[EDT LEARNING LOGO]
EXHIBIT 10.17
SUBCONTRACTOR AGREEMENT
This subcontractor agreement (the "Agreement"), is made to be effective
on May 1, 2003 (the "Effective Date") by and between EDT Learning, Inc. ("EDT
Learning"), a Delaware corporation and Interactive Alchemy, Inc. ("Contractor").
WHEREAS, EDT Learning is in the business of providing custom content
development services to its customers (in the corporate, government and
education customers sectors) and is the owner of certain proprietary techniques,
methods and/or processes for developing and converting content into online and
cd-rom based courses to individual end users and distributors;
WHEREAS, EDT Learning and Contractor desire to enter into an agreement
whereby Contractor will provide e-Learning custom content development and
professional services to EDT Learning and indirectly to EDT Learning's Customers
using among other things EDT Learning's Development Software;
WHEREAS, EDT Learning and Contractor wish to execute this Agreement and
certain subsequent statements of work, which will provide a description of each
specific engagement or project, the associated fees, and the resulting work
products or courses;
NOW, THEREFORE, EDT Learning and Contractor, in exchange for the mutual
promises and conditions contained herein and other good and valuable
consideration the sufficiency of which is hereby acknowledged, do agree as
follows:
1. DEFINITIONS:
a. "Custom Services" shall mean any of the services provided by
Contractor pursuant to a Statement of Work to EDT Learning and
indirectly to EDT Learning's Customers, which may include but
are not limited to: (i) development of Courses incorporating
and combining Customer Source Material with EDT's Learning
Products or EDT Learning's Development Software; (ii)
customizing and creating a Customer's Course using EDT
Learning's Development Software; (iii) the creation or
customization of an existing Customer's Course using Customer
Source Material and a third party's development software for
EDT Learning; or, (iv) any other type of work or effort on
behalf of EDT Learning or its Customer pursuant to a Statement
of Work executed by the parties hereto.
b. "Source Material" shall be the source materials that belong to
EDT Learning or its Customers that will be used or
incorporated into a Course as a part of a Statement of Work,
including text, pictures, graphics, sound files and video
files.
c. "Customer" shall mean any person or entity that: (i) had prior
to the Effective Date ever purchased, obtained or received any
good, service or product from either EDT Learning or from
entities that have engaged in a merger or asset purchase
transaction with EDT Learning, (specifically LearningEdge,
Inc., ThoughtWare Technologies, Inc., Quisic Corporation and
Mentergy, Inc.) and (ii) any person or entity who does during
the period beginning with the Effective Date and ending the
with termination date of this Agreement purchase, obtain or
receive any good, service or product from EDT Learning.
d. A "Contractor Client" shall mean any person or entity with
which Contractor does business who is not an EDT Learning
Customer. If a person or entity does business with the
SUBCONTRACTOR AGREEMENT PAGE 1 OF 19
Contractor prior to becoming an EDT Learning Customer and then
subsequently does business with EDT Learning then that person
or entity will not become a "Customer."
e. "Course" shall mean any computer based or web based training,
instructional or demonstration course that Contractor develops
for EDT Learning or an EDT Learning Customer and shall also
mean the Derivative Work and Work Product Contractor creates
on behalf of EDT Learning for its Customer using the EDT
Learning Development Software and/or the Contractor
Development Software to modify the Source Material from one or
more Courses.
f. "Derivative Work" shall mean any work that is based upon one
or more preexisting works, EDT Learning Products, EDT Learning
Development Software, such as a revision, enhancement,
modification, translation, abridgement, condensation,
expansion, or any other form in which such preexisting works
may be recast, transformed or adapted, and that, if prepared
without authorization of the owner of the copyright in such
preexisting work, would constitute copyright infringement. For
purposes hereof, a Derivative Work shall also include any
compilation or combination that incorporates such preexisting
work.
g. "EDT Learning Products" means the software and other
proprietary products developed, owned, leased and /or licensed
by EDT Learning, and/or the software and other proprietary
products developed and owned by EDT Learning including
LearnLinc(R), or learning management systems, and any other
software in which EDT Learning maintains a proprietary
ownership interest.
h. "Proprietary Rights" shall mean any and all ownership rights
and other proprietary rights and interests, including but not
limited to, patents, patent rights and published or
unpublished U.S. and foreign patent applications, copyrights,
copyrighted materials, unpublished research and development
information, engineering, technical or product specification,
designs, processes, un-patented inventions, mask xxxx, mask
works, know-how, trade secrets, trademarks and their
associated good will, trade names, service marks and their
associated good will, logos, designs, technical data, licenses
to practice any of the foregoing, and physical embodiments of
any of the foregoing.
i. "Development Software" shall mean the proprietary course
development tool set and course player developed and owned by
EDT Learning called i-Canvas(TM) and any software used or
owned by EDT Learning and used in conjunction with i-Canvas
for the development, creation or maintenance of a Course
including EDT Learning's scripting tool and i-Review(TM)
products, together with any documentation or materials
provided therewith.
j. "Statement of Work" shall mean the document between EDT
Learning and Contractor in which Custom Services will be
assigned by EDT Learning to Contractor. Each Statement of Work
to this Agreement will define Custom Services to be provided
and shall be mutually agreed to between EDT Learning and
Contractor and will be executed by both parties and shall not
be effective or binding upon EDT Learning or its Customer
until signed by an authorized officer of EDT Learning and an
authorized officer of Contractor. Each Statement of Work to
this Agreement may include the description of Custom Services
to be performed, the rate of compensation in hours and in
total, expected start and completion date, any acceptance
criteria, testing criteria, and delivery milestones. Where a
Statement of Work contains provisions that are inconsistent
with this Agreement, the inconsistent provisions of the
Statement of Work shall govern, and all other provisions of
this Agreement shall remain in full force and effect.
