<PAGE>
EXHIBIT 10.17
EDT Learning [LOGO]
The Power of e-learning Simplified
SUBCONTRACTOR AGREEMENT
This subcontractor agreement (the "Agreement"), is made to be
effective
on May 1, 2003 (the "Effective Date") by and between EDT Learning,
Inc. ("EDT
Learning"), a Delaware corporation and Interactive Alchemy, Inc.
("Contractor").
WHEREAS, EDT Learning is in the business of providing custom
content
development services to its customers (in the corporate, government
and
education customers sectors) and is the owner of certain
proprietary techniques,
methods and/or processes for developing and converting content into
online and
cd-rom based courses to individual end users and distributors;
WHEREAS, EDT Learning and Contractor desire to enter into an
agreement
whereby Contractor will provide e-Learning custom content
development and
professional services to EDT Learning and indirectly to EDT
Learning's Customers
using among other things EDT Learning's Development Software;
WHEREAS, EDT Learning and Contractor wish to execute this Agreement
and
certain subsequent statements of work, which will provide a
description of each
specific engagement or project, the associated fees, and the
resulting work
products or courses;
NOW, THEREFORE, EDT Learning and Contractor, in exchange for the
mutual
promises and conditions contained herein and other good and
valuable
consideration the sufficiency of which is hereby acknowledged, do
agree as
follows:
1.
DEFINITIONS:
a.
"Custom Services" shall mean any of the services provided by
Contractor pursuant to a Statement of Work to EDT Learning and
indirectly to EDT Learning's Customers, which may include but
are not limited to: (i) development of Courses incorporating
and combining Customer Source Material with EDT's Learning
Products or EDT Learning's Development Software; (ii)
customizing and creating a Customer's Course using EDT
Learning's Development Software; (iii) the creation or
customization of an existing Customer's Course using Customer
Source Material and a third party's development software for
EDT Learning; or, (iv) any other type of work or effort on
behalf of EDT Learning or its Customer pursuant to a Statement
of Work executed by the parties hereto.
b.
"Source Material" shall be the source materials that belong to
EDT Learning or its Customers that will be used or
incorporated into a Course as a part of a Statement of Work,
including
text, pictures, graphics, sound files and video
files.
c.
"Customer" shall mean any person or entity that: (i) had prior
to the Effective Date ever purchased, obtained or received any
good, service or product from either EDT Learning or from
entities that have engaged in a merger or asset purchase
transaction with EDT Learning, (specifically LearningEdge,
Inc., ThoughtWare Technologies, Inc., Quisic Corporation and
Mentergy, Inc.) and (ii) any person or entity who does during
the period beginning with the Effective Date and ending the
with termination date of this Agreement purchase, obtain or
receive any good, service or product from EDT Learning.
d. A
"Contractor Client" shall mean any person or entity with
which Contractor does business who is not an EDT Learning
Customer. If a person or entity does business with the
Page 1 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
Contractor prior to becoming an EDT Learning Customer and then
subsequently does business with EDT Learning then that person
or entity will not become a "Customer."
e.
"Course" shall mean any computer based or web based training,
instructional or demonstration course that Contractor develops
for EDT Learning or an EDT Learning Customer and shall also
mean the Derivative Work and Work Product Contractor creates
on behalf of EDT Learning for its Customer using the EDT
Learning Development Software and/or the Contractor
Development Software to modify the Source Material from one or
more Courses.
f.
"Derivative Work" shall mean any work that is based upon one
or more preexisting works, EDT Learning Products, EDT Learning
Development Software, such as a revision, enhancement,
modification, translation, abridgement, condensation,
expansion, or any other form in which such preexisting works
may be recast, transformed or adapted, and that, if prepared
without authorization of the owner of the copyright in such
preexisting work, would constitute copyright infringement. For
purposes hereof, a Derivative Work shall also include any
compilation or combination that incorporates such preexisting
work.
g. "EDT
Learning Products" means the software and other
proprietary products developed, owned, leased and /or licensed
by EDT Learning, and/or the software and other proprietary
products
developed and owned by EDT Learning including
LearnLic(R), or learning management systems, and any other
software in which EDT Learning maintains a proprietary
ownership interest.
h.
