EXHIBIT 10.15 DISTRIBUTION AGREEMENT BETWEEN COASTAL TRAINING TECHNOLOGIES
CORP. (Coastal) Human Resources Division 500 Studio Drive, Virginia Beach, VA
COASTAL TRAINING TECHNOLOGIES CORP. (Coastal)
Human Resources Division
500 Studio Drive, Virginia Beach, VA 23452
ADVANCED KNOWLEDGE (Distributor)
17337 Ventura Blvd. #244, Encino, CA 91316
THIS DISTRIBUTION AGREEMENT (Agreement) is entered into this 14th day of-March.,
WHEREAS, Coastal is in the business of creating, producing, and distributing
print, audiovisual and multimedia products; and
WHEREAS, Coastal has been granted exclusive world-wide rights to distribute
several products created and produced by other Producers and, when appropriate,
to retain sub-distributors for these products; and
WHEREAS, Advanced Knowledge is familiar with Coastal and the products offered by
Coastal; and desires to enter into a non-exclusive distribution agreement with
Coastal to market and distribute certain print and audiovisual materials
throughout the territory.
NOW THEREFORE, for good and valuable consideration, the Parties agree as
1. DISTINGUISHING MARKS mean the trademarks or service marks, of all
Producer's and Coastal's taken together as a whole, whether registered or
not, trade name or any other insignia, trade dress, logo, symbol or slogan
in relation to Coastal and/or to the Products. (This does not include or
mean the titles of the Products.)
2. PRODUCER means the Ary Group, Inc, Hypnotic, Richard Chang & Associates and
The Kenwood Group, and any other Producer that Coastal may from time to
time add to its catalog.
3. COMMENCEMENT DATE means March 17, 2003.
4. PRODUCTS mean audiovisual materials and Print Materials authorized for
distribution by the Human Resources division of Coastal (the human
resources product line); and SPECIFICALLY EXCLUDED are the Clarity
Multimedia Product Line, which is created, produced, published and
distributed by Coastal.
5. PERSON means any individual, company, corporation, firm, partnership, joint
venture, association, or organization.
6. PRINT MATERIALS mean any of the Print Product materials authorized for
distribution by the Human Resources division of Coastal that Distributor is
licensed to offer, promote, advertise, market, demonstrate, distribute,
license and offer.
7. Preview Copies mean the copies of Products that are sent by the distributor
to customers for the purpose of making a purchasing decision and which are
to be returned.
8. SALE COPIES mean the copies of the Products that are purchased by the
9. TERRITORY means throughout the United States.
II. CREATION OF DISTRIBUTORSHIP
1. Coastal hereby appoints ADVANCED KNOWLEDGE as a non-exclusive distributor
of the Products from the Commencement Date to offer, promote, advertise,
market, demonstrate, distribute and sell the licensed Products in the
licensed Territory subject to the terms and conditions set out in this
2. Distributor shall have a non-exclusive license to use the Distinguishing
Marks in or on the licensed Products in Distributor's marketing,
advertising, and promotional materials.
3. All Products which Distributor desires to sell to customers outside the
Territory or in languages other than English shall be referred to Coastal
and shall be approved or disapproved by Coastal on a case-by-case basis.
Decisions shall be made in the sole discretion of Coastal, or where
required by contract, decisions shall be referred by Coastal to Producer
for approval at their sole discretion. At no time shall Distributor refer
any customer request directly to another Producer unless Coastal has
specifically instructed Distributor to do so.
4. The rights granted herein are always subject to the payment of monies due
Coastal under this Agreement and the performance by Distributor of its
other obligations under this Agreement and all rights in and to the
Products not specifically granted to Distributor in the Agreement shall be
retained by Coastal.
1. Coastal herein expressly reserves the right to enter into licensing and
distribution agreements with any Person in the licensed Territory to
exploit the Products. Distributor is expressly prohibited from entering
into any distributor or sub-distributor arrangements for any of the
2. Exploitation of the rights granted herein expressly exclude exploitation of
the Products via any media in any format, other than print and video,
including satellite or terrestrial television or cable, fibre, network or
any other form of electronic broadcast transmission.