SUBCONTRACTOR AGREEMENT PAGE 2 OF 19
k. "Trademarks" shall mean the marks claimed in good faith by EDT
Learning to be its proprietary marks (service and trade) which
include, but are not limited to: "EDT Learning e-Learning
Simplified" "EDT Learning", "EDT Learning Custom Services
Group", i-Canvas(TM), LearnLinc(R), TestLinc(TM),
OfficeLinc(TM), SupportLinc(TM), MeetingLinc(TM),
ThoughtWare(TM), i-Review(TM) and any corresponding design or
logo, associated with those Trademarks together with their
respective stylistic markings and distinctive logotypes for
such trademarks, trade names and service marks, along with all
associated goodwill.
l. "Work Product" shall mean (i) all of the tangible product or
result of Contractor's work, including work of Contractor's
subcontractors, if any, pursuant to any Statement of Work
issued hereunder or pursuant to any other agreement of EDT
Learning and Contractor and (ii) all intellectual property and
intellectual property rights that relate to the business and
interests of EDT Learning that Contractor conceives, develops
or delivers at any time during the course of Contractor's
performance of any Statement of Work issued hereunder or
pursuant to any other agreement of EDT Learning and
Contractor. Notwithstanding the foregoing, "Work Product"
shall not include Consultant Tools, and EDT Learning hereby
disclaims any ownership or proprietary interest of any kind in
any Consultant Tools.
m. "Advance Deposits" shall mean monies EDT collects from EDT
customers for work for which no Statement of Work" has been
executed.
n. "Consultant Tools" shall mean any method, process or technique
designed and developed by Contractor and used by Contractor in
connection with providing consulting services under a
Statement of Work, whether any such method, process or
technique was conceived, developed or delivered prior to this
Agreement or in connection with providing services under a
Statement of Work that are not directly related to, based upon
or derived from EDT Learning Products, Derivative Work or
Development Software. Contractor retains ownership of and all
rights to any Consultant Tools. Except as otherwise expressly
provided in a separate, written license agreement signed by
Contractor, if any, no license or other right to the Tools is
granted or transferred to any Customer or to EDT Learning by
this Agreement, any Statement of Work, or any Customer
Contract.
o. "Customer Contract" shall mean any contract or agreement
between EDT Learning and a Customer (including without
limitation any master agreement, any amendments and all
relevant statements of work, including amendments) to which
Custom Services relate.
2. APPOINTMENT AS CONTRACTOR. EDT Learning hereby appoints Contractor, and
Contractor hereby accepts appointment from EDT Learning, as its sole
authorized Custom Services contractor, subject to the terms and
conditions hereof. Contractor agrees to provide to EDT Learning and its
Customers Custom Services that are described and jointly agreed upon in
a Statement of Work, as provided in this Agreement, using approved
development tools including the Development Software. EDT Learning
agrees that from time to time Contractor may hire subcontractors to
assist Contractor in providing Custom Services, provided however that
the use of subcontractors shall not relieve Contractor of any
obligation or liability under this Agreement or any Statement of Work.
3. CUSTOM SERVICES. This Agreement is a foundation document to establish
the working relationship between EDT Learning and Contractor in an
independent agent principal relationship. EDT Learning and Contractor
will endeavor to use a Statement of Work in the form attached as
EXHIBIT "A." Statements of Work will be agreed upon concerning each
project obtained by EDT Learning from the Customer pursuant to a
SUBCONTRACTOR AGREEMENT PAGE 3 OF 19
Customer Contract and will be executed from time to time by the parties
after the Effective Date. EDT Learning shall provide to Contractor, in
connection with the negotiation of each Statement of Work, a copy of
all relevant portions of the Customer Contract (including any
amendments thereto). Any Statement of Work may be supplemented or
modified by the parties from time to time, but any changes to a
Statement of Work shall only be binding if made in writing and signed
by both parties. The parties will further refine the scope of work and
the timetables associated with any particular project through the
development of a project plan and scope document which may supplement
and/or amend the Statement of Work. Contractor will not attempt to
negotiate any Statement of Work directly with a Customer and
accordingly will not attempt to negotiate the price to be paid by the
Customer or the payment terms available to the Customer. However,
Contractor may assist EDT Learning in preparation of the Statement of
Work by discussing the project with the Customer including the nature
of the work, the type of deliverable, and the timelines associated with
the project. Contractor will not be authorized to begin the delivery of
Custom Services to EDT Learning unless and until a Statement of Work is
executed by EDT Learning and by Contractor authorizing the work.
4. CONTRACTOR OBLIGATIONS. Upon execution of a relevant Statement of Work,
issued by EDT Learning to Contractor and agreed to by Contractor in
writing, Contractor warrants and represents that it will identify and
allocate the resources required to design, develop and deliver the
Custom Services to EDT Learning for timely delivery to Customer in
accordance with the Statement of Work. Contractor shall be fully
responsible for, and shall exercise all due diligence with respect to,
the care and protection of any Source Materials which may be in
Contractor's possession, custody, or control, including but not limited
to maintaining the confidentiality thereof and preventing any
unauthorized access or use thereof. Contractor shall ensure that all
Courses developed and delivered to EDT Learning or its Customers are
fully tested and comply with the Statement of Work pursuant to which
they were developed and delivered. Within 30 days after termination of
this Agreement Contractor and any third parties to whom Contractor has
disseminated such Source Materials shall provide written verification
that all such Source Materials have been returned to EDT Learning or
its Customers, and neither Contractor nor its subcontractors will
retain any copies of such Source Materials. Contractor agrees that the
quality control of the Course and the Custom Services provided shall be
the sole responsibility of Contractor. Subject to Contractor's rights
to pursue its remedies under this Agreement, Contractor shall perform
all Custom Services in a professional and expeditious manner and
warrants that its services will be of a professional quality conforming
to generally accepted industry standards and procedures. Contractor
will conduct its business with EDT Learning Customers in a manner that
reflects favorably at all times on EDT Learning and the good name,
goodwill and reputation of EDT Learning. Contractor will avoid
materially deceptive, misleading or unethical practices that are or
might be detrimental to EDT Learning or its Products. Contractor will
make no materially false or misleading representations with regard to
EDT Learning or the Custom Services and will not: (i) employ or
cooperate in the publication or employment of any materially misleading
or deceptive advertising with regard to the Custom Services or
Products; (ii) make representations, warranties or guarantees to the
Customers with respect to the specifications, features or capabilities
of the Custom Services or Courses other than those which are consistent
with the Statement of Work (or any amendment thereof); or, (iii) enter
into any contract or engage in any practice in conflict with its
obligations under this Agreement.
