EXHIBIT 10.18
LICENSE AGREEMENT
SELF DISCOVERY DYNAMICS, LLC
("Licensor")
and
KORN/FERRY INTERNATIONAL FUTURESTEP, INC.
("Licensee")
LICENSE AGREEMENT
This LICENSE AGREEMENT (this "Agreement") is made and entered into as of
May 15, 1998 (the "Agreement Date"), by and between SELF DISCOVERY DYNAMICS, a
California limited liability company ("Licensor") and KORN/FERRY INTERNATIONAL
FUTURESTEP, INC., a Delaware corporation ("Licensee").
ARTICLE 1.
RECITALS
1.1 Licensee is a newly formed Delaware corporation. The primary (but not
exclusive) business of Licensee will be to provide executive search and
ancillary services to candidates and client companies on-line through the medium
of the Internet. Licensee is currently a subsidiary of Korn/Ferry International
("KFI").
1.2 Licensor is engaged in, among other businesses, the business of
creating and developing testing instruments for evaluation, classification and
analysis of candidates and job offerings. Licensor has created and developed the
test instruments and other material referred to in Exhibit A annexed hereto
("Licensed Products"). From time to time hereafter Licensor will create and
develop Enhancements. The Licensed Products and the Enhancements shall be
collectively referred to herein as the "Licensed Material."
1.3 Licensee (and the Permitted Sublicensees referred to in Section 2.2
below) desire to use the Licensed Material in connection with the Business (as
defined in Section 5 of the Appendix). The purpose of this Agreement is to set
forth the terms and conditions under which the Licensor will grant to Licensee
the right to use the Licensed Material in connection with the Business.
1.4 Unless otherwise defined herein, all capitalized terms used in this
Agreement, shall have the meanings set forth in the Appendix annexed hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and agreed to, the Licensor and the
Licensee hereby agree as follows:
ARTICLE 2.
LICENSE
2.1 Grant of License.
----------------
2.1.1 Exclusive and Non-Exclusive Worldwide Licenses in
-------------------------------------------------
Perpetuity. The Licensor hereby grants to the Licensee a license to use the
----------
Licensed Material during the Term throughout the Territory, in connection with
the Business. Such license shall be exclusive with respect to the Business
involving jobs with first year compensation equal to or in excess of the
Compensation Threshold (the "Exclusive License"). Such license shall be
non-exclusive with respect to the Business involving jobs with first year
compensation less than the Compensation Threshold (the "Non-Exclusive License").
Licensor may grant to another Person an exclusive license with respect to the
Business involving a job with first year compensation less than the Compensation
Threshold as long as the Non-Exclusive License granted hereunder is expressly
permitted and excluded from the exclusive coverage of such license.
2.1.2 Acceptance by Licensee. Licensee hereby accepts the
----------------------
Exclusive License and the Non-Exclusive License. The Exclusive License and the
Non-Exclusive License shall be collectively referred to in this Agreement as the
"License."
2.2 Sublicenses. The Licensee shall not have the right to grant
-----------
sublicenses to any Person with respect to any rights conferred upon the Licensee
under this Agreement without the prior written consent of the Licensor, which
may be given or withheld in the Licensor's sole and absolute discretion;
provided, however, that the Licensee
-2-
may, without the consent of the Licensor, grant partial or whole, exclusive or
non-exclusive, sublicenses ("Permitted Sublicense") of either or both of the
Exclusive License or the Non-Exclusive License to KFI, or any Person which is an
Affiliate of KFI or Licensee or to any Person with respect to which Licensee or
KFI is a partner, joint venturer, member or shareholder ("Permitted
Sublicensee"). Upon the grant by Licensee of a Permitted Sublicense, Licensee
shall immediately notify Licensor of such Permitted Sublicense and deliver to
Licensor a copy of the sublicense agreement entered into with such Permitted
Sublicensee. All Permitted Sublicensees shall be subject to and subordinate to
this Agreement. Licensee shall not enter into any Permitted Sublicenses
inconsistent with the provisions and intent of this Agreement.
2.3 Sorkin Human Systems. Licensee understands that Licensor has granted a
--------------------
license for some or all of the Licensed Material to Sorkin Human Systems
("SHS"), an entity wholly-owned by Licensor and Sorkin & Associates, a
California corporation. SHS, among other things, provides services to the
healthcare industry with respect to recruitment and evaluation of personnel in
the healthcare industry. Nothing contained in this Agreement shall prohibit or
restrict the license granted by Licensor to SHS ("SHS License"), provided and on
condition that, with respect to that segment of the Competitive Business which
involves job placements with first year compensation equal to, or in excess of,
the Compensation Threshold only, SHS shall restrict its use of the Licensed
Material to the healthcare industry as specified in Exhibit B annexed hereto
("SHS Permitted Business Activities"). Licensor shall not permit SHS to use any
portion of the Licensed Material in any manner which would be inconsistent with
the Exclusive License granted to Licensee hereunder outside of the SHS Permitted
Business Activities. By executing an Acknowledgment and Agreement in the form of
Exhibit C annexed hereto, SHS and Licensee thereby agree to, and Licensor hereby
acknowledges, the terms and provisions set forth therein. The parties
acknowledge that, except as expressly provided in Exhibit B, SHS' business
activities shall in no way be limited by this Agreement. A breach by SHS of the
Acknowledgement and Agreement shall constitute a breach under this Agreement.
2.4 Translations. Licensor has created or developed translations of the
------------
Licensed Material for use in languages other than United States English as set
forth in Exhibit C annexed hereto ("Current Translations"). The Licensed
Material includes all Current Translations and Licensor shall make available to
Licensee from time to time during the Term at Licensee's request, and for no
cost, fee or other compensation payable to Licensor, a usable copy of each of
the Current Translations. If Licensor develops additional translations of the
Licensed Materials, which it may or may not do in its sole discretion, Licensor
shall give Licensee prompt written notice of the availability or existence of
such additional translations and shall make available to Licensee, at Licensee's
request, for no cost, fee or other compensation payable to Licensor, a usable
copy of each such new translation, which additional translations shall be
included within the Licensed Material. If Licensee desires translations of
Licensed Materials not yet developed by Licensor, Licensor, may at its sole and
absolute discretion, develop such translations pursuant to an agreement with
Licensee which shall be negotiated separate and apart from this Agreement.
Licensee shall have the right, at its own cost and expense, to make its own
translations of the Licensed Material into languages other than United States
English or cause such translations to be made for the benefit of or use by
Licensee; provided, however, that Licensor shall have the right to approve such
translations solely for the purpose of ensuring their accuracy before being used
by Licensee, as long as such approval is not unreasonably withheld. If Licensor
fails to communicate its disapproval within five (5) business days from receipt
by Licensor of such translation, such translation shall be deemed approved by
Licensor.
2.5 Restrictions on Use of Licensed Material. Nothing contained in this
----------------------------------------
Agreement shall be construed as affording the Licensee or any Permitted
Sublicensee the right to use the Licensed Material for any purpose other than in
connection with the Business. The Licensee and the Permitted Sublicensees shall
not permit the client companies to, among other things, access assessments or
surveys included within the Licensed Material for purposes other than (a) the
completion of the Culture Profiles and Job Profiles referred to in Sections 3.2
and 3.3 below, (b) the creation of other profiles with the objective of placing
candidates, and (c) the screening and placement of candidates into such client
companies. Any rights to use the Licensed Material for purposes other than the
screening and placement of candidates must be negotiated separate and apart from
this Agreement. Notwithstanding anything contained in this Agreement, Licensee,
KFI and the Permitted Sublicensees shall have the absolute right to use
assessments, evaluation materials, culture profiles, job profiles and other
testing instruments created or developed by Persons other than Licensor, at any
time and from time to time.
-3-
2.6 Term of License.
---------------
2.6.1 Subject to the provisions of Section 2.6.2 below, the "Term" of
the Exclusive License and the Non-Exclusive License shall each commence on the
Agreement Date and shall continue in perpetuity unless and until Licensee or
Licensor exercises its right to terminate one or both of such Licenses pursuant
to Article 10 hereto. In the event either the Exclusive License or the Non-
Exclusive License is terminated by Licensee pursuant to Article 10 below, the
other non-terminated License shall remain in full force and effect in accordance
with the terms and conditions of this Agreement.
