Exhibit 2.3
ITC LEARNING CORPORATION
OEM LICENCE and Distribution Agreement
This OEM Licence and Distribution ("Agreement") is entered into as of 12th
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December 2000 ("Effective Date"), by and between ITC Learning Corporation
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("ITC"), a Maryland corporation having its principal place of business at
13515 Dulles Technology Drive, Herndon, Virginia 20171 and Activ Training
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Limited ("OEM"), a United Kingdom business, having its principal place of
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business at 45 Bromham Road, Bedford, MK40 2AA United Kingdom.
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The parties have entered into this agreement on the terms and conditions set
forth in the following documents:
1. TERMS AND CONDITIONS
2. EXHIBIT A: LICENCED PRODUCTS
3. EXHIBIT B: LICENCE FEE AND ROYALTIES
4. EXHIBIT C: SUBLICENCE TERMS
EACH PARTY ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT AND THAT IT AGREES TO
ALL OF THE TERMS AND CONDITIONS AS SET FORTH IN THE ABOVE NOTED DOCUMENTS.
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE DULY EXECUTED
BELOW:
ITC LEARNING CORPORATION ACTIV TRAINING LIMITED ("OEM")
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By: /s/Christopher E. Mack By: /s/Phillip G. Jones
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Authorized Signature Authorized Signature
Name: Name:
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Please Type or Print Please Type or Print
Title: President Title: Managing Director
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Please Type or Print Please Type or Print
Date: 12/12/00 Date: 12/12/00
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ITC OEM Contract Number:
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
TERMS AND CONDITIONS
DEFINITIONS
Product(s). shall mean only where the singular word "Product(s)" appears those
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which are defined below as ITC Owned Product(s), Third Party Product(s) and
Composite Product(s).
ITC Owned Product(s). shall mean ITC courseware modules (including but not
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limited to all media elements instructional design related documentation and
software programmes in object and source code format) in which ITC have
greater than 50% of any intellectual property rights.
Third Party Product(s). shall mean ITC courseware modules (including but not
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limited to all media elements instructional design related documentation and
software programmes in object and source code format) which ITC does not
itself own but are licensed or sub-licensed to it or in which ITC has 50% or
less of any intellectual property rights.
Composite Product(s). means new product(s) created by OEM by (i) incorporating
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modifications and/or additional programming code to ITC Owned Product(s) which
add substantially new or different functionality to them, and/or (ii) by
integrating those ITC Owned Product(s) with OEM's own product(s) to create a
highly differentiating offering.
Documentation. Information related to all elements of the Product.
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Object Code. The representation of Product(s) in the binary instruction code
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form suitable for execution by a computer.
Source Code. The representation of Product(s) in a relatively high-level
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software programming language and digital media assets.
End-User(s). Customers who acquire product(s) for their internal use and not
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for redistribution, remarketing, time-sharing, or service bureau use.
Sub-Distributor(s). Distributors and Resellers of the OEM who purchase and
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resell products and provide distribution and logistical resources for the
ultimate purpose purchase by End-Users.
Territory. United Kingdom, Europe (as defined by any geographical/political
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definition referring to Europe currently in operation of which shall be
extended to include those countries not presently within `Europe' but which
may become part of `Europe' during the currency of this Agreement)
Scandinavia, Ireland, Baltic Republics, the Middle East and the continent of
Africa (including any islands off shore of any of the aforementioned).
Effective Date. The date of execution hereof by both parties as specified
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above.
1. OEM AND DISTRIBUTION LICENCE GRANTED
1.1. OEM Licence. ITC hereby grants to OEM a non-transferable and non-
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exclusive restricted right to develop Composite Product(s) based on
the items licenced as described in "Exhibit A: Part 1". Rights and
ability (including the provision of Source codes or any such similar)
to modify the ITC Owned Product(s) are granted herein. OEM shall
reproduce and apply the copyright, trademark and other proprietary
notices, including any applicable third party notices on all copies
of the Composite Product(s) made by OEM. OEM hereby grants ITC an OEM
Licence on Composite Product(s) developed by OEM as shall separately
be agreed between them.
