Settlement Agreement and General Release between The Thomson Corporation, National Education Training Group, and SkillSoft

Summary

This agreement settles all disputes and legal claims between The Thomson Corporation, Thomson Learning Inc., National Education Training Group, and SkillSoft plc/SkillSoft Corporation. The parties agree to release each other from any claims related to prior litigation involving intellectual property and business operations. The agreement outlines the resolution of ongoing lawsuits, the release of all claims, and certain restrictions on the use of intellectual property. It becomes effective as of July 21, 2003, and is intended to fully resolve the parties' legal disputes.

EX-10.4 6 b47756spexv10w4.txt SETTLEMENT AGREEMENT AND GENERAL RELEASE EXHIBIT 10.4 SETTLEMENT AGREEMENT AND GENERAL RELEASE This Settlement Agreement and General Release, effective as of the CLOSING DATE, is entered into in Chicago, Cook County, Illinois between The Thomson Corporation, and Thomson Learning Inc., both having places of business at Metro Center, One Station Place, Stamford, Connecticut 06902; and National Education Training Group, having a place of business at 1751 W. Diehl Road, Naperville, Illinois 60563-9099, on the one hand; and SkillSoft plc and SkillSoft Corporation, having a place of business at 107 Northeastern Boulevard, Nashua, New Hampshire 03062, on the other hand. DEFINITIONS For purposes of this AGREEMENT as well as any exhibits attached hereto, the following terms shall have the following meanings. Each defined term stated in the singular form shall include the plural form, and each defined term stated in the plural form shall include the singular form. A. "AGREEMENT" shall mean this Settlement Agreement and General Release. B. "APPEAL" shall mean NETg's Notice of Appeal from the Examiner to the Board of Patent Appeals and Interferences regarding the Patent. C. "BROWN" shall mean Dennis Brown, an individual residing in the State of Illinois. D. "CASE NO. 00 C 4551" shall mean the action previously pending in the United States District Court for the Northern District of Illinois known as National Education Training Group, Inc. v. SkillSoft Corporation, Case No. 00 C 4551. E. "CASE NO. 98 C 2752" shall mean the action previously pending in the United States District Court for the Northern District of Illinois known as National Education Training Group, Inc. v. SkillSoft Corporation, et al., Case No. 98 C 2752. F. "CASE NO. 99 L 10324" shall mean the action pending in the Circuit Court of Cook County, Illinois, known as National Education Training Group, Inc. v. SkillSoft Corporation, et al., Case No. 99 L 10324. G. "CLAIM" or "CLAIMS" shall mean any and all manner of claims or obligations of any kind or nature whatsoever, including, without limitation, any and all manner of accounts, actions, agreements, attachments, attorneys' fees, causes of action, claims, consequential damages, contracts, contribution, costs, court costs, damages, debts, demands, enrichment, executions, exemplary damages, expenses, fees, incidental damages, indemnification, injunctions, judgments, legal fees, legal expenses, legal costs, liens, lost profits, penalties, permanent injunctions, preliminary injunctions, promises, punitive damages, restraining orders, royalties, suits, temporary injunctions, temporary restraining orders, unjust enrichment, or warranties, whatsoever, without limitation, whether based in law, equity, tort, contract, common law, statute or other source of law, regulation or right of any kind whatsoever, whether domestic, foreign or international, whether known or unknown, suspected or unsuspected, direct, indirect or derivative, fixed or contingent, matured or unmatured, liquidated or unliquidated, disputed or undisputed, or secured or unsecured, which arise out of or relate to the business and/or business operations of NETg and/or LLG. H. "CLOSING DATE" shall mean July 21, 2003. I. "COMPLAINT" shall mean the original Complaint and Demand for Trial By Jury that NETg filed on or about May 6, 1998 in CASE NO. 98 C 2752. 2 J. "FIFTH AMENDED COMPLAINT" shall mean the Fifth Amended Complaint and Demand for Trial By Jury that NETg filed on or about May 25, 2001 in CASE NO. 99 L 10324. K. "FIRST AMENDED COMPLAINT" shall mean the First Amended Complaint and Demand for Trial By Jury that NETg filed on or about June 25, 1999 in CASE NO. 98 C 2752. L. "FOURTH AMENDED COMPLAINT" shall mean the Fourth Amended Complaint and Demand for Trial By Jury that NETg filed on or about April 17, 2000 in CASE NO. 99 L 10324. M. "HOVIS" shall mean Sally Hovis, formerly known as Sally Welsh, an individual residing in the State of New Hampshire. N. "INTELLECTUAL PROPERTY" shall mean all of NETg's trade secrets, confidential information, proprietary information, inventions, ideas, innovations, processes, technology, methodologies, know-how, U.S. or foreign patents (and U.S. or foreign patent applications and requests for patents), copyrights, information or property subject to any license or license restriction, and other intellectual property of any kind, including, but not limited to, the alleged trade secrets that were at issue in or the subject of discovery in CASE NO. 99 L 10324 or CASE NO. 98 C 2752; the PATENT; any invention claimed or