5. EDT LEARNING OBLIGATIONS. EDT Learning will conduct its business
activities in a professional and expeditious manner. EDT Learning will
avoid materially deceptive, misleading or unethical practices that are
or might be detrimental to Contractor. EDT Learning will make no
materially false or misleading representations with regard to
Contractor or the Custom Services and will not: (i) employ or cooperate
in the publication or employment of any materially misleading or
deceptive advertising with regard to the Custom Services or Products or
(ii) make representations, warranties or guarantees to the Customers
SUBCONTRACTOR AGREEMENT PAGE 4 OF 19
with respect to the specifications, features or capabilities of the
Custom Services or Courses other than those which are consistent with
the Statement of Work.
6. GRANT OF SOFTWARE LICENSE. Subject to the terms and conditions
contained herein, EDT Learning hereby grants to Contractor while this
Agreement remains in effect a non-exclusive, non-transferable, limited
license to use the Development Software and the EDT Learning Trademarks
to provide Custom Services to EDT Learning's Customers and to
Contractor Clients. It is agreed and accepted by the parties that any
licenses granted by EDT Learning to Contractor herein are limited
personal licenses with no right to sublicense or sell that license. All
proprietary rights in and to the Development Software, EDT Learning
Products and Trademarks not granted herein shall remain fully and
exclusively vested in EDT Learning. The limited license rights granted
pursuant to this Agreement are the only rights that Contractor has to
the EDT Learning Development Software, EDT Learning Products and
Trademarks. During the term of this Agreement and in consideration for
its execution, Contractor will be provided a fifty (50) user license to
the i-Canvas software, including maintenance, support and upgrades
without charge to Contractor. Upon termination of this Agreement,
Contractor will have the right during the ninety (90) day period
following the termination date to purchase licenses of the i-Canvas
software at the lesser of the then current price or 80% of the price of
i-Canvas at the Effective Date of this Agreement with the i-Canvas
license purchased by Contractor being granted on EDT Learning's
standard end user license terms. Unless and until this Agreement is
terminated, Contractor may modify the source code of the i-Canvas
software from time to time for use on a Customer's or Contractor
Client's project. Prior to modification, Contractor will notify EDT
Learning of the proposed change. Any changes to the i-Canvas software
or any other EDT Learning Products or Development Software made by
Contractor, regardless of the nature of the change or the timing of the
change, will at all times exclusively vest in EDT Learning with all
right title and interest in and to the i-Canvas software or any other
EDT Learning Products or Development Software, and such changes shall
be considered work-for-hire by Contractor on EDT Learning's behalf,
without compensation of any nature to Contractor for the work performed
or the value of the resulting modified software or product. Except and
expressly authorized in writing by EDT Learning, Contractor shall not
modify, translate, reverse engineer, de-compile or disassemble the
Development Software or the EDT Learning Products or any portion
thereof. Contractor agrees that is will use the Development Software
only for the purposes of performing Custom Services or developing
Courses for Contractor Clients and EDT Learning's Customers. Unless a
license is purchased, Contractor agrees that within 30 days after
termination of this Agreement, then Contractor will immediately return
to EDT Learning all copies of Development Software or the EDT Learning
Products, whether in the possession of Contractor or any subcontractor,
and the license granted will immediately cease. Contractor will also
receive such concurrent user licenses as EDT Learning reasonably
determines necessary to use the LearnLinc(R)virtual classroom software
for the exclusive purpose of internal use (the "Internal Use License")
by Contractor while this Agreement remains in effect. The Internal Use
Licenses will include free maintenance, support and upgrades while this
Agreement remains in effect. Contractor will be able to use the
Internal Use Licenses for the exclusive purpose of: (a) training its
own employees; (b) providing training and support to those person who
will be using the Courses created by Contractor; or (c) providing to
Customers and Contractor Clients ongoing review and modification of the
Courses while in development or during maintenance periods. Contractor
shall not use the Internal Use Licenses to compete with EDT Learning
and shall not directly or indirectly sell, re-sell, deliver,
distribute, transfer, lease, sub-lease, sub-license or otherwise make
available for use by an End User the Internal Use Licenses other than
those in the direct employment of Contractor.
7. OFFICE SHARING ARRANGEMENT. Unless and until this Agreement is
terminated and in consideration for the Contractor Payments
(hereinafter defined), EDT Learning will provide to Contractor use of
an appropriate amount of square feet of EDT Learning's premises
(located at 0000 X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx) (the
SUBCONTRACTOR AGREEMENT PAGE 5 OF 19
"Premises") and facilities for the support of up to 45 fulltime
employees who work for Contractor (the "Contractor Space"). Should
Contractor need more square footage than the Contractor Space provided
then Contractor and EDT Learning may engage in a separate sublease
agreement concerning some other portion of EDT Learning's Premises or
Contractor may seek other additional premises outside of the EDT
Learning's Premises. Unless and until this Agreement is terminated and
in consideration for the Contractor Payments, EDT Learning will provide
to Contractor use of its office equipment, office furniture and general
office suite services (the "Executive Suite Services") which is
necessary to provide the Custom Services to EDT Learning that will
include at no additional cost to Contractor office cubicles, desks,
computers, software, telephones, internet access, long distance, fax,
copier, office supplies and postage without itemization. Should EDT
Learning vacate the Premises for any reason and not provide equivalent
space reasonably acceptable to Contractor, then, on and after the date
of vacancy of the Premises, the obligation to provide Contractor Space
and the obligations related to the Executive Suite Services shall
terminate and the Percentage (as defined below) shall be reduced by
one-half and the fees due to Contractor under Section 9b shall be
increased to 90% from 80% of the Net Fees as defined therein. In the
event of vacancy of the Premises, other than the foregoing changes in
the Percentage and the amount due to Contractor the obligations of
Contractor to EDT Learning concerning the Contractor Payments shall
continue during the Term hereof. In consideration for the Executive
Suite Services and use of the Contractor Space provided and other good
and valuable consideration, then Contractor will (the "Contractor
Payments"): (a) provide to EDT Learning each month that this Agreement
remains in effect, at no additional charge, 80 hours of Custom Services
for the creation of product demonstration, sales and marketing
literature, web site enhancements and other creative services for use
by EDT Learning, but not as part of the Custom Services provided to
Customers; (b) reimburse one half of the base compensation of the sales
executive which is focused on the sale of Custom Services (currently
Xx. Xxx Xxxx) in an amount up to $2,500 per month; (c) pay a percentage
(the "Percentage") of the collected revenues associated with the sale
of Custom Services to Contractor's Clients (i.e., revenues to persons
other than EDT Learning Customers, the "Collected Revenues") based upon
the following table:
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COLLECTED REVENUES BY CONTRACTOR DURING THE FIRST 12 DURING THE SECOND 12 AFTER THE SECOND
MONTHS FROM THE MONTHS FROM THE ANNIVERSARY OF THE
EFFECTIVE DATE EFFECTIVE DATE EFFECTIVE DATE
---------------------------------------------------------------------------------------------------------------
LESS THAN $2 MILLION 20% 20% 20%
---------------------------------------------------------------------------------------------------------------
BETWEEN $2 AND $4 MILLION 15% 15% 15%
---------------------------------------------------------------------------------------------------------------
BETWEEN $4 AND $5 MILLION 10% 10% 10%
---------------------------------------------------------------------------------------------------------------
OVER $5 MILLION 10% 5% 0%
---------------------------------------------------------------------------------------------------------------
EDT Learning will maintain a fulltime sales representative who is dedicated
to the sale of Custom Services (the "Contractor Payments"). However, should
EDT Learning terminate that sales associate and no longer employ a person
who is dedicated to the sale of Custom Services, then Contractor on the
termination date of that dedicated sales person will no longer provide to
EDT Learning reimbursement of any sales person's compensation. If EDT
Learning desires to hire and/or assign a new salesperson dedicated to the
sale of Custom Services then Contractor will have the right to approve or
disapprove the assignment/hire and upon their hiring the obligation to
reimburse for one half of their compensation shall again resume.
