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EXHIBIT 10.16
THIS LICENSE AGREEMENT dated July 26, 1997.
BETWEEN:
ITI LEARNING SYSTEMS INC., a body corporate,
incorporated under the laws of Delaware, USA
(hereinafter referred to as "ITI")
- and -
AMERICAN EUROPEAN CORPORATION, a body corporate,
incorporated under the laws of Georgia, USA
(hereinafter referred to as the "Licensee")
- and -
EDUTREK INTERNATIONAL, INC., a body corporate,
incorporated under the laws of Georgia, USA
(hereinafter referred to as the "Guarantor")
WHEREAS ITI has developed the ITI System for use in the Institutes;
AND WHEREAS the ITI System is being licensed to others to conduct business at
institutes pursuant to the ITI System;
AND WHEREAS Licensee desires a license of the ITI System with the right to
operate one or more Institutes under the Licensed Marks within the Territory;
NOW THEREFORE, in consideration of the above premises, and of the additional
mutual covenants and valuable consideration recited below, the parties agree as
follows:
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TABLE OF CONTENTS
1. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. License of the ITI System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Confidential Operations Manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. The Territory and Site Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Sites Mutually Agreed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Institutes by Licensee Within Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Protection of ITI's Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Licensed Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Obligations of ITI; Supervision, Assistance and Services . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Obligations Included in License Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.1 Confidential Operations Manual . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.2 Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.3 Assistance Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.4 Advertising Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.5 Quality Assurance Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.6 Latest Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1.7 Site Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.1.8 Training Materials and Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.1.9 Training and Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Additional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2.1 Consultation Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2.2 Ongoing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2.3 Training Sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2.4 Periodic Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Initial License Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Monthly Royalty Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Monthly Royalty Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Establishment of Tuition Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 Records, Inspection and Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.7 Licensee to Pay Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.8 Payment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Licensee's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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7.1 Compliance with Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Other IT Instruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Expense of Upgrades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Credentialed Instructors/Facilitators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 Advertising To Promote the ITI System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 Licensee to Obtain Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.8 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.9 Use of Designated Computer Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.10 Advertising Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.11 Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.12 Compliance with Educational Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.13 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.14 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.15 Non Competition Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.16 Confidentiality Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. Transfer and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.1 Transfer or Assignment by ITI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.2 Assignment by Licensee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3 Approval of Transferees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.4 Record of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.5 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9. Term and Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.1 Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.2 Renewal of License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.3 Month-To-Month License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.4 Termination Before Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Default and Termination Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Material Breaches That May Be Cured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.3 Material Breaches That Cannot Be Cured . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Licensee's Notice of Breach by ITI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. Relationship After Expiration or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.1 Obligations of Licensee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 Settlement of Outstanding Contracts with Students . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Cessation of Sales Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Payment of All Obligations Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.5 Licensee and Principals Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.6 Assignment of Territory Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. Injunctive Relief and Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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13. Hold Harmless, Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.1 Hold Harmless and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14. Parties as Independent Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
15. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16. Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
18. Time is of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
19. Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20. Most Favoured Nations Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
21. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22. Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
23. Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
24. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25. Vested Right to Additional Territories in Addition to the Territory . . . . . . . . . . . . . . . . . . 34
25. Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25. Best Efforts Negotiations and Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . 35
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1. INTERPRETATION
1.1 DEFINITIONS. In this Agreement, unless the context requires
otherwise:
1.1.1 "Agreement" means this License Agreement;
1.1.2 "Annualized Full Time Equivalent Basis" when used in relation
to the number of students, means the number of students
multiplied by the number of months of study for such
students, divided by twelve months;
1.1.3 "Confidential Operations Manual" means the confidential
operations manual or manuals produced by ITI, whether in
printed or electronic form, as amended from time to time,
describing the policies, rules and procedures to be used in
the operation of Institutes by the Licensee and other
licensees pursuant to the ITI System;
1.1.4 "Director of Program Delivery" means an employee or employees
of the Licensee dedicated (unless otherwise agreed in writing
by ITI, acting reasonably) to perform the tasks of the
Director of Program Delivery at the Institute as specified in
the Confidential Operations Manual, such employee maintaining
the credentials specified in the Confidential Operations
Manual;
1.1.5 "Director of Recruiting" means an employee or employees of the
Licensee dedicated (unless otherwise agreed in writing by ITI,
acting reasonably) to perform the tasks of the Director of
Recruiting at the Institute as specified in the Confidential
Operations Manual, such employee maintaining the credentials
specified in the Confidential Operations Manual;
1.1.6 "Fee Schedule" means the schedule of fees included in the
Confidential Operations Manual for services which ITI may
perform from time to time for the Licensee, which schedule ITI
may amend from time to time upon 30 days notice to the
Licensee;
1.1.7 "Gross Revenues" means the aggregate gross amount of all
revenues from whatever source derived (based on the cash
method of accounting), which arise from or are derived,
whether by cash, credit or otherwise, by Licensee from
business conducted or which originated in, on, from, or
through the Institute, or from the sale of any products or
services associated with the use of the Licensed Marks,
whether such business is conducted in compliance with or in
violation of the terms of this Agreement, including, without
limitation, tuition (in accordance with sections 6.5 and
7.2.3), corporate training revenue, revenue from the sale,
rental or otherwise of student computers, accessories, books
and materials, and the proceeds of any business interruption
insurance received by the Licensee with respect to revenues
deemed to have been lost by the Licensee as a result of the
interruption of business at the Institute, minus:
(a) any sums collected by the Licensee on behalf of any
duly constituted governmental authority and paid out
to such authority on account of sales taxes, goods
and services taxes and other like taxes imposed
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upon the sale or provision of goods and services by
the Licensee from or through the Institute;
(b) the amount of any refund or credit paid to any
student; and
(c) the cost of goods sold for promotional items using
the Licensed Marks not required by ITI to be sold
under this Agreement such as caps, T-shirts, pens,
bags, screen savers or pencils;
1.1.8 "Guarantor" means EduTrek International, Inc., a body
corporate, incorporated under the laws of Georgia, USA;
1.1.9 "Institute" or "Institutes" means information technology
institutes or places of delivery of the ITI System, whether
physical, virtual or otherwise, operated under the License in
accordance with the terms of this Agreement whether at
American European Corporation, American Intercontinental
University or otherwise;
1.1.10 "Instructor" means an instructor/facilitator who is qualified
in accordance with section 7.5 and the Confidential Operations
Manual to provide the classroom and/or other instruction and
team facilitation which is part of the ITI Program Delivery at
the Institute;
1.1.11 "In-Territory Services" means Program Delivery under the ITI
System within the Territory pursuant to federal
government-sponsored or funded contracts and/or national or
multinational corporate contracts, which require the delivery
or performance of ITI System services both outside and within
the Territory;
1.1.12 "ITI" means ITI Learning Systems Inc., a body corporate,
incorporated under the laws of Delaware, USA;
1.1.13 "ITI System" means the procedures of operation for the
institutes owned, operated or licensed by ITI, utilizing
certain standards, specifications, methods, procedures,
techniques, processes, formulas, management systems, formats,
admissions criteria, Program Delivery and proprietary marks
and information, including without limitation certain
proprietary programs, systems, instructional and management
techniques, physical or technical security requirements,
procedures and methods for the education and training,
including curricula, and for admissions and placement, used in
the institutes, all of which may be changed, improved and
further developed from time to time by ITI, and including the
Confidential Operations Manual;
1.1.14 "License" means the rights granted under section 2.1 of this
Agreement;
1.1.15 "Licensed Marks" means the trade names, trademarks, service
marks, logos, symbols and other indicia of origin identified
in the Confidential Operations Manual by which ITI and its
licensees are now identified, whether or not registered, which
may include, but are not limited to, "ITI", "ITI Information
Technology Institute", "ITI Institute" and such other trade
names, trademarks, service marks, associated logos
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and symbols as are now designated by ITI and as may hereafter
be designated by ITI in writing;
1.1.16 "Licensee" means American European Corporation, a body
corporate, incorporated under the laws of Georgia, USA, and
shall include any corporation, partnership, individual or
combination of individuals, or other legal entity which owns a
majority interest of or controls American European
Corporation, or in which American European Corporation owns a
majority interest or controls;
1.1.17 "Program Delivery" means technologies, methodologies,
curricula and techniques employed for the purpose of the
facilitation of learning by students, including without
limitation, instruction, teaching, facilitation, use of
curricula, books, electronic media, distance education
technologies, self-paced learning materials, media,
courseware, and collaborative team and/or problem based
projects;
1.1.18 "Registrar" means an employee or employees of the Licensee
dedicated (unless otherwise agreed in writing by ITI, acting
reasonably) to perform the tasks of the registrar at the
Institute as specified in the Confidential Operations Manual,
such employee maintaining the credentials specified in the
Confidential Operations Manual;
1.1.19 "Stand-Alone ITI Program" means a program of information
technology education and training consisting only of curricula
designated by ITI to the Licensee under this Agreement and
using the ITI System; and
1.1.20 "Territory" means the State of Georgia in the United States of
America.
1.2 FUNDS. In this Agreement, all references to funds shall be in United
States dollars, unless otherwise stated.
2. LICENSE OF THE ITI SYSTEM
2.1 LICENSE. Subject to all of the conditions of this Agreement, ITI
grants to Licensee for the term established by section 9 of this Agreement a
license to use the ITI System in the Territory.
2.2 CONFIDENTIAL OPERATIONS MANUAL. ITI shall lend to Licensee, at no
additional charge, a copy of the Confidential Operations Manual as specified in
section 5.1.1. The Licensee acknowledges and agrees as follows:
2.2.1 ITI has determined that certain Program Delivery, and certain
other policies, systems, techniques and materials are
essential to the successful operation of an Institute. In
order to protect the reputation and goodwill of the businesses
operating under the ITI System and to maintain standards of
operation under the Licensed Marks, Licensee agrees to operate
its Institute in accordance with the Confidential Operations
Manual, including such amendments thereto, as ITI may publish
from time to time, all of which Licensee acknowledges belong
solely to ITI and shall be
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on loan from ITI during the term of this Agreement. Should
Licensee lose one or more of the Confidential Operations
Manual or supplements, ITI may impose a reasonable charge for
replacement manuals or supplements issued to Licensee. The
standards, specifications or requirements established by ITI
for Licensee, unless otherwise indicated, shall be set forth
in this Agreement or may, from time to time, be set forth by
ITI in the Confidential Operations Manual.
2.2.2 Licensee shall at all times use its best efforts to keep the
information in the Confidential Operations Manual, the
Confidential Operations Manual itself and any other manuals,
materials, goods and information created or used by ITI and
designated for confidential use within the ITI System
confidential and shall limit access to employees of Licensee
on a need-to-know basis, on this same confidential basis.
2.2.3 Licensee understands and acknowledges that the ITI System
serves markets and operates under market conditions that are
continuously changing and evolving, and that new and different
standards, procedures, curricula, and techniques will be
developed and recommended by ITI in response to those changes,
or other conditions in the ITI System, to maintain and/or
enhance the quality of services provided by Licensee, and the
reputation and goodwill of the ITI System and its institutes.
Accordingly, Licensee understands and acknowledges that ITI
may, from time to time, revise the contents of the
Confidential Operations Manual to implement new or different
requirements for the ITI System, and Licensee expressly agrees
to comply with all such changed requirements which are by
their terms mandatory, within 90 days of being notified by ITI
of such changed requirements; provided that such requirements
shall also be applied in a reasonably nondiscriminatory manner
to comparable institutes operated under the ITI System by ITI
or by other licensees having similar license agreements, and
that the fundamental terms and conditions of this Agreement
shall not be altered.
