EXHIBIT 10.1
MEMORANDUM OF AGREEMENT made as of the 1st day of December, 1998.
BETWEEN:
DIVERSIFIED COSMETICS INTERNATIONAL INC., a corporation
incorporated pursuant to the laws of the Province of Alberta.
(hereinafter referred to as the Licensor")
-and-
SOFTNET INDUSTRIES, INC., a corporation incorporated pursuant
to the laws of the State of De1aware.
(hereinafter referred to as the "Licensee")
LICENCE AND OPTION TO SELL AGREEMENT
WHEREAS The Licensor has agree to license certain computer software and
other intellectual property rights to the Licensee;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and the mutual covenants and agreements herein contained the parties
hereto agree as follows:
1. The Licensor represents that it has all rights to the computer software
and related intellectual property rights being herein collectively referred
to as the "Software") described in Schedule "A" hereto, and has the right,
power and authority to enter into this Agreement.
2. The Licensor agrees to license the software to the Licensee and the
Licensee agrees to license the Software from the Licensor, upon the terms and
conditions hereinafter set out.
3. The term of this license shall be for a period of five years commencing
from December 1, 1998.
4. At all times during the term of the license and thereafter (unless the
Licensee exercises
the Option described hereinafter) the Software shall be and remain the
property of the Licensor.
5. In consideration of the license of the Software the Licensee agrees to pay
to the Licensor a royalty (the "Royalty") equal to TEN (1O%) PERCENT of the
Net Revenues (as hereinafter defined) of the Licensee from the use, in any
way whatsoever, of the Software. For the purposes of this Agreement, the term
"Net Revenues" shall mean the total revenues received by or for the benefit
of the Licensee (or any subsidiary or affiliate of the Licensee) through the
use, in any way, or as a result of the Software, less all direct costs
associated therewith (excluding the Royalty) and a reasonable allocation of
administrative costs, but without deduction of any income taxes.
6. The Royalty shall be paid by the Licensee on a quarterly basis, within 30
days of the end of each fiscal quarter of the Licensee. Together with each
Royalty payment the Licensee shall provide the Licensor with a report
providing details of the calculation of the amount of the Royalty.
7. Within 60 days of each of the first, second and third fiscal quarters of
the Licensee in each year, the Licensee shall provide the Licensor with
financial statement of the Licensee for such period prepared in accordance
with generally accepted accounting principles. Within 140 days of the end of
each fiscal year of the Licensee the Licensee shall provide the Licensor with
audited financial statements for such fiscal year prepared in accordance with
generally accepted accounting principles and generally accepted auditing
standards.
8. The Licensor may, at its own expense, verify or audit any of the
Licensee's calculations of the Royalty and the Licensee shall provide access
to all records and personnel necessary for such verification or audit. If the
verification or audit shall reveal an understatement by the Licensee in
excess of 5% the Licensee shall pay all costs of the verification or audit.
9. Any overdue license payments or other amount required to be paid to the
Licensor hereunder shall bear interest at the rate of TEN (1O %) PERCENT per
annum.
10. The Licensor shall have the right and option (the "Option") at any time
during the term of this Agreement to sell to the Licensee, and to compel the
Licensee to purchase the Software for a purchase price to be paid by the
Licensee issuing to the Licensor 2,500,000 Common Shares in the capital stock
of the Licensee.
11. The Option shall expire seven (7) days after the expiry of the term of
the license.
12. In the event that the Licensee makes any modifications improvements or
additions to the Software then such modifications, improvements and/or
additions shall be deemed to form part of the Software and shall be and
become the property of the Licensor upon their creation.
13. The Licensee shall be responsible for all costs of registering and or
enforcing the proprietary rights associated with the Software together with
additional development, marketing and operating costs from the date hereof
and the Licensor and Licensee shall cooperate, each with the other in all
situations.
14. Notwithstanding Section 9 and subject to Section 21, if the Licensee
fails to make a license payment when due, or otherwise is in default of the
Agreement, then if such default is not remedied either by the Licensee within
14 days of receiving notice of such default the Licensor shall have the right
to terminate this license immediately and to take immediate possession and
delivery of the Software. Such remedy is in addition to, and not in
substitution for, any other remedies that the Licensor may have at law or
under this Agreement.
15. Upon the termination of this license by the expiry of its termination,
the Licensee, shall deliver the Software to the Licensor together with all
documentation associated therewith, as it directs, within seven (7) days of
the termination, unless the Licensee has exercised the Option.
16. Any notice required or permitted to be given hereunder shall be
effectively given if sent by facsimile transmission (fax) or delivered
personally or by prepaid courier, addressed to
AS TO THE LICENSOR:
0000 Xxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx
X0X 0X0
Fax Number (000) 000-0000
AS TO THE LICENSEE:
c/o 0000 Xxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx
00000
Fax Number: (000) 000-0000
Any such notice by facsimile transmission shall be deemed to have
been given and received one (l) business day (excluding Saturday and Sundays
and statutory holidays) following the day on which it is transmitted. If
delivered personally or by prepaid courier it shall be deemed to have been
given and received on the day delivered.
17. Time shall be of the essence of this Agreement.
18. The parties hereto agree to execute such other documents and do such
other things as may be required to give full force and effect to this
Agreement.
19. The Licensor may assign its interest under this Agreement without the
consent of the Licensee.
20. The Licensee may not assign its interests under this Agreement without
the prior written consent of the Licensor.
21. If at any time during the term of this license the Licensee commits an
act of bankruptcy, becomes insolvent, makes an assignment or proposal under
the Bankruptcy Act, or its business or assets are the object of the
appointment of a receiver or receiver-manager, then this license shall be
automatically and forthwith terminated without notice and the Licensor shall
have the right to take immediate possession and delivery of the Software.
22. This Agreement shall be governed and construed in accordance with the
laws of the Province of A1berta.
23. This Agreement shall be binding upon and enure to the benefit of the
parties hereto, their respective successors and permitted assigns.
24. Time shall be of the essence of this Agreement.
25. The parties agree to execute such further or other documents as may be
necessary or desirable to give effect to this Agreement and to cooperate with
each other with respect to obtaining the regulatory approvals.
26 This Agreement constitutes the entire Agreement between the parties hereto
respecting the subject matters hereof and supercedes all prior and
contemporaneous agreement understandings, negotiations and discussions and
representations, whether written or oral, respecting the subject matters
hereof.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the day and year above written.
DIVERSIFIED COSMETICS INTERNATIONAL, INC.
PER: /S/ Xxxx Slamko
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SOFTNET INDUSTRIES, INC.
PER: /S/ Xxxxxx Xxxxxxx
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SCHEDULE A
1. All software and source codes, including any software development.
2. Any domain names associated with the software.
3. All or any web sites under the control under the control or ownership
of Diversified Cosmetics which pertain to any aspect of the software.
4. All or any trademarks associated with the software.
5. All technical specifications, documentation and/or manuals associated
with the development of the software.