SUBCONTRACTOR AGREEMENT PAGE 6 OF 19
8. LOYALTY AND EXCLUSIVITY.
a. Each party warrants and represents to the other party that:
i. During the term of this Agreement and for the one (1)
year period after termination of this Agreement,
neither party will solicit for hire or hire any
employee of the other party.
ii. During the term of this Agreement and for the three
(3) year period after termination of this Agreement,
Contractor will not solicit any Customer of EDT
Learning (or facilitate the solicitation of any
Customer by any third party) for the purpose of the
sale of the Custom Services or other product or
service which is competitive with that of the
products and services sold by EDT Learning as of the
termination date of this Agreement other than
pursuant to the terms and conditions of this
Agreement, and EDT Learning will not solicit any
Contractor Client for the purpose of the sale of the
Custom Services..
iii. During the term of this Agreement and for the one (1)
year period after termination of this Agreement,
Contractor will not solicit any Value Added Reseller
or referral partner of EDT Learning (or facilitate
the solicitation by any third party), including but
not limited to SkillSoft, for the purpose of the sale
of the Custom Services or other product or service
which is competitive with that of the products and
services sold by EDT Learning as of the termination
date of this Agreement, other than pursuant to the
terms and conditions of this Agreement. During the
term of this Agreement and for the one (1) year
period after termination of this Agreement, EDT
Learning will not solicit any distribution or
referral partner of Contractor (or facilitate the
solicitation by any third party), for the purpose of
the sale of the Custom Services, other than pursuant
to the terms and conditions of this Agreement
iv. During the term of this Agreement and for the three
(3) year period after termination of this Agreement,
each party represents and covenants that it will not
(either personally, or through any individual
association, partnership, corporation or other
entity) intentionally disclose any Trade Secret or
Confidential Information of the other party to any
person, (or any association, partnership, corporation
or other entity) for any reason or purpose
whatsoever, except as may be required by this
Agreement, a Statement of Work or operation and
compulsion of law.
b. Each party represents and warrants that its training and
experience are such that the restrictions contained in this
section, in general and in this paragraph specifically, shall
not result in an inability on its part to pursue a livelihood,
and that other alternatives or employment or business
endeavors are reasonably available with these covenants fully
enforced. Each party expressly agrees that the duration,
geographical limitations and description of the prohibited
conduct described in these representations and covenants are
reasonable and that such party has given valuable
consideration for the representations and covenants contained
in this section. Each party agrees that the representations
and covenants contained in this section are a material
inducement for the other party to enter into this Agreement.
Because each party has negotiated and agreed to the
limitations and restrictions contained in this section, such
Party expressly waives the right to later protest the
reasonableness of the limitations, warranties, geographical
limitations and prohibited conduct specified in these
restrictive representations and covenants. Each party agrees
that any compensation or fee due to such party may be offset
by any damages sustained by the other party should Contractor
SUBCONTRACTOR AGREEMENT PAGE 7 OF 19
materially breach the foregoing restrictive covenants after
notice and failure to cure such breach. Each party agrees that
the other party would be immediately and irreparably harmed in
the event of breach by it and therefore enforcement by
immediately obtaining an injunction would be proper; and each
party agrees that the amount of surety bond if any required
shall not exceed $500.00.
9. FEES, PAYMENT TERMS AND CANCELLATION.
a. EDT Learning and Contractor agree that the fees charged to
Customers for the Custom Services shall be mutually agreed
upon by both parties prior to the execution of a Statement of
Work between EDT Learning and the Customer. Attached hereto in
EXHIBIT "B" is Contractor's current standard fee schedule for
the provision of Custom Services. EXHIBIT "B" is subject to
modification by Contractor on at least 90 days prior written
notice by Contractor. Any deviation from the standard rates
for any Statement of Work shall be mutually agreed upon by
both parties prior to quotation of the prices for the Custom
Services to the Customer.
b. Only EDT Learning will xxxx and collect from the EDT Learning
Customer and accordingly Contractor will only look to EDT
Learning for collection of any fees and charges due to
Contractor from such Customer, including for work performed
pursuant to this Agreement or any applicable Statement of
Work. EDT Learning shall make reasonable commercial efforts to
collect such fees and charges, and in connection therewith and
will provide to Contractor a weekly written report of EDT
Learning's aged accounts receivable, cash collections and such
other related information that Consultant reasonably requests
concerning Custom Services. EDT Learning represents that it
shall not write off its accounts receivable arising from
Custom Services performed by Contractor except for appropriate
reserves and write offs due to uncollectability.
