Exhibit 10.99.3
AGREEMENT FOR THE TRANSFER AND ASSIGNMENT OF
INTELLECTUAL PROPERTY
THIS AGREEMENT ("Agreement") is entered into as of the 6th day of March,
1997, by and between Youth Services International, Inc. ("YSI"), a Maryland
corporation with principal place of business at ▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and International Youth Institute, Inc. ("IYI"), a
Maryland corporation with principal place of business at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇; ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Both YSI and IYI are sometimes referred
to herein as "the Parties".
WHEREAS, YSI uses and owns all rights in the intellectual property and
other intangibles further described herein and referred to as the "Intellectual
Property"; and
WHEREAS, during 1996 YSI transferred certain employees to IYI who were
instructors experienced in training certain youth correctional professionals;
and
WHEREAS, such former YSI employees may require the use of the Intellectual
Property in connection with their performance for IYI;
WHEREAS, IYI has obtained the Intellectual Property; and
WHEREAS, YSI hereby conveys all right, title and interest in the
Intellectual Property to IYI as set forth herein in exchange for the payment and
other covenants set forth herein and a perpetual, irrevocable, fully paid-up and
royalty-free license for YSI to use the Intellectual Property as set forth in
that certain License Agreement of even date herewith by and between YSI and IYI
(the "License Agreement");
NOW, THEREFORE, in consideration of these premises and the mutual covenants
contained herein the parties hereto mutually agree;
1. Intellectual Property.
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"Intellectual Property" as used herein shall mean the notes, outlines,
books, compositions, writings, inventions, processes, computer programs, ideas,
know-how, formulae, trade secrets, patents, trademarks, trade names, brand names
and copyrights and any other intangibles or tangibles whatsoever directly
related or incidental to the training of youth workers, including training
curricula, student handbooks and course syllabi and transfer of experienced
trainers or items from YSI to IYI. See Attachment A for a non-exhaustive list
of some of these items.
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2. Transfer and Assignment.
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Subject to the terms and conditions set forth in this Agreement, including
without limitations Section 4 hereof, YSI hereby transfers, conveys and assigns
to IYI all rights, title and interest of YSI in and to the Intellectual
Property, as defined in Section 1.
3. Excluded Assets. The parties hereto understand and agree that this
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Agreement is not intended, and shall not be construed, to convey any rights to
any intellectual property or other property of YSI not described in Section 1 or
on Attachment A hereof. Without limiting the generality of the foregoing, IYI
understands and agrees with YSI that this Agreement shall not operate to
transfer to IYI any right in or to any of the general management policies and
procedures, financial policies, procedures and information, human resource
policies, procedures and data, current or completed bid proposals, corrective
action plans, special projects or assessments that are proprietary to YSI, or
any other documents of intellectual property or proprietary information of YSI
that relate to the juvenile justice or youth care services provided by YSI in
connection with its business.
4. Restrictions. Notwithstanding the sale of the Intellectual Property to
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IYI, both IYI and YSI understand and agree that the ownership rights in and to
the Intellectual Property transferred to IYI by this Agreement shall be subject
at all times to, and limited by the following restrictions:
(a) All rights of IYI in and to the Intellectual Property (and all
improvements, and enhancements thereto) shall terminate, and revert back to YSI,
immediately upon the occurrence of any of the following events: (i) a voluntary
or involuntary petition or action under Title 11 of the United States Code is
filed by or against IYI, provided that so long as IYI retains control of all of
its assets and there is no intent by any party to sell any of the Intellectual
Property, the reversion right shall not apply, or (ii) IYI makes a general
assignment for the benefit of its creditors. Accordingly, from and after the
occurrence of any of the events listed in this paragraph 4(a), IYI shall have no
further rights in or to, including the right to use, the Intellectual Property
(or the improvements or enhancements thereto), but all rights in and to the
Intellectual Property (and all improvements and enhancements thereto) shall
thereafter be the rights of YSI.
(b) IYI agrees to hold the Intellectual Property in confidence and to
protect the value of the Intellectual Property in any way reasonably necessary
in order to sustain such value.
