Courseware Reproduction License Agreement - Prosoft I-Net Solutions Inc. and Training Resources International Inc.
PROSOFT I-NET SOLUTIONS, INC.
COURSEWARE REPRODUCTION LICENSE AGREEMENT
This Courseware Reproduction License Agreement (this "Agreement") is made
and entered into as of the 20th day of January, 1997 (the "effective date"),
by and between Prosoft I-Net Solutions, Inc., a Nevada corporation having its
principal place of business at 2333 North Broadway, Suite 300, Santa Ana,
California ("Prosoft"), and Training Resources International, Inc., a Nevada
corporation having its principal place of business at 42690 Rio Nedo, Suite
E, Temecula, California 92590 ("Customer").
R E C I T A L S
WHEREAS, Prosoft is engaged in the development, distribution and sale of
certain Internet, intranet and other computer training products and services,
as more particularly described in Prosoft's catalogues and other written and
electronic materials (collectively, the "Training Products");
WHEREAS, in conjunction with the development, distribution and sale of
such Training Products Prosoft has developed specific written and electronic
course materials (the "Courseware Titles"), which Courseware Titles are set
forth on SCHEDULE 1 to this Agreement;
WHEREAS, Customer wishes to purchase the Courseware Titles from Prosoft
in electronic format for the purpose of reproducing and packaging the
Courseware Titles for distribution and resale to its customers, including
without limitation public and private elementary, secondary and
post-secondary educational institutions, under the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, do
hereby agree as follows:
1. DEFINITIONS. When used in this Agreement, the following terms
shall have the respective meanings indicated:
"Customer Resale" shall mean the reproduction, manufacture, and
packaging of the Courseware Titles into the Kits for distribution and resale
to the Educational Institutions, provided however that Customer Resale shall
not include the licensing or sublicensing of the Courseware Titles without
the prior written consent of Prosoft (which shall not be unreasonably
withheld) or any other use of the Courseware Titles otherwise prohibited
under the terms of this Agreement.
"Educational Institutions" shall mean public and private
elementary, secondary and post-secondary educational institutions and all
agencies, departments, divisions, bureaus and branches thereof.
"Electronic Courseware Title" shall mean a Courseware Title that
is reproduced on a CD-ROM containing substantially the same information and
lessons as the Paper-based Courseware Title, and can be transmitted
electronically over the internet or other computer networks in connection
with distance learning.
"End Customer" shall mean any client of Customer that purchases
the Kits.
"Exercise Disk" shall mean a 3-1/2 inch floppy disk containing
classroom exercises for a Courseware Title.
"Kit" shall mean any reproduction of any Courseware Title that
includes one, two or three of the following constituent elements, and is
packaged and sold as a single unit: (a) a Paper-based Courseware Title: (b)
an Electronic Courseware Title: (c) an Exercise Disk. For purposes hereof,
each element described in clauses (a) through (c) of the previous sentence
shall be referred to as a "part thereof" with respect to each Kit.
"Net Receipts" shall mean all gross revenue received from the
sales, licensing or other distribution of the Kits, provided that "Net
Receipts" does not include any revenue not directly related to the sale or
licensing of the Kits, including but not limited to taxes, duties, tariffs,
freight, shipping, support or other charges, but only to the extent such
other items are separately stated on the invoice(s).
"Paper-based Courseware Title" shall mean a Courseware Title that
is reproduced into a bound paper book.
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2. GRANT OF REPRODUCTION RIGHTS.
2.1 Grant of Reproduction License. Subject to the terms and
conditions of this Agreement, Prosoft hereby authorizes Customer to reproduce
and distribute the Courseware Titles exclusively for Customer Resale.
Customer may not license or sublicense the Courseware Titles to any third
parties in any form without the prior written consent of Prosoft (which shall
not be unreasonably withheld). Customer shall have the right to sell the
Kits, or any part thereof, in any combination of elements that it deems
appropriate (for example, without limiting the forgoing, Customer may package
and sell the Electronic Courseware Title alone, or in combination with a
Paper-based Courseware Title and/or an Exercise Disk). Prosoft reserves all
rights not expressly granted to Customer in this Agreement.
2.2 Reproduction and Manufacture Procedure. Upon the execution
of this Agreement, Prosoft will deliver the Courseware Titles to Customer in
electronic format on "Gold Disk(s)" which will allow Customer to reproduce
copies of the Courseware Titles into individual Kits. Customer will ensure
that all Kits contain adequate copyright notices so as to protect Prosoft's
copyright interest. Customer will keep accurate records of all copies
created in accordance with Section 3.5 of this Agreement. Prosoft shall have
no responsibility for and shall bear no cost associated with the
reproduction, manufacture, packaging, shipping, distribution, marketing or
resale of the Kits.
2.3 Title to Prosoft Products. Subject to the rights granted
to Customer herein, all right, title and interest in and to the Courseware
Titles, or any element thereof constituting the Kits, including its text,
logic structure and presentation, and to any improvements, enhancements,
updates or upgrades to them, including the concepts and technology inherent
in the Courseware Titles, are, and at all times shall remain, the sole and
exclusive property of Prosoft. Nothing contained in this Agreement shall
directly or indirectly be construed to assign or grant to Customer any right,
title or interest in or to the trademarks, copyrights, patents or trade
secrets of Prosoft or any ownership rights in or to the Courseware Titles.
3. LICENSE FEES.
3.1 Royalty Payments. Customer shall pay to Prosoft twenty
percent (20%) of Customer's Net Receipts from Customer's distribution of the
Kits (such amounts being referred to herein as the "Royalty Payments"). Such
Royalty Payments shall be payable in accordance with Section 3.3 hereof.
3.2 Guaranteed License Fee. Upon execution of this Agreement,
Customer shall be immediately bound and obligated to pay to Prosoft a
guaranteed, non-refundable license fee in the amount of $1,600,000 (the
"Guaranteed License Fee") on such dates as specified on SCHEDULE 2, which
Guaranteed License Fee shall constitute an advance by Customer on all Royalty
Payments owing by Customer to Prosoft under Section 3.1. Customer's payment
of the Guaranteed License Fee shall be guaranteed, unconditional, irrevocable
and non-refundable, regardless of the number of Kits sold by the Customer to
its End Customers and the amount of the Royalty Payments due to Prosoft.
The payment by Customer of the Guaranteed License Fee shall serve as
consideration for the grant by Prosoft to Customer of the right to reproduce
Kits from the Courseware Titles set forth on SCHEDULE 1 in accordance with
the terms of this Agreement, and shall be payable notwithstanding the future
production of other courseware titles not set forth on SCHEDULE 1 (the
"Future Titles") by Prosoft. Prosoft shall make such Future Titles available
to Customer for reproduction and distribution as such Future Titles are
completed from time to time.
3.3 Payments Due. Customer shall provide monthly written
reports indicating the quantities of Kits (and the parts thereof) reproduced
and the Royalty Payments due thereon, and such amounts shall be paid within
thirty (30) days of the end of each month for all reproductions made that
month (or for any prior month(s) for which royalties are calculable),
provided that no Royalty Payments shall be due Prosoft in any month where the
cumulative amounts paid by Customer in respect of the Guaranteed License Fee
exceed the cumulative amounts paid and owing by Customer in respect of the
Royalty Payments. All sums are to be paid in United States dollars. Any
payment not received when due shall bear interest at the rate of (10% per
annum, calculated monthly.
