MASTER AGREEMENT FOR INTERNATIONAL DISTRIBUTION
BETWEEN
EDUCATIONAL TESTING SERVICE
AND
SYLVAN LEARNING SYSTEMS, INC.
FOR COMPUTER-BASED TESTING SERVICES
OUTSIDE THE UNITED STATES, CANADA AND THEIR TERRITORIES
THIS AGREEMENT, effective as of April 1, 1994, by and between
EDUCATIONAL TESTING SERVICE (ETS) , a nonprofit, nonstock corporation,
organized and existing under the Education Law of the State of New York, with
principal offices at Xxxxxxxxx, Xxx Xxxxxx 00000, and SYLVAN LEARNING SYSTEMS,
INC. (Sylvan), a Maryland business corporation, with its headquarters at 0000
Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000.
WITNESSETH:
WHEREAS, ETS has developed, and is continuing to develop,
computer-based versions of various tests and exams which are designed to be
administered on local area network-based personal computers;
WHEREAS, ETS has also developed a proprietary ETS Computer-Based
Testing System, a set of computer software that permits the administration of
computer-based versions of tests on local area network-based PCs;
WHEREAS, under the terms of an agreement effective as of September 1,
1993, between ETS and SYLVAN, Sylvan has been Providing computer-based test
administration and related services for various ETS testing, programs,
utilizing Sylvan's network of Sylvan Technology centers in the United States,
Canada and their territories; and
WHEREAS, ETS and SYLVAN wish to establish a long-term contractual
basis for creating a network of test centers capable of providing secure
computer- based test administrations outside the United States, Canada and their
territories, in countries to be designated by ETS;
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
*Portions of this exhibit has been omitted based upon a request for confidential
treatment.
NOW, THEREFORE, ETS and Sylvan agree to the following:
1.0 GENERAL:
The objective of this Agreement is to serve as a master agreement for
the establishment by Sylvan of a network of secure testing centers
outside of the United States, Canada and their territories in
countries to be designated by ETS, which will provide the highest
quality testing and related services which are both easily accessible
to and economical for the Examinees to utilize.
The Sylvan services to be provided under this Agreement will normally
include but are not necessarily limited to: establishment of a
network of testing centers in locations selected by ETS in various
countries outside the United States, Canada, and their territories,
throughout the world, scheduling of tests, registration of
examinees, receipt of payments, computer-based test administration,
and local score reporting.
ETS services to Sylvan may include but are not necessarily limited
to: test development, conversion of paper-based tests into
computer-based tests, licensing of certain ETS developed software
systems and loaning to Sylvan certain software and ETS owned
equipment.
To accomplish this objective, Sylvan will form a wholly-owned
subsidiary or subsidiaries, will provide the subsidiary(s) with
sufficient capital to establish and operate the international network
of test centers and will provide the subsidiary(s), at Sylvan's
actual cost, various administrative services necessary to establish
and operate this network. ETS will not bear any of the direct costs
associated with the establishment of this network. The parties agree
that due to the dynamic nature of technology-based testing, it may be
necessary from time to time to update and revise this Agreement.
ETS and Sylvan shall cooperate in the development and implementation
of plans for the warehousing, distribution, installation, and
operation of accommodative equipment and software at the testing
centers, and to accommodate examinees with disabilities who need
special testing. Therefore in keeping with this spirit and intent,
Sylvan shall use its best efforts to see that examinees with
disabilities in any country covered by this Agreement, will be tested
in testing centers that conform as closely as is possible to the
United States Americans With Disabilities Act's requirements.
-2-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
The parties recognize that close cooperation between them will be
critical to the successful establishment of an international network
of testing centers in accordance with the standards required by ETS
for test administration. Accordingly, the parties agree to establish
the Strategic Development Committee and to use their best efforts to
accomplish the objectives of this Agreement and to meet the deadlines
contained in the schedules that will be developed and agreed to
hereunder, from time to time.
The parties acknowledge that due to existing contractual agreements
between ETS and its foreign agents who administer ETS paper and
pencil tests in the countries covered by this Agreement, it may be
necessary to phase-in the computer-based versions of these ETS tests
on a country-by-country and/or test-by-test basis, as these
individual existing contractual agreements expire, or are amended.
2.0 DEFINITIONS:
For purposes of this Agreement, the following terms shall have the
meaning indicated below:
2.1 Certain Portions of the ETS Computer-Based Testing System:
The object code (but not the source code) for the following
sub-systems of the ETS proprietary open system architecture
computer-based testing system: the Test Delivery Application System,
the Test Administrative System, and the Network Management Control
System. Among other things, the open systems architecture permits
the administration of computer-based versions of tests on local area
network based personal computers.
2.2 Technologies and Materials:
2.2.1 ETS owned Technologies and Materials:
*
-3-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
*Text omitted based upon request for confidential treatment.
System Functions, which include all of
the following:
*
Administrative Functions, which include
all of the following:
*
Station Service Functions, which include
all of the following:
*
All OSA Test Delivery software and
Program Specific Software and Data.
2.2.2 Sylvan Owned Technologies and Materials:
*
-4-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
*Text omitted based upon request for confidential treatment.
System Functions, which include all of
the following:
*
Administrative Functions, which include
all of the following:
*
Station Service Functions, which include
all of the following:
*
All Sylvan Test Delivery software and
Program Specific data.
2.3 ETS Proprietary and Confidential Information:
All of, but not limited to, the following:
Certain Portions of the ETS Computer-Based Testing System for
test administration and delivery, the test databases and
scripts and all individual test questions, all data collected
from Examinees, all Examinee test scores and the identities
of the Examinees, the Manual, internal ETS procedures for
the secure administration of computer-based tests and any
other information identified by ETS to Sylvan as
confidential.
2.4 ETS Scheduling Algorithm:
An ETS proprietary scheduling algorithm which maximizes
scheduling at Test Centers by estimating work station
availability based on a variety of parameters.
2.5 ETS Client:
Any third party or entity for whom ETS provides tests, such
as but not limited to:
2.5.1 APICS:
The computer-based versions of the American
Production and Inventory Control Society test.
-5-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
*Text omitted based upon request for confidential treatment.
2.5.2 GRE(R):
The computer-based versions of the Graduate Record
Examinations.
2.5.3 TOEFL(R):
The computer-based versions of the Test of English as
a Foreign Language.
2.6 ETS Tests:
All computer-based versions of a test (including reviews by
Examinees of their previously taken tests), which Sylvan is
authorized by ETS to deliver or administer on behalf of ETS at
a Test Center under this Agreement, including but not limited
to the GRE, TOEFL and APICS computer-based tests.
2.7 Non-ETS Tests
All computer-based versions of tests that Sylvan delivers or
administers other than ETS Tests.
2.8 Examinee:
Any individual who receives or takes any test or is scheduled
to take an ETS Test at a Test Center, or who reviews his or
her previously taken ETS Test, if such review is permitted by
ETS.