described in whole or in part in the PATENT; any patent, request for patent or patent application that claims in whole or in part the benefit of the filing date of the PATENT; any request or application for any continuation, continuation-in-part, division, reissue, reexamination, or foreign counterpart of the PATENT; and any invention claimed or described in whole or in part in any continuation, continuation-in-part, division, reissue, reexamination, or foreign counterpart of the PATENT, but 3 excluding any valid copyright in the expression of computer-based training course content that is visible to end-users of any such course. In addition, INTELLECTUAL PROPERTY shall also mean THOMSON'S trade secrets, confidential information, proprietary information, inventions, ideas, innovations, processes, technology, methodologies, know-how, U.S. or foreign patents (and U.S. or foreign patent applications and requests for patents), copyrights, information or property subject to any license or license restriction, and other intellectual property of any kind, to the extent such intellectual property is derived from INTELLECTUAL PROPERTY as defined in the preceding sentence of this paragraph. O. "LITIGATION" shall mean Case No. 00 C 4551, Case No. 98 C 2752, AND Case No. 99 L 10324. P. "LLG" shall mean: Prometric, NETg, Course Technology, Delmar Publishing, and Drake Beam Morin, Inc. Q. "MORAN" shall mean Charles E. ("Chuck") Moran, an individual residing in the State of New Hampshire. R. "NETg" shall mean National Education Training Group, formerly a corporation and now a division of TL, and its former parent National Education Corporation. S. "NINE" shall mean Jerald ("Jerry") Nine, an individual residing in the State of New Hampshire. T. "OBJECTION NOTICE" shall mean a written communication stating specific and detailed objections to a proposed change in a RESTRICTED COURSE. An OBJECTION NOTICE must set forth specific and detailed written objections to each change to which NETg objects, specifying and detailing the manner in which NETg claims any such change makes available to the learner a PROHIBITED FEATURE. The OBJECTION NOTICE 4 shall include a narrative statement of any and all objections NETg has with respect to any RESTRICTED COURSE or materials provided to it by SKILLSOFT and shall specify in detail each feature or function of any such RESTRICTED COURSE or other material that NETg asserts constitutes or comprises a PROHIBITED FEATURE. U. "PATENT" shall mean U.S. Patent No. 6,039,575 issued by the United States Patent and Trademark Office on or about March 21, 2000. V. "PERSON" shall mean any individual, corporation, partnership, association, trust, or other entity or organization of any kind. W. "PROHIBITED FEATURE" shall mean and be the following: Presenting in any RESTRICTED COURSE a "precision learning" track to the learner or user, understood as a learner accessed functionality by which a user of the RESTRICTED COURSE takes a pre-assessment test and automatically receives a tailored path through only those topics for which the learner or user has not demonstrated mastery; provided, however, that this definition of the term PROHIBITED FEATURE is subject to the qualifications and limitations set forth in paragraph 6 below. X. "PTO" shall mean the United States Patent and Trademark Office. Y. "RESTRICTED COURSE" shall mean any course listed in Exhibit A hereto, any course that constitutes a revision or update of any course listed in Exhibit A hereto, and any future course the primary subject of which is the same or substantially identical to the subject of any course listed in Exhibit B hereto. Z. "RESTRICTED PERIOD" shall mean a period of fourteen (14) months from the CLOSING DATE. 5 AA. "RITZE" shall mean Lee Ritze, an individual residing in the State of New Hampshire. BB. "SECOND AMENDED COMPLAINT" shall mean the Second Amended Complaint and Demand for Trial By Jury that NETg filed on or about July 2, 1999 in CASE NO. 98 C 2752. CC. "SKILLSOFT" shall mean, collectively, SkillSoft plc and SkillSoft Corporation, and the subsidiaries, affiliates and divisions of either or both. DD. "SKILLSOFT RELEASEES" and "SKILLSOFT RELEASORS" shall mean, collectively, SKILLSOFT, MORAN, TOWNSEND, NINE, RITZE, BROWN, HOVIS, WPV, Warburg Pincus Ventures, L.L.C., Warburg Pincus & Company, Lionel I. Pincus, John L. Vogelstein, Dr. Harold Brown, William Janeway, Rodman W. Moorhead, III, Jeffrey A. Harris, Douglas M. Karp, Sidney Lapidus, Edward J. McKinley, Howard H. Newman, Joel Ackerman, Alvaro Aguirre, Dr. Alan Baratz, C. Samantha Chen, W. Bowman Cutter, Cary J. Davis, Stephen Distler, P. Howard Edelstein, Stewart K.P. Gross, Patrick T. Hackett, Charles R. Kaye, Henry Kressel, Rajiv B. Lall, Joseph P. Landy, Kewsong Lee, Reuben S. Leibowitz, S. Joshua Lewis, David E. Libowitz, John W. MacIntosh, Nancy Martin, James McNaught-Davis, Gary D. Nusbaum, Dalip Pathak, Ernest H. Pomerantz, John Santoleri, Henry B. Schact, Steven G. Schneider, Dominic H. Shorthouse, Chang Q. Sun, James E. Thomas, Elizabeth H. Weatherman, and Jeremy S. Young, and all of their past, present and future owners, parents, affiliates, subsidiaries, divisions, alter egos, stockholders, directors, officers, agents, servants, employees, contractors, outsourcers, insourcers, suppliers, vendors, partners, joint venturers, affiliates, customers, licensees, distributors, representatives, attorneys, trustees, predecessors-in-interest, successors-in-interest, heirs, executors, administrators and assigns. 