2.2.4 Licensee shall at all times insure that its copy of the
Confidential Operations Manual is kept current and up to date.
In the event of a dispute as to the contents of the
Confidential Operations Manual, the terms and dates of the
master copy of same maintained by ITI at its principal place
of business shall govern.
3. THE TERRITORY AND SITE LOCATION.
3.1 SITES MUTUALLY AGREED. Institutes in the Territory shall be located
at sites selected in accordance with sections 3.2, 5.1.7 and 7.14. All
services of Institutes must be delivered and received within the Territory.
For greater certainty, services shall be considered as delivered at the
location of the student of the Institute, including where the delivery is by
distributed team learning, correspondence or distance education by electronic
or other means as may be prescribed by ITI from time to time in the
Confidential Operations Manual. Licensee expressly understands and agrees that
ITI shall have the right, in its sole discretion, to own and operate (outright,
through contract, joint-ventures or otherwise) institutes using the ITI System
at any location(s) outside of the Territory; to grant licenses for the
operation of institutes using the ITI System at any location(s) outside of the
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Territory as ITI, in its sole and exclusive discretion, deems appropriate
(provided that ITI agrees that with the exception of a license for the City of
Calgary, Province of Alberta, Canada to the Southern Alberta Institute of
Technology, if the Licensee is not in default under this Agreement, it will not
enter into any license agreement on or before June 11, 1998); to conduct and
operate businesses, and offer and sell services, programs and products within
the Territory which do not comprise a part of the ITI System and, in connection
therewith, to exploit its Licensed Marks, name, reputation and know-how. ITI
agrees that, so long as this Agreement is in effect, it will not itself, or
through any affiliate or subsidiary, operate, nor will it license a third party
to, operate an institute utilizing or competitive with the ITI System in the
Territory except that:
3.1.1 ITI reserves the right to negotiate the sale and provision
of In-Territory Services. If ITI should secure such a
contract and Licensee is then in substantial compliance with
this Agreement, ITI shall, subject to the consent of the
customer (which consent ITI shall endeavour to obtain),
offer to Licensee a subcontract to perform all of the
In-Territory Services under such contract on the same terms
and conditions that ITI and the customer originally agreed
to, provided that ITI shall retain a portion of the fees
paid by the customer equal to ITI's costs of procuring and
negotiating the contract and acting as contractor thereunder
and any costs required to train or assist the Licensee as
may reasonably be required to prepare the Licensee to
provide such services. For greater certainty, any fees
received by the Licensee shall be included in Gross
Revenues. If the customer will not consent to a
subcontract, or if Licensee is not in substantial compliance
with this Agreement, or if Licensee elects not to execute
any such subcontract with ITI, ITI may elect to perform the
In-Territory Services itself or subcontract performance to
any third party, who may be another licensee of the ITI
System. If ITI should subcontract the In-Territory Services
to a third party because Licensee elected not to execute a
subcontract with ITI, ITI's subcontract with the third party
may be made on terms more favourable for the subcontractor
than those terms previously offered to Licensee only if
Licensee has been notified of the more favourable terms and
has not accepted a subcontract on such terms within five (5)
business days of receiving such notice. All operations by
ITI or a third party in providing In-Territory Services
pursuant to this section shall be conducted in compliance
with the same standards and requirements established by ITI
for its proprietary operations and for its licensees
generally.
3.1.2 ITI shall not sell or otherwise distribute any product or
service bearing any of the Licensed Marks without first
determining through appropriate market research that the
sale or distribution of such product or service, as offered
under the proposed marketing plan, is not likely to have a
material negative effect on Gross Revenues for licensees
generally. ITI may not require Licensee to sell any such
product or service in the Territory, and, correspondingly,
ITI shall not be required to sell any such product or
service to Licensee. If ITI makes any product or service
available to Licensee for resale, the price therefor shall
be no less favourable to Licensee than the price for which
such product or service is available to non-licensees.
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3.2 INSTITUTES BY LICENSEE WITHIN TERRITORY. The Licensee will operate at
least one Institute within the Territory. The first Institute shall be opened
by the Licensee within the Territory not later than November 3, 1997, unless a
later date is agreed to in writing by ITI. The opening of Institutes within
the Territory shall be subject to the following:
3.2.1 Licensee must notify ITI in writing of Licensee's intention
to open an Institute and shall submit to ITI other
information as is then required by ITI, including but not
limited to business plans, pro formas addressing new and
existing Institute operations, and financial information.
3.2.2 ITI must approve such new Institute in writing, in
accordance with such standards required for institutes, the
site and layout, size, decor, equipment, mechanical,
electrical, computer and telecommunication systems as are
then currently required for Institutes, as determined by
ITI.
3.2.3 Excepting the first Institute, Licensee must pay to ITI a
fee for services in accordance with the Fee Schedule to
compensate ITI for its expenses incurred in site review and
institute plan approval.
3.2.4 The Licensee must have all local, state and federal permits,
licenses and certificates necessary to operate the
Institute.
4. PROTECTION OF ITI'S PROPRIETARY RIGHTS
TRADE SECRETS. Licensee acknowledges ITI's proprietary rights in the ITI
System, including the programs, curricula, systems, techniques, manuals, and
trade secrets which will be disclosed to Licensee under this Agreement, and
further acknowledges that Licensee does not acquire any right or interest
therein beyond the rights expressly granted to it under this Agreement. By
execution of this Agreement, Licensee also acknowledges that the know-how and
operating format related to ITI's proprietary methods and materials is also
proprietary to ITI and will not be disclosed by Licensee except in connection
with Licensee's required activities as authorized by this Agreement during the
term of this Agreement and for a period of three (3) years after termination or
expiration of this Agreement. Licensee agrees to maintain adequate security in
the control, use, and handling of proprietary materials ITI supplies to
Licensee in accordance with the practices described in the Confidential
Operations Manual or as stated otherwise in writing from time to time. Unless
expressly waived by ITI in writing, Licensee shall require all persons who have
or could have access to ITI proprietary materials, to sign written
confidentiality agreements pertaining to the security of ITI proprietary
materials, which agreement shall be in a form reasonably acceptable to, and
approved in advance by ITI. Licensee shall immediately notify ITI of any
unauthorized use of ITI's trade secrets, or any infringement of ITI's
copyrights. ITI shall have sole discretion to take such action or inaction as
it deems appropriate. The obligation of confidentiality does not extend to
information which at the time of disclosure is generally available to the
public (other than as a result of a prohibited disclosure by the Licensee),
information which after disclosure becomes generally available to the public by
publication or otherwise through no fault of the Licensee, information which is
in the possession of the Licensee prior to disclosure and was not obtained,
directly or indirectly, from ITI, information received by the Licensee from a
third party, provided Licensee is
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not on notice that such third party is bound by a confidentiality agreement or
is otherwise prohibited from transmitting the information to Licensee by
contractual, legal or fiduciary obligations owing to ITI, and information now
or hereafter independently developed by the Licensee.
4.2 LICENSED MARKS
4.2.1 Licensee expressly acknowledges ITI's rights in and to the
Licensed Marks and agrees not to represent in any manner
that Licensee has acquired any ownership rights in the
Licensed Marks. Licensee agrees not to use any of the
Licensed Marks or any marks, names or indicia which are or
may be confusingly similar in its own corporate or business
name or in association with any of the Licensees operations
except as authorized in this Agreement. Licensee further
acknowledges and agrees that any and all goodwill associated
with the ITI System and identified by the Licensed Marks
shall inure directly and exclusively to the benefit of ITI
and that, upon the expiration or termination of this
Agreement for any reason, no monetary amount shall be
attributable by the Licensee to any goodwill associated with
Licensee's use of the Licensed Marks.
4.2.2 Licensee understands and agrees that any use of the Licensed
Marks other than as expressly authorized by this Agreement,
without ITI's prior written consent, is an infringement of
ITI's rights in the Licensed Marks and that the right to use
the Licensed Marks granted herein does not extend beyond the
termination or expiration of this Agreement, except as may
be required to liquidate any previously existing inventory
of promotional items using the Licensed Marks. Licensee
expressly covenants that, during the term of this Agreement
and thereafter, Licensee shall not, directly or indirectly,
commit any act or infringement or contest or aid others in
contesting the validity of ITI's right to use the Licensed
Marks or take any other action in derogation thereof.
4.2.3 Licensee acknowledges an obligation to monitor its own and
other parties' use of the Licensed Marks and agrees to do
so. Licensee shall promptly notify ITI of any claim, demand
or cause of action that ITI may have based upon or arising
from any unauthorized attempt by any person or legal entity
to use the Licensed Marks, any colourable variation thereof,
or any other xxxx, name or indicia in which ITI has or
claims a proprietary interest. Licensee shall assist ITI,
upon request and at ITI's expense, in taking such action, if
any, as ITI may deem appropriate to halt such activities,
but shall take no action nor incur any expenses on ITI's
behalf without ITI's prior written approval; if ITI
undertakes the defence or prosecution of any litigation
relating to the Licensed Marks, Licensee agrees to cooperate
with and assist ITI as ITI may reasonably request in the
defence or prosecution of any such action, and ITI shall
reimburse Licensee for Licensee's reasonable out-of-pocket
expenses incurred in providing such assistance. Any amounts
collected by ITI with respect to any infringement actions
prosecuted by ITI shall be retained by ITI; provided,
however, that such amounts as may be attributable to damages
suffered by Licensee, net of all costs and expenses incurred
by ITI in prosecuting the infringement, will be remitted to
Licensee and Licensee will include the same in
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its Gross Revenues. If ITI elects in writing to the
Licensee not to prosecute any trademark infringement, then
the Licensee may do so and ITI agrees to provide reasonable
non-financial assistance and to execute all pleadings as the
Licensee may reasonably deem necessary or prudent to
prosecute the infringement claim. Any amounts collected by
the Licensee with respect to any such infringement action
shall be retained by the Licensee and ITI shall have no
right or claim therein; provided, however, that such amounts
as may be attributably to costs incurred by ITI, in
connection with the Licensee prosecuting the infringements,
will be remitted to ITI and all amounts not so paid to ITI,
net of all costs and expenses incurred in prosecuting the
infringement, would be included in Gross Revenues.
4.2.4 Licensee further agrees and covenants to use the Licensed
Marks solely in the manner prescribed by ITI; to observe all
laws with respect to the registration of trade names and
assumed or fictitious names, to include in any application
therefore a statement that Licensee's use of the Licensed
Marks is limited by the terms of this Agreement, and to
provide ITI with a copy of any such application and other
registration document(s); and to observe such requirements
with respect to trademark and service xxxx registrations and
copyright notices as ITI may, from time to time, require,
including, without limitation, affixing "SM", "TM", or "(R)"
adjacent to the Licensed Marks.
4.2.5 ITI reserves the right, in its sole discretion, to designate
and require that Licensee use one or more new, modified or
replacement Licensed Marks, except as may be required to
liquidate any previously existing inventory of promotional
items using the Licensed Marks. If as a result of such
requirement, Licensee should be required to alter any
signage or outdoor advertising, Licensee shall have 120 days
from receipt of ITI's requirement to comply with same, at
Licensee's sole cost and expense.
4.2.6 In conducting any business or enterprise, in the Territory
and under the Licensed Marks, ITI agrees that it shall not
commit, or permit any of its licensees to commit, any act
causing an incurable tarnishment of the Licensed Marks or
the reputation and goodwill associated with the ITI System.