2.9 Strategic Development Committee:
The committee established pursuant to Section 4 of this
Agreement.
2.10 LAN:
A local area network made up of PCs.
2.11 Manual:
The most current ETS approved version of the ETS Computer-
Based Test Center Administrator's Manual, based on the
recommendations from the Strategic Development Committee from
time to time as necessary for use in Test Centers located
outside the United States, Canada and their territories.
-6-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
2.12 Master Agreement for U.S.-Canada Distribution
The Agreement entered into by and between ETS and Sylvan
effective as of September 1, 1993, as subsequently amended,
providing for Sylvan's administration of various ETS testing
programs utilizing Sylvan's network of Sylvan Technology Center
in the United States, Canada, and their territories.
2.13 Permitted Costs: The costs defined in Section 7.4.
2.14 PCs:
Personal computer(s).
2.15 Sylvan:
The parent organization, any controlled subsidiary,
affiliated organization, successor organization, or assignee,
in whole or in part.
2.16 Sylvan Registration Center ("SRC"):
The centralized reservation processing system operated and
staffed by Sylvan for scheduling prospective Examinees and the
collection, maintenance and storage of all confidential
relevant data regarding the delivery of services as directed by
ETS under this Agreement.
2.17 Test Center:
A Sylvan designated testing facility approved by ETS, located
outside the United States, Canada or their territories,
operated by Sylvan and used for ETS Tests.
2.18 Test Hour
Each hour scheduled for administering a test at a Test Center.
The Strategic Development Committee shall determine standard
Test Hours for all ETS Tests. The standard Test Hours for all
Non-ETS Tests administered by Sylvan shall be determined by the
particular non-ETS client and reviewed by the Strategic
Development Committee.
-7-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
3.0 TERM AND RENEWAL:
Unless earlier terminated as provided for herein, this Agreement
shall commence on the effective date and shall expire on December 31,
2003. This Agreement will renew automatically for an unlimited number
of consecutive, additional three (3) year renewal periods on the
first day of January of 2004 (and on the anniversary of said date every
three years thereafter), unless either ETS or Sylvan provides notice at
least two (2) years before the expiration date of the initial or
renewal term that this Agreement will not be renewed.
Notwithstanding the above, in the event that the Master Agreement for
U.S.-Canada Distribution is either terminated or not renewed, ETS at
its sole option may terminate this Agreement at any time following
such termination or non-renewal and prior to December 31, 2003, upon
providing 30 days written notice to Sylvan.
4.0 THE STRATEGIC DEVELOPMENT COMMITTEE
4.1 As soon as practical, the parties shall establish the
Strategic Development Committee, consisting of
representatives of each of ETS and Sylvan. The principal role
of Sylvan's representatives on the Strategic Development
Committee is to advise ETS in determining and revising from
time to time the proposed specifics of the network of Test
Centers to be established and operated by Sylvan. ETS and
Sylvan shall each appoint their own representatives to the
Committee and from time to time may appoint replacements or
additional representatives; provided that at all times, a
majority of the members of the Strategic Development
Committee shall be representatives of ETS. Each
representative shall be a full-time employee of the party
appointing that representative.
4.2 In accordance with ETS's directives, the Strategic
Development Committee shall be responsible for establishing
and revising from time to time as necessary the specifics of
the international network of Test Centers to be created
under this Agreement, including without limitation such
matters as:
a. countries and cities where Test Centers will be
located, Test Center facilities requirements, and
approval criteria for Test Centers operated by
subcontractors or agents to Sylvan;
-8-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
b. days and hours of operation of individual Test
Centers;
C. whether an individual Test Center will be permanent or
temporary, the size thereof and the number of testing
terminals therein;
d. whether to provide for local registration of
Examinees;
e. whether to establish one or more centralized
registration centers (similar to the SRC) , whether to
use a toll-free telephone registration methodology;
f. the transmission of: data, Examinee fees, and forms
back to ETS;
g. which tests will be offered at individual Test Centers
and the expected volumes of those tests to be
administered at those Test Centers; and
h. operating procedures for the Test Centers and ETS
approved revisions to the Manual as necessary for use
in Test Centers located outside the United States,
Canada and their territories.
4.3 The Strategic Development Committee shall prepare a written
report no less frequently than annually describing the
specifics of the international network of Test Centers and
recommending objectives for the establishment and operation of
such network. The first such report shall cover specifics for
the calendar years 1994, 1995 and 1996. The written report
shall also specify how the objectives are to be accomplished.
ETS has the discretion to either accept the report as submitted
by the Strategic Development Committee or make changes as it
deems appropriate.
It is intended that the Strategic Development Committee will
prepare this written report at least annually, so that there
will always be a written report covering the next calendar year
plus the two subsequent years. As an example, the second
written report would cover the calendar years of 1995, 1996 and
1997.
All cost estimates shall be constructed based upon generally
accepted accounting principles. Planned expenditures for
capital equipment shall be capitalized using mutually agreed
upon depreciation methods and schedules.
-9-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
4.4 After ETS has approved the written report describing the
specifics of the international network of Test Centers and
each time thereafter that there is an ETS approved revision of
such report, Sylvan shall prepare an estimate of the cost of
implementing the matters described in such initial report or
revision. This estimate shall present costs in as much detail
as possible. Each such cost estimate shall be submitted to the
Strategic Development Committee which shall review the same
(utilizing outside consultants if necessary) in order to verify
to the extent possible the legitimacy of such cost estimate.
Once the Strategic Development Committee has so verified such
cost estimate, the cost estimate shall be submitted to ETS. ETS
then may authorize Sylvan to commence implementation of the
matters to which such cost estimate relates. If ETS instead
determines that the cost of implementation is not
appropriate, given ETS's objectives, it may revise the
previously approved report to which the cost estimate relates,
and Sylvan then shall revise its cost estimate as appropriate
for such revisions made by ETS and shall submit such revised
cost estimate to ETS for its approval. Notwithstanding the
above, in the event that ETS is able to obtain a particular
requirement at a cost lower than that estimated by Sylvan, ETS
shall provide Sylvan the opportunity to match that lower cost.
If Sylvan does not do so, ETS reserves the right to contract
with a third party(s) to provide that particular requirement
and Sylvan agrees to work with any such third party selected by
ETS.
4.5 Once final approval by ETS of a cost estimate has been
obtained, Sylvan shall proceed to implement matters covered by
such estimate. Sylvan shall provide ETS with a report of
expenses to date no less than once each quarter.
If at any time Sylvan has reason to believe that the funds
remaining in the ETS approved cost estimate are not sufficient
to allow Sylvan to complete the remaining work based upon the
ETS approved objectives, Sylvan shall immediately inform ETS in
writing and provide ETS with a revised cost estimate containing
Sylvan's estimate of the cost to complete the remaining work.