(c) It is understood and agreed by the parties that any products and
services created by IYI in the course of its business are the exclusive property
of IYI, and IYI may sell, convey, give, donate or otherwise transfer or disclose
or license or grant any other permission to use such products and services at
any time
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to any person or entity, regardless of whether or not such person directly or
indirectly competes with YSI, and regardless of whether such products contain or
are based upon any part of the Intellectual Property. It is further understood
and agreed by the parties that IYI may create intellectual property in the same
field or on the same topic as the Intellectual Property, and IYI may sell,
convey, give, donate or otherwise transfer or disclose or license or grant any
other permission to use such intellectual property at any time to any person or
entity, regardless of whether or not such person directly or indirectly competes
with YSI. Notwithstanding the foregoing, without the written consent of YSI, IYI
shall not at any time sell, convey, give, donate or otherwise transfer or
disclose the Intellectual Property, or any portion thereof, or any enhancements
or modifications thereto, or any rights associated therewith, including any
license or other permission to use the Intellectual Property or any portion
thereof, to any person or entity (including without limitation any subcontractor
of IYI) other than (i) a disclosure of the Intellectual Property to any employee
or other agent, including any subcontractor, of IYI to whom such disclosure is
necessary in connection with the business of IYI permitted by this Agreement,
(ii) any transfer or disclosure to YSI or any subsidiary of YSI, or (iii) any
transfer to any party in connection with the sale by IYI of its business as a
whole, if and only if, the purchaser thereof purchases the Intellectual
Property, or portion thereof, subject to all of the terms and conditions of this
Agreement and the License Agreement.
(d) In the event that IYI attempts to make a sale, conveyance, gift,
donation, lease, license or other transfer or disclosure in violation of
paragraph 4(c), all rights of IYI in and to the Intellectual Property (including
any improvements or enhancements thereto) shall immediately terminate and revert
back to YSI, and IYI shall have no further rights in or to, including the right
to use, the Intellectual Property (or the improvements or enhancements thereto),
but all rights in and to the Intellectual Property (and all improvements and
enhancements thereto) shall thereafter be the rights of YSI; provided, however,
that upon discovery of any such violation, YSI shall promptly notify IYI of the
violation or alleged violation, and IYI shall have the opportunity to cure such
violation by (i) canceling any agreement to sell, convey, gift, donate, lease,
license or other transfer or disclosure; (ii) obtaining the complete recovery of
all Intellectual Property so transferred or disclosed; and (iii) obtaining an
agreement, enforceable by YSI, from the party to whom transferred or disclosed,
not to use or disclose such Intellectual Property, all to the reasonable
satisfaction of YSI.
(e) Remedies. IYI hereby acknowledges and agrees that (a) a remedy at
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law may not adequately protect the rights of YSI in the event of any breach or
threatened breach of the provisions 9f Section 4 of this Agreement by IYI or any
of its officers, employees, representatives, agents or affiliates, and (b) any
such breach or threatened breach of such provisions will result in irreparable
harm to YSI. Therefore, without prejudice to any other remedies at law or in
equity to which YSI may be entitled, IYI hereby agrees that YSI shall be
entitled to seek
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injunctive relief in any court of competent jurisdiction in the event of any
actual or threatened breach of any of the provisions of this Agreement in order
to prevent or terminate the continuance of any such breach or threatened breach
of such provisions, together with reimbursement of legal and other expenses and
fees incurred by YSI in enforcing such provisions or seeking such relief.
The parties hereto understand and agree that the restrictions set forth in
this Section 4 were a material inducement to YSI to sell the Intellectual
Property to IYI, and to IYI to buy the Intellectual Property from YSI, and
constitute an integral part of the consideration for the sale of the
Intellectual Property by YSI to IYI, and that without such restrictions, the
parties would not have entered into this Agreement.
5. Representations and Warranties of YSI.
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(a) YSI represents and warrants that, to the best of its knowledge, it
owns all rights, title and interest in and to the Intellectual Property. To the
best of YSI's knowledge, the use of the Intellectual Property does not conflict
with, infringe upon or violate a patent, patent license, patent application,
trademark, trade name, trademark or trade name registration, copyright,
copyright registration, service ▇▇▇▇, brand ▇▇▇▇ or brand name or any pending
application relating thereto, or any trade secret, know-how, programs or
processes or any other intellectual property rights of any third person, firm or
corporation;
(b) YSI further represents and warrants that to the best of its
knowledge, there are no outstanding, or overtly threatened, governmental,
judicial or adversary proceedings, hearings, arbitrations, disputes or other
disagreements, and no notice of infringement has been served upon YSI with
respect to any of the Intellectual Property.
