Exhibit 10.1
EXCLUSIVE SOFTWARE LICENSE AND DISTRIBUTION AGREEMENT
Between
RISK GOVERNANCE, LTD.
And
RISK GOVERNANCE, INC.
This Exclusive Software License and Distribution Agreement (hereinafter "this
Agreement") entered into as of this October 10th, 2003 ("Effective Date") by and
between Risk Governance, Ltd. ("RGL"), a corporation formed under the laws of
the United Kingdom, having a principal place of business at Surrey House, ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ and Risk Governance,
Inc. ("Distributor"), a Delaware corporation, having a principal place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ (RGL and Distributor, sometimes
referred to as "Party" or "Parties").
WHEREAS, RGL owns certain rights in certain technology relating to enterprise
risk management software known as "Risk Governance" Release 1.5, plus any and
all future versions thereof (the "Software");
WHEREAS, Distributor provides installation, customization, sublicensing,
consulting, support and implementation services to consumers and entities
desiring to license the Software;
WHEREAS, Distributor desires RGL to appoint Distributor as RGL's exclusive
sublicensor and distributor in all countries that are parties to the North
American Free Trade Agreement ("Territory") with respect to the distribution and
licensing of the Software.
NOW, THEREFORE, in consideration of their mutual promises set forth below and
other valuable consideration, the parties agree as follows:
1. SCOPE OF AGREEMENT
1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
a. "Copyrights" shall mean RGL's copyrights in the Software.
b. "Customers" shall mean Third Parties who license the Software,
as distributed by Distributor, by agreeing to be bound by an
end user license agreement.
c. "Fiscal Quarter" or "Quarter" shall refer to the normal
quarterly accounting periods of Distributor; if Distributor
does not have normal quarterly accounting periods, then
"Fiscal Quarters" shall mean the calendar three months periods
commencing with January of each year.
d. The term "Modifications" shall mean any changes or alterations
made to the Software by modifying, manipulating, editing or
revising the Software's Source Code. RGL shall own all
Modifications. The use of Modifications by Distributor and its
customers shall be considered to be licensed under this
Agreement and subject to the terms of this Agreement.
e. "Software" means the enterprise risk management software known
as "Risk Governance" Releases 1.5. Provided Distributor is not
in default of this Agreement, Software shall also include all
future versions of the Software - which shall be provided to
Distributor at no additional cost.
f. "Third Party(ies)" shall mean any party other than the
Distributor or RGL.
g. "Year" refers to contract years of the Agreement, i.e., a
12-month period starting with the date (or anniversary) of the
Effective Date of this Agreement.
1.2 Exclusivity. RGL hereby appoints Distributor as RGL's exclusive
distributor and sublicensor for distribution and licensing of the Software in
the Territory to Customers and grants Distributor an exclusive license to the
Software for purposes of such distribution and licensing to Customers in the
Territory, together with associated installation, customization, sublicensing,
consulting, support and implementation services.
2. LICENSE OF SOFTWARE.
2.1 Software License Rights. RGL hereby grants Distributor the
exclusive, perpetual and irrevocable (subject to termination below) license and
right during the Term of this Agreement to copy, duplicate, distribute and grant
sublicenses of the Software, together with all future versions thereof and any
Modifications thereto, to Customers, and to provide customization, maintenance,
training, support, hosting and consulting services in connection with said
license and the Software, provided (i) each Customer shall not be permitted to
access or use the Software until it has executed a sublicense agreement from
Distributor, and (ii) Distributor remits to RGL the Royalties as specified in
Section 4, below.
2.2 Appointment of Subdistributors. RGL hereby grants Distributor the
exclusive right during the Term of this Agreement to appoint subdistributors of
the Software provided (i) Distributor obtains the prior approval of RGL, which
shall not unreasonably be withheld, and (ii) any subdistributor agrees to be
bound by the terms and conditions of this Agreement.
2.3 Modifications to Software. Distributor may create Modifications as
necessary to meet the requirements of Customers. Modifications shall, however,
be owned by RGL and subject to the terms of this Agreement.
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2.4 Use of Trademarks. Distributor hereby grants Distributor the
license and right during the Term of this Agreement to use or depict RGL's name
and/or trademarks, including, but not limited, to "Risk Governance" and any
trademarks in the Software, in connection with the Software License granted
herein. RGL shall have the right, upon written request, to review Distributor's
use of RGL's trademark in marketing material or otherwise and request changes
thereto.
3. UPDATES AND SUPPORT AND TRAINING.
3.1 Release of Updates. To the extent that RGL or anyone on behalf of
RGL makes any updates, enhancements, modifications, upgrades or other
improvements to the Software ("Enhancements"), same shall be made available to
Distributor at no cost within thirty (30) days of completion of same. Any
Enhancements shall be subject to the terms of this Agreement.