Notwithstanding the foregoing, Contractor may xxxx and collect
from any Contractor Client who is not an EDT Learning
Customer. The fees due to Contractor will be equal to eighty
percent (80%) of the Net Fee received by EDT Learning from the
Customer for the Custom Services provided by EDT Learning to
Customer. The term "Net Fee" shall mean the amount of the fee
paid by Customer to EDT Learning after deduction of the sales
commission (the amount of which is subject to mutual agreement
by EDT Learning and Contractor) due to the EDT Learning sales
executive who was responsible for the sale of the Statement of
Work and shall not include any sales or other taxes collected
by EDT Learning and remitted to any taxing authority. By way
of example but not limitation, should EDT Learning's sales
person receive 10% of the total revenue earned and a project
derive revenue of $100,000, then Contractor shall be due a
cash fee equal to $72,000 with EDT Learning retaining the
remaining cash associated with the revenue of $18,000.
c. Payments to Contractor of the Net Fee will be due upon the
collection of cash from the Customer and which is earned
revenue on an accrual basis in accordance with GAAP (matching
the payments from the customer) and will be tendered to
Contractor within three (3) business days of its receipt by
EDT Learning. However, EDT Learning will have no obligation to
tender to Contractor any portion of any Advance Deposits
received by EDT Learning. If EDT Learning receives a deposit
of money from a Customer in advance of the Net Fee being due
and payable, then EDT Learning will advance to Contractor an
amount equal to eighty percent (80%) of that deposit after
deduction of the sales commission (the "Deposit"), provided,
however, that such Deposit shall remain a liability of
Contractor to EDT Learning unless and until earned by
Contractor under the applicable accrual rules. By way of
example but not limitation, should EDT Learning's sales person
receive 10% of the total revenue earned and the Customer
SUBCONTRACTOR AGREEMENT PAGE 8 OF 19
tenders a deposit of $10,000, then Contractor will receive a
cash Deposit equal to $7,200 with EDT Learning retaining the
remaining cash associated with the deposit of $1,800. Only
Custom Services which are resulting from executed Statements
of Work on and after the Effective Date of this Agreement will
result in a Net Fee due to Contractor. Contractor will not be
entitled to any portion of any accounts receivable on EDT
Learning's books prior to the Effective Date. Contractor and
EDT Learning will apportion any work in process which is
ongoing (i.e., partially completed projects prior to the
Effective Date) and only the agreed upon un-completed portion
of any work in progress will be subject to any Net Fee or
sharing between EDT Learning and Contractor. EDT Learning and
Contractor will execute separate Statements of Work for
projects that are in partial completion and for which a Net
Fee is due. All payments to Contractor shall be made in United
States dollars. EDT Learning will provide to Contractor a
weekly written report in reasonable detail itemizing cash
receipts for payments received for Custom Services. Contractor
will have right to audit upon reasonable notice and during
normal business hours EDT's books and records concerning
custom content development services that are provided to
Customers. EDT Learning will be responsible for the collection
of and payment of all taxes that are imposed on the Custom
Services delivered to Customer, including any sales taxes.
Notwithstanding any other provision of this Agreement, if EDT
Learning fails to make any payment of the Net Fee within the
three (3) days specified above, then in addition to any other
remedies available under this Agreement Contractor shall have
the right, but not the obligation, to immediately suspend all
work under the Statement of Work and/or terminate the
Statement of Work in its entirety.
10. CHANGE MANAGEMENT PROCEDURES.
a. CANCELLATION OF STATEMENTS OF WORK. Once a Statement of Work
has been executed by the parties, then EDT Learning may cancel
such outstanding Statement of Work by providing to Contractor
written notice of such cancellation in the event that: (i) the
Customer cancels the Customer Contract to for which the
Statement of Work provides Custom Services; (ii) the
Contractor and EDT Learning mutually cancel the Statement of
Work; or, (iii) Contractor breaches the Statement of Work and
fails to cure such breach pursuant to Section 18b. hereof.
Cancellation of a Statement of Work will be effective on the
later of the date provided in the notice or the date
Contractor receives written notice of cancellation. In the
event of a cancellation of a Statement of Work, EDT Learning
shall reimburse Contractor for all expenses incurred and for
all Custom Services performed through and including the
effective date of the cancellation. The fee due at
cancellation for the services performed shall be based upon
the hours expended and rates provided in the applicable
Statement of Work (or if the specific hourly rates are not
provided in the Statement of Work then the fee due to
Contractor shall be based upon Contractor's standard hourly
rate schedule).
b. REQUIREMENT OF CHANGE ORDERS. Any changes, modifications, or
additions to the obligations of either party or to any other
material aspect of a Statement of Work will require a written
Change Order prepared by either party and mutually agreed to
by the parties. Either party may initiate a Change Order by
sending the Change Order to the other party for review and
approval. All Change Orders will conform to the template set
forth in EXHIBIT "C" and may contain, but will not be limited
to, the following information, as applicable:
i. A description of any additional work to be
performed and/or changes to the performance required of either
party, including the estimated number and skill level of
personnel necessary to make such changes and/or additions and
the availability of such personnel over the ensuing period;
ii. A statement of the impact of the work or changes on the
services or other requirements of this Agreement;
SUBCONTRACTOR AGREEMENT PAGE 9 OF 19
iii. The estimated timetable to complete the work
specified in the Change Order;
iv. The impact, if any, on the schedule or fees;
v. Acceptance criteria for such work; and,
vi. Signatures of both parties.
c. ACCEPTANCE OF CHANGE ORDER. Within five (5) days of the
submission of a Change Order to either party, the other party
will notify the party submitting the Change Order of its
acceptance or rejection of the proposed change or addition in
writing. Failure to respond to such a request will not be
deemed to constitute acceptance of such Change Order request.
