Fill and Sign the Source Code License Agreement Template Get Free Sample Form

__________________________________SOURCE CODE SECURITY and PURCHASE OPTION AGREEMENT This is a Nontransferable and Nonexclusive Source Code Security and Purchase Option Agreeme nt made this day of , 19___ between ____________________________ ("___________"), an _______________________ corporation, with its offices at _________________ , __________, _______________________ ________, and WHEREAS _________________ has executed a Software License Agreement, a copy of which is attached hereto as Schedule "A" (the"License"),with _________________ for the use of the object code of t he _______________________ software at unlimited site/host locations; and WHEREAS _________________ desires to receive in a sealed form, and hold in its possession as security, the _________________ _______________________ Source Code, exclusive of any password encryption; _________________ and _________________ are desirous of creating a means by which _________________ shall have _________________ to Source Code in the event that _________________ commits certain defaults as hereinafter set forth. WHEREAS _________________ desires to have the option to purchase a perpetual license to utilize t he Source Code for its internal use only; and WHEREAS _________________ is willing to allow _________________ to hold the Source Code in its possession as security and grant to the option to purchase a license to the Source Code in accordance with the terms and conditions set forth herein; NOW THEREFORE , in consideration of the mutual promises contained herein, it is agreed as follows: 1. DELIVERY, UNSEALING OF SOURCE CODE, UP-DATES, and RETURNS Within Twenty (20) days of the execution of this Agreement, _________________ shall deliver to _________________ at to the attention of the Source Code. The Source Code shall be delivered to _________________ in sealed packaging, and shall remain sealed and unopened by _________________ unless and until _________________ either defaults hereunder pursuant to Paragraphs 2 and 3, or _________________ elects o exercise its option rights to the Source Code pursuant to Paragraph 6, hereunder. Any intentional unsealing of the Source Code by _________________ shall constitute an automatic and irrevocable exercise by _________________ of the option set forth in Paragraph 6, requiring _________________ to pay to _________________ the $100,000.00 Source Code license fee. _________________ also agrees to deliver to _________________ , at such times as they are made, a copy of al l revisions to the Source Code encompassing all corrections or enhancements made to the _______________________ Software by _________________ . Within ten (10) days after any such revised Source Code is delivered to ___________________, _________________ shall return to _________________ , at its own expense, the prior Source Code version in its original sealed state. Should _________________ fail to return the prior Source Code version in its original sealed state within twenty (20) days of wri tten demand by _________________ notifying _________________ of its delinquency in returning said prior Source Code version, then _________________’s failure to return the prior Source Code version in its original sealed stat e shall constitute an automatic and irrevocable exercise by _________________ of the option set forth in Pa ragraph 6, requiring _________________ to pay to _________________ the $________________ Source Code license fee. 2. DEFAULT A default by _________________ shall be deemed to have occurred under this Agreement upon the occurrence of any of the following: (a) if _________________ has availed itself of a proceeding in bankruptcy in which _________________ is the named debtor; or (b) if _________________ has ceased its on-going business operations, or normal maintenance or other support of the _______________________ Software. 3. NOTICE OF DEFAULT _________________ shall give written notice to _________________ of its believed occurrence of a default by _________________ hereunder, and _________________ shall have ten (10) days to respond in writing to the allegation of an alleged default. Should _________________ contest _________________ ’ assertion of default, then _________________ must seek a judicial declaration of default by a court of competent jurisdiction of the Sate of _______________________. Should _________________ contest default, and should _________________ unseal said Source Code prior to obtaining a judicial declaration of default by a court of competent jurisdiction of the State of _______________________, then _________________ ’ unsealing of said Source Code shall constitute an automatic and irrevocable exercise by _________________ of the option set forth in Paragraph 6, requiring _________________ to pay to _________________ the $100,000.00 Source Code license fee. Should _________________ default as defined in