3.2 Customer Support. Distributor shall provide primary customer
support to its Customers. If and when Distributor is unable to assist its
Customers with the Software, Distributor may request assistance from RGL. In
such a situation, RGL shall provide such guidance and assistance to Distributor
as is commercially reasonable to permit Distributor to appropriately in provide
support to its Customers. Notwithstanding the foregoing, Distributor shall not
advise its Customers, and Customers shall not be permitted, to contact RGL
directly for Software support.
3.3 Training. RGL shall provide, at its cost, such training as is
reasonably necessary in the reasonable discretion of Distributor to
Distributor's employees so as to enable Distributor to fulfill its obligations
under this Agreement. The training shall be schedule at times and located at
venues mutually agreed to by the parties.
4. PRICES AND PAYMENT.
4.1. License Fees. The total fees received by Distributor for the
sublicense of the Software to a Customer shall be the "License Fees." Solely for
purposes of calculations of Annual License Fees in connection with Royalties
pursuant to Section 4.2 hereof, and for no other purpose, the minimum License
Fee for each sublicense to a Customer shall be deemed $1.
4.2 Royalties. For each license of the Software to a Customer,
Distributor shall pay to RGL, as set forth below, a royalty ("Royalty"). The
Royalty percentage shall be determined based upon the cumulative License Fees
received by Distributor as of the end of any Fiscal Quarter ("Fee Level"). Once
a Fee Level is achieved, RGL shall be entitled (as set forth below) to a Royalty
payment equal to the applicable Royalty rate multiplied against each License Fee
received by Distributor while the Fee Level remains in effect. (i.e. until the
next higher Fee Level is achieved). The Fee Levels and applicable Royalty
percentages are as follows::
Fee Level Royalty Percentage
0-$500,000 0%
$500,001-$1,000,000 5%
$1,000,001 - $3,000,000 7.5%
$3,000,001 - $5,000,000 10%
Exceeds $5,000,001 15%
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Thus, for example, until the Fee Level exceeds $500,000, no Royalty is
due. Once the Fee Level exceeds $500,000, but does not exceed $1,000,000, RGL is
entitled to a Royalty payment equal to 5% of all License Fees collected by
Distributor after the $500,001 threshold was achieved, until such time as the
cumulative License Fees exceed the $1,000,000 limit. Thereafter, until the
cumulative License Fees collected by Distributor exceed $3,000,000, RGL is
entitled to a Royalty of 7.5% of all License Fees collected by Distributor after
the $1,000,001 threshold was achieved, and so forth.
4.3 Adjustment to Royalties. In the event that Distributor, during the
Initial Term or any Renewal Term, makes substantial Modifications to the
Software, RGL agrees to negotiate with Distributor in good faith to reduce the
Royalty for the Software for successive renewal terms. Such reduced Royalty
shall be intended to reflect the proportionate value of Modifications made by
Distributor in relation to the value of the Software originally licensed to
Distributor in the Initial Term.
4.4 Maintenance Fees. All revenue received by Distributor for
maintenance of the Software ("Maintenance Fees") shall be remitted to RGL, in
accordance with Section 4.5, without deduction or offset. Maintenance Fees shall
specifically refer to all revenue received by Distributor for the provision of
or obligation to provide upgrades, bug fixes, and enhancements to the Software.
4.5 Taxes. Distributor shall be responsible for all VAT, sales, use and
other similar taxes applicable to Software supplied under this Agreement, unless
Distributor provides written proof of exemption.
4.6 Payment Terms. While this Agreement remains in effect, Royalties
and Maintenance Fees shall be paid by Distributor to RGL for each Fiscal Quarter
within five (5) days of the end of such Fiscal Quarter, based upon the total of
the License Fees and Maintenance Fees received by Distributor during such Fiscal
Quarter.
4.7 Form of Payment. All License Fees and Maintenance Fees due
hereunder shall be paid in U.S. Dollars and shall be made by wire transfer to
RGL's account No. ▇▇▇▇▇▇▇▇, Sort 20-90-56, at Barclays, ▇▇▇▇▇▇-on-Thames, or by
Distributor's check sent in accordance with the Section entitled "Notices."
4.7 Default Interest. All amounts due hereunder which are not paid
within ten (10) days of the date due shall bear interest until paid at 12% per
annum. This provision for interest shall not be construed as a waiver of any
rights RGL has as a result of Distributor's failure to make timely payment of
any amounts.
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5. REPORTS AND AUDITS
5.1 Reporting. Distributor shall report Quarterly to RGL the number of
Licenses issued under this Agreement that are subject to the License Fees
specified above.
