<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1998
REGISTRATION NO. 333-47565
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
PRE-EFFECTIVE
AMENDMENT NO.1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________________
CALIBER LEARNING NETWORK, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 8200 52-2001020
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
1000 Lancaster Street
Baltimore, Maryland 21202
(410) 843-8000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Chris L. Nguyen
President and Chief Executive Officer
Caliber Learning Network, Inc.
1000 Lancaster Street
Baltimore, Maryland 21202
410-843-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
__________________________
Copies of all communications,
Including all communications sent to the agent for service, should be sent to:
Richard C. Tilghman, Jr. Walter G. Lohr, Jr.
Piper & Marbury L.L.P. Hogan & Hartson, L.L.P.
36 South Charles Street 111 South Calvert Street
Baltimore, Maryland 21201 Baltimore, Maryland 21202
410-539-2530 410-659-2700
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]_____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission, NASD and Nasdaq.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Filing Fee.............................. $ 17,700
NASD Filing Fee............................................................ 6,500
Nasdaq Listing Fee......................................................... *
Printing Fees and Expenses................................................. *
Legal Fees and Expenses.................................................... *
Accounting Fees and Expenses............................................... *
Miscellaneous.............................................................. *
--------------
TOTAL.................................................. $ *
==============
</TABLE>
___________
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Charter provides that, to the fullest extent that limitations
on the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Company shall have any liability
to the Company or its stockholders for monetary damages. The Maryland General
Corporation Law provides that a corporation's charter may include a provision
which restricts or limits the liability of its directors or officers to the
corporation or its stockholders for money damages except: (1) to the extent that
it is provided that the person actually received an improper benefit or profit
in money, property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the extent that a
judgment or other final adjudication adverse to the person is entered in a
proceeding based on a finding in the proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. The Company's
Charter and By-Laws provide that the Company [shall] indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
permitted by the Maryland General Corporation Law and that the Company shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.
The Charter and By-Laws provides that the Company will indemnify its
directors and officers and may indemnify employees or agents of the Company to
the fullest extent permitted by law against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Company. In addition, the Company's Charter provides that its
directors and officers will not be liable to stockholders for money damages,
except in limited instances. However, nothing in the Charter or By-Laws of the
Company protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director has been
successful in defense of any proceeding, the Maryland General Corporation Law
provides that he shall be indemnified against reasonable expenses incurred in
connection therewith.
S-1
<PAGE>
The form of underwriting agreement, filed as Exhibit 1.1 hereto, contains
provisions by which the Underwriters agree to indemnify the Registrant and each
officer, director and controlling person of the Registrant against certain
liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During 1997 and 1998, the Company granted options to purchase a total of
868,800 shares of Common Stock in three tranches. The first tranche consisted
of 793,800 options issued at an exercise price of $1.25. The second tranche
consisted of 78,000 options issued at an exercise price of $2.00. The third
tranche consisted of 60,300 options issued at an exercise price of $3.00. The
Company believes that these stock option grants were exempt from registration
under the Securities Act by virtue of the exemption provided by Section 4(2)
thereof for transactions not involving a public offering, since these options
were granted to a limited number of executive officers of the Company who, in
each case, has access to financial and other relevant data concerning the
Company, its financial condition, business and assets. In addition, the Company
believes that these stock option grants were exempt from registration under the
Securities Act be virtue of the exemption provided by Rule 701 under said Act.
On November 11, 1996, the Company issued (i) 1.99 million shares of 8%
Series A Convertible Preferred Stock and a warrant exercisable for the number of
shares of Class A Common Stock that will equal 7% of the total number of shares
to be outstanding after exercise for $10.0 million in cash and the MCI Lease and
Guarantee Commitment; (ii) Sylvan Learning Systems, Inc. 1.0 million shares of
Series B Junior Preferred Stock for $1.3 million in cash; (iii) Douglas L.
Becker 1.4 million shares of Class A Common Stock for $350,000 in cash; (iv) R.
Christopher Hoehn-Saric 1.4 million shares of Class A Common Stock for $350,000
in cash; and (v) John P. Hill 4.21 million shares of Class B Common Stock for $1
million in cash. During 1996 and 1997, the Company issued shares of Class A
Common Stock to certain officers of the Company in consideration for cash and
past services rendered. Each of these issuances was exempt from registration
pursuant to Section 4(2) of the Securities Act. Each of these issuances was
exempt from registration pursuant to Section 4(2) of the Securities Act.
On April 30, 1997, the Company issued Chris L. Nguyen 40,050 shares of
Class A Common Stock for $50,062.50 in cash.
On April 30, 1997, the Company issued B. Lee McGee 80,100 shares of Class A
Common Stock for $100,125 in cash.
On April 30, 1997, the Company issued David Dobkin 40,050 shares of Class A
Common Stock in connection with services rendered and 20,025 shares of Class A
Common Stock for $25,031.25 in cash.
On July 24, 1997, the Company issued Bryan Polivka 40,050 shares of Class A
Common Stock in connection with services rendered.
On April 30, 1997, the Company issued J.M. Schapiro 40,050 shares of Class
A Common Stock for $50,062.50 in cash.
On June 19, 1997, the Company issued Brady Locher 40,050 shares of Class A
Common Stock in connection with services rendered and 20,050 shares of Class A
Common Stock for $25,062.50.
ITEM 16. EXHIBITS.
(a) Exhibit No. Description
----------- -----------
1.01** Form of Underwriting Agreement
3.01** Articles of Amendment and Restatement of the Charter
3.02** Amended and Restated Bylaws
4.01** Specimen Common Stock Certificate
5.01** Opinion of Piper & Marbury L.L.P.
S-2
<PAGE>
10.01(a)* 1997 Stock Option Plan
10.01(b)** 1998 Stock Option Plan
10.02* Registration Rights Agreement, dated as of November 22, 1996,
among Caliber Learning Network, Inc., Sylvan Learning Systems,
Inc., MCI Telecommunications Corporation, Douglas L. Becker and
R. Christopher Hoehn-Saric
10.03* Warrant issued to MCI Communications Corporation, dated
as of November 22, 1996 and, as amended.
10.04+ Agreement between Caliber Learning Network, Inc. and The
Johns Hopkins University, dated as of January 29, 1998
10.05+* Agreement between Caliber Learning Network, Inc. and MCI
Systemhouse Corp. dated March 2, 1998
10.06+ Agreement between Caliber Learning Network, Inc. and
Macmillan Computer Publishing USA, dated February 2, 1998
10.07+* Agreement between Caliber Learning Network, Inc. and
Compaq Computer Corporation, dated December 22, 1997
10.08** Letter Agreement and Line of Credit Promissory Note, dated as of
December 1, 1996, between Caliber Learning Network, Inc. and
Sylvan Learning Systems, Inc.
10.09+ Agreement between Caliber Learning Network, Inc. and MCI
Systemhouse Corp., dated July 1, 1997
10.10* Management Agreement between Caliber Learning Network, Inc. and
Sylvan Learning Systems, Inc., dated as of January
1, 1998
10.11+ Testing Center Management and CBT Services Agreement, as amended,
dated May 1, 1997
23.01* Consent of Ernst & Young LLP
23.02 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.01)
24.01 Power of Attorney of Directors and Executive Officers
(included on signature pages hereto)
______________
* Previously filed.
** To be filed by amendment.
+ Filed under confidential treatment request.
S-3
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in this Registration Statement
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling persons of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
S-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in Baltimore, Maryland on
this 10th day of March, 1998.
CALIBER LEARNING NETWORK, INC.
By *
-----------------------------
Chris L. Nguyen, President and Chief
Executive Officer
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Chris L. Nguyen and Matthew C. Brenneman (with
full power to each of them to act alone) as his or her true and lawful attorney-
in-fact and agent, with full power of substitution, for him and in his name,
place and stead in any and all capacities to sign any or all amendments or post-
effective amendments to this Registration Statement, including amendments made
pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file
the same with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, to sign any and all applications,
registration statements, notices or other document necessary or advisable to
comply with the applicable state securities laws, and to file the same, together
with all other documents in connection therewith, with the appropriate state
securities authorities, granting unto said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, thereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or Amendment has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*
- -------------------------- Chairman of the Board of Directors March 10, 1998
R. Christopher Hoehn-Saric
*
- -------------------------- Vice Chairman of the Board of Directors March 10, 1998
Douglas L. Becker
*
- -------------------------- President and Chief Executive Officer March 10, 1998
Chris L. Nguyen (Principal Executive Officer)
* Treasurer
- -------------------------- (Principal Financial and Accounting March 10, 1998
B. Lee McGee Officer)
*
- -------------------------- Director March 10, 1998
Susan Mayer
*
- -------------------------- Director March 10, 1998
John P. Hill
*
- -------------------------- Director March 10, 1998
Janeen M. Armstrong
</TABLE>
* Signed by Attorney-in-Fact
/s/ Mathew C. Brenneman
- ---------------------------
Mathew C. Brenneman
S-5
<PAGE>
EXHIBIT INDEX
(a)
<TABLE>
<CAPTION>
Sequentially
Exhibit No Description Numbered Page
- --------------- ------------------------------------------------------------- --------------------
<S> <C> <C>
1.01** Form of Underwriting Agreement
3.01** Articles of Amendment and Restatement of the Charter
3.02** Amended and Restated Bylaws
4.01** Specimen Common Stock Certificate
5.01** Opinion of Piper & Marbury L.L.P.
10.01(a)* 1997 Stock Option Plan
10.01(b)** 1998 Stock Option Plan
10.02* Registration Rights Agreement dated as of November 22,
1996 among Caliber Learning Network, Inc., Sylvan
Learning Systems, Inc., MCI Communications Corporation,
Douglas L. Becker and R. Christopher Hoehn-Saric
10.03* Warrant issued to MCI Communications Corporation, dated
as of November 22, 1996
10.04+ Agreement between Caliber Learning Network, Inc. and The
Johns Hopkins University, dated as of January 29, 1998
10.05+* Agreement between Caliber Learning Network and MCI
Systemhouse Corp. dated March 2, 1998
10.06+ Agreement between Caliber Learning Network, Inc. and
Macmillan Computer Publishing USA, dated February 2, 1998
10.07+* Agreement between Caliber Learning Network, Inc. and
Compaq Computer Corporation, dated December 22, 1997
10.08** Letter Agreement and Line of Credit Promissory Note
dated as of December 1, 1996 between Caliber Learning
Network, Inc. and Sylvan Learning Systems, Inc.
10.09+ Agreement between Caliber Learning Network, Inc. and MCI
Systemhouse Corp., dated July 1, 1997
10.10* Management Agreement between Caliber Learning Network,
Inc. and Sylvan Learning Systems, Inc. dated January 1,
1998
10.11+ Testing Center Management and CBT Services Agreement, as
amended, dated May 1, 1997
23.01* Consent of Ernst & Young LLP
23.02 Consent of Piper & Marbury L.L.P. (included in Exhibit
5.01)
24.01 Power of Attorney of Directors and Executive Officers
(included on signature pages hereto)
</TABLE>
___________________
* Previously filed.
** To be filed by amendment.
+ Filed under confidential treatment request.
<PAGE>
EXHIBIT 10.04
CALIBER LEARNING NETWORK, INC.
PROGRAM DEVELOPMENT AGREEMENT
THIS PROGRAM DEVELOPMENT AGREEMENT ("Agreement") is dated as of this
29th day of January, 1998 (the "Effective Date") and is by and between CALIBER
LEARNING NETWORK, INC. ("Caliber"), a Maryland corporation, with its principal
place of business at 1000 Lancaster Street, Baltimore, Maryland 21202, and THE
JOHNS HOPKINS UNIVERSITY ("JHU"), with its principal place of business at 3400
North Charles Street, Shaffer Hall, Baltimore, Maryland 21218.
RECITALS
1. Caliber is in the process of establishing a nationwide network of
facilities and a distance learning infrastructure that enable it to provide
educational, training and other distance learning services.
2. JHU has developed and will continue to develop educational courses
that it wishes to offer to an increased number of participants at various
geographical locations.
3. Caliber and JHU desire to jointly develop distance learning programs
that Caliber can deliver to JHU students through its distance learning
infrastructure.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1. "HBOM Program" means the Hopkins Business of Medicine/SM/ program,
which comprises the following Courses: Managed-Care: Perspectives and Practices;
Accounting for Decision-Making in Medicine; Managerial Finance for Medical
Services; Leadership and Organizational Behavior in Medical Settings, and any
other Course that may later be identified in the "Course Plan" that are jointly
developed by JHU and Caliber for use within the Caliber Learning Network. This
includes any derivative works such as video tape versions, CD-ROM versions,
Internet versions, etc.
2. "JHU Course Content" means any lecture, Course or series of Courses
* .
3. "Course" means any course offered in the HBOM Program, which will
consist of 10 (ten) classes.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-1-
<PAGE>
4. "Caliber Programming" means any programming or technical information
that Caliber contributes to the HBOM Program or any Course used in the HBOM
Program.
5. "Course Plan" means an addendum that shall be added to this
Agreement for each Course in the HBOM Program to be delivered under this
Agreement that sets forth the specifics of that Course which will include,
without limitation, a description of the Course, the instructor(s) for the
Course, the frequency, dates and times at which the Course will be offered, the
Caliber sites and other locations that will offer the Course, tuition for the
course, Caliber's marketing plan for each Course in every market, and the method
of registration, enrollment, and financial projections and Direct Expenses. Each
Course offered in the HBOM Program and corresponding Course Plan shall be
labeled with course and section numbers created by JHU and approved by Caliber.
6. "Course Offering" means each new offering of a specific Course. For
example, a Course may be offered in September, January, and the following
September, with each start referred to as a Course Offering.
7. For the purposes of this Contract, JHU will mean The Johns Hopkins
University School of Medicine and The School of Continuing Studies.
TERMS AND CONDITIONS
In consideration of the mutual covenants and conditions set forth this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Caliber and JHU agree as follows:
1. TERM.
----
This Agreement commences with the Effective Date and shall expire upon
the completion of the HBOM Program delivered unless earlier terminated by either
party pursuant to Section 9.0 hereunder. The HBOM Program shall have a term of
five (5) years, unless terminated earlier by either party pursuant to Section
9.0.
2. DEVELOPMENT OF JHU COURSE CONTENT.
---------------------------------
JHU will develop JHU Course Content to be used in each Course in the
HBOM Program that will be delivered through the Caliber Learning Centers. JHU
will have sole responsibility for the JHU Course Content, including, without
limitation, curriculum and instructional Course development, applicable
diagnostic or evaluation procedures, instructor selection and training, and
development of related text materials including applicable copyright consents,
admission/enrollment decisions, grading, payment and collections process,
financial aid, transcripts and management of student files. * .
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-2-
<PAGE>
3. DEVELOPMENT AND DELIVERY OF HBOM PROGRAM.
----------------------------------------
3.1 Format. Caliber will be responsible for formatting and
------
adapting each JHU Course Content used in the HBOM Program so that it is suitable
for distance learning delivery as a Course in the HBOM Program. JHU shall
cooperate with Caliber and provide such assistance as Caliber may reasonably
require for this purpose. Caliber will supply to JHU, for its approval, which
approval shall not be unreasonably withheld, a final version of each JHU course
Content used in the HBOM Program that has been formatted. JHU will within 10
(ten) days give either written approval or disapproval of the formatting. If JHU
disapproves of the formatting as not being suitable for distance learning
delivery as a Course in the HBOM Program, Caliber will be entitled to a
reasonable opportunity to address JHU's concerns.
3.2 Course Delivery. Courses in the HBOM Program will be
offered and delivered at those Caliber Learning Centers and other locations as
set forth in the Course Plan and agreed to by JHU. The method or system by which
each Course in the HBOM Program is to be delivered will be mutually established
by Caliber and JHU, and based on the ongoing reviews of the HBOM Program.
3.2.1 Caliber will provide the software and computer
programs, including, without limitation, class interaction support
software, necessary to deliver each Course in the HBOM Program.
3.2.2 Caliber will provide the hardware components
necessary to deliver each Course of the HBOM Program and create a two-way
audio and video environment, including, without limitation, satellite dish and
integrated receiver decoder to receive the video and audio signals at each
Caliber Learning Center, and workstations, cameras, video monitors and related
components necessary to return audio and video signals from each Caliber
Learning Center.
3.2.3 Caliber will provide maintenance and related
support services necessary to maintain the software and computer programs and
the hardware components required for delivery of each Course in the HBOM
Program.
3.2.4 Through each Course in the HBOM Program,
Caliber will have a Caliber employee available at those locations participating
in that HBOM Program to provide technical and administrative assistance to
participating students.
3.2.5 The four courses in the first offering of the
"Hopkins Business of Medicine" program are scheduled to begin in April,
September, and November of 1998 and January 1999. A second offering of the
program will begin in September 1998 and conclude within twelve months. From
September 1998 on, each of the four courses in the "Hopkins
-3-
<PAGE>
Business of Medicine" program will be offered twice during a twelve month
period, for a total of eight courses each twelve months.
3.3 Marketing. Caliber, with the approval of JHU, which
---------
approval shall not be unreasonably withheld, will use its best efforts to
promote each Course in the HBOM Program through advertising and public relations
activities designated to reach as wide a market as possible, and for this
purpose, Caliber may schedule "open house" meetings with groups of potential
HBOM Program attendees and develop brochures and other marketing materials. JHU
agrees to assist Caliber in such efforts by publicizing Courses in the HBOM
Program in JHU catalogues, magazines, newsletters, brochures, and another
publications distributed by JHU to students, alumni and others, and providing
such additional assistance as Caliber may reasonably request. Caliber will
include as part of its Course Plan a mutually approved and detailed marketing
plan setting forth how each Course in the HBOM Program will be advertised and
marketed in each market where a class is offered.
3.4 Evaluation. JHU and Caliber will develop a process to
----------
define, implement and evaluate each Course in the HBOM Program under this
Agreement, that will also include the development of continuous and ongoing
mechanisms for monitoring and ensuring quality control.
3.5 Implementation and Evaluation Audits. JHU shall have the
------------------------------------
right to observe the delivery of any Course in the HBOM Program at all Caliber
sites and other locations offering such HBOM Program.
3.6 Enrollment Fees and Revenue Collections. * .
---------------------------------------
3.7 Sponsorship revenues must be reviewed and approved by JHU.
3.8 * .
3.9 Caliber agrees to use its best efforts to assist JHU in
any way necessary to comply with any state requirements for obtaining or
maintaining authorization or approval to offer the HBOM program in that state.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-4-
<PAGE>
4. OWNERSHIP AND USE.
-----------------
4.1 Ownership. * .
---------
4.2 Exclusive Use. Other than as necessary to perform its
-------------
obligations under this Agreement, neither party during the term of this
Agreement shall license, use or permit any use of any Course of the HBOM Program
or portion thereof, including, without limitation, any derivative works, or
Internet product, by any person or entity, without the express prior written
consent and approval of the other party. * .
4.3 Applications and Filings. JHU and Caliber shall cooperate
------------------------
in good faith with one another to make all necessary applications and filings,
including patent and copyright registration and other legal protections, both
U.S. and foreign, to protect the interests of the parties, or either of them, in
the HBOM Program.
4.4 Confidentiality.
---------------
4.4.1 Caliber and JHU shall take reasonable and necessary
precautions to prevent the unauthorized copying, removal, alteration,
disclosure, use, loss of or improper access to the HBOM Program and JHU Course
Content.
4.4.2 JHU acknowledges that, during the term of this
Agreement and in the course of performing its obligations hereunder, it may be
the recipient of or become exposed to proprietary and confidential information
of ("Caliber Confidential Information") including, but
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-5-
<PAGE>
not limited to, customers or active prospects, strategic plans and materials,
marketing strategies, business data, financial information, distance learning
systems, and software. JHU acknowledges and agrees that such Caliber
Confidential Information shall remain the exclusive property of Caliber, and
that JHU shall not disclose, use, copy, or make available such Caliber
Confidential Information to anyone, except as may be required in the Course of
performing its obligations hereunder. JHU agrees to only make such Caliber
Confidential Information available to employees on a need-to-know basis.
4.4.3 Caliber acknowledges that, during the term of
this Agreement and in the Course of performing its obligations hereunder,
it may be the recipient of or become exposed to proprietary and confidential
information of ("JHU Confidential Information") including, but not limited to,
customers or active prospects, strategic plans and materials, marketing
strategies, business data, financial information, and software. Caliber
acknowledges and agrees that such JHU Confidential Information shall remain the
exclusive property of JHU, and that Caliber shall not disclose, use, copy, or
make available such Confidential Information to anyone, except as may be
required n the Course of performing its obligations hereunder. Caliber agrees to
only make such JHU Confidential Information available to employees on a
need-to-know basis.
4.4.4 It is agreed that information received by one
party from the other party as a result of this Agreement shall not be
considered confidential, and neither party shall be limited in disclosing or
using the same if and to the extent that:
(i) the information was already known to
the receiving party at the time of its receipt fro the other party, or
(ii) the information is, or becomes through
no fault of the receiving party, in the public domain.
4.4.5 Caliber and JHU agree that money damages would
not be a sufficient remedy for any breach of this Section 4.0 and that, in
addition to all other remedies, both parties shall be entitled to specific
performance and injunctive and equitable relief as a remedy for any such breach.
Caliber and JHU agree to be responsible for any breach of this Section 4 by any
of its employees, officers, directors or agents.
4.5 Protections.
-----------
4.5.1 JHU agrees that all of the covenants in this
Section 4 are reasonable in light of the substantial investment to be made by
Caliber in the development and promotion of the HBOM Program during the term of
this Agreement, and that Caliber's exclusive right to offer the HBOM Program in
Caliber locations is a substantial and essential benefit of this Agreement,
specifically bargained for. Further, JHU acknowledges that during the term of
this Agreement any loss of such exclusivity suffered with the assistance or aid
of JHU would constitute a material breach hereof and cause immeasurable damage
to Caliber. Accordingly,
-6-
<PAGE>
JHU agrees that if it violates any of the covenants of this Section 4, Caliber
may immediately seek injunctive relief to enjoin the violation and restore
Caliber's exclusive status.
4.5.2 Caliber agrees that all of the covenants in this
Section 4 are reasonable in light of the substantial investment to be made by
JHU in the development and promotion of JHU Course Content during the term of
this Agreement, and that JHU's development of JHU Course Content is a
substantial and essential benefit of this Agreement, specifically bargained for,
and any use thereof in violation of the terms of this Agreement would constitute
a material breach hereof and cause immeasurable damage to JHU. Accordingly,
Caliber agrees that if it violates any of the covenants of this Section 4, JHU
may immediately seek injunctive relief to enjoin the violation and restore JHU's
rights hereunder.
5. COMPENSATION.
------------
5.1 Allocation. For and in consideration of the mutual
----------
promises and covenants made herein by the parties, the parties agree that all
tuition, sponsorship revenues, collateral material sales proceeds, and any other
revenue derived from whatever source in connection with the HBOM Program,
including any derivative works, (collectively, "Revenues") shall be * :
5.1.1 Initial Managed-Care Course. All Revenues derived
---------------------------
from or in connection with the initial Managed-Care Course offering (4/8/98)
will be * .
5.1.2 Subsequent Revenues. All Revenues derived from or
-------------------
in connection with the HBOM Program after completion of the initial Managed-Care
Course will be * .
5.2 Direct Expenses. The parties agree that, with respect to
---------------
any Course offered in the HBOM Program, each party's expense items, up to but
not to exceed any maximum amounts, as specified in each Course Plan for that
Course, will constitute * .