Paragraphs 2 and 3, then the parties shall perform and be bound by Paragraph 7, et seq. 4. SOURCE CODE MAINTENANCE FEE As compensation for the services to be performed by _________________ hereunder, _________________ shall pay to _________________ an initial fee of $_________, payable at the time of execution of this Agreement, and an annual fee in the amount of $__________, to be paid to _________________ in advance on each anniversary date hereafter. _________________ failure to pay the required Source C ode Maintenance Fee shall require _________________ to return the Source Code in its original and unseal ed state and shall relieve _________________ of all obligations set forth herein. _________________ shall invoice _________________ at least sixty (60) days prior to each anniversary date hereof. 5. INSPECTION BY _________________ . _________________ shall have the right upon twenty (20) days notice to enter the business of _________________ during normal business hours and inspect the Source Code to determine if the seal has bee n broken and the Source Code _________________ without proper authorization.. 6. OPTION. a. Grant of Option. _________________ hereby grants to _________________ an option to purchase a nontransferable and nonexclusive license to use the Source Code for the sum of $ _______ (Source Code license fee). b. Term of Option. This option is effective upon the execution hereof, and shall remain open unless _________________ fails to pay its annual Source Code Maintenance Fee, or unless _________________ ’ materially breaches this Agreement or the License Agreement set forth in Schedule "A." c. Exercise of Option. _________________ may exercise this option by delivering a written notice thereof, signed by _________________ , and upon tendering to _________________ the Source Code license fee, in full. If the option is exercised, the parties shall perform and be bound by the additional terms hereof.d. Source Code License Fee Increase. The fee payable in Paragraph 6(a) as the Source C ode license fee shall increase by ten percent (10%) on the annum of each year from the date of execution of this Agreement, until the date that _________________ exercises this option., if at all. 7. _________________ ’S RIGHTS. Upon the exercise of the option in Paragraph 6, or default by _________________ as defined in Paragraphs 2 and 3, _________________ shall have the right to the nonexclusive use of the Source Code, including the right to modify the Source Code, and to make copies of the Source Code, consistent with and pursuant to the further terms and provisions of this Agreement. The use by _________________ of the Source Code in any manner inconsistent with the uses permitted and allowed by this Agreement, shall constitute a material breach of this Agreement. 8. _________________ ’S DUTIES. _________________ shall: a. not reproduce or duplicate the Source Code in any medium, or in any manner whatsoever, othe r than for its own use; b. not sell, assign, convey, or transfer in any manner whatsoever, the Source Code, this Agreement, or any part or portion thereof, or right or interest therein, of any nature, kind character, de scription, or duration whatsoever; c. have the affirmative obligation to protect the secrecy and confidentiality of t he Source Code, and each part and portion thereof , and not to disclose the Source Code to any third party, by any me ans. _________________ hereby acknowledges that the Source Code is a trade secret of _________________ under all of the laws of the several states of the United States, and under federal law, and _________________ agrees that it is hereby stopped from making any claim to the contrary in any matter or proceeding involving the Source Code, whether or not _________________ is a party thereto. _________________ SHALL BE STRICTLY AND ABSOLUTELY LIABLE TO _________________ FOR ANY DISCLOSURE OF THE SOURCE CODE OR ANY PART THEREOF TO ANY THIRD PARTY, AND FOR ANY BREACH OF THE SECRECY AND CONFIDENTIALITY OF THE SOURCE CODE. Consistent with the foregoing, _________________ shall implement sufficient procedures, policies and checkpoints to prevent the disclosure of the Source Code, and will advise and provide copies to _________________ of all of same from time to time at the request of _________________ , at the cost and expense of Licensee. The foregoing shall include, but not be limi ted to (i) implementing procedures which will limit _________________ ' employees _________________ to the Source Code to those who must have _________________ to the Source Code to allow _________________ the practical benefit of this Agreement, (ii) implementing procedures and policies for the physical security of each and every copy of the Source Code. d. shall use the Source Code only for the exclusive purpose of modifying and maintaining the _______________________ Software that is duly licensed under Schedule "A." Licensee shall not install the Source Code on any computer, host or location site that is not a computer, host or location site duly licensed under Schedule "A." e. The failure of _________________ to perform any of the foregoing duties, and/or any breach of the security and confidentiality of the Source Code, or the disclosure of the Source Code to any third party, arising out of acts or omissions of _________________ respecting the Source Code, whether or not due to the fault or negligence of _________________ , shall constitute a material breach of this Agreement. 