STRATEGIC ALLIANCE AND JOINT DEVELOPMENT AGREEMENT
Exhibit
10(k)
This
Strategic
Alliance and Joint Development Agreement (the “Agreement”) is
entered into on this 2nd day of February, 2007, (the “Effective
Date”) by and between:
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1.
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Edumatics
Corporation, Inc.
incorporated under the laws of the State of California, USA, having
its
office at 0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx XX 00000 through
its
authorized representative, Xx. Xxxxxxx Xxxxx (hereafter referred
to as
“Edumatics” which expression shall where the context
permits include its successors and permitted
assigns),
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AND
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2.
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Siboney
Learning Group, Inc.,
incorporated under the laws of the State of Texas, USA, having
its office
at 000 X. Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx 00000, through its authorized
representative, Xx. Xxxxxxx X. Xxxxxxx (hereafter referred to as
“Siboney” which expression shall where the context
permits include its successors and permitted
assigns).
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Edumatics
and Siboney are hereafter sometimes collectively
referred to as the “Parties” and singly as a “Party”.
NOW
THEREFORE, in consideration of the mutual
covenants contained herein, the sufficiency and adequacy of which are hereby
acknowledged, the Parties agree as follows:
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1. DEFINITIONS
AND CONSTRUCTION.
1.1 All
references in this Agreement to "Section”, “Sections”, “Exhibits” refer to the
section, sections and exhibits of this Agreement. As used in this Agreement,
neutral pronouns and any variations thereof shall be deemed to include the
feminine and masculine and all terms used in the singular shall be deemed
to
include the plural, and vice versa, as the context may require. The words
"hereof," "herein" and "hereunder" and other words of similar import refer
to
this Agreement as a whole, as the same may from time to time be amended or
supplemented, and not to any subdivision contained in this Agreement. The
word
"including" when used herein is not intended to be exclusive and means
"including, without limitation."
2. INTENT
AND PURPOSE; NEW PROGRAM;
POTENTIAL BENEFITS.
2.1 Intent
and Purpose. This Agreement contemplates
certain joint development activities between Edumatics and Siboney that are
intended to facilitate the creation of a new online test preparation program
(such web based version hereafter referred to as the "New
Program"), (a) using the intellectual property, software development
manpower, sales and marketing expertise of Siboney, (b) using software
development manpower and capital provided by Edumatics, and (c) as well as
the
marketing and distribution by Siboney of the New Program thus developed and
created (the aforesaid joint development and marketing hereafter referred
to as
the “Project”).
2.2 Potential
Benefits.
2.2.1 Potential
Benefits to Edumatics
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Leverage
Siboney’s market knowledge to access new and
emerging opportunities by participating in the
Project;
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Leverage
Siboney’s assessment item bank that is correlated
to all 49 states that have curriculum
standards;
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Leverage
other Siboney intellectual property such as
preprogrammed business objects, graphics, sound files and motivational
games;
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Leverage
the proven educational curriculum software
development expertise of the Siboney software
engineers;
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Leverage
the existing Siboney business infrastructure to
provide accounting, marketing, sales and technical support for
the New
Program;
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Increased
visibility in the US market through development of
the New Program; and
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Increase
revenue growth by exploiting opportunities
identified through Siboney’s existing marketing
channels.
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2.2.2
Potential
Benefits to Siboney
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Access
to capital and highly skilled personnel at lower
costs, to realize competitive edge/advantage for the New
Program.
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2.3 New
Program. It is contemplated that the New
Program shall have the functionalities/specifications attached hereto as
Exhibit
A Section: Online Product Offerings-Proposed Online Products-Phase I. For
avoidance of doubt, the New Program will not include any
functionality/specifications as described in Exhibit A Section: Online Product
Offerings-Proposed Online Products Phase II or Phase III.
2.4 Budget.
Based upon the Parties’ good faith
estimates, the entire Project will cost a total of $1,200,000, as per the
Budget, a break down of which is attached hereto as Exhibit B. The
mutually agreed upon working capital budget is presented in Exhibit B - Section:
Operating Costs. No Party under any circumstances will be required to incur
additional working capital beyond an additional $100,000 to that stated in
Exhibit B - Section: Operating Costs.
It
is estimated that the Project would require resource commitment
and deliverables by the Parties as follows:
Edumatics
may designate a new Development Team Manager and change
other personnel constituting the Development Team responsible for particular
tasks related to this Agreement by written notice to Siboney.
3.2.1 Siboney
will contribute its proprietary item bank which
is correlated to 49 states’ curriculum standards towards the development and
creation of the New Program.
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Siboney
may designate a new Development Team Manager and change
other personnel constituting the Editorial Team responsible for particular
tasks
related to this Agreement by written notice to Edumatics.
Siboney
may designate a new Sales and Marketing Team Manager and
change other personnel constituting the Sales and Marketing Team responsible
for
particular tasks related to this Agreement by written notice to Edumatics.
It
is understood and agreed that the New Program will be created
and developed in terms of the Project plan attached at Exhibit C
(hereafter the "Project Plan"). The Project Plan sets forth the
development phases, deliverables; milestone schedules, testing and acceptance,
launch and hosting, and marketing of the New Program under the Project.