5.3 Carryover Expenses. *
------------------
- --------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-7-
<PAGE>
5.4 Revenue Distribution. Once all tuition funds for a
--------------------
specific Course Offering have been deposited, Caliber and JHU shall * . Funds
shall be distributed within thirty (30) days of the conclusion of the refund
period for each Course Offering, so that each party receives * .
5.5 Reconciliation. A final reconciliation of all actual
--------------
revenues and Direct Expenses shall occur within ninety (90) days after the
conclusion of a Course Offering.
5.6 Audit. Each party shall have the right to audit, review
-----
and copy at its sole expense, the financial accounts and records maintained by
the other party related to performance and other activities under this
Agreement.
6. JHU AND CALIBER MARKS.
---------------------
6.1 JHU Marks. Caliber acknowledges that JHU possesses various
---------
registered and unregistered trademarks and service marks ("JHU Marks") and JHU
hereby grants to Caliber the non-exclusive, limited right and license to use
those JHU Marks and logos as are set forth in Exhibit I hereto, as such Exhibit
may from time to time be amended by the parties hereto, for an during the term
of this Agreement solely in connection with the offer, promotion, marketing,
implementation and delivery of the HBOM Program. Caliber expressly acknowledges
JHU's rights in and to the JHU Marks and agrees not to represent in any manner
that Caliber has acquired any ownership rights in the JHU Marks. The HBOM
Program and all courses in the HBOM Program shall be offered under JHU's
trademarks.
6.2 Caliber Marks. "Caliber," "Caliber Learning Network,"
-------------
Caliber Learning Center and the Caliber logo ("Caliber Marks") are the
trademarks and/or service marks, as the case may be, of Caliber and Caliber
hereby grants to JHU the non-exclusive, limited right and license to use the
Caliber Marks during the term of this Agreement solely in connection with
promotion and solicitation for the HBOM Program. JHU expressly acknowledges
Caliber's rights in and to the Caliber Marks and agrees not to represent in any
manner that JHU has acquired any ownership rights in the Caliber Marks.
6.3 Misuse of Marks. Each party understands and agrees that
---------------
any use of the other party's marks, other than as expressly authorized by this
Agreement, without the other party's prior written consent, is an infringement
of such other party's rights in and to its marks and that the right granted
herein to use the other party's marks does not extend beyond the termination or
expiration of this Agreement. Each party expressly covenants that, during the
term of this Agreement and thereafter, such party shall not, directly or
indirectly, commit any act
- -------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-8-
<PAGE>
of infringement or contest or aid others in contesting the validity of such
other party's right to use its marks to take any other action in derogation
thereof.
6.4 Monitoring. Each party acknowledges an obligation to
----------
monitor its own use of the other party's marks and agrees to do so. Each party
shall notify the other of any claim demand, cause of action that the other party
may have based upon or arising from any unauthorized attempt by any person or
entity to use such other party's marks, any colorable proprietary interest and
shall assist such other party, upon it request and at such other party's
expense, in taking action including legal action, if any, as such other party
may deem appropriate to halt such activities, but shall take no action nor incur
any expenses on such other party's behalf without such other party's approval.
6.5 Requirements. Each party further agrees and covenants to
------------
use the other party's marks solely in the manner prescribed by such other party,
to observe all laws with respect to the registration of trade name and assumed
or fictitious names, to include in any application therefor a statement that
such party's use of the other party's marks is limited by the terms of this
Agreement, and to provide such other party with a copy of any such application
and other registrations and copyright notices as the other party may, from time
to time, require, including, without limitation, affixing "/SM/," "/TM/" or (R)
adjacent to such other party's marks.
6.6 Guidelines. Each party shall from time to time provide
----------
written guidelines to the other party regarding the proper depiction of the
party's marks. Press released, catalog copy, coy and graphics for print and
electronic promotion and advertising, information booklets, and promotional
literature that a party proposes to use in conjunction with a Course in the HBOM
Program shall be submitted to the other party for review, editing and comment,
at least ten (10) days prior to intended use or reproduction (whichever is to
occur first). If not responded to within (10) days of presentation, the material
shall be deemed approved. Component or advertisements previously approved may be
used subsequently without further need for submission and approval. Each party
shall designate for the other party's contact a person on their respective
staffs who shall have responsibility for the review and response procedures
describe in this paragraph.
7. COOPERATION.
-----------
Upon execution of this Agreement, JHU and Caliber shall identify a
sufficient number of qualified persons from their respective organizations who
will be responsible for the coordination, design, development and implementation
of each Course in the HBOM Program under this Agreement.
8. PARTICIPANT NAMES.
-----------------
During the term of this Agreement, Caliber will have access to the
names of all HBOM Program participants, and with the prior approval of JHU, not
to be unreasonably denied, Caliber during the term of this Agreement and
thereafter may use those names in mailings and other
-9-
<PAGE>
marketing related activities provided such mailings and activities are
noncompetititve with JHU. This access to names is for Caliber's use only. Such
names will not be sold, leased, or otherwise transferred to third parties. JHU
and Caliber endorse federal privacy standards required by FERPA and all use of
HBOM Program participant information will be consistent with those requirements.
9. DEFAULT AND TERMINATION.
-----------------------
9.1 Prior to the Initial Managed-Care Course. Prior to the
----------------------------------------
commencement of the delivery of the Initial Managed-Care Course (4/8/98), either
party may terminate this Agreement for whatever reason, in its sole discretion.
Upon such termination, the terminating party shall:
9.1.1 * .
9.1.2 * .
9.2 After the Initial Managed-Care Course/Notice of Default
-------------------------------------------------------
and Termination. After commencement of delivery of the Initial Managed-Care
- ---------------
Course, this Agreement may be terminated by either party if the other party is
in breach of any material provision of this Agreement, but only after written
Notice of Default and opportunity to cure has been given to the breaching party.
With respect to a monetary default, the notice of default must provide for an
opportunity to cure of at least twenty (20) days following receipt of the
notice. With respect to a non-monetary default, the notice of default must
provide for an opportunity to cure of at least thirty (30) days following
receipt of the notice. If the party receiving the notice has not cured the
breach before the cure date started in the notice, the party giving notice may
terminate this Agreement by giving the breaching party a written Notice of
Termination, stating the date on which the termination is to be effective. With
respect to breaches stated herein or otherwise determined to be incurable, a
period of cure does not have to be provided.
Notwithstanding the delivery of a Notice of Default or Notice of
Termination by either party to the other, all obligations to perform services
shall continue in effect and be duly observed and complied with by both parties
until the effective date of any termination.
9.3 Material Breaches That May be Cured. The following types
-----------------------------------
of activity are acknowledged by the parties to jeopardize the offering of the
HBOM Program under this
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-10-
<PAGE>
Agreement, and shall, unless cured as provided herein, be cause for termination
by the non-breaching party:
9.3.1 The failure of either party to adhere to any material
provision of this Agreement.
9.3.2 * .
9.3.3 To fail to provide necessary materials and updated content
for any Course in the HBOM Program.
9.4 Material Breaches That Cannot Be Cured. The following types of
activity are acknowledged by the parties to be incurable, material breaches and
are cause of immediate termination by the non-breaching party effective upon
delivery of written Notice of Termination:
9.4.1 Any willful breach by either party of such party's
confidentiality obligations under this Agreement.
9.4.2 Any act of theft or embezzlement by either party.
9.4.3 Any breach by either party of such party's exclusivity
obligations under Section 4.2 of this Agreement.
9.4.4 The withdrawal of * of the
total number of students over the course of a HBOM Program.
9.5 Individual Course Termination.
9.5.1 Each course in the HBOM Program may be terminated upon
mutual agreement of the parties.
9.5.2 Upon termination of this Agreement, every Course in the
HBOM Program currently being operated or offered pursuant to this Agreement and
a Course Plan shall be terminated. However, upon such termination, each party
agrees that it will fulfill its obligations under this Agreement and all Course
Plans for the Courses then being offered, and shall complete each such Course
Offering.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-11-
<PAGE>
9.5.3 * .
9.6 Ownership After Termination. Upon expiration or termination of
this Agreement, * . The parties may mutually agree to renew this Agreement
upon its expiration.
10. NOTICES.
Any notice of other communications required or which may be given by
either party to the other party under this Agreement shall be in writing and may
be sent by facsimile. However, the original shall be sent either by overnight
courier, with a verified receipt, or by certified mail, return receipt
requested, postage prepaid and addressed to and at the address stated below or
to such other address as the parties shall subsequently designate to each other
by notice given in accordance with this Section. Such notice shall be deemed to
be sufficiently given when the original is received by the receiving party.
FOR JHU:
The Johns Hopkins University
Attn: Estelle Fishbein, Vice President and General Counsel
Garland Hall, 3400 North Charles Street
Baltimore, Maryland 21218
(Fax No. 410-516-5448)
WITH A COPY TO:
Elizabeth Mayotte
Assistant Dean
School of Continuing Studies
203A Shaffer, 3400 North Charles Street
Baltimore, Maryland 21218
(Fax No. 410-516-7704)
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-12-
<PAGE>
FOR CALIBER:
Caliber Learning Network, Inc.
Attn: Chris Nguyen
1000 Lancaster Street
Baltimore, Maryland 21202
(e-mail: [email protected])
with a copy to O. Steven Jones, General Counsel
Fax: 410-843-8059
11. INDEPENDENT CONTRACTORS.
Under this Agreement, each party agrees that it will perform as an
independent contractor and not as an agent or employee of the other party.
12. APPLICABLE LAW.
This Agreement shall be deemed to have been made in the State of
Maryland and shall be construed and enforced in accordance with, and the
validity and performance hereof shall be governed by, the laws of the State of
Maryland, without regard to conflict of laws principles. Judicial proceedings
regarding any matter arising under the terms of this Agreement shall be brought
solely in the federal or local courts of the State of Maryland.
13. FORCE MAJEURE.
Neither party shall be liable for delay or failure in performance of
any of its obligations under this Agreement when such delay or failure arises
from events or circumstances beyond the reasonable control of such party
(including, without limitation, acts of God, fire, flood, war, explosion,
sabotage, terrorism, embargo, civil commotion, acts or omissions of any
government entity, supplier delays, communications or power failure, equipment
or software malfunction, or labor disputes).
14. WAIVER.
No failure on the party of either party to exercise, no delay in
exercising, and no course of dealing with respect to any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
15. ASSIGNMENT.
Neither party may assign this Agreement, or any part thereof, without
the prior written approval of the other party, which approval shall not be
unreasonably withheld.
-13-
<PAGE>
16. SURVIVAL BEYOND TERMINATION.
It is mutually greed that any and all obligations arising under
Section 4.1 Ownership, 4.4 Confidentiality, and 4.5 Protections shall survive
any termination expiration of this Agreement.
17. INDEMNIFICATION.
* .
18. GENERAL.
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and may only be changed or modified in
writing signed by both parties. If any provision of this Agreement is held
invalid, the validity of the remainder of this Agreement shall not be affected.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
"CALIBER"
CALIBER LEARNING NETWORK, INC.
By:
---------------------------
Chris Nguyen
Title: Chief Operating Officer
"JHU"
THE JOHNS HOPKINS UNIVERSITY
By:
---------------------------
Steven Knapp
Title: Provost and Vice President for Academic
Affairs
By:
---------------------------
Edward D. Miller, Jr.
Title: Vice President for Medicine and Dean of the
Medical Faculty, School of Medicine
AND
By:
---------------------------
Stanley C. Gabor, J.D.
Title: Dean, School of Continuing Studies
-15-
<PAGE>
Exhibit 10.06
CALIBER LEARNING NETWORK, INC.
PROGRAM DEVELOPMENT AGREEMENT
THIS PROGRAM DEVELOPMENT AGREEMENT ("Agreement") is dated as of this
2nd day of February, 1998 (the "Effective Date") and is by and between CALIBER
LEARNING NETWORK, INC. ("Caliber"), a Maryland corporation, with its principal
place of business at 1000 Lancaster Street, Baltimore, Maryland 21202, and
MACMILLAN COMPUTER PUBLISHING USA ("MCP"), a division of Simon & Schuster, Inc.,
with its principal place of business at 210 West 103rd Street, Indianapolis, IN
46290.
RECITALS:
1. MCP is a publishing firm and provider of educational products to the
computer industry principally through its Que, SAMS, New Riders and Waite Group
Press imprints.
2. Caliber is developing a network of nationwide facilities and a
distance learning infrastructure that will enable it to provide educational,
training and other distance learning services.
3. Caliber and MCP desire to jointly develop and distribute training
courses for distribution in a distance learning format.
TERMS AND CONDITIONS
In consideration of the mutual covenants and conditions set forth in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Caliber and MCP agree as follows:
1. TERM AND RENEWAL.
----------------
1.1 This Agreement commences with the Effective Date and will
continue for three (3) years from the Effective Date (the "Expiration Date"),
unless terminated earlier as provided in Section 7 ("Termination").
2. PREFERRED PARTNER.
-----------------
2.1 In consideration of the minimum commitments set forth in
section 6.2 and so long as MCP complies in all material respects with all the
terms and conditions of this Agreement, Caliber will consider MCP a Preferred
Partner and shall not *
- ---------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-1-
<PAGE>
* . MCP's IT training business shall mean those IT training courses developed
by MCP for delivery in Caliber Learning Centers.
3. DEVELOPMENT, MARKETING, AND SELLING OF COURSES.
----------------------------------------------
3.1 Content: Subject to the terms and conditions of this
-------
Agreement, MCP will develop computer training Courses (hereinafter "Courses")
consisting of the following two components: (i) an instructor-led training (ILT)
module offering MCP content to be delivered via The Caliber Learning Network;
and (ii) and web-based module offering MCP content deemed necessary to support
the ILT module. Each ILT module will consist of two sessions, one session per
day, with each session ranging in length from two (2) hours up to seven (7). A
list of the Initial Courses is provided in Attachment A attached hereto and may
be modified (i.e. rescheduled, added, or deleted) by MCP within thirty (30) days
following "Effective Date." Thereafter the list of Courses may be modified at
least one hundred and twenty days (120) prior to the delivery of a Course. At
least one-hundred twenty (120) days prior to the delivery of each Course, MCP
will notify Caliber of (i) the type of Course to be offered, (ii) the length of
the Course and dates and times the Course will be offered, (iii) the locations
at which the Course will be offered, (iv) the enrollment and participation fees,
(v) the related Course materials to be developed, MCP will be responsible for
developing all content of such Course, selecting and training instructors, and
developing (and distributing to all Caliber sites) and all of the supporting
materials.
3.2 Program Management. For each Course, Caliber shall provide
------------------
Program Management, which shall consist of the following activities: (i) Develop
and/or define a marketing plan, including product positioning, suggested pricing
and market execution, including recommendations on which Caliber sites and the
number of sites to reserve for a particular Course; (ii) Coordinate and develop
all product marketing (print, web based, and other mediums) and coordinate and
develop all public relations activities necessary to enroll students and collect
revenues; (iii) Assist with instructional design between MCP content developers
and Caliber's Instructional Design team, including the development of a Course
Template for each Course, which will enable an Instructor to provide stand-up
Instruction; (iv) Provide sales training to all Channel Partners and designated
MCP sales persons, including certain training materials; and (v) Coordinate
student registration via Inbound toll-free numbers and web-based registration
site; (vi) Manage all sales training, sales strategies, and sales activities of
the Caliber channel sales force. Caliber agrees that through Program Management
all marketing and sales training will be conducted by Caliber staff, Caliber
agrees that the staff of five (5) will be dedicated full-time to the execution
of the marketing and sales programs for MCP Courses. Such activity will include,
but not be limited to, conducting market research and developing and executing
the direct mail campaigns necessary to drive Course registrations.
Caliber shall use its best efforts to provide additional services at
MCP's request, including but not limited to video roll-ins, enhanced video
production, additional power points, slides, animation, voice-overs, software
demos, creation of software labs, the loading of specialized
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-2-
<PAGE>
software on file servers, or creation, loading and maintenance of software which
is not a part of the Caliber platform. Such additional services that are not
included in Program Management shall be agreed upon by MCP and be performed on a
work-for-hire basis and shall be invoiced to MCP at a mutually agreed price.
Under Program Management, Caliber and MCP agree that MCP's primary
responsibility will be the selection and development of Courses offered through
the Caliber network.
3.3 Format. Caliber shall format each Course so that it is
------
suitable for distance learning delivery via the Caliber network. MCP agrees to
cooperate with Caliber and provide such assistance as Caliber may request for
this purpose, including but not limited to timely providing of instructors at
broadcast locations for training.
Caliber agrees that it is responsible for the direction of high quality
video and audio transmission of each Course and responsible for directing the
presentation of each Course instructor and the interaction of all participants
during each Course. Caliber agrees to make its best efforts to simulate the
interaction between instructor and participants possible in one-to-one
student-Instructor classes. Caliber also agrees to manage the transmission of
all internet/intranet content during the Course. * .
3.4 Instructor Training. MCP shall select instructors, provide
-------------------
training, and will to its best ability develop Courses in a consistent style and
approach. Caliber shall make available to each instructor a room at the
Baltimore Caliber Learning Center for one (1) day of training and will provide
assistance in such 1-day training. Such room rental will be invoiced to MCP at
Caliber's standard daily rate, and MCP shall also be solely responsible for any
charges incurred by its use of studio time. Should MCP have a need for
additional rehearsal time for instructor training, Caliber will use its best
efforts to provide such facilities, and shall invoice MCP for additional
facilities at a mutually agreed upon price.
3.5 Marketing. Within thirty (30) days of the Effective Date, the
---------
parties shall mutually agree on a six (6) month Marketing plan, that shall
include the Courses to be offered during the following six (6) month period and
the marketing activities necessary to support such Courses. The parties shall
conduct a post-course audit for each Course to determine whether the Course met
mutually established performance benchmarks.
MCP agrees to support the marketing of each Course each year of this
Agreement. Such support may include Direct Response Advertising, placement of
advertising in MCP books, and reprinting of book covers to include the Caliber
logo. All MCP marketing efforts are at the direction of MCP. Caliber agrees that
under Program Management it is responsible for the direction and development of
all marketing programs and MCP is responsible only for the
- -----------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-3-
<PAGE>
execution of marketing promotions related directly to MCP book and software
products and online services.
Caliber agrees to provide the marketing activities set forth in Section
3.2 above, and MCP agrees to cooperate as necessary to assist Caliber with such
activities, including, but not limited to providing speaker/instructor
biographies and Course outlines one hundred and twenty (120) days prior to each
Course's start date.
4. DELIVERY OF COURSES.
-------------------
4.1 Courses will be offered and delivered at those Caliber
Learning Centers and other Caliber-authorized locations as the parties may
mutually agree. The method or system by which Courses are to be delivered will
be established by Caliber and for that purpose:
A. Caliber will provide the software, including, without limitation,
class interaction support software, necessary to deliver each
Course.
B. Caliber will provide the hardware components necessary to deliver
each Course and create a two-way audio and video environment,
including, without limitation, a satellite dish and integrated
receiver decoder to receive the video and audio signals for each
Course broadcast, and workstations, cameras, video monitors and
related components necessary to support the terrestrial based
return audio and video signals for each Course.
C. Caliber will provide maintenance and related support services
necessary to maintain the software and hardware components
required for delivery of each Course.
D. For delivery of each Course, Caliber will arrange to have a
Caliber employee present at those locations offering that course.
Such employees will be trained facilitators who will assist with
Course delivery.
E. MCP shall provide one instructor per Course broadcast and when MCP
determines necessary provide sufficient subject matter experts who
shall be proficient in the relevant subject matter and who can
answer student questions via a help-desk format or e-mail format.
F. Caliber will collect an evaluation from each participant at the
end of each Course that (i) evaluates the MCP instruction and
Course quality and (ii) describes all Caliber deliverables.
Caliber will provide a summary and all original evaluations to
MCP. MCP reserves the right to make changes to a Course as it
deems necessary through information collected from Course
evaluations.
G. Caliber will provide its Broadcast Origination Equipment at one or
more Caliber-compliant production studios. If MCP elects to use
one of these studios,
-4-
<PAGE>
it shall only pay for the studio fees. If MCP elects to use a non
Caliber-compliant studio, then it agrees to pay all Caliber's set
up costs, daily studio fees, and the reasonable pre-approved
travel expenses of Caliber personnel upon submission of adequate
documentation evidencing the occurrence of such expenses.
H. MCP shall make available electronic course content through its
website, which shall be linked to the Caliber web site. All access
to Course content will require use of a password, provided by MCP
to Course attendees, provided to Course participants through
payment of the total Course fee which shall include payment for
the two-day Caliber sessions. Course book, and on-line access. The
development and maintenance of the MCP web site shall be MCP's
responsibility.
4.2 Enrollment. Caliber shall be responsible for implementing an
----------
inbound toll-free registration process for each Course, and shall provide a web-
based registration site by March 31, 1998. Caliber shall also be responsible for
collecting all applicable Course fees, and shall deposit all collected Course
fees * . Caliber agrees to provide MCP once a week a report
indicating the number of paid registrations per Caliber site where a Course is
scheduled to be offered. If and when a scheduled site becomes full, Caliber
agrees to notify MCP within forty-eight (48) hours. Caliber agrees to provide
monthly to MCP a database of all participant information, including but not
limited to names, addresses, phone, e-mail addresses, and positions. If MCP
requests or Caliber conducts as a part of its obligations for Program Management
market research to its list of participants, Caliber agrees to provide MCP with
all information obtained through such research. Such participant and market
research information shall be solely owned by MCP and shall be considered
"Confidential Information" as defined in this Agreement.
4.3 Additional Caliber Services. MCP may request certain other
---------------------------
services to be provided by Caliber, including catering, additional production,
enhanced production, and additional assistance. Upon MCP's written request,
Caliber shall provide an estimate of rates (based upon Caliber's standard rates)
for all such requested services.
5. OWNERSHIP AND USE.
-----------------
5.1 * .
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-5-
<PAGE>
5.2 Exclusive Use. * .
5.3 Applications and Filings. MCP and Caliber may at their own
------------------------
expense make all necessary applications and filings, including patent and
copyright registration and other legal protections, both U.S. and foreign, to
protect their respective interests in the Courses.
5.4 Confidentiality. (a) each party hereto (the "Disclosing
---------------
Party") will disclose to the other party ("Recipient") information in connection
with the performance of this Agreement. All information disclosed by the
Disclosing Party to the Recipient during the term of this Agreement, including
but not limited to technical and business information relating to Disclosing
Party's products, research and development, production, costs, engineering
processes, profit or margin information, finances, customers, marketing and
future business plans, shall be deemed "Confidential Information." All
Confidential Information shall remain the sole property of Disclosing Party and
Recipient shall have no rights to or in the Confidential Information. Recipient
agrees that it shall hold the Confidential Information in strict confidence.
Recipient further agrees that it shall not make any disclosure of the
Confidential Information (including methods or concepts utilized in the
Confidential Information) to anyone without the express written consent of
Disclosing Party, except to employees, consults or agents to whom disclosure is
necessary to the performance of this Agreement and who shall be bound by the
terms hereof, or to the extent it is required to disclose such information in
the context of any administrative or judicial proceeding; provided that prior
written notice of such required disclosure and an opportunity to oppose or limit
disclosure is given to Disclosing Party.
