EXHIBIT 10.1
SECURAC INTERNATIONAL LTD.
SOFTWARE LICENSE AND SERVICES AGREEMENT
THIS AGREEMENT (the
"AGREEMENT") dated and effective as of the 1st day of
April,
2004 (the "EFFECTIVE
DATE").
BETWEEN:
SECURAC
TECHNOLOGIES
LTD., a body corporate
created pursuant to the laws
of the
Province of Alberta ("LICENSOR") - and -
SECURAC
INC., a body corporate created pursuant to the laws of the
Province
of Alberta ("LICENSEE")
WHEREAS
Licensor owns the rights in and to the software application known
as the "Acertus(TM)"
Enterprise Risk &
Compliance Software for all areas on the
world other than North
America;
AND
WHEREAS Licensee
wishes to obtain, and
Licensor wishes to license to
license, the right to use the
software and be the exclusive distributor of such
software in the Territory (as
defined below);
NOW
THEREFORE in consideration of the above recitals and all of the
representations, promises and conditions set forth in this Agreement, the
parties agree as
follows:
1. DEFINITIONS
"AFFILIATE" means with respect to any entity,
any other entity directly or
indirectly controlling or controlled
by, or under direct or
indirect,
control
with such entity or one or more of the other
Affiliates
of that entity (or a
combination thereof). For purposes of this definition
any entity shall control
another entity if the first
entity:
(i)
owns,
beneficially
or of record,
more than fifty (50%)
percent of
the voting securities of the other entity, or
(ii)
has the ability to elect a majority of the
directors of the other
entity;
"BUSINESS DAY" means any
calendar day other than a Saturday, Sunday or statutory
holiday observed in
Canada;
"CLIENT" means a natural
person, sole proprietorship, partnership,
corporation,
trust, joint venture, any governmental authority or any incorporated or
unincorporated entity or association of any nature, and any Affiliate,
subsidiary or entity directly
or indirectly controlled thereby, which resides in
the Territory and enters into
a contract, oral or
written, with Licensee or any
of its resellers,
distributors or other sub-licensees;
"CONFIDENTIAL INFORMATION" means all non-public, proprietary, confidential
information pertaining to or concerning a
party or its Affiliates including (i)
all confidential information
relating to the business and affairs of Licensee or
any Affiliate thereof,
including all data stored on or processed by the
Software
and all information relating
to its operations,
financial affairs,
technology,
clients or prospective clients and projects undertaken for its clients or
prospective clients; and (ii) all confidential information relating to the
business and affairs of Licensor or any Affiliate thereof, including all
information relating to its
operations, financial
affairs, technology,
clients
and projects undertaken for its clients, and (iii) the logic, structure,
sequence and organization of
the Software, and all information, data, drawings,
specifications, documentation, software listings, source or object code
which
Licensor may have imparted and may from time to time impart to Licensee,
relating to the Software, or
any other Licensor product, provided that:
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(i)
information that
is independently developed by the receiving party;
(ii)
information
which becomes part of the public domain (other than
through unauthorized disclosure by the receiving party);
or
(iii)
information which is disclosed by the owner of such information to
a
third party free of any obligation of confidentiality or of which
either party gained
knowledge or possession free of any obligation
of confidentiality,
shall not
be considered Confidential Information;
"DOCUMENTATION" means standard documentation (print or electronic media)
supplied by Licensor to Licensee in respect of the Software, Releases, or
Enhancements, and containing descriptive information, as the case may be,
regarding functionality, defects corrections, installation, operating and
maintenance
instructions;
"ENHANCEMENTS" has the
meaning set forth in Section 4.2 herein;
"GROSS REVENUES" means all gross revenues generated by Licensee through the
licensing and distribution of the Software in the Territory
on a
consolidated
basis, net any applicable
taxes, returns or rebates;
"MAINTENANCE" has the meaning
set forth in Section 4.1 herein;
"RELEASE" means a new version of the
Software that may contain Enhancements,
functional changes,
modifications, extensions, Error corrections or bug
fixes;
"SOFTWARE" means the
Acertus(TM) Enterprise
Risk & Compliance
Software product
and the Documentation, tools and utilities, and miscellaneous technical
information as well as any Enhancements and Releases as provided from time
to
time by Licensor pursuant to
this Agreement;
"SUPPLEMENTAL SERVICES" has
the meaning set forth in Section 4.2 herein;
"TERRITORY" means the country of Canada and
the country of the United States of
America; and
"THIRD PARTY SOFTWARE" means any third party
software that is required in order
for the Software to perform
its functionality.
2. LICENSE TO USE AND
DISTRIBUTE THE SOFTWARE
2.1 GRANT OF EXCLUSIVE
LICENSE
Licensor hereby grants to Licensee an
exclusive, perpetual,
non-transferable,
sub-licensable license and limited right, subject to the terms and
conditions
herein, to:
(a) market and distribute the Software in the
Territory for all fields of use
and in all
vertical markets,
using any distribution
model that
Licensee
reasonably
deems appropriate, including without limitation, directly
licensing
to Clients or appointing re-sellers to market and distribute
the
Software
to Clients;
(b) enter into software
license and
maintenance
agreements for the
Software
directly
with Clients in the Territory;
(c) use the Software to conduct risk assessment projects for Clients and
sub-license the right for others to do the same; and
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(d) use any and all of the
copyright, patents and
trade-marks and other trade
indicia of
Licensor in the Territory for the sole and limited
purpose of
carrying
out the business of
marketing,
distributing and
licensing
the
Software
in the Territory pursuant to the terms of this
Agreement.