2.6.2 Notwithstanding the provisions of Section 2.6.1 above, the
"Term" of the Exclusive License and the Non-Exclusive License for the country of
Japan shall not commence until August 1, 1998. Licensor hereby represents and
warrants to and covenants with Licensee that the current license for the
Licensed Material which it has entered into with another entity for the country
of Japan will expire on July 31, 1998 and the Licensor will not enter into or
permit any other Person to enter into any license or other arrangement with such
entity with respect to the Licensed Material inconsistent with the provisions
and intent of this Agreement. The Licensor may enter into a non-exclusive
license or other arrangement with such entity with respect to the Business
involving jobs in Japan with first year compensation less than the Compensation
Threshold.
2.7 Distributors. Licensee shall not have the right to grant to any Person
------------
the right to distribute or facilitate the distribution of any Licensed Material
whether in cooperation with the Licensee or any Permitted Sublicensee, without
the prior written consent of Licensor, which consent may be given or withheld in
Licensor's sole and absolute discretion.
2.8 Attribution. Licensee shall attribute the Licensed Materials (or any
-----------
portion thereof) to Licensor in the form and manner which Licensee reasonably
determines. Licensee acknowledges and agrees that Licensor, in its sole and
absolute discretion, may change its name and trademarks from time to time during
the Term and that Licensee shall promptly accommodate such changes in any
attributions pursuant to this Section 2.8.
ARTICLE 3.
LICENSE FEES AND OTHER PAYMENTS
3.1 License Fees. The following annual license fees ("Annual Licensee
Fees") shall be payable by Licensee for use of the Licensed Material by
Licensee and all Permitted Sublicensees:
Year 1 $ 50,000
Year 2 $150,000
Year 3 $250,000
Year 4 & Each Year Thereafter An amount equal to 100% of prior Year's
fee plus or minus 50% of the percentage
increase or decrease in Placement
Revenues over the Placement Revenues for
the prior Year. (For example, if in Year
4 Placement Revenues increased 30% over
the prior Year's Placement Revenues, the
Annual License Fee for Year 4 would
increase 15% to $287,500 ($250,000 X
1.15). And if in Year 4 Placement
Revenues decreases 30% over the prior
Year's Placement Revenues, the Annual
Licensee Fee for Year 4 would decrease
15% to $212,500 ($250,000 x .85).
Permitted Sublicensees shall not be required to make payment of the Annual
License Fee or any other similar fee or payment directly to Licensor.
-4-
3.1.1 Payment of Annual License Fees. The Annual License Fee payable
------------------------------
for Year 1 shall be paid by Licensee within thirty (30) days after the Agreement
Date. The Annual License Fee payable for each of Year 2 and Year 3 shall be paid
within thirty (30) days after the date of commencement of such Year. The Annual
License Fee for Year 4 and each Year thereafter shall be payable within ninety
(90) days after the end of each such Year.
3.2 Quarterly Culture Profile Fees. Culture Profiles created and developed
------------------------------
by Licensor, which are completed by the client companies, are part of the
Licensed Material. Within thirty (30) days after the end of each Quarter,
commencing with the first full Quarter after the Launch Date, Licensee shall
pay to Licensor a quarterly fee ("Culture Profile Fee") in an amount equal to
Seventy-Five Dollars ($75.00) for each Culture Profile included within the
Licensed Material which is completed by each client company for each department,
regardless of the number of Culture Profiles completed for a department or the
number of personnel within the client who complete such Culture Profiles;
provided, however, that the maximum amount of Culture Profile Fees which shall
be payable by Licensee in any Year shall be Fifty Thousand Dollars ($50,000.00).
3.3 Quarterly Job Profile Fees. Job Profiles created and developed by
--------------------------
Licensor, which are completed by the client companies, are part of the Licensed
Material. Within thirty (30) days after the end of each Quarter, commencing with
the first full Quarter after the Launch Date, Licensee shall pay to Licensor a
quarterly fee ("Job Profile Fee") in an amount equal to Fifty Dollars ($50.00)
for each Job Profile included within the Licensed Material which is completed by
each client company for each position, regardless of the number of Job Profiles
completed for a position or the number of personnel within the client who
complete such Job Profiles; provided, however, that the maximum amount of Job
Profile Fees which shall be payable by Licensee in any Year shall be Fifty
Thousand Dollars ($50,000.00).
3.4 Quarterly Placement Fees. Within thirty (30) days after the end of
------------------------
each Quarter, commencing with the first full Quarter after the Launch Date,
Licensee shall pay to Licensor a quarterly placement fee ("Quarterly Placement
Fee") equal to one percent (1%) of the Placement Revenues actually received by
Licensee during the preceding Quarter; provided, however, that the maximum
amount of aggregate Quarterly Placement Fees which shall be payable by Licensee
for any Year shall be One Hundred Thousand Dollars ($100,000.00).
3.5 Licensee Registration Fees. From time to time, Licensee and/or any
--------------------------
Permitted Sublicensee may, in its sole and absolute discretion, elect to impose
a fee or charge for individual candidates registering on its website on the
Internet ("Registration Fee"). Such Registration Fees shall not constitute
Placement Revenues for purposes of the License Fees or Placement Fees payable by
Licensee to Licensor under this Agreement. However, in the event any such
Registration Fees are collected, Licensor shall receive a royalty equal to
thirty percent (30%) of the Registration Fees collected by Licensee and its
Permitted Sublicensees in each calender quarter during the Term ("Registration
Fee Royalties"). Such Registration Fee Royalties shall be payable quarterly
within thirty (30) days after the end of each calendar quarter during the Term.
3.6 Currency-Matters. All Royalty payments required to be made by Licensee
----------------
hereunder shall be paid to the Licensor in U.S. dollars. If any Placement
Revenues with respect to which Royalties are payable hereunder are received
initially in foreign currency, all such Revenues shall be first converted, where
applicable, from the foreign currency into U.S. dollars at the financial rate of
exchange quoted under Foreign Exchange in the Wall Street Journal or by another
source regularly used by KFI in its business, in the manner which is the
customary practice utilized by KFI, and the amount of the Royalties payable by
Licensee with respect to such Placement Revenues shall be determined after the
conversion. No Royalties based upon Placement Revenues shall be payable if such
Placement Revenues are received by Licensee in a currency which cannot be
legally converted to U.S. dollars ("blocked currency") until such conversion can
legally be made.
3.7 Withholding Taxes. If required by applicable law, any and all taxes
-----------------
due or payable by the Licensor on Royalty payments or with respect to the
remittance thereof shall be deducted by Licensee from such payments and shall
be paid by Licensee to the proper taxing authorities, and proof of payment
promptly shall be secured by Licensee and sent to the Licensor.
-5-
3.8 Records. The Licensee shall keep, and cause any Permitted
-------
Sublicensees to keep, full, complete, accurate and proper records and accounts
of all Placement Revenues and other matters pertinent to the payment of
Royalties hereunder. The Licensor and its duly authorized representatives and
agents shall have the right, at all reasonable times, during normal business
hours, upon at least twenty (20) business days advance written notice, to
examine and/or audit such records and books of account and all other documents
and materials in the possession or under the control of the Licensee and/or the
Permitted Sublicensee, pertaining to the subject matter of this Agreement, and
to make copies and/or extracts therefrom. If the audit shows that there is a
deficiency in the payment of any amounts due pursuant to this Agreement, the
deficiency shall become immediately due and payable. The costs of the audit
shall be paid by Licensor unless the audit shows that Licensee understated the
fees due by more than ten percent (10%), in which case Licensee shall pay all of
Licensor's costs of the audit.
3.9 Enhancements.
------------
3.9.1 Inclusion. All Enhancements hereafter created, developed or
---------
processed by Licensor, directly or indirectly, shall be included within the
Licensed Material at no additional cost or expense to Licensee.
3.9.2 Notification. Licensor shall, during the term hereof, notify
------------
the Licensee of any and all Enhancements, and all results thereof and therefrom.
Licensor shall furnish and deliver to Licensee all such Enhancements as soon as
they are available and shall, for the additional consideration set forth in
Section 4.2, assist Licensee in its efforts to incorporate such Enhancements
into the Licensed Material being used by Licensee and its Permitted
Sublicensees.