(b) Return of Information. After termination of this
---------------------
Agreement, upon written request, Recipient shall return within ten (10) business
days all originals and copies thereof of any requested Confidential Information
disclosed by Disclosing Party which has been fixed in any tangible means of
expression.
(c) Exceptions. Notwithstanding the other provisions
----------
of this Agreement, nothing received by Recipient shall be considered to
be Confidential Information of
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-6-
<PAGE>
the other, if: (i) it has been published or is otherwise readily available to
the public other than by a breach of this Agreement; (ii) it has been rightfully
received by Recipient from a third party without confidentiality limitations;
or(iii) it was known to Recipient prior to its first receipt by Recipient, as
shown by files existing at the time of initial disclosure.
(d) No Disclosure of Terms of this Agreement. Each party
----------------------------------------
agrees that, without the prior written consent of the other party, it will not
disclose to any third party the material terms of this Agreement, except as
required by law or regulatory body.
6. FEES/PAYMENT.
------------
6.1 Course Delivery Fee. * . For the purposes of this
Agreement, a "Network Rental Day" shall be defined as rental of up to thirty
(30) classrooms in a CLC for seven (7) network hours. Network hours shall be
defined as that time during which actual audio-video broadcast of Course content
takes place. If an unanticipated event occurs within thirty (30) days of
delivery of the Course for either party, either party reserves the right to
reschedule the "Network Rental Days" within sixty (60) days of the time the
course was originally offered for no extra charge. In the event that Course
demand exceeds thirty rooms per day or MCP desires to schedule additional
capacity, it is agreed that Caliber will use its best efforts to provide such
capacity at a rate of * per additional classroom. Course Delivery Fees
shall be payable sixty (60) days following the completion of a Course session .
6.2 Minimum Volume Commitment: MCP agrees to develop a minimum
-------------------------
of eight (8) Courses, during the first (1st) nine months of this Agreement. Such
eight (8) courses shall be offered by MCP in any combination MCP decides upon so
that MCP utilizes no less than forty (40) Network Rental Days during the first
(1st) nine (9) months of the Term. MCP understands and agrees that the minimum
volume commitment for the first (1st) nine (9) months of the Agreement is to
forty (40) Network Rental Days, but reserves the right to use the forty (40)
Network Rental Days for any proportion of the eight (8) Courses developed. MCP
shall give Caliber one-hundred twenty (120) days prior written notice regarding
which Courses will be offered, desired date, locations, and specific number of
classrooms. Caliber shall reserve such dates and locations, which will not be
subject to scheduling preemption, except as set forth herein. In the event
market demand warrants additional classrooms, Caliber will use best efforts to
make available at a pro-rated rate.
At the end of years one and two of this Agreement, the parties will
mutually agree to minimum volume commitments for years two and three,
respectively, if any, which in no event shall be less than the minimum volume
commitment applicable for the prior nine (9) months.
MCP reserves the right to sublicense its network time to its customers
or to any affiliates. In the event MCP exercises its option to sublicense
network time, Caliber reserves the right to adjust network pricing to its
standard commercial rate.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-7-
<PAGE>
If MCP does not materially achieve the revenue targets projected in
Attachment B, MCP reserves the right to terminate this Agreement, effective as
of the end of the first (1st) nine (9) months of the term of this Agreement,
with no further obligation to develop Course content for the Caliber Learning
Network and/or to fulfill the terms of this Agreement. In addition, after the
first (1st) nine (9) months of this Agreement, MCP also reserves the right to
terminate this Agreement with ninety (90) days notice to Caliber with no further
obligation to develop Course content for the Caliber Learning Network and/or to
fulfill the terms of this Agreement. If MCP does not materially achieve the
revenue targets projected in attachment B.
6.3 Program Management Fee. For each Course, MCP shall pre-pay
----------------------
Caliber a Program Management Fee of * per Course. Such fee will be
pro-rated throughout the calendar year and shall be payable monthly according to
the pro-rated amount.
6.4 Audit. Caliber and MCP shall each have reasonable rights
-----
during normal business hours and upon reasonable prior notice to inspect, copy
and audit the records of the other party concerning the Courses and other
activities under this Agreement. In the event that the reviewing party discovers
a discrepancy in excess of five percent (5%) between the revenues or Additional
Revenues actually paid to or collected by such party and the amount earned by
such party, the other party shall pay any such difference; provided, however,
that if such party disagrees with the reviewing party's determination, such
party shall be entitled to engage an Independent firm of certified public
accountants of national standing to perform an audit ("CPA Audit"). If the
results of the CPA Audit confirm the discrepancy in excess of five percent (5%),
payment to the aggrieved party shall be made as herein above set forth.
Otherwise, no payments shall be made and the parties shall jointly bear the cost
of the CPA Audit.
6.5 Net Revenue/Income Distribution. The parties mutually agree
-------------------------------
that Caliber shall receive * . Net Revenues shall be defined as gross revenues
less and except commissions paid to channel partners, other discounts and
promotions, and less the percent of gross revenues calculated according to the
schedule in Table 1.1.
Table 1.1
Percent of Total Paid Participants
Attending Courses Sessions Income Distribution
75% *
80% *
85% *
90% *
95% *
100% *
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-8-
<PAGE>
One hundred percent (100%) shall mean * paid participants and use of
thirty (30) Caliber classrooms for every Course session during years one and two
of this Agreement and shall mean * paid participants and use of forty (40)
classrooms for every Course session during year three of this Agreement. If
Course pricing is discounted below [$1000] per Course, MCP reserves the right to
adjust the Income Distribution paid to Caliber accordingly, proportional to any
retail adjustment.
* . Schedules for 1999 and 2000 fiscal month end dates will be
provided in January of each respective year. When Caliber submits revenue to
MCP, it shall provide a report indicating the exact calculation of net revenues
including only those deductions allowed herein.
6.6 Reselling MCP Books. Both parties agree that for each Course
-------------------
offered, all Course participants are required to purchase the relevant MCP
Course book. Caliber shall be responsible for collecting all payment for and
distributing all Course books to attendees of MCP-Caliber Courses and
responsible for returning to MCP or a distributor chosen by MCP any Course books
remaining after a Course because of cancellations or over shipment. Caliber
shall receive * for all books distributed to Course attendees. Such titles
shall be sold to Caliber at the "1998" Retailer Terms and Conditions," as such
may be revised from time to time, attached herein.
In addition to the distribution of Course books to all attendees of
MCP-Caliber Courses, Caliber agrees to purchase during the first nine (9) month
period and each twelve (12) month period thereafter of this Agreement no less
than * total Macmillan products per Caliber center for sale in all Caliber-
owned centers operating during each year of this Agreement. Such titles will be
sold to Caliber at the "1998" Retailer Terms and Conditions" attached herein
(Attachment D). Caliber agrees to promote the selling of such products in all
operating centers and to restock and stock new products throughout the term of
the Agreement.
6.7 Multimedia Product. It is agreed that during the contract the
------------------
parties may choose to jointly create multimedia products ("Multimedia Products")
that augment the Courses and are sold through existing MCP retail channels and
Caliber Learning Centers. The Multimedia Products may consist of a packaged
offering including one or more of the following items: MCP Course book, CD ROMs
and/or videotapes that supplement a Course, a registration tool allowing
purchasers access to MCP's Zone, and assessment tool or access to assessment
tools on-line. Caliber agrees to video tape each session of each MCP Course
offered, to develop and edit all recorded video as directed by MCP, and to
provide MCP with no less than six (6) hours of recorded video of each new Course
offered. MCP agrees to pay Caliber * .
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-9-
<PAGE>
* .
Table 1.2
* *
* *
* *
* *
* *
* *
* .
MCP shall determine the appropriate price for each Multimedia Product.
MCP and * .
6.8 Course Pricing. The parties agree that MCP shall determine
--------------
all Course pricing.
6.9 Channel Partner Commission. The parties agree that Caliber
--------------------------
shall use its best efforts to pay a maximum commission of * of the enrollment
fee to authorized channel partners, who shall be authorized to market to and
recruit potential Course enrollees. Caliber shall pay channel partners *
only when the channel partner is directly responsible for closing a paid
registration.
6.10 Payment Terms. MCP shall pay Caliber the Program Management
-------------
Fees sixty (60) days upon receipt of a Caliber invoice according to the pro-
rated schedule as agreed upon in Section 6.3 above, which invoice shall be sent
after Caliber receives the Course Notice described in Section 3.1 herein. Within
fifteen (15) business days of receiving the Course Notice, Caliber shall notify
MCP of any additional pre-approved fees related to the sales and marketing. MCP
reserves the right to approve such services and agrees to pay such additional
fees related to services sixty (60) days from invoicing. Caliber shall invoice
MCP for the Course Delivery Fees upon the conclusion of each Course delivery.
All above invoices shall be paid net sixty (60) days.
6.11 Annual Cost Adjustments. The parties mutually agree that
-----------------------
the costs and fees stated herein shall be annually adjusted to reflect annual
adjustments in the Consumer Price
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-10-
<PAGE>
Index (CPI). Such adjustments shall be effective sixty (60) days after the CPI
has been published.
7. TERMINATION.
-----------
7.1 Either party may terminate this Agreement in the event of a
material breach of the Agreement, upon sixty (60) days written notice to the
other party setting forth the details of such material breach, such notice to be
effective only if the party receiving the notice does not cure such breach
within such sixty (60) day notice period.
7.2 In the event either party to this Agreement shall become
insolvent, shall make an assignment for the benefit of creditors, shall have a
trustee on liquidation, appointed for it or a substantial part of its property,
shall file a voluntary petition in bankruptcy, shall be the subject of an
involuntary petition in bankruptcy, this Agreement shall automatically terminate
without notice.
7.3 * .
8. WARRANTIES AND REPRESENTATIONS/INDEMNIFICATION.
----------------------------------------------
8.1 Caliber warrants and represents that:
(a) Caliber possesses full power and authority to enter into
this Agreement and to fulfill its obligations hereunder and that it is
financially and technically competent to perform its obligations hereunder, and
agrees that any change in such status shall be immediately communicated in
writing to MCP; and that performance of the terms of this Agreement and of
Caliber's obligations hereunder shall not breach Caliber's charter or bylaw or
any separate agreement by which Caliber is bound;
(b) the work and services provided to MCP by Caliber will be
its original work (except for material in the public domain or as to which
permission has been obtained from the copyright owner); and
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-11-
<PAGE>
(c) the Caliber Learning Network, Program Management,
and the software provided by Caliber will not contain any libelous or otherwise
unlawful material or infringe any statutory or common law copyright, trademark
or registered U.S. patent or otherwise infringe any personal or proprietary
right of any person or entity.
8.2 MCP warrants and represents that:
(a) MCP possesses full power and authority to enter
into this Agreement and to fulfill its obligations hereunder and that it
is financially and technically competent to perform its obligations hereunder,
and agrees that any change in such status shall be immediately communicated in
writing to Caliber; and that performance of the terms of this Agreement and of
MCP's obligations hereunder shall not breach MCPs charter or bylaw or any
separate agreement by which MCP is bound;
(b) the work and services provided to Caliber by MCP
will be its original work (except for material in the public domain or
as to which permission has been obtained from the copyright owner); and
(c) the Courses, exclusive of any material provided
by Caliber, will not contain any libelous or otherwise unlawful material or
infringe any statutory or common law copyright, trademark or registered U.S.
patent or otherwise infringe any personal or proprietary right of any person or
entity.
8.3 Indemnification by Caliber. * .
--------------------------
8.4 Indemnification by MCP. * .
----------------------
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-12-
<PAGE>
8.5 * .
9. INDEPENDENT CONTRACTORS.
-----------------------
Each party is appointed by the other party only for the purposes and to
the extent set forth in this Agreement, and each party's relation to the other
shall, during the period covered by this Agreement, be that of an independent
contractor, and neither party has and shall not have any power, and neither
party shall represent that such party has any power, to bind the other party, to
assume or to create any obligation or responsibility, express or implied, on
behalf of the other party or in its name. Both parties shall perform all duties
hereunder in good faith, and shall avoid any conflicts of interest in the
performance of their respective obligations hereunder.
10. APPLICABLE LAW.
--------------
This Agreement shall be deemed to have been made in the State of New
York and shall be construed and enforced in accordance with, and the validity
and performance hereof shall be governed by, the laws of the State of New York,
without regard to conflict of laws principles.
11. FORCE MAJEURE.
-------------
Neither party shall be liable for delay or failure in performance of
any of its obligations under this Agreement when such delay or failure arises
from events or circumstances beyond the reasonable control of such party
(including, without limitation, acts of God, fire, flood, war, explosion,
sabotage, terrorism, embargo, civil commotion, acts or omissions of any
government entity, supplier delays, communications or power failure, equipment
or software malfunction, or labor disputes); provided, however, that MCP shall
use reasonable efforts to obtain substitute instructors in the event that the
intended instructor for any Course is, for whatever reason, unable to attend as
originally planned. In the event that a Course is canceled pursuant to the terms
of this Section 11.0, the parties will use their best efforts to reschedule the
Course. Enrollment brochures, forms and other registration materials will
contain a statement to the effect that the subject Course may be canceled or
re-scheduled due to circumstances beyond Caliber's and/or MCP's reasonable
control and, except for a full refund of all amounts paid, neither Caliber nor
MCP will have any liability to any participant. Course participants will be
instructed to contact Caliber at its Web address in order to learn of any Course
cancellations and/or reschedules.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-13-
<PAGE>
12. WAIVER.
------
No failure on the part of either party to exercise, no delay in
exercising, and no Course of dealing with respect to any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
13. ASSIGNMENT.
----------
Neither party may assign this Agreement, or any part thereof, without
the prior written approval of the other party, which approval shall not be
unreasonably withheld. Caliber may, without the necessity of obtaining MCP's
consent, assign its rights and obligations under this Agreement to a parent or
wholly-owned subsidiary, provided that MCP is given prompt written notice of
such assignment. Notwithstanding the foregoing, MCP may assign this Agreement to
any MCP affiliate or in connection with a sale or transfer of all or
substantially all of its business or assets.
14. GENERAL.
-------
This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof and may only be changed or modified in
writing signed by both parties. If any provision of this Agreement is held
invalid, the validity of the remainder of this Agreement shall not be affected.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"CALIBER" "MCP"
CALIBER LEARNING NETWORK, INC. MACMILLAN PUBLISHING USA
By: By:
-------------------------- -------------------------------
Title: Title:
------------------------- ------------------------------
-14-
<PAGE>
ATTACHMENT A
1998 MCP-Caliber Suggested Courses
1. Windows Platform Strategy: Planning, Implementation, Support and
Training Issues for Windows 98 and NT 5
2. Upgrading and Supporting PC Hardware
3. Upgrading and Supporting Networks
4. COBOL Programming for the 21st Century: Year 2000 Issues; legacy code
migration, maintenance and integration; client/server COBOL; COBOL
database programming; object-oriented COBOL
5. Building, Upgrading, and Supporting Heterogeneous Networks in the
Enterprise
6. Network and Internet/Intranet Security
7. Introduction to Cisco Routing
8. Windows NT 5: Introduction
Substitutes
- -----------
. Windows NT 5: Domain Naming Services*
. Windows NT 5: Upgrading from Windows NT 4*
. Windows NT 5: Active Directory*
. Cisco Routing and Switching
. Re-engineering Your Web Site: the latest in programming, navigational,
and database tools to give your web site the functionality, design, and
dependability required for your organization
*Pending the release of Windows NT 5, these courses may be scheduled and
delivered in 1998 in place of others or held until 1999.
-15-
<PAGE>
ATTACHMENT B
MCP-CALIBER COURSE
PROJECTED REVENUES *
- ---------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-16-
<PAGE>
ATTACHMENT C
1998 MONTH-END CLOSE DATES
Period Month Day # of Weeks
- ------------------ ------------------ -------------------- --------------------
1 JAN 24 4
2 FEB 21 4
3 MAR 28 5
4 APR 25 4
5 MAY 23 4
6 JUN 27 5
7 JUL 25 4
8 AUG 22 4
9 SEP 26 5
10 OCT 24 4
11 NOV 21 4
12 DEC 31 5+
-17-
<PAGE>
ATTACHMENT D
Macmillan Computer Publishing
Macmillan General Reference
1998 Retailer Terms and Conditions
Discount Schedule:
For Resale Only
*
Freight
Customers will have the option of choosing pre-paid freight on an annual basis,
which will reduce their discount by up to * . Retailers can prepay product
delivery, or returns delivery, or both, calculated at a rate of * for product
delivery in and * for delivery of returns to Macmillan Publishing USA (MP).
The prepaid freight option applies only to ground transportation. To be
eligible, customers must agree to use the MP minimum shipment weight.
Electronic Discounts
Electronic discounts will be separated by transaction type.
. Customers submitting purchase orders electronically (EDI transaction type 850
or PUBNET) will receive an additional * discount.
. Customers using electronic invoicing (EDI transaction type 810) will receive
an additional * discount.
Retail Distribution Center Discount
An additional * discount may be earned by meeting the following
qualifications:
. Retailer must maintain a distribution center with truck-height loading and a
receiving dock capable of receiving multiple cartons on a skid.
. Retailer must order in carton quantities, and/or allow orders to be rounded
to the carton quantity.
Sell Through Information Discount
An additional * discount may be earned by providing Macmillan Computer
Publishing (MCP)/Macmillan General Reference (MGR) sell through information
electronically. For the purpose of qualifying for this discount, acceptable
electronic formats will be defined as electronic spreadsheet or ASCII file
delivered on a 3 1/4" diskette, or EDI transaction type 852. This information
must be provided on a monthly basis by ISBN for all MCP and MGR titles, with
remaining in-field inventory levels.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-18-
<PAGE>
Direct Fulfillment Guidelines
These Terms and Conditions apply to customers who meet the MCP/MGR Direct
Fulfillment Guidelines. A copy of the Direct Fulfillment Guidelines are
available from your MCP or MGR sales representative.
Returns Policy
Address for Returns
4430 Airport Expressway
Suite B
Indianapolis, IN 46241
Products returned to a MP or Simon & Schuster/Prentice Hall facility other than
the above address risk being destroyed without credit to the retailer's account.
LTL and full truck shipments will be refused without dock appointment.
All products returned are at account's risk and expense, unless the customer has
chosen to trade * of discount for pre-paid return freight as defined above.
Product must be in resaleable condition, free of markings, labels, and security
tags.
Any and all product which is not published by MP and is shipped by the customer
to MP for any reason (including but limited to misdirected returns of other
publishers' product) is subject to destruction by MP without notice and without
any credit to the customer's account with MP. Notwithstanding the foregoing, MP
may contact the customer to arrange for the prompt shipment to the customer of
such non-MP product, in which case the customer shall bear and pay all risk of
loss or damage and all expenses relating to any such shipment (including but not
limited to the cost of freight and charges by MP for processing and handling
such shipments).
Credit for Returns
Credits will be issued for product only - no cash refunds.
The bookseller will be credited for returns using the average discount given for
MCP/MGR product purchases shipped during the previous year. This discount
information will be available to the retailer by January 15 of each year until
such time as the MCP/MGR Retailer Terms & Conditions state otherwise. The
retailer may contact MP's Customer Service Department at 800-858-7674 for
average discount information. MP will not give credit to dealers for MCP/MGR
books purchased through distributors.
Period of Eligibility for Returns
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-19-
<PAGE>
New titles, not before 120 days from publication date; backlist, not before 90
days from invoice date.
Strip Cover Returns
Strip covers are accepted for the following:
Arco All Product
Lasser All Product
Frommers Titles declared OP only
Both front and back covers of the product are required for customer credit.
Exception
If the customer receives damaged or defective goods from MP, the retailer should
contact MP Customer Service or the MCP or MGR Sales Representative.
Packaging and Shipping Guidelines
Additional information regarding the handling, packaging, and shipping
requirements for returning product to MP is published in a document titled
"Macmillan Computer Publishing, Macmillan General Reference Packaging and
Shipping Guidelines for Customer Returns." Please contact MP Customer Service or
a MCP or MGR Sales Representative if a copy of these guidelines is required.
Terms
Net 30 days, F.O.B. point of shipment. Payment terms based on a customer
receipt are standard terms reduced by 15 days.
-20-
<PAGE>
Macmillan Computer Publishing
Macmillan General Reference
Packaging and Shipping Guidelines For
Customer Returns
The following is a guide for preparing documents and products returned to
Macmillan Publishing USA (MP).
Shipping Method
LTL and full truck shipments require carriers to obtain dock appointments.
Shipments without appointments will be refused. Appointments are obtained by
calling (317) 705-6370 or (317) 705-6380. Small package returns do not require
appointments.
Address
Returns must be sent to the following address:
4430 Airport Expressway
Suite B
Indianapolis, IN 46241
Products returned to a MP or Simon & Schuster/Prentice Hall facility other than
the above address risk being destroyed without credit to the customer's account.
Required Documents
. Standard Bill of Lading which includes skid count, carton count, weight of
shipment, shipper name and address and customer reference number.
. Standard Packing Slip which includes carrier, customer name and address,
customer reference number, customer original PO#, MP invoice #, carton count
information, ISBN #, ISBN description, quantity per ISBN, retail price per
ISBN, customer cost per ISBN, extended dollar value of ISBN, total quantity
returning, and total dollars of return.
. Special Handling: Please make sure when returning bundled product you use the
bundle ISBN and the quantity of one unit per bundle.
Required Packaging
All material must be packaged on corrugated cartons. Carton size should be
fitted for product size. Packing material should be used to secure product from
movement within the carton.
All cartons should be labeled or identified with the customer name and
reference/credit number. If more than one carton, all cartons should be labeled
with corresponding 1 of X information.
Shipments requiring pallet loading should use a standard 40 X 48 pallet. All
pallet and gaylord shipments must be clearly marked with pallet/gaylord tags as
to reference/credit number. The reference/credit number is crucial for correct
posting to accounts.
-21-
<PAGE>
A carton, pallet or gaylord must not contain multiple reference/credit numbers.
Non-Conforming Product
MCP/MGR product not conforming to these return guidelines will be shipped back
to the customer at the customer's expense or destroyed at the customer's
request. Any and all product which is not published by MP and is shipped by the
customer to MP for any reason (including but not limited to misdirected returns
of other publishers' product) is shipped to destruction by MP without notice and
without any credit to the customer's account with MP. Notwithstanding the
foregoing, MP may contact the customer to arrange for the prompt shipment to the
customer of such non-MP product, in which case the customer shall bear and pay
all risk of loss or damage and all expenses relating to any such shipment
(including but not limited to the cost of freight and charges by MP for
processing and handling such shipments).
-22-
<PAGE>
Exhibit 10.09
networkMCI ENTERPRISE MANAGEMENT (nEM) AGREEMENT
THIS AGREEMENT (hereinafter "Agreement") is made and entered into this
1st day of July, 1997 (the "Effective Date") by and between CALIBER LEARNING
NETWORK, INC. having its principal place of business at 1000 Lancaster St,
Baltimore, Maryland 21202 (hereinafter "Customer") and MCI SYSTEMHOUSE CORP.,
with offices located at 3 Ravinia Drive, Atlanta, Georgia 30346 (hereinafter
"MCIS").