1.2. Distribution Licence. ITC hereby grants to OEM an exclusive and non-
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transferable licence during the term of this Agreement to distribute
the ITC Owned Product(s) as described in "Exhibit A: Part 1" and
Composite Product(s) in the agreed Territory. ITC grants OEM a
non-exclusive and non-transferable licence to distribute Third-Party
Product(s) as described in "Exhibit A: Part 2". OEM may, in its sole
discretion, appoint sales agents, sub-distributors, and resellers to
distribute Product(s). OEM is authorized to sublicence reproductions
of Product(s) to End-User(s) without consent, and Sub- Distributor(s)
with the prior consent of ITC which shall not be unreasonably
withheld. No distribution rights for Call Centre Product(s) for the
Temporary Staffing Services market is granted herein. Where there is
already in existence an Agreement in place between ITC, OEM and any
End-User or Sub-Distributor the prohibition for the distribution
rights for the Temporary Staffing Services Markets will not apply
(specifically in South Africa). ITC shall have a unilateral approval
authority over any new exclusive Sub-Distributor(s) Agreement that
OEM may make, such approval authority not to be
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
unreasonably withheld. OEM Sub-Distributor(s) Licence Agreement shall
include the mandatory terms provided by ITC in "Exhibit C:
Sub-Licence terms: mandatory terms for OEM's Sub-Distributor(s)
Licence Agreement".
1.3. End-User(s) Licence. OEM will grant Sublicences to End-User(s) for
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use of the Product(s). OEM End-User(s) licence shall include
End-User(s) Sublicence terms provided by ITC in "Exhibit C:
Sublicence Terms: mandatory terms for OEM's End-User(s) Licence
Agreement", save in respect of any existing End-User(s) Licence
Agreements already entered into by OEM. OEM shall make no
representations and warranties on behalf of ITC and shall not grant
any rights to End-Users beyond those contemplated by this Agreement.
Upon request, OEM will promptly provide ITC with reasonable access to
all End-User(s) agreements licensing Product(s).
1.4 Conflict. This Agreement shall apply to any existing End-User(s) and
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Sub-Distributor(s) Agreements entered into by OEM before the date of
this Agreement save where those are expressly excluded by this
Agreement. In the event of any conflict between the terms of this
Agreement and any such prior Agreements the terms of those prior
Agreements between OEM and its End-User(s) and Sub-Distributor(s)
shall prevail.
1.5 EXCLUSIVITY
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1.5.1 ITC will not appoint any third party as a competitor as
agent, distributor or otherwise for the sale and distribution
of the Product(s) for the duration of this Agreement or any
holding over or extension thereof and shall not itself make
any sale of or other such distribution or disposal of
Product(s) directly or indirectly within the Territory for
the duration of the Agreement or any holding over or
extension thereof.
1.5.2 In the event that ITC is approached by any End-User and/or
Sub-Distributor directly for the purchase, sale, delivery or
distribution of product(s), directly or indirectly to it, ITC
will refer any such End-User(s) and Sub-Distributor(s) to
OEM.
1.5.3 ITC will not grant any form of licence or distribution
agreement relating to product(s) to any third party which
will result in competition with the activities of OEM within
the Territory for the duration of the Agreement or any
holding over or extension thereof.
1.5.4 ITC will not refer or recommend any End-User or
Sub-Distributor, who has a place of business within the
Territory, to any other licencee or agent with whom it has
the same or similar Agreement as entered into with OEM,
outside the Territory so that any End-User and/or Sub-
Distributor has access to or is supplied with Product(s)
which otherwise should be supplied by OEM.
1.5.5 In the event that ITC merges with or acquires or is acquired
by any other form of legal corporation, undergoes
amalgamation, reconstruction or de-merger, is subject to any
management buy-out or form of receivership or winding-up
procedure (until actually wound up) or in the event that in
any way assigns or sub-licences its obligations and benefits
or any of them as set out in this Agreement, the exclusivity
of this Agreement shall be preserved by ITC ensuring that any
such third party shall be subject to the obligations of this
Agreement, and will, enter into a positive obligation to
perform the terms set out in this clause as to exclusivity
for the continuing benefit of OEM.
1.5.6 ITC will honour and maintain OEM exclusively in relation to
any End-User or Sub-Distributor Agreement entered into by OEM
with any End-User or Sub-Distributor and which are in
existence and operative as at the Effective Date and which
may be subject to extension or renewal during the operation
of this Agreement and that the foregoing provisions as to
exclusivity under clause 1.4 shall apply to those existing
End-User(s) or Sub Distributor(s) Agreements as if entered
into with OEM after the Effective date.
1.5.7 ITC shall be released from its obligations under the forgoing
sub clauses by giving three months written notice to OEM.