3.10 Reports and Basis of Payments. Licensee shall complete and submit to
-----------------------------
the Licensor a quarterly report concurrently with the payment of the quarterly
fees due hereunder and an annual report within ninety (90) days following the
end of each Year. Each quarterly report shall contain a statement setting forth
the Placement Revenues of Licensee for the preceding Quarter, the number of
Culture Profiles and Job Profiles for the preceding Quarter which are subject to
Sections 3.2 and 3.3, the Registration Fees, if any, imposed by Licensee for the
preceding Quarter, and the Culture Profile Fees, Job Profile Fees, Quarterly
Placement Fees and Registration Royalties, if any, payable to Licensor under
this Agreement in respect of the preceding Quarter. Annual reports prepared
pursuant to this section shall include all of the foregoing information for the
preceding Year and in addition, shall set forth the Annual License Fees payable
in respect of the succeeding Year. The quarterly and annual reports shall set
forth the foregoing information on a cash basis. The Annual License Fees and
Quarterly Placement Fees payable to Licensor hereunder shall be based upon
actual Placement Revenues received by Licensee on a cash basis during the
relevant period. The Registration Royalties payable to Licensor hereunder shall
be based upon actual Registration Fees received by Licensee on a cash basis
during the relevant period. All information contained in the quarterly and
annual reports shall constitute "Confidential Information" of Licensee within
the meaning of this Agreement and shall be subject to the provisions of Article
9 below.
ARTICLE 4.
PROFESSIONAL SERVICES TO BE PROVIDED BY LICENSOR
4.1 Professional Services.
---------------------
4.1.1 Type of Services. During the Term, Licensor shall render
----------------
professional services to Licensee and its Permitted Sublicensees, as requested
from time to time by Licensee and as mutually agreed upon by Licensor, and
Licensee or the Permitted Sublicensees, as applicable. In Year 1 the
professional services shall consist primarily, but not exclusively, of services
relating to the transfer of technology referred to in Article 7 below and
assistance in making certain that Licensee's web site on the Internet is fully
operational. In Years subsequent to Year 1, such professional services shall be
those which are requested from time to time by Licensee, subject to the approval
of Licensor, which approval shall not be unreasonably withheld or delayed.
Licensor hereby commits to providing at least ten (10) days of such professional
services to Licensee during Year 1, if and to the extent requested from time to
time by Licensee, and at least sixty (60) days of professional services during
each Year thereafter during the Term, if and to the extent requested from time
to time by Licensee.
-6-
4.1.2 Written Descriptions and Budget. Any and all professional
-------------------------------
services to be rendered by Licensor pursuant to Section 4.1.1 above, shall be
reasonably described in writing and submitted to Licensee for its approval,
together with a reasonably detailed budget showing the estimated fees to be paid
for such services. Licensor is not authorized to render any such professional
services unless and until the Chief Executive Officer of Licensee has approved
in writing the written description and budget referred to above.
4.2 Professional Services Fees.
--------------------------
4.2.1 For professional services rendered by Licensor for mutually
agreed upon research and development of the Licensed Materials during Year 1,
Licensor shall receive fees at the rate of One Thousand Two Hundred and Fifty
Dollars ($1,250.00) per day.
4.2.2 For professional services rendered by Licensor for mutually
agreed upon research and development of the Licensed Materials during Year 2,
Licensor shall receive fees at the rate of One Thousand Four Hundred Dollars
($1,400.00) per day.
4.2.3 For professional services rendered by Licensor for mutually
agreed upon research and development of the Licensed Materials during Year 3,
Licensor shall receive fees at the rate of One Thousand Five Hundred and Forty
Dollars ($1,540.00) per day.
4.2.4 For professional services rendered by Licensor for mutually
agreed upon research and development of the Licensed Materials during Year 4 and
each Year of the Term thereafter, Licensor shall receive fees at the rate of one
hundred and ten percent (110%) of the daily rate paid by Licensee during the
immediately preceding Year.
4.2.5 Any other professional services performed by Licensor during
the Term of this Agreement at Licensee's request, subject to the approval of
Licensor in its sole and absolute discretion, shall be at a fee to be negotiated
at such time.
ARTICLE 5.
TRADEMARKS AND COPYRIGHTS
5.1 Trademarks. All Existing Trademark Registrations relating to Licensor
----------
and/or the Licensed Material are listed in Exhibit E annexed hereto. Licensee
shall not file any Trademark Application without the prior written consent of
Licensor. If Licensor consents to any such Trademark Application filing by
Licensee, then such applications shall be filed in the name of Licensor and the
costs and expenses incurred in connection therewith shall be shared equally by
the Licensee and the Licensor. Licensor may, at its sole cost and expense, file
such Trademark Applications as it deems necessary or appropriate without the
consent of Licensee. All trademarks pertaining to the Licensed Materials shall
constitute the property of Licensor and shall be included within the Licensed
Material hereunder. Licensor and Licensee shall fully cooperate with each other
in connection with the prosecution and maintenance of all such Trademark
Applications and all Trademark Registrations; provided, however, that (a)
Licensor shall indemnify and reimburse Licensee for any and all costs and
expenses (including, without limitation, all attorneys' fees) incurred by
Licensee in connection therewith and (b) the obligation of Licensee to cooperate
with Licensor shall not require Licensee to engage in any litigation or
administrative proceeding.
5.2 Copyrights. All Existing Copyright Registrations are listed in Exhibit
----------
F annexed hereto. Licensee shall not file any Copyright Application without the
prior written consent of Licensor. If Licensor consents to the filing of any
such Copyright Application by Licensee, then such applications shall be filed in
the name of Licensor and the costs and expenses incurred in connection therewith
shall be shared equally by the Licensee and by Licensor. Licensor may, at its
sole cost and expense, file such Copyright Applications as it deems necessary or
appropriate without the consent of Licensees. Licensor and Licensees shall fully
cooperate with each other in connection with the prosecution and maintenance of
all such Copyright Applications and all Copyright
-7-
Registrations; provided, however, that (a) Licensor shall indemnify and
reimburse Licensee for any and all costs and expenses (including, without
limitation, all attorneys' fees) incurred by Licensee in connection therewith
and (b) the obligation of Licensee to cooperate with Licensor shall not require
Licensee to engage in any litigation or administrative proceeding.
5.3 Ownership. Licensor shall retain full ownership and title to the
---------
Licensed Material, subject only to the Licensee's and Permitted Sublicensee's
rights under this Agreement.
5.4 Notification; Protection.
------------------------
5.4.1 Licensee agrees to promptly notify Licensor of any
written claims or charges received by Licensee relating to the Licensed Material
or of any infringement of the Licensed Material of which it has knowledge.
Licensor agrees to promptly notify Licensee of any written claims or charges
received by Licensor relating to the Licensed Material or of any infringement of
the Licensed Material of which it has knowledge.
5.4.2 Subject to the provisions of Section 5.4.3, the
Licensor reserves all rights to protect and preserve the integrity and validity
of the Trademarks and Copyrights, including the taking of actions deemed by the
Licensor to be necessary or appropriate to secure, protect and/or maintain the
Licensor's rights to the Licensed Material. Licensee agrees to (a) do any and
all things reasonably requested by Licensor which are necessary or appropriate
to secure, protect and/or maintain the Licensor's rights to the Licensed
Material (including, but not limited to, executing any relevant documents or
instruments), and (b) otherwise cooperate with the Licensor's efforts to protect
such rights; provided, however, that subject to the provisions of Section 5.4.3
below, Licensor shall indemnify and reimburse Licensee for any and all costs and
expenses (including, without limitation, all attorneys' fees) incurred by
Licensee in connection therewith.
5.4.3 At the request of the Licensee, the Licensor shall take
such action, including initiating litigation or an appropriate administrative
proceeding, as Licensee may reasonably request to secure, protect and/or
maintain the Licensor's rights to the Licensed Material, in which event the
Licensee shall cooperate with Licensor in connection therewith. In the event
Licensor fails, refuses or neglects to take any such action within ten (10) days
after receiving a request from the Licensee to do so, the Licensee may take such
action (either in its name and/or the name of the Licensor) as it deems
necessary or appropriate in order to secure, protect and/or maintain the
Licensor's rights to the Licensed Material, in which event the Licensor shall
cooperate with Licensee and its counsel in connection therewith. In the event
Licensor takes any action at the request of Licensee pursuant to this Section
5.4.3 or the Licensee takes such action pursuant to this Section 5.4.3, then
Licensor shall bear and be responsible, and indemnify Licensee against, the
first $100,000 in attorneys' fees and court or administrative costs incurred in
connection therewith. Attorneys' fees and court or administrative costs incurred
in excess of $100,000 in connection with any action taken by the Licensor or
Licensee pursuant to the provisions of this Section 5.4.3 shall be borne equally
by Licensor and Licensee. No action taken by the Licensor pursuant to this
Section 5.4.3 may be settled or compromised without the prior written consent of
Licensee.