WHEREAS, MCIS wishes to provide to the Customer and the Customer wishes
to obtain from MCIS the Services (as herein below defined), subject to and in
accordance with the provisions of this Agreement;
NOW THEREFORE in consideration of the foregoing and the covenants and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
ARTICLE 1 - DEFINITIONS
1.1 In this Agreement, the following terms shall have the following
respective meanings:
"Act of Insolvency" means that a Party:
(i) institutes proceedings for its winding up (except for
reorganization), liquidation, or dissolution or
consents to the filing of any petition with respect
thereto or files a petition seeking reorganization,
readjustment, arrangements, composition or similar
relief under any United States or other applicable
law or consents to the filing of any such petition or
to the appointment of a receiver, liquidator, trustee
or similar officer of itself or any part of its
property or makes an assignment for the benefit of
creditors or is unable, or admits in writing its
inability, to pay its debts as they become due or
otherwise acknowledges its insolvency or is deemed
for the purposes of any applicable law to be
insolvent or voluntarily suspends transaction of its
usual business or any action is taken by such party
in furtherance of any of the aforesaid purposes, or
(ii) if a court having jurisdiction enters a decree or
order for its winding up, liquidation or dissolution
or adjudges it to be insolvent or enters a decree or
order which remains in force, undischarged or
unstayed, for a period of 15 days or more approving,
as properly filed, a petition seeking reorganization,
readjustment, arrangement, composition or similar
relief for any such party under any applicable law,
or the appointment of any receiver, liquidator,
trustee or similar officer of any such party or all
or any part of its property, or
(iii) if any application is made with respect to it under
applicable insolvency or replacement legislation or
if a proceeding is instituted for its winding up or a
petition in bankruptcy is presented against it under
a bankruptcy or similar act and such application,
proceeding or petition is not dismissed, stayed or
<PAGE>
withdrawn within 15 days after such party has notice
or knowledge of the institution thereof; or
(iv) if a party otherwise ceases doing business as a going
concern for 5 or more Business Days.
"Additional Services" means services to be provided by MCIS to Customer
which are not included in the Services.
"Affiliate" and "Subsidiary", when used with reference to MCIS or
Customer, respectively, a person or entity (i) that at such time owns
directly or indirectly, more than 50% of the capital stock (or other
ownership interest, if not a corporation) of such party ordinarily
having voting rights, or (ii) more than 50% of whose capital stock (or
other ownership interest, if not a corporation) ordinarily having
voting rights at such time is owned, directly or indirectly, by such
party, or (iii) more than 50% of whose capital stock (or other
ownership interest, if not a corporation) ordinarily having voting
rights at such time is owned, directly or indirectly, by another person
or entity that at such time owns, directly or indirectly, more than 50%
of the capital stock (or other ownership interest, if not a
corporation) of such party ordinarily having voting rights, or (iv) is
otherwise, directly or indirectly, under common ownership, management
or control with either party.
"Agreement" means this agreement, any Schedule annexed thereto and all
Modifications.
"Business Day" means any day other than a Saturday, Sunday, statutory
holiday or other holiday observed by MCIS in the United States.
"Change Order Request" and "Change Order Proposal" mean the respective
documents used by a party to request a change to the Services. The
general forms are attached as Exhibits 1 and 2 of Schedule G.
"Commencement Date" means for each Customer Location, the date upon
which MCIS commences providing the Services.
"Confidential Information" means all data, information and materials
relating to the business and management of each party respectively,
which is disclosed to the other party pursuant to this Agreement and/or
in respect of the Services including all input data, output data,
programs and documentation information relating thereto; any
information concerning systems; any business, financial marketing and
technological information of either party; proprietary and trade
secrets; technical drawings, designs and concepts; technology and
accounting, financial and personnel records of such party; each party's
software programs, routines, formulae and concepts and documentation
information relating thereto; production plans, designs, layouts and
schedules; marketing analyses, plans, customer data and surveys; and,
in the case of Customer, all Customer Data; however Confidential
Information shall not include any data or information which:
(i) is available to the public or becomes generally
available to the public through no fault of the
receiving party;
MCIS Confidential
2
<PAGE>
(ii) subsequently becomes available to the public through
no fault of the receiving party and through means
other than by disclosure by the receiving party;
(iii) is received by the receiving party from a third party
who was lawfully in possession of such information
free of any obligation of confidence;
(iv) was already in the possession of the receiving party
before it was disclosed to that party by the other
party and the receiving party has documentary
evidence of that possession;
(v) is disclosed by the receiving party with the prior
written consent of the disclosing party; or
(vi) must be disclosed as required by law, provided,
however, that the receiving party shall first have
given prompt notice to the disclosing party in order
to permit the disclosing party a reasonable
opportunity to interpose an objection or obtain a
protective order to protect the confidentiality of
such information.
"Contract Month" means any calendar month of a Contract Year.
"Contract Year" means the 12-month period beginning on July 1 and
ending on June 30 of each calendar year during the Term, and any
subsequent 12-month periods thereafter for so long as this Agreement is
in effect.
"Customer Data" means (a) all information in the form provided to MCIS
by Customer and (b) all information generated and/or stored by the
Services excluding the associated database rules, classification
systems, organization systems or other MCIS proprietary methodology and
all other proprietary data of MCIS or third parties.
"Customer Locations" means the Customer locations in which WAN/LAN
Environment computer hardware, other equipment and associated software
are located, whether owned or operated by Customer, Customer's agents
or franchisees or clients of Customer, and includes the initial
Customer Locations identified in Schedule "B".
"Customer Software" means those software programs including all related
documentation and media, which are owned or licensed by or are
proprietary to Customer, including third party software, which are
required to perform the Services.
"Disclosing Party" means the Party furnishing Confidential Information
and "Receiving Party" means the Party receiving Confidential
Information;
"End Users" means the Customer's users of the Services who are located
at the Customer Locations identified in Schedule "B".
"End-User Device" means the Customer workstations or LAN-attached
printers used by the End User.
MCIS Confidential
3
<PAGE>
"Equipment" means the terminal hardware and firmware and all other
equipment acquired in respect thereto by Customer and listed at
Schedule C hereof including, without limitation, routers, switches,
servers, desktops and LAN printers.
"Managed Network Element" means the Equipment necessary for MCIS to
provide the Services to the End-User Devices, including routers,
switches, hubs, and servers.
"Network" means the MCI bandwidth services acquired from MCI by the
Customer which are connected to the Managed Network Elements.
"LAN" means Local Area Network.
"Master Lease Agreement" means the agreement governing SHL Financial
Services lease to Customer of machines, furniture, equipment, services
and features as described therein. To the extent that there is a
conflict between the terms of this Agreement and the Master Lease
Agreement, the terms of the Master Lease Agreement shall take
precedence over those of the Agreement.
"Materials" means the part of any tangible media upon or within which
any part of the Confidential Information is recorded or reproduced in
any form and shall exclude any storage device which forms a part of
computer hardware.
"Modification" means (a) a written amendment to the Agreement signed by
all parties, or (b) a Change Order Request or Change Order Proposal
signed by all parties.
"Parties" means the parties to this Agreement and "Party" means either
one of them.
"Person" means an individual, partnership, corporation (including
business trust), joint stock company, trust, unincorporated
association, joint venture or other entity or a government or any
agency, department or instrumentality thereof or vice versa, howsoever
designated or constituted.
"Required Consents" means, collectively, all consents required to be
obtained for MCIS third party access to or use of applicable software.
"Schedule(s)" means attachments to this Agreement, as the parties may
agree to amend same from time to time. The terms and conditions of any
Schedule are in addition to the terms and conditions set forth in this
Agreement, except where such terms and conditions of any Schedule
conflict or are inconsistent with the terms and conditions of the main
body of this Agreement, in which case the terms and conditions of the
main body shall prevail.
"Services" means those services to be provided to Customer by MCIS, its
agents or representatives under this Agreement and as set out herein
and in Schedule "A" attached hereto.
"Service Level" means the standard of the service delivery system which
must be attained or exceeded and is expressed in Schedule "F".
"Software" means computer programs, regardless of format or medium,
their documentation and specifications.
MCIS Confidential
4
<PAGE>
"Subcontractor" means any third party having an agreement with MCIS
for the execution or supply of all or any portion of the Services.
"Term" shall mean the Initial Term and any renewal period or subsequent
Contract Year.
"Work Product" means all original written material made, prepared,
developed or produced by either party in the performance of its
obligations pursuant to this Agreement including source code and object
code ("Code") but excluding ideas, concepts, know-how or techniques.
1.2 Schedules. The following Schedules are annexed hereto and form part
hereof:
Schedule "A" - Description of Services
Schedule "B" - Customer Locations
Schedule "C" - Equipment to be purchased by Customer - per
site Schedule "D" - Minimum Configurations Schedule "E" -
Pricing Schedule "F" - Service Levels Schedule "G" - Change
Order Procedures
1.3 Headings. The division of this Agreement into Sections and the
insertion of recitals and headings are for convenience of reference only and
shall not affect the construction or interpretation hereof.
1.4 Singular, Plural, Gender. Wherever in this Agreement the context so
requires, the singular number shall include the plural number and vice versa and
any gender herein used shall be deemed to include the feminine, masculine or
neuter gender.
1.5 Agreement. The terms "hereof," "hereto," "herein," "hereunder" and
similar expressions refer to this Agreement and not to any particular Section or
other portion hereof and include any agreement supplemental hereto.
1.6 Entire Agreement. The Parties agree that this Agreement constitutes
the complete and exclusive statement of the terms and conditions between them
covering the performance thereof and cannot be altered, amended or modified
except in writing executed by both parties hereto. Any representation, warranty
or condition, written or otherwise, not expressly contained in this Agreement or
in an authorized written amendment thereto shall not be enforceable by either
Party. Each of the Parties acknowledge that it has not been induced to enter
into this Agreement by any representation not specifically stated herein.
1.7 Severability. If any of the provisions contained in this Agreement is
found by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, the validity, legality or unenforceability of the
remaining provisions contained herein shall not be in any way affected or
impaired thereby.
1.8 Governing Law. This Agreement and its application and interpretation
will be governed exclusively by the laws prevailing in the State of New York,
and the federal laws of the United States of America applicable therein
(excluding any conflict of laws rule or principle that might refer such
construction to the laws of another jurisdiction).
MCIS Confidential
5
<PAGE>
1.9 Date for Action. In the event that any date on which any action is
required to be taken hereunder by any of the parties on a Business Day is not a
Business Day, such action shall be required to be taken on the next succeeding
day which is a Business Day unless otherwise provided in this Agreement. For
greater certainty, this Section 1.9 shall not apply to Service Levels set forth
in Schedule "F".
ARTICLE 2 - TERM AND RENEWAL
2.1 This Agreement shall commence as of 12:01 a.m. on the Effective Date
and shall continue for a period of four (4) years ending on June 30, 2001 unless
sooner terminated pursuant to the terms herein ("Initial Term").
2.2 Where, at least six (6) months prior to the expiry of the Initial Term
or any subsequent 12-month period thereafter (each a "Contract Year"), the
parties have failed to reach agreement in writing upon the terms and conditions
for renewal of this Agreement, the party which intends to terminate this
Agreement shall give written notice to the other party of its intention to
terminate this Agreement. Notice must be received between 6 months and 30 days
before expiry. Where no notice hereunder is received by either party within
thirty (30) days prior to the expiry of the Initial Term or any subsequent
Contract Year, this Agreement shall be automatically extended upon the same
terms and conditions set forth herein on a month-to-month basis and continue
until either party terminates in writing on 60 days notice to the other.
ARTICLE 3 - SERVICES
3.1 General. MCIS shall provide Customer with the Services described in
Schedule "A." The Services shall be performed at the Customer Locations.
3.2 Upon written authorization from the Customer on at least 30 days' prior
notice and in accordance with a mutually agreed roll-out schedule, MCIS shall
begin the implementation of the Services at the specified Location as set forth
in Schedule "B." MCIS and the Customer shall mutually agree on the date upon
which implementation shall begin for any site not included in the roll-out
schedule
3.3 For installation and service implementations that must be performed on
less than 30 days notice to MCIS in writing, Customer shall have the right to
retain third parties or perform the work itself for implementation delivery,
only whenever MCIS has declined in writing or has not responded in a reasonable
manner to provide such services for the applicable charges set forth in this
Agreement, and MCIS shall not be responsible for any loss or claim resulting
directly or indirectly from the acts or omissions of such third party.
ARTICLE 4 - PRICING
4.1 Service Charges. For the Services to be provided by MCIS to Customer
under this Agreement MCIS shall charge and Customer shall pay the rates and
charges set forth on Schedule "E" (the "Service Charges"). If the Services or
Customer Locations change during the Term of this Agreement, the Service Charges
to be paid by Customer to MCIS shall be adjusted upon the mutual agreement of
MCIS
MCIS Confidential
6
<PAGE>
and Customer. Service Charges shall not include charges for any Additional
Service. Any estimates made by MCIS for the cost of any Equipment or Additional
Services specified in the Schedules shall be estimates only, unless otherwise
stated in writing by MCIS to Customer.
4.2 Taxes. The prices stated herein are exclusive of Federal, State or
local taxes or any and all duties and taxes, however designated, levied or based
on this Agreement or services delivered hereunder, including any personal
property, retail sales, goods and services, use or value-added taxes and whether
such taxes are now in force or subsequently levied ("Taxes"). * .
ARTICLE 5 - PAYMENT
5.1 Payment. The Customer shall pay the Service Charges and any other
charges payable hereunder within 30 days of the date of invoice at the place and
in the manner specified by MCIS in the applicable invoice, or otherwise as MCIS
shall direct. Invoicing, payment, late payment or overdue interest charge terms
and conditions which may be contained in any collateral finance document,
including the Master Lease Agreement between Customer and SHL Financial Services
Ltd. dated April 14, 1997, ("Master Lease Agreement") shall govern to the extent
of any inconsistency with this Article 5. Leasing payments are subject to the
terms and conditions of the Master Lease Agreement.
5.2 Invoicing. MCIS will invoice the Customer on a monthly basis for the
Service Charges and any other applicable charges or fees. Each invoice will
state separately applicable Taxes owed by the Customer, if any, detailed by tax
jurisdiction, as well as segregate services delivered across all Customer
Locations, and per Customer Location services. For lease invoicing, SHL
Financial Services shall invoice Customer as set forth in the Master Lease
Agreement. MCIS shall reasonably provide explanation and detailed backup for
Invoice line items.
5.3 Late Payment Charge. Without prejudice to any other rights, remedies
or recourses available to MCIS under this Agreement, at law or in equity, should
Customer fail to pay any amount required to be paid by Customer to MCIS
hereunder, Customer shall pay to MCIS * . Late payments set off
conditions and security interest are subject to the terms and conditions of the
Master Lease Agreement.
5.4 No Set-Off or Withholding. Subject to Section 6.2, the right of MCIS
to any payment provided for under this Agreement shall not be subject to any
abatement, reduction, set-off, defense, counterclaim or recoupment of any amount
due or alleged to be due by reason of any past, present or future claims of the
Customer against MCIS save and except that Customer may, upon notice to MCIS,
withhold * for any bona fide disputed amount provided that withholding of such
amounts shall be subject to the dispute resolution provisions in Article 13.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
7
<PAGE>
ARTICLE 6 - MCIS RESPONSIBILITIES
6.1 Client Services Representative (CSR). Upon execution of this
Agreement, MCIS shall designate a person to whom all communications from the
Customer shall be addressed and who has the authority to act for MCIS in
connection with all operational aspects of this Agreement only ("CSR"). MCIS may
replace the MCIS CSR at any time during the Term upon reasonable prior written
notice to the Customer. MCIS will replace the MCIS CSR upon reasonable notice
from Customer.
6.2 Services and Service Levels. MCIS shall provide the Services as set
out in Schedule "A" hereto. MCIS shall meet or exceed each of the applicable
Service Levels as identified in Schedule F, however Service Levels are not
guarantees of performance, * .
6.3 Project Management. Upon execution of this Agreement, MCIS shall
designate a implementation Project Manager who has the responsibility of
networkMCI Enterprise Management implementation of Customer Locations. Once
implementations are complete, MCIS shall designate a CSR as defined in Section
6.1 who will act as the Customers single point of contact for on-going service
delivery.
6.4 Subcontractors. MCIS hereby reserves and the Customer acknowledges
MCIS' right to obtain, contract for or otherwise acquire the services of
Subcontractors or agents in order to perform its obligations hereunder, provided
that MCIS' use or reliance upon any such Subcontractor shall not relieve MCIS of
its obligations under this Agreement. Customer acknowledges MCI Telecommuni-
cations Corporation and its Affiliates as approved subcontractors. To the extent
that such third parties provide warranties to MCIS and to the extent that they
permit the transfer of such warranties to the Customer, MCIS will pass such
warranties through to the Customer.
ARTICLE 7 - CUSTOMER RESPONSIBILITIES
7.1 Upon execution of this Agreement, Customer shall designate a person at
each Customer Location to accept the delivery of the Services for that Customer
Location (the "Site Manager"). All communications from MCIS concerning the
Services to be provided to that Customer Location shall be addressed to the Site
Manager as necessary and the Site Manager shall have the authority to act on
behalf of the Customer in all matters relating to the Services provided to the
Site Manager's Customer Location . Customer will provide MCIS with prompt notice
of any change of Site Manager. Customer will also designate a central project
manager authorized by Customer to act in its behalf on all matters relating to
this Agreement, including, without limitation, Customer responsibilities related
to performance by MCIS of the Services, Service Level matters and co-ordination
with MCIS personnel ("Project Manager").
7.2 The Site Manager or immediate supervisor shall be the point of contact,
without limitation, for the following at his Customer Location:
(a) Escalation and after business hours contact
(b) Authorization of all security and service requests
(c) Application support
(d) Change notification
(e) Miscellaneous faults.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
8
<PAGE>
7.3 Customer's Site Manager will provide the site information containing
the supported site, associated users, phone number, and location.
7.4 Customer will agree with and adhere to MCIS standards for the Services
outlined in Schedule D. The standards address hardware and software
configurations, End-User profiles and other elements of the environment.
7.5 Customer will be responsible for selecting, obtaining or developing all
applications and shall be responsible for maintaining applications software the
Customer has developed that execute on the LAN Environment. MCIS will maintain
the systems software that executes on the LAN infrastructure.
7.6 Customer will make available to MCIS, for the sole purpose of providing
the Services, the Customer's Software used by the Customer in Customer Locations
and the Customer shall obtain, with the non-financial assistance of MCIS, where
practicable, all Required Consents. If any Required Consent is withheld, the
Parties will cooperate with each other in achieving reasonable alternative
arrangements to providing MCIS access to the Customer Software as needed by MCIS
in order to perform the Services for the Customer.
7.7 The Customer shall provide:
(a) controlled-access equipment room which conforms to the
requirements identified by MCIS per Schedule D;
(b) physical access to Customer premises 24 hours per day, 7 days per
week;
(c) sufficient heating, ventilation and air conditioning to maintain
temperature in equipment room to manufacturer recommended
specifications.;
(d) one direct dial analog phone line;
(e) appropriate electrical power;
(f) appropriate working space for onsite and dispatched MCIS staff;
and
(g) during implementation, (1) physical access to Customer premises
24 hours per day, 7 days per week; (2) supervisory access on
servers; access to all desktops (i.e. no power-on passwords); (3)
access to site personnel as needed; (4) access to infrastructure
topology diagrams; (5) when performing inventory, users must make
available all devices currently not on premises; (6) an existing
inventory list for reconciliation (if available); (7) current
organizational charts; (8) written concurrence from the Site
Manager, upon Customer request, that there will be no Change
Order during implementation; and (9) appropriate working space.
7.8 Customer shall permit MCIS to install (and update as needed) Software
or software agents enabling MCIS to provide the Services under this Agreement.
As a precondition to the provision of Services by MCIS, Customer shall upgrade
and maintain its equipment required for and subject to the Services to the
minimum standards as set forth on Schedule "D" (the "Minimum Configurations").
MCIS Confidential
9
<PAGE>
7.9 Customer agrees to accurately complete a monthly electronic update for
their inventory profile. MCIS will provide the capability to enable Customer to
update their user profiles on a monthly basis. MCIS shall not be liable for any
reliance by any other Person on the accuracy of such updates.
7.10 Each party shall notify the other in the event of virus detection or
infections. MCIS shall use commercially available software at the server level
to monitor and remove virus infections; however MCIS shall not be liable for the
effect of any virus introduced by Customer or any third party on the Services.
MCIS shall use reasonable efforts to remove any virus which is introduced in the
Managed Network Elements (7.19). Customer will designate administrative
person(s) to support tape mounting and off site storage and retrieval.
7.11 Customer, when contacting the Help Desk, will provide the following
information:
(a) End-User name and telephone number
(b) Location
(c) MCIS equipment identifier/tag number
(d) Nature of problem or request.
7.12 Standard of Care. The parties shall perform their responsibilities
hereunder in a professional, competent and workmanlike manner. The Customer or
its agents, employees or representatives shall not commit any act or cause any
act to be committed or provide any services which will conflict with or effect
in any way the provision of Services by MCIS or its Subcontractors or Affiliates
hereunder. In the event that the Customer or its agents or employees violates
this Section (7.12) the Customer shall be liable for all additional costs,
liabilities and expenses incurred by MCIS in ensuring that Service Levels
continue to be met. The Customer will permit or will arrange unrestricted access
for MCIS to the site premises for the purpose of performing its obligations
hereunder, subject only to the Customer's normal security procedures and
requirements.
7.13 Access. Customer shall provide MCIS and its Subcontractors, at no
charge, sufficient working and storage space, when needed at Customer Locations
to provide the Services at the Service Levels, the use of any necessary
equipment or facilities, including without limitation, reasonable sized work
areas, phones, fax machines, supplies as well as such access to Customer's
personnel, files and equipment at the Customer's facilities as MCIS reasonably
deems necessary for its employees and Subcontractors in connection with
providing the Services. Work space shall be of the quality and kind furnished by
Customer to its own employees.
7.14 Decisions Requests. MCIS may make written requests for approvals,
decisions or other actions by Customer relating to the Services ("Decision
Request"). Each Decision Request shall set forth the additional cost to the
Customer and effect upon the delivery of Services, if any, of the proposed
Decision Request, shall require a response from the Customer during a reasonable
and specified period of time not to exceed ten (10) Business Days. In the event
no written response is received from the Customer by the specified deadline,
MCIS shall be entitled to act as if Customer had responded by approving the
action contemplated by the Decision Request and such approval shall be deemed
given, unless a decision request will or is likely to include additional direct
cost to Customer, in which case, written Customer consent shall be required, and
not deemed given, and Customer shall respond to such request for consent in a
timely manner. Where Customer withholds its consent, MCIS shall not be liable
for any loss, claim or effect in performance arising directly or indirectly from
Customer's failure to approve a Decision Request.
MCIS Confidential
10
<PAGE>
7.15 Change Control Procedures.
(a) Change Control Procedures will govern all requests for changes
to the Services, provision of Additional Services or any material Equipment
change or change to a delivery schedule in connection therewith. All requests by
Customer or MCIS for any non-administrative change or addition to the Services,
Service Levels or any other item provided for in this Agreement, are subject to
the procedures concerning Change Orders, Change Order Requests and Change Order
Proposals and this Section 7.15 hereof ("Change Control Procedures" Schedule G).
Customer may at any time during the Term request that the Services or Service
Levels be revised to accommodate Customer's business requirements. MCIS may at
any time propose changes through a Change Order, as provided in Section 7.15(b).
(b) To respond to a change requested by Customer, or to offer any
change, MCIS will prepare at its expense (and within ten (10) days of any
Customer request, where commercially reasonable) a "Change Control Document"
(Change Order Request or Change Order Proposal, as appropriate) describing the
change, the price of the change, any effect the change may have on such Service
Levels or on any implementation or other schedules between MCIS and Customer and
any other particulars.