3.4 Records. Customer shall keep true and accurate records of
all Kits (and parts thereof) reproduced in accordance with generally accepted
accounting principles, consistently applied. No more frequently than twice a
year, Prosoft shall have the right (upon two business days prior notice) to
have a certified public accountant selected by Prosoft audit the books of
customer to determine whether all royalties due have been paid. Prosoft
shall pay the cost of such investigation, except that should the accountant
find that the royalties for a period investigated have been underpaid by
five percent (5%) or more, the entire cost of the investigation shall be
borne by Customer. Customer shall immediately pay to Prosoft any amounts
discovered to be owed as a result of the investigation, plus interest at the
rate of ten percent (10%) per annum, calculated monthly for each month the
amount due was outstanding.
4. RESELLER AGREEMENT: GRANT OF EXCLUSIVITY.
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4.1 Reseller Agreement. Customer, upon execution of the
Training Resale Agreement substantially in the form of Exhibit A hereto (the
"Reseller Agreement"), shall have the right to become a non-exclusive
reseller of Prosoft's instructor led training to Educational Institutions,
upon the terms and conditions set forth in the Reseller Agreement.
4.2 Exclusivity. From the effective date until the Termination
Date (as defined below), Customer shall have the exclusive right to resell
the Courseware Titles to the Educational Institutions. In the event that
Customer elects the Renewal Option in accordance with Section 10 hereof, then
Customer shall have the exclusive right to resell the Courseware Titles to
the Educational Institutions through January 15, 2008. During the term of
this Agreement, Customer shall receive 25% of any revenues received by
Prosoft relating to sales by Prosoft's internal sales staff of instructor-led
training, distance learning or seminar-style training to the Educational
Institutions, as compensation for the courseware component of such training
engagements (this same provision is set forth in Section 1(b) of the Reseller
Agreement, and the 25% commission described in this Section 4.2 is not
cumulative or in addition to the 25% commission described in Section 1(b) of
the Reseller Agreement).
5. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
5.1 Customer represents and warrants that it has the authority
to enter into this Agreement, and to carry out its obligations hereunder, and
that the performance of this Agreement shall not cause a breach of any other
obligation of Customer.
5.2 Each party represents and warrants as follows: (a) such
party has full power and authority to execute, deliver and perform its
obligations under this Agreement; (b) such party is financially solvent and
has the sufficient liquidity and financial wherewithal to perform its
obligations under this Agreement; (c) there are no actions, proceedings or
investigations, pending or, to the best of the such party's knowledge,
threatened against such party which may in any manner whatsoever materially
affect the enforceability of this Agreement; and (d) the execution, delivery
and performance of this Agreement will not constitute a breach or default
under any agreement, law or court order under which such party is a party or
may be bound.
6. COPYRIGHT OBLIGATION. Customer covenants and warrants that the
copyright notices included in the "Gold Disk" copy of the Courseware Titles
and set forth on SCHEDULE 3 hereto shall be reproduced with each Kit (and
each part thereof). Customer agrees that each copy of the Kits (and each part
thereof) shall also include a notice stating that such Kit (and each part
thereof) were "Reprinted with permission of Prosoft I-Net Solutions, Inc."
If Customer believes that any of Prosoft's contractual, statutory,
intellectual property or other rights are being violated, it agrees to
promptly notify Prosoft and cooperation in any investigation.
7. TRADEMARKS; TRADENAMES AND COPYRIGHTS.
7.1 Acknowledgments of Rights. Customer acknowledges that
Prosoft is the owner of all right, title and interest in and to the name
Prosoft and the trademarks or trademark applications listed on SCHEDULE 3
hereto in connection with Internet, intranet and other computer training and
services (the "Trademarks"), and Customer agrees not to adopt or use the
Trademarks in any manner whatsoever except as expressly provided in this
Agreement. Customer further acknowledges that Prosoft is the owner of all
right, title and interest in and to all copyrights of Prosoft relating to the
Courseware Titles (the "Copyrights"), and Customer agrees not to reproduce
any material subject to any such Copyright except as expressly provided in
this Agreement.
7.2 Use of Trademarks in Connection with Courseware Titles.
Customer agrees to use the Trademarks only within the Courseware Titles or to
identify the authorized use of the Courseware Titles. Customer's use of the
Trademarks shall at all times be in accordance with such styles and together
with such Trademark notices as Prosoft may require. Customer shall not
combine the Trademarks with any other names or marks, and agrees that this
Agreement does not constitute any conveyance of any right, title or interest
in or to any Trademarks, except for the permissive uses provided herein.
7.3 Infringements. Customer shall promptly notify Prosoft of
any and all infringements or attempted infringements of any of Prosoft's
Trademarks that may come to its attention, and shall assist Prosoft at
Prosoft's expense in taking such action against such infringers as Prosoft,
in its discretion, may elect.
8. WARRANTY.
8.1 Warranty on Courseware Titles. Prosoft warrants that the
Courseware Titles as delivered to Customer will conform in all material
respects to the written version thereof at the at the time of delivery to
Customer. Prosoft makes no warranty to the end-users of the Courseware
Titles, any such warranty to be made and honored by Customer. NO
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OTHER WARRANTY, OR CONDITION, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OR
CONDITIONS RELATED TO FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY,
ARE GRANTED TO CUSTOMER OR END-USERS, AND ALL SUCH WARRANTIES AND CONDITIONS
ARE EXPRESSLY EXCLUDED.
8.2 Defective Courseware Titles. Should the Courseware Titles
fail to be as warranted above, Customer should return the Courseware Titles
to Prosoft within 30 days of delivery thereof. Prosoft will then, at its
sole option, correct or replace the Courseware Titles such that the
Courseware Titles comply with Section 8.1.
8.3 THE SECTION 8 CONTAINS THE EXCLUSIVE REPRESENTATION,
WARRANTIES AND ASSOCIATED REMEDIES FOR ANY CLAIM ASSOCIATED WITH THE
PERFORMANCE OF THE COURSEWARE TITLES, REGARDLESS OF WHETHER SUCH CLAIM IS
MADE IN CONTRACT OR TORT.
9. LIABILITY AND INDEMNIFICATION.
9.1 Limitations on Liability. CUSTOMER AGREES THAT, REGARDLESS
OF THE FORM OF ANY CLAIM, CUSTOMER'S SOLE REMEDY AND PROSOFT'S SOLE
OBLIGATION SHALL BE GOVERNED BY THIS AGREEMENT, AND IN NO EVENT SHALL
PROSOFT'S LIABILITY EXCEED THE LICENSE FEES ACTUALLY PAID FOR THE COURSEWARE
TITLES THAT GAVE RISE TO THE CLAIM DURING THE 12 MONTH PERIOD IMMEDIATELY
PRECEDING THE CLAIM, PROVIDED THAT THE ABOVE LIMITATION SHALL NOT APPLY TO
CLAIMS FOR INFRINGEMENT PURSUANT TO SECTION 9.2 OF THIS AGREEMENT. CUSTOMER
EXPRESSLY AGREES THAT IN NO EVENT SHALL PROSOFT BE LIABLE FOR ANY
CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES ARISING FROM SECTION 9.2.
BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE OR ANY OTHER LEGAL THEORY,
WHETHER IN TORT OR CONTRACT, EVEN IF PROSOFT HAS BEEN APPRISED OF THE
LIKELIHOOD OF SUCH DAMAGES OCCURRING, INCLUDING WITHOUT LIMITATION DAMAGES
FROM INTERRUPTION OF BUSINESS, LOSS OF PROFITS OR BUSINESS OPPORTUNITIES,
LOSS OF USE OF SOFTWARE, LOSS OF DATA, COST OF RECREATING DATA, COST OF
CAPITAL, COST OF ANY SUBSTITUTE SOFTWARE, OR LOSSES CAUSED BY DELAY. PROSOFT
SHALL NOT BE RESPONSIBLE FOR ANY DAMAGES OR EXPENSES RESULTING FROM
ALTERATION OR UNAUTHORIZED USE OF THE COURSEWARE TITLES, OR FROM THE
UNINTENDED AND UNFORESEEN RESULTS OBTAINED BY CUSTOMER RESULTING FROM SUCH
USE. SHOULD ANY LAW UNDER WHICH THIS AGREEMENT IS INTERPRETED PROHIBIT
EXCLUSION OF CERTAIN CONDITIONS OR WARRANTIES. THE REQUIRED CONDITIONS OR
WARRANTIES SHALL BE DEEMED INCLUDED. THE LIABILITY OF PROSOFT FOR ANY BREACH
OF SUCH TERM, CONDITION OR WARRANTY SHALL BE LIMITED, AT THE OPTION OF
PROSOFT, TO ANY ONE OR MORE OF THE FOLLOWING; (A) REPLACEMENT OF THE
COURSEWARE TITLES WITH FUNCTIONALLY COMPARABLE MATERIALS, OR (B) SUPPLEMENT,
MODIFY OR REVISE THE COURSEWARE TITLES TO MEET THE REQUIRED WARRANTY OR
CONDITION.
9.2 Copyright Infringement. Prosoft shall, at its cost, defend
or, at its sole option, settle any claim or suit brought against Customer on
the issue that the Courseware Titles infringe a United States copyright,
provided that Customer (a) notifies Prosoft promptly in writing of any such
claim or suit; (b) gives Prosoft full information and assistance in settling
and/or defending the suit; and (c) gives Prosoft full authority and control
of the defense and/or settlement of any such action. Prosoft shall not be
liable for any costs or expenses incurred (a) by Customer without Prosoft's
prior written authorization; (b) for any claim based on the use of a
combination of the Courseware Titles with any other property not provided by
Prosoft, (c) for any claim based on Customer's modification of the Courseware
Titles; or (d) from use of other than the latest available version of the
Courseware Titles.
9.3 If the Courseware Titles become subject to a claim of
infringement for which Prosoft may become liable, Prosoft may at its option
(a) obtain the right to continue using the Courseware Titles; or (b) replace
or modify the Courseware Titles to make them non-infringing, so long as the
replacement or modification meets substantially similar specifications.
EXCEPT FOR THESE REMEDIES, PROSOFT SHALL HAVE NO LIABILITY TO CUSTOMER OR ITS
CUSTOMERS FOR COPYRIGHT, PATENT, TRADE SECRET OR ANY OTHER CLAIM ASSOCIATED
WITH AN INFRINGEMENT OF A PROPRIETARY RIGHT, AND SHALL IN NO INSTANCE HAVE
ANY LIABILITY TO CUSTOMER FOR DIRECT, INDIRECT OR CONSEQUENTIAL DAMAGES FROM
INFRINGEMENT.
10. TERM AND TERMINATION.
10.1 Term. This Agreement shall have an initial term from the
effective date through January 31, 2003 (the "Termination Date"), as
specified on Schedule 2 and shall then terminate automatically, provided that
Customer may, upon (a) the delivery to Prosoft of written notice within 60
days of the Termination Date and (b) the payment of an additional one-time
Guaranteed License Fee of $41,000,000 within 20 days of the Termination Date
(the "Renewal License Fee"), elect to have
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the Agreement continue in effect from February 1, 2003 until January 31,
2008 (such option being referred to as the "Renewal Option" and January 31,
2008 being referred to as the "Extended Termination Date"). In the event
that customer elects the Renewal Option, then the Renewal License Fee shall
be treated as the Guaranteed License Fee for purposes of Section 3.2 hereof,
and all other terms and conditions of this Agreement shall remain the same
for the extended term.
10.2 Termination for Cause. Prosoft may terminate this
Agreement upon the happening of any of the following events if Customer fails
to cure the problem within ten (10) days of notice of an intent to cancel if
not cured:
a. Customer fails to make any payment when due; or
b. Customer breaches any representations, warranty, or any
material term of this Agreement or fails to perform any duty required
hereunder; or
c. Customer fails to comply with any legal prerequisites,
formalities and/or material government regulations applicable to performance
of its obligations under this Agreement.
10.3 Termination by Customer. Customer may terminate this
Agreement upon the happening of one of the following events if Prosoft fails
to cure such event within thirty (30) days' notice of an intent to cancel if
not cured:
a. Prosoft breaches any warranty or material term of this
Agreement or fails to perform any duty required hereunder; or
b. Prosoft fails to comply with any legal prerequisites,
formalities, and/or material government regulations applicable to performance
of its obligations under this Agreement.
10.4 Effect of Termination. Customer agrees that upon
expiration or termination of this Agreement under this Section 10, Prosoft is
discharged from any further obligations under this Agreement and Customer's
rights to reproduce and distribute the Courseware Titles and to use Prosoft's
tradename and trademarks as provided in this Agreement shall cease as of the
date of such expiration or termination except as follows: Within thirty (30)
days of the delivery by Prosoft or receipt by Prosoft of a notice of
termination at the end of any term or expiration, or within ten (10) days
after automatic termination or termination for cause, Customer shall: (1)
return to Prosoft all Gold Disk(s); and (2) destroy all copies of the
Courseware Titles or Kits not previously distributed, in whatever form they
exist, including deleting all copies from any electronic memories.
Notwithstanding the foregoing, with respect to any copies of the Courseware
Titles or Kits that have been distributed for Customer Resale prior to the
termination date. Customer may grant the approved license to use the
Courseware Titles or Kits to end-users of these specific copies of the
Courseware Titles or Kits; provided, however, that this permission does not
allow Customer, after the date of termination, to make further reproductions
of the Courseware Titles or Kits or to fill requests for copies orders that
have not been filled on the date of termination or that are received after
that date. All licenses for Customer Resale previously given, provided they
were in accordance with the terms of this Agreement, shall continue in effect
after termination or expiration of the Agreement.
All requirements of indemnification, payment, and terms related to use
or protection of intellectual property or confidential information, and
provisions related to venue and choice of laws, shall survive termination or
expiration of this Agreement.
11. ARBITRATION. All disputes and controversies arising out of, or
in any manner relating to, this Agreement which the parties do not resolve in
good faith within thirty (30) days after either of the parties notifies the
other of its desire to arbitrate such dispute or controversy shall be settled
by arbitration by the American Arbitration Association in accordance with its
then prevailing Commercial Arbitration Rules. Such arbitration shall be
conducted in Orange County, California. The award or decision made in such
arbitration shall be binding on the parties and judgment upon the award may
be made in any court having jurisdiction. The prevailing party shall be
entitled to recover from the other party all reasonable costs and expenses of
arbitration.
12. NO AGENCY, REPRESENTATION OR JOINT VENUE. It is expressly
understood that Customer and Prosoft are business entities independent of one
another. Neither the making of this Agreement nor the performance of any
part of its terms shall be construed to constitute Customer as an agent or
representative of Prosoft for any purpose. Nor shall this Agreement be
deemed to establish a joint venture or partnership.
13. FORCE MAJEURE. Failure of Prosoft or Customer to perform its
obligations hereunder, or a portion thereof if occasioned in whole or in part
by any act of God, any act of fire, explosion, perils of sea, flood, war, or
any action of any
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governmental authority shall excuse the non-performing party from performing
the non-performing party's obligations to perform shall be suspended for the
duration of such excusing event.
14. ASSIGNMENT. The rights and obligations under this Agreement
shall be binding upon each party and its successors and assigns, provided
that the assignment by Customer of its obligations under this Agreement shall
be subject to the written approval by Prosoft, which shall not be
unreasonably withheld or delayed.