"Proprietary Rights" shall mean any and all ownership rights
and other proprietary rights and interests, including but not
limited to, patents, patent rights and published or
unpublished U.S. and foreign patent applications, copyrights,
copyrighted materials, unpublished research and development
information, engineering, technical or product specification,
designs, processes, un-patented inventions, mask ware, mask
works, know-how, trade secrets, trademarks and their
associated good will, trade names, service marks and their
associated good will, logos, designs, technical data, licenses
to practice any of the foregoing, and physical embodiments of
any of the foregoing.
i.
"Development Software" shall mean the proprietary course
development tool set and course player developed and owned by
EDT Learning called i-CanvasTM and any software used or owned
by EDT Learning and used in conjunction with i-Canvas for the
development, creation or maintenance of a Course including EDT
Learning's scripting tool and i-ReviewTM products, together
with any documentation or materials provided therewith.
J.
"Statement of Work" shall mean the document between EDT
Learning and Contractor in which Custom Services will be
assigned by EDT Learning to Contractor. Each Statement of Work
to this Agreement will define Custom Services to be provided
and shall be mutually agreed to between EDT Learning and
Contractor and will be executed by both parties and shall not
be effective or binding upon EDT Learning or its Customer
until signed by an authorized officer of EDT Learning and an
authorized officer of Contractor. Each Statement of Work to
this Agreement may include the description of Custom Services
to be performed, the rate of compensation in hours and in
total, expected start
and completion date, any acceptance
criteria, testing criteria, and delivery milestones. Where a
Statement of Work contains provisions that are inconsistent
with this Agreement, the inconsistent provisions of the
Statement of Work shall govern, and all other provisions of
this Agreement shall remain in full force and effect.
Page 2 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
k.
"Trademarks" shall mean the marks claimed in good faith by EDT
Learning to be its proprietary marks (service and trade) which
include, but are not limited to: "EDT Learning e-Learning
Simplified" "EDT Learning", "EDT Learning Custom Services
Group", i-CanvasTM, LearnLinc(R), TestLincTM, OfficeLincTM,
SupportLincTM, MeetingLincTM, ThoughtWareTM, i-ReviewTM and
any corresponding design or logo, associated with those
Trademarks together with their respective stylistic markings
and distinctive logotypes for such trademarks, trade names and
service marks, along with all associated goodwill.
1.
"Work Product" shall mean (i) all of the tangible product or
result of Contractor's work, including work of Contractor's
subcontractors, if any, pursuant to any Statement of Work
issued hereunder or pursuant to any other agreement of EDT
Learning and Contractor and (ii) all intellectual property and
intellectual property rights that relate to the business and
interests of EDT Learning that Contractor conceives, develops
or delivers at any time during the course of Contractor's
performance of any Statement of Work issued hereunder or
pursuant to any other agreement of EDT Learning and
Contractor. Notwithstanding the foregoing, "Work Product"
shall not include Consultant Tools, and EDT Learning hereby
disclaims any ownership or proprietary interest of any kind in
any Consultant Tools.
m.
"Advance Deposits" shall mean monies EDT collects from EDT
customers for work for which no Statement of Work" has been
executed.
n.
"Consultant Tools" shall mean any method, process or technique
designed and developed by Contractor and used by Contractor in
connection with providing consulting services under a
Statement of Work, whether any such method, process or
technique was conceived, developed or delivered prior to this
Agreement or in connection with providing services under a
Statement of Work that are not directly related to, based upon
or derived from EDT Learning Products, Derivative Work or
Development Software. Contractor retains ownership of and all
rights to any Consultant Tools. Except as otherwise expressly
provided in a separate, written license agreement signed by
Contractor, if any, no license or other right to the Tools is
granted or transferred to any Customer or to EDT Learning by
this Agreement, any Statement of Work, or any Customer
Contract.
o.
"Customer Contract" shall mean any contract or agreement
between EDT Learning and a Customer (including without
limitation any master agreement, any amendments and all
relevant statements of work, including amendments) to which
Custom Services relate.
2.
