[*CONFIDENTIAL TREATMENT REQUESTED]
TMS VSC LICENSE AGREEMENT
BETWEEN
VSC TECHNOLOGIES, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AND
TMS, INC.,
AN OKLAHOMA CORPORATION
October 10, 2002
TMS VSC LICENSE AGREEMENT
THIS TMS VSC LICENSE AGREEMENT (the "Agreement"), made and
entered into as of the 10th day of October, 2002 by and between
VSC Technologies, LLC, a Delaware limited liability company
("LLC") and TMS, Inc., an Oklahoma corporation ("TMS").
WHEREAS, contemporaneously herewith, Measurement
Incorporated, a North Carolina corporation ("MI"), along with TMS
and LLC have entered into that certain Master Agreement (the
"Master Agreement"), pursuant to which, among other things, the
parties agreed that TMS and the LLC shall enter into this
Agreement; and
WHEREAS, in addition to entering into the Master Agreement,
MI, TMS and LLC have contemporaneously entered into that certain
Operating Agreement;
NOW, THEREFORE, in consideration of the premises, the
parties agree as follows:
1. Definitions.
1.1. Code shall mean computer programming code and any
other machine processable material necessary to complete the
computer programming code.
1.2. Confidential Information shall have the meaning
given in Section 3.01 of the Master Agreement.
1.3. Copy shall mean a material object in which a work
is fixed by any method now known or later developed, and from
which the work can be communicated, either directly or with the
aid of a machine or device. The term "copy" includes the
material object in which a work is first fixed, including a
diskette, or a file which may be downloaded via any electronic
or telecommunications means.
1.4. Documentation (in lower case) shall mean textual
and/or graphic material, perceivable directly by humans and/or
with the aid of a device or machine, relating to a computer
program; (when capitalized) the term shall mean documentation
relating to the Licensed Software.
1.5. Education Market shall mean customers (including,
but not limited to, educational testing companies, private
and governmental departments of education and colleges,
universities and similar institutions) which conduct testing,
surveys or otherwise collect and/or archive information in
or for educational systems or institutions.
1.6. Executable Code shall mean the machine readable
form of the Code.
1.7. Field means the market for delivering products and/or
services for the purpose of scoring and measuring the results of
constructed response and selected response answers against
predefined criteria and for archiving and exploiting stored
images, but shall exclude the Education Market.
1.8. Intellectual Property Rights shall mean any and all
rights to exclude existing from time to time in a specified
jurisdiction under patent law, copyright law, moral rights law,
trade secret law, trademark law, unfair competition law, or
other similar rights.
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1.9. Item shall mean a constructed response answer to
be read or archived using the Licensed Software.
1.10. Licensable Activity shall mean any activity
encompassed by one or more Intellectual Property Rights, e.g.,
an activity which, absent a license, would give rise to
liability for infringement (or inducement of infringement
or contributory infringement) of the Intellectual Property
Right(s).
1.11. License shall have the meaning given in
Section 2.1.
1.12. Licensed Marks shall mean those trademarks
listed in Annex A hereto, and all other trademarks now or
hereafter owned by LLC, relating to the Field.
1.13. Licensed Software shall mean the software
listed in Annex A hereto, all Improvements (as such term is
defined in the Operating Agreement) and Modifications (as
defined in Section 3.5 thereto) thereto and all other Program
Technology (as such term is defined in the Operating Agreement),
relating to the Field.
1.14. Net Sales shall mean TMS's invoice price of
Licensed Software, f.o.b. factory, sold or leased by TMS, less
only: (a) sales taxes, shipping and/or insurance if these are
separately itemized on the invoice; and (b) credits,
product returns, refunds, rebates, chargebacks, retroactive
price adjustments and any other reasonable allowances granted
following the original invoice. A Copy of Licensed Software
shall be deemed to be sold or leased upon acceptance of the
Licensed Software by the customer. In no event, however,
shall Net Sales exceed the amount actually paid to TMS.
1.15. Operating Agreement shall mean the certain
operating agreement by and among the LLC, MI and TMS of even date
herewith.
1.16. Person shall mean a natural person, a
corporation (for profit or not-for-profit), an association, a
partnership (general or limited), a joint venture, a trust, a
government or political department, subdivision, or agency, or
any other entity.
1.17. Prescribed Term shall mean terms, conditions and
warranties implied by law and to some contracts for the supply of
goods and services which the law expressly provides:
(a) may not be excluded, restricted or modified;
or
(b) may be excluded, restricted or modified only to a
limited extent.
1.18. Processor System shall mean a central processing unit
("CPU") and one or more co-processors (e.g., math or graphics co-
processors) associated with the CPU.