4.2.7 The Licensee acknowledges that the Licensee does not have
any rights greater than ITI to the use of the Licensed
Marks in the Territory. ITI and the Licensee shall use
their reasonable best efforts to obtain the use of the
Licensed Marks, including the name "ITI Information
Technology Institute" in the Territory, without obligation
to defend any Licensed Xxxx, prevent others from using the
Licensed Marks or any marks which are so similar as to be
confusing, or otherwise bargain with any users of similar
marks or trade names.
4.3 ITI shall use its best efforts to maintain in good standing all
Licensed Marks which the Licensee is required to use in the Territory. In the
event that ITI fails to use its best efforts, ITI shall indemnify and hold the
Licensee harmless from and against any losses, liabilities, claims, damages,
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costs or expenses incurred with respect to any actual or alleged infringement
resulting from the Licensee's use, in accordance with the terms of the
Agreement, of the License Marks.
5. OBLIGATIONS OF ITI; SUPERVISION, ASSISTANCE AND SERVICES
5.1 OBLIGATIONS INCLUDED IN LICENSE FEE. The obligations and services to
be performed by ITI as part of the License, and at no additional charge to
Licensee, are:
5.1.1 CONFIDENTIAL OPERATIONS MANUAL. The Confidential Operations
Manual will be loaned to Licensee as described in section
2.2.
5.1.2 ACTION PLAN. Prior to the opening of the first Institute in
the Territory, ITI will assist Licensee in developing an
action plan for Licensee to follow and implement in
operating its Institute, which includes a marketing
strategy, an estimate of expenses and sales goals. Neither
ITI nor Licensee shall be bound to implement the action
plan, nor shall any action plan constitute a representation
by ITI with respect to actual, average, projected, or
forecasted volume, sales, profits, or earnings of Licensee
if Licensee follows and implements such plan.
5.1.3 ASSISTANCE NUMBER. ITI will provide a telephone number for
Licensee's use in contacting employees of ITI for
assistance, as designated from time to time by ITI.
5.1.4 ADVERTISING MATERIALS. ITI will provide to Licensee, from
time to time, a copy of certain advertising material
approved by ITI.
5.1.5 QUALITY ASSURANCE REVIEW. ITI will maintain a procedure and
checklist for the Quality Assurance Review of all aspects of
Licensee's operation of its Institute whereby ITI can
determine the extent to which Licensee's operations are or
are not in compliance with the ITI System. Approximately
ninety (90) days after Licensee first opens its Institute,
ITI will send an ITI representative to Licensee's Institute
to conduct a Quality Assurance Review. At Licensee's
request, ITI will have an ITI representative conduct a
Quality Assurance Review at Licensee's Institute once each
calendar year if ITI has not itself initiated such action.
ITI has the right to conduct additional Quality Assurance
Reviews from time to time in its discretion. At Licensee's
request, ITI will provide Licensee with the materials and
forms used in the Quality Assurance Review process for
Licensee's use in reviewing Licensee's operations.
5.1.6 LATEST DEVELOPMENTS. ITI shall endeavour to keep abreast of
the most recent and advanced knowledge and techniques
concerning information technology education and training.
ITI will, based on its good faith determination of the
applicability of such knowledge and techniques to Licensee
operations, make certain such knowledge and techniques are
available to the Licensee.
5.1.7 SITE SELECTION. ITI will assist the Licensee in the
selection of a location for the first Institute and,
following the guidelines and standards contained in the
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Confidential Operations Manual, make recommendations and
suggestions regarding lease preparation, size, layout,
decor, furniture, equipment, and electrical, mechanical,
computer and telecommunication systems to ensure compliance
with ITI standards.
5.1.8 TRAINING MATERIALS AND FORMS. ITI will furnish Licensee
certain materials deemed by ITI to be appropriate for
instruction of Licensee's personnel in the conduct of the
ITI System.
5.1.9 TRAINING AND ASSISTANCE. Prior to the opening of the first
Institute in the Territory, ITI will:
(a) provide advice to the Licensee on the development of
advertising and marketing strategies for students, on
marketing to potential employers of graduates and on
public relations opportunities relating to the
opening of the first Institute;
(b) assist in meetings and negotiations with potential
strategic recruiting (employer) partners;
(c) provide training on ITI sales techniques and
terminology for the Director of Recruiting and sales
staff, such training not to exceed a maximum of five
person-days of ITI representatives;
(d) provide, up to a maximum of seven person-days of ITI
representatives, advice to the Licensee on the
development of employee recruiting strategies,
Instructor recruiting and selection, and staff
compensation models;
(e) provide, up to a maximum of seven person-days of ITI
representatives, training of technical support staff
and assistance with respect to installation of the
technical environment, including installation of
staff and student servers, premises wiring, equipment
specifications, and equipment and software license
procurement;
(f) provide training to the Director of Program Delivery
and Instructors of the Licensee in ITI Program
Delivery to a maximum of 10 person-days of ITI
representatives; and
(g) provide training to the Registrar, Director of
Program Delivery and Director of Recruiting in
policies and procedures under the ITI System to a
maximum of five person-days of ITI representatives.
5.2 ADDITIONAL FEES. In addition to the services described in section
5.1, ITI may, and will where such services are required to be obtained by the
Licensee under this Agreement, provide the following additional services for
additional fees and charges specified in the Fee Schedule:
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5.2.1 CONSULTATION SERVICES. ITI may, when requested by the
Licensee but subject to the availability and prior
commitments of ITI's representatives, provide to the
Licensee an ITI representative to consult in the following
areas:
(a) employer or corporate relations, including assistance
in meetings and negotiations with potential employers
of graduates to develop strategic recruiting
partnerships;
(b) premises related matters, including lease preparation
and negotiation, design concepts and space planning;
(c) human resources, including assistance in employee
recruiting and selection, and staff compensation
models;
(d) sales and marketing, including assistance in the
development of advertising and marketing strategies
and sales training;
(e) provision of media buying and ad placement
assistance;
(f) technical services, including assistance in the
development of the technical environment,
installation of servers, premises wiring, equipment
specifications, equipment and software procurement;
and
(g) assistance relating to administration and finance,
including training of Licensee employees on the ITI
System and any Quality Assurance Review.
5.2.2 ONGOING ASSISTANCE. ITI will at Licensee's request send an
ITI representative to Licensee's Institute to provide such
assistance and offer suggestions and recommendations within
his or her knowledge toward the continuous improvement of
the Institute.
5.2.3 TRAINING SESSIONS. From time to time, but at least once
each year, ITI will conduct training sessions of not
more than five (5) days duration at a location to be selected
by ITI. ITI shall determine the topics and agenda for such
conferences or training sessions to serve the purpose, among
other things, of updating the Licensee on new developments
affecting Licensee and other licensees, and exchanging
information between licensees and ITI personnel regarding
Institute operations and Program Delivery. Attendance at such
training shall be mandatory for Registrar, Director of
Program Delivery, Director of Recruiting and such other
personnel as ITI may prescribe from time to time in the
Confidential Operations Manual. All travel, room and board
expenses for Licensee and Licensee's personnel attending the
training shall be borne by Licensee.
5.2.4 PERIODIC TRAINING. ITI will provide training as requested
by the Licensee (subject to the availability of qualified
ITI representatives) and as required by section 7.5.
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6. FEES
6.1 INITIAL LICENSE FEE. Notwithstanding section 6.8, Licensee shall pay
an initial fee of $450,000 for the License and its rights pursuant to section
25, which fee shall be payable as follows:
6.1.1 $120,000 upon the execution of this Agreement;
6.1.2 $60,000 on the first day of each of the following months:
August, 1997; September, 1997; October, 1997 and November,
1997; and
6.1.3 $90,000 on the first day of December, 1997,
and the Licensee acknowledges that ITI has the right to deem such fee as having
been earned at or prior to such time.
6.2 MONTHLY ROYALTY FEE. At all times after the commencement of
operations by Licensee, Licensee shall pay ITI a monthly royalty for the
preceding month equal to seven percent (7%) of Gross Revenues. In addition,
Licensee agrees to pay an additional amount equal to any sales, gross receipts,
or similar tax imposed on ITI and calculated solely on payments required to be
made by Licensee to ITI under this Agreement, unless such tax is an optional
alternative to an income tax otherwise payable by ITI. In no event shall
Licensee be required to pay any income tax otherwise payable by ITI. ITI may
accept any such payment without prejudice to ITI's right to recover any balance
remaining or pursue any remedy available to ITI.
6.3 MONTHLY ROYALTY PAYMENT DATE. The payments under section 6.2 shall be
due and payable to ITI by electronic funds transfer or in such other manner as
ITI shall establish in the Confidential Operations Manual, or otherwise in
writing, by the last day of the calendar month for revenues received by
Licensee in the immediately preceding month. Within 30 days after expiration
or termination of this Agreement, Licensee shall pay ITI the royalty for the
period immediately preceding expiration or termination. Licensee agrees to pay
a late charge of five percent (5%) upon any sum not paid within 15 days of when
due under this section, plus such additional late charges as provided for in
section 6.8. The obligation to pay a late charge is in addition to the
potential liability for termination under section 10. Licensee's obligation to
pay sums due under section 6.2 for revenues received during the term of this
Agreement shall survive termination of this Agreement.
6.4 REPORTS. Licensee's monthly payment shall be accompanied by fully
completed and accurate (a) Gross Revenue, (b) income and expense and (c)
student accounts receivable reports on forms as required by the ITI, setting
forth information specified by ITI in the Confidential Operations Manual
including the Gross Revenues received during the previous month, the number of
students currently enrolled or confirmed for enrollment by Institute and any
advertising expenditures paid. Such forms and information required therein may
be changed by ITI from time to time. Licensee shall keep adequate records and
retain appropriate data and receipts to verify the information provided in such
reports and shall provide such backup data as ITI may request from time to
time. Licensee shall certify the accuracy of such data in writing on each such
report. Annually, within 120 days of the end of Licensee's tax year, Licensee
shall provide ITI with a profit and loss statement and a balance sheet for
Licensee's Institute, together with a reconciliation to the year end Gross
Revenues report, in form as requested by ITI, which may at ITI's specific
request
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be required to be audited by a Certified Public Accountant at Licensees
expense. Where Licensee installs computer equipment and software required by
ITI under section 7.9, ITI may request that Licensee submit monthly reports
electronically.
6.5 ESTABLISHMENT OF TUITION CHARGES. Licensee shall establish the
tuition and other charges to Licensee's students, provided that,
notwithstanding actual tuition charged by the Licensee from time to time to
students of the Institute, tuition payable in respect of each student of the
Institute attributable to Gross Revenues for the purposes of this Agreement,
including the calculation of any royalties, shall not, without the written
consent of ITI, be less than tuition charged for a program equivalent to the
Stand Alone ITI Program by ITI at other locations in the United States or, if
there are no institutes operated by ITI in the United States, the same number
of United States dollars (i.e. with adjustment for the exchange rate) of any
tuition charged by ITI in Canada from time to time for a program equivalent to
the Stand Alone ITI Program except that for the first 12 months from the date
hereof at 75% thereof. Licensee shall make revenue information available to
ITI on request, as necessary for the purpose of ITI's audit procedures and
other purposes. For greater certainty, such tuition shall not be reduced by
any bursaries, scholarships, bad debts or other discounts from the tuition
otherwise established under this section. Any tuition amounts deemed to be
included in Gross Revenues which are not paid or to be paid to the Licensee in
cash shall be deemed to have been received by the Licensee for the purposes of
determining Gross Revenues during the month of the corresponding commencement
of Program Delivery to the student at the Institute. Tuition shall be due as
specified by ITI in the Confidential Operations Manual. If any student account
for tuition at the Institute is in arrears for a period of 180 days, such
tuition shall be deemed to have been paid and is attributed to Gross Revenues
at that time.
