER PROCEDURE, ROYALTY PAYMENTS PROCEDURE, PAYMENT TERMS, COMPANY
CONTACT DETAILS
PRODUCT ORDER PROCEDURES:
The following procedures will apply when ordering American versions of product
from Reality Interactive:
1. Product is ordered once every 30 days via fax to: SALES ADMINISTRATION
MANAGER, REALITY INTERACTIVE, ▇▇ (▇▇▇) ▇▇▇-▇▇▇▇ WITH A COPY TO ▇▇▇▇▇ ▇▇▇▇▇,
DIRECTOR OF INTERNATIONAL SALES VIA EMAIL); product is supplied at cost;
invoices payable by Distributor within 30 days.
During the first week of every month, Distributor shall provide monthly royalty
statements against which Company will invoice LaserMedia GMBH. LaserMedia GMBH
will settle the royalty payments within seven days of Company receiving payment
from its customers (average payment is 35 days) but no more than 50 days from
LaserMedia GMBH invoicing its customers. Distributor will pay for shipment and
insurance.
2. Reality Interactive's payment terms: wire transfers are preferred.
Wire transfers to Reality Interactive can be made as follows:
Bank: First Bank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: 173100140149
3. Orders for marketing materials should be in writing and faxed or emailed to
Marketing Department (fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇; email: ▇▇▇▇▇@▇▇.▇▇▇)
REALITY INTERACTIVE CONTACT DETAILS:
Distributor should primarily communicate with Reality through the following
person:
▇▇▇▇▇ ▇▇▇▇▇, Director, International Sales (business issues)
▇▇▇▇▇ ▇▇▇▇▇▇, International Product Manager (product issues)
▇▇▇▇▇ ▇▇▇▇▇'▇ Contact Details:
Internet: ▇▇▇▇▇▇@▇▇.▇▇▇ (communication via internet is preferred means)
Phone: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇'▇ Contact Details:
Internet: ▇▇▇▇▇▇@▇▇.▇▇▇
Phone: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Reality's Corporate Website: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇
46
SCHEDULE G
DISTRIBUTOR DISCOUNT SCHEDULE FOR AMERICAN VERSION; ROYALTY RATE FOR GERMAN
VERSION
The discount rate shall be (***)% for American versions of the products. The
royalty rate payable to Reality for the German Version of QS 9000 shall be the
greater of $(***) per unit or (***)% of the German selling price.
Royalty targets to maintain exclusivity are as follows:
1. $USD (***) in royalties paid to Reality by June 30, 1997; and
2. $USD (***) in royalties paid to Reality by December 15, 1997 (includes
$(***) from part 1 above)
*** Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934,
confidential portions of this Exhibit have been deleted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
47
AS WITNESSED this Agreement has been signed on behalf of each of the
parties the day and year first above written.
SIGNED for and on behalf of
REALITY INTERACTIVE, INC.
Signature: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name (printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------
Title: CHIEF FINANCIAL OFFICER
-----------------------
Date: OCTOBER 9, 1996
---------------
SIGNED for and on behalf of
FUTUREMEDIA PLC
Signature: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Name (printed: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------
Title: OPERATIONS DIRECTOR
-------------------
Date: OCTOBER 20, 1996
----------------
48