(c) YSI further represents and warrants that to the best of its
knowledge, no other writings, inventions, processes, computer programs, know-
how, formulae, trade secrets, patents, trademarks, trade names, brand names,
copyrights, licenses or applications are necessary for the unimpaired use or
conveyance of the Intellectual Property.
(d) YSI further represents and warrants that to the best of its
knowledge, YSI has the authority to transfer, convey and assign the Intellectual
Property and the rights. in and to the Intellectual Property as contemplated by
this Agreement.
6. IYI Covenants.
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(a) The provisions of Section 3 of the License Agreement regarding the
confidentiality of the Intellectual Property, including without limitation, the
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provisions requiring each of IYI and YSI to ensure that its employees,
representatives and agents keep the Intellectual Property in confidence, are
incorporated herein by reference and are obligations of the parties in this
Agreement as if fully set forth herein.
(b) IYI agrees to cause and ensure that each of its employees,
representatives or agents having access to the Intellectual Property or
information related thereto to be bound by the confidentiality and noncompete
covenants and agreements of IYI of this Agreement.
7. Consideration.
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In consideration of the transfer and assignment set forth in Section 2, IYI
will pay to YSI the sum of Seven Hundred Thousand Dollars ($700,000.00).
8. Payment.
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The consideration set out in paragraph 7 shall be paid in the form of a
check to YSI within 90 days of the execution of this Agreement.
9. Registration.
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IYI shall file such registrations with the United States copyright Office,
the United States Patent and Trademark Office, and any governmental agencies
responsible for the registration or perfection of rights and as are necessary to
effectuate this Agreement. YSI for itself and on behalf of its subsidiaries,
affiliates, agents, officers, directors, and employees agrees to cooperate, sign
and otherwise execute any such notices or related documents as are reasonably
necessary to evidence, perfect, transfer, assign or convey any of the
Intellectual Property Rights transferred hereunder. Any and all fees, costs or
expenses arising in connection with any filing or recording done pursuant to
this Section 9 shall be borne by IYI.
10. Covenants Not to Compete.
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(a) IYI hereby covenants and agrees, for itself and its subsidiaries
aid affiliates, that, from and after the date of this Agreement, neither IYI nor
any of its subsidiaries or affiliates will directly or indirectly, either alone
or with others, engage or make equity investments in or have an ownership
interest in, any person, firm, company or entity engaged in any business similar
to the business of YSI, or in a business that would be competitive with the
business of YSI, which is understood to be the provision of juvenile justice and
youth care services; provided, however, that nothing herein shall be deemed to
restrict IYI (or its subsidiaries and affiliates) from (i) making investments
representing not more than five percent (5%) of the outstanding equity
securities of any publicly traded company or (ii) training
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youth care workers for businesses, firms, companies or entities in which IYI
does not have any financial interest; or
(b) YSI hereby covenants and agrees, for itself and its subsidiaries
and affiliates, that, from and after the date of this Agreement, neither YSI nor
any of its subsidiaries or affiliates, will engage in the business of training
any personnel for compensation (it being understood that YSI and its
subsidiaries and affiliates shall be permitted to train the employees,
representatives or agents of YSI and its subsidiaries and affiliates, state
agencies and joint venture or other partners in connections with YSI's operation
and expansion of the business of YSI and its subsidiaries in the ordinary
course, so long as such training does not conflict with the terms of any
Training Agreement between the parties at the time); provided, however, that
nothing herein shall be deemed to restrict YSI (or its subsidiaries and
affiliates) from making investments representing not more than five percent (5%)
of the outstanding equity securities of any publicly traded company.