Such notice may only be given where ITC becomes a wholly
owned subsidiary of another company or merges with another
company (already formed trading and not an `associated
company' or another company in a `group' of companies with
which ITC is or shall have become already concerned by the
time such notice is given) and not being a company formed for
that purpose. In the event of such notice being given ITC
will:
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
1) Repay all royalty payments paid by OEM under this
Agreement
2) Forthwith release OEM from any obligations under this
Agreement
3) Forthwith release OEM from the Secured Promissory Note
and remove all entries related to that Secured Promissory
Note at Companies House or wherever else placed.
ITC's release from its obligations under this sub-clause
shall not apply in any event to all or any of OEM's existing
Sub-Distributor(s) Agreements (where exclusive in nature) and
existing End-User(s). For the purpose of this sub-clause
"existing" includes those End-User(s) and Sub-Distributor(s)
with whom OEM dealt prior to the date of this Agreement and
during its operation.
1.6 Limitations. All associated patents, copyrights, trade secrets and
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other proprietary rights shall remain with ITC. Title to the Third
Party Product(s) developed by third parties and all associated
patents, copyrights, trade secrets and other proprietary rights shall
remain with such third parties.
1.6 Product Availability. ITC shall use reasonable efforts to upgrade and
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update existing ITC Owned Product(s) and Third Party Product(s) and
introduce new Third Party Product(s) and ITC Owned Product(s) and to review
the need for the same regular intervals throughout the period for which
this Agreement is in operation. ITC may withdraw any ITC Owned Product(s)
and Third Party Product(s) at any time within twelve (12) months prior
notice.
1.7 Standard of Performance. OEM shall use its reasonable efforts to perform
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responsibilities described in this agreement.
1.8 Retained Rights. All rights that are not expressly granted to OEM herein
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are retained by ITC.
2. ROYALTIES, PAYMENT AND REPORTS
2.1. Royalties. For each copy of Product(s) distributed by OEM, OEM shall
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pay royalties as set out on Exhibit B. The royalties shall accrue
when the end copy is shipped by OEM to a Sub-Distributor or End-User.
2.2. Reports and Payment; Audit Rights.
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a) OEM shall provide, within 10 days after the end of each calendar
month, a report of all payments due ITC for sales of new licences and
upgrades made during the month. OEM shall also provide, within sixty
(60) days after the end of each calendar quarter, royalties due ITC
for sales made during the preceding quarter. Payment shall be
accompanied by a list of customers sold to during this royalty
period. Such list shall show each customer by name and customer
contact, including address, and telephone number. ITC agrees that it
will not directly or indirectly contact any third party appearing on
any such list unless by prior agreement with OEM.
b) OEM agrees to make and to maintain until the expiration of two (2)
years after the last payment under this Agreement is due, complete
books, records and accounts regarding OEM's copies and the Licence
Fees due ITC hereunder. ITC shall have the right not more than once
every twelve (12) months to examine such books, records and accounts
during OEM's normal business hours to verify OEM's reports on the
amount of payments made to ITC under this Agreement. If any such
examination discloses a shortfall in payment to ITC of more than five
(5%) for any quarter, OEM agrees to pay or reimburse ITC for the
reasonable expenses of the examination.
3. WARRANTY AND SUPPORT
3.1. Warranty. ITC warrants to OEM that, for a period of one (1) year from
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the shipment to OEM, the ITC Owned Product(s) and Third Party
Product(s) will conform substantially to the documentation supplied
with the ITC Owned Product(s) and Third Party Product(s). If OEM
discovers a material defect in a ITC Owned Product(s) and Third Party
Product(s) which causes such product to fail to substantially so
conform, within the warranty period, OEM will promptly notify ITC.
ITC's obligation will be, in the case of ITC Owned Product(s),
developed by ITC, for ITC to use all reasonable commercial efforts
promptly to correct such failure to conform, and, in the case of
Third Party Product(s) developed by a third party, to all use
reasonable commercial efforts to provide OEM with a corrected version
of the third party product. In the event of such failure not being
cured within sixty days or in the event of delay in rectification
beyond sixty days (both periods of sixty days being calculated from
the time/date of notification to ITC by OEM) such as to cause a
significant effect upon or delay on Gross Receipts by OEM the terms
of this Agreement and the Secured Promissory Note shall be
renegotiated between the parties. THE PROVISIONS OF THIS SECTION 3.1
SETS FORTH OEM'S SOLE REMEDY AND ITC'S SOLE LIABILITY WITH RESPECT TO
THE WARRANTY SET FORTH HEREIN, REGARDLESS OF WHETHER THIS REMEDY
FAILS OF ITS ESSENTIAL PURPOSE.
