ADDENDUM #6 TO
LICENSING AND DISTRIBUTION AGREEMENTS
(2004-2005 and 2005-2007)
THIS ADDENDUM #6
TO LICENSING AND DISTRIBUTION AGREEMENTS (this “
Addendum ”) is dated as of October 6, 2005 and is
effective as of June 30, 2005 (“ Effective Date
”), by and between ENCORE SOFTWARE, INC. , a Minnesota
corporation (“ Distributor ”), and RIVERDEEP
INC., A LIMITED LIABILITY COMPANY, a Delaware limited liability
company (“ Riverdeep ”), with respect to the
following Recitals.
A. WHEREAS,
Distributor and Riverdeep have entered into (i) that certain
Licensing and Development Agreement (Manufacturing
Rights)(2004-2005), dated as of March 29, 2004, as amended and
in effect (collectively, “ Agreement One ”),
(ii) that certain Licensing and Development Agreement
(Manufacturing Rights)(2005-2007), dated as of March 29, 2004,
as amended and in effect (collectively, “ Agreement
Two ”, and together with Agreement One, as amended, the
“ Manufacturing Agreements ”, and
(iii) that certain Transition Services Agreement dated
April 1, 2004 (the “ Transition Agreement
”); each initially-capitalized term used herein and not
otherwise defined shall have the meaning ascribed to such term in
the Manufacturing Agreements or the Transition Agreement, as
applicable), pursuant to which, among other things, Riverdeep has
granted Distributor exclusive rights to replicate, sell, and
distribute the Products into the Channel and the Territory, as more
particularly described in each of the Agreements.
B. WHEREAS,
the parties now desire to enter into this Addendum to amend certain
terms and conditions of the Manufacturing Agreements as
specifically set forth herein, and to memorialize the release of
certain specific rights as further set forth herein solely with
respect to Agreement One and the Transition Agreement;
and
C. WHEREAS,
the parties agree to work in good faith to amend and restate
Agreement Two to reflect and be consistent with the terms and
conditions set forth herein, in addition to other identified
amended terms included in any and all other Addenda previously
agreed in writing between the parties.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1.
Definitions. Capitalized terms used but not defined herein
shall have the same meaning as in the Agreements.
2.
Reconciliation .
The parties hereby acknowledge and agree that each has made good
faith efforts in respect of the reconciliation of accounts and
records related to Agreement One and the Transition Agreement, and
have reached mutual agreement with respect to such amounts,
provided however that
certain additional adjustments to such reconciliation may be
required by the mutual agreement of the parties in the future due
to the difficulties of presently ascertaining all possible
adjustments to the subject matter of the reconciliation as of the
Effective Date of this
Addendum.
Notwithstanding the foregoing, as of the Effective Date the parties
are not aware of any outstanding reconciliation items. The parties
hereby agree, subject to Section 4 (Offset) below:
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(i)
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Payments made by Distributor to
Riverdeep have equaled $12,106,360.00, which included both cash
payment and acknowledged and agreed discounts on payment, effective
as of March 31, 2005 of which $2,624,878 of such amount are
pre-paid royalties under Agreement One which Distributor has not
yet recouped (“Unearned Royalties”). Distributor shall
be entitled to take as prepaid royalties under Agreement One.
Notwithstanding the foregoing, to the extent that Distributor has
not otherwise earned out any Unearned Royalties by the expiration
of the Term of Agreement Two, then the Term of Agreement Two shall
be extended until such time as any Unearned Royalties have been
recouped, in addition to such extensions as otherwise set forth in
Section 4 of Agreement Two. To the extent the Unearned
Royalties are recouped by the expiration of the Term of Agreement
Two, no such extension shall be triggered.
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(ii)
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Riverdeep agrees to pay (in the form
of a credit against amounts owed by Distributor to Riverdeep)
Distributor $1,433,203.04 , or such other amount based upon
those adjustments permissible under Section 2(iii) over twelve
(12) months beginning on April 1, 2005. Payment will be
made in 12 monthly installments, with the April monthly
installment due as of May 1, 2005. All remaining payments will
be due on the first day of the subsequent month with the last
payment due on April 1, 2006. The first seven (7) of
those installments shall be of $106,146.05 and the remaining five
installment payments shall be of $138,036.14.
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(iii)
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The
parties agree that, as of the Effective Date, certain
reconciliation items remain to be finalized and are have been
expressly excluded from the releases set forth in this Addendum in
addition to items 2(iii)(A)-(D) (the “ Release
Exceptions ”). Notwithstanding the foregoing, each party
shall diligently work in concert to resolve all such
reconciliations, chargebacks, credits and/or payments. Each party
agrees that deductions or credits pursuant to Section 2 shall
result in corresponding adjustments to the royalties paid to
Riverdeep by adjusting the Net Receipts. As of the Effective Date,
the parties are aware of the following reconciliation
items:
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(A) Riverdeep is entitled to payment of
$114,282.81 in channel inventory reconciliation with respect to the
account of certain Products formerly distributed by Riverdeep and
now owned by MyFamily.com pursuant to an agreement by and between
Riverdeep and MyFamily.com, provided that Riverdeep
represents and warrants that as of the Effective Date, it is the
owner of such channel inventory and Riverdeep hereby agrees to
indemnify and hold Distributor harmless from any loss, cost,
expense or damage (including attorney’s fees) to the extent
relating to any action, claim, demand or proceeding instituted by
MyFamily.com, Inc. due to payment of such amounts by Distributor to
Riverdeep in relation to such channel inventory.
(B) Distributor is entitled to and
Riverdeep has credited an amount equivalent to $1,071,040.96 for
returns, rebates, product mark-down expenses, MDF credits,
and
Sales Discounts
(“ Dilutions ”) incurred by Encore from various
retail accounts related to activity prior to the Commencement Date
of Agreement One.
(C) Riverdeep is entitled to payment in the
amount of $116,471.94 due to Wal-Mart Corporation erroneously
crediting Distributor, or Distributor’s parent company with
such aforementioned amount, that was actually due to Riverdeep for
unresolved account activity in the retail channel prior to the
Commencement Date of Agreement One.
(D) Riverdeep may be entitled to credit or
reconciliation of amounts up to a maximum of $41,690.57 in relation
to post-audit credits relating to sales and distribution by
Wal-Mart Corporation prior to the Commencement Date of Agreement
One, the parties shall endeavor to research and resolve such
post-audit credits within sixty (60) days from the Effective
Date hereof .unless such time period is extended by mutual
agreement of the parties.
3.
Modifications and Release . In consideration of the amendments made herein
and such other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by each of the parties, with
the exception of the Release Exceptions , the parties intend to
release any and all potential disputes, claims or potential claims
that may arise between Distributor and Riverdeep in relation to
Returns received through March 31, 2005 for sales of Channel
Inventory attributable to Riverdeep prior to the Effective Date of
Agreement One (the “Potential Claim”). In full
satisfaction of such Potential Claim,
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(i)
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pay
Distributor $507,617.75 in three (3) equal annua
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