Sylvan shall not expend funds in excess of the ETS approved
cost estimate for such matters without the prior approval of
ETS, and until such approval is obtained, Sylvan may suspend
implementation, and such
-10-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
suspension shall not constitute a default of its obligations
under this Agreement.
4.6 The parties recognize that the key to the success of the
establishment of the network of international Test Centers is
cooperation at the Strategic Development Committee level, the
ETS approval level, and the Sylvan cost estimation and
implementation level. The parties, therefore, shall seek ways
to minimize the formality of the processes described above in
this Section 4 and to work together in good faith to identify
problems and to solve them as expeditiously as possible so that
the network of international Test Centers can be established as
quickly as possible and operate in an efficient and effective
manner. Sylvan or the Strategic Development Committee may
recommend deviations and exceptions from the requirements of
this Agreement and the Manual where appropriate or justified to
achieve the aforesaid objectives, which deviations and
exceptions ETS may or may not approve and allow on a case-by-
case basis.
5.0 SYLVAN'S RESPONSIBILITIES
5.1 Sylvan Facilities.
At each Test Center, Sylvan will provide a testing room
convenient for access by the Examinees and suitable for secure
testing purposes, meeting the specifications established from
time to time by the Strategic Development Committee and
approved by ETS, and will appropriately equip the room with
Sylvan equipment and software (and install and maintain
software provided by ETS).
The parties acknowledge that Test Centers may be located within
facilities operated by third parties (such as Novell) that
provide computer-based training and/or testing and
certification. Notwithstanding the above, Sylvan shall be
responsible to ETS for the operation of each Test Center,
regardless of who operates the Test Center. Whenever a Test
Center is to be operated by a subcontractor or agent of Sylvan,
the contract governing such operation shall incorporate and
apply the principal clauses contained in this Agreement where
applicable, and shall be subject to ETS's review and approval.
Where permitted by Sylvan's SMARTS(R) client (which permission
Sylvan shall use its reasonable best efforts to obtain), Sylvan
shall allow Examinees access to its
-11-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
International Smarts Centers and the associated technological
infrastructure.
5.2 Sylvan Equipment and Software
Sylvan agrees to assume responsibility for obtaining and paying
for PCs and software licenses (including but not limited to MS
Windows and Novell Operating System) and for maintenance of
such PCs and software in good working order for the duration of
this Agreement, and to assume the risk of loss for such PCs and
software, except where ETS has waived the requirement that
Sylvan obtain insurance covering the PCs and software and has
approved the quantity and cost of the PCs and software to be
installed, in which event, ETS shall be responsible for
one-third of the cost resulting from such loss. PCs and
software will remain the property of Sylvan or its lessor(s)
and licensor(s) .
Excent where deviations are permitted by ETS, all Test Center
LAN systems shall be consistent and in compliance with the
specifications recommended from time to time by the Strategic
Development Committee and approved by ETS.
Except for maintenance, repairs and corrections for software
defects, Sylvan will notify ETS at least thirty (30) days in
advance of any proposed changes, additions, or deletions to
Sylvan equipment and software, and Sylvan will obtain ETS's
approval before implementing any such changes, additions, or
deletions, to Sylvan Equipment and Software. Such approval
shall not be unreasonably withheld.
Sylvan agrees to operate an ETS owned software security
mechanism (which is a part of the Test Administration
System/Kernel and the Test Delivery Application System) which
will be used to monitor and maintain the security of all ETS
Tests, test items and the ETS Application System software
installed on Sylvan's LAN-based PCs. ETS reserves the right to
review and approve the software security mechanism to be used
by Sylvan at any time.
-12-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
5.3 Test Center Certification
Sylvan agrees that each new and/or relocated Test Center will
be required to complete a facilities review, staff training and
software certification as part of a Test Center authorization
process prior to the delivery of ETS Tests and at other times
when significant software or operational changes occur.
Sylvan shall correct any condition where in ETS's opinion,
either security or operating procedures have not been correctly
established or maintained. At ETS's request, Sylvan agrees to
initiate immediately progressive disciplinary action with any
Test Center to correct a condition. In the event that any such
condition is not corrected by Sylvan within twenty-five (25)
days after Sylvan receives ETS's written notice of need for
remedial action, ETS reserves the right where, in ETS's sole
opinion, the severity of the condition so warrants, at the
express written direction or approval of an ETS Executive Vice
President or ETS's President, to terminate immediately the Test
Center's authorization to deliver ETS Tests, upon the delivery
of written notice of termination to Sylvan.
5.4 Maintaining Market Capacity
5.4.1 If a Test Center ceases operating or loses its
authorization to administer Tests, or if a Test
Center, which Sylvan represented in writing to ETS as
a Test Center to be opened, does in fact not open, for
whatever reason, by the time requested by ETS, Sylvan
will open and establish an alternative Test Center
within fifty (50) miles (81 km) of the represented
Test Center location within forty-five (45) days
following the closing or represented opening date.
However, if a Test Center serving a market or area
ceases operating or loses its authorization to
administer Tests, and that market is also served by
another Test Center located within fifty (50) miles
(81 km) of the Test Center that ceased operations,
Sylvan shall be required to open and establish an
alternative Test Center only if the market is then
dete rmined by ETS to be under served after the
closing of the Test Center.
-13-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
Notwithstanding the above, Sylvan agrees that if the closed
Test Center was specifically designated as one that was
requested by an ETS Client, Sylvan shall immediately open a
replacement Test Center, as near to the location of the closed
Test Center, as is possible.
5.4.2 If an Examinee has paid a surcharge to take a Test in a market
or area served by a Test Center and is unable to do so due to
lack of adequate Sylvan capacity under the circumstances
described in Section 5.4.1, and ETS must refund such surcharge
to the Examinee, Sylvan shall be liable for and shall reimburse
ETS for all of such surcharges refunded.
5.4.3 If Sylvan fails to comply with any of the requirements
contained in Section 5.4, ETS shall then be free to procure the
needed capacity itself or through other parties.
5.5 Training, Staffing and Support
Sylvan will provide all training to ETS approved standards for Test
Centers' staff, as well as assure that the correct administrative
procedures and schedules are followed. Sylvan will communicate at least
quarterly in writing to the Strategic Development Committee and ETS
about progress and problems during the course of this Agreement,
including but not limited to the status of Test Center operations,
completed training and retraining activities, disciplinary actions with
Test Centers and the resulting Test Center's actions.
Sylvan will provide all staff required to administer the tests in
strict accordance with the procedures detailed in the most current
Strategic Development Committee report approved by ETS, including
procedures to operate the test administration and delivery software, to
complete security identification of all Examinees, to operate the Test
Center while maintaining appropriate system and test security, to
secure Examinees responses to appropriate ancillary questionnaires, and
to return all proprietary and confidential materials to ETS.