Funding
for the
design, development, marketing, sales and technical support of the New Program
will be provided in the following three ways subject to Section 2.4:
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5.2 Intellectual
Property. Siboney will be providing
approximately 16,000 items correlated to state standards to be used in the
New
Program. Edumatics and Siboney agree that the approximate value of these
items
is $500,000. Therefore, in order to equally share the cost of these items,
Edumatics agrees to pay $250,000 to Siboney. Siboney agrees to accept payment
of
this amount solely from the revenue generated from the New Program. Siboney
will
receive an additional 10% of the profit from the New Program (thus 60% to
Siboney and 40% to Edumatics) until the $250,000 is paid off. Upon final
payment
of the $250,000 the split will return to 50% - 50%.
Edumatics
agrees to pay $62,132 to Siboney as the first quarter
2007 working capital payment no later than February 14, 2007.
6.
RESPONSIBILITIES,
COVENANTS AND
AGREEMENTS OF EACH PARTY RELATING TO THE PROJECT.
6.1 Obligations
of Edumatics
6.1.1 Development.
Edumatics shall assist in
developing the New Program in accordance with the functionalities and
specifications specified in Exhibit A. In this regard, Edumatics, shall,
in addition to its expressed commitments in terms of Section 3.1 above, fund
all
costs and expenses incurred by it in the development of the New Program,
however, all such costs and expenses are, subject to Section 2.4, not to
exceed
$33,000 as stated in the Budget in Exhibit B.
6.2 Obligations
of Siboney
6.2.1 Development.
Siboney shall assist in developing
the New Program in accordance with the functionalities and specifications
specified in Exhibit A. In this regard, Siboney, shall, in addition to
its expressed commitments in terms of Section 3.2 above, fund all costs and
expenses incurred by it in the development of the New Program, however,
all
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such
costs and expenses are, subject to Section 2.4, not to exceed
$390,000 as stated in the Budget in Exhibit B.
6.2.2 Sales
and Marketing. Siboney shall be
responsible for the sales and marketing of the New Program through its sales
and
distribution channels in accordance with the Sales and Marketing Summary
attached hereto as Exhibit A Sections: Sales Strategy and Marketing
Strategy and referred to in Section 6.3.5 and any revised Sales and
Marketing Summary. Siboney shall use its best efforts and professional staff
to
achieve the highest possible sales of the New Program. Siboney’s
responsibilities include, but are not limited to the following:
(a) Revising
and developing the Sales and Marketing Summary
attached hereto as Exhibit A, within thirty (30) days of the Effective
Date of this Agreement and submitting a revised comprehensive Sales and
Marketing Summary to Edumatics for approval. Edumatics has the right to approve
the revised Sales and Marketing Summary, which may subsequently be modified
as
necessary by the Project Committee with the unanimous consent of the Parties
in
writing. The Project Committee shall review the Sales and Marketing Summary,
no
less frequently than quarterly.
(b) Executing
the Sales and Marketing Summary, including, but
not limited to, attending mutually agreed to road/trade shows to promote
the New
Program, and otherwise promoting the New Program to end users.
(c) Conducting
market research, mutually agreed upon by the
Parties, to identify prospective/new customers, new opportunities, market
demand
for the New Program as well as other competitive products.
(d) Establishing,
training, and managing a sales force and
work with its channel partners and through its own sales resources to generate
sales and achieve revenue targets, in accordance with the Sales and Marketing
Summary, and the terms of this Agreement.
6.3 Mutual
Obligations of the Parties
6.3.1 Coordination.
Edumatics and Siboney shall
jointly coordinate the development efforts of the New Program according to
the
functionalities and specifications specified in Exhibit A. In this
regard, Edumatics and Siboney will cooperate in terms of the Project Plan
to
ensure that the Project is completed on the due date stated in the Project
Plan.
The Project Plan will be reviewed by the Project Committee from time to time
with the intent that the Parties move expeditiously and effectively toward
commercialization of the New Program. Each Party shall keep the other Party
closely informed through regular reports to the Project Committee of the
progress of the Project, in a format to be mutually agreed upon by the Parties.
The Parties shall also create a document retention policy related to each
Party's development efforts.
6.3.2 Change
Requests. Within sixty (60) days of the
Effective Date, either Edumatics or Siboney may request changes (consisting
of
additions, modifications, reallocation of development funds, deletions or
other
revisions) with respect to Exhibit A and/or Exhibit C, provided such changes
are
made in good faith and enhance the overall results of the collaborative efforts
of the Parties/New Program. Each change request must be
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reflected
in a written document signed by both Parties that
includes a detailed description of the specific change, along with any modified
specifications and desired completion date(s) ("Change Request"). Each Change
Request duly authorized in writing by the Parties shall constitute a formal
amendment to this Agreement, and shall be deemed incorporated into and shall
become part of this Agreement. A Change Request shall have no effect on the
rights and obligations of either Party with respect to deliverables or
developmental activities provided before the effective date of the Change
Request. The Parties shall negotiate in good faith the terms, conditions
(including any changes to milestone schedules), and allocation of costs related
to the implementation of any Change Request.
6.3.3 Acceptance
Criteria. The Parties shall use
commercially reasonable efforts and work in good faith to mutually agree
in
writing upon an acceptance criteria for the New Program (“Acceptance
Criteria”) within sixty (60) days of Effective Date. The agreed
Acceptance Criteria shall, upon its execution, be deemed incorporated into,
and
form a part of this Agreement, with effect from the date of its execution.