APPOINTMENT AS CONTRACTOR. EDT Learning hereby appoints Contractor,
and
Contractor hereby accepts appointment from EDT Learning, as its
sole
authorized Custom Services contractor, subject to the terms and
conditions hereof. Contractor agrees to provide to EDT Learning and
its
Customers Custom Services that are described and jointly agreed
upon in
a Statement of Work, as provided in this Agreement, using
approved
development tools including the Development Software. EDT
Learning
agrees that from time to time Contractor may hire subcontractors
to
assist Contractor in providing Custom Services, provided however
that
the use of subcontractors shall not relieve Contractor of any
obligation or liability under this Agreement or any Statement of
Work.
3.
CUSTOM SERVICES. This Agreement is a foundation document to
establish
the working relationship between EDT Learning and Contractor in
an
independent agent principal relationship. EDT Learning and
Contractor
will endeavor to use a Statement of Work in the form attached
as
EXHIBIT "A." Statements of Work will be agreed upon concerning
each
project obtained by EDT Learning from the
Page 3 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
Customer pursuant to a Customer Contract and will be executed from
time
to time by the parties after the Effective Date. EDT Learning
shall
provide to
Contractor, in connection with the negotiation of each
Statement of Work, a copy of all relevant portions of the
Customer
Contract (including any amendments thereto). Any Statement of Work
may
be supplemented or modified by the parties from time to time, but
any
changes to a Statement of Work shall only be binding if made in
writing
and signed by both parties. The parties will further refine the
scope
of work and the timetables associated with any particular
project
through the development of a project plan and scope document which
may
supplement and/or amend the Statement of Work. Contractor will
not
attempt to negotiate any Statement of Work directly with a Customer
and
accordingly will not attempt to negotiate the price to be paid by
the
Customer or the payment terms available to the Customer.
However,
Contractor may assist EDT Learning in preparation of the Statement
of
Work by discussing the project with the Customer including the
nature
of the work, the type of deliverable, and the timelines associated
with
the project. Contractor will not be authorized to begin the
delivery of
Custom Services to EDT Learning unless and until a Statement of
Work is
executed by EDT Learning and by Contractor authorizing the
work.
4.
CONTRACTOR OBLIGATIONS. Upon execution of a relevant Statement of
Work,
issued by EDT Learning to Contractor and agreed to by Contractor
in
writing, Contractor warrants and represents that it will identify
and
allocate the resources required to design, develop and deliver
the
Custom Services to EDT Learning for timely delivery to Customer
in
accordance with the Statement of Work. Contractor shall be
fully
responsible for, and shall exercise all due diligence with respect
to,
the care and protection of any Source Materials which may be in
Contractor's possession, custody, or control, including but not
limited
to maintaining the confidentiality thereof and preventing any
unauthorized access or use thereof. Contractor shall ensure that
all
Courses developed and delivered to EDT Learning or its Customers
are
fully tested and comply with the Statement of Work pursuant to
which
they were developed and delivered. Within 30 days after termination
of
this Agreement Contractor and any third parties to whom Contractor
has
disseminated such Source Materials shall provide written
verification
that all such Source Materials have been returned to EDT Learning
or
its Customers, and neither Contractor nor its subcontractors
will
retain any copies of such Source Materials. Contractor agrees that
the
quality control of the Course and the Custom Services provided
shall be
the sole responsibility of Contractor. Subject to Contractor's
rights
to pursue its remedies under this Agreement, Contractor shall
perform
all Custom Services in a professional and expeditious manner
and
warrants that its services will be of a professional quality
conforming
to generally accepted industry standards and procedures.
Contractor
will conduct its business with EDT Learning Customers in a manner
that
reflects favorably at all times on EDT Learning and the good
name,
goodwill and reputation of EDT Learning. Contractor will avoid
materially
deceptive, misleading or unethical practices that are or
might be detrimental to EDT Learning or its Products. Contractor
will
make no materially false or misleading representations with regard
to
EDT Learning or the Custom Services and will not: (i) employ or
cooperate in the publication or employment of any materially
misleading
or deceptive advertising with regard to the Custom Services or
Products; (ii) make representations, warranties or guarantees to
the
Customers with respect to the specifications, features or
capabilities
of the Custom Services or Courses other than those which are
consistent
with the Statement of Work (or any amendment thereof); or, (iii)
enter
into any contract or engage in any practice in conflict with
its
obligations under this Agreement.