1.19. Royalty shall have the meaning given in Section 3.1.
1.20. Sheet shall mean two sides or two pages of a single
sheet of paper whether processed in whole or in part by the
Licensed Software.
1.21. Term shall have the meaning given in Section 4.
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1.22. Territory shall be the world.
1.23. Trademark Use means use of a Licensed Mark in
accordance with and subject to Section 2.4.
1.24. Transactional Agreements shall have the meaning given
in Section 1.07 of the Master Agreement.
1.25. Use or Using of the Licensed Software shall mean the
performance of the following steps only:
(a) copying some or all of a Copy of the Licensed
Software into memory accessible by one or more
Processor Systems, solely for the purpose of making the
Copy accessible to that Processor System for execution
of the Licensed Software (specifically not including
making other Copies of the Licensed Software in disk
storage or other permanent storage); and
(b) causing the User's Processor System to
execute the computer programs which have been copied
into its memory.
1.26. User shall mean each Person who Uses the
Licensed Software to perform VSC Services, in the Field.
1.27. User License shall mean a license granted by
TMS to a User to Use the Licensed Software in accordance with
Section 1.24 (a) and (b).
1.28. User License Agreement shall have the meaning
given in Section 2.2.
1.29. VSC Services shall mean the processing of
Sheets, which may include archiving the resulting images of those
Sheets, and reading Items utilizing the Licensed Software.
2. Grant of License.
2.1. License Rights Granted. Subject to the terms and
conditions of this Agreement, LLC hereby grants to TMS and TMS
hereby accepts a non-exclusive license in the Territory (the
"License") during the Term, under any and all Intellectual
Property Rights owned or otherwise assertable by LLC, to engage
in the following Licensable Activities:
(a) Distribution of Copies of the Licensed
Software to customers within the Field for the
sole purpose of performing VSC Services by
Users thereof;
(b) Trademark Use of the Licensed Marks; and
(c) Distribution of Documents for use by Users.
2.2. Sublicensing. TMS shall have the right to grant
User Licenses in the Territory, but shall have no other right to
grant other sublicenses of the rights conferred by this
Agreement. Prior to granting any User License, TMS and MI, on
behalf of the LLC, shall agree upon a standard User License
agreement (excluding financial terms), which form shall be
attached hereto as Annex B ("User License Agreement").
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2.3. No Other Rights Granted. Apart from the license
rights enumerated in this Agreement, this Agreement does not
include a grant to TMS of any other right, license or
interest in, any trademarks of the LLC, the right to
engage in any other Licensable Activity, nor any other
ownership right, title, or interest, nor any other security
interest or other interest, in any other Intellectual Property
Rights relating to the Licensed Software. LLC acknowledges,
however, the exclusive license separately granted to TMS
under Section 7.2 of the Operating Agreement to use
"Program Patent Rights" and "Program Technology", as
such terms are defined in the Operating Agreement,
outside of the Field (as such term is defined in the
Operating Agreement and not as defined in this Agreement).
2.4. Licensed Marks.
(a) The Licensed Marks shall be used only in
connection with the grant of User Licenses of the Licensed
Software in connection with the VSC Technology (as defined in the
Operating Agreement) and may not be used to identify any other
product or service, whether or not licensed under this Agreement.
TMS shall cause appropriate indicia of LLC's ownership of the
Licensed Marks to appear on all promotional materials using the
Licensed Marks.
(b) TMS may use its own trademarks in conjunction
with the Licensed Marks.
(c) TMS acknowledges LLC's right to control
quality regarding the nature and quality of the Licensed Software
sold under the Licensed Marks. TMS agrees to the quality
standards as the LLC has or shall establish regarding the manner
of the Licensed Marks' use. LLC reserves the right to inspect
the use of the Licensed Marks and TMS agrees to provide examples
of its use every six (6) months and as requested by LLC. All use
of the Licensed Marks shall terminate upon the termination of
this Agreement.
(d) TMS acknowledges the validity of LLC's
ownership, right, title and interest in and to the Licensed
Marks, including LLC's rights to register or to have registered
as the owner of any or all of the Licensed Marks under the laws
of any jurisdiction. All use of any of the Licensed Marks by TMS
shall inure to the sole benefit of LLC in any and all
jurisdictions. Notwithstanding the foregoing, if any of the
Licensed Marks are found to be invalid or generic in a court of
law or by a decision of the Trademark Office of any jurisdiction,
and such decision is not appealed or is not ultimately
overturned, then TMS shall no longer be required to treat the
Licensed Marks as trademarks of LLC or to be bound by the
restrictions of this Agreement concerning their use, in the
nation in which the decision was rendered.