It is
contemplated that acceptance shall be performed by Project Committee. The
Project Committee shall conduct such testing and acceptance processes with
respect to the New Program in order to determine that the New Program meets
the
functionalities and specifications set forth herein and in Exhibit A
attached hereto.
6.3.4 Launch
and Hosting. Edumatics and Siboney shall
agree within ten (10) days of completion of acceptance in terms of the
Acceptance Criteria upon a plan for launching and hosting the New Program.
6.3.5 Delivery
of Source Code. No later than
July 1, 2007, Siboney shall deliver to Edumatics, a complete copy of the
latest
version of the New Program, including, without limitation, all source code
and
other source material, in the media and format as Edumatics shall
designate.
6.3.6 Sales
and Marketing Summary. Attached in Exhibit
A is a Sales and Marketing Summary which sets forth a comprehensive description
of the methods by which the Sales and Marketing Team will cooperate, including
product positioning, methods of sales engagement, action plans and time lines,
for the New Program. Within sixty (60) days from the Effective Date, the
Parties
shall mutually agree on a more detailed Sales and Marketing Summary (draft
to be
submitted by the Sales and Marketing Team in terms of Section 6.2.2 above)
addressing each of the points identified in the Sales and Marketing Summary
including the following.
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A
mutually agreeable market message and marketing strategy
to describe the joint development efforts of both Parties and the
benefits
offered to the market/customers through the cooperation of the
Parties by
the creation and development of the New
Program.
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Appropriate
press, analyst, distributors, customer and field
sales briefings to better describe the
above.
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Definition
of a marketing program to create awareness and
provide lead generation for the development
activities.
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Any
revised Sales and Marketing Summary as aforesaid, shall, upon
its execution, by Siboney and Edumatics, be deemed incorporated into, and
form a
part of this Agreement, with effect from the date of its execution.
6.3.7 Branding
6.3.7.1 Ownership
of Pre-Existing Brand Names and
Trademarks. Each Party shall retain all rights, title and other interest to
its pre-existing brand names, service marks, trademarks and other proprietary
markings except as expressly provided otherwise in this Agreement.
6.3.7.2 Branding
of the New Program. The New Program
shall be branded with a newly created product name (the “New Program
Trademark”), which shall be jointly adopted by the Parties and provided to the
Sales and Marketing Team. Siboney shall be the owner of the New Program
Trademark, and agrees to grant and does hereby grant a sole, exclusive,
worldwide, royalty free, irrevocable license to Edumatics to use the New
Program
Trademark in connection with the marketing and sale of the New Program during
the term of this Agreement, subject to the provisions of Section 16. The
New
Program Trademark shall appear prominently in any web site or portals marketing,
advertising and/or using the New Program as licensed by any of the Parties,
provided that the owners/operators of such web sites or portals permit the
same.
6.3.8 Expenses
6.3.8.1 Records.
Each Party shall maintain detailed
records which accurately identify all costs and expenses incurred and paid
in
connection with the New Program. Each Party shall submit this information
to the
Project Committee on a quarterly basis to ensure that costs and expenses
actually incurred are within the budgetary limits and cash outlays identified
in
Exhibit B. No expense or cost incurred not provided for in Exhibit
B shall be borne by the New Program without the unanimous approval of
the
Parties in writing. Expenses internally generated because tasks are performed
by
a Party's own staff will be accounted for based upon actual employee salaries
and fringe benefits (at 20% of salary) and variable expenses and directly
applicable overhead allocations.
6.3.8.2 Adjustments
for Costs. Each Party will be
responsible for all its costs with respect to participation of its own staff
on
the Development Team and the Project Committee throughout the duration of
the
development of the Phase I New Program, including travel expenses for meetings
and participation on the respective teams or Project Committee. The goal
of
equality in expenditures shall be regarded with respect to these costs, and
these costs shall be reflected and adjusted in the Revenue Sharing Formula
(as
defined below in Section 9).
6.4 Pricing.
The Parties shall within 90 days of the
Effective Date prepare and agree upon an initial pricing policy for the New
Program. Such pricing policy shall be subject to review from time to time
and
amended by the Parties upon the recommendation of the Project Committee.
Prices
set through the pricing policy shall be subject to, and modified to comply
with
all applicable laws and regulations governing the New Program.
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6.5 Sales
Targets. Notwithstanding the provisions of
Section 2.1 above, the Parties understand that though the technical and
commercial feasibility of the Project has not been established, it is the
intent
of the Parties that Siboney commits to, and Siboney hereby agrees and commits
to, minimum annual revenues from sales of the New Program as follows:
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Minimum
Revenues $
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Year
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$250,000
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2007
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$1,300,000
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2008
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$2,200,000
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2009
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Siboney
shall use
commercially reasonable efforts to achieve the minimum sales targets specified
above. If Siboney fails to achieve the minimum sales target as specified
above
for 2 consecutive years, then Edumatics shall have the option but not the
obligation, exercisable in its sole discretion to either assume or sub-assign
the marketing to a third party at Edumatics’ sole discretion or sell the New
Program to a third party, in which event this Section 6.5 shall apply rather
than Section 16.6. If Edumatics decides to market (rather than liquidate)
Edumatics will pay Siboney 40% of the proceeds after all applicable and
reasonable expenses including all reasonable marketing expenses of the New
Program incurred by Edumatics. If Edumatics chooses to liquidate the New
Program Edumatics will retain a liquidation preference of one times (1x)
the
total investment made by Edumatics; after Edumatics has deducted its liquidation
preference, then Siboney will retain a liquidation preference of one-half
times
(1/2x) the total investment made by Siboney; and any remaining proceeds (after
deducting Edumatics’ and Siboney’s liquidation preference) will be divided
50%-50%. Edumatics agrees to provide Siboney with a first right of refusal
to
purchase the New Program at the agreed-upon price with the potential buyer
of
the New Program. This is Edumatics’ sole remedy for Siboney’s failure to meet
the minimum sales targets and such failure does not constitute a material
breach
of this agreement.