15. HEADINGS. The headings contained in this Agreement are for
convenience only and should not be construed to limit or expand any terms
otherwise provided.
16. NOTICES. Any notice made in relation to this Agreement shall
be sent to the addresses set forth above, or such other address as the
intended recipient has previously designated by written notice. The notice
shall be sent by a prepaid courier service which requires signature for
receipt or by facsimile.
17. LEGAL REVIEW. It is acknowledged that this Agreement was
initially prepared by Prosoft. Both parties, however, have had an
opportunity for legal review of all terms. The parties therefore agree that,
in interpreting any issues which may arise, any rules of construction related
to who prepared the Agreement shall be inapplicable, each party having
contributed or having had the opportunity to contribute to clarify any issue.
18. PARTIAL ILLEGALITY. It is agreed that if any provision, or part
of a provision, of this Agreement is held to be invalid or unenforceable
under any applicable statute or rule of law, then the parties shall use their
best efforts to replace the invalid or unenforceable provision by a provision
that, to the extent permitted by applicable law, achieves the purposes
intended under the original provision and to allow the parties to have the
intended benefit of their bargain. If it cannot be so reformed it shall be
omitted. In any such instance, the balance of this Agreement shall remain
valid and unchanged and in full force and effect.
19. WAIVER OF COMPLIANCE. Any failure by either party to enforce at
any time any term or condition under this Agreement shall not be considered a
waiver of that party's right thereafter to enforce each and every term and
condition of this Agreement.
20. APPLICABLE LAW. The parties agree that this Agreement shall be
governed and construed by the laws of the state of California, and that no
conflict-of-laws provision shall be invoked to permit the laws of any other
state or jurisdiction.
21. AMENDMENTS. All amendments to or changes in this Agreement must
be in writing executed by both parties.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the parties on the subject matter above,
and supersedes any and all prior agreements (written and oral) between the
parties.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and all of which shall
constitute one and the same agreement with the same effect as if all parties
had signed the same signature page. Any signature page of this Agreement may
be detached from any counterpart of this Agreement and reattached to any
other counterpart of this Agreement identical in form hereto but having
attached to it one or more additional signature pages. Each of the parties
hereto agrees that it will be bound by its own telecopied signature and that
it accepts telecopied signatures of the other parties to this Agreement, with
original signatures to be forwarded to the other party as promptly as
possible.
24. VOCATIONAL BUSINESS. The parties further agree as follows:
24.1 Customer is hereby granted a nonexclusive license under
Prosoft's post secondary status and, once Prosoft has been accredited, the
accreditation relating to Prosoft's distance learning business. Prosoft will
use its best efforts to complete the accreditation process with respect to
distance learning and shall keep Customer apprised as to its progress in this
regard. Customer shall have a nonexclusive license under this accreditation,
along with Prosoft, for so long as Prosoft operates its vocational division
(the "Vocational Division"), which is funded by Title III monies and trains
unemployed workers. Customer is hereby granted an irrevocable option (the
"Option") to acquire all of Prosoft's right, title and interest under the post
secondary status and the accreditation status and/or process (if
accreditation has not yet been attained), which option shall be immediately
exercisable by Customer at an exercise price of $1000.00 upon written notice
to Prosoft at such time as Prosoft (a) discontinues operation of the
Vocational Division, or (b) is acquired by a third party.
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24.2 Prior to the exercise of the Option, Prosoft shall
maintain its post secondary status and distance learning accreditation in
good standing.
24.3 All revenues generated by Customer under or in respect
of the Vocational Division will be initially paid to and recognized by
Prosoft. Customer will subsequently invoice Prosoft for all amounts owing to
it.
(signature page follows)
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In Witness Whereof, the parties hereto have duly executed this Agreement
on the date first above written.
PROSOFT: CUSTOMER:
PROSOFT I-NET SOLUTIONS, INC. TRAINING RESOURCES INTERNATIONAL, INC.,
a Nevada corporation a Nevada corporation
By: /s/ Donald Danks By: /s/ Michael Kahlid
-------------------------- --------------------------
Donald Danks Michael Kahlid
Senior Vice President President
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Schedule I
Courseware Titles
PAGER-BASED COURSEWARE TITLES
Basic Internet Business Skills
Advanced Internet Business Skills
Mastering the Net With Netscape Communicator
Empowering the Enterprise With Microsoft Internet Explorer 4.0
Internet Security for Business Applications
Internet/Intranet Business Applications Using Office 97
Gaining Market Intelligence Using the World Wide Web
Introduction to HTML Authoring
Advanced HTML Authoring
Internet/Intranet Publishing Using Microsoft FrontPage 97
Web Publishing Using HTML and FrontPage 97
Microsoft Web Master Boot Camp
Visual Site Design and Management Using NetObjects FUSION 2.0
Introduction to VRML Authoring and Interactive 3D Modeling For the Web
Introduction to JavaScript Programming
Advanced JavaScript Programming
Introduction to Database Publishing Using Visual InterDev
Fundamentals of CGI Programming Using Perl
Introduction to ActiveX Technology and Tools
Deploying Active Server Pages
Developing Java Applets and ActiveX Controls Using Visual J++
Internet Security Threats and Countermeasures
Advanced TCP/IP Internetworking
ELECTRONIC COURSEWARE TITLES
Basic Internet Business Skills
Advanced Internet Business Skills
Empowering the Enterprise With Microsoft Internet Explorer 4.0
Internet Security for Business Applications
Gaining Market Intelligence Using the World Wide Web
Introduction to HTML Authoring
Advanced HTML Authoring
Internet/Intranet Publishing Using Microsoft FrontPage 97
Introduction to JavaScript Programming
Advanced JavaScript Programming
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Schedule 2
Agreement Terms
Guaranteed License Fee: $1,600,000
Payment dates of Guaranteed License Fee:
The payments under the Guaranteed License Fee shall be due and payable
to Prosoft within 15 calendar days of each of the following dates, and shall
be paid in United States dollars in the amounts set forth next to each date:
March 31, 1998: $200,000
June 30, 1998: $200,000
September 30, 1998: $200,000
December 31, 1998: $200,000
March 31, 1999: $200,000
June 30, 1999: $200,000
September 30, 1999: $200,000
December 31, 1999: $200,000
Initial Agreement Term: Effective date through January 31, 2003
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Schedule 3
Trademarks
Copyright Notifications
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TRI
Intellectual Property
1. Courseware Reproduction License Agreement Jan. 20, 1998
2. Training Resale Agreement Jan. 21, 1998
3. Amendment No. 1 to Courseware Reproduction Agreement
4. Sublicense Agreement--TRI Mar. 27, 1998
5. Assignment of Contracts and Compensation Agreement Jul. 5, 1998
TRI (Not Used)
6. Amendment No. 1 to Courseware Reproduction License Aug. 1, 1998
Agreement - Prosoft & TRI
7. Prosofttraining.com: Termination of Courseware License Dec. 14, 1998
Agreement
8. Letter Terminating License Agreement by Mike Khaled Dec. 21, 1998
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Exhibit A
TRAINING RESALE AGREEMENT
This Training Resale Agreement (this "AGREEMENT") is entered into on
this 21st day of January, 1998 by and between Prosoft I-Net Solutions, Inc.,
a Nevada corporation ("PROSOFT"), and Training Resources, Inc., a Nevada
corporation (the "TRAINING AFFILIATE"), with reference to the following facts:
(1) The Training Affiliate is in the business of corporate training and
has certain clients and customers who have a need for Internet, Intranet and
other computer training.
