EXHIBIT 2.14
ROYALTY AGREEMENT
THIS AGREEMENT entered into at Halifax, in the Providence of Nova Scotia,
effective the 18th day of September, 1998;
AMONG:
ITC CANADA LIMITED, a body corporate
(referred to as "ITC")
- and -
GRANT THORNTON LIMITED, receiver and manager of
Mentor Networks Inc. and High Performance Group (Canada)
Inc.
(referred to as the "Receiver")
- and -
ITC LEARNING CORPORATION, a body corporate
(referred to as "ITC Learning")
WHEREAS the Receiver has agreed to sell to ITC certain assets for a sum
certain and in addition ITC has agreed to pay certain royalties, when and if
earned;
IN CONSIDERATION of the mutual promises and agreements contained in this
agreement, and other good and valuable consideration, the parties agree as
follows:
1. DEFINITIONS
In this agreement, unless there is something in the subject or context
inconsistent with it, the following words shall have the following meaning:
(a) "Net Receipts" mean all gross receipts actually received by ITC and
its affiliates and related entities from all sales, conveyances or grants of
licenses of Generic Software or Custom Software which may be produced excluding
any and all rebates, commissions, credits, returns, freight and insurance
charges, value added taxes, and sales taxes or other similar taxes and duties to
the extent these charges are actually paid or credited by ITC.
(b) "Custom Software" means all software developed as custom courseware by
ITC including, but not limited to, entertainment or educational software,
interactive or otherwise, for use in networks, computers, optical disk base
systems such as CD ROM's and in any and all media whether now known or hereafter
developed, including semiconductor, magnetic and optical based media.
(c) "Generic Software" means all of the software formerly owned or
developed by mentor Networks Inc. and/or High Performance Group (Canada) Inc.
and all software other than Custom Software which is developed by or owned by
ITC including, but not limited to, entertainment or educational software,
interactive or otherwise, for use in networks, computers, optical disk base
systems such as CD ROM's and in any and all media whether now known or hereafter
developed, including semiconductor, magnetic and optional based media.
2. ROYALTY PAYMENTS
2.1 ITC shall pay to the Receiver a royalty calculated at 3% of 100% of
Net Receipts, derived from the exploitation of the Generic Software which may be
produced hereunder, provided that such royalty shall not apply with respect to
Generic Software which is distributed at no charge for the purposes of
promotional demonstrations, including any Generic Software provided to the
Province of Nova Scotia by ITC Learning Corporation.
2.2 ITC shall pay to the Receiver a royalty calculated at 1% of 100% of
Net Receipts, derived from the exploitation of the Custom Software which may be
produced hereunder, provided that such royalty shall not apply with respect to
Custom Software which is distributed at no charge for the purposes of
promotional demonstrations.
2.3 ITC shall calculate the royalty payments for each fiscal year (for the
period ended December 31) and shall, within 120 days of each fiscal year end pay
the amount so calculated and deliver to the Receiver a calculation certified by
the auditor for ITC confirming the amount of the payment.
2.4 The royalty payments payable by ITC to the Receiver pursuant to
sections 2.1 and 2.2 above shall continue until such time as the Receiver
receives the sum of $1,600,000.00. In the event that ITC for any reason
discontinues operations as a going concern in Nova Scotia, all obligations of
ITC hereunder shall forthwith become obligations of ITC Learning Corporation.
3. BOOKS AND RECORDS
3.1 ITC shall maintain books of accounts and records of revenues and
expenses in connection with the Generic Software and Custom Software and the
royalties to which the Receiver shall be entitled to, which books and records
pertaining to the Generic software and Custom software shall be available for
inspection by the Receiver or anyone on the Receiver's behalf at ITC's local or
head office, during normal business hours, upon seven days advance written
notice.
4. ASSIGNMENT
ITC acknowledges that the Receiver may assign its rights under this
agreement to Nova Scotia Business Development Corporation ("NSBDC") and
effective the date of any such assignment any security held by NSBDC on the
assets of ITC shall secure the obligations of ITC under this agreement.
5. MISCELLANEOUS
5.1 HEADINGS. Headings are not to be considered part of this agreement,
are included solely for convenience and are not intended to be full or accurate
descriptions of the content of the paragraphs.
5.2 INTERPRETATION. In this agreement, words importing the singular number
include the plural and vice versa, words importing the masculine gender include
the feminine and neuter genders; and words importing persons include
individuals, sole proprietors, corporations, partnerships, trusts and
unincorporated associations.
5.3 APPLICATION LAW. This agreement shall be governed by and construed in
accordance with the laws of the Province of Nova Scotia and the laws of Canada
in force therein.
5.4 INVALIDITY OF PROVISION. The invalidity or unenforceability of any
provision of this agreement or any covenant in it shall not affect the validity
or enforceability of any other provision or covenant in it and the invalid
provision or covenant shall be deemed to be severable.
IN WITNESS WHEREOF, the parties have executed this agreement on the day
and year first above written.
SIGNED, SEALED AND DELIVERED ) ITC CANADA LIMITED
IN THE PRESENCE OF: )
) PER: /s/ Wendy G. Berney
) -----------------------
)
)
/s/ Robert G. Mackeigan ) PER: /s/ Phillip Read
- ------------------------ ) -----------------------
WITNESS: )
)
) GRANT THORNTON LIMITED, AS
) RECEIVER AND MANAGER OF THE PROPERTY
) AND ASSETS OF MENTOR NETWORKS INC. AND
) HIGH PERFORMANCE GROUP (CANADA) INC.
)
)
/s/ Robert G. Mackeigan ) PER: /s/ Ross Landers
- -------------------------- ) ---------------------------
WITNESS: )
) ITC LEARNING CORPORATION
)
) PER: /s/ Christopher E. Mack
) ---------------------------
/s/Christina R. Mexicotte )
- -------------------------- )
) PER: ___________________________
)
)
--------------------------------------------------
ITC CANADA LIMITED, A BODY CORPORATE
(REFERRED TO AS "ITC")
- AND -
GRANT THORNTON LIMITED, RECEIVER AND MANAGER OF
MENTOR NETWORKS INC. AND HIGH PERFORMANCE GROUP (CANADA)
INC. (REFERRED TO AS THE "RECEIVER")
- AND -
ITC LEARNING CORPORATION, A BODY CORPORATE
(REFERRED TO AS "ITC LEARNING")
----------------------------------------------------------
ROYALTY AGREEMENT
----------------------------------------------------------
ROBERT G. MACKEIGAN
COX HANSON O'REILLY MATHESON
BARRISTERS AND SOLICITORS
SUITE 1100, PURDY'S WHARF TOWER ONE
1959 UPPER WATER STREET
PO BOX 2380, STN CENTRAL RPO
HALIFAX NS B3J 3E5