11. WARRANTY.
a. Contractor represents and warrants that:
i. All work undertaken by it to provide Custom Services,
all Courses, and all Work Product shall be
accomplished in a professional and workmanlike
manner, and in accordance with industry standards,
and in accordance with this Agreement and the
applicable Statement of Work; and,
ii. All software, content and other material provided to
EDT Learning or EDT Learning Customer, including
Contractor Work Product and covered Derivative Works
do not and will not, to its knowledge, violate any
copyright, trademark, service xxxx, trade secrets,
U.S. patents, proprietary right or personal right of
any third party, including any right of privacy or
publicity and will not contain any defamatory or
obscene statement or material.
b. EDT Learning represents and warrants that the Development
Software and EDT Learning Products and other material provided
to Contractor for a Customer do not and will not, to its
knowledge, violate any copyright, trademark, service xxxx,
trade secrets, U.S. patents, proprietary right or personal
right of any third party, including any right of privacy or
publicity, and that they are original works for which EDT
Learning has the right, power and authority to convey the
licenses to Contractor or Contractor's subcontractors
contemplated by this Agreement.
12. LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, EDT LEARNING AND CONTRACTOR MAKE AND RECEIVE EACH TO THE
OTHER NO WARRANTIES, EXPRESS, IMPLIED, STATUTORY, ARISING FROM THE
COURSE OF DEALING OR USEAGE OF TRADE, OR OTHERWISE, AND EACH PARTY
SPECIFICALLY DISCLAIMS ANY WARRANTIES OF TITLE, QUIET ENJOYMENT,
ABSENCE OF SECURITY INTEREST, LIEN OR ENCUMBRANCE, NONINFRINGEMENT,
MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN (INDEMNIFICATION), NEITHER EDT
LEARNING NOR CONTRACTOR SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL,
CONSEQUENTIAL, INCIDENTAL EXEMPLARY, OR PUNITIVE DAMAGES RELATING TO OR
ARISING FROM ANY BREACH OR ALLEGED BREACH OF THIS AGREEMENT, OR FROM
SUBCONTRACTOR AGREEMENT PAGE 10 OF 19
ANY PRODUCTS, SERVICES OR OTHER ACTIONS OR OMISSIONS CONNECTED WITH OR
UNDERTAKEN PURSUANT TO THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR
THEORY OF LIABILITY, (WHETHER BASED UPON BREACH OF CONTRACT OR
WARRANTY, STRICT LIABILITY, NEGLIGENCE, TORT OR OTHERWISE), INCLUDING,
WITHOUT LIMITATION, LOST PROFITS OR INJURY TO BUSINESS, REGARDLESS OF
WHETHER THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. EDT LEARNING'S LIABILITY FOR DAMAGES RELATING TO OR ARISING
FROM ANY ALLEGED BREACH OF THIS AGREEMENT, OR PRODUCT, SERVICE ACT OR
OMISSION IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED THE BALANCE
OF PROJECT PRICE PAYABLE TO CONTRACTOR WITH RESPECT TO COMPLETED
COURSES PREVIOUSLY DEVELOPED PURSUANT TO THE STATEMENT OF WORK
DELIVERED BY EDT LEARNING TO CONTRACTOR PURSUANT TO THIS AGREEMENT AND
PRIOR TO EXPIRATION OR TERMINATION OF THIS AGREEMENT. CONTRACTOR'S
LIABILITY FOR DAMAGES RELATING TO OR ARISING FROM ANY ALLEGED BREACH OF
THIS AGREEMENT SHALL NOT EXCEED THE AMOUNT OF PROJECT PRICE ALREADY
PAID BY EDT LEARNING WITH RESPECT TO STATEMENT OF WORK ISSUED PURSUANT
TO THIS AGREEMENT. IN NO EVENT SHALL EDT LEARNING'S OR CONTRACTOR'S
RESPECTIVE AFFILIATES, OR THE RESPECTIVE SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF EDT LEARNING OR
CONTRACTOR, BE LIABLE FOR ANY CLAIMS OR DAMAGES RELATING TO OR ARISING
FROM ANY BREACH OR ALLEGED BREACH OF THIS AGREEMENT, OR FROM ANY
PRODUCTS, SERVICES OR OTHER ACTIONS OR OMISSIONS CONNECTED WITH OR
UNDERTAKEN PURSUANT TO THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR
THEORY OF LIABILITY, (WHETHER BASED UPON BREACH OF CONTRACT OR
WARRANTY, STRICT LIABILITY, NEGLIGENCE, TORT OR OTHERWISE), INCLUDING,
BUT NOT LIMITED TO, INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL,
EXEMPLARY, OR PUNITIVE DAMAGES, OR THIRD PARTY CLAIMS, INCLUDING
WITHOUT LIMITATION LOST PROFITS OR INJURY TO BUSINESS, REGARDLESS OF
WHETHER SUCH INDIVIDUALS OR ENTITIES HAVE BEEN OR ARE ADVISED OR KNOW
OR SHOULD KNOW OF THE POSSIBILITY OF SUCH DAMAGES.
13. INDEMNIFICATION.
a. BY CONTRACTOR. Contractor hereby agrees to indemnify, defend
and hold harmless EDT Learning, its affiliates, and their
respective shareholders, officers, directors, employees,
agents and representatives from and against any and all third
party claims or proceedings ("Claims") for causes of action,
demands, liabilities, obligations, losses, damages, judgments,
costs and expenses (including reasonable attorney's fees and
expert witness fees) of any kind whatsoever: (a) which arise
directly or indirectly out any breach of a Statement of Work
by Contractor or its subcontractors; (b) which arise directly
or indirectly under any agreement between Contractor and any
Contractor Client; (c) which are based on an allegation that
any materials, Custom Services, covered Derivative Works,
Customer's Courses, or Work Product provided by Contractor
hereunder infringe any Proprietary Rights of third parties
provided that such infringement in not caused in whole or in
part by EDT Learning Products; or, (d) which are claims by
Contractor's employees for any wage, compensation, taxes,
benefits, vacation pay, insurance, xxxxxxx'x compensation or
other employment claims based upon the employment of such
person by Contractor.
b. BY EDT LEARNING. EDT Learning hereby agrees to indemnify,
defend and hold harmless Contractor, its affiliates, and their
respective shareholders, officers, directors, employees,
SUBCONTRACTOR AGREEMENT PAGE 11 OF 19
agents and representatives from and against any and all Claims
of any kind whatsoever: (a) which arise directly or indirectly
out any breach of a Statement of Work by EDT Learning; (b)
which arise directly or indirectly under any Customer Contract
(other than a breach of the related Statement of Work by
Contractor or its subcontractors); (c) which are based on an
allegation that any EDT Learning Products infringe any
Proprietary Rights of third parties; or, (d) which are claims
by EDT Learning's employees for any wage, compensation, taxes,
benefits, vacation pay, insurance, xxxxxxx'x compensation or
other employment claims based upon the employment of such
person by EDT Learning.
c. PROCEDURES. A party's obligation to indemnify the other party
hereunder is conditioned upon such other party providing
prompt written notice to the indemnifying party of an Claim
and cooperating (at no out-of-pocket cost) with the
indemnifying party in all reasonable respects.