(2) Prosoft has developed expertise in Internet. Intranet and other
related computer training and services as more particularly described in
Prosoft's catalogues and other materials which it has, or will, provide the
Training Affiliate from time to time (collectively, the "TRAINING"),
including the Prosoft Courses set forth on SCHEDULE 1 attached hereto (the
"PROSOFT COURSES"). Prosoft has ownership or possession of various
internet/intranet computer training centers (the "TRAINING CENTERS"), the
locations and addresses of which are set forth on SCHEDULE 2. Prosoft and the
Training Affiliate wish to form a relationship under which the Training
Affiliate will sell the Training to its clients and customers and Prosoft
will deliver the Training to such clients and customers, on the terms and
conditions set forth herein.
(3) Prosoft and the Training Affiliate have entered into the Courseware
Reproduction License Agreement dated as of January 20, 1998 (the "License
Agreement"), and under the terms of the License Agreement the Training
Affiliate has been granted the right to enter into this Agreement with
Prosoft.
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, intending to be legally bound hereby, the
parties hereby agree as follows:
1. SALES AND COMPENSATION.
(a) GENERAL COMPENSATION STRUCTURE. The Training Affiliate shall
receive the following percentage discounts (the "SALES DISCOUNTS") off the
List Price for the following types of Training sales, provided that the
Training Affiliate shall have satisfied the Closing Requirements:
Sales Type Sales Discount
---------- --------------
Lead Generation Discount 10%
Sale Closing Discount 25%
The Training Affiliate shall receive no Lead Generation Discount or Sale
Closing Discount with respect to any class containing 4 or fewer Students.
(b) COMPENSATION RESULTING FROM PROSOFT SALES IN EDUCATION MARKET.
During the term of this Agreement, the Training Affiliate shall receive 25%
of any revenues received by Prosoft relating to sales by Prosoft's internal
sales staff of instructor-led training distance learning or seminar-style
training to Educational Institutions (as defined below). As used herein,
"Educational Institutions" shall mean public and private elementary,
secondary and post-secondary educational institutions and all agencies,
departments, divisions, bureaus and branches thereof.
2. BILLING; PAYMENT OF COMMISSIONS. The Training Affiliates be solely
responsible for all billing and collections with respect to the Training
Purchasers hereunder. Prosoft will invoice the Training Affiliate for the
List Price of such Training minus the applicable Sales Discounts (the
"INVOICED AMOUNTS"), and such invoices shall be due and payable by the
Training Affiliate within 30 days of the mailing thereof. The Training
Affiliate agrees that as a reseller of the Training, the Training Affiliate
shall be unconditionally liable to Prosoft for the payment of all Invoiced
Amounts in accordance with this SECTION 2, regardless of any Training
Purchaser's failure to pay the Training Affiliate or delay in paying the
Training Affiliate any amounts relating to the Training provided by Prosoft
hereunder.
3. TRAINING ADMINISTRATION. During the term of this Agreement,
Prosoft shall be responsible for, shall bear the cost of and agrees to do the
following: (i) manage the scheduling of the courses constituting the Training
and the registration (including confirmations and cancellations) of the
Students; and (ii) provide the instructors, courseware, computer equipment
and other hardware and furniture that will be necessary for the completion of
the Training.
4. SALES REPRESENTATIVE AND MARKETING.
(a) SALES REPRESENTATIVE. During the term of this Agreement, the
Training Affiliate shall employ at all times at least one (1) sales
representative (the "SALES REPRESENTATIVE") who shall be responsible for and
shall agree to do the following: (i) dedicate at least 50% of his or her time
(i.e. at least 20 hour per week) to overseeing the Training Affiliate's sales
and marketing efforts with respect to the Training in the Subject Market, and
(ii) compile and distribute information useful to the sales and marketing of
the Training as requested from time to time by Prosoft, including without
limitation (A) preparing weekly written reports, in the form of Exhibit A
hereto (as supplemented or amended by Prosoft from time to time, the "SALES
REPORTS"), and submitting the Sales Reports directly to Prosoft on a weekly
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basis, and (B) preparing monthly written reports by the 20th day of each
month with respect projections of Training business for the next succeeding
month (the "PROJECTION REPORTS"), and submitting such Projection Reports
directly to Prosoft within two days of the completion thereof. The name,
address and telephone number of the Sales Representatives are set forth on
SCHEDULE 3 hereto. The Training Affiliate shall immediately notify Prosoft in
writing of any changes in the Sales Representative's name, addtress or phone
number. The Training Affiliate shall provide a copy of this Agreement to the
Sales Representative, and secure the agreement of the Sales Representative to
the terms and conditions hereof that directly relate to such Sales
Representative.
(b) MARKETING. During the term of this Agreement, the Training
Affiliate shall use its best efforts to actively and agressively market,
promote and sell the Training within the Subject Market. The Training
Affiliate is free to promote and advertise the Training in any manner in
which the Training Affiliate deems appropriate, provided that such promotion
and advertising shall be performed in accordance with the Trademark
Guidelines set forth on EXHIBIT C.
5. TRAINING OF THE TRAINING AFFILIATE AND ITS EMPLOYEES. Prosoft will
prvide to the Training Affiliate and its employees, and the Training
Affiliate and its employees (including the Sales Representative) will be
reasonably available for, between 10 and 20 hours of sales and marketing
training relating to the Training.
6. REPRESENTATIONS AND WARRANTIES. As an inducement to enter into this
Agreement, each party represents and warrants as follows: (a) such party has
full power and authority to execute, deliver and perform its obligations
under this Agreement; (b) there are no actions, proceedings or
investigations, pending or, to the best of the such party's knowledge,
threatened against such party, which may in any manner whatsoever materially
affect the enforceability of this Agreement or the Training; (c) the
execution, delivery and performance of this Agreement will not consitute a
breach or default under any agreement, law or court order under which such
party is a party or may be bound or affected by or which may affect the
Training, and (d) the Training Affiliate represents and warrants, and Prosoft
acknowledges, that the Training Affiliate maintains and will maintain
significant business operations relating to product lines and services other
than the sale of Prosoft internet and intranet training.
7. PROPRIETARY INFORMATION. Each party understands that the other
party hereto (such other party being referred to as the "OWNING PARTY")
possesses and will continue to possess information, software, data, hardware,
furniture, course books, catalogues, brochures, marketing material and other
printed material, and other tangible and intangible property of a proprietary
nature that has been created and developed by such Owning Party (including
without limitation any such information or property created or developed by
such Owning Party during the term of this Agreement), or in which property
rights have been assigned or otherwise conveyed to such Owning Party
(collectively, "PROPRIETARY INFORMATION"), which Proprietary Information has
commercial value in the business in which such Owning Party is engaged. Each
party agrees that all such Proprietary Information, whether provided to such
party in connection with the Training or otherwise, is and shall be the
property of the Owning Party, whether or not such Proprietary Information is
copyrighted, patented, or trademarked, and the Owning Party shall be the sole
owner of all copyrights, patents and trademarks, and other rights in
connection therewith. At all times during the term of this Agreement and
after its termination, each party shall keep in its strictest confidence and
trust all Proprietary Information and will not, and will not let any other
Person, disclose, copy, reproduce, transmit or otherwise use any of the
Proprietary Information, except (i) as may be necessary in connection with
Prosoft's delivery of the Training pursuant to the terms and conditions of
this Agreement, or (ii) with the written consent of the Owning Party. Upon
the termination of this Agreement, each party shall return to the Owning
Party all Proprietary Information made available to such party, and shall not
take or use any of the Proprietary Information, any reproduction or summary
of the Proprietary Information or any Proprietary Information that is
embodied in a tangible medium.