(c) The Change Control Document from MCIS shall constitute an
offer by MCIS to Customer to deliver the requested services with the associated
changes to price, payment terms, delivery schedules and related areas as set
forth in the Change Control Document. Such offer shall be irrevocable for the
period stated therein or if none is stated, for a period of thirty (30) days.
(d) Customer may choose whether to accept the offer in MCIS'
Change Control Document. Customer and MCIS shall promptly discuss in good faith
such Change Control Document. If Customer accepts such offer by signing the
Change Control Document, such agreement shall constitute a "Change Order" and
the Schedules affected by the change shall be formally amended to incorporate
such Change Order.
(e) Customer shall in all cases request a Change Control Document
from MCIS before seeking a proposal for such change from another supplier. If
MCIS and Customer are unable to agree on a change, Customer may obtain such
change from another supplier (after giving MCI a first refusal opportunity to
match the terms offered by the other supplier(s) where reasonably possible). In
no event shall MCIS be deemed responsible for work or services performed by any
other supplier, excluding any of MCIS subcontractors, or for the effect such
work or services may have on applicable Service Levels.
7.16 Costs of Delay. In the event that Customer fails to fulfill any of
its responsibilities under this Agreement and the Schedules in a proper and
timely manner and such failure causes a delay in the provision of the Equipment
or other Services or results in additional costs to MCIS, MCIS shall take such
action as it deems reasonably prudent and shall provide Customer with a written
specification of such delay and the resultant costs. * .
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
11
<PAGE>
7.17 Substitute Providers.
--------------------
(a) If twenty-four (24) hours after commencement of a force majeure event,
which event causes a problem with any Services provided to Customer, MCIS does
not cure such problem or provide the notifier with a good-faith proposal to
effect such repair in a timely manner that is reasonably acceptable to Customer,
then Customer may, using reasonable efforts to coordinate with MCIS, (i) repair
such Equipment itself at its own expense, or (ii) engage the services of another
vendor or independent contractor at its own expense to repair or service such
Equipment or provide a substitute for such Service. MCIS shall at all times have
the option to replace any substitute vendor's equipment in such a manner as to
meet the applicable Service Level. In no event shall MCIS be deemed responsible
for work or services performed by any other vendor or independent contractor or
for the effect such work or services may have on applicable Service Levels.
(b) In the event Customer requires an installation to be performed which is
not set forth in Schedule "B" and MCIS determines that it cannot fulfill the
requested installation time frame, Customer may engage a third party, provided
that Customer shall be required by MCIS to have such installation re-certified.
7.18 Correction of Inaccurate Data. Customer agrees that MCIS shall not be
-----------------------------
responsible for the accuracy of any Customer Data input to the system or the
effect such inaccurate Customer Data may have on performance of the Services.
7.19 Managed Network Elements. During the Term, the Customer will arrange
------------------------
with MCIS for the supply, installation and maintenance (including any associated
software upgrades) of the Managed Network Elements and all associated Software
through MCIS or its designated subcontractors or Affiliates exclusively or as
otherwise specified in this contract. This requirement includes those items
listed at Schedule C. The Customer will ensure at all times that the Managed
Network Elements and any other equipment in respect of its Network shall be
stored, maintained and operated by the Customer in an environment which conforms
to the manufacturer's specifications. The Customer will provide all necessary
infrastructure, including, without limitation, power outlets, grounding and
anti-static environments required for the safe and efficient operation and
maintenance of the Managed Network Elements in accordance with all
specifications or regulations as provided to Customer in advance. The Customer
will designate such number of its employees, as the parties shall agree are
necessary to supply first line support for the Managed Network Elements, other
equipment and Services, and such designees will each constitute contact points
for MCIS for the Services hereunder.
7.20 * .
ARTICLE 8 - INSPECTION AND TESTING
MCIS or MCIS's designated representatives shall be authorized to visit
any Customer site(s) to review MCIS work in progress with appropriate Customer
personnel as reasonably required. MCIS agrees to abide by all security
regulations in effect at such sites. Such security regulations must be provided
to MCIS in writing at the site.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
12
<PAGE>
ARTICLE 9 - INTELLECTUAL PROPERTY AND CONFIDENTIALITY
9.1 Subject to any right, title or interest expressly granted by this
Agreement, neither party shall acquire any right, title, or interest in or to
any intellectual property rights or Confidential Information (including without
limitation patents, copyright and trade secrets) of the other party.
9.2 Rights, Restrictions and Obligations of the Receiving Party
-----------------------------------------------------------
(a) Except as otherwise specifically stated in this Agreement, the
Receiving Party shall not during the Term and after expiration
or termination hereof:
(i) disclose, in whole or in part, any Confidential
Information received directly or indirectly from the
Disclosing Party; or
(ii) sell, rent, lease, transfer, encumber, pledge,
reproduce, publish, transmit, translate, modify, reverse
engineer, compile, disassemble or otherwise use the
Confidential Information in whole or in part.
(b) The Receiving Party acknowledges that:
(i) the Disclosing Party possesses and will continue to
possess Confidential Information that has been created,
discovered or developed by or on behalf of the Disclosing
Party or otherwise provided to the Disclosing Party by third
parties, which information has commercial value and is not in
the public domain;
(ii) unauthorized use or disclosure of Confidential
Information is likely to cause injury not readily measurable
in monetary damages, and therefore is irreparable;
(iii) in the event of an unauthorized use or disclosure,
the Disclosing Party shall be entitled, without waiving any
other rights or remedies, to such injunctive or equitable
relief as may be deemed proper by a court of competent
jurisdiction;
(iv) subject to the rights expressly granted to the
Receiving Party in this Agreement, the Disclosing Party and
its licensors retain all right, title and interest in and to
its proprietary Confidential Information, including without
limiting the generality of the foregoing, title to all
Materials regardless of whether provided by or on behalf of
the Disclosing party; and
(v) any disclosure by the subcontractors, agents,
representatives, advisors, directors, officers, employees and
Affiliates of the Receiving Party and, where applicable, their
directors, officers and employees shall be deemed to be
disclosure by the Receiving Party and the Receiving Party
shall indemnify and hold harmless the Disclosing Party from
any losses, claims or damages incurred as a result of such
breach.
9.3 Rights and Remedies of the Disclosing Party
-------------------------------------------
(a) Immediately upon the Disclosing Party's request or the
expiration or termination of this Agreement, the Receiving Party shall:
MCIS Confidential
13
<PAGE>
(i) return all Materials, including, without limiting the
generality of the foregoing, all originals, copies,
reproductions and summaries of Confidential Information; and
(ii) destroy all copies of Confidential Information in its
possession, power or control, which are present on magnetic
media, optical disk, volatile memory or other storage device,
in such a manner as ensures that the Confidential Information
is rendered unrecoverable.
Upon completion of the foregoing an officer of the Receiving
Party shall provide written confirmation to the Disclosing
Party that the Receiving party has complied with the
requirements of this Paragraph.
(b) The Disclosing Party may visit the Receiving Party's premises,
upon reasonable prior notice and during normal business hours, to review
the Receiving Party's compliance with the terms of this Paragraph.
9.4 Data Security. MCIS shall not be responsible for the corruption of data
-------------
or for the security of data during transmission via public telecommunications
facilities or shipped via commercial carriers. MCIS will provide a separate
Frame Relay Permanent Virtual Circuit (PVC) over Customer's existing network
circuit to provide remote management and monitoring services to the Customer's
locations. This PVC will be used for management purposes only and MCIS will
prevent all Customer's network data from passing across this PVC. MCIS will
provide commercially reasonable security for analog dial-in lines used for
management purposes and LAN/WAN infrastructure and a secure environment for
areas within its exclusive control MCIS and Customer shall cooperate fully in
efforts to prevent and cure unauthorized use of Services by implementing
commercially available and reasonable security measures and by promptly
informing Customer when MCIS is aware of suspected abuse of Services and, when
known, the identity of the responsible individuals. MCIS will assist Customer,
upon request, to minimize fraud or abuse through timely reconfiguration of the
Services and limitations on their use. Except for the Equipment, Customer is
responsible for the Customer-premises equipment it uses with the Services and
shall not connect to the Services any Customer-premises equipment which would
harm the Managed Network Elements. Customer and MCIS shall each maintain the
security of any information that they respectively control involving passwords,
access codes or other identification of Customer employees or other authorized
users, and each party shall reasonably assist the other in meeting its
responsibilities under this Section 9.4.
9.5 Data Ownership and Access. All Customer Data shall be and remain the
-------------------------
property of Customer or its suppliers, licensors or third parties.
9.6 Work Product Ownership. Except as otherwise specifically provided in
----------------------
this Agreement or in a Modification, all rights, title and interest in and to
all processes and methodologies and other intellectual property created solely
by Customer or those for whom Customer is responsible at law in respect of the
Services shall be owned by Customer. Title to and ownership of all systems,
software, documentation, utilities, tools, methodologies, specifications,
techniques and other materials, know-how and hardware owned by each Party or in
the possession of such Party prior to the Effective Date of this Agreement and
used by that Party in connection with providing the Equipment and Services,
together with all intellectual property rights therein, shall remain with that
Party whether or not they are specifically adapted by that Party for use by
Customer. The rights, title and interest in and to all
MCIS Confidential
14
<PAGE>
jointly-created intellectual property created or developed in the course of
performance of the Services shall be negotiated on a case-by-case basis.
9.7 No Title. Notwithstanding anything to the contrary in this Agreement,
--------
nothing in this Agreement shall, directly or indirectly, confer any title in any
Party's existing intellectual property or in any Modification thereto to the
other Party or anyone operating under such other Party.
9.8 Patent, Copyright. Any ownership or license rights herein granted to
-----------------
either party are limited by and subject to any patents and copyrights held by,
and terms and conditions of any license agreements with, applicable third party
software vendors.
9.9 Further Assurances. To the extent any of the Work Product may not, by
------------------
operation of law, be owned by the Party to which ownership has been granted (as
described in this Article 9), each Party agrees to assign and hereby assigns,
without further consideration, the ownership of all right, title and interest in
all United States and foreign copyrights and mask work rights (if any) in such
Work Product to the other Party, and such assignee Party shall have the right to
obtain and hold in its own name copyrights, registrations, renewals and all
other rights relating or pertinent thereto.
9.10 Legends. The Parties agree to reproduce copyright legends which appear
-------
on any portion of the Work Product which may be owned by third parties.
9.11 Competitive Development. This Agreement shall not preclude the Parties
-----------------------
from developing materials or providing services which are competitive to the
Work Product irrespective of their similarity to computer programming code,
documentation or other materials or services which might be delivered pursuant
to this Agreement, except to the extent any of same may involve disclosure of
the other Party's Confidential Information or may infringe any of the other
Party's or its subcontractor's patent, copyright or other proprietary rights.
9.12 Know-How, etc. Nothing contained in this Agreement shall restrict either
-------------
Party from the use of any ideas, concepts, know-how or techniques relating to
data processing or network management which either party individually or jointly
develops or discloses under this Agreement, except to the extent such use
involves disclosure of either party's Confidential Information or infringes any
of either Party's patent copyright or other proprietary rights. Neither this
Agreement nor any disclosure made hereunder grants any license to either party
under any patents or copyrights of the other Party. Each Party shall be
responsible for abiding by the terms and conditions of any agreement in force
between that Party and any third party with respect to the subject matter
hereof.
ARTICLE 10 - WARRANTY AND LIMITATION OF LIABILITY
10.1 Warranty. MCIS warrants that the Services shall be performed to the
--------
levels as set forth in Schedule "F", attached hereto and incorporated
herein. *
- -----------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
15
<PAGE>
10.2 Disclaimers
-----------
(a) MCIS does not warrant the accuracy of any advice, report, data
or other product delivered to the Customer which is produced with or
from data or software provided by the Customer to the extent that the
accuracy is affected directly or indirectly by an error in such data or
software.
(b) Subject to the provisions of this Agreement, MCIS does not
warrant uninterrupted or error-free operation of the Services.
(c) To the extent that MCIS agrees to sell and deliver to the
Customer any items of hardware or licenses for third party software
pursuant to this agreement ("third-party materials"), MCIS agrees to
pass on to the Customer the manufacturer's or supplier's warranties to
the extent MCIS is contractually able to do so. The warranties given by
the manufacturer or supplier of the respective third party materials are
the exclusive remedies of the Customer with respect to the third party
materials. These warranties are the only warranties with respect to the
third party materials and MCIS makes no representations or warranties
with respect to third party materials except as set out above. All other
warranties, express or implied, including without limitation the implied
warranties of merchantability and fitness for any particular purpose
with respect to third party materials, are hereby expressly excluded.
10.3 Limitation of Liability
-----------------------
(a) * .
(b) * .
(i) * ;
(ii) * ;
(iii) * .
(c) *
- ------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
16
<PAGE>
* .
(d) The provisions of this Subparagraph shall apply whether the
claim arises as a result of contract, tort (including negligence) or any
other statutory, legal or equitable grounds.
(e) In no event will MCIS or its Subcontractors be liable for any
damages if and to the extent caused by Customer's failure to perform its
responsibilities nor shall Customer be liable for any damages if and to
the extent caused by any failure by MCIS or its Subcontractors to
perform hereunder.
(f) Where any of MCIS's employees are admitted to Customer's
premises pursuant to this Agreement, Customer shall take such measures
as are reasonable to ensure that the condition and operation of its
premises and any plant, equipment or substance in such premises comply
with all applicable laws and regulations. * .
(h) Notwithstanding the foregoing, MCIS shall not be liable with
respect to:
(i) * ;
(ii) * ;
(iii) * ;
(iv) * ;
(v) *
(vi) * .
10.4 Customer Warranty. In addition to the representations, warranties and
-----------------
liabilities set forth elsewhere in this Agreement, Customer represents and
warrants that it has the authority to permit MCIS to run Customer Software
subject to the terms and conditions of this Agreement.
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
17
<PAGE>
10.5 Accuracy of Data. Each Party warrants to the other that all information
----------------
and data provided by it to the other in respect of this Agreement and in the
course of its performance under this Agreement shall be accurate. The recipient
shall be entitled to rely upon such information in its performance of this
Agreement.
ARTICLE 11 - CONFIGURATION CONTROL
11.1 Customer shall neither make nor incorporate any change to any equipment,
networks or otherwise which affect the Services to be performed hereunder
without the prior express written approval of MCIS. Any such changes that are
made without MCIS's prior written approval which adversely affects the ability
of MCIS to meet a particular Service Level shall relieve MCIS of the obligation
of meeting any Service Levels or other performance guarantees set forth in this
Agreement. Subject to Section 7.17, if Customer's business needs require a
change in any equipment, networks, operating systems or otherwise, MCIS will
work with Customer in good faith to effect such changes in a timely manner,
based on Customer's business priorities. Subject to Section 11.2, changes not
affecting any equipment, networks, or the Services may be made and incorporated
by Customer. Each party shall provide advance written notice to the other of
such changes as soon as reasonably possible.
11.2 All changes must be compatible with all equipment provided hereunder or
previously provided by MCIS. In the event that such changes are not compatible
with such equipment, Customer must pay MCIS, at MCIS's standard rates, to (i)
make such equipment compatible or (ii) replace such equipment with compatible
equipment. In the event Customer does not perform (i) or (ii) above, MCIS shall
not be responsible for meeting the Service Levels as set forth on Schedule "F".
ARTICLE 12 - FORCE MAJEURE
Neither Party shall be liable for any loss or damage or for any delay
or failure in performance due to acts beyond the control of such party which it
could not reasonably anticipate and take action to avoid or mitigate. Such acts
shall include, by way of example but not by way of limitation, acts of God, war
(including civil war), acts of any state or federal government, utility
failures, fires, floods, explosions, the elements, epidemics, quarantine
restrictions, lockouts, strikes, blackouts, plant shutdowns, material shortages
due to petroleum and natural gas shortages, embargoes, delays in transportation
or delays of supplies or subcontractors for like causes, or regulations,
ordinances, or other regulatory, administrative or government acts or measures
which hereinafter prescribe or substantially restrict the lawful performance of
duties and obligations arising under this Agreement. In the event of any such
causes, the affected party will immediately inform the other party of the
circumstances creating the delay or expected to create the delay and provide a
statement of impact. In such event, the non-performing party will be excused
from any further performance or observance of the duties, obligations and
responsibilities so affected for as long as such circumstances prevail and such
party continues to use its reasonable commercial efforts to recommence
performance or observance whenever and to whatever extent possible without
delay. Any party so delayed in its performance will immediately notify the other
by telephone (to be confirmed in writing within five (5) Business Days of the
inception of such delay) and describe at a reasonable level of detail the
circumstances causing such delay.
ARTICLE 13 - ARBITRATION
Any dispute or disagreement arising between the parties in connection
with this Agreement, which is not settled by the parties' respective designated
representatives to the mutual satisfaction of the
MCIS Confidential
18
<PAGE>
parties within thirty (30) days (or such longer period as may be mutually agreed
upon) from the date that the dispute arose shall be settled by arbitration in
accordance with the J.A.M.S./ENDISPUTE Arbitration Rules and Procedures, as
amended by this Agreement. The cost of the arbitration, including the fees and
expenses of the arbitrator(s), will be shared equally by the parties unless the
award otherwise provides. Each party shall bear the cost of preparing and
presenting its case. The parties agree that this provision and the arbitrator's
authority to grant relief shall be subject to the United States Arbitration Act,
9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this Agreement, and the ABA-
AAA Code of Ethics for Arbitrators in Commercial Disputes. The parties agree
that the arbitrator(s)) shall have no power or authority to make awards or issue
orders of any kind except as expressly permitted by this Agreement, and in no
event shall the arbitrator(s) have the authority to make any award that provides
for punitive or exemplary damages. The decision of the arbitrator(s) shall
follow the plain meaning of the relevant documents, and shall be final and
binding upon the parties. The award may be confirmed and enforced in any court
of competent jurisdiction. All post-award proceedings shall be governed by the
USAA. Notwithstanding the foregoing, any dispute involving (a) any decision to
terminate this Agreement; (b) breach or alleged breach of confidentiality
provisions; or (c) infringement or alleged infringement of intellectual property
rights shall not be subject to arbitration pursuant to this Article 13.
ARTICLE 14 - TERMINATION
14.1 Termination for Cause
(a) In the event that either Party:
(i) materially breaches or defaults on any of its material
obligations hereunder and such breach or default is not
cured or a plan to cure presented and agreed upon,
within fifteen (15) days (or such other mutually agreed-
upon period) after written notice is given to the
breaching party specifying the breach or default; or
(ii) in the case of MCIS, after the first six (6) months from
the Commencement Date, fails to meet Critical Service
Levels (as defined in Schedule "F" hereof) at the
aggregate enterprise level across all Customer Locations
in any three (3) months in any 12 consecutive month
period ("Unacceptable Service"); or
(iii) commits an Act of Insolvency;
the other Party, as the case may be, may, by giving written
notice of the breach (upon 30 days' prior written notice) or
act of insolvency (upon immediate written notice) to the other
party, and without prejudice to any other rights, remedies or
recourses it may have under this Agreement, at law or in
equity, terminate this Agreement as of the date specified in
such notice of termination. Notwithstanding the foregoing and
anything else contained in this Agreement, neither Party may
terminate this Agreement during the first six (6) months of
the Term (the "Ramp Period") except for non-payment of amounts
due. payment of amount due.
(b) For the purposes of this Section 14.1, a Party shall be deemed
not to have materially breached or defaulted its material
obligations hereunder if the breach or default is due to the
other Party's failure to perform its obligations as set forth
in this Agreement.(b)
MCIS Confidential
19
<PAGE>
14.2 Termination for Non-Payment. If the Customer fails to make any payment
---------------------------
required to be made hereunder, then MCIS may terminate this Agreement no earlier
than fifteen days following the date of its notice of intention to terminate for
non-payment as of the date specified in such notice, without prejudice to any
other rights, recourses or remedies it may have under this Agreement, at law or
in equity.
14.3 Equipment Leases. Notwithstanding the expiration or termination of this
----------------
Agreement or any other term or condition herein contained, the terms and
conditions of the Master Lease Agreement and Equipment Lease Schedules between
the Parties shall remain in full force and effect unamended after termination or
expiration of this Agreement, in accordance with their respective terms.
14.4 Services After Termination. Upon the termination of this Agreement for
--------------------------
any reason, MCIS will cooperate with Customer to effect an orderly transition to
a successor service provider or otherwise (as defined below, "Termination
Assistance"). MCIS shall provide Termination Assistance, at Customer's request,
for a period of up to three (3) months beginning on the date of the notice of
expiration in Section 2.2 or notice of early termination of this Agreement,
provided that in no event shall MCIS be obligated to provide Termination
Assistance (at the rates for Services set forth in this Agreement) beyond such
period. Thereafter, Customer shall pay MCIS' then-current rates for such
services, provided that MCIS shall not be obligated to provide Termination
Assistance beyond six (6) months from the termination date of this Agreement. If
MCIS terminates this Agreement for nonpayment by Customer pursuant to Section
14.2, MCIS may, at its option, condition the provision of Termination Assistance
upon monthly advance payment of reasonable estimated monthly charges. For the
purposes of this Section 14.4, "Termination Assistance" shall include (i)
providing Services and Equipment for which Customer will pay MCIS in accordance
to the rates set forth in Schedule E, (ii) providing an inventory of Equipment;
(iii) providing non-financial assistance in the physical migration of software
systems and Customer Data to Customer or Customer's supplier and; (iv) providing
Customer information to Customer or Customer's supplier which has not been
identified as Confidential Information in nature.
ARTICLE 15 - NOTICES
15.1 Any notices, request, demands or communications required or permitted
hereunder by either party shall be in writing, delivered personally or by telex,
telegram or certified registered or express mail at the respective addresses set
forth below (or at such other addresses as shall be given in writing by either
party to the other). All notices, requests, demands or communications shall be
deemed effective upon personal delivery, on the calendar day following the date
of the telex, telegram or MCIS Mail, or when received if sent by certified,
registered or express mail.
If to MCIS:
With a copy to: MCI Systemhouse Corp.
1768 Business Center Drive
Reston, Virginia
Attn: Corporate Counsel
If to Customer: Caliber Learning Network, Inc.
1000 Lancaster Street
Baltimore, Maryland 21202
Attn: Corporate Counsel
MCIS Confidential
20
<PAGE>
ARTICLE 16 - GENERAL PROVISIONS
16.1 Relationship of Parties
-----------------------
(a) Nothing in this Agreement shall be deemed or construed as
creating a joint venture or partnership between the parties. Neither
party is by virtue of this Agreement authorized as an agent, employee
or legal representative of the other. Neither party shall have the
power or authority to bind or commit the other to control the
activities and operations of the other and their status is, and at all
times will continue to be, that of independent contractors.
(b) Customer recognizes that MCIS personnel providing Services to
the Customer under this Agreement may perform similar services from
time to time for other persons, and this Agreement shall not prevent
MCIS from using the personnel and equipment used by MCIS to provide
Services to the Customer under this Agreement for the purpose of
performing such similar services for such other persons, including,
without limitation, the personnel and equipment of the Network Systems
Management Center.
(c) MCIS may delegate performance of any of its duties, obligations
and responsibilities hereunder to any of its Affiliates or to any MCIS-
selected independent contractor provided, however, that MCIS shall not
be relieved of any of its duties, obligations or responsibilities
hereunder by use of such Affiliates or independent contractors.