5.5 Licensee's Use of Trademarks. The Licensee shall not adopt, use
----------------------------
or register (by filing an amendment to its articles of incorporation, filing a
fictitious business name statement or otherwise) any trade or business name,
style or design which includes, or is confusingly similar to, any of the
Licensor's trademarks, service marks, trade names, logos, insignia, slogans,
emblems, symbols, designs or other identifying characteristics. The Licensor
shall not adopt, use or register (by amending its partnership agreement, filing
a fictitious business name statement or otherwise) any trade or business name,
style or design which includes, or is confusingly similar to, any of the
Licensee's trademarks, service marks, trade names, logos, insignia, slogans,
emblems, symbols, designs or other identifying characteristics.
5.6 Changes to Trademarks. The Licensor shall have the right at any
---------------------
time to make additions to, deletions from and changes in any of the Trademarks
upon notice to the Licensee. At the Licensor's sole option, any such addition,
deletion or change shall be incorporated into this Agreement upon notice to the
Licensee.
-8-
5.7 Indemnification of Licensee. Licensor shall indemnify, defend and hold
---------------------------
Licensee and KFI harmless from and against any Claims or Losses which may be
suffered or incurred by Licensee in connection with or by reason of (a) the
breach by Licensor of any of its covenants contained in this Agreement, (b) the
breach by SHS of any of its obligations under the Acknowledgment and Agreement
attached hereto as Exhibit B, (c) the breach or inaccuracy of any of the
representations or warranties made by Licensor in this Agreement.
5.8 Indemnification of Licensor. Licensee shall indemnify, defend and hold
---------------------------
Licensor harmless from and against any Claims or Losses which may be suffered or
incurred by Licensor in connection with or by reason of (a) the breach by
Licensee or a Permitted Sublicensee of any of the covenants contained in this
Agreement, and (b) the breach or inaccuracy of any of the representations or
warranties made by Licensee in this Agreement.
ARTICLE 6.
OBLIGATIONS RELATED TO COMMERCIALIZATION
6.1 Rules and Regulations. Licensee shall be responsible for compliance
---------------------
with any and all applicable laws, rules and regulations regarding, and for
obtaining any and all necessary governmental approvals for the use of the
Licensed Material in connection with the Business.
6.2 Trademark and Copyright Notices. Licensee shall, at its own expense,
-------------------------------
apply trademark and copyright notices and other markings as Licensor may
reasonably request in connection with each and every use of the Licensed
Material under the laws or regulations of each country where the Licensed
Material is used, which markings shall be in such form and manner as Licensee
may reasonably determine.
6.3 Website HyperLinks. Licensee shall display a link and a reference to
-------------------
Licensor's website (in a normal and customary typeface and manner) on the
Internet on Licensee's website on the Internet as part of Licensee's feedback
report to candidates. Licensee will, at Licensor's request or with Licensor's
prior consent, have an additional link to a fulfillment center for purposes of
selling Licensor's publications.
ARTICLE 7.
TECHNOLOGY SHARING AND TRANSFER
7.1 Technology Transfer. Licensor hereby agrees to provide and transfer to
-------------------
the Licensee and its Permitted Sublicensees all of the following, which shall
constitute part of and be included within the meaning of the term Licensed
Material:
7.1.1 All such algorithms as may be necessary or appropriate to
generate or enable Licensee and its Permitted Sublicensees to provide feedback
to individual candidates based upon assessment test scores derived from the
Licensed Material.
7.1.2 All such algorithms as may be necessary or appropriate in
order for the Licensee and its Permitted Sublicensees to create, develop,
compute or determine coefficients indicating a particular individual candidate's
suitability and fitness for a particular position or for the culture of one or
more client companies.
7.1.3 All such algorithms as may be necessary or appropriate in
order for the Licensee and its Permitted Sublicensees to produce follow-up
interview questions.
7.1.4 All such algorithms as may be necessary or appropriate in
order for the Licensee and its Permitted Sublicensees to determine the
potential effectiveness of a particular individual candidate in terms of four
broad bands of behavioral competency and two leadership profiles.
-9-
7.1.5 All such compiled software necessary or appropriate for
scoring assessments included within the Licensed Material; provided, however,
that the Licensee and the Permitted Sublicensees shall not undertake or permit
other Persons under its control to undertake any decompiling or reverse
engineering, in whole or in part, of such compiled software provided by
Licensor.
7.1.6 All procedures, software and other programs already
developed or hereafter developed by Licensor relating to the linking of software
and algorithms included within the Licensed Material to databases and user
interfaces implemented on the world wide web or Internet.
7.2 Access Rights of Licensor to Licensee's Database; Licensor's Use of
-------------------------------------------------------------------
Information.
-----------
7.2.1 During the Term, subject to the Confidentiality provisions
set forth in Article 9, Licensor shall have access to Licensee's database on a
monthly basis and only for research purposes and the publication of research
reports relating thereto at such times, for such duration and under such
conditions as Licensee may reasonably determine. In addition, all other
information and data obtained by Licensor in connection with Licensee's (and any
Permitted Sublicensee's) use of the Licensed Material may be used by Licensor
but only for research purposes and publications related to such research.
7.2.2 All information in Licensee's database and all other
information and data obtained by Licensor in connection with Licensee's (and any
Permitted Sublicensee's) use of the Licensed Material constitutes Confidential
Information of Licensee within the meaning of Article 9.
7.2.3 Under no circumstances whatsoever shall Licensor be
permitted to use Licensee's database (a) to obtain the names of or any
correspondence information relating to any candidates or client companies and
use such information except as expressly authorized herein or (b) to solicit or
otherwise contact any candidates or client companies of Licensee or KFI or (c)
for purposes contrary to the terms and intent of this Agreement or (d) for the
benefit or in aid of a Company Competitor or a KFI Competitor. Nothing in this
Section 7.2.3 shall restrict Licensor from using information from Licensee's
database to improve upon the reliability and validity of the Licensed Material
as long as no individual or company is specifically identified and such
information is not identified as originating from Licensee's database or KFI.
The parties acknowledge that Licensor may obtain personal assessment responses
to Licensed Material from Licensee for persons who have registered at Licensee's
website and who have contacted Licensor at Licensor's website and who have also
given written permission to Licensor to obtain said assessment responses from
Licensee and, in addition, has given written authorization to Licensee to
release such information to Licensor. Licensor may charge fees to such persons
for additional career guidance services.
ARTICLE 8.
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of Licensor. Licensor hereby
------------------------------------------
represents and warrants to Licensee that:
8.1.1 Licensor is the sole owner of the Licensed Material, the
Existing Copyright Registrations and the Existing Trademark Registrations, and,
except as expressly set forth in this Agreement, has not sold, transferred,
assigned or otherwise disposed of, directly or indirectly, by operation of law
or otherwise, any of the Licensed Material, any of the Existing Copyright
Registrations, or any of the Existing Trademark Registrations, or any interest
therein, to any Person other than Licensee hereunder. To the best of Licensor's
knowledge, no Person has made any claim or filed any protest or filed any
action, suit or proceeding challenging Licensor's exclusive ownership rights and
interests in and to the Licensed Material, the Existing Copyright Registrations
or the Existing Trademark Registrations.
-10-
8.1.2 Licensor is not aware of any rights of third parties
that would be infringed by manufacturing, using or selling the Licensed Material
or by any of the Existing Copyright Registrations or by any of the Existing
Trademark Registrations.
8.1.3 Licensor is not aware that any third parties in any way
infringing the Licensed Material or the Existing Copyright Registrations or the
Existing Trademark Registrations.
8.1.4 Licensor is not aware of any action, suit, proceeding
or other claim pending or threatened against Licensor or any other person, firm
or entity, involving or relating to the Licensed Material or the Existing
Copyright Registrations or the Existing Trademark Registrations. Licensor is not
aware of any order, decree or judgment in effect that affects the Licensed
Material and/or the ability of Licensor to perform its obligations hereunder.