6.6 RECORDS, INSPECTION AND AUDITING.
6.6.1 Without limitation, the Licensee shall on a timely basis
supply ITI with quarterly unaudited and annual audited
financial statements, prepared in accordance with generally
accepted accounting principles and disclosing separately the
operations of each Institute. Licensee shall allow ITI or
its representatives to inspect the Institute premises, the
books of account and federal and state income tax and sales
tax returns of Licensee pertaining to the Institute during
reasonable times of the business day upon two (2) days
advance written notice. Licensee shall maintain on the
Institute premises, or at a mutually agreed upon location,
for a period of at least three years, all student records,
cancelled cheques and receipts, and all books of account.
If ITI's audit discloses a liability for any fees due to
ITI, Licensee shall pay the amount of the deficiency,
including late charges due under section 6.3, within thirty
(30) days of ITI's notice to Licensee of the deficiency.
Should the audit reflect a balance due Licensee, ITI agrees
to pay said balance within thirty (30) days of completion of
the audit report. If the deficiency (excluding late
charges) is five percent (5%) or more of the fees Licensee
was required to pay hereunder for the relevant period,
Licensee shall pay ITI its reasonable costs incurred in
performing the audit in addition to the amount of the
deficiency. Nothing in this section shall limit ITI's right
to terminate Licensee under section 10 for Licensee's
failure to pay when due royalties owing ITI.
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6.6.2 In the event that the Licensee contests the accuracy of any
audit conducted by ITI under section 6.6.1, Licensee shall
pay to the Bank of Nova Scotia as escrow agent any amount
disclosed in ITI's audit as a liability for any fees due
from the Licensee to ITI, and the parties shall remit the
matter to arbitration in accordance with the provisions of
the Arbitration Act (Nova Scotia) or any other act relating
to arbitration at the time in force in the Province of Nova
Scotia. The cost of such arbitration shall be decided by
the arbitrators. Any royalty payment and related report
submitted by the Licensee to ITI shall, upon the expiration
of the 36 month period following receipt thereof, be deemed
to be true and accurate unless ITI has notified the Licensee
to the contrary prior to that time.
6.6.3 ITI agrees that it will maintain the confidentiality of all
financial information it shall obtain about Licensee's
operations which has not been publicly disclosed by the
Licensee, and shall not disclose such financial information
to any third party who is not bound to maintain the
confidentiality of such information unless otherwise
required by applicable law; provided however, that ITI may
use such information in preparing financial information so
long as the information about Licensee's operations is not
identified as pertaining to Licensee and such information
cannot be reasonably identified as pertaining to Licensee.
6.7 LICENSEE TO PAY TAXES. Licensee shall pay all taxes, regardless of
their nature, assessed against it when due and before delinquent except when
being contested in good faith by appropriate proceedings. If ITI is charged
with any tax by the authorized taxing authority of any state or political
subdivision thereof, including taxes on sales made to or licenses granted to
Licensee, or sales made by Licensee at Licensee's Institute, Licensee shall pay
such taxes on ITI's behalf except when being contested in good faith by
appropriate proceedings.
6.8 PAYMENT OF ACCOUNTS. ITI may, from time to time, and at its sole
option and discretion, allow Licensee to purchase goods, materials, equipment,
books, printed matter, electronically produced and distributed materials,
curricula and materials on an open or revolving account, or through special
installment payment plans. Any limitation on the amount Licensee may charge to
an account or payment plan will be determined by ITI, taking into consideration
the credit worthiness, financial capability and business history of Licensee.
All items charged to Licensee's account(s) shall be supported by invoice.
Licensee shall promptly pay ITI for all charges made to Licensee's account(s).
Invoiced charges are due and payable thirty (30) days after date of the
invoice. If not paid by then, the unpaid balance will be considered past due,
and balances not paid when due shall be subject to finance charges of one and
one-half percent (1 1/2%) per month or portion thereof that the amount due
remains unpaid. No payment by Licensee, nor any endorsement or statement on
any cheque or writing accompanying any cheque or payment may be deemed an
accord and satisfaction unless agreed by ITI in a separate writing. ITI may
accept any such cheque or payment without prejudice to ITI's right to recover
any balance remaining or pursue any remedy available to ITI.
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7. LICENSEE'S OBLIGATIONS
7.1 COMPLIANCE WITH STANDARDS. Licensee agrees that its Institute shall
be managed and administered in a competent manner, in full compliance with
applicable laws (including without limitation copyright and trademark), this
Agreement and the Confidential Operations Manual to preserve, maintain and
enhance the goodwill associated with the ITI System and the Licensed Marks.
Licensee shall use only the ITI System in the operation of the Institute.
Licensee agrees to comply with ITI's standards, specifications and other
reasonable requirements which ITI may make in writing from time to time
concerning Institute site, layout, size, decor and systems (including
equipment, mechanical, electrical, computer and telecommunications) and use of
the Licensed Marks. ITI may prescribe specific standards for all signs
identifying the Institute, and Licensee shall place and maintain at least one
sign at each location meeting ITI's standards, subject to local ordinances.
Licensee shall purchase from ITI all ITI proprietary courseware and other
material as set out in the Confidential Operations Manual or otherwise in
writing by ITI and other information booklets, and explanatory and promotional
brochures developed and copyrighted by ITI. ITI may also prescribe from time
to time in the Confidential Operations Manual that certain material may or must
be obtained by the Licensee from prescribed third party sources. ITI shall not
unreasonably withhold consent to alternative third party suppliers. Licensee
must at all times maintain an inventory of such material sufficient to service
its students.
ITI warrants that proprietary products purchased by Licensee from ITI hereunder
meet ITI's specifications for such products. ITI neither makes, nor does it
authorize Licensee to make any other warranties, express or implied, with
respect to proprietary products delivered under the Agreement, and ITI
expressly excludes and disclaims all implied warranties of merchantability and
fitness for a particular purpose with respect to proprietary products delivered
under the Agreement.
Licensee shall also purchase certain commercially available equipment and
materials required by ITI in the Confidential Operations Manual or otherwise in
writing for use in ITI Institute. The approved sources of such equipment and
materials shall be designated by maker or author, publisher, and title in the
Confidential Operations Manual. Licensee is free to choose the wholesale or
retail distributor from which it purchases such equipment and materials. The
equipment and materials used by the Licensee must be consistent with the type,
quantity, quality, and variety associated with the ITI image. Additional
sources may, in ITI's discretion, be approved in the future. Licensee may
request that ITI consider a proposed additional source by following the
procedure stated in the Confidential Operations Manual or otherwise in writing
by ITI.
Licensee shall also purchase certain furniture products which meet the
specifications of ITI. This furniture can be obtained through ITI or other
sources. If Licensee desires to purchase furniture through another source, ITI
will provide Licensee with specifications upon such request from Licensee. If
the furniture does not meet ITI's specifications, Licensee may not use such
furniture in any Institute, and the Institute will not be considered open for
purposes of section 3.2 unless and until such conforming furniture is
installed.
Licensee shall not purchase courseware, explanatory and promotional brochures,
equipment, furniture items or other materials for which ITI has designated
specifications from any supplier which does not meet ITI's specifications.
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7.2 OTHER IT INSTRUCTION. It is expressly acknowledged that the Licensee
is in the business of providing education through its "American
Intercontinental University" and/or other subsidiaries or business units, with
facilities in the Territory. The Licensee shall offer to students and operate
at the Institute a Stand Alone ITI Program at all times during the term of this
Agreement. The Licensee shall not offer any information technology related
program or any other program which would contain any Program Delivery which is
from time to time included in the ITI System other than in accordance with this
Agreement. The Licensee may, with the written consent of ITI obtained in
accordance with this section, offer other educational programs within the
Territory using the ITI System in combination with or as part of such other
educational programs of the Licensee only provided that:
7.2.1 Unless otherwise agreed in writing by ITI, a minimum of 50%
of the students of the Institute on an Annualized Full Time
Equivalent Basis shall be enrolled either in the Stand Alone
ITI Program or other programs of the Licensee which include
the whole of the Stand Alone ITI Program (i.e. a Masters in
Information Technology);
7.2.2 ITI shall be required to approve the curriculum for any
program containing Program Delivery in any way contained in
or derived from the ITI System, which program shall not, in
the opinion of ITI, derogate from the quality of Program
Delivery otherwise required under the ITI System. In the
event that the Licensee wishes to provide a program
containing Program Delivery in any way including or derived
from the ITI System, the Licensee shall provide written
notice to ITI, which notice must contain details of the
Program Delivery sufficient to enable ITI to determine the
quality of the program, both as it relates to the use of the
ITI System and otherwise, including curriculum, materials,
and a schedule of Program Delivery. ITI may, in its sole
discretion, request additional information that it considers
necessary to assess the program. ITI shall use its best
efforts to assess the program and provide a response to the
Licensee within 30 days of receipt of the notice referred to
herein, provided that ITI shall not be under any obligation
to provide its approval where, in its sole discretion, the
program may derogate from the quality of Program Delivery
otherwise required under the ITI System;
7.2.3 Unless otherwise approved in writing by ITI, the tuition
allocated to the program using the ITI System in any program
which is not a Stand Alone ITI Program shall be in
compliance with section 6.5 of this Agreement;
7.2.4 Any post-graduate programs of the Licensee containing
Program Delivery in any way including or derived from the
ITI System shall not substitute or alter in any way the
curriculum or schedule for delivery of instruction used in
the ITI System;
7.3 EXPENSE OF UPGRADES. Licensee acknowledges that ITI may, in its sole
good faith discretion, change or add to the ITI System, including any standards
or policies applicable to Licensee, and that such changes or additions may
affect Licensee's required performance or obligations hereunder or may require
additional capital investment or expenditures by Licensee; but
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in no event shall Licensee be required to spend more than 3% of Gross Revenues
in any calendar year in response to changes in or additions to such standards
and policies, excluding required continuous replacement or upgrades to computer
equipment and related network infrastructure (which is at the expense of the
Licensee) for which specifications shall be provided from time to time in the
Confidential Operations Manual.
7.4 TRAINING . The success of every student enrolled in an Institute is
dependent upon the quality and integrity of the Program Delivery in which that
student receives instruction, and in turn the quality and integrity of the
Program Delivery is dependent upon the proper initial and continuous training
of Licensee's personnel involved in the operation of the ITI System. To assist
Licensee in the operation of its Institute and the ITI Program Delivery, ITI
agrees to provide certain training sessions. The training sessions referred to
in sections 5.1.9 (c), (f) and (g) and 5.2.3 shall be mandatory for the
Registrar, Director of Program Delivery and/or Director of Recruiting as
referred to in such sections, and Licensee shall be required to ensure that
such Registrar, Director of Program Delivery and/or Director of Recruiting, as
the case may be, is available on reasonable notice to take such training.
Prior to any training, Licensee and the employees to be trained must sign a
confidentiality and nondisclosure agreement in a form approved by ITI.
Each Institute operated by Licensee must at least have one of each of a
Registrar, Director of Program Delivery and Director of Recruiting, each of
whom is a separate individual actively involved in the management and operation
of the Institute and is certified/credentialed in accordance with the
Confidential Operations Manual. In the event that the employment of a
Registrar, Director of Program Delivery or Director of Recruiting of Licensee
should be terminated and Licensee hires a replacement for such position,
Licensee agrees to submit the replacement to a minimum five day ITI training
session within ninety (90) days of a replacement's first day of employment.
Such training shall be an additional service of ITI and the Licensee shall pay
to ITI for such training additional fees and charges specified in the Fee
Schedule. All travel, room and board expenses for Licensee and Licensee's
personnel attending the training shall be borne by Licensee.