-14-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
5.6 Scheduling, Collection of Test Fees and Administration
Sylvan will use the ETS Scheduing Algorithm, based upon existing
parameters, or future parameters to be mutually agreed upon, to
schedule appointments for testing, and in accordance with ETS
procedures, administer ETS Tests to Examinees who have either
preregistered with ETS or completed the proper registration procedure
(including payment of the proper registration fees payable to ETS).
Examinees taking ETS Tests will be given priority in scheduling of
tests over Examinees taking non-ETS tests. On a test by test basis, ETS
may direct that Examinees taking ETS Tests be allowed to view their
score on-screen upon their completion of the ETS Test.
Sylvan and its Test Centers will use their best efforts to schedule all
Examinees taking ETS Tests so that the administration of their Tests
fail within the Test Center's regular operating hours.
ETS, in consultation with the Strategic Development Committee, shall
determine the form in which fees for ETS Tests shall be paid at each
Test Center and the manner in which they shall be collected. Sylvan
shall comply with all such procedures established by ETS and the
Strategic Development Committee and its compliance shall be subject to
audit pursuant to Section 10.2. As long as Sylvan shall comply with the
procedures for conversion and transmission of testing fees, all risk of
loss (and gains arising) from fluctuations in currency conversion
rates/deviation shall be borne by and inure to the benefit of ETS.
5.7 Contract Compliance
Sylvan will comply with all contractual obligations ETS has to ETS
Clients with respect to ETS Tests delivered to Examinees at Test
Centers, and such contractual obligations (including those hereinafter
incurred) are incorporated herein by reference for all purposes.
Sylvan agrees to follow the ETS approved directives of the Strategic
Development Committee.
6.0 COVENANTS
6.1 ETS's Covenants
6.1.1 As long as no notice of termination or notice of non-renewal
has been given by either party
-15-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
hereunder, ETS agrees that Sylvan will be the exclusive
provider of computerized commercial testing capacity to ETS for
all secure ETS testing programs outside the United States,
Canada and their territories. If either party shall have given
notice of termination or notice of non-renewal, as provided
elsewhere herein, ETS shall be free to establish or contract
with third parties to establish Test Centers anywhere without
restriction.
Notwithstanding anything in this Agreement to the contrary and
regardless of the fact that neither party has given notice of
termination or notice of non-renewal, Sylvan understands and
agrees that ETS may procure needed services and/or capacity
itself or through other parties pursuant to subsections 4.4 and
5.4.3 and Sylvan agrees to coordinate its efforts with ETS and
another party selected by ETS.
6.2 Sylvan's Covenants
6.2.1. Security:
Sylvan shall subject all ETS Tests to security procedures that
ensure that Examinees have access to the ETS Tests only during
testing, and that neither an ETS Test nor any part of it shall
be disclosed or made available to any person who is not subject
to confidentiality and nondisclosure obligations regarding
same.
6.2.2. Sylvan's Covenant Not to Compete:
Sylvan covenants and agrees that during the term of this
Agreement and, if this Agreement is terminated in accordance
with the provisions of Section 14 or not renewed in accordance
with Section 3, for a period of two (2) years after termination
or expiration of this Agreement, it will not engage as an
owner, operator, joint venturer or in any other capacity in a
business (i) offering computer-based testing services or
facilities to any entity, person, company or organization that
is or has been at any time during the term of this Agreement an
ETS
-16-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
Client, or (ii) offering a test or tests that are in direct
competition with any tests offered by ETS or an ETS Client.
Sylvan acknowledges that ETS's remedy at law for Sylvan's
breach of this Section 6.2.2 would be inadequate and that,
accordingly, in such event, ETS shall be entitled to immediate
injunctive relief to enforce the terms of this Section.
Sylvan agrees that within five months from the date of this
Agreement and at all times thereafter, Sylvan will require that
all of its officers and employees who are participants in any
stock option plan maintained by Sylvan, execute a non-compete
agreement containing a covenant that prohibits the employee,
during the term of his or her employment and for a period of
two (2) years after termination of employment, from engaging
in, as an owner, employee, operator or in any other capacity, a
business (i) offering computer-based testing services or
facilities to any entity, person, company or organization that
is or has been at any time during the term of employment an ETS
Client; (ii) offering a test or tests that are in direct
competition with any tests offered by ETS or an ETS Client.
Further, Sylvan agrees that effective upon execution of this
Agreement, Sylvan will require that (i) all persons who
subsequently become officers and employees who are participants
in any stock option plan maintained by Sylvan and (ii) Xxxxx
Xxxxx-Xxxxx and Xxxxxxx Xxxxxx, shall execute an agreement that
prohibits the employee, during the term of his or her
employment and for a period of two (2) years after termination
of employment, from offering coaching (as described in Section
15) with respect to any ETS Test being administered at a test
center under this Agreement. Further, the non-compete agreement
will contain a provision deeming ETS to be a third-party
beneficiary of such agreement, and entitling ETS to such rights
and remedies of enforcement as are available at law or in
equity, including injunctive relief.
-17-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
6.2.3. Force Majeure:
If, as a result of an occurrence not occasioned by the
conduct of either party hereto, such as an act of God,
act or failure to act by a third party, weather, riot,
civil commotion, war, intervention of public
authorities, work stoppage, interruption of utility
service, or any other comparable event (an
"Extraordinary Event") , a party is temporarily unable
to perform, in whole or in part, any of that party's
obligations under this Agreement, that party's
obligation to perform shall be correspondingly
suspended or delayed, as the case may be, so long as
the Extraordinary Event shall exist. Within
seventy-two (72) hours after the Extraordinary Event
no longer exists, the affected party shall submit a
plan to the other party describing how performance
will be restored or achieved. Within forty-eight (48)
hours of receipt of the plan, the other party shall
respond with any objections it may have to such plan
and thereafter the parties shall attempt to negotiate
in good faith any appropriate changes to the plan.
6.2.4. Sylvan's Key Personnel
No replacement of the key personnel in their
capacities listed below shall be made without prior
written notice to ETS. Sylvan shall notify ETS in
writing reasonably in advance of the proposed
replacement and shall submit justification for the
proposed replacement in sufficient detail to permit
evaluation of the impact on Sylvan's responsibilities
hereunder.
Name Title
Xxxxx Xxxxx-Xxxxx Chairman and Chief
Executive Officer
Xxxxxxx Xxxxxx President
-18-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
6.3 Capabilities of the Parties
Neither Sylvan nor ETS will develop capabilities
provided by the other without first informing and
consulting with the party providing the services that
would be duplicated. Each party will use their best
efforts to periodically inform the other party of
discussions or contacts with potential clients who
might utilize the services of the other party.
7.0 CAPITAL, FEES, COMPENSATION, TAXES AND REIMBURSEMENT
Sylvan agrees to secure and provide whatever capital is
required for establishing and maintaining the Test Centers.
All monetary amounts (whether stated in this Section or
elsewhere in this Agreement), prices, and payments are in
United States dollars, unless otherwise specifically stated.