8.1.5 Licensor is not aware that any aspect of any of the
Licensed Material or job-person matching violates any federal or state laws,
including equal employment opportunity laws. Licensor is not aware that the
Licensed Material or the process of job-person matching included therein has had
an adverse impact on any group protected by any equal employment opportunity
laws, including, but not limited to, Title VII of the Civil Rights Act of 1964,
42 U.S.C Section 2000e et. Seq. and any similar laws of any state. The Licensed
Material and the process of job-person matching included therein have been
validated in accordance with generally accepted professional practices for
construct and criterion related validity. Licensor agrees that in the event of
any challenge by any third party to the legality of the Licensed Material and/or
the process of job-person matching, Licensor shall provide, at no cost to
Licensee (a) evidence establishing that the Licensed Material and the process of
job-person matching included therein do not have an adverse impact on any group
protected by any equal employment opportunity laws for selection into positions
involved in Licensee's Business; (b) evidence that the Licensed Material and the
process of job-person matching have been validated in accordance with standard
practices; and (c) expert witness testimony to support such evidence.
8.1.6 When used by Licensee (and any Permitted Sublicensee)
in connection with the Business, the Licensed Material will perform the
functions for which it has been designed. All assessments and job-person
matching included within the Licensed Material have been tested by internal
objective studies conducted by Licensor and the results of those tests
demonstrate that the Licensed Material will perform the functions for which it
has been designed and marketed. The parties acknowledge that the Licensed
Material is designed and marketed to estimate individuals' effectiveness in
specific job-related behavioral competencies.
8.1.7 Licensor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of California.
All action required or appropriate in order for Licensor to execute, deliver and
perform this Agreement have been duly and validly taken and Licensor is entitled
to execute and deliver this Agreement and perform its obligations hereunder.
This Agreement constitutes a legal, valid and binding obligation of Licensor,
enforceable against Licensor in accordance with its terms and all persons
executing this Agreement on behalf of Licensor are duly authorized and empowered
to do so.
8.1.8 No consent, approval or notice is required to be
obtained or given by Licensor from or to any person, firm or entity,
governmental or nongovernmental, in order for Licensor to execute and deliver
this Agreement and perform its obligations hereunder. This Agreement will not
violate Licensor's Articles of Organization or any other agreement or document
to which Licensor is a party or by which it is bound.
8.2 Representations and Warranties of Licensee. Licensee hereby
------------------------------------------
represents and warrants to Licensor that:
8.2.1 There is no action, suit, proceeding or other claim
pending or threatened against Licensee and there is no order, decree or judgment
in effect which affects the ability of Licensee to perform its obligations
hereunder.
8.2.2 Licensee is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. All
action required or appropriate in order for Licensee to execute, deliver and
-11-
perform this Agreement have been duly and validly taken and Licensee is entitled
to execute and deliver this Agreement and perform its obligations hereunder.
This Agreement constitutes a legal, valid and binding obligation of Licensee,
enforceable against Licensee in accordance with its terms and all persons
executing this Agreement on behalf of Licensee are duly authorized and empowered
to do so.
8.2.3 No consent, approval or notice is required to be
obtained or given by Licensee from or to any person, firm or entity,
governmental or nongovernmental, in order for Licensee to execute and deliver
this Agreement and perform its obligations hereunder. This Agreement will not
violate Licensee's Articles of Incorporation, By-Laws or any other agreement or
document to which Licensee is a party or by which it is bound.
ARTICLE 9.
CONFIDENTIALITY
9.1 Confidentiality.
---------------
9.1.1 Treatment of Confidential Information. The parties agree
-------------------------------------
that during the term of this Agreement, a party receiving Confidential
Information of the other party will (a) maintain in confidence such Confidential
Information, (b) not disclose such Confidential Information to any third party
without prior written consent of the other party and (c) not use such
Confidential Information for any purpose except those expressly permitted by
this Agreement.
9.1.2 Publications. Nothing in this Agreement shall limit the
------------
Licensor's right to publish information about or related to the Licensed
Material; provided, however, prior to any such publication, the Licensor shall
use reasonable efforts to submit to the Licensee for review only a copy of the
proposed publication prior to the anticipated publication date.
9.1.3 Publicity. Except as otherwise provided in Section 9.1.4
---------
below or as set forth in Exhibit H annexed hereto, or required by applicable
law, no party shall originate any publication, news release, or other public
announcement, written or oral, whether in the public press or otherwise,
relating to this Agreement or to any sublicense arrangement hereunder, without
the prior written approval of the other party, which approval shall not be
unreasonably withheld. Professional, scholastic, and research publications and
publications distributed to lenders, investment bankers, stockholders or
potential investors in the Licensee or in the Licensor shall be deemed not to
violate this Section.
9.1.4 Relationships. Licensor is hereby granted permission to
-------------
publicly disclose its relationship with the Licensee by virtue of this
Agreement; provided, the form and substance of such disclosure is approved in
advance by the Licensee, which approval shall not be unreasonably withheld or
delayed; provided, however, Licensee, upon ten (10) days advance written notice
to Licensor, may require Licensor to immediately cease publicly disclosing such
relationship at the end of such ten (10) day period if Licensor, or any of its
principals, commit a Revocation Act (as hereafter defined). Licensee is hereby
granted permission to publicly disclose its relationship with the Licensor by
virtue of this Agreement; provided, the form and substance of such disclosure
is approved in advance by the Licensor, which approval shall not be unreasonably
withheld or delayed; provided, however, Licensor, upon ten (10) days advance
written notice to Licensee, may require Licensee to immediately cease publicly
disclosing such relationship at the end of such ten (10) day period if Licensee,
or any of its principals, commit a Revocation Act (as hereafter defined). As
used herein, "Revocation Act" shall mean: (a) conduct which brings the acting
party into public disrepute; (b) commission of a felony; or (c) conduct which
becomes the subject of adverse publicity which would or could, in the good faith
judgment of the revoking party, adversely affect the reputation of the revoking
party.
-12-
ARTICLE 10.
TERM AND TERMINATION
10.1 Termination.
-----------
10.1.1 Termination by Licensee Without Cause. At any time and from
-------------------------------------
time to time following the expiration of the first Year of the Term, Licensee
shall have the right to (a) terminate this Agreement without cause or (b)
terminate either the Exclusive License or the Non-Exclusive License without
cause. In order to exercise such right of termination, Licensee shall give
Licensor at least thirty (30) calendar days prior written notice of such
termination. The Annual License Fee shall not be affected by the termination of
either the Exclusive License or Non-Exclusive License if this Agreement remains
in effect.
10.1.2 Termination Upon Default. Either or both of the following
------------------------
events shall constitute an event of default hereunder: (a) the failure of any
party to pay any amounts when due hereunder within ten (10) business days after
receipt of a written demand therefor; or (b) the failure of any party to perform
any other obligation hereunder within thirty (30) days after receipt of written
notice from the other party specifying in reasonable detail the nature of such
nonperformance. Upon the occurrence of any event of default, the non-defaulting
party may terminate this Agreement and the License by delivering to the
defaulting party written notice thereof. Such termination shall be effective
upon the date set forth in such notice. Termination pursuant to this Section
10.1.2 shall not relieve the defaulting party from liability for damages
suffered by the other party. Waiver by either party of a single default or a
succession of defaults shall not deprive such party of its right to terminate
this Agreement by reason of any subsequent default.
10.1.3 Other Termination Event. Licensor may terminate this
-----------------------
Agreement and the License, in its sole and absolute discretion, if Licensee and
all Permitted Sublicensees, in the aggregate, cease to use the Licensed Material
as part of the registration process for at least 20% of the potential job
candidates registering at Licensee's (and any Permitted Sublicensee's) Internet
Website.
10.1.4 Rights Upon Termination. Upon any termination of this
-----------------------
Agreement, the License shall terminate. Upon termination of either but not both
the Exclusive License or the Non-Exclusive License (if applicable), the License
which is not terminated shall remain in full force and effect in accordance
with the terms and conditions of this Agreement. Upon any termination of this
entire Agreement, the Licensee promptly shall return all materials, samples,
documents, information and other materials which embody or disclose any Licensed
Material; provided, however, that the Licensee shall not be obligated to provide
the Licensor with Confidential Information or proprietary information
independently developed by the Licensee, except to the extent it relates to the
Licensed Material. Any such termination shall not relieve either party from any
obligations accrued up to the date of termination. Notwithstanding the
termination of this Agreement during any Year, no portion of the Annual License
Fee paid for such Year shall be refundable. If this Agreement is terminated
during Year 4 or thereafter, the Annual License Fee shall be determined by
annualizing the Placement Revenues generated during such partial Year. Upon any
such termination, each party shall be required to abide by its nondisclosure
obligations pursuant to Article 9 hereof, which obligations shall survive any
termination of this Agreement.