Licensee shall adequately train all other personnel at Licensee's Institute
with respect to ITI's methods and materials, all as may be specified from time
to time by ITI in the Confidential Operations Manual.
7.5 CREDENTIALED INSTRUCTORS/FACILITATORS. Licensee agrees that only
Instructors credentialed as specified by ITI in the Confidential Operations
Manual will provide the classroom and/or other instruction and team
facilitation which may be part of the ITI Program Delivery. When required by
third party official curriculum vendors, Licensee will ensure that Instructors
have achieved the necessary industry certifications which may also be specified
by ITI in the Confidential Operations Manual. In addition, in order to
maintain the high image and quality standards of the ITI Program Delivery,
Licensee shall ensure that Instructors are trained through ITI's professional
development programs under the ITI System or through Licensee's
ITI-credentialed staff who have been approved by ITI to deliver such
professional development training, as specified by ITI in the Confidential
Operations Manual. Upgrades to credentials and mandatory industry
certifications may be required from time to time as specified by ITI. ITI
shall, in the Confidential Operations Manual, establish Instructor/student
ratios and provide detailed descriptions of technical competencies required by
Instructors.
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7.6 ADVERTISING TO PROMOTE THE ITI SYSTEM. ITI will make available to
Licensee from time to time certain advertising materials which have been
approved by ITI as being suitable for advertising and promotional purposes.
Licensee shall not make any changes to such pre-approved advertising materials
without the advance written consent of ITI. ITI may subsequently withdraw its
approval of any previously approved advertising materials in which event
Licensee shall cease using such advertising within a reasonable period of time,
which shall in no event exceed ninety (90) days. Licensee shall not publish or
otherwise utilize in any medium any advertising which has not been previously
approved or provided by ITI. If Licensee wishes to use any advertising which
has not been previously approved by ITI, Licensee shall submit a copy of each
new advertisement to ITI prior to the first use of that advertisement, and
shall not use any advertising without the express written approval of ITI. Any
advertisement submitted to ITI for approval shall be deemed approved if not
expressly disapproved by ITI within twenty-one (21) calendar days after receipt
by ITI. Failure of the Licensee to so submit constitutes a breach by the
Licensee of this Agreement. Licensee may participate in or contribute to a
local or regional advertising cooperative comprised of such Licensee and ITI
operated Institutes as ITI shall designate or as shall elect to participate
with Licensee.
7.7 LICENSEE TO OBTAIN PERMITS AND LICENSES. Prior to commencing business
operations Licensee shall use its best efforts to obtain all local, state and
federal permits, licenses and certificates necessary to operate the Institute,
including those from the State of Georgia, the Southern Association of Colleges
and Schools, and the United States Department of Education. Licensee shall
also comply at all times with all educational, safety, building or other local,
state and federal statutes, ordinances, regulations, codes, licensing
requirements or standards applicable to Licensee's Institute. ITI shall in no
manner be liable for advising Licensee of such matters or determining
Licensee's compliance therewith and Licensee will defend, indemnify and hold
ITI harmless from any claims or loss relating to same. The Licensee's
obligations pursuant to this Agreement are subject to receipt by the Licensee
of all necessary approvals and licenses from the State of Georgia, the Southern
Association of Colleges and Schools and the United States Department of
Education, provided that the obligations of the Licensee to pay license fees to
ITI pursuant to paragraph 6.1 shall be effective until such time as the
Licensee has given to ITI written notice that it has used its best efforts and
is unable to obtain such approvals and licenses, following which monies due and
payable prior to such notice shall remain due and payable. The parties agree
that they will use their reasonable best efforts to modify this Agreement to
comply with requirements of the authorities of the State of Georgia, the
Southern Association of Colleges and Schools, and the United States Department
of Education in respect of this arrangement.
7.8 BEST EFFORTS. Licensee shall at all times during the term hereof
actively promote and sell ITI System services at and from the Institute and
will use its primary and best efforts to cultivate, develop and expand the
market therefore within the Territory consistent with ITI's evaluation of the
potential of the Territory taking into consideration such factors as the size
of population in and market potential of the Territory, competition in the
marketplace, the prior performance of Licensee, of ITI or other licensees in
other geographic areas, and such other financial and market factors as ITI may
deem pertinent. Excluding the 24 months following commencement of Program
Delivery at the Institute, Licensee shall maintain at the Institute a minimum
of 250 students on a Annualized Full Time Equivalent Basis.
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7.9 USE OF DESIGNATED COMPUTER SYSTEMS. Upon ITI's request, Licensee
agrees to install, update and replace any equipment (including both networked
and stand alone hardware and software) designed to be used in connection with
the Program Delivery and administration of the Institute, and to utilize
equipment, hardware and software of such kind and in such manner as specified
by ITI from time to time in the Confidential Operations Manual. The Licensee
shall provide dedicated (24 hours x 7 days) Internet access for each networked
computer system. The Internet connection and any additional security measures
(e.g., firewalls) must accommodate point to point type applications such as
desktop video conferencing. Without limiting the generality of the foregoing,
Licensee agrees that it shall install and utilize in connection with the
Institute such hardware and software as ITI may require from time to time for
Program Delivery and administration, which is compatible and accessible to
ITI's central administrative system through modem or other manual or electronic
access. Upon ITI's request, Licensee agrees to provide ITI with electronic and
physical access to its computer systems and to send ITI original or duplicates
of all electronic information used in the operation of the Institute, but in no
event shall this provision entitle ITI to any information other than that
pertaining to Licensee's Institute which ITI would have the right to secure if
ITI were auditing Licensee's records under section 6.6.
7.10 ADVERTISING EXPENDITURES. In order to promote its Institute, Program
Delivery and the ITI System generally, Licensee agrees that it shall expend on
approved advertising a monthly minimum of six percent (6%) of Licensee's
monthly Gross Revenues, averaged over the previous six months, on the type of
advertising specified in this Agreement or on other marketing and advertising
materials approved by ITI. Provided however, that there shall be no monthly
minimum advertising expenditures if the Licensee is operating the Institute at
a minimum of 85% capacity, with capacity being scheduled capacity agreed to by
ITI and the Licensee, each acting reasonably, on an Annualized Full Time
Equivalent Basis. Licensee shall keep appropriate records and receipts for all
advertising or marketing expenditures for at least three years, and shall
provide substantiating data for such expenditures upon request by ITI.
7.11 QUALITY ASSURANCE. In order to enhance the public image and
reputation of the ITI System and maintain and ensure the quality and
consistency of services provided thereunder, ITI may, with or without notice
(without notice, a maximum of four times in a calendar year) send an ITI
representative to Licensee's Institute, and Licensee shall allow ITI's
representative to observe Licensee's operation and methods. Licensee will
fully cooperate with such ITI representative and will make available any data
concerning Licensee's Institute and its operation as reasonably requested by
such ITI representative. If one is conducted, ITI's representative will
procure and deliver to Licensee a Quality Assurance Review which will describe
the results of the Review and include a Correction Plan setting forth any
material deficiencies observed and recommendations relating thereto. Licensee
will, within the time limits set forth in such Correction Plan, comply with and
fully implement any corrective action designated therein as mandatory or
required, and will consider in good faith any other recommendations or
suggestions. While an ITI representative is present in Licensee's Institute,
the representative will endeavour to minimize the disruption of the educational
services being provided by Licensee.
7.12 COMPLIANCE WITH EDUCATIONAL STANDARDS. ITI has established certain
defined standards in methods and procedures for Program Delivery, and will
offer help and assistance to the Licensee
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in attaining and maintaining those standards. Licensee shall comply with all
educational standards designated as required or mandatory by ITI in its
Confidential Operations Manual or otherwise in writing. From time to time, ITI
may develop new or enhanced programs or modules, and shall make such programs
or modules available to Licensee as either mandatory or optional items. In the
event the item is designated as mandatory, ITI may not require implementation
of the item in Licensee's Institute earlier than 90 days after the item is
generally made available to ITI's Licensees. Enhancements or updates to
mandatory programs shall be provided to Licensee by ITI. Optional programs and
updates to same will be made available to Licensee for such additional charges
as ITI shall establish.
7.13 BOARD OF DIRECTORS. Unless ITI otherwise directs from time to time,
management of the Licensee will propose one nominee of ITI for election to the
Board of Directors of EduTrek International, Inc. Management shall do all
things reasonably within its ability to ensure that such nominee is elected to
the Board of Directors. ITI agrees that Mr. Xxxxxx Xxxxxx will be its nominee
unless a conflict exists which would prevent Xx. Xxxxxx from actively
participating on such Board of Directors.
7.14 LEASE. A fully executed copy of any lease of the Institute premises
shall be delivered to ITI promptly following execution thereof.
7.15 NON COMPETITION AGREEMENTS. The Licensee are required to obtain
non-competition agreements in favour of the Licensee and ITI, in such form and
content as may be used from time to time by ITI or as may otherwise be
prescribed from time to time by ITI in the Confidential Operations Manual, from
certain of the Licensee's and its affiliates key shareholders, directors,
officers or employees prescribed from time to time by ITI.
7.16 CONFIDENTIALITY AGREEMENTS. In order to preserve the confidentiality
of the ITI System, including ITI's proprietary information, Licensee expressly
agrees that no person or entity shall have or be allowed to have, nor shall the
Licensee allow without the written consent of ITI, access to any ITI
educational programs, trade secrets, confidential information or the
Confidential Operations Manual unless it is reasonably required for the
day-to-day operation or conduct of activities in the Institute in accordance
with this Agreement. ITI may, at is sole discretion, require the Licensee to
obtain confidentiality agreements in favour of the Licensee and ITI, in such
form and content as may be used from time to time by ITI or as may otherwise be
prescribed from time to time by ITI in the Confidential Operations Manual, from
certain of its shareholders, directors, officers or employees prescribed from
time to time by ITI. The obligation of confidentiality does not extend to
information which at the time of disclosure is generally available to the
public (other than as a result of a prohibited disclosure by Licensee),
information which after disclosure becomes generally available to the public by
publication or otherwise through no fault of Licensee, information which is in
the possession of Licensee prior to disclosure and which was not acquired,
directly or indirectly, from ITI, information received by Licensee from a third
party, provided Licensee is not on notice that such party is bound by a
confidentiality agreement or is otherwise prohibited from transmitting the
information to Licensee by contractual, legal or fiduciary obligation owing to
ITI, and information now or hereafter independently developed by Licensee.
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8. TRANSFER AND ASSIGNMENT
8.1 TRANSFER OR ASSIGNMENT BY ITI. This Agreement and all rights and
duties of ITI hereunder may be freely assigned or transferred by ITI at its
sole discretion to any person or legal entity which agrees to assume ITI's
obligations hereunder, with the Licensee's prior written consent acting
reasonably, and shall be binding upon and enure to the benefit of ITI's
successors and assigns including, without limitation, any entity which acquires
all or a portion of the capital stock of ITI or any entity resulting from or
participating in a merger, consolidation or reorganization in which ITI is
involved, and to which ITI's rights and duties hereunder are assigned or
transferred.
8.2 ASSIGNMENT BY LICENSEE. The Licensee shall not, without ITI's prior
written consent acting reasonably, directly or indirectly sell, assign,
transfer, convey, give away, pledge, mortgage or otherwise encumber any
interest in the License, this Agreement or any portion or aspect thereof. Any
purported assignment occurring by operation of law or otherwise, including any
assignment by a trustee in bankruptcy, without ITI's prior written consent
shall be a material default of this Agreement. Licensee shall have no rights
to sublicense under this Agreement. Any change of control of the Licensee is
deemed to be a transfer of the License, provided that this clause shall not
prevent any transfer or issue of shares in EduTrek International, Inc., the
parent company of the Licensee or reorganization of the share capital thereof.