(d) For the term of this Agreement and for a period of one (1) year
thereafter, no Party will recruit, hire as an independent contractor of
offer employment to any employee of another Party who is or was
involved in the delivery of Services without the prior written consent
of the other party. In the event of a breach of this Section 16.1(d),
the offending Party shall offer the non-offending Party as liquidated
damages and not as a penalty an amount equal to twice the employee's
base annual salary as at the date of termination of employment with the
non-offending Party.
(e) It is understood that the receipt of Confidential Information
under this Agreement will not limit or restrict assignment or
reassignment of employees of MCIS and Customer within or between the
respective Parties and their Affiliates and Subsidiaries.
16.2 Assignment of Agreement
-----------------------
(a) Except as expressly permitted in this Agreement, neither Party
shall assign or delegate this Agreement or any of its rights, duties or
obligations to any Person or entity without the prior written consent
of the other Party, whose consent shall not be unreasonably withheld,
provided that MCIS may assign this Agreement to an Affiliate.
(b) This Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective successors and
assigns.
16.3 Non-Waiver. No waiver of any term or provision hereof, or any breach
----------
or default hereunder, shall be valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be
MCIS Confidential
21
<PAGE>
deemed a waiver of any other term or provision of any subsequent breach or
default of the same or similar nature.
16.4 Order of Precedence In the event of any inconsistency between
-------------------
provision of this Agreement and any Purchase Order issued against the Agreement
that inconsistency shall be resolved by giving in the following order:
a. Agreement
b. Schedules
c. Purchase Order issued in accordance with this Agreement.
16.5 Examination and Entirety of Agreement
-------------------------------------
(a) By executing this Agreement each party represents that it has
thoroughly examined this Agreement and believes it to be complete
consistent and accurate.
(b) This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other
contemporaneous or prior agreements and understandings, whether written
or oral, between the parties relating hereto. This Agreement may not be
modified, amended or terminated except by a written instrument signed
by duly authorized signatories of the parties hereto.
16.6 Publicity. Each Party agrees to submit to the other for prior written
---------
approval all advertising, sales promotion and other publicity matter relating to
this Agreement wherein the other Party's name is mentioned or language used from
which the connection of the other Party's name therewith may be inferred or
implied, which approval may not be unreasonably withheld or delayed. Each Party
further agrees not to publish or use any such advertising, sales promotion or
publicity without consent of the other Party.
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be duly executed as of the date first written above.
MCI SYSTEMHOUSE CORP. CALIBER LEARNING NETWORK, INC.
- --------------------- -----------------------
Signature Signature
- --------------------- -----------------------
Name Name
- --------------------- -----------------------
Title Title
- --------------------- -----------------------
Date Date
MCIS Confidential
22
<PAGE>
Schedule "A"
------------
DESCRIPTION OF SERVICES
-----------------------
I. General Provisions
------------------
A. MCIS will provide Customer with a WAN/LAN infrastructure
described herein. MCIS will provide the Services to Customer twenty-
four (24) hours per day, seven (7) days per week, each day of the year,
within the Service Levels identified in Schedule "F".
B. Customer will procure the routers, switches, servers, desktops
and LAN printers through MCIS. Procurement Services are further
described in Section II of Schedule "A". Customer will procure
additional hardware and necessary software required to ensure proper
operations of the devices covered under this Agreement limited to
Sentry remote power control system, ACP 9 call distribution system,
modems and remote management software. In addition, MCIS will provide a
single toll-free number to support End Users.
C. The Services include the following products and services at each
Customer Location being managed by MCIS:
(i) Desktop/Printers: Remote over the shoulder support,
field service dispatch, help desk services and maintenance for
all pre-approved End-User Device environments.
(ii) Servers: The hardware platform, the Network Operating
Systems (NOS), server administration, file backup and recovery,
tape management, virus detection, gold disk(s) management,
printer queue management, configuration management, fault
management, performance management, maintenance and help desk
service.
(iii) Routers/Hubs/LAN Switches: The routers, hubs and LAN
switches required to run the management network while providing
configuration management, fault management, performance
management, maintenance and help desk services.
(iv) Network Components: MCIS will perform management of the
environment over Customer's existing MCI Frame Relay network.
Additionally, MCIS will provide configuration management, fault
management, performance management, maintenance and help desk
services.
D. The Services include support and maintenance of all LAN/WAN
infrastructure components such as, but not limited to, the following:
. Catalysts Switches
. Routers
. Servers
. Desktops
. Printers
. Proshare Teamstations (excluding monitors)
. Racks
. Cabling
MCIS Confidential
23
<PAGE>
Customer may request additional component support according to Schedule A, I,I.
E. The Service delivery shall be tracked and measured by pre-defined Service
Levels. The Service Levels are identified in Schedule "F".
F. MCIS will supply End Users who are temporarily not LAN attached with remote
services which allow the End User to use the Enterprise Help Desk for problem
management and resolution while temporarily away from their regular Customer
Location. This shall be the only support given to such End Users by MCIS.
G. MCIS and Customer will use a mutually agreed upon regular monthly
maintenance window to implement infrastructure changes of the managed
environment. The Project Manager will receive sufficient prior notification of
the changes to be implemented in the maintenance window per Section 7.17.
H. MCIS will conduct maintenance of End-User profiles and access rights on the
LAN/WAN infrastructure.
I. In the event Customer desires MCIS to provide Additional Services, Customer
and MCIS shall negotiate in good faith for the provision of such Additional
Services. Customer shall make all request for quote for new services or major
service enhancements through their assigned MCIS Client Services Representative
in accordance to Schedule G.
J. MCIS will provide periodic updates to the managed software. These updates
will be made according to the following provisions, (a) Server operating
system - Major releases will be made available as required to support nEM
customers, (b) Desktop operating system - Updates will be made per customer
request, according to Schedule A, I,I, (c) Desktop applications - Major releases
will be made available as required to support all nEM customers. Customer may
request special releases not limited to agreed-upon critical enhancements, per
Schedule A, I,I. These requests will be made in accordance with change control
procedures and according to mutually agreed to schedules. MCI will make
commercially reasonable efforts to implement these releases within a six (6)
month time frame based on the stability of the release and availability of
appropriate management tools.
K. MCIS will maintain a centrally administered repository of LAN attached
users, desktops, printers, servers, hubs, router and circuits. Device
information will be gathered electronically through the use of auto-discovery
tools in place within the LAN infrastructure. Customer shall update all
information monthly and provide such updates to MCIS.
L. MCIS will provide the following services to the Customer's Data Center
location:
(i) Server: The hardware platform, the Network Operating Systems (NOS),
server administration, file backup and recovery, tape management, virus
detection, gold disk(s) management, printer queue management, configuration
management, fault management, performance management, maintenance and help
desk service.
(ii) Router/LAN Switches: The router, and LAN switch required to run the
management network while providing configuration management, fault
management, performance management, maintenance and help desk services.
MCIS Confidential
24
<PAGE>
(iii) Network Components: MCIS will perform management of the environment
over Customer's existing MCI Frame Relay network. Additionally, MCIS will
provide configuration management, fault management, performance management,
maintenance and help desk services.
M. MCIS will reasonably assist Customer in reviewing Customer proposed new
technologies and enhancements to LAN/WAN infrastructure to the extent such
technologies and enhancements do not affect the Services and MCIS
obligations under this Agreement. If Customer wishes to proceed with any
such technologies and enhancements, such decision will be subject to
Section 7.15.
II. Procurement
MCIS will work with customer to define mutually agreeable procurement
processes and service levels. MCIS will provide procurement services as
described below.
- -------------------------------------------------------------------------------
Service Level Item Service Level
- -------------------------------------------------------------------------------
4 hours if product ordered off product list
Request for Quote
8 hours if product not ordered off product list
3 days if no part number is provided and
configuration research is required
- -------------------------------------------------------------------------------
Product Ordering 1 business day from the time PO is received
Customer
- -------------------------------------------------------------------------------
Product Delivery 7 business days from the time order is
placed assuming the following:
1. Product is not constrained
2. No staging of equipment
3. Product is not made to built
- -------------------------------------------------------------------------------
MCIS will provide procurement services to Customer at industry Competitive
Rates. All pricing will be mutually reviewed and agreed upon. Competitive Rates
will be established in the following ways:
. Prior Experience: If Customer has recognized the pricing as competitive, no
further review is required.
. Comparable Services: In cases where pricing doe not appear to be in line
with Customer's expectations, MCIS has the option to demonstrate the
competitiveness of the pricing by providing Customer with documentation
showing similar product provided at commensurate levels at the same price.
. Competitive Services: In cases where Customer further desires that
procurement services be taken to competitive bid, MCIS will assist Customer
with said process and has first right of refusal for providing the
procurement services.
MCIS will pass on applicable price reductions in hardware and software as made
available by respective third party vendors.
MCIS Confidential
25
<PAGE>
Provisioning & Shipping
. Ordering and acquisition of PC/Server equipment will be as per standard
configuration. The current standard configuration is listed in Schedule C.
. Ordering of furniture equipment is outside the scope of services
. Order tracking and deployment to Unisys Quality Integration Center (QIC)
. If MCIS cannot meet delivery requirements, Customer may elect to provision
equipment through an alternative provider
Lead Times
. It is anticipated that lead times of six (6) weeks will be required to
provision equipment from aggregator, ship to QIC for configuration and install
for a full site implementation.
Order Process
. The equipment will be provisioned by MCIS
. SHL Financial Services, will be the leasing company holding the master lease
for all the equipment.
. Ordering and acquisition of PC/Server equipment will be as per standard
configuration is listed in Schedule C or mutually agreed to changes.
III. Implementation
MCIS will implement the WAN/LAN infrastructure components within the Caliber
Learning Centers. Both the Voice and Satellite networks are excluded from the
implementation scope. The scope of implementation is as follows:
. Program management
. Single point of responsibility project
planning/coordination/vendor management
. On-site teams for installation support and acceptance testing
. Staging (Unisys QIC)
. Routers, hubs, servers will be preconfigured at the Unisys
Quality Integration Center
. Warehousing and inventory management of desktops, printers,
Proshare Teamstations
. Implementation
. Cabling
. Necessary Compaq rack and separate generic side rack o
Routers, switches, servers, desktops and printers o Proshare
Teamstations o WAN (Frame Relay and ISDN)
. Desktop image certification (Gold Disk)
. Inventory/Asset tag all supported equipment
. Preparation of Caliber Help Desk environment
. Development of all support management practices
. Problem/Escalation Management
. Change Management
. Service Order Management
MSCI Confidential
26
<PAGE>
. Data Management
. Security Management
. Disaster Recovery
. Implementation "lessons learned" debriefing after each
implementation
. List of Implementation sites is contained in Schedule "B".
IV Enterprise Help Desk
MCIS will provide the following Enterprise Help Desk Services:
. Enterprise Help Desk
- Single point of contact for support
- Toll free telephone access to support resources
- Sophisticated knowledge-base
- Service request initiation and tracking
. Problem Management and Resolution
- Fault logging
- Fault tracking
- Primary fault resolution at level 1 support
- Secondary fault dispatch to Caliber internal/external contacts (Maximum
of ten contacts)
- Assigned MCIS Problem Manager
. Escalation
- Business impacting outages escalated to defined Caliber contacts
- Service provider escalation
. Notification
- IVR based status updates for major outages
- Proactive problem notification to End users
. Remote over-the-shoulder support
IV Reporting
MCIS will provide a single monthly report outlining service delivery performance
against target service levels, outlined in Schedule "F," which is generated from
the trouble ticket, telephony, inventory and service order databases. Included
within the report is trending of the following:
. Service Delivery
- Delivery summary
- Key indicators
- End-user support
- Enterprise Help Desk call activity
- Incidents by severity
- Incidents by Call Type
- Quality measurements
MCIS Confidential
27
<PAGE>
- - Average speed of answers
. Availability
- WAN availability
- LAN availability
. Infrastructure and Network Usage
- Server usage
- Network usage
- Inventory summary
MCIS will continue to improve Customer reporting. Customer may request
customized reporting in accordance with Schedule A, I,I. These requests will be
made in accordance with change control procedures and according to mutually
agreed to schedules.
MCIS Confidential
28
<PAGE>
Schedule "B"
CUSTOMER LOCATIONS
The following are the Customer Locations as known at the execution of this
contract. Customer may change these locations and must provide MCIS 30 days
notice of any site changes to allow for re-scheduling of implementation
services. Any additional costs and/or changes in the schedule are the Customer's
responsibility.
. Atlanta, Georgia
. Cherry Hill, New Jersey
. Jacksonville, Florida
. Chicago, Illinois
. New York (55 Broad Street), New York
. Tampa, Florida
. Austin, Texas
. Milwaukee, Wisconsin
. Pittsburgh, Pennsylvania
. Minneapolis, Minnesota
. Charlotte, North Carolina
. New Orleans, Louisiana
. Raleigh, North Carolina
. Washington DC
. Dallas, Texas
. Cleveland, Ohio
. Los Angeles, California
. San Jose, California
. Boston, Massachusetts
. St. Louis, Missouri
. Miami, Florida
. Indianapolis, Indiana
. Cincinnati, Ohio
. Memphis, Tennessee
. New York (Penn Plaza), New York
. Portland, Oregon
. Oklahoma City, Oklahoma
. Orange County, California
. Salt Lake City, Utah
. Orlando, Florida
. Vancouver, Canada
. Detroit, Michigan
. Seattle, Washington
. Nassau, New York
. Houston, Texas
. Toronto, Canada
. San Francisco, California
. Philadelphia, Pennsylvania
. Nashville, Tennessee
MCIS Confidential
29
<PAGE>
. Denver, Colorado
. Rochester, New York
. Kansas City, Kansas
. Montreal, Canada
. Phoenix, Arizona
. Baltimore, Maryland
MCIS Confidential
30
<PAGE>
Schedule "C"
EQUIPMENT TO BE PURCHASED BY CALIBER - PER SITE
-----------------------------------------------
*
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
31
<PAGE>
Schedule "D"
------------
MINIMUM CONFIGURATIONS
----------------------
The Customer must upgrade and maintain its equipment to the minimum
standards which are more fully described as follows:
Desktop
Minimal Acceptable Configuration for Existing PCs
. Intel 486 based system
. Minimum of 8 Megabytes of RAM (16Mb for Windows '95)
. 200 Megabyte Hard Drive
. Either of:
DOS 6.22/Windows for Workgroups 3.11
Windows '95
. LAN connected via 10Base-T or Token Ring
. Acceptable Network Interface Cards are:
- Compaq NetFlex series
- 3COM
- SMC
- Cabletron
- XIRCOM
- IBM
- Megahertz
- Intel Ethernet Express
Cabling Infrastructure
. Category 5 Universal Twisted Pair Wiring
EIA/TIA 568A compliant
Facilities
. Controlled access equipment room (size 6x8)
. 7x24 MCI accessibility
. Sufficient heating, ventilation and air conditioning according
to manufacturing specifications.
. All cabinet based equipment is EIA 19 inch rack mount compatible.
. One (1) direct dial analog phone line.
MCIS
33
<PAGE>
Schedule "E"
------------
PRICING
-------
*
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
34
<PAGE>
Additional Pricing:
Development of Caliber's custom courseware application has not yet been
completed. Hence, it cannot be integrated into Caliber's desktop image (e.g.
gold disk). In order to proceed with implementation for the initial sites, the
nEM implementation team has developed a temporary desktop image. Once
development of the custom application is complete it will need to be integrated
into the temporary image. Due to the unknowns of the custom application, it may
require a second site visit to install the final image. If a second site visit
is required, it is assumed that re-implementation of the desktop image would
require one (1) man-day worth of work. If needed, this re-implementation work
will be billed at a rate of * .
The Customer acknowledges that forgoing services are based on the following
service assumptions: *
- ------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
35
<PAGE>
Cabling is based on all classrooms within a CLC being completely cabled. The
following represents a total drop count per CLC. This drop count is based
on an average CLC with three (3) classrooms and thirty-six (36)
workstations.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Data ISDN Measured PBX Coax Mikes Speakers Number Total Cat 5
Business Telco of Units Drops "Data"
Lines Lines Drops
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Classroom 1
Classroom Common 2 1 1 1 1 4 1 10 4
Student Workstations 1 12 12 12
Classroom 2
Classroom Common 2 1 1 1 1 4 1 10 4
Student Workstations 1 12 12 12
Classroom 3
Classroom Common 2 1 1 1 1 4 1 10 4
Student Workstations 1 12 12 12
Resource Center
Common 1 0 0
RC Workstations 1 4 4 4
Conference Room 1 1 1 2 2
Site Manager 1 1 1 2 2
Receptionist 1 1 1 2 2
Facsimile 1 1 1 1
Network Printer 1 1 1 1
Wiring Room 1 1 1 1 3 3
Security System 0 1 0 0
TOTALS 49 5 1 8 3 3 12 81 63
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
. *
. The lease rates are based on MCI guaranteeing the leases.
. Implementation is based on the following number of desktop and printer
devices.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CLC # of Student Site manager Admin Resource Center Printers Total device
sites workstations workstations workstations workstations (per site) count (all sites)
(per site) (per site) (per site) (per site)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Small/ 37 36 1 1 0 1 1443
Medium
- ---------------------------------------------------------------------------------------------------------------------------
Large 8 48 1 1 0 1 408
- ---------------------------------------------------------------------------------------------------------------------------
Totals 1851
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
36
<PAGE>
. Proshare Teamstation installs will be as follows:
. Large site: 2 Proshare Teamstations will drive four monitors/cameras
. Small/medium site: 2 Proshare Teamstations will drive three
monitors/cameras.
. Over-the-shoulder services are assumed to fall into two categories:
. More frequently for the site manager and administrative desktops
(potentially during class hours)
. On an ad-hoc basis for the actual student workstations mostly during
off class hours (e.g. testing in preparation of a future class).
. Maintenance for Caliber's entire LAN/WAN infrastructure hardware (excluding
satellite and voice equipment) will be as referenced in Schedule A.
. A decision on the make/model for the Proshare Teamstation monitors has not yet
been decided. Hence, pricing does not include any maintenance for these
devices.
. The CLC LAN/WAN infrastructure will be managed over the existing MCI Frame
Relay circuit. Pricing excludes a separate 56k MCI Frame Relay circuit for
management.
. Standard networkMCI Enterprise Management Service Level Agreements (SLA)
listed on Schedule F, will be used with the exception of maintenance
break/fix for desktops and Proshare Teamstations. The maintenance for these
components are:
. Desktop: 2 day mean time to repair
. Proshare Teamstation: 1 day mean time to repair.
Response and mean time to repair times will be calculated from the time the
problem ticket is opened.
. Implementation approach is based on the "gold disk" theory (e.g. standard
image(s) for all routers, hubs, switches, servers, workstations).
Configuration change requests to the standard images will be made in
accordance with Change Control Procedures herein and in accordance with
Schedule A, General Provisions, Section I.
. Non-LAN-related equipment (Satellite equipment and voice equipment) will be
installed by other vendors.
. All CLC schematics will be provided ahead of time so infrastructure cabling
plant can be planned and implemented properly.
. Delivery/support approach is for following Caliber Sites:
. Full LAN/WAN management: all Caliber Learning Center sites,
including ISDN lines.
. Router, catalyst switch, server management only: Caliber Data
Center.
. * Implementation and management requirements need to be defined by Caliber
prior to defining a price point.
- ------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
37
<PAGE>
. It is anticipated that the current application software distribution
solution for nEM will not meet all of Caliber's software distribution
requirements, specifically due to frequency of distribution, anticipated
file sizes and time to completion for distribution to all CLC's
simultaneously. To that end, application software distribution is not
included in the price. However, MCI Systemhouse can assist Caliber in the
following areas:
. Assist Caliber in any development efforts during their evaluation of
software distribution options
. Provide on-going management of the software distribution solution
Caliber chooses.
Pricing will be dependent on scope of work for each option.
. * .
It is assumed that access to all Caliber facilities will exist as required to
perform agreed-upon services.
- -------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
38
<PAGE>
Schedule "F"
SERVICE LEVELS
I. General Provisions
A. MCIS provides the Services to defined standards (the "Service
Levels").
B. The following terms shall have the following respective
meanings:
"Severity 1" means a problem with a major system, service or
loss of access to a work group which is critical to Customer's
business.
"Severity 2" means a critical service, other than those
described in Severity 1 service, that is unavailable to a
large number of End-Users or performance degradation to a work
group.
"Severity 3" means a loss of access or performance degradation
to an individual or a problem that can be handled within the
normal problem management process. No special treatment is
required unless Customer indicates that the problem is
critical.
"Excess Outages" means a Severity 1 incident exceeding eight
(8) hours without resolution.
C. Service levels will be measured and reported on a per site
basis.
D. Critical Incident, Excess Outage and LAN Availability are
identified as Customer's Critical Service Levels.
II. Problem Resolution Service Level
A. Severity 1, 2 or 3 problems will be resolved within a mean time
identified respectively in the chart below from the time the
initial call is completed between the End User and the Enterprise
Help Desk dispatcher. The initial call is the first call placed by
any Customer End User to the Enterprise Help Desk to report a
problem (the "Initial Call"). If several Customer End Users call
to report the same problem, the measurement time begins at the
completion of the call with the first End-User who reported the
problem. Site Manager may change severity levels per the normal
operational processes in place for the Services.
B. Problem Resolution Service Level measurement period includes
restoring device operation but does not include the time to
restore data from backup media. File recovery time is variable and
is not included in the service level guarantee. This time is
highly dependent on tape handling and the size of the tape and
volume to be restored.
C. Requests by Customer to delay resolution of problems are excluded
from all calculations in determining performance requirements and
Service Levels hereunder.
MCIS Confidential
39
<PAGE>
D. Problem resolution measurement time is committed for locations
within 50 miles of major service center. Initial sites as defined
in Schedule B all fall within 50 miles of major service center
E. Measurement for the Problem Resolution Service Level is defined as
follows:
i) All targets are calculated as the mean time to resolution:
1. Sum of resolution time of all Severity 1 incidents
(divided by) Total number of Severity 1 incidents
2. Sum of resolution time of all Severity 2/3/4 incidents
(divided by) Total number Severity 2/3/4 incidents
ii) Excess Outage is calculated for each Severity 1 incident.
III. Enterprise Help Desk Service Level
A. For Average Speed of Answer Service Level, mean time begins from
the time the Customer End User places the call to the time the
analyst answers the call. Under normal circumstances, Customer
will not receive busy signals.
B. For Call Dispatch Turnaround, mean time begins upon conclusion
of the Initial Call.
IV. Availability
A. Measurement for this Service Level is defined as follows:
i) WAN availability is calculated as per MCIS normal
procedures for a Frame Relay Customer as set forth in MCIS
FCC Tariff No.1. Refer to Customer FR contract
ii) LAN availability is calculated as a weighted average of the
availability of all servers, hubs, and routers for a client
as follows:
1-(Sum of servers downtime(multiplied by)weight)(plus)(sum of
Hubs downtime(multiplied by)weight)(plus)(sum of Routers
downtime(multiplied by)weight)(plus)sum of switches downtime
(multiplied by)weight)/(Sum of servers total time(multiplied
by)weight)(plus)(sum of Hub total time(multiplied by)weight)
(plus)(sum of Routers total time(multiplied by)weight)
. Weights are table maintained. A weight (a number between
0 and 1) is assigned to the categories: hubs, routers
and servers. Weights will be assigned and agreed to by
Client Services Manager and Customer based on the final
configuration.