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
3.2. Disclaimer. EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTY, ITC MAKES
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AND OEM RECEIVES NO WARRANTIES ON THE PRODUCTS, EXPRESS, IMPLIED,
STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR
COMMUNICATION WITH OEM, AND ITC SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ITC
does not warrant that the operation of the Products will be
uninterrupted or error free.
3.3. Support. OEM shall offer and provide prompt and efficient first line
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support for the Products to its Sub-Distributor(s) and End-User(s),
including, without limitation, installation, training and telephone
support. OEM will maintain at least one designated
full-time-equivalent employees adequately trained and able to provide
such support services. ITC will train such employees at ITC's
facilities at no charge. ITC will provide OEM back-up telephone
support for the designated employees only during ITC's normal
business hours for answering questions regarding use and operation of
the Products and for receiving reports of errors in the Products. ITC
will supply OEM all workarounds, bug fixes and modifications to the
Products which it makes generally available to its customers. In
order to allow ITC to provide support, and as a condition of ITC's
support obligations, OEM will provide ITC two units of each
representative Composite Product free of charge within thirty (30)
days after commercial release of the Composite Product. As
maintenance, ITC shall provide, to OEM only, on an ongoing basis,
upgrades and significant updates or revisions to the ITC Owned
Product(s) and Third Party Product(s), over the Term of the
Agreement. ITC shall determine what constitutes an upgrade and a
significant update or revision.
3.4. Supplemental Support. ITC shall provide to OEM in addition to and in
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order to support its obligations otherwise set out the following:
3.4.1 All and any artwork for marketing literature/collaterals in
respect of Third Party Product(s) and ITC Owned Product(s) to
OEM within 14 days of such materials being produced for or on
behalf of ITC to enable OEM to produce customized literature
in support of its performance of its obligations under this
Agreement entered into by it with End-Users and
Sub-Distributors.
3.4.2 Two master copies of all courseware which shall be full,
complete and defect free together with any associated
literature within 14 days of such being produced and marketed
by ITC.
4. INDEMNIFICATION
4.1. ITC will defend at its expense any action brought against OEM to the
extent that it is based on a claim that the ITC Owned Product(s) and
Third Party Product(s) or any part thereof, when used within the
scope of this Agreement, infringe any copyright or infringe any
patent issued as of the Effective Date, and ITC will pay any
settlements and any costs, damages and attorneys' fees incurred by
OEM in such action which are attributable to such claim; provided,
the foregoing obligation shall be subject to OEM notifying ITC
promptly in writing of the claim, giving ITC the exclusive control of
the defense and settlement thereof, and providing all reasonable
assistance in connection therewith. ITC shall have no liability for
any claim of infringement arising out of (i) the use of other than an
unaltered release of a ITC Owned Product(s) and Third Party
(Product(s) developed by ITC, (ii) the use or combination of a ITC
Owned Product(s) and Third Party Product(s) developed by ITC with
non- ITC programs, data or equipment if such infringement was caused
by such use or combination, or (iii) OEM's continued distribution of
a ITC Owned Product(s) and Third Party Product(s) developed by ITC
after notification from ITC to cease such distribution due to ITC 's
determination that the ITC Owned Product(s) and Third Party
(Product(s) developed by ITC is or is likely to become the subject of
a claim of infringement. THE FOREGOING SETS FORTH ITC 'S ENTIRE
LIABILITY FOR ANY INFRINGEMENT BY THE PRODUCTS OR ANY PART THEREOF.
4.2. Except for warranty claims for which ITC is liable under Section 3.1
and infringement claims covered by Section 4.1, OEM agrees to
indemnify and hold ITC harmless against any cost, loss, liability, or
expense (including attorneys' fees) arising out of third party claims
against ITC as a result of OEM's negligent promotion or distribution
of the ITC Owned Product(s) and Third Party Product(s), including,
without limitation, providing unauthorized - representations or
warranties to its customers regarding the ITC Owned Product(s) and
Third Party Product(s) or breaching any term, representation or
warranty of this Agreement.
5. LIMITATION OF LIABILITY
5.1. SAVE AS OTHERWISE PROVIDED FOR ELSEWHERE IN THIS AGREEMENT IN NO
EVENT WILL ITC BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE
PRODUCTS OR SERVICES, LOST PROFITS, OR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND ON ANY
THEORY OF LIABILITY, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE
TERMINATION THEREOF, WHETHER OR NOT ITC HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
DAMAGE, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY PROVIDED IN THIS AGREEMENT.