6.6 Use
of Name in Promotional Materials. Each Party
shall, with prior approval of the other Party (which shall not be unreasonably
withheld or delayed), be permitted to identify the other Party as a strategic
partner, to use the other Party's name in connection with proposals to
prospective customers, and to refer to the other Party in print or electronic
form for marketing or reference purposes, provided however that such proposals
and marketing and reference materials shall not promote any third party or
the
products of any third party.
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intellectual
property infringement claims against Edumatics with
respect to any Sole Edumatics Intellectual Property; and (v) its performance
of
the obligations under this Agreement does not and shall not violate: any
applicable law, rule, or regulation; any contracts with third parties; or
any
third party rights in any patent, trademark, copyright, trade secret, or
any
other proprietary right anywhere in the world.
8.1 For
the avoidance of doubt, the Parties agree that the
results of the efforts by either Party under this Agreement including the
New
Program shall not be considered “work for hire”, and that neither Party acquires
any exclusive rights to, or licenses to use, any such results including the
New
Program except as expressly set forth in this Agreement.
8.2 Edumatics
shall own all Edumatics Background Rights (as
hereafter defined) including Sole Edumatics Intellectual Property (as hereafter
defined).
“Edumatics
Background Rights” means all
intellectual property rights owned or controlled by Edumatics except for
Joint
Intellectual Property (as hereafter defined).
“Sole
Edumatics Intellectual Property” means all
intellectual property, including intellectual property rights associated
with
the science program and/or its digital educational content libraries, as
the
case may be, conceived by Edumatics, its employees, agents, partners, either
solely or jointly with non-Party contractors of Edumatics, prior to the
execution of this Agreement. Intellectual property rights include, by way
of
example, patents, patent applications, know-how, trade secrets, and other
confidential information, and copyrights. Sole Edumatics Intellectual Property
shall constitute one type of Edumatics Background Rights.
8.3 Siboney
shall own all Siboney Background Rights (as
hereafter defined) including Sole Siboney Intellectual Property (as hereafter
defined).
“Siboney
Background Rights” means all intellectual property rights owned or
controlled by Siboney except for Joint Intellectual Property.
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“Sole
Siboney Intellectual Property” means all intellectual property
including intellectual property rights associated with the Orchard, Journey,
TSS
and EA/RA products and/or its digital educational content libraries, as the
case
may be, conceived by Siboney, its employees, agents, partners, either solely
or
jointly with non-Party contractors of Siboney, prior to the execution of
this
Agreement. Intellectual property rights include, by way of example, patents,
patent applications, know-how, trade secrets, and other confidential
information, and copyrights. Sole Siboney Intellectual Property shall constitute
one type of Siboney Background Rights.
8.4 Subject
to any other express provisions of this
Agreement, Edumatics and Siboney shall jointly own all Joint Intellectual
Property (as hereafter defined).
“Joint
Intellectual Property” means all
intellectual property that both (a) is comprised in and/or accruing to the
New
Program including the test item bank referenced in Section 5.2, and (b) is
conceived during the term of this Agreement either jointly by the Parties
or
independently by either Party or by one or more of their respective employees,
agents, partners or non-Party independent contractors. For purposes of part
(a)
of this definition of Joint Intellectual Property, intellectual property
shall
be deemed to relate to the New Program if such intellectual property relates
to
the functionalities/specifications attached hereto as Exhibit A Section:
Online
Product Offerings-Proposed Online Products-Phase I.
8.5 Neither
Party acquires any rights, either express or
implied, under any Background Rights of the other Party unless expressly
stated
in this Agreement or another written agreement signed by authorized
representatives of each of the Parties.
8.6 Except
as provided in Sections 8.7, 8.8 and 10 below,
each Party shall have the right to operate under Joint Intellectual Property
and
grant nonexclusive licenses to third parties as they may desire without
accounting to the other Party.
8.7 Edumatics
agrees to grant and does hereby grant to
Siboney the exclusive, worldwide, royalty-free right under Joint Intellectual
Property and Sole Edumatics Intellectual Property, with the right to sublicense
and authorize the granting of sublicenses, to the extent that such Sole
Edumatics Intellectual Property is incorporated into the New Program, to
use,
sell, offer for sale, import, or otherwise commercially exploit the New Program
in terms of this Agreement.
8.8 Siboney
agrees to grant and does hereby grant to
Edumatics the exclusive, worldwide, royalty-free right under Joint Intellectual
Property and Sole Siboney Intellectual Property, with the right to sublicense
and authorize the granting of sublicenses, to the extent that such Sole Siboney
Intellectual Property is incorporated into the New Program, to use, sell,
offer
for sale, import, or otherwise commercially exploit the New Program in terms
of
this Agreement.
