Exhibit 10.35
December 21, 2001
Our file No.:
Xxxxxxxx.xxx, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx
X0X 0X0
ATTENTION: PRESIDENT
Dear Sirs:
RE: Letter of Intent: Technology License and Support Services Agreement
("License") With Xxxxxxxx.xxx, Inc. ("Licensor")
Tengtu International Inc. ("Licensee") hereby proposes to enter into a license
agreement for the exclusive and perpetual license (the "License") of Licensor's
software, technology and intellectual property designed and targeted
specifically to the K-12 and higher education market, a business summary of
which is attached as Schedule "A" (collectively "Software").
This letter sets out the framework of the transaction.
1. EXECUTION OF LICENSE. Licensor and Licensee agree to execute the
License on the terms and conditions contained in this letter of intent
on or before January 31, 2002.
In consideration for granting of the License, Licensee agrees to pay
Licensor a license fee in the aggregate amount of $850,000 (the "Fee")
payable as follows:
(a) $250,000 payable coincidentally with the execution and delivery
of this letter of intent by the Licensor (the "Initial Payment");
(b) $100,000 payable on the date on which the License is executed and
delivered by each of the Licensor and the Licensee;
(c) $100,000 payable on the first Wednesday of each month beginning
on the first Wednesday of February, 2002 and on the first
Wednesday of each month thereafter to and including the first
Wednesday of June, 2002.
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Licensee agrees to pay a 2% royalty to Licensor on gross sales of all Software
except in respect of sales of Software to persons or entities located in the
People's Republic of China for which no royalty shall every be payable.
2. SOFTWARE SUPPORT/COLLABORATION. Following Closing, and throughout the
term of the License.
(a) Licensor will provide continuous support services for, and to
improve, the Software including, without limitation, in respect
of Licensee's activities under the License until June 30, 2002.
Following June 30,2002, the Licensor agrees to continue to
provide such support services indefinitely at rates to be agreed
by the Licensor and Licensee from time to time provided, however,
if rates cannot be agreed upon by the parties hereto, the rate
shall be $100,000 per month payable on the first Wednesday of
each month following June 30, 2002 until such time as the
licensee elects, in its sole discretion and at any time, to
terminate the support services provided by the licensor;
(b) Licensee will use all reasonable commercial efforts to promote
Licensor's Software to prospective third party licensees;
(c) Licensee and licensor agree that the Software will be a custom
developed version of the Software that will address the specific
needs of the K-12 and higher education market; and
(d) For greater certainty, Licensor agrees that the support services
to be provided pursuant to paragraph (a) above, shall, at a
minimum, require the Licensor to assign six employees on a full
time basis to the development of the Software and that
additionally, the two key technical employees will devote at
least eighty percent of their time to the development of the
Software. For purposes of clarity, there will always be a minimum
team of eight people working on the development of the Software.
3. SOURCE CODE. Licensor covenants and agrees to provide the source code
for the Software to the Licensee in accordance with an escrow agreement
(with a recognized escrow agent selected by the Licensee) in a form
which is standard for the software industry (the "Escrow Agreement").
The parties shall enter into the Escrow Agreement on or before the date
on which the License is executed.
4. INSOLVENCY OF LICENSOR. In the event that the Licensor commits an act
of bankruptcy, becomes insolvent (as defined pursuant to the BANKRUPTCY
AND INSOLVENCY ACT (Canada)), makes an assignment for the benefit of
creditors, makes a proposal under the BANKRUPTCY AND INSOLVENCY ACT
(Canada), is adjudicated insolvent or bankrupt, petitions or applies to
any tribunal for the appointment of any receiver, trustee or similar
liquidator, has a petition in bankruptcy filed against it, or any
proceeding is commenced relating to it or to any portion of its
properties under any law relating to reorganization, arrangement or
re-adjustment of debt, dissolution, winding up or similar law, or if
any receiver, receiver and manager, monitor, liquidator or similar
party is appointed in respect of any of its properties, then the
Licensee shall be entitled to hire such employees of the Licensor as it
sees fit to ensure its ability to use and to continue to develop and
improve the Software.
5. TERMINATION. The Licensee shall be entitled to terminate the License
and this letter of intent at any time up to and including June 30,
2002, in the event that the software does not perform in accordance
with the technical specifications as outlined in the license. In the
event that the Licensee terminates this letter of intent in accordance
with this paragraph 5 following the execution of the License by the
parties hereto, the Licensor shall forthwith return in full to the
Licensee the Initial Payment. In the event that the Licensee terminates
this letter of intent in accordance with this paragraph 5 following the
execution of the License by the parties hereto, the balance of the Fee
outstanding at such time, shall not be payable by the Licensee and the
obligations of the parties to the License and this letter of intent
shall immediately cease.
6. PUBLICITY. Except as required by law, no public announcement or press
release concerning the proposed transaction may be made without the
prior consent and joint approval of the Licensee and the Licensor.
7. CONFIDENTIALITY AND NON-SOLICITATION. Except as required by law, the
Licensee and the Licensor will receive and maintain all information
received from the other strictly in confidence and not disclose to any
person or make public or authorize the disclosure of any such
information and not use such information for any purpose except for the
purpose contemplated by this letter unless: (i) the specific
information is now or hereafter publicly disclosed other than as a
result of breach of this provision; (ii) the specific information was
in the possession of the disclosing party prior to the disclosure by
the disclosing party; (iii) the specific information is hereafter
disclosed to the disclosing party by a third party having no obligation
of confidentiality with regard to the information; or (iv) the specific
information is independently generated by the disclosing party without
the use and not as a consequence of the disclosure by the other party.
If this letter is terminated or the License is not executed, each party
must immediately return to the other all confidential information that
was furnished to it, without retaining a copy thereof.
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8. BINDING LETTER OF INTENT. The terms of this letter of intent shall be a
binding agreement of the parties hereto.
If you agree with the foregoing, please deliver a counter signed copy
of this letter to the undersigned by December 21, 2001.
TENGTU INTERNATIONAL INC.
Per:
--------------------------------
Name: --------------------------------
Title: --------------------------------
AGREED AND ACCEPTED ON THIS
_____ DAY OF DECEMBER 21, 2001
XXXXXXXX.XXX, INC.
Per:
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