6. CONFIDENTIALITY
6.1. OEM and ITC agree that any inventions, algorithms, know-how, ideas
and other business, technical or financial information (specifically
source codes or - other such coding or information) obtained from
each other are the confidential property of each party or its
licensors ("Confidential Information"). Except as expressly provided
herein, both parties will hold in confidence and not use or disclose
any Confidential Information, and shall similarly bind its employees
in writing. Both parties nondisclosure obligation shall continue for
three (3) years following termination of this Agreement, but shall
not apply to information that (a) is known by the receiving party or
is publicly available at the time of disclosure by the disclosing
party to the receiving party through no breach of this Agreement by
the receiving party; (b) becomes publicly available after disclosure
by the disclosing party to the receiving party through no breach of
this Agreement by the receiving party; (c) is hereafter rightfully
furnished to the receiving party by a third party without restriction
as to use or disclosure; d) is disclosed with the prior written
consent of the disclosing party; (e) is information that was
independently developed by the receiving party; or (f) is required to
be disclosed pursuant to any judicial or administrative proceeding,
provided that the receiving party immediately after receiving notice
of such action notifies the disclosing party of such action to give
the disclosing party the opportunity to seek any other legal remedies
to maintain such information in confidence.
7. TRADEMARKS
7.1. Use. During the term of this Agreement, OEM shall have the right to
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indicate to the public that it is an authorized OEM of the Product(s)
and to advertise such Products under the trademarks, marks, and trade
names that are contained on the Products (the "Trademarks"). OEM will
not, and will ensure that its distributors will not, alter or remove
any Trademark, or affix, without the written permission of ITC, any
other trademarks, marks or other logos on the products. Nothing
herein shall grant to OEM any right, title or interest in the
Trademarks. At no time during or after the term of this Agreement
shall OEM challenge or assist others to challenge the Trademarks or
the registration thereof or attempt to register any trademarks, marks
or trade names confusingly similar to the Trademarks.
7.2. Approval. All representations of the Trademarks, which OEM intends to
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use for the Product(s) and shall first be submitted to ITC for
approval (which shall not be unreasonably withheld).
8. TERM AND TERMINATION
8.1. This Agreement shall continue in force from the Effective Date hereof
and shall continue for a period of 5 years unless terminated under
the provisions of this Agreement. After the end of the 5 year period
the Agreement shall continue unless terminated by other party upon
not giving less than 12 months written notice which may not be given
to expire before the end of the 5 year period.
8.2. Termination. If either party defaults in the performance of any
provisions of this Agreement, then the non-defaulting party may give
written notice to the defaulting party that if the default is not
cured within thirty (30) days the Agreement shall be terminated. If
the non-defaulting party gives such notice and the default is not
cured during the thirty-day period, then the Agreement shall
terminate immediately without further notice. This Agreement shall
terminate automatically, without notice, (i) upon the institution by
or against OEM of insolvency, receivership or bankruptcy proceedings
or any other proceedings for the settlement of OEM's debts, (ii) upon
OEM's making an assignment for the benefit of creditors, or (iii)
upon OEM's dissolution.
8.3. Effect of Termination. Upon the termination of this Agreement the
rights and licences granted to OEM pursuant to this Agreement will
automatically cease provided that all existing sub-licences to
End-Users and Sub-Distributors will continue for their duration as
agreed with OEM and OEM shall be able to discharge their obligations
under those licences and they shall be entitled to purchase from ITC
and sell any ITC Owned Product(s) and Third Party Product(s)
necessary to fulfil those obligations. The unpaid balance of any
royalties shall become due and payable within 60 days of such
termination. Except as provided in the last sentence of this Section
8.3, all Trademarks, marks, trade names, patents, copyrights,
designs, drawings, formulae or other data, photographs, samples,
literature, and sales aids of every kind supplied by ITC shall be
returned to ITC. Within sixty (60) days after the termination of this
Agreement, OEM shall prepare all such items in its possession for
shipment, as ITC may direct, at ITC's expense. OEM shall not make or
retain any copies of any confidential items or information which may
have been entrusted to it. Effective upon the termination of this
Agreement, OEM shall cease to use the Trademarks. Provided, however,
that OEM may use the Trademarks after termination of this Agreement
to sell any Product(s) it has in inventory at that time.