6 EE. "THIRD AMENDED COMPLAINT" shall mean the Third Amended Complaint and Demand for Jury Trial that NETg filed on or about September 15, 1999 in CASE NO. 99 L 10324. FF. "THOMSON" shall mean The Thomson Corporation, TL, and the subsidiaries, affiliates and divisions of either or both, including, but not limited to, NETg. GG. "THOMSON RELEASEES" and "THOMSON RELEASORS" shall mean THOMSON, TL, NETg and all of their past, present and future owners, parents, affiliates, subsidiaries, divisions, alter egos, stockholders, directors, officers, agents, servants, employees, contractors, outsourcers, insourcers, suppliers, vendors, partners, joint venturers, affiliates, customers, licensees, distributors, representatives, attorneys, trustees, predecessors-in-interest, successors-in-interest, heirs, executors, administrators and assigns. HH. "TL" shall mean Thomson Learning Inc., and its subsidiaries and divisions, including, but not limited to, NETg. II. "TOWNSEND" shall mean Mark A. Townsend, an individual residing in the State of Massachusetts. JJ. "WPV" shall mean Warburg Pincus Ventures, L.P. RECITALS A. On or about May 6, 1998, NETg filed a lawsuit in the United States District Court for the Northern District of Illinois, CASE NO. 98 C 2752, against SkillSoft Corporation and two of its executives, MORAN and TOWNSEND, who were former executives of NETg. In its COMPLAINT, NETg asserted various claims and allegations, including, but not limited to, claims and allegations that the defendants misappropriated or inevitably will misappropriate NETg's alleged trade secrets; that MORAN breached a fiduciary duty of loyalty 7 to NETg; and that MORAN and SkillSoft Corporation tortiously induced NETg employees to leave NETg to join SkillSoft Corporation. The defendants answered and asserted affirmative defenses to the COMPLAINT denying any liability or wrongdoing. B. On or about June 25, 1999, NETg filed its First Amended Complaint, in which NETg named NINE and RITZE as additional defendants, both of whom were former employees of NETg, and Warburg Pincus Ventures, L.L.C. C. On or about July 2, 1999, NETg filed its Second Amended Complaint, which substituted WPV as a defendant in place of Warburg Pincus Ventures, L.L.C. WPV was an investor in SkillSoft Corporation. D. In its Second Amended Complaint, NETg added various claims and allegations, including, but not limited to, claims and allegations that NINE and RITZE misappropriated or inevitably will misappropriate NETg's alleged trade secrets; that NINE breached his fiduciary duty of loyalty to NETg; that MORAN, NINE, SkillSoft Corporation and WPV tortiously interfered with NETg's prospective economic advantage in various ways; that WPV engaged in unfair competition with NETg; that WPV tortiously interfered with NETg's contractual rights; that WPV actively participated in Moran's and Nine's alleged breaches; and that WPV tortiously interfered with NETg's prospective contractual relationships. E. On or about September 15, 1999, NETg filed a lawsuit in the Circuit Court of Cook County, Illinois, Case No. 99 L 10324, by filing what it styled as its THIRD AMENDED COMPLAINT against the defendants named in the SECOND AMENDED COMPLAINT. In addition to the defendants named in the SECOND AMENDED COMPLAINT, NETg named as defendants in its THIRD AMENDED COMPLAINT BROWN, 8 who is a former NETg employee later employed by SkillSoft Corporation, and various individuals, identified among the RELEASEES, who were allegedly members of WPV. F. On or about September 24, 1999, the Court dismissed Case No. 98 C 2752 for lack of federal subject matter jurisdiction. G. In addition to the allegations contained in its SECOND AMENDED COMPLAINT, in its THIRD AMENDED COMPLAINT NETg added various claims and allegations, including, but not limited to, claims and allegations that BROWN misappropriated or inevitably will misappropriate NETg's alleged trade secrets; and that SkillSoft Corporation and RITZE breached a licensing agreement with NETg. H. The court dismissed the THIRD AMENDED COMPLAINT in its entirety, after which NETg, on or about April 17, 2000, filed its FOURTH AMENDED COMPLAINT against the same defendants named in the THIRD AMENDED COMPLAINT, and also purported to add as a defendant HOVIS, who is a former NETg employee later employed by SkillSoft Corporation. I. In its FOURTH AMENDED COMPLAINT, NETg added to or expanded various claims and allegations contained in its THIRD AMENDED COMPLAINT, including, but not limited to, claims and allegations: of misappropriation of NETg's alleged trade secrets, which allegedly included, among other things, NETg's alleged technology (including various computer programs and processes), NETg's alleged soft skills product line business plan, NETg's alleged customer and potential customer lists and strategic partner information, and NETg's alleged outsourcing strategy, procedures, and practices for course development; that the defendants, or various of them, and other former NETg employees who later became employed by SkillSoft Corporation had stolen the alleged underpinnings of a portion of