ADDENDUM #7 TO
LICENSING AND DISTRIBUTION AGREEMENTS
(2004-2005 and 2005-2007)
THIS ADDENDUM
#7 TO LICENSING AND DISTRIBUTION AGREEMENTS (this
“Addendum”) is dated and effective as of April 1,
2006 (“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”).
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A.
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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”). Each
initially capitalized term used herein and not otherwise defined
shall have the meaning ascribed to such term in the Manufacturing
Agreements.
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B.
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WHEREAS, the parties now desire to
enter into this Addendum to amend certain terms and conditions of
Agreement Two and the Manufacturing Agreements, as applicable, and
as specifically set forth herein.
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C.
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WHEREAS, the parties agree 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.
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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.
Additional or Amended Terms to the Manufacturing
Agreements.
The parties hereby
agree to amend the terms of the Manufacturing Agreements as
follows:
A.
Effective April 1, 2006 and notwithstanding anything to the
contrary in Addendum 5 to the Manufacturing Agreements, sales of
the New Products shall be included in calculations of earned
royalties for sales of Products under Agreement Two. Accordingly
Distributor shall not, after such date, be liable for any
additional, incremental payments in relation to the New Products
(including any Guaranteed Royalties that would have otherwise been
due on such New Products) under Agreement Two above and beyond
those payments that shall be calculated in accordance with
Section 1B below.
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B.
The parties agree that for the period of April 1, 2006 through
March 31, 2007 (“Annual Target Period”) only
(unless mutually agreed upon otherwise in a writing executed by
both parties):
(i) each and every
reference of the term “Guaranteed Royalty” (including
but not limited to the Guaranteed Royalty for New Products) shall
be replaced with the term “Target Payments” for such
duration of time.
(ii) effective
only during the Annual Target Period, and not applicable
retroactively to any previous period whatsoever, Section 4.2.
of Agreement Two shall be amended and replaced with the following
covering only such Annual Target Period, and thereafter shall
revert back to the previous language as amended herein as further
set forth in Section C below:
4.2.1. Subject
to further adjustments as provided in this Section 4.2,
Distributor and Riverdeep shall mutually determined and derive
“Quarterly Targets” and an “Annual Target”
as further defined below and shall make Quarterly Target payments
to Riverdeep (that shall be recouped against royalties earned in
accordance with Exhibit B) as follows (the sum of all such
Quarterly Target payments, shall be referred to as the
“Target Payment(s)”):
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(a)
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For
the first fiscal quarter of the Annual Target Period commencing on
April 1, 2006 the Annual Target, prior to any adjustment that
may later be applicable as provided for herein, shall be in the
amount of Ten Million Dollars ($10,000,000) and the initial
Quarterly Target payment for the first quarter beginning on
April 1, 2006 shall be in the amount of Two Million Five
Hundred Thousand Dollars ($2,500,000), payable as set forth
herein;
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(b)
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For
the second fiscal quarter of the Annual Target Period, and for
every fiscal quarter thereafter during such aforementioned Annual
Target Period ending on March 31, 2007, the parties shall
re-evaluate the accuracy of the Annual Target and the Quarterly
Targets for the remainder of such Annual Target Period, not later
than thirty (30) days prior to the beginning of each
subsequent fiscal quarter and shall adjust the Annual Target and
Quarterly Targets in accordance with the following two
calculations:
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(X) the
Annual Target shall be revised to equal
(1) the
sum all royalties earned against Net Receipts (in accordance with
Exhibit B) for all preceding quarters during such Annual
Target Period; divided by
(2) the
number of quarters preceding the quarter in which the calculation
is being determined, which shall result in an average of quarterly
royalties earned by Riverdeep (“Average”),
and
(3) the
Average multiplied by four (4);
(Y) the
revised Quarterly Target applicable for any remaining fiscal
quarters in the Annual Target Period shall equal the revised Annual
Target figure equally
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divided into
four (4) and the next Quarterly Target payment shall
refl
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