ARTICLE 11.
MISCELLANEOUS
11.1 General Provisions.
------------------
11.1.1 Assignment by Licensee. Except as otherwise provided in
----------------------
Section 2.2 above, neither this Agreement nor any rights granted hereunder may
be assigned or transferred by the Licensee without the prior written consent of
the Licensor, which consent may be withheld or delayed in Licensor's sole and
absolute discretion; provided, however, that this Agreement and all of the
rights and duties of the Licensee and a Permitted Sublicensee hereunder may be
assigned or transferred to any Person who acquires all or substantially all of
the
-13-
Business of the Licensee or such Permitted Sublicensee, either by way of an
acquisition, merger, consolidation, reorganization or other transaction.
11.1.2 Assignment by Licensor. Licensor may transfer its
----------------------
rights and obligations under this Agreement to any Person without the prior
written consent of Licensee, provided and on condition that: (a) the transferee
is also acquiring all right, title and interest in and to the Licensed Material
and the transferee agrees in writing to assume all of Licensor's duties and
obligations under this Agreement; and (b) the transferee is not a Company
Competitor or a KFI Competitor. If the transferee is a Company Competitor or a
KFI Competitor then Licensor may not transfer its rights and obligations under
this Agreement to such Person without the prior written consent of Licensee,
which consent may be given or withheld in the sole and absolute discretion of
Licensee. For purposes of this Section 11.1.2, a merger, consolidation or
reorganization of Licensor into or with another Person, whether or not Licensor
is the surviving entity, the sale of the Licensed Material (including the
transfer of the Licensed Material in connection with the sale of all or
substantially all of the assets of Licensor), and/or the acquisition by any
Person of more than ten percent (10%) of the ownership interests, percentage
interests in profits, or voting rights of the Licensor, whether by contract,
purchase of interest or otherwise, shall constitute a transfer of Licensor's
rights under this Agreement within the meaning of this Section.
11.1.3 Binding Upon Successors and Assigns. Subject to the
-----------------------------------
limitations on assignment set forth in Sections 11.1.1 and 11.1.2 hereof, this
Agreement shall be binding upon and inure to the benefit of any successors in
interest and assigns of the Licensor and the Licensee.
11.2 Independent Contractors. The relationship between the Licensor
-----------------------
and the Licensee shall only be that of independent contractors. The Licensor and
the Licensee shall for no purposes, be deemed to be joint ventures, partners,
principal and agent, master and servant, or employer and employee. On no account
may a party hereto create (or hold itself out to third parties as being able to
create) any binding obligation on behalf of the other without the prior written
consent of the other.
11.3 Preparation of Agreement. It is acknowledged by each party that
------------------------
such party either had separate and independent advice of counsel or the
opportunity to avail itself or himself of separate and independent legal
counsel. Each party hereto understands and acknowledges that the law firm of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, is legal counsel to Licensee only, and does not
represent any other parties to this Agreement. In light of these and other
relevant facts it is further acknowledged that no party shall be construed to be
solely responsible for the drafting hereof, and therefore any ambiguity shall
not be construed against any party as the alleged draftsman of this Agreement.
11.4 Cooperation and Further Assurances. Unless otherwise expressly
----------------------------------
provided in this Agreement, each party agrees, without further consideration, to
cooperate and diligently perform any further acts, deeds and things and to
execute and deliver any documents that may from time to time be reasonably
necessary or otherwise reasonably required to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay or expense; provided, however, to the extent such cooperation shall
require the expenditure of time or funds, the party requesting such cooperation
shall reimburse the other party its costs and reasonably compensate the other
party for its time.
11.5 Interpretation.
--------------
11.5.1 Entire Agreement/No Collateral Representations. Each
----------------------------------------------
party expressly acknowledges and agrees that this Agreement: (i) is the final
expression of the parties agreements with respect to the subject matter hereof
and thereof and are the complete and exclusive statements of the terms of such
agreement; (ii) supersedes any prior or contemporaneous agreements, promises,
assurances, guarantees, representations, understandings, conduct, proposals,
conditions, commitments, acts, course of dealing, warranties, interpretations or
terms of any kind, oral or written (collectively and severally, the "Prior
Agreements"), and that any such Prior Agreements are of no force or effect
except as expressly set forth herein and therein; and (iii) may not be varied,
supplemented or contradicted by evidence of Prior Agreements. Any agreement
hereafter made shall be ineffective to modify,
-14-
supplement or discharge the terms of this Agreement, in whole or in part, unless
such agreement is in writing and signed by the party against whom enforcement of
the modification or supplement is sought.
11.5.2 Waiver. No breach of any agreement or provision herein
------
contained, or of any obligation under this Agreement, may be waived, nor shall
any extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.
11.5.3 Remedies Cumulative. Except as otherwise provided in
-------------------
this Agreement, the remedies of each party under this Agreement, at law and in
equity, shall be cumulative and non-exclusive.
11.5.4 Severability. If any term or provision of this
------------
Agreement or the application thereof to any Person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (i) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (ii) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
11.5.5 No Third Party Beneficiary; No Liability for KFI.
--------------------------
Except to the extent KFI is expressly referred to in this Agreement, the parties
specifically disavow any desire or intention to create any third party
beneficiary obligations, and specifically declare that no third party shall have
any rights hereunder or any right of enforcement hereof. Notwithstanding the
foregoing, KFI shall be a third party beneficiary to the extent of the rights
and benefits expressly conferred own KFI under this Agreement. Under no
circumstances shall KFI have any duty, obligation, liability or responsibility
for any of the duties, obligations and liabilities of Licensee under this
Agreement, either at law or in equity.
11.5.6 No Reliance Upon Prior Representation. The parties
-------------------------------------
acknowledge that no other party has made any oral representation or promise
which would induce them prior to executing this Agreement to change their
position to their detriment, partially perform, or part with value in reliance
upon such representation or promise; the parties acknowledge that they have
taken such action at their own risk; and the parties represent that they have
not so changed their position, performed or parted with value prior to the time
of their execution of this Agreement.
11.5.7 Headings; References; Incorporation; Gender. The
-------------------------------------------
headings used in this Agreement are for convenience and reference purposes only,
and shall not be used in construing or interpreting the scope or intent of this
Agreement or any provision hereof. References to this Agreement shall include
all amendments or renewals thereof. All cross-references in this Agreement,
unless specifically directed to another agreement or document, shall be
construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, each gender shall be
deemed to include the other gender, including neutral genders or genders
appropriate for entities, if applicable, and the singular shall be deemed to
include the plural, and vice versa, as the context requires.
11.6 Enforcement.
-----------
11.6.1 Applicable Law. This Agreement and the rights and
--------------
remedies of each party arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall be solely governed by, interpreted
under, and construed and enforced in accordance with the laws (without regard to
the conflicts of law
-15-
principles thereof) of the State of California, as if this agreement were made,
and as if its obligations are to be performed, wholly within the State of
California.
11.6.2 Consent to Jurisdiction; Service of Process. Any action or
-------------------------------------------
proceeding arising out of or relating to this Agreement shall be filed in and
heard and litigated solely before the state courts of California located within
the County of Los Angeles. Each party generally and unconditionally accepts
the exclusive jurisdiction of such courts and to venue therein, consents to the
service of process in any such action or proceeding by certified or registered
mailing of the summons and complaint in accordance with the notice provisions of
this Agreement, and waives any defense or right to object to venue in said
courts based upon the doctrine of "Forum Non Conveniens". Each party irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.
11.6.3 Attorneys' Fees and Costs. If any party institutes or should
-------------------------
the parties otherwise become a party to any Action Or Proceeding based upon or
arising out of this Agreement including, without limitation, to enforce or
interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the Prevailing Party in any such
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of
prosecuting or defending the Action Or Proceeding, as the case may be,
including, without limitation, reasonable Attorneys' And Other Fees.