NETg's business; 9 that MORAN, TOWNSEND, NINE, RITZE, BROWN and HOVIS breached NETg's alleged confidentiality policy; and that MORAN, TOWNSEND, NINE, RITZE and BROWN breached NETg's alleged conflict of interest policy. J. The court dismissed certain portions of the FOURTH AMENDED COMPLAINT, after which NETg, on or about May 25, 2001, filed its FIFTH AMENDED COMPLAINT. The FIFTH AMENDED COMPLAINT reiterated against SkillSoft Corporation, MORAN, TOWNSEND, NINE, RITZE, BROWN, and HOVIS, the claims and allegations asserted in NETg's FOURTH AMENDED COMPLAINT, with certain additional allegations, and asserted allegations against WPV and certain of its partners, claiming tortious interference with fiduciary duty. All of the defendants answered and asserted affirmative defenses to the FIFTH AMENDED COMPLAINT denying any liability or wrongdoing. K. On or about March 21, 2000, the PTO issued the PATENT to National Education Corporation, which was NETg's parent corporation at the time of the filing of the application that led to issuance of the PATENT. At NETg's direction, applications or requests for patents in various foreign jurisdictions were also filed seeking foreign patents on the same alleged invention or inventions as those specified or claimed in the PATENT. L. On or about July 26, 2000, NETg filed suit in the United States District Court for the Northern District of Illinois, Case No. 00 C 4551, against SkillSoft Corporation alleging infringement of the PATENT. M. On or about November 11, 2000, NETg and/or its parent company and/or various of its then-past or present employees filed an application for a U.S. patent that was asserted to be a continuation of patent application number 09/532,527 filed on or about March 10 21, 2000, which was asserted to be a continuation-in-part of patent application number 081738,038 filed on or about October 24, 1996 and subsequently issued as the PATENT. N. On or about April 17, 2001, SkillSoft Corporation filed with the PTO a Request for Reexamination of the PATENT. O. On or about June 6, 2001, the PTO granted SkillSoft Corporation's Request for Reexamination of the PATENT and, on or about December 19, 2001, issued an Office Action in Ex Parte Reexamination rejecting claims 1-7 of the PATENT, which are all the claims of the PATENT. P. On or about July 12, 2001, Reed Elsevier acquired NETg's then-parent company Harcourt by completion of a tender offer, and The Thomson Corporation then immediately acquired from Reed Elsevier various of the former Harcourt businesses, including NETg. Q. On or about February 19, 2002, NETg filed a submission entitled "Amendment Pursuant to 37 C.F.R. 1.550" in response to the PTO's Office Action of December 19, 2001 in Ex Parte Reexamination the PATENT. The submission proposed modifications to the specification and to existing claims 1 and 2, and sought to add 51 claims to the PATENT. Finally, the submission argued against the rejections of Claims 1-7 of the PATENT. R. On or about April 10, 2002, the PTO issued an Office Action again rejecting all of the claims of the PATENT, stating that "this action is made final," to which NETg filed a response on or about June 10, 2002 seeking to cancel certain claims and amend certain other claims of the PATENT. 11 S. On or about July 10, 2002, NETg filed its APPEAL from the Examiner to the Board of Patent Appeals and Interferences regarding the Patent. NETg's APPEAL remains pending. T. On or about July 16, 2002, the PTO issued an Ex Parte Reexamination Advisory Action which stated that NETg's June 10th, 2002 response failed to overcome all of the rejections contained in the PTO's Final Office Action on the PATENT and that the proposed amendments were rejected because they raised new issues that would require further consideration and/or search. U. On or about September 6, 2002, the court in CASE NO. 00 C 4551 issued an order dismissing the case "without prejudice and with leave to reinstate upon full and final resolution of the reexamination proceedings." V. On or about May 5, 2003, the PTO Examiner mailed notice of the submission of the Examiner's Answer to NETg's APPEAL, which sets forth reasons that the Examiner "believe[s] the rejections [of the claims of the PATENT] should be sustained." W. Without admitting any of the claims or defenses asserted in the LITIGATION and without admitting any liability or wrongdoing, but solely to avoid further protracted and costly litigation and the risks attendant to such litigation and trial by jury, the parties to this AGREEMENT in their mutual best interests now desire to effect a full and complete settlement of the LITIGATION and a general release and covenant not to sue on the terms set forth in this AGREEMENT, and now enter into this AGREEMENT to terminate all controversy between them as set forth in this AGREEMENT and to secure a dismissal with prejudice of all claims in the LITIGATION. 