(c) Each covenant and agreement of this paragraph 10 shall be read and
construed independently of each other and if any one of them (or portion
thereof) is held invalid, the others (or other portions thereof) shall continue
to be valid and to apply and the one (or the portion) held to be invalid shall
be read and construed in the most restrictive manner intended by this paragraph
10 that would permit it to be held valid and enforceable. Accordingly, the
parties agree that because the provisions of this paragraph 10 are divisible and
separable, if any provision hereof is held to be unreasonable, unlawful or
unenforceable in duration, geographical scope or character of restriction by any
court of competent jurisdiction, such provision shall be modified to the extent
necessary in order that any such provision or portion thereof shall be legally
enforceable to the fullest extent permitted by law, and the parties hereto do
hereby expressly authorize any court of competent jurisdiction to enforce any
such provision or portion of this paragraph 10 or to modify any such provision
or portion hereof in order that any such provision or portion hereof shall be
enforced by such court to the fullest extent permitted by applicable law.
(d) Each of IYI and YSI recognize the broad scope of the foregoing
covenants, but expressly agrees that they are reasonable in light of the scope
of the business of each party and the rights transferred hereby. Each of IYI
and YSI expressly acknowledges that the damages to the business of the other
party resulting from any breach of this paragraph 10 may be intangible in whole
or in part and incapable of being assessed a monetary value and that the other
party is entitled to seek specific enforcement, injunctive relief and other
equitable remedies in addition to monetary damages and legal remedies.
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11. Indemnity.
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(a) Indemnification by IYI. IYI shall defend, indemnify and hold
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harmless YSI and its subsidiaries, and the officers, directors, employees,
agents, successor and assigns of YSI or any of its subsidiaries, from and
against all claims, damages, judgments, fines, penalties, costs or expenses
incurred or sustained by YSI, or its officers, directors, employees, agents,
successors or assigns, (i) by reason of any direct or indirect breach by IYI of
any of the representations, warranties, covenants or agreements of IYI contained
in this Agreement or (ii) in connection with the Intellectual Property or any
derivative product thereof, as a result of the negligent or intentional
misconduct of IYI or its officers, directors, employees or agents.
(b) Indemnification by YSI. YSI shall defend, indemnify and hold
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harmless IYI and its subsidiaries and the officers, directors, employees,
agents, successor and assigns of IYI from and against all claims, damages,
judgments, fines, penalties, costs or expenses incurred or sustained by IYI, or
its officers, directors, employees, agents, successors or assigns, (i) by reason
of any direct or indirect breach by YSI of any of the representations,
warranties, covenants or agreements of YSI contained in this Agreement or (ii)
in connection with the IYI Intellectual Property or any derivative product
thereof, as a result of the negligent or intentional misconduct of YSI or its
officers, directors, employees or agents.
12. Bankruptcy Provisions.
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(a) The parties hereto acknowledge and agree that the Intellectual
Property is "intellectual property" as that term is defined by Title 11 of the
United States Code, as amended ("Title 11").
(b) IYI agrees that in the event a Chapter 7 petition is filed by or
against it under Title 11, IYI will consent to YSI's obtaining relief under 11
U.S.C. (S)107.
(c) IYI agrees that, in the event that a Chapter 7 petition is filed
by or against IYI under Title 11, or IYI becomes the subject of receivership
proceedings, IYI or any subsequently appointed trustee or receiver shall, at the
sole option of and on written request by YSI, continue to perform under this
Agreement or within five days of written request by YSI return to YSI all of the
Intellectual Property and all embodiments of the Intellectual Property,
wheresoever located, at the sole expense of IYI. Further, IYI and any trustee
or receiver shall not interfere with the rights of YSI as provided in this
Agreement, including but not limited to any covenant not to compete, or
confidentiality provisions, which rights shall continue in YSI.
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13. General.
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(a) This Agreement is not assignable by either party, and neither
party may delegate its benefits or its duties hereunder without the prior
written consent of the other party, except that IYI may assign this Agreement
one time without the consent of YSI only to a new entity with the same
ownership, substantially all the same employees and the same business as IYI if
such entity was created at the designation of IYI for the sole purpose of
effecting a change in the business form of IYI. Any other attempted assignment
in violation of this provision shall be void and the provisions hereof will be
binding upon and inure to the benefit of the parties, their successors and any
permitted assigns.