For the services to be provided hereunder by Sylvan, ETS agrees
to pay Sylvan in the following manner:
7.1 Cost Plus Compensation
The parties agree that Sylvan's compensation under
this Agreement shall equal the sum of 1) Sylvan's
Permitted Costs (as defined in Section 7.4) plus an
amount equal to 10% of such Permitted Costs, and 2)
ETS's share of Sylvan's Cost of Capital (as defined
in Section 7.5) which shall be payable as hereinafter
described.
7.2 Payments During First Four Years
Upon approval by ETS of the report of the Strategic
Development Committee covering establishment and
administration of the international network of Test
Centers during calendar 1994, 1995, 1996, and 1997,
and approval by ETS of Sylvan's estimates of
Permitted Costs and Cost of Capital for such four
year period, the parties shall calculate a "Test Hour
Fee." The Test Hour Fee shall be determined by
dividing (i) the sum of Sylvan's estimates, as
approved by ETS, of the amount of its Permitted Costs
for such four-year period plus 10% of such Permitted
Costs plus its Cost of Capital by (ii) the total
number of Test Hours that ETS estimates will be used
to administer ETS tests during the four-year period.
No less often than annually during 1994, 1995, 1996
and 1997, the parties shall recalculate the Test Hour
Fee by revising the volumes of tests, hours required
per test, or costs used in the
-19-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
calculation pursuant to the procedures set forth in Section 4
of this Agreement.
Sylvan shall submit invoices to ETS within 30 days after the
end of each calendar quarter, commencing with the quarter in
which the first ETS Test is administered in a Test Center. Such
invoices shall itemize the number of Test Hours by ETS testing
program, by Test Center and by administration dates. ETS
shall pay each such invoice within 30 days after receipt.
Sylvan shall provide ETS quarterly reports itemizing its actual
Permitted Costs and Cost of Capital during the four-year
period. As soon as practical after December 31, 1997, Sylvan
shall prepare a final report detailing its actual Permitted
Costs and its Cost of Capital for the years 1994, 1995, 1996
and 1997, and the actual number of Test Hours used in
administering ETS Tests in Test Centers during the four-year
period. Using this report, Sylvan shall determine whether its
actual Permitted Costs plus 10% of such Permitted Costs plus
its Cost of Capital for the four-year period exceed or are less
than the aggregate amount previously paid to Sylvan by ETS
pursuant to the procedures outlined above in this Section 7.2.
If there is such an excess, Sylvan shall submit an invoice to
ETS in the amount of the excess, which shall be paid by ETS
within 30 days after receipt. If Sylvan has been overpaid by
ETS, Sylvan shall repay such overpayment amount to ETS no later
than March 31, 1998.
7.3 Payments During Remainder of Agreement
For all years beginning on or after January 1, 1998, based on
annual cost estimates approved by ETS, ETS shall pay Sylvan for
Sylvan's actual Permitted Costs plus 10% of such Permitted Cost
plus its Cost of Capital. Sylvan shall.calculate these costs on
a calendar quarterly basis and submit an itemized invoice to
ETS therefor within 30 DAYS AFTER THE END OF EACH calendar
quarter. ETS shall pay each such invoice within 30 days of
receipt. Sylvan will prepare an annual reconciliation of Pe =
itted Costs and Cost of Capital within 45 days after the end of
the calendar year and the appropriate party will pay the other
to the extent of any over payments or under payments within 30
days after receiving such reconciliation.
-20-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
7.4 Definition of Sylvan's Permitted Costs.
Permitted Costs for purposes of this section 7 shall include
the following:
7.4.1 All costs incurred by Sylvan that are directly
attributable to the provision of services to ETS or a
particular ETS Client and that would not have been
incurred but for the provision of such services
("Nonallocable Costs").
7.4.2 ETS's share of all costs (other than Nonallocable
Costs) incurred by Sylvan in establishing and
operating the Test Centers ("Allocable Costs"),
including but not limited to rents, salaries and
benefits of employees assigned to the Test Centers,
compensation paid to any third parties/agents or
operators of test Centers, insurance, duties,
utilities, supplies, depreciation and amortization of
capitalized items and expenditures for non-capital
items, taxes that are classified under generally
accepted accounting principles as business expenses,
but specifically excluding (i) taxes that are not
classified as business expenses under generally
accepted accounting principles (such as but not
limited to income and sales/services taxes) and (ii)
Sylvan's share of any uninsured losses incurred by
Sylvan under Section 5.2. Allocable Costs shall also
include the cost of services (such as data services,
technical systems, scheduling, training and
accounting) provided to the Test Centers by Sylvan.
Allocable costs shall not include the capital invested
or advanced by Sylvan to establish or operate Test
Centers, those amounts, as adjusted, being taken into
account under the calculation of Sylvan's Cost of
Capital under Section 7.5. ETS's share of Allocable
Costs for a particular period shall be determined by
multiplying the Allocable Costs for the period by the
percentage derived from dividing the number of Test
Hours used to administer ETS Tests during the period
by the number of Test Hours used to administer all
tests during the period.
-21-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
7.4.3 The cost of services provided by Sylvan shall be the
actual cost of such services, but shall include an
appropriate allocation of Sylvan's general and
administrative expense, as approved by ETS. Costs
incurred by Sylvan in providing access to its
International Smarts Centers and the associated
technical infrastructure will not be taken into
account in determining Sylvan's costs for purposes
of this Section 7. If ETS provides services in
connection with the delivery of ETS Tests, ETS shall
not be reimbursed for the cost of such services. If
ETS provides services in connection with the
delivery of tests for testing clients other than ETS
Clients, ETS shall be reimbursed for the actual cost
of such services, plus 10 percent. Services provided
by ETS, whether with or without charge to Sylvan,
shall not be taken into account in determining
Allocable Costs or Nonallocable Costs.
7.5 Definition of Cost of Capital
Sylvan's Cost of Capital shall be deemed to be Citibank's prime
rate of interest, as in effect on the first day of each
calendar quarter and computed on a quarterly basis, times the
average outstanding balance of Sylvan's Capital Account during
the calendar quarter (which average shall be calculated by
dividing by three the sum of the month-end Capital Account
balances for each of the months in the quarter), divided by
four. Sylvan's Capital Account shall be the amounts advanced
from time to time by Sylvan (in the form of equity or loans)
to establish, equip and operate the Test Centers, and shall be
decreased by any and all cost. reimbursement payments made by
ETS under Sections 7.2 and 7.3. Any single addition to Sylvan's
Capital Account in excess of $50,000 must be approved by ETS.
ETS's share of Sylvan's Cost of Capital for the particular
period shall be determined by multiplying Sylvan's Costs of
Capital for the period by the percentage derived from dividing
the number of Test Hours used to administer ETS Tests during
the period by the number of Test Hours used to administer all
tests during the period. For purposes of this Section 7,
Sylvan's Capital Account shall include only that capital
invested or advanced by Sylvan that is properly allocable to
the establishment or operation of Test Centers administering
ETS tests, and only such amounts as are then dedicated for
those purposes.