8.3 APPROVAL OF TRANSFEREES. Prior to Licensee effecting any transfer
hereunder, ITI shall have forwarded to Licensee its conditional approval of the
proposed transfer subject to compliance with this section. Provided that
Licensee and the proposed transferee comply with the provisions of this
section, ITI shall not unreasonably withhold its consent to a transfer by
Licensee of any interest in this License, this Agreement or any equity or
voting interest in Licensee. Licensee agrees to place in escrow with a trustee
approved by ITI any and all funds received from the proposed transferee until
such time as all of the following requirements have been met:
8.3.1 The transferee shall demonstrate to ITI's sole satisfaction
that it meets all of ITI's requirements for becoming a
licensee, including, without limitation, that it meets ITI's
managerial, financial and business standards then in effect,
meets the financial requirements ITI shall deem appropriate
in light of the terms and conditions of the proposed
transfer; will comply with all Program Delivery and training
requirements of ITI and has the ability to operate the
licensed business (as may be evidenced by prior related
business experience or otherwise).
8.3.2 As of the effective date of the proposed transfer, all
obligations of Licensee under this Agreement and under any
other agreements between Licensee and ITI, its subsidiaries
and affiliates are fully satisfied. Licensee shall have
paid all outstanding debts and obligations to ITI, its
subsidiaries and affiliates.
8.3.3 As of the effective date of the proposed transfer, all
obligations of the proposed transferee to ITI, its
subsidiaries and affiliates must be fully satisfied.
8.3.4 If ITI is then offering license agreements to new licensees,
the proposed transferee must execute such documents as are
then required by ITI including ITI's then
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current form of license agreement which may contain terms
and conditions different from those in this Agreement;
otherwise, this Agreement shall be assumed by the
transferee.
8.3.5 There shall have been paid to ITI a transfer fee in the
amount of Twenty-five Thousand Dollars ($25,000).
8.3.6 There shall have been paid to ITI a transfer training fee in
such amount specified by ITI to be a reasonable estimate of
the training costs which would be incurred if ITI were to
offer this Territory to a new licensee, to fund training of
the transferee and/or its employees, and the transferee
agrees to complete, to ITI's satisfaction, the training then
required by ITI.
8.3.7 ITI will perform a Quality Assurance Review with respect to
the Institute to be transferred and will make the results
thereof available to Licensee and the proposed transferee.
Thereafter, Licensee shall prepare and deliver to ITI, prior
to the transfer, a written statement specifying how any
deficiencies set forth in the Review will be corrected, and
whether the expense thereof will be borne by Licensee or the
proposed transferee. Provided, however, that ITI assumes no
liability or responsibility to Licensee or the proposed
transferee with respect thereto.
8.3.8 Licensee agrees in writing to transfer to the proposed
transferee all curricula, books, programs, materials and
other items reasonably necessary to operate the Institute,
as set forth in the quality Assurance Review referenced
above.
8.3.9 Licensee shall have executed a general release in a form
satisfactory to ITI, of any and all claims against ITI, its
subsidiaries, affiliates and their officers and directors,
including, without limitation, claims arising under federal,
state and local laws, rules and ordinances arising out of,
or connected with, the performance of this Agreement.
8.3.10 ITI's consent to a transfer of any interest in the License
granted herein shall not constitute a waiver of any claims
it may have against the transferring party, nor shall it be
deemed a waiver of ITI's right to demand exact compliance
with any of the terms of this Agreement by the transferee.
8.4 RECORD OF OWNERSHIP. Without regard to whether ITI's consent to the
transfer is or may be required, Licensee shall submit to ITI at any time upon
request, a list of all holders of equity and voting interests of record
reflecting their respective present interests in Licensee, in such form as ITI
may reasonably require.
8.5 RIGHT OF FIRST REFUSAL. Before any transfer described above, Licensee
must advise ITI in writing of the proposed transfer, including the name and
background experience of the proposed transferee and all terms of the proposal.
ITI shall have the right of first refusal, to be exercised within 30 days of
ITI's receipt of Licensee's written notice, to acquire such interest on the
identical
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bona fide terms proposed by the transferee, or, at ITI's option, for the cash
equivalent thereof. In the event ITI does not elect to exercise its rights of
first refusal as provided, the other conditions of an assignment or transfer
stated herein must nevertheless be met, and Licensee may conclude the proposed
transfer, but only if such transaction is closed within sixty (60) days of
ITI's election not to accept, and only if the transaction closes on the same
terms and conditions as was advised to ITI. In the event the transaction is
not so closed, Licensee must again comply with all of the terms of this right
of first refusal before transferring to the proposed transferee or any other
transferee.
9. TERM AND RENEWAL
9.1 EXPIRATION. This Agreement will expire on July 31, 2007 unless
otherwise agreed.
9.2 RENEWAL OF LICENSE AGREEMENT. Licensee may renew the License granted
under this Agreement for one ten-year renewal term, with renewal being on this
same form of Agreement including any subsequent modifications or amendments
agreed to by ITI and Licensee. There shall be no renewal fee required of
Licensee when renewing under this section 9.2. Without waiving its rights not
to renew as provided in this section, ITI will notify Licensee of the upcoming
expiration date, and the procedures for securing approval of renewal, at least
270 days prior to the expiration date. Renewal will be granted provided that
Licensee meets the following conditions:
9.2.1 Licensee is in ITI's opinion, acting reasonably, in
substantial compliance with all conditions and terms of the
Agreement at the time of renewal.
9.2.2 Licensee has, during the last three years of the term of
this Agreement, never failed to timely cure any default as
to which Licensee was given a Notice of Default.
9.2.3 Licensee has never, during the term of this Agreement,
committed a material breach of this Agreement which cannot
be cured and as to which Licensee was given a Notice of
Default.
9.2.4 Licensee gives ITI notice of its intention to renew in the
last year of the ten-year term of the Agreement (but not
less than 270 days prior to the scheduled final day of the
term). If Licensee fails to give such notice or to so
agree, this Agreement shall expire on the expiration date of
the term without further notice to Licensee.
9.2.5 Licensee has complied with ITI's requirements for additional
performances or obligations of Licensee other than those set
forth herein such as correction of deficiencies,
modernization or updating, which ITI believes in its good
faith judgment shall be required and which may require
significant additional capital expenditures by Licensee.
9.3 MONTH-TO-MONTH LICENSE. If Licensee fails to give notice of its
election to renew the License as provided in section 9.2 and ITI nonetheless
permits Licensee to continue to operate an Institute under the Licensed Marks
and/or ITI System, all terms of this Agreement shall be deemed to be extended
on a month-to-month basis. In that event either party may terminate this
Agreement effective the last day of any calendar month, upon thirty (30) days'
notice to the other party.
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9.4 TERMINATION BEFORE EXPIRATION. Notwithstanding sections 9.1 and 9.2,
this Agreement may be terminated as provided in section 10 hereof.
9.5 SURVIVAL. Notwithstanding any other provisions of this Agreement, the
provisions of section 11 of this Agreement shall survive the termination of
this Agreement, whether by expiry of the term or otherwise, and remain in full
force and effect in accordance with its terms.
10. TERMINATION
10.1 DEFAULT AND TERMINATION NOTICES. If Licensee is materially in breach
of any provision of this Agreement, including, but not limited to section 10.2
of this Agreement, ITI may give a Notice of Default and Opportunity to Cure
which shall be not less than thirty (30) days with respect to curable monetary
defaults and forty-five (45) days with respect to curable non-monetary
defaults, after the date of the Notice. In no event, however, shall the number
of days of notice be less than that required by any applicable statute or
regulation of the state in which the Territory lies. If Licensee is determined
by ITI to have cured the breach before the date stated in the Notice, such
Notice shall be of no further effect. If the breach has not been cured before
the cure date stated in the Notice, then ITI may give a Notice of Termination
stating its intention to terminate on a certain date. With respect to breaches
stated herein or otherwise determined to be incurable, ITI need not provide a
period for cure.
10.2 MATERIAL BREACHES THAT MAY BE CURED. The following types of activity
are acknowledged by Licensee to jeopardize the goodwill associated with the ITI
System and the Licensed Marks, and shall, unless cured as provided herein, be
cause for termination. Provided, however, that although ITI intends to allow
Licensee to cure the defaults listed hereunder, if in ITI's good faith
judgement, reasonably exercised, such default cannot reasonably be cured (such
as, but not limited to damages to ITI from misrepresentations or warranties
referenced in section 10.2.3), then such breaches shall be deemed incurable
under section 10.3 hereof, and same shall be grounds for termination, effective
on the earlier of delivery or three days after mailing by ITI of a written
declaration of termination to Licensee.
10.2.1 The Licensee offering directly or indirectly, information
technology related programs at Licensee's Institute or
otherwise not approved by ITI and incompatible with the ITI
System and this Agreement.
10.2.2 Delivery by the Licensee or to allow receipt from the
Licensee, directly or indirectly, of any component of
Program Delivery using the ITI System outside of the
Territory without an appropriate license from ITI.
10.2.3 Expressly or impliedly to misrepresent, warrant or guarantee
the results of the licensed programs, except as specifically
authorized by ITI.
10.2.4 To fail to pay when due any invoice of ITI or of any third
party for goods or services Licensee has received; or any
sales or other taxes when due and before
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delinquent, except when being contested in good faith by
appropriate proceedings; or any rental or other amount due
under a lease covering the Institute premises.
10.2.5 To fail to provide at Licensee's Institute adequately
trained personnel as required by this Agreement.
10.2.6 Notorious behaviour by a principal, director, officer, agent
or employee of Licensee which would tend to bring Licensee's
Institute or the ITI System into disrepute. If the activity
is the type described in this subsection, ITI may require
Licensee, in order to the cure the breach adequately, to
sever its relationship with the person whose behaviour is
offensive.
10.2.7 To fail to provide any Gross Revenue Report or to pay any
royalty payment when due. In the event that Licensee fails
four times within any twelve-month period to pay any one or
more of such sums within ten days after the date same are
due, and has each time been notified by ITI of said failure,
Licensee may be deemed by ITI to have committed an incurable
breach of this Agreement.
10.2.8 To fail to comply with mandatory or required standards and
policies set forth in the Confidential Operations Manual and
any changes, additions or modifications thereto, or to fail
to implement required or mandatory components of Program
Delivery, module or other materials, or to adhere to
mandatory or required educational policies or standards, or
to implement new mandatory components of Program Delivery as
required by ITI.
10.2.9 To operate an Institute without obtaining and maintaining
all necessary permits and licenses, or to fail to comply
with applicable laws.
10.2.10 To fail to permit ITI to inspect the premises, or observe
the operation, or conduct an audit of Licensee's Institute.
10.2.11 To allow unlawful activities to occur or to sell, utilize or
exchange any unauthorized or illegal material at Licensee's
Institute.
10.2.12 To fail to maintain insurance as required by this Agreement.
10.2.13 To fail to obtain ITI's written approval of the site, design
and layout for any Institute that is opened within the
Territory.
10.2.14 To fail to implement or fully comply within the time
prescribed, any items designated as mandatory or required on
a Plan of Action delivered to Licensee pursuant to this
Agreement.
10.2.15 To place an advertisement or cause an advertisement to be
circulated in another Licensee's exclusive territory or in
the territory of an ITI owned Institute without
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the prior written approval of ITI, except pursuant to
section 7.6 hereof, or to violate ITI's policies, as
established from time to time, regarding advertising.