9. _________________'S COPYRIGHT NOTICE. The copy of the Source Code distributed to _________________ pursuant to this Agreement, and all copies of the Source Code made by _________________ under this Agreement, shall carry notices of _________________ ' copyright in a manner and form to be reasonably determined by _________________ to protect its proprietary interests. Should Licensee fail to mark any of the Source Code as herein specified, such failure shall constitute a material breach of this Agreement. 10. LIMITED WARRANTY. _________________ warrants that it is the sole owner of the Source Code; that it has the sole interest, right and title to all copyrights and trade sec rets associated therewith; that it has no knowledge or reason to believe that the Source Code may lead to any claims of infringem ent of any copyright, trade secret or other property right by any third party. _________________ will defend at its expense any action brought against _________________ to the extent that it is based on a claim that the Code infri nges a copyright in the United States, subject to the limitation of liability stated in Para graph 11. _________________ will pay any costs and damages finally awarded against the _________________ in such action which are attributable to such claim, provided that _________________ notifies _________________ promptly in writing of the claim and permits _________________ to fully participate in the defense and may, at its option, assume the defense of such claim, in which case the _________________ shall cooperate in the defense and in any settlem ent of such claim. Should the Source Code become the subject of a claim of infringement of a copyright, _________________ m ay procure for _________________ the right to continue using the Source Code, or replace or modify it to make i t non-infringing, or discontinue it. _________________ shall have no liability for any claim of copyright or patent infringement based on (a) use of other than the exact version of the Source Code as delivere d to _________________ pursuant to this Agreement, if such infringement would have been avoided by the use thereof, or (b) use of any modified version of the Source Code or combination of the Source Code with non- _________________ programs or data if such infringement would have been avoided without such use or without such combination with other programs or data. The foregoing states the entire liability of _________________ with respect to infringement of any copyright by the Source Code or any parts thereof and _________________ shall have no liability with respect to any other proprietary rights. 11. DISCLAIMER OF WARRANTIES. THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. _________________ WILL NOT BE OBLIGATED TO MAKE ANY WARRANTY ADJUSTMENTS HEREUNDER, THE SOURCE CODE IS HEREBY ACCEPTED BY _________________ "AS IS'. _________________ MAKES NO WARRANTY WHATSOEVER REGARDING THE SOURCE CODE, OTHER THAN AS SET FORTH IN PARAGRAPH 10, AND SPECIFICALLY DOES NOT WARRANT THAT THE FUNCTIONS CONTAINED IN THE SOURCE CODE WILL MEET _________________’S REQUIREMENTS OR THAT THE OPERATION OF THE SOURCE CODE WILL BE UNINTERRUPTED OR ERROR FREE, ALL OF SUCH WARRANTIES BEING HEREBY DISCLAIMED BY _________________ IN ALL RESPECTS. _________________ IS ADVISED TO TEST THE SOURCE CODE THOROUGHLY BEFORE RELYING ON IT. 12. LIMITATION OF LIABILITY AND RELEASE . IN NO EVENT WILL _________________ BE LIABLE TO _________________ FOR ANY COMPENSATORY DAMAGES OR FOR CONSEQUENTIAL DAMAGES EVEN IF _________________ HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. ANY AND ALL SUCH DAMAGE CLAIMS BEING HEREBY SPECIFICALLY AND KNOWINGLY WAIVED AND RELEASED BY _________________ . _________________ ' LIABILITY HEREUNDER FOR DAMAGES INCLUDING, BUT NOT LIMITED TO, LIABILITY FOR PATENT OR COPYRIGHT INFRINGEMENTS, REGARDLESS OF THE FORM OF ACTION, SHALL NOT EXCEED THE CHARGES PAID BY _________________ FOR THE SOURCE CODE. _________________ WILL NOT BE LIABLE FOR ANY LOST PROFITS, OR FOR ANY CLAIM OR DEMAND AGAINST _________________ . 