-22-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
7.6 No costs shall be taken into account more than once for
purposes of this Section 7.
7.7 All costs taken into account for purposes of this Section 7
shall be determined in accordance with generally accepted
accounting principles.
7.8 Notwithstanding anything in this Agreement to the contrary,
Sylvan agrees that Sylvan shall be solely responsible for
collecting, paying, and filing for any and all taxes, such as
but not limited to sales taxes, value added taxes, and income
taxes, incurred by Sylvan under this Agreement.
7.9 All costs, terms, and benefits granted by Sylvan herein are
comparable to or better than the equivalent terms being offered
by Sylvan to any present customer. If Sylvan shall, during the
term of this Agreement, enter into arrangements with any other
customer providing greater benefits or more favorable terms,
this Agreement shall thereupon be deemed amended to provide the
same to ETS.
8.0 OWNERSHIP
8.1 Sylvan acknowledges and agrees that ETS holds all proprietary
rights, including, but not limited to, copyright, trade secret,
and patent in the ETS OWNED Technologies and Materials, which
will be provided to and/or used by Sylvan to perform its
responsibilities under this Agreement. ETS Owned Technologies
and Materials shall include any hardware or software that
Sylvan utilizes which is supplied by ETS.
8.2 Sylvan acknowledges that, except for the right to use the ETS
Owned Technologies and Materials, in accordance with the terms
of this Agreement, no proprietary rights in the ETS Owned
Technologies and Materials are granted to Sylvan pursuant to
this Agreement. Neither Sylvan nor any third party who obtains
access to the ETS owned Technologies and Materials shall (i)
reproduce, distribute, disclose or create derivative works
based upon the ETS Owned Technologies & Materials or (ii)
reverse-engineer, decompile, disassemble or in any way
attempt to create source code from Certain Portions of the ETS
Computer-Based Testing System. Sylvan shall assume full
responsibility and liability for any acts taken by a third
party in violation of this Section.
8.3 Sylvan shall not make any changes or modifications in the
ETS-Owned Technologies and Materials without the
-23-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
prior written consent of ETS. In the event Sylvan makes any
such changes or modifications, whether authorized or
unauthorized, all title and ownership rights to such
modifications or enhancements shall vest in ETS.
ETS may make such changes or modifications to the ETS-Owned
Technologies and Materials as, in its sole discretion, it deems
appropriate. ETS is under no obligation to make any
modifications upon the ETS-Owned Technologies and Materials. In
the event ETS develops any modifications or enhancements, all
title and ownership rights to such modifications or
enhancements shall vest in ETS.
8.4 Sylvan also understands and agrees that ETS, EDUCATIONAL
TESTING SERVICE, and the ETS logo are the registered trademarks
of ETS, registered in the U.S.A., and in many other countries.
Sylvan agrees not to use, reproduce, copy or create materials
bearing the ETS name or the ETS registered trademarks for
promotional or other purposes, without ETS's advance written
approval and review of such materials.
9.0 CONFIDENTIALITY AND SECURITY
Sylvan acknowledges and agrees that, during the term of this Agreement,
certain information which is proprietary and confidential to ETS shall
be disclosed to Sylvan and its employees.
Sylvan agrees that such ETS Proprietary and Confidential Information,
including Examinee data, is disclosed to Sylvan in trust and that it
will not disclose the ETS Proprietary and Confidential Information to
any third party without ETS's prior written consent. When the ETS
Proprietary and Confidential Information is not in use, Sylvan agrees
to keep the ETS Proprietary and Confidential Information in a secure,
locked location.
Sylvan also agrees that it will disclose the ETS Proprietary and
Confidential Information only to employees of Sylvan with a need to
know such ETS Proprietary and Confidential Information.
Sylvan agrees that it will use the ETS Proprietary and Confidential
Information for the sole purpose of performing its responsibilities in
connection with this Agreement. Upon either the termination or
expiration of this Agreement, Sylvan shall cease to use the ETS
Proprietary and Confidential Information, shall remove all copies of
Certain
-24-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
Portions of the ETS Computer-Based Testing System from its machine-
readable media, shall retrieve all copies of ETS Proprietary and
Confidential Information from any third parties, and shall return all
copies of Certain Portions of the ETS Computer-Based Testing System
and other ETS Proprietary and Confidential Information to ETS.
In the event that Sylvan uses vendors for either equipment or software
installation and/or maintenance support, Sylvan agrees to have each
such vendor sign a non-disclosure agreement to be supplied by ETS
before permitting such vendors any access to Certain Portions of the
ETS Computer-Based Testing System or the LAN-based PCs upon which
Certain Portions of the ETS Computer-Based Testing System, Tests or
Test data are stored.
Sylvan agrees that all tests are subject to security procedures that
ensure that Examinees have access to the test(s) only during testing,
and that the test itself or any part of it shall not be disclosed or
made available to any person who is not subject to confidentiality and
nondisclosure obligations regarding same.
10.0 ETS'S RIGHT TO AUDIT
10.1 Technical and Security Audits
ETS reserves the right to send either announced or unannounced
observers to perform either technical and/or security audits at
Test Centers, Sylvan's corporate center, and other Sylvan sites
or back-up sites, at any time, to observe/monitor operations
during Test Center staff training sessions, administration of
the tests, and pre-and post-testing periods, and to verify the
Test Centers, security arrangements. Upon arrival at a site,
the ETS observers will furnish proper identification.
10.2 Financial Audit
ETS reserves the right to perform financial audits, during
Sylvan's normal business hours, of Sylvan's financial records
to verify Examinee counts, Sylvan's costs subject to the cost
and compensation arrangements of Section 7, and Sylvan's
collection and transmission of fees pursuant to Section 5.6.
11.0 INSURANCE
During the term of this Agreement, Sylvan shall procure and maintain
with an insurance carrier comparably rated "A+"
-25-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
with a financial class of "15" determine by A.M. Best, the following
kinds of insurance coverages in each of the countries in wnich Sylvan
provides services to ETS under this Agreenent, with minimum limits set
forth below. It is agreed that local coverages secured will be
comparable to insurance requirements for the United States in all
material respects, and that ETS may waive or adjust certain coverage
requirements in certain countries.