10.2.16 To fail to adhere to any other material provision of this
Agreement, any other agreements between Licensee and ITI,
its subsidiaries or affiliates, or any authorized
specification, standard, policy or operating procedure
prescribed by ITI as mandatory or required.
10.2.17 Failure of the Licensee to have representatives attend
training as required by section 7.4.
10.3 MATERIAL BREACHES THAT CANNOT BE CURED. ITI may terminate this
Agreement, effective on the sooner of delivery or three days after mailing a
written declaration of termination to the Licensee if any one or more of the
following material, non-curable breaches of this Agreement occur:
10.3.1 An assignment or transfer without ITI's prior written
consent which is prohibited under section 8 of this
Agreement.
10.3.2 Any incurable breach of Licensee's confidentiality
obligations under this Agreement which results in material
damage to ITI, in ITI's discretion acting reasonably.
10.3.3 Any act causing an incurable tarnishment of ITI's reputation
which results in material damage to ITI, in ITI's discretion
acting reasonably.
10.3.4 Assuming that Licensee operates but one Institute in the
Territory; the abandonment of the Institute, including any
closing of the Institute for a period of twenty (20) or more
consecutive days, without the written approval of ITI.
ITI's approval shall be given in those instances when the
Institute has been closed as the result of an act of God,
fire or weather-related catastrophe, but only on the
condition Licensee shall submit to ITI a plan for re-opening
the Institute within one hundred and eighty (180) days of
its closing. ITI's consent shall not be given in the event
Licensee's closing of the Institute is related to or
pursuant to the events described in sections 10.3.5 to
10.3.7 below, or due to any adverse financial or economic
condition suffered by Licensee.
10.3.5 The insolvency, bankruptcy, or reorganization of the
Licensee under the bankruptcy laws.
10.3.6 The making by Licensee of an assignment for the benefit of
creditors.
10.3.7 The appointment of a receiver or trustee of all or any part
of the assets of Licensee or Licensee's business.
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10.3.8 The conviction of Licensee or its principals of a felony or
misdemeanour relevant to the operation of the Institute.
10.3.9 The breach of any of the terms of this Agreement four (4) or
more times within any twelve (12) month period, whether or
not such breach was cured, each breach having been the
subject of a separate notice by ITI to Licensee.
10.3.10 Excluding the 24 months following commencement of Program
Delivery at the Institute, to have fewer than 250 students
on a Annualized Full Time Equivalent Basis.
10.3.11 Breach of section 7.2.
10.4 REMEDIES. The remedies hereby reserved are independent, cumulative,
and concurrent, and the exercise of any one shall not preclude the simultaneous
or subsequent exercise of the same, or any other remedy. ITI's right of
termination in this section is in addition to any other rights or remedies it
may have. ITI's failure to exercise any remedy available to it shall not be
deemed a waiver of its right to exercise any other right or remedy under this
Agreement.
10.5 LICENSEE'S NOTICE OF BREACH BY ITI. It is the intention of ITI to
comply with all obligations, performances and duties required of it under this
Agreement. In the event that Licensee shall claim that ITI has failed to meet
any obligation under this Agreement, Licensee shall provide ITI with a notice
of such claim. Licensee's notice shall describe ITI's alleged deficiency and
shall provide ITI with an opportunity to cure same within at least thirty (30)
days from the date of receipt of the notice by ITI.
11. RELATIONSHIP AFTER EXPIRATION OR TERMINATION
11.1 OBLIGATIONS OF LICENSEE. Upon the expiration of termination of this
Agreement, Licensee agrees that it shall immediately take the following action:
11.1.1 Licensee shall cease to do business under any name
incorporating or similar to "ITI Information Technology
Institute" or "ITI Learning Systems Inc." and shall cease to
use any and all of the ITI System, including Licensed Marks,
proprietary programs, curricula, systems, techniques, or
materials.
11.1.2 Licensee shall promptly return to ITI all proprietary,
confidential or trade secret materials in its possession,
custody or control including without limitation, the
Confidential Operating Manual(s), all computer software and
database material, customer lists, records and files.
Licensee hereby covenants and agrees that it will not
destroy, damage, hide or take any steps so as to prevent ITI
from obtaining any such information, nor will Licensee
retain any printouts, disks or tapes containing any of the
Program Delivery information or data stored in its computer
system. Licensee shall retain no copy or record of any of
the foregoing, except Licensee's copy of this Agreement, any
correspondence between the parties and any other documents
which Licensee reasonably needs for compliance with any
provision of
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law. Licensee expressly affirms and agrees that the
foregoing software, materials, lists, records and files
shall be deemed to be the property of ITI, and that ITI
shall have the right to enter upon Licensee's premises and
to remove such materials.
11.1.3 Licensee shall immediately remove and destroy or return to
ITI within thirty (30) days after such termination all
signs, designs and insignia in any way indicating or
suggesting that Licensee's business establishment is related
to or connected with ITI, its subsidiaries or affiliates, or
any of ITI's licensees.
11.1.4 Licensee acknowledges that there will be substantial
confusion in the mind of the public if, after the expiration
or termination of the Agreement Licensee continues to use
any of the listed or unlisted telephone numbers used by
Licensee's Institute, or listed in the "Yellow Pages" or
"White Pages" of the telephone directory under the name
"ITI," or some other name confusingly similar thereto.
Therefore, Licensee agrees that promptly after the
expiration or termination of the Agreement for any reason
whatsoever, Licensee will forthwith cease and desist using
such telephone numbers and, upon written demand of ITI,
direct the telephone company servicing Licensee's Institute
to transfer the telephone numbers utilized by or listed for
the Institute in the then-current "Yellow Pages" and "White
Pages" of the telephone directory to ITI, or to such other
person and at such location as ITI may direct. If Licensee
does not promptly so direct the telephone company, Licensee
irrevocably appoints ITI as its attorney-in-fact to so
direct the telephone company to make such transfers under
the terms of the Agreement.
11.1.5 Except as provided in section 11.2 below, Licensee shall
immediately refrain from engaging in any and all contacts
with customers, whether with respect to providing service to
customers, or for any other purpose whatsoever.
11.2 SETTLEMENT OF OUTSTANDING CONTRACTS WITH STUDENTS. Licensee agrees
that it is solely responsible to settle all claims of enrolled students whose
Program Delivery are not completed on the effective date of expiration or
termination of this Agreement. Upon termination, Licensee may not in any event
accept any new students at Licensee's Institute. However, if in ITI's sole
judgment, the breach that led to termination is not such that Licensee should
be immediately prevented from any further Program Delivery, ITI may, in
writing, allow Licensee to continue to complete the Program Delivery for some
or all of Licensee's existing students. ITI may in its reasonable discretion
waive the application of section 11.1 for a period not to exceed nine months,
to the extent necessary to allow Licensee to complete the student's course of
Program Delivery.
11.3 CESSATION OF SALES ACTIVITIES. If Licensee is in breach of any
material provision of this Agreement which is either incurable or which has not
been cured after ITI has given Licensee a Notice of Default and Opportunity to
Cure, ITI shall have no obligation whatsoever to sell any products, equipment
or services to Licensee on cash or credit. Licensee shall not thereafter have
any right to offer or sell ITI System products or services, and Licensee shall
not, as a result thereof, have a defence at law or equity based upon
impossibility of Licensee's performance, nor will Licensee as a result have any
claim against ITI.
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11.4 PAYMENT OF ALL OBLIGATIONS DUE. The expiration or termination of this
Agreement shall not relieve Licensee from its obligation to pay ITI and other
creditors when due any and all obligations and indebtedness incurred, or
license fee accrued, as of the effective date of termination, and Licensee's
obligations under sections 4 and 11.4 shall remain in full force and effect.
11.5 LICENSEE AND PRINCIPALS NOT TO COMPETE. Licensee acknowledges that it
has received information which ITI has developed in the ITI System over time at
great expense, including but not limited to methods of site selection;
marketing methods; delivery methodology and service methods and skills. They
further acknowledge that this information is not generally known in the
industry and that to develop it itself would be expensive, time-consuming and
difficult. Licensee further acknowledges that ITI's information provides a
competitive advantage and will be valuable to it in the development of its
business, and that gaining access to it is the primary reason why they are
entering into this Agreement. Accordingly, Licensee agrees that ITI's
information as described above constitutes trade secrets belonging to ITI. In
consideration of ITI's confidential disclosure of these trade secrets, Licensee
covenants:
11.5.1 During the term of this Agreement, to use its best efforts
in operating the licensed business and in recommending,
promoting and encouraging patronage of all ITI System
Institutes.
11.5.2 In the event this Agreement is terminated, expires, or is
not renewed, or if Licensee assigns or transfers its
interest herein to any person or business organization, then
in such event Licensee covenants, for a period of three (3)
years after such termination, expiration, non-renewal,
transfer or assignment not to engage in any education
business offering information technology education or
training contained in or derived from the ITI System, within
the Territory or otherwise, including at Los Angeles or
London, England, other than as an authorized licensee of
another ITI Institute.
11.5.3 The parties agree that each of the foregoing covenants shall
be construed as independent of any other covenant or
provision of this Agreement. Should any part of the
restrictions contained in this section be found to be
unenforceable by virtue of its scope in terms of area,
business activity prohibited or length of time, and should
such part be capable of being made enforceable by reduction
of any or all thereof, Licensee and ITI agree that the same
shall be enforced to the fullest extent permissible under
the law. The running of any period of time specified in
this section shall be tolled and suspended for any period of
time in which the Licensee is found by a court of competent
jurisdiction to have been in violation of any such
restrictive covenant. ITI may, unilaterally, at any time,
in its sole discretion, revise any of the covenants in this
section so as to reduce the obligations of Licensee
hereunder. Licensee further expressly agrees that the
existence of any claim it may have against ITI whether or
not arising from this Agreement, shall not constitute a
defence to the enforcement by ITI of the covenants in this
section.
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11.6 ASSIGNMENT OF TERRITORY UPON TERMINATION. Upon termination of this
Agreement for any reason, ITI may immediately license the Territory or any
portion thereof to another person or may itself operate an Institute within the
Territory.
12. INJUNCTIVE RELIEF AND LIQUIDATED DAMAGES
Licensee acknowledges that ITI's remedy at law for Licensee's breach
of section 4, section 11.1, or section 11.5 would be inadequate and that,
accordingly, in such events, ITI shall be entitled to immediate injunctive
relief. In addition to, and not in derogation of, the right to obtain an
injunction, ITI shall be entitled to liquidated damages until such injunction
issues. Due to the difficulties of computing actual damages from any such
breach, damages shall be fixed in an amount equal to the average monthly
royalty Licensee had paid ITI over the 36 month period (or such shorter period
if Licensee held the Agreement for a lesser period) preceding termination or
expiration of this Agreement for each month or part thereof that Licensee is in
breach of section 4, section 11.1, or section 11.5. The parties agree that the
stated sum is not a penalty, but reasonably represents the actual damages ITI
will suffer in the event of a breach of any one of the enumerated sections.
13. HOLD HARMLESS, INDEMNIFICATION AND INSURANCE
13.1 HOLD HARMLESS AND INDEMNIFICATION. Licensee agrees that it will
defend, indemnify and save ITI harmless from all fines, suits, proceedings,
claims, demands, or actions of any kind or nature, instituted by any third
party, arising or growing out of or otherwise connected with Licensee's
operation of its licensed business, except in respect of claims made by
students of Licensee based upon errors or misinformation occurring in the
copyrighted materials provided by ITI under this Agreement, as to which latter
claims ITI agrees to indemnify Licensee and save Licensee harmless from any and
all liability.