3. Distributor shall not sell any Products to any customer in the Territory
who wishes to make such Products available within their organizations to
employees based outside the Territory. Said opportunities for the Products
shall be referred to Coastal, and Coastal agrees to discuss such
opportunities in good faith and with reasonable expedition. Distributor
further acknowledges that neither Coastal nor Producer are obliged to
consent to any requests that are made which would enable Distributor to
pursue such opportunities and if the necessary rights are not granted to
Distributor, Coastal or Producer respectively shall be entitled to pursue
4. Distributor shall not create any derivative works of any licensed Product
without the express written authorization to do so, and any derivative work
created by Distributor shall be considered work made for hire and be for
the sole and exclusive benefit of Coastal or Producer respectively.
Distributor shall obtain, execute and/or provide any and all necessary
releases, assignments, and/or agreements required to assign and transfer
all rights, title and interest in any derivative work that may be created
by Distributor to Coastal or Producer respectively. It is the intent of
both Parties to this Agreement that Coastal and Producer will solely and
exclusively own the copyrights and other intellectual property rights to
their respective derivative works and will in return license the rights as
governed by this Agreement back to Distributor to allow Distributor to
distribute said derivative work.
1. Distributor shall take reasonable steps to actively advertise and promote
the Products licensed under this Agreement, Reasonable steps may include,
but are not limited to:
a. listing the Products in Distributor catalog(s);
b. creation and use of promotional mailers/brochures;
c. direct mail pieces;
d. informational e-mails and faxes; and
e. advertising in trade magazines and at trade shows.
2. Promotion within the licensed Territory of the licensed Products shall be
the sole responsibility of and at the sole expense of Distributor.
3. All marketing and promotional materials, which are produced by or on the
behalf of Distributor and which incorporate any of the Distinguishing
Marks, shall be provided to Coastal for approval. Where Coastal is being
asked to approve the use of the Distinguishing Marks, Coastal shall respond
by granting or denying permission within 7 business days from the date of
receipts of the materials. Where Coastal is denying permission, Coastal
shall provide a written explanation of why approval was withheld. Where
Coastal remains silent beyond the 7 business days from the date of receipt,
Distributor shall be deemed to have received approval of the materials.
4. Except for the purpose of promoting the Products in accordance with this
Agreement, Distributor shall not use the name or likeness of any person
appearing in or connected with the Products for the purpose of a commercial
tie-in or tie-up.
1. Distributor shall order all Preview Copies and Sales Copies of the Products
from Coastal and Coastal shall drop ship all orders directly to
Distributor' customers within three business days from the date the order
is placed. Large orders or backlogged orders may not always be shipped
within three business days, in such cases, Coastal shall make its best
effort to notify Distributor as soon as possible and provide Distributor
with an anticipated ship date so that Distributor may inform the customers.
Distributor shall be responsible for all actual shipping charges and
Coastal shall invoice Distributor accordingly.
2. Distributor may order Products as follows:
a. Fax or email orders containing the quantity needed and shipping
address; if special shipping is required (such as second day air or overnight) a
statement requesting such shipment method should be included.
b. Use of purchase order whether by mail or fax, identifying the
quantity needed and shipping address; if special shipping is required (such as
second day air or overnight) a statement requestin such shipment method should
3. All products shall be shipped regular UPS ground (or other similar service)
unless a specific request is made by Distributor for an alternative
4. Although no provisions have been made for Distributor to hold Preview Copy
inventory of the Products, Coastal is willing to allow Distributor to do
so. Preview Copy inventory may be purchased for $7/copy for a single
program, or Sl0.00/copy for a combo program, plus shipping and Distributor
will be invoiced at the time the Preview Copies are shipped. Coastal will
charge a fee of $50.00 for all unretumed or missing preview copies.
VI. TRADE DISCOUNT
1. Distributor shall receive a trade discount of sixty percent (60 %) off the
suggested retail price, at the time the order was placed for each of the
Products, (EXCLUDING print material and the Clown Program) which
Distributor sells. The suggested retail price shall be the price advertised
by Coastal in its current catalogs, including the volume discount schedule,
both of which are SUBJECT TO CHANGE. See schedule A for the volume discount
pricing attached hereto and made a part hereof.
2. Distributor shall receive a trade discount of Twenty percent (20%) off the
suggested retail price at the time the order was placed for each of the
Print Materials, which Distributor sells. The suggested retail price shall
be the price advertised by Coastal in its current catalogs, including the
volume discount schedule, both of which are SUBJECT TO CHANGE. See schedule
3. For the CLOWN PROGRAM, Distributor shall receive a trade discount of
forty-nine percent (49 %) off the suggested retail price, at the time the
order was placed. No other discounts may be applied to the Clown Program.