14. INDEPENDENT CONTRACTOR RELATIONSHIP BETWEEN PARTIES. Contractor
represents and warrants that it, and not EDT Learning, is the employer
of Contractor's employees and that it is solely responsible for
complying with all laws, rules and regulations of any governmental
authority having appropriate jurisdiction relating to such employment,
including, but not limited to, immigration, taxation, worker
compensation and unemployment compensation. EDT Learning and Contractor
are independent contractors, and neither party will have the power to
bind the other or incur obligations on the other's behalf without the
other's prior written consent. The parties agree that Contractor shall
retain sole discretion and judgment in the manner the services are to
be performed. Neither party is, nor shall be considered to be, an
agent, distributor, partner, joint venture or representative of the
other party for any purpose.
15. CONFIDENTIAL INFORMATION. The term "Confidential Information" means,
with respect to each party information which relates to a party's
business, research, development, programs, costs, customers or general
activities that is held in confidence by such party, including
information that is designated as confidential or that, by its nature,
should be considered confidential, including the terms of this
Agreement, information relating to the Development Software, Source
Material, EDT Learning Products, Work Products, Custom Services and
Customers.. Each party (and its agents and licensors) will not disclose
to any third party (except as required by law or government
requests/orders or to its attorneys, accountants and other advisors as
reasonably necessary), any of the Confidential Information. If law
requires disclosure of Confidential Information, the party receiving
the request will give prior written notice to the other to permit the
other to contest such disclosure. Each party agrees to protect the
confidentiality of the Confidential Information with at least the same
degree of care it takes to protect its own Confidential Information.
Neither party has any confidentiality obligations regarding information
that enters into the public domain without breach of this Agreement;
that it receives from a third party without restrictions on disclosure
and without breach of a nondisclosure obligation; or that it has
developed internally.
16. RIGHTS IN WORK PRODUCT.
a. WORK PRODUCT. All Work Product created or prepared by
Contractor for EDT Learning pursuant to this Agreement whether
or not prepared on or off the premises of EDT Learning or
during regular work hours shall be the sole and exclusive
property of EDT Learning.
SUBCONTRACTOR AGREEMENT PAGE 12 OF 19
b. EXCLUDED ITEMS. EDT Learning hereby disclaims any ownership
in, and Contractor shall not be required to assign to EDT
Learning, any invention, discovery, innovation or improvement
of Contractor which does not involve any of EDT Learning
Products or Development Software or Contractor Tools (the
"Excluded Inventions"). In any Dispute with respect to these
exclusions, the burden of proof will be on Contractor to show
that the exclusion applies.
17. INSURANCE. Contractor agrees to obtain and maintain insurance which is
required by any Statement of Work or that is required by the Customer
of EDT Learning, including the following:
a. Workers' Compensation insurance in an amount sufficient by
virtue of the laws of the State of Arizona;
b. General Liability insurance in which the limit of liability
for injuries, including accidental death, and property damage
is no less than U.S. $1,000,000 for any one occurrence;
c. Professional Liability (errors & omissions): with limits of
not less than $1,000,000 each occurrence; and,
d. Automobile insurance in which the limit of liability for
injuries, including accidental death, and property damage is
no less than U.S. $1,000,000 for any one occurrence.
18. TERM AND TERMINATION.
a. TERM. The initial term of this Agreement will be thirty-six
(36) months from the Effective Date of this Agreement (the
"Initial Term"), unless terminated as provided herein with the
date upon which termination is to occur provided in the Notice
of Termination (the "Termination Date").
b. BREACH. In the event that either party hereto breaches in the
substantial performance of any material obligation specified
herein or in any Statement of Work, the non-breaching party
shall notify the other party hereof in writing and, if such
breach is not remedied within thirty (30) days from the date
of such notice, then the non-breaching party shall have the
right to terminate this Agreement and all outstanding
Statements of Work immediately.
c. FINANCIAL DIFFICULTY. This Agreement shall automatically
terminate if any of the following take place with regard to
the other party: such party makes a general assignment or
general arrangement for the benefit of its creditors; the
filing by or against such party of a petition to have it
adjudged bankrupt or of a petition for reorganization or
arrangement of such party under any law relating to bankruptcy
or insolvency unless, in the case of a filing against such
party, the same is dismissed within thirty (30) days; the
appointment of a trustee or a receiver to take possession of
substantially all of such party's assets or its interests in
this Agreement, where such possession is not restored within
thirty (30) days; or the attachment, execution or other
judicial seizure of substantially all of such party's assets
or its interests in this Agreement, where such seizure is not
discharged within thirty (30) days.
d. VOLUNTARY TERMINATION. After the Initial Term, this Agreement
shall continue from month to month unless and until terminated
upon delivery by either party of thirty (30) days prior
written notice of a party's intent to terminate (the
"Termination Date").
e. EFFECT UPON TERMINATION. No new Statements of Work may be
entered into after the Termination Date, but termination of
this Agreement by either party will not cause the automatic
SUBCONTRACTOR AGREEMENT PAGE 13 OF 19
cancellation of any pending Statement of Work signed by both
parties prior to the Termination Date (the "Remaining
Statements of Work"). Services to be performed under Remaining
Statements of Work will continue until completion, unless
Customer cancels any or all of the Remaining Statements of
Work as provided herein. This Agreement will remain in effect
with respect to the Remaining Statements of Work until their
completion, at which time this Agreement will automatically
terminate.