. All times are calculated in minutes.
C. Outages are considered any or all of the following: a) a failure
of a Managed Network Element making it non-useable, b) an
unplanned shutdown of a device, or c) loss of access to a work
group.
MCIS Confidential
40
<PAGE>
V. Administration
A. Password and user ID related requests must be made by
Customer's Site Manager prior to commencement of the SLA
commitment time.
B. Moves of five (5) or more desktops will be scheduled as a
project and may be subject to additional pricing. A move is
identified as when End-User Devices are moved within the same
location from one cable-ready location to another cable-ready
location.
C. * .
D. Requests by Customer to delay work are excluded from all
calculations.
VI. Service Level Credits
A. Service Levels are not guarantees of performance and the following Service
Level Credits ("SLCs") shall constitute Customer's sole remedy, subject
only to Section 14.1 hereof, in respect to failure to achieve Service
Levels. For the purposes of SLCs, where Service Levels are missed, Service
Credit Points ("SCPs") will be applied as follows:
The aggregate of all points in each monthly reporting period shall be applied to
the following table:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Total Service Credit Points Percentage of Monthly Bill
===========================================================================================================
<S> <C>
Less than 25 Points No credits
25 to 39 Points * credit against Invoice, less taxes and pass-throughs
40 to 50 Points * credit against Invoice, less taxes and pass-throughs
Greater than 50 Points * credit against Invoice, less taxes and pass-throughs
- -----------------------------------------------------------------------------------------------------------
</TABLE>
B. SLCs are applied toward desktop fees at the applicable Customer
Location.
C. All Service Levels for which SLCs are applicable are based on results
at the end of each reporting period, other than Excess Outages, which are
calculated on a per incident basis.
D. SLCs shall only apply after the end of the Ramp Period.
E. * .
F. Notwithstanding anything else in this Section VI, SLCs shall not apply
to:
1. Acts or omissions of Customer, its agent or contractors;
2. Failure attributable to Customer initiatives or contractors or
systems not provided or under MCIS direct control;
3. force majeure events;
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
MCIS Confidential
41
<PAGE>
4. failure of Customer or third party equipment;
5. any change by Customer or third parties in equipment, Software,
Software environments (unless authorized in writing by MCIS);
6. Spikes in service volumes where material increases occur without
sufficient advance notice in writing to MCIS to permit remedial
action; or
7. failure of Customer to meet its responsibilities under this
Agreement.
<TABLE>
<CAPTION>
Service Level Table
- ---------------------------------------------------------------------------------------------------
Service Level Item Measurement Target/SCP
<S> <C> <C>
Problem Resolution
Critical Incident Mean Time to Resolve 4 Hours / 15
(Severity 1)
Regular Incident Mean Time to Resolve 12 Hours / 5
(Severity 2 or 3)
Non-Regular Incident Mean Time to Resolve 48 Hours / 5
(Severity 4)
Excess Outage Per Incident Time to Resolve 0/ 1 per hr., max 5
(Sev 1 Exceeding 8 Hrs) per incident
Enterprise Help Desk
Average Speed of Answer (ASA) Mean Time to talk to Analyst 30 Seconds / 10
Call Dispatch Turnaround Mean Time to dispatch at 15 Minutes / 5
completion of call
Availability
WAN Availability Time Available 99% / 10
(Frame Relay) (Minus planned outages)
LAN Availability Time Available 99% / 10
(Servers, Hubs, Routers) (Minus planned outages)
Administration
Create New User Account Mean Time to complete 4 Hours / 5
(from authorized request)
</TABLE>
MCIS Confidential
42
<PAGE>
<TABLE>
<S> <C> <C>
Reset Password Mean Time to complete 1 Hour / 5
(from authorized request)
Move, Add, Changes Mean Time to complete 7 Days / 5
(Less than 5 Users) (from authorized request)
- ---------------------------------------------------------------------------------------------------
</TABLE>
Component hardware break/fix problems fall within the following incident
categories:
Critical incident: routers, servers, switches Proshare Teamstation monitors
Regular Incident: Printers, Proshare Teamstations
Non-Regular Incident: Desktops
Note: The Service Level for laptop break/fix is five (5) business days from the
time of shipment of the defective unit to the depot repair facility.
MCIS Confidential
43
<PAGE>
Schedule "G"
Change Order Procedure
ARTICLE 1
INTRODUCTION
Overview
1.1 The purpose of this Schedule "G" is to detail the mechanism for
requesting changes to the Services.
Interpretation
1.2 References to "Section" refer to Sections in this Schedule "G" unless
otherwise indicated. References to "Exhibits" refer to Exhibits in this Schedule
"G" unless other indicated. The financial responsibility relating to a
particular function lies with the party who has the responsibility of performing
that function unless otherwise indicated in this Agreement.
ARTICLE 2
CUSTOMER-INITIATED CHANGE
2.1 Customer will use the Change Order Request form (Exhibit 1) when
notifying MCIS of a required change.
2.2 MCIS will respond to the Change Order Request within fifteen (15)
Business Days after receipt thereof, identifying the scope of the proposed
solution, expected delivery time frame, implementation approach, and the price
implications, if any. If, in the opinion of MCIS, a Change Order Request could
be implemented in a more cost-effective manner than that described in the Change
Order Request or should, for any reason, be implemented in a different manner
than that described in the Change Order Request, MCIS shall advise Customer in
writing of its recommendations and shall, if requested by Customer, prepare a
written response which reflects its recommendations.
2.3 Customer will respond within fifteen (15) Business Days indicating
acceptance by signing the response or by written communication indicating either
rejection of the response or proposing alternatives for the unacceptable items.
2.4 If Customer has proposed alternatives under Article 2.3, MCIS shall
submit an updated response within fifteen (15) Business Days. Customer reserves
the right to accept or reject any response submitted by MCIS. Decisions made by
Customer in this regard will not be subject to the dispute resolution process.
In the event that Customer and MCIS cannot agree on the terms
MCIS Confidential
44
<PAGE>
and conditions of the updated response, Customer but not MCIS, may submit the
matter to dispute resolution in accordance with Article 7 of the Agreement.
ARTICLE 3
MCIS-INITIATED CHANGE
3.1 If MCIS wishes to initiate a change, it shall use the Change Order
Request. The Change Order Request shall contain all required technical and
financial information for Customer to assess the proposal.
3.2 Customer will evaluate the Change Order Request to determine the extent
of impact on Customer. Customer will use reasonable effort to accommodate the
MCIS's Change Order Request; however, if, in Customer's view, the effort
required, Customer's costs or the price to be paid to adapt to a proposed change
is significant, Customer retains the right to object to the proposed change or
to delay its implementation for a long as it reasonable takes for Customer to
devote resources to adapt to the change, having regard to its other business
requirements and priorities. If Customer and MCIS cannot agree on the change or
the timing of the change, either of them may refer the matter to dispute
resolution in accordance with Section 20 of the main Agreement, provided that
such a disagreement is excluded from the arbitration process set out in that
Article.
3.3 Customer will respond within thirty (30) Business Days after receipt of a
Change Order Request, either indicating acceptance by signing the Change Order
Request or by identifying where the Change Order Request is unacceptable and
indicating rejection or acceptable alternatives. Decisions made by Customer with
respect to Change Order Request initiated by MCIS will not be subject to the
dispute resolution process.
ARTICLE 4
ANCILLARY AGREEMENTS
Ancillary Agreements
4.1 In each Change Order Request, Customer shall warrant that the only
Ancillary Agreements required are those listed in the Change Order Request. MCIS
shall acquire and pay for any Ancillary Agreements that are not listed in the
Change Order Request. In the event that MCIS believes that one or more of such
Ancillary Agreements could not reasonably have been foreseen by a person skilled
in the provisioning of systems management services or were not identified
because of incomplete or inaccurate information provided by Customer and
provided that MCIS has acquired and paid for such Ancillary Agreements, MCIS may
require Customer to pay for such Ancillary Agreements, to be accompanied by a
written explanation of the reasons for the omission. If Customer refuses to make
payment, MCIS may submit the matter for dispute resolution in accordance with
Section 20 of the Agreement.
MCIS Confidential
45
<PAGE>
EXHIBIT 1
CHANGE ORDER REQUEST
TO: MCI MCIS Corp. ("MCIS")
FROM:
RE: nEM Agreement between MCIS and Customer dated *
- --------------------------------------------------------------------------------
Change Order Request Number _____________.
This Change Order Request forms part of and is subject to the terms and
conditions in the Agreement and is not binding until Customer and MCIS have
executed and agreed to a Change Order Proposal prepared by MCIS.
1. Statement of Objective
2. Description of Expected Service Change
3. Expected Effect on Existing Services
4. Delivery Schedule
5. Ancillary Agreements Anticipated
6. Expected Effect on Price
Please respond to this Change Order Request on or before ______________________.
Per:________________________________
- ------------------------------------
Name (Print or Type)
- ------------------------------------
Title
- -------------------------------------
Date
MCIS Confidential
46
<PAGE>
EXHIBIT 2
CHANGE ORDER PROPOSAL
TO:
FROM: MCIS
RE: nEM Agreement between MCIS and Customer dated *
- --------------------------------------------------------------------------------
Change Order Proposal Number ______.
This Change Order Proposal forms part of and is subject to the terms and
conditions in the Agreement and is not binding until either MCIS or Customer has
executed and agreed to this Change Order Proposal prepared by MCIS.
1. Statement of Objective
2. Description of Expected Service Change
3. Expected Effect on Existing Services
4. Delivery Schedule
5. Ancillary Agreements Anticipated
6. Expected Effect on Price
Please respond to this Change Order Request on or before ________________.
Per:_____________________________
- --------------------------------
Name (Print or Type)
- ---------------------------------
- ---------------------------------
Title
- ---------------------------------
Date
MCIS RESPONSE:
- -------------------------------------
Title
- --------------------------------------
Date:
MCIS Confidential
47
<PAGE>
EXHIBIT 10.11
TESTING CENTER MANAGEMENT AND CBT SERVICES AGREEMENT
This Testing Center Management and CBT Services Agreement (this
"Agreement") is made as of May 1, 1997 (the "Effective Date"), and is by and
between SYLVAN LEARNING SYSTEMS, INC. ("Sylvan"), a Maryland Corporation, and
CALIBER LEARNING NETWORK, INC. ("Caliber"), a Maryland corporation.
RECITALS
1. Sylvan utilizes, and owns and operates, a series of locations across the
United States (the "Testing Centers") at which computer-based testing
services are delivered to individuals on behalf of various testing clients
of Sylvan; and
2. Caliber is establishing a network of distance learning centers, in which
testing services utilizing the Sylvan Prometric computer-based testing
system will also be offered and provided; and
3. Caliber desires to assume control of a certain group of Sylvan's locations
for the expansion and establishment of the Caliber network; and
4. In connection with the foregoing, Sylvan and Caliber have agreed that
Caliber will manage the Testing Centers and in connection therewith will
assume certain obligations assets related to the Testing Centers, and
desire to set forth in writing the terms and conditions of their
understanding and agreements.
TERMS AND CONDITIONS
In consideration of the mutual covenants and conditions set forth in this
Agreement and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, Sylvan and Caliber agree as follows:
1.0 MANAGEMENT OF TESTING CENTERS
1.01 From May 1, 1997 (the Effective Date) through and until December 31,
2000, (the "Management Period") Caliber shall assume, pursuant to the
provisions of this Agreement, management and responsibility for all
obligations and operations of the Testing Centers listed on Exhibit A
of this Agreement, including without limitation delivering CBT
services on behalf of Sylvan and its clients in accordance with the
terms of the Agency and Licensing Agreement for Operation of a Sylvan
Technology Center "Services Agreement"(as shown as Exhibit B of this
Agreement), staffing the Testing Centers with adequate qualified
personnel and assuming and satisfying all costs and expenses incurred
as a result of the Testing Centers' operations after the Effective
Date. The costs and expenses incurred as a result of the Testing
Centers operations shall include but are not limited to leases and
other occupancy costs, utilities,
<PAGE>
salaries, data communications, and, in the case of former NASD
centers, all operation costs billed to Sylvan by NASD and paid by
Sylvan pursuant to the Asset Transfer and Management Agreement between
Sylvan and NASD.
1.02 Under this Agreement, Caliber agrees that it will perform as an
independent contractor, and not an agent or employee of Sylvan.
A. Caliber and its personnel (including without limitation personnel
hired by Sylvan under this Agreement), in performance of this
Agreement, are acting as independent contractors and not as employees
of Sylvan. Caliber shall, at its sole cost and expense, for the term
of this Agreement provide all insurance coverage required by
applicable laws, regulations, or employment agreements, including,
without limitation, medical and workers' compensation.
B. Caliber represents and warrants that neither Caliber nor Caliber's
personnel (including without limitation personnel hired by Caliber
under this Agreement) or any individual associated with or performing
services for Caliber shall be an employee of Sylvan for any purpose
whatsoever. Caliber shall be responsible for the payment of all
unemployment, social security and other payroll taxes of all
individuals who are engaged in the performance of the services. If, at
any time, any liability is asserted against Sylvan for unemployment,
social security or any other payroll tax related to Caliber or
Caliber's personnel or any individual or subcontractors associated
with Caliber, then Caliber shall indemnify and hold harmless Sylvan
from any such liability, including, without limitation, any such
taxes, any interest or penalties related thereto, and reasonable
attorney's fees and costs.
1.03 As consideration for all of the services to be performed by Caliber
in its operation of the Testing Centers during the Management Period,
Sylvan shall pay to Caliber the STC commissions monthly (the
"Management Fees"), for the Management Period. The Management Fees
shall be paid in accordance with the terms of the Services Agreement,
provided that Sylvan may deduct as a credit against such Management
Fees an amount equal to any Assumed Direct Cost (as defined below)
that has been paid by Sylvan and by any fees due Sylvan for providing
interim accounting services for Caliber Sylvan shall provide such
interim accounting services for Caliber at no cost through December
31, 1997. Commencing with January 1, 1998, the parties will review
the interim accounting services to be provided by Sylvan to Caliber
and agree on fees for those services at that time.
As additional consideration for all of the services to be
performed by Caliber in its operation of the Testing Centers during
the Management Period, Caliber shall receive fifty (50%) percent of
the profits Sylvan receives from its fingerprint testing services
business with Identix Corporation.
2
<PAGE>
For purposes of this Agreement and except as otherwise expressly
provided herein, the term "Assumed Direct Cost" shall mean any cost,
rental charge or expense arising from the operation, maintenance and
staffing of the Testing Centers during the Management Period, which
cost or expense is assumed by Caliber from Sylvan under this
Agreement, or is of a nature incurred by Sylvan in the operation,
maintenance and staffing of the Testing Centers after the Effective
Date, and includes all costs contemplated by Section 1.01 above.
1.04 During the period commencing with the Effective Date and ending
December 31, 1997, Sylvan will, at Caliber's request, not deduct
credits as described in Section 1.03 above from the Management Fees.
Caliber may defer payment to Sylvan for those credits not deducted
from the Management Fees until December 31, 1997. Those credits not
deducted shall be paid in full, together with four (4%) percent
interest within forty-five (45) days of the end of the deferral period
ending December 31, 1997. After the period ending December 31, 1997,
any credits not deducted from the Management Fees shall be paid by
Caliber to Sylvan on a monthly basis. Following the Management
Period, Caliber shall reimburse Sylvan for any credits attributable to
payments by Sylvan under Section 1.03 but not previously deducted as
credits from the Management Fees pursuant to Section 1.03 and not
otherwise paid by Caliber to Sylvan. Any such reimbursement shall be
paid within forty-five (45) days following presentation by Sylvan to
Caliber of documentation reflecting the amount of any such amounts
paid by Sylvan and the fact of such payment by Sylvan.
1.05 Following the Management Period, Caliber may, but need not, continue
to operate any Testing Center as it determines to be appropriate,
subject to the requirements of the Services Agreement. Certain of the
Testing Centers may be closed (or converted to other, non-STC uses) in
accordance with the schedule of Permitted First Closing Dates shown in
Exhibit A.
1.06 From time to time it may become necessary for Sylvan to open STC's in
locations where no franchisees are available or where franchisees are
unable or unwilling to locate or expand to meet testing demand. In
those circumstances, if Caliber has a Caliber Learning Center located
or plans to locate a Caliber Learning Center in the geographical
region where the STC needs to be located, Sylvan may request and
Caliber shall use reasonable efforts to establish an STC in that
location. The ownership, operation, and management of the STC shall
be subject to the terms of this Agreement. In the event an STC is
established pursuant to this Section 1.06, Sylvan and Caliber shall
negotiate in good faith for an equitable sharing of any additional
costs expended by Caliber to establish and operate the STC.
3
<PAGE>
2.0 TRANSFER OF TESTING CENTER LEASES AND LEASEHOLD
IMPROVEMENTS
2.01 From time to time on or after the Effective Date and on or before the
end of the Management Period, Sylvan shall assign to Caliber and
Caliber shall assume from Sylvan, on the terms and conditions set
forth in this Agreement, all of Sylvan's right, title, interest and
obligations as lessee or tenant under the leases shown on the attached
Exhibit A, together with all rights in and to any security deposits
held by landlords under said leases and any leasehold improvements.
Such assignment and assumption shall be effected on a date specified
by Sylvan to occur within ninety (90) days after the Effective Date;
provided, however, that notwithstanding anything to the contrary
herein:
(i) if a lease requires the landlord's consent to an assignment
thereof, Caliber shall use all reasonable efforts to obtain such
consent and Sylvan may delay assigning such lease until such consent
is obtained,
(ii) if and to the extent that a landlord does not consent to the
assignment to Caliber of any lease and does not elect to terminate the
lease, Sylvan agrees to sublet the premises to Caliber on
substantially the same terms and conditions contained in the affected
lease for a term through the end of the Management Period and for such
longer period as Caliber and Sylvan may agree,
(iii) if Sylvan believes that a landlord may elect to terminate a
lease pursuant to the terms thereof instead of consenting to the
assignment to Caliber of such lease, Sylvan shall notify Caliber of
such and may delay attempting to assign such lease to Caliber until a
date not later than the last day of the Management Period,
(iv) Sylvan shall not be obligated to ensure that any of the leases
listed on Exhibit A is assignable and any lease terminated by a
landlord, whether upon notice of Sylvan's assignment of or intent to
assign such lease, or otherwise, shall not be subject to assignment
and assumption under this Agreement, and
(v) Certain of the Testing Centers (as indicated by an asterisk on
Exhibit A) are subject to the prior right of the National Association
of Securities Dealers, Inc. ("NASD") to have assigned to it the leases
for same, and the rights to occupy same to the exclusion of Sylvan and
its assigns, under certain conditions, and upon notice per the terms
of that certain CBT Services Master Agreement dated March 1, 1996, to
which reference is made and of which Caliber acknowledges having been
provided a copy. In certain cases the lease for a former NASD site has
not been assigned to Sylvan but Sylvan is subletting the site. Sylvan
will sublet under like terms to
4
<PAGE>
Caliber and Caliber shall pay to Sylvan such lease costs as are
assumed by Sylvan for these sites.
2.02 Caliber shall bear and be responsible for all transfer, sales,
recording and filing taxes or fees resulting from the transfer of any
lease hereunder, which amounts are Caliber's sole responsibility.
3.0 USE OF TESTING CENTER ASSETS
3.01 On the Closing Date (as defined in Section 4.01), Sylvan shall provide
and extend to Caliber the exclusive use of the following:
(a) All of the furniture, fixtures, supplies, equipment and other
tangible assets owned by Sylvan that are used or held for use
solely in connection with the operation of the Testing Centers,
shown on the attached Exhibit D, together with all sundry items
of a like character which, although not described on Exhibit D,
are owned by Sylvan and situated on or about the various premises
described in Exhibit A. Collectively, the items described in
this paragraph (a) are referred to as the "Center Assets."
3.02 Nothing in this Agreement shall obligate Sylvan to transfer any
accounts receivable arising with respect to the operation of the
Testing Centers. Nothing in this Agreement shall obligate Caliber to
assume any accounts payable or liabilities, determined in accordance
with generally accepted accounting principles, arising with respect to
the Testing Centers prior to the Effective Date.
3.03 Upon Caliber's cessation of operating an STC in any of the Testing
Center sites, all physical property and equipment in such site that is
owned by Sylvan shall be packed and shipped by Caliber, at Caliber's
expense, to such location(s) as directed by Sylvan.
4.0 CLOSING
4.01 The closing of the transactions contemplated by Section 3 of this
Agreement (the "Closing") shall take place at the offices of Sylvan,
1000 Lancaster Street, Baltimore, Maryland 21202, on a date (the
"Closing Date") to be agreed to by the parties, which shall be within
ninety (90) days after the Effective Date, provided that either party
may by advance notice to the other party unilaterally extend the
Closing Date by up to thirty (30) days and the Closing Date and
Closing may occur at such other place and date as the parties may
mutually agree to in writing.
4.02 At the Closing, Sylvan shall execute and/or deliver to Caliber:
(a) Original or photocopies of all books, records, files, documents,
and papers, including commercial vendor contracts and all records
of the accounts used in the operation of or relating exclusively
to the
5
<PAGE>
operation or management of the Testing Centers and Center Assets,
provided, however, that the transfer of such books and records
shall be extended to the date on which interim accounts services
are last provided by Sylvan;
(b) Any and all other documents, instruments or agreements reasonably
necessary to fulfill the purposes of this Agreement.
4.03 At the Closing Caliber shall execute and/or deliver to Sylvan:
(a) Assumption agreements relating to the leases assumed by Caliber
pursuant to Section 2.0 of this Agreement;
(b) Any and all other documents, instruments or agreements reasonably
necessary to fulfill the purposes of this Agreement.
5.0 SYLVAN EMPLOYEES
5.01 A complete list of all employees involved in or having duties
associated with the Testing Centers (the "Center Employees"), their
current salary/wage level, date of hire, date of birth, credited years
of service, and position is shown on Exhibit E attached hereto.
Caliber agrees to extend offers to employ as of May 1, 1997 (the
"Transition Date"), or as soon as practicable thereafter, each of the
Center Employees actively employed in a Testing Center immediately
prior to the Transition Date (including Center Employees on leave of
absence or receiving short-term disability or workers compensation)
and to employ as of the Transition Date each Center Employee accepting
such offer.
(a) In every case, an offer of employment shall be on terms that
provide the same salary or wage rate (calculated on an hourly
basis for nonexempt employees), a similar position,
responsibility and employment status (i.e., part or full-time) as
held by the Center Employee immediately prior to the Transition
Date. Every Center Employee accepting employment with Caliber
shall receive and be entitled to benefits at least comparable to
those enjoyed by similarly situated employees of Caliber.
(b) Caliber agrees to permit every Center Employee on leave of
absence who accepts employment with Caliber to continue such
leave on the same terms and conditions, including benefits, as
provided by Sylvan.
(c) The employee incentive plan currently operated by Sylvan for the
benefit of the Center Employees shall not be modified or
terminated by Caliber, but shall be maintained and observed by
Caliber at least through December 31, 1997.
6
<PAGE>
5.02 Every Center Employee accepting employment with Caliber will, for
purposes of any eligibility, vesting or waiting period under any
health, 401k, vacation, severance or other benefit plan, be credited
for the same periods of service credited by Sylvan prior to the
Transition Date.