2.2 LOSS OF
EXCLUSIVITY
Notwithstanding the above, if the common shares of Licensee are not listed
on
either the NASDAQ,
AMEX or NYSE stock
exchanges as of the third anniversary of
the Effective Date, the exclusivity granted to Licensee in Section 2.1
shall
automatically cease and the rights granted
therein shall become
non-exclusive
throughout the Territory for
the balance of the term of the Agreement.
2.3 LICENSEE'S RELATIONSHIP WITH
ITS RESELLERS, DISTRIBUTORS AND CLIENTS
The rights granted herein are
conditional upon Licensee ensuring that:
(a) all reseller agreements, distributor agreements, end user license
agreements, and
maintenance
agreements
entered into by
Licensee, its
resellers,
distributors, Clients
and other sub-licensees pursuant to this
Agreement
are in a form acceptable to Licensor;
(b) Licensee monitors its use of Licensor's trade-marks and other trade
indicia,
as well as the use of such trademarks and trade indicia by
Licensee's
resellers,
distributors,
Clients and other
sub-licensees
in
connection
with the marketing,
distribution and use of the Software, and
promptly
notifies Licensor of any and all infringements, imitations,
illegal
use or misuse, of such
trade-marks and indicia, and requires its
resellers,
distributors,
Clients and other
sub-licensees to do the same;
and
(c) agreements entered into by Licensee conferring rights upon resellers,
distributors, Clients and other sub-licensees do not impose
obligations on
Licensor
or expose Licensor to
any liability
beyond what
Licensor has
agreed to
hereunder.
3. LICENSE
RESTRICTIONS
3.1 Licensee agrees not to, and
agrees to cause its Clients not to:
(a) reproduce, adapt, vary,
modify, decompile,
enhance, translate, attempt to
reverse
engineer, reverse
engineer, reverse assemble, create a derivative
work of,
or otherwise attempt to discover any source code of the
Software,
or
communicate
the same to any
other person, or otherwise reduce or
attempt to
reduce the Software to human perceivable form;
(b) develop or write any
software or other program or have any software or
other
program written or
developed based on the
Software or based on any
of the
Confidential Information;
(c) unless otherwise permitted
under this Agreement, sell, assign, sublicense,
rent,
lease, grant a security interest in, or otherwise transfer any
right
in the
Software or
distribute
or network any portion
of the Software or
related
materials;
(d) remove any proprietary
notices or labels from the Software; or
(e) other than as permitted pursuant to this Agreement, use the name,
trade-marks or trade
indicia of
Licensor or of any of its Affiliates,
licensors,
third party content or service providers, distributors,
dealers
or authorized
suppliers, in any advertising, publicity releases,
reference
lists,
media such as but not limited to sales presentations, without its
prior
written consent.
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4. MAINTENANCE,
ENHANCEMENTS AND SUPPLEMENTAL SERVICES
4.1 Licensor shall update and
maintain the Software throughout the term of the
Agreement
and provide Licensee with Releases as and when they are
released
by
Licensor from time to time (hereinafter "Maintenance").
Licensee
shall
pay to
Licensor one hundred twenty thousand dollars ($120,000) per annum
(the
"Maintenance
Fees") for Maintenance. Maintenance Fees shall be
payable on
each anniversary of the Effective Date.
4.2 Licensee shall be solely
responsible for providing installation, training
and
support services to its Clients. Notwithstanding the foregoing,
upon
request
by Licensee, Licensor may, at its sole discretion, provide
installation, training
and support services,
or additional
enhancements
and
modifications,
to Licensee and/or Licensee's Clients or other
sub-licensees
("Supplemental
Services") at Licensor's standard time and
material
rates currently in effect when the Supplemental Services are
performed.
Such charges shall be invoiced according to Licensor's
standard
billing
cycle, and payable according to Licensor's standard billing
policies.
4.3 Licensor and/or its
Affiliates shall own all intellectual property rights
developed,
authored, invented, first reduced to practice or
otherwise
created
during the development
of any Enhancements or
the performance of
any
Supplemental Services.
5. LICENSEE
RESPONSIBILITIES
5.1 Licensee agrees:
(a) to vigorously promote the
sale of the Software within the Territory;
(b) not to sell or distribute any Software to anyone that is not
within the
Territory;
and
(c) not to promote, offer for
sale, or demonstrate any product or service that
is
directly competitive with the Software or the various services
provided
by
Licensor in the Territory.
6. ROYALTY AND AUDIT
RIGHTS
6.1 ROYALTY
In consideration
for the licenses and
rights granted to Licensee pursuant to
this
Agreement, Licensee shall pay royalties to Licensor as
follows:
(a) six hundred thousand United States dollars
($600,000 USD) as an
up front
royalty
payable as follows:
(i)
Licensee
immediately
assigns to Licensor
its right to receive
the
entire balance of a
non-interest
bearing promissory note in the
amount of $374,024.83
(USD) between Licensee and Licensor's parent
Securac Holdings Inc.; and
(ii)
$