8. TERM OF AGREEMENT; TERMINATION. This Agreement shall be effective
from the date hereof until the later of the "Termination Date" (as defined in
the License Agreement) or the Extended Termination Date (as defined in the
License Agreement), unless the License Agreement is terminated sooner than the
Termination Date or the Extended Termination Date in accordance with the
terms thereof, in which case this Agreement shall automatically terminate.
9. MISCELLANEOUS. No amendment, waiver or modification to this
Agreement shall be effective unless in writing and signed by both parties
hereto. The Training Affiliate may not assign any of its rights or
obligations under this Agreement, without the prior written consent of
Prosoft, which consent may be witheld or denied in its sole and absolute
discretion. Any notices and other communications between the parties in
connection with this Agreement shall be delivered by overnight courier, U.S.
mail or facsimile at the addresses set forth on SCHEDULE 3 hereto and shall
be deemed received upon the earlier to occur of the actual receipt of such
notice or, if mailed, five (5) Business Days following deposit in the mail.
To the fullest extent permitted by law, the Training Affiliate agrees to
protect, indemnify, defend and hold harmless Prosoft, its directors,
officers, agents and employees from and against any and all liability,
expense, loss or damage of any kind or nature and from any suits, claims or
demands, including reasonable attorney's fees and costs, on account of any
matter or thing or action, whether in suit or not, arising out of this
AGreement, or the Training, or in connection herewith or therewith, unless
such suit, claim or demand is caused soley by gross neglegence or willful
misconduct of Prosoft, its directors, officers, agents and employees. The
Training Affiliate hereby represents, warrants, acknowledges and admits that
(i) Prosoft does not owe any fiduciary duty to the Training Affiliate with
respect to this Agreement or the transactions contemplated hereby, and (ii)
no partnership, franchise or joint venture is granted or exists with
respect to the Agreement between Prosoft and the Training Affiliate. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. This Agreement
may be executed in any number of counterparts each of which shall be deemed
an original and all of which shall constitute one and the same agreement with
the same effect as if all parties had signed the same signature page. Any
signature page of this Agreement may be detached from any conterpart of this
Agreement and reattached to any other counterpart of this Agreement identical
in form hereto but having attached to it one or more additional signature
pages.
10. NON-COMPETE. The Training Affiliate shall not directly or
indirectly sell, resell, engage in the providing of any, or have any
substantial ownership interest in any Person that engages in the providing of
any, Internet or Intranet training (including without limitation
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the providing of any training using the techniques, methods or materials of
Prosoft), other than the Training Affiliate's resale of the Prosoft Courses.
11. DEFINITIONS. In addition to the other terms defined herein, the
following initially capitalized terms shall have the meanings set forth below:
"BUSINESS DAY" means a day, other than a Saturday, Sunday or legal
holiday on which commercial banks are authorized or obligated by law or
executive order to close in the State of California.
"CLOSING REQUIREMENTS" means the following requirements that must
be satisfied by the Training Affiliate in order for the Training Affiliate to
receive a Sales Discount with respect to sales of Training: (a) Prosoft shall
have received an original or a copy of a purchase order for such Training
signed by the Training Purchaser, and (b) the Training Affiliate shall have
properly completed the Student Registration Form attached hereto as EXHIBIT B
and submitted such form to Prosoft's Educational Consulting Center at the
address set forth on SCHEDULE 3 hereto.
"LEAD GENERATION DISCOUNT" means the discount off the List Price
for any Training that results from a lead or referral supplied to Prosoft by
the Training Affiliate, where such Training is sold either (a) exclusively by
Prosoft or (b) by the Training Affiliate upon the use of Prosoft
Presentational Sales Support.
"LIST PRICE" means the list price for any particular Training as
published by Prosoft from time to time as described in the invoice delivered
by Prosoft to the Training Affiliate or Training Purchaser pursuant to
SECTION 3 hereof.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee
thereof, estate or executor thereof, unincorporated organization or joint
venture, court or governmental unit or any agency or subdivision thereof, or
any other legally recognizable entity.
"PROSOFT ADMINISTRATIVE SALES SUPPORT" means sales support provided
by Prosoft to the Training Affiliate involving no more than telephonic
assistance by (a) a Prosoft Educational Consultant with respect to pricing,
scheduling and curricular planning issues, and the scheduling and planning of
onsite Training, or (b) a Prosoft Area Manager or Regional Vice President
with respect to pricing issues.
"PROSOFT PRESENTATIONAL SALES SUPPORT" means sales support provided
by Prosoft to the Training Affiliate in which either (a) Prosoft prepares a
written or oral presentation that is delivered by Prosoft or the Training
Affiliate to the Training Purchaser in connection with the closing of the
sale, or (b) a Prosoft Regional Vice President or Area Manager becomes
directly involved in coordinating the execution and closing of the sale,
including without limitation by attending telephonic or live meetings with
the Training Purchaser or by participating in the preparation or delivery of
the presentation described in clause (a).
"SALE CLOSING DISCOUNT" means the discount off the List Price for
any Training that is sold exclusively by the Training Affiliate without any
Prosoft Presentational Sales Support (as reasonably determined by Prosoft),
provided that the Training Affiliate may have received Prosoft Administrative
Sales Support in connection with such sale and still qualify for the "Sale
Closing Discount".
"SUBJECT MARKET" means the geographic area described on SCHEDULE 3
hereto.
"TRAINING PURCHASER" means any Person that is a purchaser or
potential purchaser of the Training.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first above written.
"PROSOFT"
PROSOFT I-NET SOLUTIONS, INC.,
a Nevada corporation
By: /s/ Donald Danks
------------------------
Name:
Title: VP
"TRAINING AFFILIATE"
By: /s/ Michael Khalid
------------------------
Name:
Title:
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SCHEDULE I
----------
PROSOFT COURSES
ENTERPRISE INTERNET LITERACY TRACK
----------------------------------
End User Series
Basic Internet Business Skills
Advanced Internet Business Skills Using the Web
Netscape Communicator for Web Power Users*
Internet Security for Business Applications
Internet/Intranet Business Applications Using Office 97
Conducting Market Research Using the Internet and the Web
Web Publishing Series
Introduction to HTML Authoring
Intermediate HTML Authoring
Advanced HTML Authoring
Internet/Intranet Publishing Using Microsoft FrontPage 97
Web Publishing Using Microsoft FrontPage 97
WEB PROFESSIONAL TRACK
----------------------
Web Master Series
Microsoft Web Master Boot Camp
Netscape Web Master Boot Camp
Visual Site Design and Management Using NetObjects FUSION 2.0*
Creating Dynamic and Interactive Multimedia Web Sites
Instant Java: Incorporating Java Applets and Javascript in Web Pages
Introduction to VRML Authoring and Interactive 3D Modeling for the Web
Web Developer Series
Introduction to JavaScript Programming
Advanced JavaScript Programming
Netscape LiveWire Pro Workshop*
Learning and Applying Java Development Tools
Fundamentals of Java Programming
Fundamentals of CGI Programming
VB Script for Web Applications
Introduction to ActiveX Technology and Tools
Deploying Active Platform and ActiveX Server Pages on IIS 3.0
Managing Software and Web Development With Microsoft Visual SourceSafe 5.0*
Developing Java Applets and ActiveX Controls Using Visual J++*
Developing Java Applets Using Symantec Visual Cafe Pro*
Implementing a Database Design on Microsoft SQL Server 6.5
<PAGE>
I-NET ENGINEER TRACK
--------------------
PLATFORM INDEPENDENT SERIES
Internet Security Threats and Countermeasures*
Advanced TCP/IP Internetworking
Internetworking: Configuring Bridges and Routers*
NETSCAPE SOLUTIONS SERIES
The Full Service Intranet Implementing Netscape Technology and Solutions
Building Network-Centric Applications Using Netscape Open Network Environment
(ONE)**
Implementing Commerce Based Web Sites Using Netscape Commerce Platform and
LivePayment**
Implementing Turn-Key Commerce Solutions and Extranets Using Netscape
Commercial Applications**
MICROSOFT SOLUTIONS SERIES
Building and Deploying Corporate Intranets Using Microsoft Solutions
Supporting Microsoft Windows 95
Supporting Microsoft Windows NT Server 3.51
Supporting Windows NT 4.0 Core Technologies
Internetworking Microsoft TCP/IP on Microsoft Windows NT 3.5
Supporting Microsoft Internet Information Server 2.0
Fundamentals of Microsoft Exchange Server
System Administration for Microsoft SQL Server 6.0
NETSCAPE PRODUCT CENTRIC SERIES
Netscape Proxy Server (NT Platform)
Netscape Enterprise Server (NT Platform)
Netscape Mail Server (NT Platform)
Netscape News Server (NT Platform)
<PAGE>
AMENDMENT NO. 1 TO
COURSEWARE REPRODUCTION LICENSE AGREEMET
THIS AMENDMENT NO. 1 TO COURSEWARE REPRODUCTION LICENSE AGREEMENT (the
"AMENDMENT") between PROSOFT I-NET SOLUTIONS, INC. ("PROSOFT") and TRAINING
RESOURCES INTERNATIONAL, INC., a Nevada corporation (the "CUSTOMER") is made
and entered into as of the 1st day of August, 1998. Prosoft and the Customer
will be sometimes collectively referred to herein as the "PARTIES."