8.9 Edumatics
and Siboney may jointly file any applications
for copyright/patents on material/inventions that are Joint Intellectual
Property. The applications shall be prepared and prosecuted by a mutually
acceptable intellectual property rights attorney with the expenses of
preparation, prosecution and maintenance to be shared equally between the
Parties. If one Party elects not to pursue any such application, the other
Party
may do so on its own, at its own expense, but the non-electing Party must
provide reasonable cooperation,
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sign
the required documents, etc.
Edumatics
- 50%
Siboney
- 50%
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be
conducted in Siboney’s facilities during normal business hours
on reasonable notice. An audit may cover any period; provided that: (i) the
period has not been previously audited; and (ii) the period under audit is
immediately preceding the commencement of the audit. Siboney shall promptly
reimburse and pay to Edumatics the amount of any discrepancy arising out
of such
audit which indicates that Edumatics is owed amounts hereunder as well as
the
costs of the audit, if applicable, as provided above. Any dispute pursuant
to
this provision is subject to the provisions of Section 19.9 hereof. In any
event, for a period of at least 12 months following the date of termination
or
expiration of this Agreement, Siboney shall keep available for inspection
by
Edumatics and its representatives for any reasonable purpose all records,
files,
documents and correspondence relating to the Project.
During
the term of this Agreement (the “Exclusivity Period”),
neither Party shall, (a) engage in development efforts or marketing or bidding
(whether or not with a Party’s competitor) to develop or provide solutions that
compete with the New Program that contain Joint Intellectual Property, or
(b)
build substantial capability around a Party’s competitors' products using Joint
Intellectual Property (including sponsoring or investing in training, marketing
and solution development of service offerings that include a Party’s competitor
products and/or that undermine a Party’s market strategy); provided, however,
that nothing herein shall prohibit a Party from deploying competing products
where requested or required by a customer in the ordinary course of providing
consulting services, or engaging in education and training necessary to support
such deployment.
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11.1.1
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The
Parties shall attempt to promptly resolve through good faith
negotiation any dispute or disagreement between them directly relating to
development priorities and decisions and resource allocation under the Program
Plan or this Agreement.
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11.1.2
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In
the event of a dispute among the Development Team or Sales and
Marketing Team, either Party may identify the said dispute for escalation.
If
the dispute is not resolved within seven (7) calendar days of such
identification, then the dispute shall be escalated to the Project Committee.
The Project Committee shall discuss the dispute within five (5) days of
escalation and shall render a decision within ten (10) days of their initial
discussion. If the Project Committee is unable to resolve the dispute within
ten
(10) days of their initial discussion then the dispute shall be submitted
to the
Senior Executives as set forth in Section 11.1.3.
In
the event of a dispute in the Project Committee or a dispute
has not been resolved by the Project Committee pursuant to Section 11.1.2,
either Party may identify the said
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dispute
for escalation. If the dispute is not resolved within ten
(10) calendar days of such identification, then the dispute shall be escalated
to the most senior executives of Edumatics and Siboney. The most senior
executives shall discuss the dispute within five (5) days of escalation and
shall render a decision within ten (10) days of their initial discussion.
If the
most senior executives are unable to resolve the dispute within ten (10)
days of
their initial discussion then the dispute shall be submitted to arbitration
as
set forth in Section 19.9.
Edumatics
agrees to defend and indemnify Siboney, its affiliates,
associates and their respective directors, employees, consultants and officers,
against any and all liability, loss, damage, cost and expense (including
cost of
defense and reasonable attorney's fees) which any or all of them may hereafter
suffer itself or pay out to another by reason of any claim, or actions arising
out of such claim, filed and originating in Sole Edumatics Intellectual
Property.
Edumatics’
obligations under this Section 12.1 are subject to the following conditions
and
obligations of Siboney: (i) Siboney agrees to notify promptly Edumatics upon
knowledge of any claim, suit, action, or proceeding for which it may be entitled
to indemnification under this Agreement; (ii) Siboney shall permit Edumatics
to
have the sole right to control the defense of any such claim; (iii) Siboney
agrees to provide reasonable assistance to Edumatics at Edumatics’ expense, in
the defense of same; and (iv) Siboney will not enter into any settlement
agreement or otherwise settle any such claim without Edumatics’ express prior
consent or request. Siboney may, at its own expense, participate in the defense
of any such claim or action.
In
addition to its
obligations set forth in this Section 12.1, Edumatics agrees that in the
event
Edumatics or Siboney is enjoined from using Sole Edumatics Intellectual Property
in terms of this Agreement, Edumatics shall, at its expense, (i) replace
or
modify the infringing portion so it becomes non-infringing, yet functionally
equivalent or (ii) procure for Edumatics and Siboney the right to continue
using
the Sole Edumatics Intellectual Property for the New Program in terms of
this
Agreement.
Siboney
agrees to
defend and indemnify Edumatics, its affiliates, associates and their respective
directors, employees, consultants and officers against any and all liability,
loss, damage, cost and expense (including cost of defense and reasonable
attorney's fees) which any or all of them may hereafter suffer itself or
pay out
to another by reason of any claim, or actions arising out of such claim,
filed
and originating in Sole Siboney Intellectual Property.