19. MISCELLANEOUS PROVISIONS.
a. FORCE MAJEURE. Either party's non-performance shall be excused
to the extent that performance is impossible due to reasons
beyond such party's control.
b. GOVERNMENT REGULATIONS. Contractor will not export, re-export,
transfer, or make available, whether directly or indirectly,
any regulated item or information to anyone outside the U.S.
in connection with this Agreement without first complying with
all export control laws and regulations which may be imposed
by the U.S. government and any country or organization of
nations within whose jurisdiction Customer operates or does
business.
c. GOVERNING LAW. This Agreement is made under and will be
governed by and construed in accordance with the laws of the
State of Arizona (except that body of law controlling
conflicts of law) and specifically excluding from application
to this Agreement that law known as the United Nations
Convention on the International Sale of Goods. Notwithstanding
the foregoing, claims seeking injunctive relief for Services
in accordance with this Agreement may be brought in any state
or federal court of competent jurisdiction. The prevailing
party in any litigation between the parties shall recover its
reasonable attorneys' fees and costs from the non-prevailing
party.
d. SEVERABILITY; WAIVER. In the event any provision of this
Agreement is held to be unenforceable, the remaining
provisions of this Agreement will remain in full force and
effect, and the unenforceable provisions will be construed in
accordance with applicable law as nearly as possible to
reflect the original intention of the parties. The waiver of
SUBCONTRACTOR AGREEMENT PAGE 14 OF 19
any breach or default of this Agreement will not constitute a
waiver of any subsequent breach or default, and will not act
to amend or negate the rights of the waiving party.
e. ASSIGNMENT. Contractor may not assign this Agreement, whether
by operation of law or otherwise, without the prior written
consent of EDT Learning, and any purported assignment without
such consent will be void. The rights and obligations of EDT
Learning hereunder may be assigned to an EDT Learning
affiliate, or to an individual or entity that acquires all or
substantially all of the assets or shares of EDT Learning, or
with whom EDT Learning merges. This Agreement will bind and
inure to the benefit of each party's permitted successors and
assigns.
f. NOTICES. Any written notices, demands or other communications
required or permitted by this Agreement must be given in
English language and delivered via registered or certified air
mail, return receipt requested, postage prepaid or by
overnight courier or transmitted via telegraph, telex or
telefax as follows: If to EDT Learning at 0000 X. 00xx Xxxxxx,
Xxxxx 000, Xxxxxxx, XX 00000, (000-000-0000 - FAX) or if to
Contractor at the address identified as Contractor's principal
place of business. Delivery shall be deemed to have occurred
upon receipt and/or transmission validation for telex and
telefax. All notices are to be forwarded to the parties at
their respective addresses stated hereinabove, unless either
party furnishes written notice as to a change of its address
in the manner provided hereinabove.
g. CONTRARY, INCONSISTENT, OR ADDITIONAL TERMS. Any contrary,
inconsistent, or additional terms contained in a mutually
executed Statement of Work between EDT Learning and Contractor
securing such services, as compared to the terms and
conditions contained in this Agreement, will be governed,
interpreted, and construed in the following order of
precedence: (i) the applicable Statement of Work and (ii) this
Agreement. Any pre-printed terms and conditions on any
materials, which EDT Learning regularly uses with its other
customers, will be null and void and of no consequence
whatsoever in interpreting the parties' legal rights and
responsibilities as they pertain to any of the contemplated
services provided hereunder. Should the terms of this
Agreement or the existence of this Agreement itself cause a
change in the ability of EDT Learning to recognize revenue
from the sale of Custom Services or cause any change in the
value of any of EDT Learning's assets, then the parties agree
that they will either modify this Agreement to avoid that
occurrence or will mutually terminate this Agreement.
h. ENTIRE AGREEMENT; COUNTERPARTS; ORIGINALS. This Agreement,
including all documents incorporated herein by reference,
constitutes the entire agreement between the parties with
respect to the Custom Services, and supersedes all prior or
contemporaneous agreements, written and oral, regarding the
Custom Services. This Agreement may be executed in
SUBCONTRACTOR AGREEMENT PAGE 15 OF 19
counterparts, each of which will be deemed an original, but
both of which together shall constitute one and the same
instrument. This Agreement may be changed only by a written
document signed by authorized representatives of both parties.
i. AUTHORITY. Authorized representatives of EDT Learning and
Contractor have read the foregoing and all documents
incorporated therein and agree and accept such terms effective
as of the date set forth beneath such party's signature.
Executed as indicated below to be effective as indicated on the first
date written above.
INTERACTIVE ALCHEMY, INC. EDT LEARNING, INC.
By: /S/ XXXXXX X. XXXXXXX, III By: /S/ XXXXX X. XXXXXX, XX.
-------------------------------- ------------------------------
Printed Name: Xxxxxx X. Xxxxxxx, III Printed Name: Xxxxx X. Xxxxxx, Xx.
Title: President Title: President
Date: May 13, 2003 Date: May 13, 2003
SUBCONTRACTOR AGREEMENT PAGE 16 OF 19
EXHIBIT "A"
FORM OF STATEMENT OF WORK
-------------------------
The following document is the form of Statement of Work that will be
the basis for any work performed by Contractor for EDT Learning, with the actual
terms and conditions varying from project to project as needed.
[The remainder of this page intentionally left blank.]
SUBCONTRACTOR AGREEMENT PAGE 17 OF 19
EXHIBIT "B"
CONTRACTOR'S STANDARD HOURLY RATES
----------------------------------
The following attachment will be the basis for any work performed by
Contractor for EDT Learning, with the actual hours and rates varying from
project to project as needed and reflected in the appropriate Statement of Work.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
SUBCONTRACTOR AGREEMENT PAGE 18 OF 19
EXHIBIT "C"
CHANGE ORDER
------------
Change Order No.___________ entered into pursuant to the Subcontractor Agreement
dated May 1, 2003 by and between EDT Learning, Inc. and Contractor ("Contractor
") and the Statement of Work or Statement of Work executed on ____________
pertaining to ____________________.
1. Describe changes, modifications, or additions to the services.
2. Necessity, availability and assignment of requisite EDT personnel and/or
resources to make requested modifications or additions.
3. Impact on Costs, Performance Period, and other requirements.
a. Changes in Costs:
b. Changes in Performance Period:
c. Changes to any other requirements:
4. Describe any revisions in acceptance test procedures.
_______________________________ __________________________________
Signature of Contractor Date
_______________________________ __________________________________
Signature of EDT Learning, Inc. Date
SUBCONTRACTOR AGREEMENT PAGE 19 OF 19