13.2 INSURANCE. Licensee shall, at its expense and no later than upon
commencement of the business contemplated by this Agreement, produce and
maintain in full force and effect throughout the term of this Agreement the
types of insurance enumerated in the Confidential Operations Manual which shall
be in such amounts as may from time to time be required by ITI, including but
not limited to workers' compensation insurance, all risk protection with
replacement cost coverage on equipment, furnishings, fixtures, and building,
comprehensive public liability insurance and business interruption insurance.
Licensee may, but is not required to, also secure teacher's professional errors
and omission coverage if available. ITI may at any time amend the amount of
insurance Licensee is required to carry. ITI shall be named as an insured
under the comprehensive public liability insurance policies, and otherwise as
its interest may appear. Licensee shall keep and maintain any and all
insurance required hereunder, and under any lease or any loan agreement, in
full force and effect at all times during the term of this Agreement. Licensee
shall make timely delivery of certificates of all required insurance to ITI,
each of which shall contain a statement by the insurer that the policy will not
be cancelled or materially altered without at least thirty (30) days' prior
written notice to ITI. The procurement and maintenance of such insurance shall
not relieve Licensee of any liability to ITI under any indemnity requirement of
this Agreement. In the event that Licensee fails to carry and maintain any and
all insurance as required hereunder, Licensee authorizes ITI to secure such
insurance for Licensee and to charge Licensee for such premiums.
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14. PARTIES AS INDEPENDENT CONTRACTORS
Nothing in this Agreement is intended by the parties hereto to create
a fiduciary relationship between them nor to constitute Licensee an agent,
legal representative, subsidiary, joint venturer, partner, employee or servant
of ITI for any purpose whatsoever. It is understood and agreed that Licensee
is an independent contractor and is in no way authorized to make any contract,
warranty or representation or to create any obligation on behalf of ITI.
In all dealings with third parties including, without limitation,
employees, suppliers and customers, Licensee shall disclose in an appropriate
manner acceptable to ITI that it is an independent entity licensed by ITI. At
ITI's request, Licensee shall prominently indicate on all letterheads, business
forms and the like that it is a Licensee of ITI by using language substantially
stating Licensee is "A Licensee of ITI Learning Systems Inc."
15. NOTICES
Any notice required or permitted by this Agreement shall be in
writing, addressed to a party at the address given below, or such other address
as the parties may advise in writing, or to such other address as the party by
notice informs the other, shall be mailed by registered or certified mail if
not hand delivered or transmitted via facsimile, and shall be effective on the
sooner of delivery or five days after mailing. The addresses for service are:
ITI Learning Systems Inc.
x/x XXX Information Technology Institute Incorporated
Xxxxx 000, 0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX X0X 0X0
Attention: Chairman
American European Corporation or EduTrek International, Inc.
Tower Place, Suite 2000
0000 Xxxxxxxxx Xxxx XX
Xxxxxxx, Xxxxxxx 00000
Attention: President
with a copy to:
Xxxxx Xxxxxxxx & Xxxxxxx, LLP
Atlanta Financial Centre
Suite 1800
0000 Xxxxxxxxx Xxxx XX
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx Xxx Xxxxxxxx
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16. ATTORNEY FEES
In the event either ITI or Licensee institutes a suit or action to
enforce any term or provision of this Agreement, the most prevailing party in
the suit or action, or on appeal, shall be entitled to recover from the losing
party a reasonable attorney fee to be set by the trial or appellate court in
addition to costs or disbursements provided by law.
17. CONSTRUCTION
All captions and headings are for reference purposes only and shall
not be deemed to be a part of this Agreement. If any part of this Agreement
shall, for any reason whatsoever, be declared invalid or unenforceable, the
affected portion shall nevertheless be enforced to the fullest extent allowed
by law, and such declaration shall not affect the validity of the remaining
provisions, which shall remain in full force and effect. The parties hereby
declare their intention that they would have executed the remaining portion of
this Agreement without including herein any portions which may, for any reason,
be declared invalid in the future.
18. TIME IS OF THE ESSENCE
Time is of the essence of this Agreement.
19. JURISDICTION AND VENUE
The parties agree that this agreement shall be interpreted and
enforced according to the laws of the Province of Nova Scotia, and the Parties
irrevocably attorn to the courts in the Province of Nova Scotia.
20. MOST FAVOURED NATIONS PROVISION
In the event that ITI shall enter into any agreement to grant a
license of the ITI System in another territory with any other person, firm or
corporation which agreement, when taken as a whole, shall contain more
favourable terms, covenants and conditions as those contained herein, ITI shall
notify the Licensee and the Licensee may in writing request to ITI that the
terms of this Agreement be amended to be consistent with such other agreement,
which request will not be unreasonably denied by ITI.
21. WAIVER
ITI reserves the right and privilege, in its sole discretion and as it
may deem in the best interests of all concerned in any specific instance, to
vary standards for any licensee based upon the peculiarities of a particular
site or circumstance, demographics, or any other conditions which ITI deems to
be of importance to the successful operation of an ITI Institute. Licensee
shall have no recourse against ITI on account of any licensee and shall not be
entitled to require ITI to grant Licensee a like or similar variation
hereunder.
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22. MODIFICATION
Except as otherwise provided herein, neither ITI nor Licensee may
modify this Agreement except by an instrument in writing between ITI and
Licensee.
23. ACKNOWLEDGEMENTS Licensee hereby acknowledges the following:
23.1 Licensee has conducted an independent investigation of the business
contemplated by this Agreement and understands and acknowledges that the
business contemplated by this Agreement involves business risks making the
success of the venture largely dependent upon the business abilities and
participation of Licensee and its efforts as an independent business operator.
ITI expressly disclaims the making of, and Licensee acknowledges that it has
not received or relied upon any warranty or guarantee, express or implied, as
to the potential volume, profits or success of the business venture
contemplated by this agreement, or as to the suitability of the site as a
successful location for the Institute.
23.2 Licensee has no knowledge of any representations by ITI or its
officers, directors, shareholders, employees, agents or servants, about the
business contemplated by this Agreement that are contrary to the terms of this
Agreement or the documents incorporated herein. Licensee represents, as an
inducement to ITI's entry into this Agreement, that Licensee has made no
misrepresentations in obtaining this Agreement.
23.3 Licensee acknowledges that ITI's approval of Licensee's premises does
not constitute any assurance by ITI that the operation of an ITI Institute at
the premises will be successful or profitable.
23.4 Licensee acknowledges that it has had ample opportunity to consult
with its own attorneys, accountants and other advisors with respect to this
Agreement or the relationship thereby created.
23.5 Licensee, together with its advisors, has sufficient knowledge and
experience in financial and business matters to make an informed investment
decision with respect to the License.
23.6 Licensee is aware of the fact that other present or future licensees
of ITI may operate under different forms of agreement(s), and consequently that
ITI's obligations and rights with respect to its various licensees may differ
materially in certain circumstances.
23.7 Licensee acknowledges that this instrument constitutes the entire
agreement of the parties, and supersedes any prior agreement between the
parties, concerning the same subject matter.
23.8 Licensee shall conspicuously identify itself and the institute in all
dealings with clients, contractors, suppliers, public officials and others, as
an independent licensee of ITI, and shall place such notice of independent
ownership on all forms, business cards, stationery, advertising, signs and
other materials and in such fashion as ITI may in its sole and exclusive
discretion, specify and require from time to time, in the Confidential
Operating Manual(s) (as same may be amended from time to time) or otherwise.
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24. GUARANTEE
In consideration of ITI granting the License to the Licensee, a wholly
owned subsidiary of the Guarantor, the Guarantor hereby guarantees to ITI the
payment of all monies by the Licensee to ITI under this Agreement and also the
observance and performance of the covenants, conditions and provisos herein
contained on the part of the Licensee to be observed and performed. ITI shall
be at liberty, from time to time, and at all times, at its discretion, to allow
installments of principal and interest to be in arrears or extend the time for
payment thereof, or any part or parts thereof, or otherwise deal with the
obligations of the Licensee in such manner as ITI may see fit without notice
to, or the consent of the Guarantor and that notwithstanding the conditions
recited above the Guarantor shall continue to be liable hereunder until all
monies due under the Agreement to ITI have been paid in full and all
obligations of the Licensee hereunder have been satisfied in full. ITI shall
not be bound to exhaust its remedies against the Licensee or against any other
person or persons before enforcing its rights against the Guarantor.
25. VESTED RIGHT TO ADDITIONAL TERRITORIES IN ADDITION TO THE TERRITORY
As part of the consideration extended pursuant to this Agreement, ITI
grants to the Licensee the right to open additional Institutes in each of the
cities of Los Angeles, London, England and Dubai on payment of an additional
$150,000 per additional territory pursuant to additional license agreements
substantially in the form of this Agreement.
26. BINDING
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and such counterparts
together shall constitute but one instrument, and all parties hereto agree that
the reproduction of signatures by way of telecopying device shall be treated as
though such reproductions were executed originals.
27. BEST EFFORTS NEGOTIATIONS AND RIGHT OF FIRST REFUSAL
For a period of 12 months until July 26, 1998 so long as the Licensee
is not in default of this Agreement, ITI agrees that it will negotiate
exclusively with the Licensee, upon reasonable notice by the Licensee, in good
faith, further license agreements on terms to be agreed for the following
territories: (a) the State of California (in addition to Los Angeles); (b) the
State of Florida; (c) the State of Virginia; (d) the District of Columbia; (e)
the State of Texas; and (f) the United Arab Emirates (in addition to Dubai)
(collectively herein, the "Additional Territories").
For a further period of 24 months from July 26, 1998 so long as the
Licensee is not in default of this Agreement, if ITI receives a bona fide
written offer to license any of the Additional Territories (the "Subject
Territory") on terms acceptable to ITI (the "Prime Offer"), ITI shall supply a
copy of the Prime Offer to the Licensee and advise the Licensee that the Prime
Offer is acceptable to ITI. The Licensee shall have 10 days following the
receipt of such copy of the Prime Offer to make a written offer (the "Secondary
Offer") to ITI for the Subject Territory at the same price and upon the same
terms as contained in the Prime Offer. If the Licensee makes a Secondary Offer
as aforesaid, then the Licensee shall be entitled and required to license from
ITI, and ITI shall license, in accordance with the provisions of the Secondary
Offer all of the Subject Territory, on the
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execution of the required license agreement. If the Licensee does not make a
Secondary Offer within the 10-day period ITI shall be entitled to accept the
Prime Offer and to license the Subject Territory in accordance with the
provisions of the Prime Offer, but not otherwise.
It is understood that as a condition of this Agreement that in the
event that ITI shall enter into any agreement to grant a license of the ITI
System in another territory with any other person, firm or corporation which
agreement, when taken as a whole, shall contain more favourable terms,
covenants and conditions as those contained in the licenses of the Licensee,
ITI shall notify the Licensee and the Licensee shall be required to amend the
terms of the licenses of the Licensee in the Additional Territories to be
consistent with such other agreement (other that the license of the Territory).
This section shall not apply to the establishment of ITI proprietary
schools in the Additional Territories.
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IN WITNESS WHEREOF, the parties hereto have set their respective hands, as of
the day and year first above written.
ITI LEARNING SYSTEMS INC. EDUTREK INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxx
------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx
Chairman And: /s/ Xxxxxxx X. Xxxxx
--------------------------------
AMERICAN EUROPEAN CORPORATION
By: /s/ Xxxxx Xxxxxx
--------------------------------
And: /s/ Xxxxxxx X. Xxxxx
--------------------------------