5.03 Except as expressly provided in this Article 5, nothing in this
Agreement, whether express or implied, shall confer upon any Center
Employee any rights or remedies, including any right to employment, or
continued employment for any specified period, of any nature or kind
whatsoever under or by reason of this Agreement.
5.04 Caliber shall be solely responsible for, and hereby agrees to hold
Sylvan harmless against, any COBRA obligations or liabilities relating
to Center Employees who accept employment with Caliber, or relating to
the qualified beneficiaries of such employees.
6.0 REPRESENTATIONS AND WARRANTIES OF CALIBER
Caliber hereby represents and warrants to Sylvan that:
6.01 Caliber is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and has the corporate
power to carry on its business as it is now being conducted and to
perform the actions contemplated hereby. Neither the execution and
delivery of this Agreement nor the carrying out of the transactions
contemplated hereby will result in any violation of, or be in conflict
with, Caliber's Charter or By-Laws.
6.02 No litigation, actions or proceedings, legal, equitable,
administrative, through arbitration or otherwise, including but not
limited to lawsuits, claims or disputes with employees, clients and
vendors, etc., are pending or, to the best of Caliber's knowledge,
threatened as of the date this Agreement is executed by Caliber that
might affect the Testing Centers or the consummation of the
transactions described in this Agreement.
6.03 To the best of Caliber's knowledge, neither the execution and delivery
of this Agreement nor the carrying out of the transactions
contemplated hereby will result in any violation, termination or
modification of; or be in conflict with any terms of any contract,
instrument or other agreement to which Caliber is a party or by which
it or any of its properties is bound or affected, or any law, rule,
regulation, license, permit, judgment, decree or order applicable to
Caliber or by which any of its properties or assets are bound or
affected, or result in any breach of or constitute a default (or with
notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation, or result in the creation of any lien, charge or
encumbrance upon any of its properties or assets, except where such
event or occurrence would not, singly or in the aggregate, have a
material adverse affect on Caliber.
7
<PAGE>
6.04 Caliber has taken no action which would give rise to a valid claim
against any party hereto for a brokerage commission, finder's fee,
counseling or advisory fee, or like payment.
6.05 The execution, delivery and performance of this Agreement by Caliber
has been duly authorized by its Board of Directors, and this Agreement
is a valid, legally binding and enforceable obligation of Caliber.
7.0 REPRESENTATIONS AND WARRANTIES OF SYLVAN
Sylvan hereby represents and warrants to Caliber that:
7.01 Sylvan is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland, and has the
corporate power and authority to carry on its business as it is now
being conducted and to perform the actions contemplated hereby.
Neither the execution and delivery of this Agreement nor the carrying
out of the transactions contemplated hereby will result in any
violation of; or be in conflict with, Sylvan's Articles of
Incorporation or By-Laws.
7.02 To the best of Sylvan's knowledge, Sylvan possesses sufficient title
to all of the Center Assets to use the Center Assets as they are being
used immediately prior to the Effective Date.
7.03 With the exception of 1) the ACT litigation described on Exhibit C
attached to this Agreement, and 2) the rights of NASD referred to in
Section 2.01(v) hereof, no litigation, actions or proceedings, legal,
equitable, administrative, through arbitration or otherwise, including
but not limited to lawsuits, claims or disputes with employees,
clients and vendors, etc., are pending or, to the best of Sylvan's
knowledge, threatened as of the date this Agreement is executed by
Sylvan that might affect the Testing Centers, the assets being
purchased, or the consummation of the transactions described in this
Agreement.
7.04 To the best of Sylvan's knowledge, all of the assets which constitute
furniture, fixtures, supplies, equipment and other tangible assets
sold pursuant to this Agreement are as of the Effective Date in good
condition, except for those the absence of which is not material to
the operation of the Testing Centers.
7.05 To the best of Sylvan's knowledge, Sylvan has fulfilled all of its
obligations under and has complied in all material respects with all
state and federal laws, rules and regulations applicable to the
operation of the Testing Centers, except for any failure which would
not have a material adverse effect on the operation of the Testing
Centers.
8
<PAGE>
7.06 To the best of Sylvan's knowledge, neither the execution and delivery
of this Agreement nor the carrying out of the transactions
contemplated hereby will result in any violation, termination or
modification of, or be in conflict with any terms of any contract,
instrument or other agreement to which Sylvan is a party or by which
it or any of its properties is bound or affected, or any law, rule,
regulation, license, permit, judgment, decree or order applicable to
Sylvan or by which any of its properties or assets are bound or
affected, or result in any breach of or constitute a default (or with
notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation, or result in the creation of any lien, charge or
encumbrance upon any of its properties or assets, except where such
event or occurrence would not, singly or in the aggregate, have a
material adverse effect on Sylvan.
7.07 Sylvan has taken no action which would give rise to a valid claim
against any party hereto for a brokerage commission, finder's fee,
counseling or advisory fee, or like payment.
7.08 The execution, delivery and performance of this Agreement by Sylvan
has been duly authorized by its Board of Directors, and this Agreement
is a valid, legally binding and enforceable obligation of Sylvan.
8.0 COVENANTS AND AGREEMENTS OF SYLVAN AND CALIBER
8.01 Sylvan hereby covenants and agrees with Sylvan as follows:
(a) Any accounts payable accruing as a result of the operation of the
Testing Centers before the Effective Date shall remain the
responsibility of Sylvan and shall be paid by Sylvan promptly as
they become due and payable.
(b) Prior to the Closing Date and upon reasonable notice, Sylvan
shall make available to Caliber and its authorized agents and
accountants at reasonable times and under reasonable
circumstances the following items with respect to the Testing
Centers: assets, properties, business and financial records,
working papers, files, and memoranda of its public accountants or
auditors, including, without limitation, vendor contracts with
and records of the accounts of vendors used in the operation of
or relating to the Testing Centers, for the purposes of
inspecting, examining and copying the same, as is deemed
necessary or desirable by Caliber.
(c) Sylvan shall use all reasonable efforts to preserve intact the
Centers' organization and personnel and to keep available all of
its employees, agents, independent contractors, and consultants
through the Closing Date.
9
<PAGE>
(d) Sylvan shall use all reasonable efforts to preserve intact the
goodwill of all commercial vendors and others with respect to the
Testing Centers through the Closing Date;
(e) Sylvan shall keep in force through the Closing Date all policies
of insurance covering the Testing Centers and its properties and
assets;
(f) Sylvan shall use reasonable efforts to maintain through the
Closing Date the furniture, fixtures, supplies, equipment and
other tangible assets to be used by Caliber pursuant to this
Agreement in the same condition as they are on the Effective
Date, ordinary wear and tear excepted.
(g) Sylvan shall use all reasonable efforts to cooperate in obtaining
all consents and satisfying all conditions to be obtained or
satisfied on or before the Closing Date.
8.02 Caliber hereby covenants and agrees with Sylvan as follows:
(a) Any accounts payable accruing as a result of the operation of the
Testing Centers on or after the Effective Date shall be the
responsibility of Caliber and shall be paid by Caliber promptly
as they become due and payable.
(b) After the Effective Date and upon reasonable notice, Caliber
shall make available to Sylvan and its authorized agents and
accountants at reasonable times and under reasonable
circumstances any books or records relating to the pre-Effective
Date operation of the Testing Centers.
(c) Caliber is to be responsible for all liabilities associated with
the operation of the Testing Centers, including, without
limitation, lease payments, withholding taxes, social security
taxes, unemployment contributions, salaries, and purchases,
incurred after the Effective Date, and Caliber specifically
agrees to assume such liabilities as of the Effective Date.
(d) Caliber shall use all reasonable efforts to cooperate in
obtaining all consents and satisfying all conditions to be
obtained or satisfied on or before the Closing Date.
10
<PAGE>
9.0 NONASSUMPTION OF LIABILITIES
9.01 Unless otherwise expressly provided for in this Agreement, the
liabilities and obligations incurred by Sylvan prior to the Effective
Date are not assumed by Caliber but continue as liabilities and
obligations of Sylvan and shall be solely paid by Sylvan. In the event
Caliber is presented with a bill or invoice addressed to it but
relating to operation of the Testing Centers before the Effective
Date, Caliber shall forward such to Sylvan and Sylvan shall pay such
within fifteen days after the latter of its due date and the date it
is forwarded by Caliber, together with any applicable interest or
penalties. If Sylvan disputes any obligation or amount reflected on a
bill or invoice it shall deliver notice of such to the payee within
such fifteen day period and provide a copy of such notice to Caliber,
in which case Caliber shall be indemnified by Sylvan against any
liability for such amount pursuant to Section 10. In the event that
Sylvan neither pays nor delivers notice of dispute of such obligation
or amount within such period of time, Caliber may pay such amount and
shall be entitled to reimbursement of such amount from Sylvan, and
Caliber shall have the right to offset any such amount actually paid
by Caliber against any payment owed to Sylvan by Caliber.
9.02 Unless otherwise expressly provided for in this Agreement, the
liabilities and obligations incurred in the operation of the Testing
Centers after the Effective Date shall not be the responsibility of
Sylvan but shall be liabilities and obligations of Caliber and shall
be solely paid by Caliber. In the event Sylvan is presented with a
bill or invoice addressed to it but relating to operation of the
Testing Centers on or after the Effective Date, Sylvan shall forward
such to Caliber and Caliber shall pay such within fifteen days after
the latter of its due date and the date it is forwarded by Sylvan,
together with any applicable interest or penalties, except that Sylvan
may pay directly any such bill or invoice arising under any agreement
or commitment that has not been signed or transferred to Caliber
hereunder at the time such liability accrued and, unless Sylvan and
Caliber agree otherwise, Sylvan shall be entitled to credit such
amount against any Management Fees thereafter payable under this
Agreement or, after the expiration of the Management Period, against
any amounts payable under the Services Agreement. If Caliber
disputes any obligation or amount reflected on a bill or invoice
forwarded to it by Sylvan, it shall deliver notice of such to the
payee within such fifteen day period and provide a copy of such notice
to Sylvan, in which case Sylvan shall be indemnified by Caliber
against any liability for such amount pursuant to Section 10. In the
event that Caliber neither pays nor delivers notice of dispute of such
obligation or amount within such period of time, Sylvan may pay such
amount and shall be entitled to reimbursement of such amount from
Caliber, and Sylvan shall have the right to offset any such amount
actually paid by Sylvan against any payment owed to Caliber by Sylvan.
11
<PAGE>
9.03 Unless otherwise expressly provided for in this Agreement, any bill
or invoice relating to liabilities or obligations incurred with
respect to the Testing Centers over a period of time that begins
prior to the Effective Date and ends after the Effective Date (a
"Straddle Period"), regardless of whether paid before or after the
Effective Date, shall be allocated between Sylvan and Caliber as
follows: (i) Sylvan shall be responsible for that portion of the
amount determined by multiplying the amount of the liability or
obligation by a fraction, the numerator of which shall be the number
of days from the beginning of the Straddle Period until the day
before the Effective Date and the denominator of which shall be the
total number of days in the Straddle Period, and (ii) Caliber shall
be responsible for that portion of the amount determined by
multiplying the amount of the liability or obligation by a fraction,
the numerator of which shall be the number of days from the
Effective Date until the end of the Straddle Period and the
denominator of which shall be the total number of days in the
Straddle Period.
10.0 INDEMNIFICATION
10.01 From and after the Effective Date, Caliber shall indemnify, defend
and hold Sylvan, its officers, directors, employees, agents and
permitted assigns and the property of Sylvan free and harmless from
any and all claims, losses, damages, injuries, and liabilities
arising from or in connection with:
(a) any misrepresentation, breach of representation or warranty or
breach or non- fulfillment of any agreement or covenant on the
part of Caliber under this Agreement, or from any inaccuracy or
misrepresentation in or omission from any certificate or other
instrument or document furnished or to be furnished by Caliber
hereunder; and
12
<PAGE>
(b) the operation of the Testing Centers or the ownership, control,
or management of any assets or properties of the Testing
Centers by Caliber after the Effective Date.
10.02 From and after the Effective Date, Sylvan shall indemnify, defend
and hold Caliber, its officers, directors, employees, agents and
permitted assigns and the property of Caliber free and harmless from
any and all claims, losses, damages, injuries, and liabilities
arising from or in connection with:
(a) any misrepresentation, breach of representation or warranty or
breach or non-fulfillment of any agreement or covenant on the
part of Sylvan under this Agreement, or from any inaccuracy or
misrepresentation in or omission from any certificate or other
instrument or document furnished or to be furnished by Sylvan
hereunder; and
(b) the operation of the Testing Centers or the ownership, control,
or management of any assets or properties of the Testing
Centers by Sylvan prior to the Effective Date.
10.03 The party claiming indemnification under this Section shall promptly
notify (and, in the case of any action, suit, arbitration, or
judicial or administrative proceeding, shall so notify no later than
fifteen (15) days after the party claiming indemnification has
received notice thereof or has been served with a complaint or other
process) the other party when it has knowledge of circumstances or
the occurrence of any events which are likely to result in an
indemnification obligation under this Agreement or when any action,
suit, arbitration, or judicial or administrative proceeding is
pending or threatened that is covered by this Agreement.
The indemnifying party shall defend the party to be indemnified
through counsel reasonably satisfactory to the party to be
indemnified. Sylvan, as the party to be indemnified, shall have the
right of prior approval over any settlement if such settlement might
directly or indirectly affect, in a materially detrimental way,
Sylvan.
The party claiming indemnification shall cooperate with the other
party in the defense of any such suit or proceeding, and the other
party shall reimburse the party claiming indemnification for its
expenses with respect thereto, including counsel of its choice. Such
cooperation shall include, but not be limited to, the making of
statements and affidavits, attendance at hearings and trials,
production of documents, assistance in securing and giving evidence
and obtaining the attendance of witnesses, provided, however, that
in no event shall either party be required to waive attorney-client
or other applicable privileges.
Failure by the party claiming indemnification to promptly notify the
other party within the time period set forth in the first paragraph
of this Section shall not invalidate any claim or right for
indemnification, unless such failure has a material adverse affect
on the settlement, defense, or compromise of the matter that is the
subject of the claim for indemnification. In addition, the party
claiming indemnification shall be responsible for any claims or
losses which could have been avoided or mitigated by prompt notice
as required by this subsection.
11.0 GENERAL AND ADMINISTRATIVE PROVISIONS
11.01 Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective heirs,
executors, administrators, legal representatives, successors and
assigns.
11.02 Assignment. Neither party may assign this Agreement, or any part
thereof, without the prior written approval of the other party,
which approval shall
13
<PAGE>
not be unreasonably withheld. Any such request for approval of a
proposed assignment shall be accompanied by a copy of the proposed
contract between the party and the proposed assigned subcontractor.
Caliber may, upon reasonable prior notice to Sylvan, but without the
necessity of Sylvan's consent, assign its rights and obligations
under this Agreement to a parent or wholly owned subsidiary pursuant
to any internal reorganization not involving a change of control or
ownership of Caliber. Any other assignment by Caliber may be made
only with the prior consent and approval of Sylvan. Sylvan may, upon
reasonable prior notice to Caliber, but without the necessity of
Caliber's consent, assign this Agreement and its rights and
obligations hereunder to an entity controlling, controlled by or
under common control with Sylvan. Any other assignment by Sylvan may
be made only with the prior consent and approval of Caliber.
11.03 Maryland Law. This Agreement shall be subject to, governed by and
construed in accordance with the laws (except for the choice of law
provisions) of the State of Maryland. Any and all obligations or
payments are due and payable in the City of Baltimore, Maryland.
11.04 Severability. If any provision of this Agreement should, for any
reason, be held violative of any applicable law, and so much of this
Agreement be held unenforceable, then the invalidity of such a
specific provision of this Agreement shall not be held to invalidate
any other provisions of this Agreement, which other provisions shall
remain in full force and effect unless removal of the invalid
provisions destroys the legitimate purposes of this Agreement, in
which event this Agreement shall be canceled.
11.05 Entire Agreement. This Agreement and the Services Agreement,
together with all other documents, instruments or agreements
executed or delivered in connection herewith or therewith,
collectively represent the entire understanding of the parties
hereto with respect to the subject matter hereof. There are no oral
agreements, understandings, or representations made by any party to
this Agreement that are outside of this Agreement and the Services
Agreement and are not expressly stated herein or therein.
Capitalized terms not defined herein shall have the meaning set
forth in the Services Agreement.
11.06 Notices. Any notices or other communications required or which may
be given by either party to the other party under this Agreement,
shall be in writing and may be sent by Fax, however the original
shall be sent either by overnight courier, with a verified receipt,
or by registered or certified mall, postage prepaid and addressed to
and at the address stated below or to such other address as the
parties shall subsequently designate to each other by notice given
in accordance with this Section. Such notice shall be deemed to be
sufficiently given on the earlier of the date when the original is
received by the receiving party and the date that is three (3)
business days after the original is sent or mailed.
14
<PAGE>
FOR SYLVAN: SYLVAN LEARNING SYSTEMS, INC.
Attention: B. Lee McGee
1000 Lancaster Street
Baltimore, Maryland 21202
FOR CALIBER: CALIBER LEARNING NETWORK, INC.
Attention: Christopher Nguyen
1000 Lancaster Street
Baltimore, Maryland 21202
A party may change the address for notice by giving notice of such
change to the other party in writing.
11.07 Amendments & Waivers. This Agreement may be amended only in
writing by the mutual consent of all of the parties hereto. No waiver
of any provision of this Agreement shall arise from any action or
inaction of any party, except an instrument in writing expressly
waiving the provision executed by the party entitled to the benefit
of the provision.
11.08 Survival. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement or contained in
any writing delivered pursuant to this Agreement shall survive the
Closing.
11.09 Expenses. Except as otherwise expressly provided herein, each
party to this Agreement shall pay the fees and expenses incurred by
it in connection with the transactions contemplated by this
Agreement. if any action is brought for breach of this Agreement or
to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover court costs and reasonable attorney's
fees.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereunder have executed this Agreement as
of the day and year first above written.
"CALIBER" "SYLVAN"
CALIBER LEARNING NETWORK, INC. SYLVAN LEARNING SYSTEMS, INC.
BY: _______________________________ BY: _______________________________
16
<PAGE>
AMENDMENT NO. 1 TO
TESTING CENTER MANAGEMENT AND CBT SERVICES AGREEMENT
BETWEEN
SYLVAN LEARNING SYSTEMS, INC.
AND
CALIBER LEARNING NETWORK, INC.
This Amendment No. 1 (this "Amendment") to the Testing Center Management
and CBT Services Agreement (the "Agreement") is made and entered into effective
as of May 2, 1997, by and between SYLVAN LEARNING SYSTEMS, INC. ("Sylvan"), a
Maryland corporation, and CALIBER LEARNING NETWORK, INC. ("Caliber"), a Maryland
corporation.
RECITALS
1. The parties entered into the Agreement on May 1, 1997.
2. This Amendment is entered into to correct certain errors and to clarify
certain obligations of the parties.
TERMS AND CONDITIONS
In consideration of the mutual covenants set forth in the Agreement and this
Amendment, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sylvan and Caliber amend the
Agreement as follows:
1.0 COMPENSATION
The first sentence of Paragraph 1.03 of the Agreement is hereby deleted and the
following is substituted therefor:
"1.03 As consideration for all of the services to be performed by Caliber in
its operation of the Testing Centers during the Management Period, Sylvan
shall pay the following fees to Caliber (the "Management Fees"), during
the following periods:
*
*
- ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
2.0 TESTING CENTER SITES
Section 2.0 of the Agreement is hereby deleted in its entirety and the following
is substituted therefor:
"2.0 MANAGEMENT AND USE OF TESTING CENTER LEASEHOLDS
Sylvan represents and warrants that it has obtained any and all landlord
consents required under the leases covering the Testing Centers (the
"Leases") in order for Caliber lawfully to manage and use the leased
premises covered thereby. Caliber shall use and manage the Testing Centers
subject to the terms of this Agreement and the terms of the Leases.
Caliber assumes and agrees to perform and comply with all of the
agreements, covenants and obligations of Sylvan as tenant under the Leases,
the terms and conditions of which being hereby incorporated by reference
herein as if set forth in full; provided, however, that nothing in this
Section 2.0 shall be deemed to constitute any Testing Center landlord a
third party beneficiary of Caliber's covenants hereunder and no such
landlord shall have any right or power to enforce against Caliber any
obligations of Sylvan under any Lease."
3.0 COVERED TESTING CENTERS
Exhibit A to the Agreement is hereby deleted in its entirety and replaced by the
- ---------
substitute Exhibit A attached hereto. For all purposes of the Agreement, the
---------
term "Testing Centers" means those Testing Centers listed on the substitute
Exhibit A attached to this Amendment.
- ---------
4.0 GENERAL
This Amendment constitutes all of the amendments to the Agreement intended by
the parties. Except as modified hereby, all of the other contractual
obligations of the parties under the Agreement shall remain in full force and
effect. In the event of any conflict between the terms of this Amendment and
the terms of the Agreement or any Exhibit thereto, the terms of this Amendment
shall prevail.
- -------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year first above written.
SYLVAN LEARNING SYSTEMS, INC.
By:_______________________________
Name:_____________________________
Title:______________________________
CALIBER LEARNING NETWORK, INC.
By:_______________________________
Name:_____________________________
Title:______________________________
3
<PAGE>
EXHIBIT A
TEST CENTERS & PERMITTED FIRST CLOSING DATES
<TABLE>
<CAPTION>
# CITY SEATS PERMITTED FIRST CLOSING DATES
<S> <C> <C> <C> <C>
SITES: 5201 Anchorage, AK 5 N/A#
5202 Dover, DE 5 N/A#
5206 Forest Hills[Queens], NY 28 N/A#
5209 Williston, VT 5 N/A#
5212 Little Rock, AR 15 N/A#
5216 Washington, DC 15 N/A#
5230 Chicago, IL 12 N/A#
5233 Baton Rouge, LA 15 N/A#
5235 Boston, MA 28 N/A#
5237 Morgantown, WV 7 N/A#
5241 Bloomington [Normal], IL 8 N/A#
5242 Concord, NH 8 N/A#
5244 Toledo, OH 11 N/A#
5249 Scranton, PA 9 N/A#
5804 *Atlanta, GA 15 N/A
5807 *Chicago, IL 25 N/A
5811 *Dallas, TX 21 N/A
5812 *Denver, CO 15 N/A
5815 *Glendale [LA], CA 24 N/A
5823 Melville [Long Island], NY 21 N/A#
5832 *NY [Midtown], NY 50 N/A
5833 *NY [Whitehall], NY 50 N/A
5836 *Maitland [Orlando], NY 15 N/A
5849 *San Francisco, CA 26 N/A
5855 *Waltham [Boston], MA 23 N/A
5856 NY [Penn Plaza], NY 44 N/A#
5858 Union [Newark], NJ 22 N/A#
CLOSING SITES:
5802 Albuquerque, NM 4 When alternate sites are operating
5817 Houston, TX 15 When alternate sites are operating
5826 Milwaukee, WI 12 When alternate sites are operating
5831 Norwalk, CT 11 When alternate sites are operating
5854 Tyson's Corner, VA 15 9/1/97
</TABLE>
Other sites in the 52xx series are not included in this list because they are
currently operated by 3rd parties or inside ETS FSOs [Field Service Offices].
. * These sites are designated NASD "Flagship" sites and operate per the
"Flagship" guidelines in the NASD Agreement.
. # These sites have no planned closing date however they could be closed
if a franchise operated STC opened in this market