(b) The laws of the State of Maryland excluding that body of law
controlling conflicts of law, will govern all disputes arising out of or
relating to this Agreement.
(c) Neither IYI nor YSI will be responsible for any failure to perform
due to unforeseen circumstances or to causes beyond IYI's or YSI's control,
including but not limited to acts of God, war, riot, embargoes, acts of
government, civil or military authorities, fire, floods, epidemics, accidents,
strikes, or shortages of transportation, facilities, fuel, energy; labor or
materials. In the event of any such occurrence, the party learning of such a
condition shall notify the other party as soon as practicable, and when the
condition is remedied, performance will be resumed with equitable adjustments to
be made in good faith.
(d) The waiver by IYI or YSI of any default by the other will not
waive subsequent defaults by the other of the same or a different kind.
(e) Except as otherwise set forth herein, in the event of a dispute
involving this Agreement, the parties agree to submit all claims in writing to
the American Arbitration Association, Washington, D.C. to be decided under the
commercial rules of the American Arbitration Association. Any award issued in
writing by the American Arbitration Association, based on this provision, may be
converted to judgment by any Court of competent jurisdiction.
(f) In the event any of the provisions of this a is held by a court or
other tribunal of competent jurisdiction to be unenforceable, the other
provisions of this Agreement will remain in full force and effect.
(g) This Agreement, together with Attachment A, constitutes the entire
agreement between the parties pertaining to the subject matter hereof, and
supersedes in their entirety any and all written or oral agreements previously
existing between the parties with respect to such subject matter. The Parties
acknowledge that they are not entering into this Agreement on the basis of any
representations not expressly contained herein or in the License Agreement. Any
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modifications of this Agreement must be in writing and signed by both parties
hereto. The Parties agree that they have read this Agreement, understand it, and
intend to be bound by its terms.
(h) This Agreement may be executed in two or more counterparts, each
of which when so executed will be deemed an original, and all of which together
will constitute one and the same instrument.
(i) Any notice, request, instruction or other document or
communication required or permitted to be given under this Agreement shall be in
writing and shall be deemed given upon delivery in person; upon being deposited
in the mail, postage prepaid, for mailing by certified or registered mail; or
upon being transmitted by facsimile, as follows:
If to YSI, delivered, mailed or transmitted to:
Youth Services International, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
If to IYI, delivered, mailed or transmitted to:
International Youth Institute, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
or, in each case, to such other address or addresses as may be specified in
writing from time to time by any party to the other parties.
IN WITNESS WHEREOF, the authorized representatives of the parties hereto
have executed this Transfer and Assignment Agreement as of the Effective Date.
Youth Services International, Inc. International Youth Institute, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: Chairman & Chief Executive Officer
Chief Executive Officer ----------------------------------
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STATE OF VIRGINIA
CITY OF ALEXANDRIA ) to wit:
I, the undersigned, a Notary Public in and for the State and County
aforesaid, do hereby certify that this day personally appeared before me ▇▇▇▇ ▇.
▇▇▇▇▇, whose name is signed to the foregoing Agreement for the Transfer and
Assignment of Intellectual Property Rights, and acknowledged the same.
GIVEN under my hand this 30th day of April, 1997.
/s/ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
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Notary Public
My Commission Expires: 1/31/2000
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STATE OF MARYLAND )
COUNTY OF ▇▇▇▇▇▇ ) to wit:
I, the undersigned, a Notary Public in and for the State and County
aforesaid, do hereby certify that this day personally appeared before me ▇▇▇▇▇▇▇
▇. ▇▇▇▇, whose name is signed to the foregoing Agreement for the Transfer and
Assignment of Intellectual Property Rights, and acknowledged the same.
GIVEN under my hand this 1st day of May, 1997.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Notary Public
My Commission Expires: 1/10/99
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ATTACHMENT A
The following is a representative, nonexhaustive list of Intellectual
Property being purchased, assigned and licensed back:
. Curriculum as received from YSI
. The 3 I's
. YSI Formula for Success
. World of Work
. Transfer of Experienced Trainers
. Youth Development Professionals Career Path
. Comprehensive YSI Program
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