12 NOW, THEREFORE, in consideration for the covenants contained in this SETTLEMENT AGREEMENT, the adequacy and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. The foregoing recitals are incorporated herein by reference. DISMISSAL 2. Simultaneous with the CLOSING DATE, the attorneys for the parties shall cause to be executed a Stipulation of Dismissal, in the form attached hereto as Exhibit C, with prejudice, with each party to bear its own costs, of CASE NO. 99 L 10324, the filing of which shall be governed by paragraph 5(B) of this AGREEMENT. RELEASES AND COVENANTS NOT TO SUE 3. (A) The Thomson Corporation and TL, on behalf of themselves and all of the THOMSON RELEASORS, do hereby fully, unconditionally and irrevocably remise, release and forever discharge the SKILLSOFT RELEASEES and each of them from and against any CLAIMS, and do hereby covenant not to sue the SKILLSOFT RELEASEES or any of them on or for any CLAIMS, that any of the THOMSON RELEASORS, individually or collectively, in their own names or in the names of or through any other PERSON, now have, ever have had, or ever will have, that: (1) arose, have arisen, or will arise out of any conduct, action, activity, omission, circumstance, situation, fact, matter or thing whatsoever that has or have occurred up to and including the CLOSING DATE, including, but not limited to, any such CLAIMS that were or could have been asserted in, did form or could have formed the basis of any CLAIM in, or otherwise were or are related in any way to the subject matter of CASE NO. 99 L 10324, CASE NO. 00 C 4551 13 or CASE NO. 98 C 2752, except that with respect to this clause 1, this Release shall exclude any and all commercial arrangements and/or agreements between any of the SKILLSOFT RELEASEES, on the one hand, and any THOMSON RELEASEES (other than NETg), on the other hand ; or (2) will or might arise out of any conduct, action, activity, omission, circumstance, situation, fact, matter or thing whatsoever, that occurs or occur in the future that: (a) did form, or as to NETg only could have been properly asserted in or could have formed, the basis of any CLAIM in, or is or are related in any way to the subject matter of CASE NO. 99 L 10324, CASE NO. 00 C 4551 or CASE NO. 98 C 2752; or (b) are based on any past or present INTELLECTUAL PROPERTY (including, without limitation, such past or present INTELLECTUAL PROPERTY as embodied or manifested in future INTELLECTUAL PROPERTY), or are based on any future INTELLECTUAL PROPERTY that is derived from some person or entity other than a THOMSON RELEASOR from any past or present INTELLECTUAL PROPERTY, except that with respect to 2(a) and (b) hereof this Release shall exclude any valid copyright in the expression of editorial content that is visible to end users of any computer based training, internet based training, instructor led training, and/or other course. (B) The SKILLSOFT RELEASORS do hereby fully, unconditionally and irrevocably remise, release and forever discharge the THOMSON RELEASEES and each of them from and against any CLAIMS, and do hereby covenant not to sue the THOMSON RELEASEES or any of them on or for any CLAIMS, that any of the SKILLSOFT RELEASORS, individually or collectively, in their own names or in the names of or through any other 14 PERSON, now have, ever have had, or ever will have, that arose, have arisen or will arise out of any conduct, action, activity, omission, circumstance, situation, fact, matter or thing whatsoever that has or have occurred up to and including the CLOSING DATE, except that this Release shall exclude any and all commercial relationships for the provision of content between SKILLSOFT and the following divisions of TL: Gale Group; Delmar Publishing, and Course Technologies. 4. The THOMSON RELEASORS and the SKILLSOFT RELEASORS, understand and acknowledge that there is a risk that they may suffer losses, damages or injuries, resulting from CLAIMS that are unknown or unanticipated at the time of execution and delivery of this AGREEMENT. Further, there is a risk that any losses, damages or injuries resulting from CLAIMS presently known may be or may become greater than they now understand, expect or anticipate. The THOMSON RELEASORS and the SKILLSOFT RELEASORS assume all such risks and this AGREEMENT shall apply to such unknown, misunderstood, unexpected or unanticipated losses, damages and injuries. PAYMENTS 5. (A) Recognizing that claims for damages were prayed for in the LITIGATION, with respect to which the SKILLSOFT RELEASEES have denied and continue to deny any liability or obligation, as a royalty paid in consideration for settling and compromising all claims for damages of any kind based on allegations of past misappropriation of trade secrets, allegations of past infringement of the PATENT, allegations of past breaches of licenses, allegations of any other past conduct, actions, activities, omissions, circumstances, situations, matters or things of any kind or nature, all of which the SKILLSOFT RELEASEES have denied and continue to deny, and in consideration for the releases and covenants not to sue in Paragraph 3(A)(1) of this AGREEMENT, SKILLSOFT shall pay to NETg a total sum of Forty-Four 15 Million Dollars (U.S. $44,000,000.00), to be paid in two equal installments, with no interest, as follows: (1) SKILLSOFT shall pay to NETg the first installment of twenty-two million dollars (U.S. $22,000,000.00) within seven (7) days after the CLOSING DATE; and (2) SKILLSOFT shall then pay to NETg the second installment of twenty-two million dollars (U.S. $22,000,000.00) on the first anniversary of the CLOSING DATE. It is specifically understood that two million dollars of this payment shall be in respect of a