R E C I T A L S
---------------
A. The parties entered into a Courseware Reproduction License Agreement
mistakenly dated as of January 20, 1997, but intended to be dated as of
January 20, 1998 (the "LICENSE AGREEMENT").
B. The parties desire to amend the License Agreement pursuant to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, do
hereby agree as follows:
1. DATE. The date of the License Agreement is amended to read "as of
January 20, 1998."
2. SCHEDULE 2. Schedule 2 of the Agreement is hereby replaced with
Schedule 2 attached to this Amendment.
3. DEFINITIONS.
(a) A new definition of "Future Titles" shall be inserted in the
appropriate alphabetical location in Section 1 of the Agreement and shall
read as follows:
"Future Titles" shall mean Courseware Titles tied to internet skills
or training that are not set forth on Schedule 1 of this Agreement or that
are developed or published by Prosoft after the date of this Agreement, but
shall not include any courseware that is not developed by Prosoft."
(b) The definition of "Educational Institution" set forth in Section 1 of
the Agreement is hereby amended by inserting the words "in the United States"
between the phrases "educational institutions" and "and all agencies".
<PAGE>
(c) The definition of "Net Receipts" set forth in Section 1 of the
Agreement is hereby amended to read as follows:
"Net Receipts" shall mean all gross revenue received from the sales,
licensing or other distribution of the Kits, but not including revenue not
directly related to the sale or licensing of the Kits, provided that the
price charged for the Kits is an identified line item and is no less
than the Distributor's cost to produce a Kit (plus a reasonable profit
thereon and an allowance for the Royalty Payment (as defined below)
associated therewith). Examples of items that are not included in the
term "Net Receipts," include but are not limited to, taxes, duties,
tariffs, freight, shipping, support or other charges, but only to the
extent such other items are separately stated on the invoice(s).
4. SECTION 2. The title to Section 2 of the Agreement is hereby
amended to read as follows:
"2. GRANT OF LICENSE."
5. SECTION 2.1. Section 2.1 of the Agreement will be amended to read
in its entirety as follows:
"2.1 GRANT OF LICENSE. Prosoft hereby grants to Customer an
exclusive license to use, sell, or distribute the Courseware to any
Educational Institutions. In addition, and subject to the terms and
conditions of this Agreement, Prosoft hereby authorizes Customer to
reproduce and distribute the Courseware Titles exclusively for Customer
Resale. Customer may not license or sublicense the courseware Titles to
any third parties in any form without the prior written consent of
Prosoft (which consent shall not be unreasonably withheld). Customer
agrees not to reverse compile or translate the Courseware Titles, in
whole or in part. Customer shall have the right, however, to
disassemble and reassemble any of the Courseware Titles and to sell the
reassembled titles in the same manner as the Courseware Titles, subject
to the same License Fee, provided that (a) such sale of reassembled
Courseware Titles may only occur to the Educational Institutions, and
(b) such reassembled products must be approved by Prosoft if the Prosoft
trademark or tradename is attached to such reassembled products.
Customer shall have the rights to sell the Kits, or any part thereof, in
any combination of elements that it deems appropriate (for example,
without limiting the forgoing, Customer may package and sell the
Electronic Courseware Title alone, or in combination with a Paper-based
Courseware Title and/or an Exercise Disk). Prosoft reserves all rights
not expressly granted to Customer in this Agreement."
2
<PAGE>
6. SECTION 3. Sections 3.1, 3.2, and 3.3 of the Agreement are hereby
amended to read in their entirety as follows:
"3. LICENSE FEES.
3.1 ROYALTY PAYMENTS. Customer shall pay to Prosoft twenty
percent (20%) of Customer's Net Receipts from Customer's distribution of
the Kits (such amounts being referred to herein as the "Royalty
Payments"). Such royalty Payments shall be payable in accordance with
Section 3.3 hereof.
3.2 GUARANTEED LICENSE FEE. Upon execution of this Agreement,
Customer shall be immediately bound and obligated to pay to Prosoft a
guaranteed, non-refundable license fee in the amount of $1,600,000 (the
"GUARANTEED LICENSE FEE") on such dates as specified on Schedule 2,
which Guaranteed License Fee shall constitute an advance by Customer on
all Royalty Payments owing by Customer to Prosoft under Section 3.1.
Such payments of the Guaranteed License shall be made strictly on the
dates set forth on Schedule 2, and there shall be no grace period for
the payment thereof. Customer's payment of the Guaranteed License Fee
shall be guaranteed, unconditional, irrevocable and non-refundable,
regardless of the number of Kits sold by the Customer to its End
Customers and the amount of the Royalty Payments due to Prosoft. The
payment by customer of the Guaranteed License Fee shall serve as
consideration for the grant by Prosoft to Customer of the right to
reproduce Kits from the courseware Titles set forth on Schedule 1 in
accordance with the terms of this Agreement, and shall be payable
notwithstanding the existence of the Future Titles. Notwithstanding
anything to the contrary contained herein, Customer shall have the right
at any time and from time to time to substitute Future Titles for any of
the Courseware Titles set forth on Schedule 1 (and Prosoft agrees to
identify the existence and nature of such Future Titles upon Customer's
request) and such substituted Future Titles will become "Courseware
Titles" for all purposes under this Agreement, so long as the total
number of Courseware Titles subject to this Agreement does not increase
in number, provided, however, that with respect to uses, sales or
distributions by Customer of Courseware to Educational Institutions,
Customer shall have the right to substitute Future Titles in its
discretion (including Future Titles relating to Prosoft's Internet
Certification programs provided that the purchaser of such Kits shall
have executed a CIW license agreement in form supplied by Prosoft) and
without any prior refusal right of Prosoft."