11.7 Notices. Any notice, approval, disapproval, consent, waiver, or other
-------
communication (collectively, "Notices") required or permitted to be given
under this Agreement shall be in writing and shall be delivered personally or
mailed, certified or registered United States mail, postage prepaid, return
receipt requested, or sent by Federal Express or other reliable overnight
carrier for next business day delivery, or by fax. All Notices shall be deemed
delivered (a) if personally served, when actually delivered to the address of
the person to whom such Notice is given, (b) if sent via Federal Express or
other overnight courier for next business day delivery, one (1) business day
following the date on which the Notice is given to Federal Express or other
overnight courier, (c) if by mail, three (3) days following deposit in the
United States mail, or (d) if by fax, when the transmitting telecopier machine
has confirmed that the Notice has been completed or sent without error. All
Notices shall be addressed to the party to whom such Notice is to be given at
the party's address set forth below or as such party shall otherwise direct by
Notice sent pursuant to this Section:
If Licensee: Korn/Ferry International Futurestep, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. Man ▇▇▇ ▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If Licensor: Self Discovery Dynamics, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,. Ph.D., General Partner
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
-16-
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
2100 Symphony Towers
▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Self Discovery Dynamics, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
11.8 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument, binding on all parties hereto. Any signature page
of this Agreement may be detached from any counterpart of this Agreement and
re-attached to any other counterpart of this Agreement identical in form hereto
by having attached to it one or more additional signature pages.
11.9 Exhibits. All Exhibits annexed hereto are incorporated into this
--------
Agreement and made a part hereof by this reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
LICENSOR: LICENSEE:
SELF DISCOVERY DYNAMICS, LLC, KORN/FERRY INTERNATIONAL FUTURESTEP,
a California limited liability company INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ Man ▇▇▇ ▇▇▇▇▇
----------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Ph.D., Man ▇▇▇ ▇▇▇▇▇,
Member President
By: /s/ ▇▇▇▇▇▇▇ ▇. Driver By: ________________________________
-----------------------------------
▇▇▇▇▇▇▇ ▇. Driver, Its:________________________________
Member
-17-
APPENDIX
CERTAIN DEFINITIONS
1. "Action Or Proceeding" means any and all claims, suits, actions,
notices, inquiries, proceedings, hearings, arbitrations or other similar
proceedings, including appeals and petitions therefrom, whether formal or
informal, governmental or non-governmental, or civil or criminal.
2. "Affiliate" means with respect to any person or entity ("Person
No. 1"), any other person or entity which either (i) directly or indirectly owns
or controls Person No. 1, or (ii) is directly or indirectly owned or controlled
by Person No. 1, or (iii) is under direct or indirect common control with Person
No. 1. The term "control" (and its corollaries) includes, without limitation,
ownership of interests representing a majority of total voting power in an
entity, and "ownership" (and its corollaries) includes, without limitation,
ownership of a majority of the equity interests in an entity.
3. "Agreement" means this Agreement and all agreements, exhibits,
schedules and appendices expressly annexed hereto.
4. "Attorneys' And Other Fees" means attorneys' fees, accountants' fees,
fees of other professionals, witness fees (including experts engaged by the
parties, but excluding shareholders, officers, employees or partners of the
parties), and any and all other similar fees incurred in the prosecution or
defense of an Action Or Proceeding.
5. "Business" shall mean the business of providing executive recruiting
services which shall be defined as the screening and evaluation of individual
candidates (whether or not placed) for placement in positions with client
companies which have engaged Licensee and/or Permitted Sublicensees for this
purpose, and the placement of individual candidates in positions with client
companies which have engaged Licensee and/or Permitted Sublicensees for this
purposes, in either case whether or not conducted on the Internet. The Parties
acknowledge and agree that the Business shall not include, among other things,
career counseling, team development, research services, publishing, or any
other services or endeavors not specifically included in the definition of
Business ("Excluded Activities"). It is understood and agreed that Licensee, KFI
and the Permitted Sublicensees shall have the absolute right to engage in one or
more of the Excluded Activities so long as they do not use the Licensed Material
in connection with any of the Excluded Activities.
6. "Competitive Business" means any business, which directly competes,
in part or in whole, with the Business and includes the conduct of such Business
by KFI.
7. "Company Competitor" means any (a) Person (other than KFI or any
Affiliate of KFI) who engages, directly or indirectly, in any Competitive
Business and who, from that segment of the Competitive Business which involves
job placements with first year compensation equal to, or in excess of, the
Compensation Threshold, derives gross revenues in excess of One Million
Dollars($1,000,000) annually, or (b) stockholder, partner, or joint venturer
owning, directly or indirectly, more than a five percent (5%) ownership interest
in any Person referred to in subparagraph (a), or (c) officer, director,
executive employee, agent, or consultant who is hired specifically for the
purpose of advising on executive recruiting matters, of or to any Person
referred to in subparagraph (a).
8. "Compensation Threshold" means for the United States of America, as of
the date of determination, the sum of Seventy-Five Thousand Dollars ($75,000.00
US). In making the determination of the Compensation Threshold for areas outside
of the United States of America: (a) the percentages set forth in Exhibit G for
the applicable country shall be used by applying the applicable percentage to
the amount of the Compensation Threshold for the United States of America in
effect on the date of determination; and (b) foreign currency shall be converted
at the currency exchange rates in effect as of the business day immediately
preceding the date of determination as such rates are quoted in the Wall Street
Journal or, if no longer quoted in the Wall Street Journal, as quoted by the
Bank of America. At the beginning of Year 2 and at the beginning of each and
every Year thereafter, the amount of the Compensation Threshold shall be
increased or decreased for each country included
within the Territory by the amount by which the consumer price index (or its
closest equivalent in such country) for the applicable country as a whole for
the preceding Year has increased or decreased. Licensee shall make all
determinations regarding applicable currency exchange rates, applicable consumer
price indices (and applicable equivalent indices, if necessary) and increases or
decreased caused by changes in the consumer price indices (and applicable
equivalent indices, if necessary) in good faith, and all such determinations
shall be binding and conclusive upon Licensor for all purposes absent mistake or
manifest fraud by Licensee.
9. "Confidential Information" means all proprietary and confidential
information regarding the Licensor or Licensee, as applicable, their
subsidiaries and Affiliates, and their businesses, clients, and personnel,
including, without limitation: (a) client lists, client prospects, and business
development information; (b) company lists, profiles and reports, position
specifications, salary structures, and engagement information; (c) source lists,
executive lists, and candidate lists, profiles and reports; (d) candidate
resumes, appraisals, compensation information, and reference reports; (e) search
executive methodologies; (f) structure, operations, pricing, financial and
personnel information; g) information databases (including information
contained therein either individually or in the aggregate), and assessments,
analysis and studies developed exclusively by or for the benefit of the Licensor
or Licensee, as applicable; (h) plans, designs, inventions, formulas, research
and technology developed by or for the benefit of the Licensor or Licensee, as
applicable; (i) personal histories or resumes, employment information, business
information, business secrets of clients and candidates; (j) trade secrets of
the Licensor or Licensee, as applicable; (k) plans, prospects, policies,
practices, and procedures of the Licensor or Licensee, as applicable, which are
not generally known in the industry; and (l) all other proprietary information
of Licensor or Licensee, as applicable, of every nature and source. The term
"Confidential Information" does not include any information which: (A) is or
becomes generally available to the public through no breach of this Agreement or
any other agreement to which the Licensor or Licensee, as applicable, is a
party; (B) was received from a third party free to disclose such information
without restriction; (C) is approved for release in writing by the Board of
Directors or general partners of the Licensee or Licensor, as applicable,
subject to whatever conditions are imposed by the Board or general partners, as
applicable; (D) is required by law or regulation to be disclosed, but only to
the extent necessary and only for the purpose required; or (E) is disclosed in
response to a valid order of a court or other governmental body, but only to the
extent necessary and for the purpose required, if and only if, the Licensor or
Licensee, as applicable, is first notified of the order and are permitted to
seek an appropriate protective order against public disclosure of such
information.
10. "Copyright Application(s)" shall mean any and all applications for
copyright filed after the Agreement Date by Licensor or Licensor which relates
to any portion of the Licensed Material.
11. "Copyright Registration(s)" shall mean (a) the copyright registrations
listed in Exhibit F annexed hereto ("Existing Copyright Registrations") and (b)
any and all copyright registrations received as a result of any Copyright
Application ("Future Copyright Registrations").
12. "Costs And Expenses" means the cost to take depositions, the cost to
arbitrate a dispute, if applicable, and the costs and expenses of travel and
lodging incurred with respect to an Action Or Proceeding.
13. "Enhancements" shall mean all additions, improvements, modifications
or amendments made to the Licensed Material in connection with the Business,
including, without limitation, all assessments included in the Licensee
Material, all feedback sheets to individual candidates and client companies,
training material and promotional material; provided, however, that for the
purposes of this Agreement, Enhancements developed by Licensor exclusively for
another Person other than Licensee which is wholly paid for by, or exclusively
developed for, such other Person shall not be included within the definition of
Enhancements or Licensed Materials
14. "KFI Competitor" shall have the same meaning as "Company Competitor."