non-transferable and non-exclusive worldwide license -- with no right to sublicense (except to SKILLSOFT's own customers, distributors, outsourcers and the like as necessary to effectuate this license) -- that NETg hereby grants to SKILLSOFT in perpetuity to develop, make, use, sell, offer for sale, lease or offer for lease, products or services containing, embodying, practicing or implementing any of the inventions or technology (such inventions or technology commonly referred to by NETg as "Precision Skilling") that are disclosed or described in pending patent application numbers: U.S. serial numbers 09/705, 153, 10/001,902, and 10/199, 987 (the "Applications") and that are or may be claimed in any patents (domestic or foreign) that have issued or that may issue or reissue in the future. It is understood that this license is limited to the inventions and technology disclosed in these presently pending patent applications and shall not extend to any enhancements or improvements thereto created after the CLOSING DATE, or to any patent claims claiming any such enhancements or improvements (B) Should NETg or THOMSON be ordered or compelled for any reason to return or disgorge the first installment of twenty-two million dollars (U.S. $22,000,000.00) paid pursuant to Paragraph 5(A)(1) of this AGREEMENT, and as a result NETg or THOMSON does finally return that first installment of twenty-two million dollars (U.S. $22,000,000.00) as so ordered or compelled, then: (1) in Case No. 99 L 10324, the court shall 16 retain jurisdiction; (2) the releases as to all of the SKILLSOFT RELEASEES and Thomson Releasees shall be null and void; and (3) the LITIGATIONS shall return to the status quo ante as of the CLOSING DATE as to all parties. The Stipulation of Dismissal with prejudice and without costs referred to in Paragraph 2 of this AGREEMENT shall be held in escrow by the attorneys for THOMSON and TL and shall be entered and effectuated in CASE NO. 99 L 10324 without notice on the 95th day following receipt of the first installment of twenty-two million dollars (U.S. $22,000,000.00) paid pursuant to Paragraph 5(A)(1) of this AGREEMENT, provided no bankruptcy petition on behalf of SKILLSOFT has been filed by such 95th day. (C) Should SKILLSOFT default in its payment of the second installment of $22 million, or should NETg or THOMSON have to return or disgorge the second payment for any reason, a Confession of Judgment in the form attached hereto as Exhibit D may be entered by consent in the Circuit Court of Cook County, Illinois against SKILLSOFT in the amount of $22 million, with interest at the legal rate from the first anniversary of the CLOSING DATE. RESTRICTIONS AND DISPUTE RESOLUTION 6. Recognizing that requests for injunctive relief were prayed for in the LITIGATION, with respect to which SKILLSOFT RELEASEES have denied and continue to deny any liability or obligation, and in consideration for the releases and covenants not to sue in Paragraph 3(A)(2) of this AGREEMENT, the parties agree to the following limitations, which are within the scope of but narrower than the injunctive relief sought in the LITIGATION: During the RESTRICTED PERIOD: (a) the functionality of the RESTRICTED COURSES listed in Exhibit A shall not be modified in a way that makes available to the learner the PROHIBITED FEATURE; and (b) the functionality of any revised version of any RESTRICTED COURSE and the functionality of any future RESTRICTED COURSE shall not be implemented in a way that 17 makes available to the learner the PROHIBITED FEATURE. Provided, however, that the functionality as it existed on or before the CLOSING DATE of any RESTRICTED COURSE listed in Exhibit A, and such functionality in any revised or updated version of any RESTRICTED COURSE or in any future RESTRICTED COURSE, shall not be considered to be within the scope of the definition of PROHIBITED FEATURE; in other words, notwithstanding any other provision or language contained in this AGREEMENT, any feature that is or was contained in any RESTRICTED COURSE on or before the CLOSING DATE cannot be considered to constitute a PROHIBITED FEATURE. In addition, during a period of two years from the CLOSING DATE, SKILLSOFT shall not hire the following TL or NETg employees: Clint Everton, Robert McCain, Michael Havens, Derek Rempfer, Laura Helliwell, Carol Townsend, Jim L'Allier, David Korkery, Brad London, Jared Madden, Boyd Neilson, Elaine Roche, and Mike Nordberg. 7. During the RESTRICTED PERIOD: (a) SKILLSOFT shall provide to NETg, pursuant to the restrictions set forth in Exhibit B attached hereto, access to any anticipated RESTRICTED COURSE release that makes changes in the manner in which a RESTRICTED COURSE presents course content to a learner based on the results of a pre-assessment test. SKILLSOFT shall provide such access, together with a description of any such changes in presentation to the learner, prior to any public release of the RESTRICTED COURSE. (b) From the day SKILLSOFT provides such access to NETg, NETg shall then have ten (10) business days in which to deliver an OBJECTION NOTICE to SKILLSOFT. If, during the ten (10) day period, SKILLSOFT does not receive from NETg a written OBJECTION NOTICE stating specific objections in respect to any change to which NETg objects, the change will conclusively be deemed not to be or contain a PROHIBITED FEATURE. 