3.3 PAYMENTS DUE. Customer shall provide monthly written reports
indicating the quantities of Kits (and the parts thereof) reproduced
3
<PAGE>
and the Royalty Payments due thereon, and such amounts shall be paid
within thirty (30) days of the end of each month for all reproductions
made that month (or for any prior month(s) for which royalties are
calculable), provided that no Royalty Payments shall be due Prosoft
until the total amount of all Royalty Payments owing exceed the
cumulative amount of the Guaranteed License Fee paid to Prosoft as of
the date of determination, and then only to the extent of the excess.
All sums are to be paid in United States dollars. Any payment not
received when due shall bear interest at the rate of 10% per annum,
calculated monthly."
7. SECTION 4. Section 4 of the Agreement is hereby amended to read in
its entirety as follows:
"4. RESELLER AGREEMENT; GRANT OF EXCLUSIVITY.
4.1. RESELLER AGREEMENT. Customer, upon execution of a Training
Resale Agreement, the form of which will be provided by Prosoft and
which will be substantially similar to other reseller agreements entered
into by Prosoft and its third party resellers at that time (the
"Reseller Agreement"), shall have the right to become a non-exclusive
reseller of Prosoft's instructor led training to Educational
Institutions, upon the terms and conditions set forth in the Reseller
Agreement.
4.2. GRANT OF EXCLUSIVITY. From the effective date until
Termination Date (as defined below), Customer shall have the exclusive
right to resell the Courseware Titles to Educational Institutions. In
the event that Customer elects the Renewal Option in accordance with
Section 10 hereof, then Customer shall have the exclusive right to
resell the Courseware Titles to Educational Institutions through
January 31, 2008. Except as expressly set forth herein, neither
(i) Prosoft and its agents, affiliates and employees, nor (ii) any other
third party, (the parties referred to in clauses (i) and (ii) being
referred to herein as the "Restricted Parties"), shall sell or
distribute the Courseware Titles to any Educational Institution during
the Exclusivity Period. Prosoft, at its sole cost and expense, shall
take all necessary measures and actions (including the prosecution of
lawsuits and injunctions with the proper courts) to insure that no
Restricted Parties shall sell or distribute the courseware Titles to any
Educational Institution during the Exclusivity Period. For purposes
hereof, the term "EI TRAINING EVENT" shall include, but not necessarily
be limited to, seminars, instructor led training, distance learning, and
the like, that any of the Restricted Parties deliver to any Educational
Institution. Notwithstanding anything to the contrary contained herein,
the Courseware Titles may be sold or distributed by the Restricted
Parties to any Educational Institution in connection with an EI Training
Event during the Exclusivity Period, provided that Prosoft pays to
Customer a sublicense fee
4
<PAGE>
as follows: (a) in the case where Prosoft directly sells any EI Training
Event to any Educational Institution, 25 percent of the invoiced revenue
(not including instructor travel expenses, room rental charges,
equipment rental charges and other costs not associated with instruction
and content (such excluded costs being referred to as "Excluded Costs"))
for such EI Training Event; (b) in the case where a third party sells
any EI Training Event to any Educational Institution on behalf of
Prosoft, 30% of the fee (not including Excluded Costs) that Prosoft
receives from such third party; (c) in the case where a third party
sells a single seat for an EI Training Event to a student associated
with any Educational Institution, 3 percent of the revenue received by
Prosoft (not including Excluded Costs) arising from such student's
participation in such EI Training Event; and (d) in the case where
Prosoft sells any Courseware Titles or any Kits to any Educational
Institution where such a sale is not related to an EI Training Event, 75
percent of the invoiced revenue relating to such sale, provided that
Customer shall have given Prosoft its prior written approval of the terms
and conditions of such sale prior to the consummation thereof. With
respect to any amounts owing by Prosoft to Customer in connection with
clauses (a) through (d) above, such amounts shall be considered "Net
Receipts" for purposes of this Agreement, and Prosoft shall provide
Customer with quarterly written reports describing the EI Training
Events that have occurred and the amounts owing Customer for the
three-month periods ending January 31, April 30, July 31 and October 31
(the "Prosoft Quarter-End Dates") during the term of this Agreement.
Such written reports, and the payments owing by Prosoft for such
quarters, shall be delivered to Customer within 30 days of each of the
Prosoft Quarter-End Dates."
8. SECTION 7.4. A new Section 7.4 of the Agreement shall be added and
shall read as follows:
"7.4 Changes to Trade-dress. In the event that Prosoft alters its
trade dress, Prosoft shall notify the customer of the details of such
change and Customer shall promptly begin using the new trade-dress in
connection with the Kits."
9. SECTION 14. Section 14 of the Agreement is hereby amended to read in
its entirety as follows:
"14. ASSIGNMENT. Except as provided herein, neither party may assign
their rights or obligations under this Agreement. Notwithstanding
anything to the contrary contained herein, either party may assign this
Agreement to a company which acquires all or substantially all of its
assets or into which it is merged, provided that such acquiring company
assumes
5
<PAGE>
all the obligations under this Agreement."
10. SECTION 24.1. Section 24.1 is hereby amended in its entirety to read as
follows:
"24.1. Customer is hereby granted a nonexclusive license
under Prosoft's post secondary status and, once Prosoft has been
accredited, the accreditation, to be used by Customer is its distance
learning business. Prosoft will use its best efforts to complete the
accreditation process and will diligently pursue such process through to
completion. Prosoft will provide Customer with a timetable for the
completion of the accreditation process, which timetable shall be
subject to the reasonable approval of Customer. Prosoft shall keep
Customer apprised as to its progress in this regard. Customer shall have
a nonexeclusive license under this accreditation, along with Prosoft,
for so long as Prosoft operates its vocational division (the "Vocational
Division"), that is, for so long as it is funded by Title III monies and
trains unemployed workers. Customer is hereby granted an irrevocable
option (the "Option") to acquire all of Prosoft's right, title and
interest under the post secondary status and the accreditation status
and/or process (if accreditation has not yet been attained), which
option shall be immediately exercisable by Customer at an exercise price
of $1,000.00 upon written notice to Prosoft at such time as Prosoft (a)
discontinues operation of the Vocation Division, or (b) is acquired by a
third party."
Other than as amended hereby, the Agreement shall remain in full force
and effect and the parties hereby ratify and reaffirm the Agreement as so
amended. All references in the Agreement to "the Agreement," "this Agreement,"
"hereof" and words of like import shall mean the Agreement as modified by this
Amendment.
IN WITNESS WHEREOF the parties hereto have executed this Amendment as
of the date set forth above.
PROSOFT I-NET SOLUTIONS, INC.,
a Nevada corporation
By /s/ Jerrell M. Baird
------------------------------
Name: Jerrell M. Baird
Title:Chairman
TRAINING RESOURCES
INTERNATIONAL, INC.,
a Utah corporation
6
<PAGE>
By /s/ Michael Khaled
------------------------------
MICHAEL KHALED
President
APPROVED:
NETGATEWAY,
a Nevada corporation
By: /s/ Donald M. Corliss, Jr.
-----------------------------------
Donald M. Corliss, Jr.,
President
7
<PAGE>
Schedule 2
Agreement Terms
Guaranteed License Fee: $1,600,000
Payment dates of Guaranteed License Fee:
The payments under the Guaranteed License Fee shall be due and payable
to Prosoft within 15 calendar days of each of the following dates, and shall be
paid in United States dollars in the amounts set forth next to each date:
March 31, 1998: $200,000
June 30, 1998: $200,000
September 30, 1998: $100,000
December 31, 1998: $100,000
March 31, 1999: $250,000
June 30, 1999: $250,000
September 30, 1999: $250,000
December 31, 1999: $250,000
Initial Agreement Term: Effective date through January 31, 2003
8