Line Perils Minimum Limits
Worker's Statutory Worker's Compensation
Compensation Compensation Statutory Coverage
and Employers
Liability
General a. Comprehensive $1,000,000
Liability General Liability Bodily Injury
$1,000,000
Property Damage
b. Premises-Operation $1,000,000
Bodily Injury
$1,000,000
Property Damage
C. Personal Injury $1,000,000
Bodily Injury
d. Contractual $1,000,000
Bodily Injury
$1,000,000
Property Damage
e. Independent $1,000,000
Contractor's Bodily Injury
$1,000,000
Property Damage
f. Owners Protective $1,000,000
(which is Hold Harmless) Bodily Injury
$1,000,000
Property Damage
Umbrella Excess of Primary $9,000,000
Liability Policies Listed Above Bodily Injury
$9,000,000
Property Damage
-26-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
At least thirty (30) days before any Test Center begins operating in a
country, Sylvan shall furnish ETS with an insurance certificate
evidencing the above coverage with respect to the Test Center and
providing for at least ninety (90) days prior written notice of policy
cancellation or modification.
The certificates of insurance shall name ETS as an "Additional
Insured" to reflect the fact that ETS has been named as an "additional
insured" on the policy, and shall specify the country (or location if
different) by name that the insurance is applicable to.
The insurance specified herein shall be minimum requirements, and
Sylvan is responsible for providing any additional insurance deemed
necessary to protect Sylvan's interests from other hazards or claims
in excess of the minimum coverage. The liability of Sylvan to ETS is
not limited to Svlvan's insurance coverage, nor is this clause intended
to limit Sylvan's liability in any way for other non-insurable risks.
12.0. HOLD HARMLESS
12.1 Sylvan will indemnify and hold harmless ETS, its employees,
guests, and visitors from any and all loss, damage, injury,
costs, expenses or any other liability (including without
limitation ETS's attorneys' fees) arising directly or
indirectly out of Sylvan's services to ETS, clients, or third
parties, including operation of Sylvan owned or leased
equipment, acts of omission, commission, or negligence of
Sylvan's employees or agents when engaged in carrying out its
services, and the failure to comply with applicable laws,
regulations and ordinances. Sylvan will assume responsibility
and liability for ETS owned or leased equipment in its
custody, including maintenance of, taxation of, defects in, and
the return of same to the appropriate party.
12.2 Sylvan agrees to waive and disclaim, and hereby waives and
disclaims any right it may now or hereafter have against ETS,
its agents, employees, successors and assigns for any and all
losses, damages, penalties, injuries, claims, actions and
suits, including legal expenses of whatsoever kind and nature,
in contract or tort, including, but not limited to ETS's strict
liability in tort, arising out of the acceptance or rejection
of the ETS Equipment and Software, the ownership of the ETS
Equipment and Software during the term of this Agreement, and
the delivery, possession, maintenance, uses, condition, return
or operation of
-27-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
the ETS Equipment and Software (including, without limitation,
latent and other defects, whether or not discoverable by ETS or
Sylvan and any claim for patent, trademark or copyright
infringement).
12.3 ETS will indemnify and hold Sylvan harmless from any and all
loss, damage, injury, costs, expenses, or any other liability
(including without limitation Sylvan's attorneys' fees)
arising out of or in connection with the content, character,
and/or validity of any test, and the test development and
measurement provided for any ETS Client, by ETS, or in
connection with any ETS developed test administered by Sylvan
under this Agreement.
13.0 NOTICES AND APPROVALS
Any notices, approvals or other communications required or which may be
given by either party to the other party under this Agreement, shall be
in writing and may he sent by FAX, however the original shall be sent
either by overnight courier express, with a verified receipt,
registered or certified mail, postage prepaid and addressed to and at
the address stated below or to such other address as the parties shall
subsequently designate to each other by notice given in accordance with
this Section. Such notice or approval shall be deemed to be
sufficiently given when the original is received by the receiving
party.
FOR ETS: EDUCATIONAL TESTING SERVICE
Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
ATTENTION: Xxxxxxx X. Xxxxxx, Esq.
CC: Xxxxxx X. Xxxxxxx
FOR SYLVAN: SYLVAN LEARNING SYSTEMS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
ATTENTION: 0. Xxxxxx Xxxxx
General Counsel
CC: R. Xxxxxxxxxxx Xxxxx-Xxxxx, CEO
14.0 TERMINATION
14.1 Termination for Cause:
This Agreement may be terminated by either party only for good
cause (good cause being a material breach of an obligation or
responsibility imposed upon a party by this Agreement) and only
after notice and opportunity to cure has been given. With
respect to a monetary
-28-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
default, the notice must provide for an opportunity to cure of
at least ten (10) days following receipt of the notice. With
respect to non-monetary defaults, the notice must provide for
an opportunity to cure of at least thirty (30) days following
receipt of the notice. If the party receiving the notice has
not cured the breach before the cure date stated in the notice,
only then may the party giving the notice terminate this
Agreement by giving the party in breach a written termination
notice, stating the date on which termination is to be
effective. Any such termination shall have no effect upon any
payments remaining due under this Agreement, all of which shall
become immediately due and payable on the termination date.
14.2 Changes in Sylvan's Business or Financial Condition
Notwithstanding anything contained in this Agreement to the
contrary, ETS reserves the right to treat as good cause for
immediate termination of this Agreement under Section 14.1
above, any of the following events:
a. Sale of Sylvan's Assets:
The sale of all or substantially all of Sylvan's
assets to a single purchaser or to a group of
purchasers.
b. Control of Sylvan's Voting Stock:
The acquisition or accumulated ownership (by virtue
of Sylvan's repurchase of its shares, or by merger,
consolidation or acquisition etc.) of more than 50%
of Sylvan's outstanding voting corporate
shares by any single person or entity, or by a group
of affiliated persons or entities as defined by Rule
12b-2 of the rules of the Securities and Exchange
Commission.
C. Sylvan's Insolvency or Bankruptcy:
1) if Sylvan shall be declared either insolvent or
bankrupt;
2) if a petition is filed in any court and not
dismissed in sixty (60) days to declare Sylvan
bankrupt or for a reorganization under the
Bankruptcy Law or any similar statute; or
3) if a Trustee in Bankruptcy or a Receiver or
similar entity is appointed for Sylvan.
-29-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
d. Termination of Sylvan's Business:
Sylvan's bona fide decision to terminate its
business and liquidate its assets.
15.0 PROHIBITION AGAINST COACHING
During the term of this Agreement and for a period of 180 days after
the termination or completion of this Agreement:
a. Neither Sylvan, nor any Test Center (whether owned, leased, or
franchised), nor any employee or independent contractor of
Sylvan or any Test Center, will develop or offer any coaching
advice, assistance, service, software, or materials (including
those developed by any third party) for the tests being
administered under this Agreement; and
b. Neither Sylvan nor any Test Center (whether owned, leased, or
franchised), will sublet, rent to, or make space available to
any third party that offers coaching advice, assistance,
service, software, or materials, for the tests being
administered under this Agreement.
Each Test Center staff member administering the tests covered
by this Agreement shall be required to sign with Sylvan an ETS
provided agreement, stating that they agree to be bound by the
terms of this provision and Sylvan will take all steps
necessary to enforce said agreements.