5. EDT
LEARNING OBLIGATIONS. EDT Learning will conduct its business
activities in a professional and expeditious manner. EDT Learning
will
avoid materially deceptive, misleading or unethical practices that
are
or might be detrimental to Contractor. EDT Learning will make
no
materially false or misleading representations with regard to
Contractor or the Custom Services and will not: (i) employ or
cooperate
in the publication or employment of any materially misleading
or
deceptive advertising with regard to the Custom Services or
Products or
(ii) make representations, warranties or guarantees
Page 4 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
to the Customers with respect to the specifications, features
or
capabilities of the Custom Services or Courses other than those
which
are consistent with the Statement of Work.
6.
GRANT OF SOFTWARE LICENSE. Subject to the terms and conditions
contained herein, EDT Learning hereby grants to Contractor while
this
Agreement remains in effect a non-exclusive, non-transferable,
limited
license to use the Development Software and the EDT Learning
Trademarks
to provide Custom Services to EDT Learning's Customers and to
Contractor Clients. It is agreed and accepted by the parties that
any
licenses granted by EDT Learning to Contractor herein are
limited
personal licenses with no right to sublicense or sell that license.
All
proprietary rights in and to the Development Software, EDT
Learning
Products and Trademarks not granted herein shall remain fully
and
exclusively vested in EDT Learning. The limited license rights
granted
pursuant to this Agreement are the only rights that Contractor has
to
the EDT Learning Development Software, EDT Learning Products
and
Trademarks. During the term of this Agreement and in consideration
for
its execution, Contractor will be provided a fifty (50) user
license to
the i-Canvas software, including maintenance, support and
upgrades
without charge to Contractor. Upon termination of this
Agreement,
Contractor will have the right during the ninety (90) day
period
following the termination date to purchase licenses of the
i-Canvas
software at the lesser of the then current price or 80% of the
price of
i-Canvas at the Effective Date of this Agreement with the
i-Canvas
license purchased by Contractor being granted on EDT Learning's
standard end user license terms. Unless and until this Agreement
is
terminated, Contractor may modify the source code of the
i-Canvas
software from time to time for use on a Customer's or
Contractor
Client's project. Prior to modification, Contractor will notify
EDT
Learning of the proposed change. Any changes to the i-Canvas
software
or any other EDT Learning Products or Development Software made
by
Contractor, regardless of the nature of the change or the timing of
the
change, will at all times exclusively vest in EDT Learning with
all
right title and interest in and to the i-Canvas software or any
other
EDT Learning Products or Development Software, and such changes
shall
be considered work-for-hire by Contractor on EDT Learning's
behalf,
without compensation of any nature to Contractor for the work
performed
or the value of the resulting modified software or product. Except
and
expressly authorized in writing by EDT Learning, Contractor shall
not
modify, translate, reverse engineer, de-compile or disassemble
the
Development Software or the EDT Learning Products or any
portion
thereof. Contractor agrees that is will use the Development
Software
only for the purposes of performing Custom Services or
developing
Courses for Contractor Clients and EDT Learning's Customers. Unless
a
license is purchased, Contractor agrees that within 30 days
after
termination of this Agreement, then Contractor will immediately
return
to EDT Learning all copies of Development Software or the EDT
Learning
Products, whether in the possession of Contractor or any
subcontractor,
and the license granted will immediately cease. Contractor will
also
receive such concurrent user licenses as EDT Learning
reasonably
determines necessary to use the LearnLic(R) virtual classroom
software
for the
exclusive purpose of internal use (the "Internal Use License")
by Contractor while this Agreement remains in effect. The Internal
Use
Licenses will include free maintenance, support and upgrades while
this
Agreement remains in effect. Contractor will be able to use the
Internal Use Licenses for the exclusive purpose of: (a) training
its
own employees; (b) providing training and support to those person
who
will be using the Courses created by Contractor; or (c) providing
to
Customers and Contractor Clients ongoing review and modification of
the
Courses while in development or during maintenance periods.