4. Coastal shall invoice Distributor for all of the Products and actual
shipping charges incurred. Payments shall be made to Coastal within
forty-five days (45) from the date of invoice. If Distributor fails to pay
any monies when due and payable, Distributor shall be charged by Coastal a
late payment charge of 1.5% per month on the outstanding past due balance
owed to Coastal. All payments received shall be applied to the past due
outstanding balance first.
5. The Distributor's Credit Limit, terms and conditions of the Distributor's
Account are subject to change, at any time, at the discretion of Coastal
based upon the performance of the Account and Distributor's financial
1. Distributor shall be solely responsible for billing its customers and
collecting from its customers. At no time shall Coastal bear the risk of
any Distributor customer not paying.
VIII. AUDITING RIGHTS
1. Coastal shall have the right upon reasonable notice to audit the relevant
accounting and business records and the marketing and promotional materials
of Distributor in order to verify compliance with the terms of this
Agreement, but no more than once per calendar year.
2. Any such audit will be conducted at Coastal's expense and at such times and
in such manner as to not unreasonably interfere with Distributor's normal
operations; provided however, that if any such audit reveals a material
breach of this Agreement, the agreement may be immediately terminated by
Coastal and Distributor shall pay the costs of the audit. Coastal and its
auditor shall be required to treat information revealed during the audit as
1. Distributor shall promptly notify Coastal of any known use of the Products
by others not duly authorized by Coastal. Notification of such infringement
shall include all details known by Distributor that would enable Coastal to
investigate such infringement.
2. Distributor agrees to fully cooperate with Coastal in the prosecution of
any action against an infringer. Coastal agrees to pay all reasonable
expenses of Distributor (and where other agreements allow, to pass on the
cost of the reasonable expenses to Producer) incurred in the furtherance of
3. At no time shall Distributor sell any Products to any end user that
Distributor knows or has reason to know will copy, re-sell, rent, or lease
the Products to any third party. This Article is applicable throughout the
1. Coastal and Distributor hereby acknowledge and agree that during the term
of this Agreement, either Party may learn confidential information of the
other. The recipient of such confidential information agrees to maintain
the disclosing Party's confidential information in the same manner and to
the same extent as it maintains its own confidential information.
2. Confidential Information shall mean information, which is commercially
valuable to Coastal or Distributor and not generally known in the industry.
a. Any and all versions of proprietary computer software including
source code, object code, courseware, hardware, firmware, and documentation;
b. Technical information concerning proprietary products and services,
including product data and specifications, diagrams, flow charts, drawings, test
results, business know-how, processes, inventions, research projects, videos,
and video scripts, multimedia design documents, multimedia scripting templates,
and product development;
c. Information concerning either Party's business, including cost
information, profits, sales information, accounting and unpublished financial
information, purchasing techniques, supplier lists and supplier information,
customer lists and customer information, and advertising strategies;
d. Information concerning either Party's employees, including their
salaries, strengths, weaknesses and skills;
e. Information submitted by customers, suppliers, employees, or
consultants for study, evaluation or use; and
f. Any other information not generally known to the public, including
the terms of this Agreement, which, if misused or disclosed, could reasonably be
expected to adversely affect either Party's business.
3. Both Parties agree to keep the trade secrets of the other, whether or not
prepared, developed, or influenced by them, in strictest confidence. This
obligation shall survive the termination of this Agreement for so long as
such material remains confidential.
XI. CONDITIONS OF BUSINESS
1. Distributor warrants and undertakes to Coastal to ensure that the terms on
which the Products are licensed to its customers include provisions that:
a. The copy of the Product provided to the customer shall only be used
by the customer for the education or training of themselves, their employees or
persons exclusively engaged by them or, in the case of training consultants,
shall not be sold, rented, lent or otherwise transferred or made available to
any other party;
b. Audiovisual Products will only be exhibited by the customer within
the country of the licensed Territory in which the audiovisual Products is
supplied to the customer and the Products will not be taken out of such country;
c. The customer shall not edit, alter, copy or reproduce the Product
(except for the purpose of creating a back-up copy of a product in circumstances
where an unwaivable right to do so is specifically permitted by the laws of the
relevant jurisdiction) and shall not exhibit or permit the exhibition of the
Product by any means of electronic or broadcast transmission (including, without
limitation, terrestrial or satellite television or cable, fibre or network
transmission or closed circuit television).