16.0 CONFLICT OF INTEREST
No Test Center staff administering the tests covered by this Agreement,
shall take a test covered by this Agreement for a period of one hundred
eighty (180) days following the last improvement in any aspect of the
administration of such a test.
No Test Center staff shall handle materials for the administration of
or administer a test covered by this Agreement, for a period of ninety
(90) days prior to the date of a test administration that involves
either a household or immediate family member.
Each Test Center staff member administering the tests covered by this
Agreement shall be required to sign with Sylvan an ETS provided
agreement, stating that they agree to be bound by the terms of this
provision and Sylvan will take all steps necessary to enforce said
agreements.
-30-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
17.0 USE OF NAMES, LOGOS, TRADEMARKS
17.1 ETS shall not use Sylvan's name, logos, or trademarks, without
the prior written consent of Sylvan.
17.2 Sylvan shall not use ETS's name, logos, or trademarks, without
the prior written consent of ETS.
18.0 STANDARDS OF CONDUCT
It is the policy of ETS not to discriminate on the basis of race,
ethnic background, creed, age, or sex. Accordingly, by executing this
Agreement, Sylvan agrees not to permit any of its agents or employees
to behave, either through speech or conduct, in a manner that could
reasonably be construed as offensive to members of any such group or
otherwise to be in violation of the aforesaid policy whether or not
such conduct is proscribed by applicable law.
19.0 PROHIBITION ON GIFTS AND GRATUITIES
Sylvan warrants that it has not offered or given, and will not offer or
give to any employee, or representative or immediate family member of
an ETS employee a payment, gratuity, personal service, entertainment
or gift, other than novelty advertising items (i.e., pencils, pens,
clipboards, cups) of a nominal value. Any such offerings may be
construed as Sylvan's attempt to improperly influence decisions at ETS,
and Sylvan agrees that ETS may, by written notice to Sylvan, terminate
this Agreement if it is found by ETS that Sylvan has violated this
provision. In the event this Agreement is terminated by ETS pursuant to
this provision, ETS shall be entitled, in addition to any other rights
and remedies, to recover or withhold the amount of the cost incurred by
Sylvan in providing such gratuities.
20.0 EQUAL OPPORTUNITY
Sylvan shall comply with all applicable provisions of Section 202 of
Executive Order 11246 (Equal Employment Opportunity) dated 9/24/65 and
subsequently amended.
21.0 FAIR LABOR STANDARDS ACT
Sylvan shall comply with all applicable requirements of the Fair Labor
Standards Act of 1938, as amended.
22.0 COMPLIANCE WITH LAW
Sylvan and all Test Centers shall, in the performance of this
Agreement, comply with all applicable foreign, federal,
-31-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
state, and local laws now and hereafter in effect (including but not
limited to the Foreign Corrupt Practices Act; the anti-boycott
regulations; the Trading with the Enemy Act; the International
Emergency Economic Powers Act; and any applicable export control
regulations, including obtaining any required export licenses).
23.0 LAWS GOVERNING
This Agreement and any disputes, controversies or claims arising out
of, or relating to, or having any connection with this Agreement shall
be governed by the laws of the State of New Jersey, now and hereafter
in effect. Notwithstanding the above, any disputes relating to the
implementation or interpretation of Section 28.0, "Arbitration",
including but not limited to the authority of the court to grant
provisional or interim relief in aid of arbitration, shall be governed
by the federal law applicable in the federal courts in New York.
24.0 INDEPENDENT CONTRACTOR
Under this agreement, Sylvan agrees that it will perform as an
independent contractor, and not an agent or employee of ETS.
Nothing in this Agreement shall be construed as having established a
joint venture, a partnership, an agency, or any similar relationship
between the parties.
25.0 SURVIVAL BEYOND COMPLETION
It is mutually agreed that any term or provision, including but not
limited to, 6.2.2 (Sylvan's Covenant Not to Compete), Sections 8
(Ownership), 9 (Confidentiality and Security), 10 (ETS's Right to
Audit), 12 (Hold Harmless), 15 (Prohibition Against Coaching), 16
(Conflict of Interest), and 17 (Use of Names, Logos, Trademarks), which
by its nature would survive any termination, cancellation, or
expiration of this Agreement, shall survive any termination,
cancellation, or expiration of this Agreement.
26.0 ASSIGNMENT
Sylvan agrees not to assign this Agreement without the prior written
approval of ETS. Sylvan agrees to obtain ETS's prior written approval
of the proposed incorporation of any subsidiary. Sylvan agrees not to
assign any part of this Agreement or any Sylvan responsibility
thereunder, without the prior written approval of ETS. Any such request
for approval of a proposed assignment, shall be accompanied by
-32-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
a copy of the proposed contract between Sylvan and the proposed
assignee/subcontractor.
27.0 MODIFICATIONS
This Agreement can be modified only by a writing signed by both
parties.
28.0 ARBITRATION
This Agreement and any disputes, controversies or claims arising out
of, or relating to, or having any connection with this Agreement shall
be submitted to binding arbitration in the City of Newark, New
Jersey, under the rules then prevailing of the American Arbitration
Association. Judgment upon any award made in such arbitration may be
entered and enforced in any court of competent jurisdiction.
Notwithstanding the above, any disputes regarding or petitions for
provisional or interim relief in aid of arbitration shall be submitted
to the jurisdiction of the federal courts of the Southern District of
New York and neither party shall seek to remove or dismiss on
jurisdictional grounds any such action brought in such court by the
other party.
29.0 ENTIRE AGREEMENT
This Agreement constitutes and expresses the entire Agreement and
understanding between the parties hereto in reference to all the
matters herein referred to, all previous discussions, promises,
representations, and understandings relative thereto, if any, had
between the parties hereto, being herein merged.
-33-
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
IN WITNESS WHEREOF, the parties hereunder have executed this Agreement
with the intent that it become effective as of April 1, 1994.
SYLVAN LEARNING SYSTEMS, INC. EDUCATIONAL TESTING SERVICE
By /s/ R. XXXXXXXXXXX XXXXX-XXXXX By /s/ XXXXXX X. XXXXXXXXX
------------------------------- -------------------------
R. Xxxxxxxxxxx Xxxxx-Xxxxx Xxxxxx X. Xxxxxxxxx
Title Chief Executive Officer Title Executive Vice President
------------------------------- ------------------------
Date April 13, 1994 Date April 13, 1994
------------------------------- ------------------------
Attest: /s/ O. XXXXXX XXXXX Witness /s/ XXXXXXX X. XXXXXX
------------------------------ -----------------------
O. Xxxxxx Xxxxx Xxxxxxx X. Xxxxxx
Title Assistant Secretary Title Assistant General Counsel
------------------------------- -------------------------
Date April 13, 1994 Date April 13, 1994
------------------------------- --------------------------
SLS-Lf
ETS (R)
[LOGO APPEARS HERE]
EDUCATIONAL TESTING SERVICE