5.2 Maintenance of Records. Distributor shall maintain accurate books
and records such that the Royalties due and payable hereunder can be easily
ascertained. Such books and records shall be maintained at Distributor's
principal place of business and shall be available for inspection by RGL or its
representatives during the normal business day upon not less than ten (10) days
prior written notice, provided that RGL or its representatives agree to protect
the confidentiality of the information as to the customers of Distributor.
5.3 Audit. Distributor shall make available Distributor's books and
records for audit by an accounting firm or representative of RGL's selection,
and Distributor agrees to cooperate fully in any such audit, provided that the
auditors agree to protect the confidentiality of the information as to the
customers of Distributor. Any such audit shall not be more frequent than
annually. In the event that such audit determines that the amount of License
Fees paid to RGL was in error by more than five (5%) percent, Distributor shall
pay the costs of the audit.
6. PROPRIETARY NOTICES.
Distributor shall maintain on any copy of the Software that it reproduces,
whether for internal use or for distribution, all such notices as are affixed
thereto by RGL. Such notice may be loaded in the computer memory for use,
display, or reproduction and may be embedded in program source code and object
code, in the video screen display, on the physical medium embodying the Software
copy, and on any documentation and sublicensee reference manuals.
7. DISCLAIMER OF WARRANTIES AND LIMITATION OF LIABILITY.
ANY SOFTWARE, MATERIALS, SERVICES, INTELLECTUAL PROPERTY OR OTHER PROPERTY OR
RIGHTS, GRANTED OR PROVIDED BY RGL PURSUANT TO THIS AGREEMENT ARE ON AN "AS IS"
BASIS. RGL MAKES NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED, AS TO
ANY MATTER INCLUDING, BUT NOT LIMITED TO, WARRANTY OF FITNESS FOR PARTICULAR
PURPOSE, OR MERCHANTABILITY, EXCLUSIVITY OR RESULTS OBTAINED FROM USE. NOR SHALL
EITHER PARTY HERETO BE LIABLE TO THE OTHER FOR INDIRECT, SPECIAL, OR
CONSEQUENTIAL DAMAGES SUCH AS LOSS OF PROFITS OR INABILITY TO USE SAID SOFTWARE
OR ANY APPLICATIONS AND DERIVATIONS THEREOF. DISTTRIBUTOR AGREES THAT IT WILL
NOT MAKE ANY WARRANTY ON BEHALF OF RGL, EXPRESSED OR IMPLIED, TO ANY ENTITY
CONCERNING THE APPLICATION OF OR THE RESULTS TO BE OBTAINED WITH THE SOFTWARE,
INFORMATION, MATERIALS, SERVICES, INTELLECTUAL PROPERTY OR OTHER PROPERTY OR
RIGHTS, GRANTED OR PROVIDED BY RGL PURSUANT TO THIS AGREEMENT.
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8. INDEMNIFICATION.
RGL hereby agrees to defend, indemnify and hold harmless Distributor, its
trustees, officers, employees, attorneys and agents from all claims or demands
made against them (and any related losses, expenses or attorney's fees) arising
out of or relating to any claims by Third Parties arising out of a: (a) breach
of a representation or warranty of RGL in connection with the Software; or (b)
Distributor's permitted use of any trademark, copyright, patent or other
intellectual property belonging to RGL.
Distributor hereby agrees to defend, indemnify and hold harmless RGL, its
trustees, officers, employees, attorneys and agents from all claims or demands
made against them (and any related losses, expenses or attorney's fees) arising
out of or relating to any claims by Third Parties arising out of a breach of any
independent representation or warranty of Distributor in connection with the
Software which was not also provided by RGL.
The indemnification obligations of this Section are contingent upon the Party
seeking indemnification (a) giving the other Party prompt written notice of any
such claim; and (b) providing reasonable cooperation in the defense and all
related settlement negotiations.
9. PROPRIETARY INFORMATION.
9.1 Protection of Proprietary Information. RGL and Distributor agree to
keep in confidence and not disclose to others all knowledge, information and
data furnished to either by the other party and claimed by the other party to be
proprietary, provided such information is given in writing or, if oral, is
reduced to writing within thirty (30) days and such writing is marked to
indicate the claims of ownership and/or secrecy. RGL and Distributor agree that
neither shall use, nor reproduce for use in any way, any proprietary information
of the other except in furtherance of the relationship set forth herein. RGL and
Distributor agree to protect the proprietary information of the other with the
same standard of care and procedures used by each to protect its own proprietary
information of similar importance but at all times using at least a reasonable
degree of care.
9.2 Limitations. Section 9.1 shall not be applicable and shall impose
no obligation on a party with respect to any portion of proprietary information
which:
a. Was at the time received or which thereafter becomes, through
no act or failure on the part of such party, generally known
or available to the public;
b. Is known to such party at the time of receiving such
information as evidenced by documentation then rightfully in
the possession of either party;
c. Is furnished to others by the other party without restriction
of disclosure;
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d. Is thereafter rightfully furnished to such party by a third
party without restriction by that third party on disclosure;
or
e. Has been disclosed pursuant to the requirements of law or
court order without restrictions or other protection against
public disclosure; provided, however, that the other party
shall have been given a reasonable opportunity to resist
disclosure and/or to obtain a suitable protective order.