2. Distributor acknowledges that the grant to Coastal of distribution rights
in respect of certain Products is dependent on Coastal and its licensees
complying with certain additional marketing and other obligations, which
may be added to and/or amended from time to time. Distributor undertakes
that it will comply with such obligations at all times during the term of
XII. WAIVER. INDEMNIFICATION AND LIABILITY
1. Should either Party choose to waive any of the provisions of this
Agreement, that shall not void any of the other provisions or rights
outlined in this Agreement. Both Parties agree that any waiver by either
party hereto of any breach or default of any of the provisions herein set
forth shall not be deemed a waiver as to any subsequent and/or similar
breach or default.
2. Subject to the terms and conditions of this Agreement, Distributor agrees
to indemnify, reimburse, defend and hold Coastal and Producer harmless from
any claim, demand or judgment made, asserted or obtained against it,
including reasonable attorney's fees and costs, disbursements and expenses
incurred by Coastal in connection with any claims for libel, slander,
unfair competition, or any other cause of action by reason of Distributor
offering, promoting, advertising, marketing, demonstrating, distribution,
or selling the Products.
3. Coastal shall indemnify, reimburse, defend and hold Distributor harmless
from any claim, demand, or judgment made, asserted or obtained against it,
including reasonable attorneys' fees and costs, disbursements and expenses
incurred by Distributor in connection with any claims, including but not
limited to claims for libel, slander, invasion of privacy, unfair
competition, or any other cause of action by reason of Coastal's
development, creation, duplication, ownership rights, marketing and
distribution of the Products.
XIII. REPRESENTATIONS AND WARRANTIES
1. Both Parties warrant that they have the right to enter into this Agreement
and are under no disability, restriction or prohibition with respect to
their rights to execute this Agreement and perform as specified herein.
2. Coastal warrants the rights granted hereunder do not conflict with or
infringe upon any rights whatsoever of any other party. All persons whose
performances are embodied in the production of the Coastal Products have
been or will be completely paid by Coastal or will have provided Coastal a
waiver of such payment.
3. Coastal warrants that no material contained in the Coastal Products
infringes any personal or property rights of another or contains anything
libelous or which would infringe any right of privacy, or otherwise be
contrary to law; and that any necessary licenses or permissions have been
obtained. Coastal specifically offers no warranties regarding the Products
provided by other Producer and further disclaims all responsibility for
obtaining or paying for any performing rights licenses which may be
required in respect to such musical compositions included in the other
Producer Products in connection with the exercise of the rights granted
herein to Distributor or the use of the other Producer Products by its
4. Coastal makes no warranty, express or implied, as to the sales success or
results achieved in the exploitation of the licensed Products. Further,
Coastal has no control over the conditions under which consumers or other
users of the licensed Products are used, and therefore does not and cannot
warrant the results obtained by such use.
5. Coastal warrants that the licensed Products are free from defects in
materials and workmanship under normal use for a period of ninety (90) days
from the date of delivery by Coastal to the end user. Coastal's entire
liability and Distributor's sole and exclusive remedy, as well as that of
any end user, shall be replacement, without charge (including without
shipping charges) of the licensed Product, which proves defective within
6. THE WARRANTIES CONTAINED IN PARAGRAPH 5 OF THIS ARTICLE ARE IN LIEU OF ALL
OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE FACE HEREOF AND PRODUCT
LITERATURE. THE PRODUCTS ARE SOLD "AS IS" AND "WITH ALL FAULTS" AND ARE
PROVIDED WITH NO EXPRESS WARRANTY OF ANY KIND. SOME JURISDICTIONS DO NOT
ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSIONS MAY NOT
7. IN NO EVENT WILL COASTAL BE LIABLE TO DISTRIBUTOR OR ANY THIRD PARTY OR END
USER FOR ANY DAMAGES, DIRECT OR INDIRECT, INCLUDING BUT NOT LIMITED TO, ANY
LOST PROFITS, LOST SAVINGS OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND, TYPE OR NATURE ARISING OUT OF THE USE OF THE INABILITY TO USE THE
PRODUCTS EVEN IF COASTAL HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE
OR ANY CLAIM BY ANY OTHER PARTY HAS BEEN HERETOFORE NOTED BY COASTAL.