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
8.4. Survival Provisions. If this Agreement is terminated for any reason,
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the provisions of Sections 2.2.b, 4.2, 5, 6, 3.2, 7, 8.4, 9.6 and
9.11 shall survive.
9. GENERAL TERMS
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9.1. ITC will continue and maintain its support of OEM in relation to any
current or future dispute, Court action or dispute resolution and in
the taking of any reasonable steps to maintain OEM's involvement in
South Africa and further that ITC will declare and state such support
when reasonably asked by OEM to do so, in particular in statements to
the effect that Infocast have no legal right either to establish
relationships with End-Users and/or Sub-Distributors or purport to
or actually act as End-Users, Distributors or Sub-Distributors or in
any way otherwise infringe OEM's rights in South Africa.
9.2. Assignment and Binding Effect. ITC and OEM agree that their rights
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and obligations under this Agreement may not be transferred or
assigned directly or indirectly without the prior written consent of
the other which shall not be unreasonably withheld. Nor shall an
assignment or transfer of this Agreement be effected by the operation
of law such as for example by merger, consolidation, sale of business
assets or by acquisition of the majority of the voting stock of
either ITC or OEM without prior written consent of the other party
which shall not be unreasonably withheld. Any attempted assignment in
violation of the provisions of this Section shall be null and void.
Subject to the foregoing this Agreement shall be binding upon and
inure to the benefit of the parties hereto, their successors and
assigns.
9.3. Notices. Notices under this Agreement shall be sufficient only if
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personally delivered, delivered by a major commercial rapid delivery
courier service, delivered by facsimile transmission, or mailed by
certified or registered mail, return receipt requested to a party at
its addresses first set forth herein or as amended by notice pursuant
to this subsection. If not received sooner, notice by mail shall be
deemed received seven (7) days after deposit.
9.4. Publicity.
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9.4.1 No press release, press statement, policy statement or
publicity material whatsoever or in whatever format shall be
disseminated or distributed howsoever directly or indirectly
relating to any or all aspects of the relationship between
OEM and ITC before, during or after this Agreement without
the prior express joint agreement of ITC and OEM.
9.4.2 Following execution of this Agreement a Policy Statement
shall jointly be produced by ITC and OEM (the precise wording
of which shall be agreed separately) which should clearly
state that OEM are the exclusive master distributor for ITC
Product(s) (in the Territory, that OEM exclusively represents
all ITC interest in the Territory and to the effect that
anyone reading the Policy Statement can have every confidence
that OEM will provide them with Product(s) service and
support in at least a professional manner as ITC themselves
would do. Such Policy Statement to be readily available to
and provided to any Third Party enquiring of ITC as to the
status of OEM.
9.4.3 Will state with prominence on their website and any
appropriate literature that OEM are the exclusive master
distributor for the Territory and such statement will have
the same prominence as ITC will by locations or at least the
same prominence given whilst the OEM was wholly owned by ITC.
9.5. Import and Export Controls. OEM and ITC will comply with all export
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laws and restrictions and regulations of the Department of Commerce
or other United States or foreign agency or authority, and not
export, or allow the export or re-export of any Product or any direct
product thereof in violation of any such restrictions, laws or
regulations.
9.6. Proper Law and Jurisdiction.
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9.6.1. This Agreement shall be governed by English law in every
particular including formation and interpretation shall be
deemed to have been made in England. 9.6.2. Any proceedings
arising out of or in connection with this Agreement may be
brought in any Court of competent jurisdiction in the United
Kingdom.
9.6.3. The submission by ITC and OEM to such jurisdiction shall not
limit the right of either part to commence any proceedings
arising out of this Agreement in any other jurisdiction that
may be considered appropriate.
9.6.4. Any notice of proceedings or other notices in connection with
or which would give effect to any such proceedings may
without prejudice to any other method of service be served on
any party in accordance with 9.2 above.
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ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
9.7. Partial Invalidity. If any provision of this Agreement is held to be
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invalid, then the remaining provisions shall nevertheless remain in
full force and effect. The parties agree to renegotiate in good faith
any term held invalid and to be bound by the mutually agreed
substitute provision.
9.8. No Agency. ITC and OEM are each independent entities and neither
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party shall be, nor represent itself to be, a franchisor, franchisee,
joint venturer, partner, master, servant, principal, agent or legal
representative of the other party for any purpose whatsoever.