15. "Launch Date" shall mean the date on which the on-line internet
recruiting, executive search and job placement service is first launched by
Licensee on other than a test basis.
-2-
16. "Person" means any individual, firm, corporation, trust, partnership
(limited or general), limited liability company, sole proprietorship or
association.
17. "Placement Revenues" shall mean the gross revenues actually received
by Licensee from client companies in connection with the placement of
individuals assessed with the Licensed Materials, and, with respect to any
Permitted Sublicensee, shall include the gross revenues, if any, actually
received by the Permitted Sublicensee from client companies in connection with
the placement of individuals assessed with the Licensed Materials.
18. "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action or
Proceeding, whether or not the Action or Proceeding proceeds to final judgment.
The court shall retain the discretion to determine that no party is the
Prevailing Party in which case no party shall be entitled to recover its Costs
and Expenses.
19. "Quarter" shall have the following meaning: The first "Quarter" shall
commence on the Launch Date and shall terminate on the last day of the third
full calendar month following the Launch Date. The next "Quarter" shall commence
on the first day of the calendar month following the end of the first
Quarter and shall end on the last day of the third full calendar month following
the end of the first Quarter. Each "Quarter" thereafter shall commence on the
first day of the calendar month following the end of the prior Quarter and shall
end on the last day of the third full month following the end of such prior
Quarter.
20. "Royalties" shall mean the Annual License Fees, Culture Profile Fees,
Job Profile Fees, Quarterly Placement Fees and Registration Fee Royalties
payable hereunder by Licensee to Licensor, collectively.
21. "Territory" shall mean the entire universe and any and all portions
thereof.
22. "Trademark Application(s)" shall mean any and all applications for a
trademark, service ▇▇▇▇ or tradename filed by Licensor or Licensee after the
Agreement Date which relate to Licensor or utilize any portion of the Licensed
Material.
23. "Trademark Registration(s)" shall mean (a) the trademark registrations
listed on Exhibit E annexed hereto (the "Existing Trademark Registrations"), and
(b) any registration for a trademark, service ▇▇▇▇ or tradename received
pursuant to any Trademark Application ("Future Trademark Registrations").
24. "Year 1" shall commence on the Launch Date and shall terminate on the
day before the first anniversary of the Launch Date. Licensee shall notify
Licensor in writing of the Launch Date within ten (10) business days thereafter.
Each "Year" thereafter shall commence on the anniversary date of the
commencement of the prior Year and end on the day before the anniversary date of
said commencement date.
-3-
DESCRIPTION OF LICENSED MATERIAL
StyleView: Role Style Index
StyleView: Operating Style
Career View: Career Concept Questionnaire - Ideal Version
Culture View: Organizational Career Culture Survey
Task View: Job Profiling Form - 1
All translations of the foregoing for use in languages other than United
States English created or developed by Licensor as of the date of the Agreement
All feedback reports and sheets for candidates and client companies detailing
the results of decision styles assessments based on the StyleView instruments
and career motives assessments based on the CareerView instrument.
All training manuals and materials related to foregoing
All promotional materials related to foregoing
All Trademarks pertaining to the foregoing
Exhibit A
---------
SHS PERMITTED BUSINESS ACTIVITIES
---------------------------------
SHS generally may use the Licensed Materials in its discretion pursuant to its
license with Licensor. However, with respect to that segment of the Business
covered by the Exclusive License only, SHS shall restrict its use of the
Licensed Material for the placement of professional and/or executives in
positions which involve 80% or more Healthcare Information Systems (HIS)
responsibilities. Without in any way limiting the scope of the foregoing, the
following is a list of certain typical placements make by SHS which shall
constitute SHS Permitted Business Activities:
HIS VENDOR ORGANIZATIONS
This is their only business and placements include any level for the placed
professional within such types of organizations.
CONSULTING ORGANIZATIONS
Consultants, Sr. Consultants, Managers, Sr. Managers, Directors, VP's,
Partners, and Associate Partners that typically:
Evaluate HIS
Select HIS
Install/Implement HIS
Project Manage HIS
Supervise and/or create Operations respective to HIS
Supervise and/or create Process and Strategy respective to HIS
Play instrumental roles with respect to Integrated Delivery Systems
Play instrumental roles with respect to Managed Care & HIS
PROVIDER ORGANIZATIONS
CIO's, Directors of HIS, Project Managers of HIS, Installation / Implementation
professionals, Program Managers of HIS, Integrated Delivery Systems
Professionals and other professionals and/or executives specializing in a HIS
function that typically serve in the following types of settings:
Hospitals & Hospital Chains
Physician Groups
Clinics
Home Health Organizations
MANAGED CARE ORGANIZATIONS
HMO's, MSO's,IPO's, PPO's, Insurance Companies, Independent Physician
Organizations and the like that typically make placements for the following
typical positions:
CIO & other specific HIS executives
Director & IS Leads
Program & Project Managers
Documentation Specialists
Engineers & Programmers
Exhibit B
---------
ACKNOWLEDGMENT AND AGREEMENT
-----------------------------
WHEREAS, Sorkin Human Systems, a joint venture between Licensor and Sorkin &
Associates, a California Corporation ("S&A"), acknowledges and agrees in favor
of Licensee as follows (all capitalized terms, if not defined herein, shall have
the meaning set forth in that certain License Agreement between Self Discovery
Group, LLC and Korn/Ferry International Futurestep, Inc. dated of even date
herewith ["License Agreement"]):
a) SHS generally may use the Licensed Material in its discretion pursuant to
its license with Licensor ("SHS License"). However, with respect to that
segment of the Competitive Business which involves job placements with
first year compensation equal to, or in excess of, the Compensation
Threshold only, SHS agrees to restrict its use of the Licensed Material to
the healthcare industry as specified in Exhibit B annexed to the License
Agreement.
b) If at any time during the term of the SHS License, more than fifty percent
(50%) of the voting interests of SHS is owned of record or beneficially,
directly or indirectly, by a Company Competitor or a KFI Competitor or if
any time during the term of the SHS License, SHS is otherwise controlled by
a Company Competitor or a KFI Competitor, then the SHS License, with
respect to that segment of the Competitive Business which involves job
placements with first year compensation equal to, or in excess of, the
Compensation Threshold only, shall automatically terminate and be of no
further force or effect without any further notice or action on the part of
Licensor.
c) With respect to that segment of the Competitive Business which involves job
placements with first year compensation equal to, or in excess of, the
Compensation Threshold only, SHS may not assign or transfer or sublicense
any of its rights in or to the SHS License or any other license or
authority given by Licensor to SHS with respect to the Licensed Material or
any portion thereof (with respect to that segment of the Competitive
Business which involves job placements with first year compensation equal
to, or in excess of, the Compensation Threshold only), directly or
indirectly, without the prior written consent of the Licensee, which
consent may be withheld or delayed in the Licensee's sole and absolute
discretion.
d) SHS shall not permit or authorize any "Company Competitor" or any "KFI
Competitor" to use or have access to any of the Licensed Material with
respect to that segment of the Competitive Business which involves job
placements with first year compensation equal to, or in excess of, the
Compensation Threshold.
e) SHS shall not claim to have a partnership or strategic alliance or other
relationship with Licensee and shall not publicize the fact that Licensee
or KFI is using the Licensed Material. Licensee and KFI shall not claim to
have a partnership or strategic alliance or other relationship with SHS and
shall not publicize the fact that SHS is using the Licensed Material.
f) SHS agrees that the provisions of this Acknowledgment and Agreement shall
be specifically enforceable by Licensee, and that Licensee shall be
entitled to obtain equitable relief to prevent violation by SHS of any
provision of this Acknowledgment and Agreement.
SORKIN HUMAN SYSTEMS,
a California joint venture
By: Self Discovery Dynamics, LLC, By: Sorkin & Associates, Inc.
a California limited liability company a California corporation
By: __________________________ By: ___________________
Its: __________________________ Its:___________________
By: __________________________
Its: __________________________
Exhibit C
---------
CURRENT TRANSLATIONS
--------------------
Exhibit D
---------
TRADEMARK REGISTRATIONS
-----------------------
None
Exhibit E
---------
COPYRIGHT REGISTRATIONS
-----------------------
None
Exhibit F
---------