Contractor
shall not use the Internal Use Licenses to compete with EDT
Learning
and shall not directly or indirectly sell, re-sell, deliver,
distribute, transfer, lease, sub-lease, sub-license or otherwise
make
available for use by an End User the Internal Use Licenses other
than
those in the direct employment of Contractor.
7.
OFFICE SHARING ARRANGEMENT. Unless and until this Agreement is
terminated and in consideration for the Contractor Payments
(hereinafter defined), EDT Learning will provide to Contractor use
of
an appropriate amount of square feet of EDT Learning's premises
(located at 2999 N. 44th Street, Suite 650.
Page 5 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
620, Phoenix, Arizona) (the "Premises") and facilities for the
support
of up to 45 fulltime employees who work for Contractor (the
"Contractor
Space"). Should Contractor need more square footage than the
Contractor
Space provided then Contractor and EDT Learning may engage in a
separate sublease agreement concerning some other portion of
EDT
Learning's Premises or Contractor may seek other additional
premises
outside of the EDT Learning's Premises. Unless and until this
Agreement
is terminated and in consideration for the Contractor Payments,
EDT
Learning will provide to Contractor use of its office equipment,
office
furniture and general office suite services (the "Executive
Suite
Services") which is necessary to provide the Custom Services to
EDT
Learning that will include at no additional cost to Contractor
office
cubicles, desks, computers, software, telephones, internet access,
long
distance, fax, copier, office supplies and postage without
itemization.
Should EDT Learning vacate the Premises for any reason and not
provide
equivalent space reasonably acceptable to Contractor, then, on
and
after the date of vacancy of the Premises, the obligation to
provide
Contractor Space and the obligations related to the Executive
Suite
Services shall terminate and the Percentage (as defined below)
shall be
reduced by one-half and the fees due to Contractor under Section
9b
shall be increased to 90% from 80% of the Net Fees as defined
therein.
In the event of vacancy of the Premises, other than the
foregoing
changes in the Percentage and the amount due to Contractor the
obligations of Contractor to EDT Learning concerning the
Contractor
Payments shall continue during the Term hereof. In consideration
for
the Executive Suite Services and use of the Contractor Space
provided
and other good and valuable consideration, then Contractor will
(the
"Contractor Payments"): (a) provide to EDT Learning each month
that
this Agreement remains in effect, at no additional charge, 80 hours
of
Custom Services for the creation of product demonstration, sales
and
marketing literature, web site enhancements and other creative
services
for use by EDT Learning, but not as part of the Custom Services
provided to Customers; (b) reimburse one half of the base
compensation
of the sales executive which is focused on the sale of Custom
Services
(currently Ms. Sue Leff) in an amount up to $2,500 per month; (c)
pay a
percentage (the "Percentage") of the collected revenues associated
with
the sale of Custom Services to Contractor's Clients (i.e., revenues
to
persons other than EDT Learning Customers, the "Collected
Revenues")
based upon the following table:
<TABLE>
----------------------------------------------------------------------------------------
COLLECTED REVENUES BY
DURING THE FIRST 12 DURING THE SECOND
AFTER THE
SECOND
CONTRACTOR
MONTHS FROM THE 12 MONTHS FROM
THE ANNIVERSARY
OF THE
EFFECTIVE DATE
EFFECTIVE DATE EFFECTIVE
DATE
----------------------------------------------------------------------------------------
<S>
<C>
<C>
<C>
<C>
LESS THAN $2 MILLION
20%
20%
20%
----------------------------------------------------------------------------------------
BETWEEN $2 AND $4 MILLION
15%
15%
15%
----------------------------------------------------------------------------------------
BETWEEN $4 AND $5 MILLION
10%
10%
10%
----------------------------------------------------------------------------------------
OVER $5 MILLION
10%
5%
0%
----------------------------------------------------------------------------------------
</TABLE>
EDT Learning will maintain a fulltime sales representative who is
dedicated to
the sale of Custom Services (the "Contractor Payments"). However,
should EDT
Learning terminate that sales associate and no longer employ a
person who is
dedicated to the sale of Custom Services, then Contractor on the
termination
date of that dedicated sales person will no longer provide to EDT
Learning
reimbursement of any sales person's compensation. If EDT Learning
desires to
hire and/or assign a new salesperson dedicated to the sale of
Custom Services
then Contractor will have the right to approve or disapprove the
assignment/hire
and upon their hiring the obligation to reimburse for one half of
their
compensation shall again resume.