(e) TMS shall not at any time do or suffer to be
done any act or thing which will in any way impair the rights of
LLC in and to such Licensed Marks. If in the reasonable business
judgment of LLC any act or failure to act by TMS constitutes a
danger to the value or validity or ownership of any of the
Licensed Marks, then LLC may in lieu of or in addition to any
other remedy available to it (including termination of the
Trademark License) give notice to TMS describing the danger and
may suspend in whole or in part TMS's right to use the Licensed
Marks, effective on TMS's receipt of the notice. The suspension
shall continue until LLC reasonably determines that the danger no
longer exists.
3. Royalties.
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3.2. Monthly Reports. Within twenty (20) days after
the end of each month, TMS will furnish LLC with an itemized
report ("Monthly Sales Report"), signed on behalf of TMS by an
authorized representative of TMS, that sets forth in detail:
(a) the number of Copies of Licensed Software
distributed to Users in that reporting period pursuant to this
Agreement;
(b) the calculation of Net Sales for that reporting
period; and
(c) the name and addresses of each User who
provided VSC Services in that reporting period pursuant to this
Agreement, which information shall be kept confidential by LLC
pursuant to the Master Agreement; and
(d) the amount due LLC for Royalties during that
reporting period.
3.3. Annual Reports. Within forty-five (45) days after
the end of each calendar year, TMS will furnish LLC with a
consolidated year-end report, signed on behalf of TMS by an
officer of TMS.
(a) The year-end distribution report will include
year-to-date information as of the year end.
(b) The year-end distribution report may be
combined with the final Monthly Sales Report for the year in
question under Section 3.2 if (i) the final Monthly Services
Report results are separately stated, and (ii) the year-end
report is delivered on or before the time at which the final
Monthly Sales Report is due.
3.4. Records; Inspection Rights. TMS will maintain
appropriate records of the number and location of all Copies that
it may make of the Licensed Software, as well as records of
services and deductible expenses made pursuant to the License
granted hereunder. Such records shall, within three (3) years
after the royalty period to which such records relate, be open to
inspection from time to time on reasonable notice during normal
business hours by LLC or by an independent accountant selected by
LLC and approved by TMS, which approval shall not be unreasonably
withheld. LLC or the accountant shall have the right to examine
the records which relate to the computation of the Royalties to
be paid under this Agreement and the accountant may report the
findings of such examination of records to LLC solely to the
extent of reporting the accuracy of the reports and payments made
by TMS, including the amount of any discrepancy, if any. Such
examination, however, shall not occur more than one (1) time per
year, unless the prior year's audit disclosed a discrepancy, or
unless a cumulative total of two audits has disclosed a
discrepancy, in which case such examinations may occur up to four
(4) times per year at times and intervals selected in the sole
discretion of LLC. A copy of any report provided to LLC by the
accountant shall be given concurrently to TMS. Any accountant so
selected shall sign, at the request of TMS, an appropriate
agreement with TMS to keep confidential all information obtained
as a result of such examination of records. LLC shall be
responsible for all the costs associated with such audit, unless
the examination of the accountant reveals: (i) an underpayment by
TMS by more than ten percent (10%) of the amount actually owing
to LLC during any annual reporting period, or $10,000, whichever
is greater, in which case TMS shall bear such costs; or (ii)
there is an underpayment in the period in question and the amount
of all underpayments from all prior periods exceeds $20,000, in
which case TMS shall bear such costs of the final audit.
[*CONFIDENTIAL TREATMENT REQUESTED]
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3.5. Modification of Licensed Software. TMS may modify
any of the Licensed Software ("Modifications") without the
specific written permission of LLC. Modifications shall be
subject to Section 7.1.3 of the Operating Agreement
4. Term. The term (the "Term") of this Agreement shall
commence upon execution and shall continue until terminated as
provided herein.
5. Disclaimer of Warranties and Representations. LLC
DISCLAIMS ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS
(EXPRESS OR IMPLIED, ORAL OR WRITTEN), WITH RESPECT TO THE
LICENSED SOFTWARE OR ANY PART THEREOF, INCLUDING ANY AND ALL
IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY, OR FITNESS
OR SUITABILITY FOR ANY PURPOSE (WHETHER OR NOT LLC KNOWS, HAS
REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE
OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON
OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. IN
ADDITION, LLC EXPRESSLY DISCLAIMS ANY WARRANTY OR REPRESENTATION
TO ANY PERSON OTHER THAN TMS (AND ANY PERSON CLAIMING RIGHTS
DERIVED FROM TMS'S RIGHTS) WITH RESPECT TO THE LICENSED SOFTWARE
OR ANY PART THEREOF.