Siboney’s
obligations under this Section 12.2 are subject to the following conditions
and
obligations of Edumatics: (i) Edumatics agrees to notify promptly Siboney
upon
knowledge of any claim, suit, action, or proceeding for which it may be entitled
to indemnification under this Agreement; (ii) Edumatics shall permit Siboney
to
have the sole right to control the defense of any such claim; (iii) Edumatics
agrees to provide reasonable assistance to Siboney at Siboney’s expense, in the
defense of same; and (iv) Edumatics will not enter into any settlement agreement
or otherwise settle any such claim without Siboney’s
14
express
prior consent or request. Edumatics may, at its own
expense, participate in the defense of any such claim or action.
In
addition to its
obligations set forth in this Section 12.2, Siboney agrees that in the event
Siboney or Edumatics is enjoined from using Sole Siboney Intellectual Property
in terms of this Agreement, Siboney shall, at its expense, (i) replace or
modify
the infringing portion so it becomes non-infringing, yet functionally equivalent
or (ii) procure for Siboney and Edumatics the right to continue using the
Sole
Siboney Intellectual Property, as the case may be, for the New Program in
terms
of this Agreement.
Edumatics
agrees to defend and indemnify Siboney, its affiliates,
associates and their respective directors, officers and employees against
all
liability, loss, damage, costs and expenses (including cost of defense and
reasonable attorneys' fees) which any or all of them may hereafter suffer
themselves or pay out to another by reason of any claim, action, or right
of
action, at law or in equity because of any injury, including death, to persons
or damage to tangible property (excluding data or any similar concept) which
arises out of, or is in connection with the performance of this Agreement
to the
extent caused by the negligence or willful misconduct of Edumatics, its
employees or agents.
Siboney
agrees to defend and indemnify Edumatics, its affiliates,
associates and their respective directors, officers and employees against
all
liability, loss, damage, costs and expenses (including cost of defense and
reasonable attorneys' fees) which any or all of them may hereafter suffer
themselves or pay out to another by reason of any claim, action, or right
of
action, at law or in equity because of any injury, including death, to persons
or damage to tangible property (excluding data or any similar concept) which
arises out of, or is in connection with the performance of this Agreement
to the
extent caused by the negligence or willful misconduct of Siboney, its employees,
or agents.
EXCEPT
AS STATED IN
THIS AGREEMENT, NEITHER EDUMATICS NOR SIBONEY MAKES ANY OTHER WARRANTIES
TO THE
OTHER WITH RESPECT TO THE OPERATION OR PERFORMANCE OF THE NEW PROGRAM DEVELOPED
OR OTHER INTELLECTUAL PROPERTY LICENSED BY EITHER PARTY TO THE OTHER PURSUANT
TO
THIS AGREEMENT, AND EDUMATICS AND SIBONEY EACH HEREBY DISCLAIMS ALL SUCH
OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Under
no circumstances shall either Party's total liability of all
kinds arising out of or related to this Agreement regardless of the forum
and
regardless of whether any action or claim is based in contract, tort negligence
or otherwise, exceed $600,000.
15
Neither
Party
hereto shall, under any circumstances, be liable to the other for indirect,
consequential, punitive, incidental, special or exemplary damages, even if
apprised of the likelihood of such damages occurring.
The
exclusions of
damages and limitations of liability set forth in sections 14.1 and 14.2
above
shall not operate to limit amounts actually due and payable pursuant to the
express terms of this Agreement.
As
used herein,
"Confidential Information" shall mean, without limitation, any non-public
communications, written or oral, involving a Party's non-public business
information, technical information or data, however embodied, marketing plans,
financial information and strategic plans or any other information identified
in
writing as confidential or proprietary.
15.2.1 The
Parties hereby covenant and agree that, except as
required by law and as provided in this Section, they shall not disclose
the
terms and conditions of this Agreement to any other person or entity (other
than
their counsel and auditors) without obtaining the prior written consent of
the
other Party, except to the extent necessary to effect the transactions and
actions contemplated herein.
15.2.2 Each
Party may furnish to the other Party in
connection with this Agreement certain Confidential Information. The Party
disclosing such Confidential Information is referred to as the
"Discloser", and the Party receiving such Confidential
Information is referred to as the "Recipient." Each Party
agrees that it shall keep in confidence and prevent the acquisition, disclosure,
use or misappropriation by any person or persons of Confidential Information
which is received from the other under this Agreement, provided, however,
that
neither Party shall be liable for disclosure of any such information if the
same
is disclosed with the prior written approval of the other Party. Each Party
agrees that if it breaches the provisions of this Section, the Discloser
of the
Confidential Information may suffer irreparable injury and shall be entitled
to
seek a temporary and permanent injunction, in addition to the other remedies
for
breach of the Agreement.
15.2.3 Recipient
shall use the same care and discretion to
avoid disclosure, publication or dissemination of Confidential Information
as it
uses with its own similar confidential information that it does not wish
to
disclose, publish or disseminate provided that Recipient shall use at least
reasonable care. The Confidential Information is not to be disclosed to any
persons other than the employees of the Recipient who have a need to know.
Except as expressly provided by this Agreement, Recipient shall not use
Confidential Information in any manner, nor use it for the benefit of anyone
but
Discloser.