Page 6 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
8.
LOYALTY AND EXCLUSIVITY.
A. Each
party warrants and represents to the other party that:
i.
During the term of this Agreement and for the one (1)
year period after termination of this Agreement,
neither party will solicit for hire or hire any
employee of the other party.
ii. During the
term of this Agreement and for the three
(3) year period after termination of this Agreement,
Contractor will not solicit any Customer of EDT
Learning (or facilitate the solicitation of any
Customer by any third party) for the purpose of the
sale of the Custom Services or other product or
service which is competitive with that of the
products and services sold by EDT Learning as of the
termination date of this Agreement other than
pursuant to the terms and conditions of this
Agreement, and EDT Learning will not solicit any
Contractor Client for the purpose of the sale of the
Custom Services..
iii.
During the term of this Agreement and for the one (1)
year period after termination of this Agreement,
Contractor will not solicit any Value Added Reseller
or referral partner of EDT Learning (or facilitate
the solicitation by any third party), including but
not limited to SkillSoft, for the purpose of the sale
of the Custom Services or other product or service
which is competitive with that of the products and
services sold by EDT Learning as of the termination
date of this Agreement, other than pursuant to the
terms and conditions of this Agreement. During the
term of this Agreement and for the one (1) year
period after termination of this Agreement, EDT
Learning will not solicit any distribution or
referral partner of Contractor (or facilitate the
solicitation by any third party), for the purpose of
the sale of the Custom Services, other than pursuant
to the terms and conditions of this Agreement
iv. During the
term of this Agreement and for the three
(3) year period after termination of this Agreement,
each party represents and covenants that it will not
(either personally, or through any individual
association, partnership, corporation or other
entity) intentionally disclose any Trade Secret or
Confidential Information of the other party to any
person, (or any association, partnership, corporation
or other entity) for any reason or purpose
whatsoever, except as may be required by this
Agreement, a Statement of Work or operation and
compulsion of law.
B. Each party
represents and warrants that its training and
experience are such that the restrictions contained in this
section, in general and in this paragraph specifically, shall
not
result in an inability on its part to pursue a livelihood, and
that other alternatives or employment or business endeavors are
reasonably available with these covenants fully enforced. Each
party expressly agrees that the duration, geographical
limitations
and description of the prohibited conduct described in these
representations and covenants are reasonable and that such
party
has given
valuable consideration for the representations and
covenants contained in this section. Each party agrees that the
representations and covenants contained in this section are a
material inducement for the other party to enter into this
Agreement. Because each party has negotiated and agreed to the
limitations and restrictions contained in this section, such
Party
expressly waives the right to later protest the reasonableness
of
the limitations, warranties, geographical limitations and
prohibited conduct specified in these restrictive
representations
and covenants. Each party agrees that any
Page 7 of 27
<PAGE>
EDT Learning [LOGO]
The Power of e-learning Simplified
compensation or fee due to such party may be offset by any
damages
sustained by the other party should Contractor materially breach
the
foregoing restrictive covenants after notice and failure to cure
such
breach. Each party agrees that the other party would be immediately
and
irreparably harmed in the event of breach by it and therefore
enforcement by immediately obtaining an injunction would be proper;
and
each party agrees that the amount of surety bond if any required
shall
not exceed $500.00.
9.
FEES, PAYMENT TERMS AND CANCELLATION.
a. EDT
Learning and Contractor agree that the fees charged to
Customers for the Custom Services shall be mutually agreed
upon by both parties prior to the execution of a Statement of
Work between EDT Learning and the Customer. Attached hereto in
EXHIBIT "B" is Contractor's current standard fee schedule for
the provision of Custom Services. EXHIBIT "B" is subject to
modification by Contractor on at least 90 days prior written
notice by Contractor. Any deviation from the standard rates
for any Statement of Work shall be mutually agreed upon by
both parties prior to quotation of the prices for the Custom
Services to the Customer.
b. Only
EDT Learning will bill and collect from the EDT Learning
Customer and accordingly Contractor will only look to EDT
Learning for collec