[***]
[*CONFIDENTIAL TREATMENT REQUESTED]
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7. Termination.
7.1. Termination. The only cause for termination of
this Agreement shall be if a party fails to perform any of its
obligations under this Agreement and fails to remedy said breach
within thirty (30) days after being given written notice of
specific failure or default and termination by the non-breaching
party (MI may act on behalf of the LLC, in the case of a failure
to pay royalties under Section 3 or other default by TMS under
this Agreement).
7.2. Effect of Termination. In the event that this
Agreement is terminated:
(a) any and all rights granted to TMS under this
Agreement including all sublicenses granted to Users in violation
of the terms of this Agreement shall immediately terminate, but
any sublicenses granted to third parties not affiliated with TMS
that were granted in good faith by TMS to bona fide purchasers
for value and that were in compliance with the terms of this
Agreement at the time of such grants shall survive termination,
and such Users shall be deemed licensees to LLC;
(b) each party will deliver to the other party
within twenty (20) days of termination all copies in its
possession or control of the other party's Confidential
Information relating to this Agreement;
(c) TMS's obligations to make royalty payments
shall survive termination;
(d) except as specially provided herein, neither
party hereunder shall be discharged or relieved from any
liability or obligation existing prior to such termination; and
(e) all Users whose sublicenses are terminated
under (a) above shall cease Using Licensed Software and Licensed
Marks.
7.3 Payment of Claimed Royalties. Notwithstanding 7.1
and 7.2 above, this Agreement shall continue in full force and
effect as long as TMS delivers claimed Royalties into escrow
until any matters in dispute are resolved.
8. Miscellaneous.
8.1. Independent Contractor. The parties acknowledge
and understand that each party is an independent contractor under
this Agreement. This Agreement shall not create nor be construed
to create an employee/employer, agent/principal, partnership or
joint venture or any other relationship among TMS and LLC other
than that of independent contractor. Further, no party has any
authority whatsoever to represent to any party that it is the
other's attorney-in-fact or to act on behalf of or bind the other
party in any capacity or way with respect to this Agreement.
[*CONFIDENTIAL TREATMENT REQUESTED]
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8.2. Further Action. Without further consideration,
each party hereby agrees to execute and deliver, and to cause its
officers, trustees, employees and agents to execute and deliver,
such other instruments, and to take such other action as the
other party may reasonably request to more effectively convey,
transfer, vest and put in possession, the rights granted
hereunder, and to assist in the recordation of same as necessary,
all in such form and substances as the requesting party may
reasonably request.
8.3. Binding Agreement. This Agreement shall be
binding upon and shall inure to the benefit of the legal
representatives, administrators, successors and any permitted
assigns and licensees of the parties hereto but shall otherwise
be non-transferable without the express written consent of the
non-assigning party.
8.4. Governing Law. This Agreement and all User
license agreements shall be deemed to have been made under, and
shall be construed and interpreted in accordance with the laws of
the State of Delaware.
8.5. Entire Agreement. The terms and conditions herein
contained, including all the annexes hereto, along with the
Transactional Agreements and all exhibits, annexes and schedules
thereto, constitute the entire agreement between the parties and
supersede all previous communications whether oral or written
between the parties hereto with respect to the subject matters
hereof, and no other previous agreement or understanding varying
or extending the same shall be binding upon either party hereto.
Nothing herein shall otherwise limit any rights or obligations of
MI, TMS or LLC under the Operating Agreement.
8.6. No Waiver. The parties covenant and agree that if
any party fails or neglects for any reason to take advantage of
any of the terms provided for the termination of this Agreement
or if either party, having the right to declare this Agreement
terminated, shall fail to do so, any such failure or neglect by
either party shall not be a waiver or be deemed or be construed
to be a waiver of any cause for the termination of this Agreement
subsequently arising, or as a waiver of any of the terms,
covenants or conditions of this Agreement or of the performance
thereof unless such breach has been cured as provided herein.
None of the terms, covenants and conditions of this Agreement may
be waived by any party except by written consent by all the
parties.
8.7. Amendment. No amendment or modification to this
Agreement shall be effective unless it is in writing and signed
by duly authorized representatives of both parties.
8.8. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement by their duly authorized officers on the
date specified above.
LLC: VSC TECHNOLOGIES, LLC
By: Measurement Incorporated, Manager
By: /s/ Henry H. Scherich
----------------------------------
Henry H. Scherich, Ph.D., President
By: TMS, Inc., Manager
By: /s/ Deborah L. Klarfeld
-----------------------------------
Deborah L. Klarfeld, President
TMS: TMS, INC.
By:
/s/ Deborah L. Klarfeld
-----------------------------------
Deborah L. Klarfeld, President