18 8. If SKILLSOFT receives a timely OBJECTION NOTICE from NETg, then the RESTRICTED COURSE changes to which NETg has made specific written objection shall not be publicly released until the objections are resolved as described herein. The parties shall promptly (within 10 business days after receipt by SKILLSOFT of the OBJECTION NOTICE) meet and confer in Boston, Massachusetts with respect to the specific objections stated in the OBJECTION NOTICE. 9. In the event that the parties do not, within ten (10) business days after SKILLSOFT's receipt of a timely OBJECTION NOTICE, resolve the dispute, on the tenth day the parties shall refer the matter to binding arbitration, which shall occur in Boston, Massachusetts, before David Geronemus. 10. The objection referred to arbitration shall be resolved in a written decision of the arbitrator within 20 calendar days from the date of referral. Whether a RESTRICTED COURSE contains a PROHIBITED FEATURE is to be determined solely by reference to what is observable to a learner using the RESTRICTED COURSE. The decision of the arbitrator shall be final and binding on the parties. DENIAL OF LIABILITY 11. It is fully understood and agreed that this AGREEMENT is in compromise and settlement of the CLAIMS released herein, that no admission or concession of any kind to any CLAIM, defense, liability, obligation or wrongdoing is made or intended herein, and that this AGREEMENT is made solely to avoid further protracted and costly litigation and the risks attendant to such litigation and trial by jury. It is further understood and agreed that this AGREEMENT is not to be construed or interpreted as an admission or concession of any kind to any CLAIM, defense, liability, obligation or wrongdoing by any of the parties hereto or as to any 19 issue that has been or could have been disputed between them. Nothing in this AGREEMENT, nor any action taken pursuant to this AGREEMENT, shall constitute evidence with respect to any such issue or dispute. INTERPRETATION 12. All the parties to this AGREEMENT agree and represent that legal counsel for each of them contributed to, reviewed and accepted the wording and terms of this AGREEMENT, which were the product of arm's length negotiation, and all the parties to this AGREEMENT intend, in the event of a dispute between any or all of said parties concerning this AGREEMENT'S terms, conditions or scope, that no rule of interpretation or construction shall be applied to this AGREEMENT that would result in this AGREEMENT being construed more strictly against any party to this AGREEMENT than against any other party to it. 13. Except for disputes arising within the scope of the dispute resolution mechanism described in Paragraphs 6-10 above, any and all CLAIMS, disputes or controversies arising out of or related in any way to this AGREEMENT shall be presented and heard in Chicago, Illinois, and shall be governed by the internal laws of the state of Illinois without respect to any choice of law rules. 14. Nothing in this AGREEMENT is intended or should be interpreted to confer any rights, privileges, or rights of action of any kind upon any PERSON not a party to this AGREEMENT other than the non-signatory SKILLSOFT RELEASEES and the non-signatory THOMSON RELEASEES. REPRESENTATIONS AND WARRANTIES 15. The parties to this AGREEMENT make the following representations to each other as follows: 20 A. THOMSON and TL and each of them represent and warrant to the SKILLSOFT RELEASEES that: (i) they are each a corporation and have all the requisite power and authority to enter into this AGREEMENT; (ii) neither NETg, THOMSON nor TL has assigned, transferred, or otherwise shared with or relinquished to any PERSON any right, title or interest in or to any CLAIM that is subject to the release pursuant to Paragraph 3(A) against any of the SKILLSOFT RELEASEES; (iii) any and all CLAIMS NETg has made or with respect to which NETg has asserted any right, title or interest in the LITIGATION, was acquired by Thomson, TL or NETg from Harcourt, Inc., Reed Elsevier, or their past or present owners, shareholders, parent companies, subsidiaries or affiliates such that (A) Thomson, TL or NETg retained, now owns or has the right to assert any CLAIMS arising out of the facts alleged in the LITIGATION and (B) neither Harcourt, Inc., Reed Elsevier, nor any of their past or present owners, shareholders, parent companies, subsidiaries or affiliates other than NETg retained, now owns or has the right to enforce any such CLAIMS; (iv) they have neither instituted nor filed any lawsuit or proceeding against SKILLSOFT, MORAN, TOWNSEND, NINE, RITZE, BROWN, HOVIS, or WPV other than the LITIGATION; (v) they each have duly executed and delivered this AGREEMENT, which constitutes a legal, valid and binding obligation enforceable against each of them in accordance with its terms; and (vi) each of the individuals executing this AGREEMENT on behalf of THOMSON and TL are authorized to do so, and the execution of it is binding on the THOMSON RELEASORS. B. SkillSoft plc and SkillSoft Corporation represent and warrant to the THOMSON RELEASORS that: (i) they are each a corporation and have all the requisite power and authority to enter into this AGREEMENT and specifically, but without limitation, the Confession of Judgment attached hereto as Exhibit D; (ii) they have neither instituted nor filed 21 any lawsuit or proceeding against Thomson, TL or NETg, except as set forth in the RECITALS in this AGREEMENT; (iii) they each have duly executed and delivered this AGREEMENT, which constitutes a legal, valid and binding obligation enforceable against each of them in accordance with its terms; and (iv) each of the individuals executing this AGREEMENT on behalf of SkillSoft plc and SkillSoft Corporation are authorized to do so, and the execution of it is binding on the SKILLSOFT RELEASEES. 