8. Distributor expressly warrants that it shall not dispute, contest, or
challenge or cause to be dispute contested, or challenged, either directly
or indirectly, Coastal's ownership rights of any of the licensed Coastal
Products or other Producer ownership rights of any of the licensed
Products, Coastal Marks and other Product Marks, derivative works,
promotional materials or other intellectual property of any kind or nature
provided hereunder, or created pursuant to the terms of this Agreement or
any renewal thereof.
9. Distributor warrants that it shall take no action, which might encumber or
expose Coastal's, or other Producer intellectual property to any claims or
other forms of encumbrances without the prior express written permission of
1. Any notice, correspondences, purchase orders, invoices, or requests
hereunder shall be given in writing and delivered by hand, by registered
mail return receipt requested, telefax or by overnight express. Any such
notices shall be given to each Party at the following address:
Coastal Training Technologies Advanced Knowledge
500 Studio Drive 17337 Ventura Blvd. #244
Virginia Beach, Virginia 23452 Encino, CA 91316
Attn: Steve Lockyear Attn: _________________
Human Resources Distributor Manager Title: _________________
Phone Number: __________
2. All payments and invoices shall be sent respectively to the attention to
the other Party's Accounts Receivable or Accounts Payable departments.
XV. TERM AND TERMINATION
1. Except as provided in Section 2 of Article XV, this Agreement shall be a
period of One (1) year from the Commencement Date; after which this
Agreement shall automatically renew itself on a year to year basis unless
or until either Party notifies the other of its intent to terminate this
Agreement thirty (30) days prior when it would otherwise renew itself.
2. Either Party may immediately cancel or terminate this Agreement for any
material breach of any of tl terms of this Agreement by the other Party by
providing written notice to the other Party.
3. Coastal may terminate all portions of this Agreement related to the other
Producer's Products and Marl without notice where Coastal itself has lost
its rights to distribute the Products and/or lost its rights to retain
sub-distributors of the Products.
4. In no event shall the cancellation or termination of this Agreement for any
reason relieve either Party of the obligation of confidentiality or
Distributor of its obligation to pay monies still due and owing for sales
ofti Products and unpaid shipping charges.
XVI. RELATIONSHIP OF THE PARTIES
1. Nothing in this Agreement shall be construed as creating a partnership,
franchise or joint venture betwe< the Parties or making either Party an
agent or employee of the other, and neither Party shall hold itself out
such. In all of its operations hereunder. Distributor shall be an
independent contractor, shall conduct h business at his own expense and
shall have no authority to make any representations or warranties on behalf
2. Neither Party shall have the right to obligate or bind the other in any
manner whatsoever, and nothing contained in this Agreement shall give or is
intended to give any right of any kind to third persons.
1. This Agreement may not be assigned in whole or in part by Distributor
without the prior express written consent of Coastal.
1. Should any clause, provision, or portion of this Agreement be ruled
invalid, void, illegal, or otherwise unenforceable by any court,
magistrate, referee, arbitrator, or by any other process or in any other
proceeding it shall be deemed stricken and the remainder of this Agreement
shall continue to be in effect and fully enforceable.
XIX. SECTION HEADINGS
1. The section headings of this Agreement are included for the purpose of
convenience only, and shall not affect the construction of interpretation
of any of its provisions.
2. A capitalized word shall have its intended meaning regardless of it being
in the singular or plural form
1. This Agreement may be executed in counterparts, including by means of
telecopied signature pages, any of which shall be deemed an original
provided that it contains the signature of both Parties.
1. Both Parties acknowledge that this Agreement was accepted by Coastal and
Advanced Knowledge and that this Agreement and all policies and procedures
shall be interpreted consistently with the laws of the Commonwealth of
Virginia and the United States of America; and that any dispute relating
thereto shall be communicated to both Parties and originated in the Federal
District Court for the Eastern District of Virginia or in the Circuit Court
of the Commonwealth of Virginia in and for the City of Virginia Beach,
Virginia. This Agreement contains the entire agreement of the Parties and
supersedes all proposals or prior agreements both oral and written, and all
other communications between the Parties relating to the subject matter of
this Agreement. This Agreement may not be modified or changed except in a
writing signed by both Parties.
IN WITNESS WHEREOF, the Parties have casued this Agreemetn to be duly
executed as of the 14th day of March, 2003.
Costal Training Technologies Advanced Knowledge
By: /s/ Jay P. Bhatt By: /s/ Howard Young
Jay P. Bhatt Print Name: Howard Young
Senior Vice President President/Owner