9.9. No Waiver. No waiver of any term or condition of this Agreement shall
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be valid or binding on either party unless the same shall have been
mutually assented to in writing by both parties. The failure of
either party to enforce at any time any of the provisions of this
Agreement, or the failure to require at any time performance by the
other party of any of the provisions of this Agreement, shall in no
way be construed to be a present or future waiver of such provisions,
nor in any way affect the validity of either party to enforce each
and every such provision thereafter.
9.10. Force Majeure. Nonperformance by either party shall be excused to the
-------------
extent that performance is rendered impossible by strike, fire,
flood, earthquake, governmental acts or orders or restrictions,
failure of suppliers, or any other reason where failure to perform is
beyond in the control and not caused by the negligence of the
non-performing party; provided that any such nonperformance shall be
cause for termination of this Agreement by the other party if the
nonperformance continues for more than sixty (60) days.
9.11. Legal Expenses. The prevailing party in any legal action brought by
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one party against the other and arising out of this Agreement shall
be entitled, in addition to any other rights and remedies it may
have, to reimbursement for its expenses, including court costs and
reasonable attorneys' fees.
9.12. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of
which together shall constitute one instrument.
9.13. Language. This Agreement is in the English language only, which
--------
language shall be controlling in all respects, and all versions
hereof in any other language shall not be binding on the parties
hereto. All communications and notices to be made or given pursuant
to this Agreement shall be in the English language.
9.14. Entire Agreement. This Agreement sets forth the entire agreement and
----------------
understanding of the parties relating to the subject matter herein
and merges all prior discussions between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the party
to be charged.
8
ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
EXHIBIT A: LICENCED PRODUCTS
SEE ATTACHED "A"
9
ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
EXHIBIT B: LICENCE FEE AND ROYALTIES
OEM commits to minimum royalty of (British pounds)666,666.66 UK sterling which
will be paid as to
1. (British pounds)166,666.66 by way of advance royalty payment and in
consideration for the grant of this Agreement on the Effective Date and
thereafter the balance as set out below
2. On the balance (British pounds)500,000.00 throughout the five year term of
this agreement OEM shall pay 50% royalty to ITC on all Product(s) sales
until its financial obligations pursuant to the Secured Promissory Note
dated the 8th December 2000 are met in full.
Thereafter OEM shall pay for each licence of any Product and product sale
sold by OEM to its Sub-Distributors and or End-Users, OEM shall pay to ITC
30% of Gross Receipts derived from Product(s).
'Gross Receipts' shall mean all licence fee revenues received by OEM from
the licence of Product(s) at sale price less returns. It does not include
charges for shipping and handling, sales and use taxes, reimbursements for
out of pocket costs, charges for customization etc.
3. ITC agrees to provide OEM with 180 days' notice of any changes to its
published list prices and ITC will solicitor OEM input before making any
such changes.
4. ITC shall not impose on OEM any restrictions on the sale of any Product(s)
by OEM to all or any of its Sub-Distributors or End-Users, within the
Territory.
10
ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
EXHIBIT C: SUBLICENCE TERMS
MANDATORY TERMS FOR OEM'S END-USER LICENCE AGREEMENT
----------------------------------------------------
Each End User Licence shall at a minimum contain terms and conditions
substantially similar to the following:
Copyright and Licence Notice. ITC Learning Corporation. 1993-2000. All
-----------------------------
rights reserved. This software is protected by copyright law and
international treaties. Unauthorized use, reproduction, or distribution of
all or part of this software may result in civil or criminal penalties. This
software is licenced, not sold, to licencees who have agreed to the terms of
an end user licence agreement ("agreement") entered into with ITC Learning
Corporation ("ITC") that restricts use of the software to a specified number
of copies and authorized users or to a number of workstations and servers, at
specific locations, and also contains warranty disclaimers and limitations on
ITC's liability. This software is licenced for licencee's use only and not
for redistribution.
This is a legal document. Read it carefully before completing the
-------------------------
installation process and using the software. The software may only be used in
accordance with the following restrictions, which may only be modified upon
ITC's written approval. By installing and using the software, licencee is
confirming acceptance of the software and agreeing to become bound by the
terms of this document. If licencee does not wish to become so bound, do not
complete the installation process.
Licence Restrictions. Except as set forth in a written Agreement signed by
---------------------
ITC, Licencee may not:
1. Copy the Software;
2. Cause or permit reverse compilation, reverse assembly, reverse
engineering, or any other attempt to discover the human-readable form of
all or any portion of the Software;
3. Distribute, sublicence, disclose, market, rent, lease, or transfer to any
third party any portion of the Software or ITC documentation or use the
Software or such documentation in any service bureau arrangement, facility
management, or third party training;
4. Transfer the Software to a different location without prior written notice
to ITC; or 5. Export the Software.