9.3 Survival. The covenants of confidentiality set forth herein shall
survive and continue and be maintained from the Effective Date hereof until
three (3) years after termination of this Agreement.
10. TERM AND TERMINATION.
10.1. Term. The initial term of this Agreement shall commence upon the
Effective Date and shall continue until terminated by Distributor on ninety (90)
days written notice given or by RGL in the event of a breach by Distributor as
set forth below.
10.2 Termination. This Agreement may be terminated as follows:
a. At any time upon mutual written agreement of the Parties;
b. By RGL upon sixty (60) days written notice to Distributor for
failure by Distributor to make a Royalty payment when due,
unless such failure is cured within the sixty (60) day period;
or
c. By either Party if (i) the other Party is in material breach
of its obligations hereunder and such breach continues uncured
for a period of thirty (30) days after written notice to the
defaulting Party, or (ii) the other Party makes a general
assignment for the benefit of its creditors, appoints or has
appointed a receiver, trustee in bankruptcy or similar officer
to take charge of all or part of its property, files or has a
petition filed against it in any bankruptcy (unless such
petition is dismissed within sixty (60) days of its filing),
and/or is adjudged insolvent or bankrupt.
11. EXPORT REQUIREMENTS.
The Software and any documentation and all related technical information or
materials are subject to export controls and are licensable under the U.S.
Government export regulations. Distributor will comply strictly with all legal
requirements established under these controls and will not export, reexport,
divert, transfer or disclose, directly or indirectly, the Software,
documentation and any related technical information or materials without the
prior approval of the U.S. Department of Commerce.
12. BREACH
No acquiescence in any breach of this Agreement by either Party shall operate to
excuse any subsequent or prior breach.
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13. ENTIRE AGREEMENT
Except for any confidential disclosure agreement executed by the Parties, this
Agreement supersedes all previous agreements relating to the subject matter
hereof, whether oral or in a writing, and constitutes the entire agreement of
the Parties hereto and shall not be amended or altered in any respect except in
a writing executed by the Parties.
14. DISPUTE RESOLUTION
The Parties hereby irrevocably and unconditionally agree that this Agreement
shall be governed in all respects by the laws of the United States of America
and the State of Delaware, excluding the application of its conflict or choice
of law rules as well as the application to this Agreement of the United Nations
Convention on Contracts for the International Sale of Goods. The Parties
irrevocably submit to the exclusive jurisdiction of the federal and state courts
located in the State of Delaware for disputes arising under this Agreement. The
Parties will not raise in connection therewith, and hereby waive, any defenses
based on the venue, the inconvenience of the forum, the lack of personal
jurisdiction, the sufficiency of service process, or the like in any such action
brought in the State of Delaware. The Parties agree that service of a complaint
may be provided to a Party in accordance with the terms of Section 15 hereof for
any dispute, litigation or other action arising under this Agreement or to
interpret or enforce this Agreement.
15. NOTICES
Any notice under any of the provisions of this Agreement shall be deemed given
when deposited in the mail, postage prepaid, registered or certified first class
mail and addressed to the applicable party at the address stated on the
signature page hereof, or such other address as such party shall specify for
itself by like notice to other party. Each party shall transmit to the other a
facsimile copy of each such notice promptly after such deposit in the mail.
16. ASSIGNMENT
Neither Party shall assign or transfer this Agreement or any interest herein
without the prior written consent of the other Party, which shall not be
unreasonably delayed or withheld. Notwithstanding the foregoing, either Party
may assign this Agreement without the consent of the other Party in the event
that it sells substantially all of its assets to a third party in the business
of selling software and consulting services to academic institutions and
provided that such third party agree, in writing, to accept all responsibilities
to the assigning Party under this Agreement (including without limitation
payment, insurance and liability responsibilities) and provided further that the
assigning Party provide thirty (30) days advance written notice to the other
Party of such assignment.
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17. HEADINGS
The section headings contained in this Agreement are set forth for the
convenience of the parties only, do not form a part of this Agreement and are
not to be considered a part hereof for the purpose of construction or
interpretation hereof, or otherwise.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed in duplicate counterparts, each of which shall be deemed to
constitute an original, effective as of the date first above written. The
undersigned verify that they have the authority to bind to this Agreement the
party on behalf of which they are executing below.
RISK GOVERNANCE, LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Director
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Date:
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Address for Notices:
Telecopier:
RISK GOVERNANCE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: President
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Date:
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Address for Notices:
Telecopier:
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