16
15.2.4 The
obligations of Recipient with respect to any
particular portion of Confidential Information shall terminate or shall not
attach, as the case may be, when any of the following occurs: (i) it was
in the
public domain at the time of Discloser's communication thereof to Recipient;
(ii) it entered the public domain through no fault of Recipient subsequent
to
the time of Discloser's communication thereof to Recipient; (iii) it was
in
Recipient's possession free of any obligation of confidence at the time of
Discloser's communication thereof to Recipient; (iv) it was independently
developed by Recipient; or (v) its disclosure is required pursuant to applicable
law (including securities laws) or by a court or government order and Discloser
has been given reasonable notice of such order and a reasonable opportunity
to
seek a protective order.
15.2.5 All
such Confidential Information shall remain the
exclusive property of Discloser. The confidentiality obligations shall survive
any termination of this Agreement and shall continue for so long as the
Confidential Information is the property of Discloser or for as long as
otherwise permitted by law.
15.2.6 All
individuals engaged in the developmental effort
towards creating the New Program will be prohibited from using or disclosing
any
Confidential Information or trade secrets learned or developed in the course
of
such development effort other than in the course of their work on the
developmental effort or their work for Edumatics or Siboney, respectively.
17
(a) a
Party withdraws from participating in the Project for
any reason whatsoever (such withdrawal not being a termination pursuant to
the
provisions of this Agreement); or
(b) this
Agreement is terminated in terms of Section 16.2 or
Section 16.3; or
(c) the
Defaulting Party enters into one or more of the
transactions described in (i), (ii), (iii) or (iv) of Section 16.4 above,
with a
competitor of the Non-Defaulting Party and the Non-Defaulting Party elects
to
terminate this Agreement pursuant to Section 16.4,
then,
the withdrawing Party/Non-Terminating Party/Defaulting
Party, as the case may be, shall cease to have any rights, interest or title
in
and to any and all materials, deliverables, Joint Intellectual Property,
etc.
created up to the date of such withdrawal and/or termination, to the New
Program
in any manner whatsoever. In addition, the withdrawing Party/Non-Terminating
Party/Defaulting Party, as the case may be, shall be deemed to have assigned
to
the non-withdrawing Party/Terminating Party/Non-Defaulting Party, as the
case
may be, all its intellectual property rights including, by way of example,
patents, patent applications, know-how, trade secrets, and other confidential
information, and copyrights, rights, in and to any and all materials,
deliverables, Joint Intellectual Property, etc. created up to the date of
such
withdrawal and/or to the New Program in any manner whatsoever. In the event
that
the withdrawing Party/Non-Terminating Party/Defaulting Party, as the case
may
be, is Edumatics, then the trademark license to Edumatics (as referenced
in
Section 6.3.7.2) shall terminate. In the event that the withdrawing
Party/Non-Terminating Party/Defaulting Party, as the case may be, is Siboney,
then Siboney shall assign all of its right, title and interest in and to
the New
Program Trademark to Edumatics.
(a) a
Party withdraws from participating in the Project for
any reason whatsoever (such withdrawal not being a termination pursuant to
the
provisions of this Agreement); or
18
(b) this
Agreement is terminated in terms of Section 16.2 or
Section 16.3; or
(c) the
Defaulting Party enters into one or more of the
transactions described in (i), (ii), (iii) or (iv) of Section 16.4 above,
with a
competitor of the Non-Defaulting Party and the Non-Defaulting Party elects
to
terminate this Agreement pursuant to Section 16.4,
then,
the non-withdrawing Party/Terminating Party/Non-Defaulting
Party, as the case may be, shall have the option but not the obligation,
exercisable in its sole discretion, to acquire the pro-rata share of the
withdrawing Party/Non-Terminating Party/Defaulting Party, as the case may
be, in
the New Program, including all rights in the Joint Intellectual Property,
at a
pre-determined price of one times (1x) the monetary value of the Development
Team resources contributed by the withdrawing Party/Non-Terminating
Party/Defaulting Party, as the case may be, till the date of such withdrawal
and/or termination, as the case may be. If the Parties do not agree on the
monetary value of the resources/inputs contributed by the withdrawing
Party/Non-Terminating Party/Defaulting Party, as the case may be, then the
same
shall be determined by an independent CPA appointed by the non-withdrawing
Party/Terminating Party/Non-Defaulting Party, as the case may be. The cost
of
the independent CPA shall be deducted from the non-withdrawing Party/Terminating
Party/Non-Defaulting Party, as the case may be, unless a discrepancy of more
than 10% from the monetary value assessed by the withdrawing
Party/Non-Terminating Party/Defaulting Party, as the case may be, is found
in
the records, in which case the cost of the audit shall be borne by the
withdrawing Party/Non-Terminating Party/Defaulting Party, as the case may
be.
The closing of the acquisition of the pro-rata share of the withdrawing
Party/Non-Terminating Party/Defaulting Party, as the case may be, shall be
completed within sixty (60) days of determination of the monetary value of
the
resources/inputs contributed by the withdrawing Party/Non-Terminating
Party/Defaulting Party, as the case may be, whereupon the withdrawing
Party/Non-Terminating Party/Defaulting Party, as the case may be, shall cease
to
have any rights, interest or title in and to the New Program and Joint
Intellectual Property. In the event that the above-referenced option is
exercised and the withdrawing Party/Non-Terminating Party/Defaulting Party,
as
the case may be, is Edumatics, then the trademark license to Edumatics (as
referenced in Section 6.3.7.2) shall terminate. In the event that the
above-referenced option is exercised and the withdrawing Party/Non-Terminating
Party/Defaulting Party is Siboney, then Siboney shall assign all of its right,
title and interest in and to the New Program Trademark to Edumatics.