No licence, right, or interest in any ITC trademark, trade name, or service
mark is granted hereunder.
Proprietary Rights Notice. ITC (or its third-party providers) retains title
--------------------------
to all portions of the Software and any copies thereof. Title to the physical
media only for the Software vests in Licencee upon shipment to Licencee. The
Software contains valuable proprietary information and Licencees are obligated
not to disclose the Software to anyone other than those of their employees or
ITC-authorized contractors under nondisclosure obligations who have a need to
know for purposes consistent with the terms of the Agreement.
Disclaimer of Warranty. Except as indicated in a written Agreement signed by
-----------------------
ITC, the software and any documentation are provided on an "as is" basis,
without any warranty whatsoever. ITC expressly disclaims all warranties on
behalf of itself or its suppliers, express, implied or statutory, including,
without limitation, the implied warranties of merchantability, title, non-
infringement and fitness for a particular purpose, or that the software
operation will be uninterrupted or error free.
Limitation of Liability. Except as indicated in a written Agreement signed by
------------------------
ITC, ITC shall not be liable for any special, indirect, punitive,
consequential or incidental damages (including but not limited to such damages
arising from breach of contract or warranty or from negligence or strict
liability), or for lost data or lost profits, arising out of or in connection
with this agreement, even if advised beforehand of the possibility of such
damages. In no event shall ITC's liability exceed the amount paid by licencee
to ITC for the software upon which the claim is based. The parties agree to
the allocation of liability and risk as set forth in this section.
Assignment. Licencee may not assign this Agreement without the prior written
-----------
consent of ITC, and any prohibited assignment shall be null and void. Subject
to the foregoing, this Agreement shall bind and inure to the benefit of the
parties and of their successors or assigns.
U.S. Government End Users. The Software is a "commercial" item" as that term
--------------------------
is defined at 48 C.F.R. 2.101, consisting of "commercial computer software"
and "commercial computer software documentation" as such terms are used in 48
C.F.R. 12.212. Consistent with 48 C.F.R. 212 and 48 C.F.R. 227.7202-1 through
227.7202-4, all U.S. Government End Users acquire the Software with only those
rights set forth herein.
11
ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
MANDATORY TERMS FOR OEM'S SUB-DISTRIBUTOR LICENCE AGREEMENT
-----------------------------------------------------------
Licensing Restriction. The licence agreement shall provide for (i) a
----------------------
prohibition of reproduction and modification of the Product(s)); (ii)
distribution in accordance with applicable terms and conditions hereof and as
limited to the Territory and Field of Use; and (iii) a prohibition of bundling
or combining the Product(s) with any product,
except
------
(a) for existing Sub-Distributor(s) Licence Agreements and
(b) as may be reasonably necessary to enable the Product(s) to be sold and
used in the Territory appropriate to the Sub-Distributor(s) taking into
account any local requirements demands or conditions of sale.
Flow-Down Provisions for End-User Licences. OEM shall require by written
-------------------------------------------
contracts, signed by all Resellers that the mandatory provisions for End-Users
provided above are maintained throughout the channel of distribution for
Product(s).
Audit Provision. The licence agreement shall provide for the right of OEM and
----------------
its suppliers to audit the Reseller under terms and conditions similar to the
audit provisions of this Agreement.
12
ITC LEARNING CORPORATION OEM LICENCE and Distribution Agreement
EXHIBIT C: LICENCE FEE AND ROYALTIES
1. For each licence of any Product and Composite sold by OEM, its
distributors, or agents, the OEM will pay to LICENSOR:
the percentage/per unit royalty is the greater of:
(i) thirty (30%) of Gross Receipts derived from Product(s);
(ii.a) six dollars ($6) per unit of Product(a course) distributed on
single-user annual subscription licence;
(ii.b) thirty dollars ($30) per unit of Product distributed on single-
user perpetual licence; or
(ii.c) three hundred dollars ($300) per unit of Product distributed on
an stand-alone workstation perpetual licence.
Gross Receipts shall mean all licence fee revenues received by the OEM, from
the licence of Product(s) and Composite Product(s) at sales price less
returns. It does not include other charges for shipping and handling, sales
and use taxes, reimbursements for out of pocket costs, charges for
customization, etc.
13