16. The THOMSON RELEASEES each agree to indemnify the SKILLSOFT RELEASEES from and against any breach of any of the representations and warranties set forth in Paragraph 15A of this AGREEMENT. The SKILLSOFT RELEASEES each agree to indemnify the THOMSON RELEASEES from and against any breach of any of the representations and warranties set forth in Paragraph 15B of this AGREEMENT. 17. By affixing their signatures below, each person signing this AGREEMENT personally warrants that he or she has been duly authorized and has full authority to: (a) execute this AGREEMENT on behalf of the party on whose behalf he or she is signing; and (b) irrevocably bind such party and its successors and assigns to the terms hereof; and (c) specifically acknowledges that authority of the attorneys to execute the Confession of Judgment attached hereto as Exhibit D on behalf of SkillSoft. SEVERABILITY 18. If any term or other provision of this AGREEMENT is held to be invalid, illegal, a violation of law, or incapable of being enforced, all other terms and provisions of this AGREEMENT shall nevertheless remain in full force and effect, and the parties to this AGREEMENT shall not be obligated by virtue of any such holding to honor such term or provision or renegotiate or modify any term or provision of this AGREEMENT. 22 MERGER CLAUSE 19. This AGREEMENT constitutes the entire understanding between the undersigned parties with respect to the subject matter hereof and supersedes all prior discussions, agreements and understandings, both written and oral, among the parties with respect thereto. This AGREEMENT has not been entered into by any party in reliance upon any representation not contained herein. NO MODIFICATION 20. This AGREEMENT may not be modified, amended, altered, limited or supplemented (collectively, "Modify" "Modified" or a "Modification"), except by subsequent written agreement duly executed and delivered by SkillSoft plc or SkillSoft Corporation, and THOMSON or TL, and, in the case of any Modification that purports to Modify any release of or covenant not to sue any of the non-signatory RELEASEES, then any non-signatory RELEASEE whose release or covenant not to sue is Modified by such Modification. NON-PUBLICITY 21. Nothing in this Paragraph 21 shall preclude any of the parties to this AGREEMENT or the RELEASORS or RELEASEES from vigorously competing with each other or from instituting or pursuing any legal action or proceedings otherwise permitted by this AGREEMENT; provided, however, that the parties to this AGREEMENT agree not to, and shall cause their representatives, agents and attorneys not to, publicize the terms of this AGREEMENT or any of the allegations or proceedings in the LITIGATION by writing or publishing any books, articles, or other similar published writings; provided further, however, that nothing in this paragraph 21 shall be interpreted to preclude the parties from otherwise disclosing the terms of this AGREEMENT, or any of the allegations or proceedings in this LITIGATION, in any other 23 manner whatsoever, including, without limitation, in a press release, in filings with the United States Securities and Exchange Commission, with securities analysts and investors, and to the extent otherwise required by law, government regulation, or stock market regulation. NOTICES 22. Unless another person is designated in writing, notices, requests, demands, instructions and other communications which are required or may be given under this AGREEMENT shall be in writing and shall be delivered by next day commercial courier services, such as Federal Express or the like, as follows: If to SKILLSOFT: Chuck Moran SkillSoft plc 20 Industrial Park Drive Nashua, NH 03062 Christopher Cole Sheehan Phinney Bass & Green, P.A. Hampshire Plaza 1000 Elm Street P.O. Box 3701 Manchester, NH 03105 If to THOMSON, TL or NETg: Joseph B. Dougherty President Course Technology/NETg/Wave 751 W. Diehl Road, Suite 200 Naperville, IL 60563 Kenneth A. Carson, Esq. The Thomson Corporation Metro Center at One Station Place Stamford, CT 06902 24 EXECUTION IN COUNTERPARTS 23. This AGREEMENT may be executed by the parties hereto in multiple counterparts, and shall be fully enforceable against all parties hereto as if all parties had executed a single document. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be duly executed as of the CLOSING DATE. SKILLSOFT CORPORATION By /s/ Gregory M. Priest ----------------------------------- SKILLSOFT PLC By /s/ Gregory M. Priest ----------------------------------- THE THOMSON CORPORATION By /s/ Deirdre Stanley ----------------------------------- THOMSON LEARNING INC. By /s/ Deirdre Stanley ----------------------------------- 25 EXHIBIT A