If
the
non-withdrawing Party/Terminating Party/Non-Defaulting Party, as the case
may
be, does not exercise its option as aforesaid, then the withdrawing
Party/Non-Terminating Party/Defaulting Party shall have the option to buy-out
the non-withdrawing Party/Terminating Party/Non-Defaulting Party for one
and one
half times 1.5x the actual development cost of the non-withdrawing
Party/Terminating Party/Non-Defaulting Party. If the withdrawing
Party/Non-Terminating Party/Defaulting Party is unwilling or unable to buy-out
the non-withdrawing Party/Terminating Party/Non-Defaulting Party as aforesaid,
then the non-withdrawing Party/Terminating Party/Non-Defaulting Party shall
obtain all rights to the New Program at no cost. In the event that the
above-referenced option is not exercised and the withdrawing
Party/Non-Terminating Party/Defaulting Party, as the case may be, is Edumatics,
then the trademark license to Edumatics (as referenced in Section 6.3.7.2)
shall
terminate. In the event that the above-referenced option is not exercised
and
the withdrawing Party/Non-Terminating Party/Defaulting Party is Siboney,
then
Siboney shall
19
assign
all of its right, title and interest in and to the New
Program Trademark to Edumatics.
Sections
7, 8, 9,
10, 12, 13, 14, 15, 16.5, 16.6, 16.7, 17, 19.1, 19.4, 19.9, 19.10, and 19.11
shall survive any termination of this Agreement and remain in full force
and
effect.
In
connection with
this Agreement, each Party is an independent contractor and as such will
not
have any authority to bind or commit the other Party. Nothing herein shall
be
deemed or construed to create a joint venture, partnership, fiduciary or
agency
relationship between the Parties for any purpose. Each Party shall be solely
responsible for its personnel, employees and consultants hired by it for
the
purpose of performing specific obligations pursuant to this Agreement.
20
other
Party and any purported assignment in violation of the
foregoing shall be null and void. Either Party shall have the right to assign
this Agreement, as a whole, to any successor in interest to all or substantially
all of such Party's business or assets, whether by merger, reorganization,
asset
sale or otherwise, subject to the provisions of Section 16.4. Subject to
the
foregoing, this Agreement will be binding upon and inure to the benefit of
the
Parties hereto, their successors and permitted assigns.
19.9 Dispute
Resolution; Arbitration. Following the
Parties' compliance with the preceding Section, all controversies, except
disputes where a Party seeks injunctive relief, arising from or relating
to this
Agreement or the performance or breach thereof shall be resolved through
binding
arbitration conducted in St. Louis, Missouri, under and subject to the
commercial Arbitration Rules of the American Arbitration Association
("AAA") then in effect. The arbitration shall be conducted
before a panel of three (3) arbitrators, chosen according to the rules of
the
AAA from among its Panel of Commercial Arbitrators within two (2) weeks of
the
first filing before the AAA, each of whom shall be and remain independent
of the
Parties. Edumatics shall appoint one arbitrator, Siboney shall appoint one
(1)
arbitrator, and the two (2) appointed arbitrators shall choose the third
arbitrator who will act as the
21
chairperson
of the arbitration. If the two (2) arbitrators
appointed by the Parties are not able to agree on the third arbitrator within
thirty (30) days from the date that the last such arbitrator was appointed,
the
third arbitrator shall be appointed by the AAA. Each of such appointees must,
however, meet the qualifications set forth in the second sentence of this
Section.
19.10 Governing
Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State
of
Missouri, excluding its choice of law provisions. The Parties expressly agree
to
exclude the application of the U.N. Convention on Contracts for the
International Sale of Goods (1980) to this Agreement and the performance
of the
Parties contemplated herein, to the extent that such convention might otherwise
be applicable.
22
other
services are a valuable asset to such Party and are
difficult to replace. Accordingly, the Parties agrees that, for a period
of
twelve (12) months after termination of this Agreement, neither Edumatics
nor
Siboney will solicit for employment whether as an employee, independent
contractor, or consultant, any of the other Party’s employees or consultants who
perform any of the development and editorial content review services or other
material services pursuant to this Agreement.
[SIGNATURE
PAGE FOLLOWS]
23
IN
WITNESS WHEREOF, the Parties have caused their
duly authorized representatives to enter into this Agreement effective on
the
Effective Date.
|
/s/
Xxxxxxx
Xxxxx
|
/s/
Xxxxxxx X.
Xxxxxxx
|
|
For
and on behalf of Edumatics
|
For
and on behalf of Siboney
|
|
Name:
Xxxxxxx
Xxxxx
|
Name:
Xxxxxxx
X. Xxxxxxx
|
|
Designation:
President
|
Designation:
President
|
|
Witnesses:
|
|
|
Name:
_____________________
|
Name:
_______________________
|
|
Occupation:
_________________
|
Occupation:
___________________
|
|
Address:
____________________
|
Address:
_____________________
|
|
____________________________
|
_____________________________
|
24
Exhibit
A
Online
Products Business Plan
25
Exhibit
B
Online
Solution Financial
Contributions
26
Exhibit
C
Online
Solution Project Plan
27