13. TERM OF THE LICENSE. This license shall become effective upon the exercise by _________________ of the option in Paragraph 6, or upon the default of _________________ as defined in paragraphs 2 and 3 hereof, and shall constitute perpetual license to _________________ unless _________________ materially breaches this Agreement or the License Agreement set forth in Schedule “A.” 14. PROPERTY OF _________________ . All work and/or modifications performed to the Source Code by _________________ , including but not limited to, the development, modification or enhancement of t he Source Code, computer programs, operating instructions, design concepts and all other documentation developed for or relating to the Source Code and all documents, data and other information of any kind, i ncluding information incorporating, based upon, or derived from the foregoing, including reports and notes prepared by _________________ and its employees and agents, and all deliverables developed or prepared by _________________ (whether or not completed) together with all modifications, revisions, changes, copies, translations, compilations, partial copies with modifications and derivative works, shal l be and shall remain the property of _________________ . All applicable rights to patents, copyrights, trademarks, trade secrets and al l other property rights in such work and deliverables are, shall be and shall remain in _________________ , and neither _________________ nor its employees shall have any property interest in such work and the delive rables. All right, title and interest therein, all rights to patents, trade secrets, t rademarks or copyrights inherent therein and appurtenant thereto are hereby irrevocably property of _________________ . _________________ shall keep the Source Code free and clear of all claims, encumbrances and liens and any a ct of _________________ purporting to create such claims, encumbrances or liens, shall be void, and shall consti tute a material breach of this Agreement. 15. ASSIGNMENT . This License, and all or any of the rights granted hereunder, may not be assigned or transferred in any manner without the advance written permission of _________________ , which may be withhe ld for any reason. Any attempted or purported assignment or transfer shall be void and shall constitute a material breach of this Agreement. 16. SURVIVAL OF OBLIGATIONS . The obligation of _________________ to maintain the secrecy and confidentiality of the Source Code, and to prevent its disclosure to third parties, shal l survive the termination of this Agreement, for any reason, and shall continue and survive any claim made by _________________ against _________________ with respect to the secrecy and confidentiality of the Source Code and/or its disclosure , regardless of the resolution of any such claim. 17. _________________'S REMEDIES . _________________ hereby acknowledges _________________ ' proprietary interest in the Source Code, the need not to disclose the Source Code to third parties, and the need to maintain inviolate the secrecy and confidentiality of the Source Code, as the Source Code is a material and substantial asset of the business of _________________ , the disclosure or breach of security or confidentiality of which by _________________ would result in irretrievable and irreparable harm and damage to the value of _________________ ' business. Accordingly, _________________ hereby agrees that _________________ shall have the right to enjoin any activity of _________________ respecting its use of the Source C ode, which may in any manner whatsoever jeopardize or threaten the disclosure or the secrecy and c onfidentiality of the Source Code, whether or not the act or omission of _________________ in question is specifically prohibited by t his Agreement. Furthermore, _________________ acknowledges and agrees that the use or incorporation of the Source Code resulting in the development of a product competitive with _________________ will result in damage to _________________ which is significant, material, and difficult if not impossible of asc ertainment as of the date of this Agreement, as a result of which _________________ and _________________ agree that _________________ shall be liable to _________________ for all compensatory consequential, continuing, exemplary and future damages in the amount of $__________________ in the event of any such use, and in addition thereto, _________________ shall pay to _________________ all costs and attorneys' and expert witness fees incurred by _________________ in the enforcement of this or any other provision of this Agreement. 18. SEVERABILITY. If any provision of this Agreement shall be held by a court of competent jurisdiction to be contrary to any law, the remaining provisions shall remain in full force as if said provision never existed. 19. INTERPRETATION AND VENUE . This Agreement shall be construed and governed according to the laws of the State of _______________________ and, where necessary, under the United States Copyright Act and applicable international treaties. Any and all litigation involving either party's rights and duties under this Agreement shall be brought in _____________ County, _______________________, U.S.A. The parties hereto agree to submit to the personal and exclusive jurisdiction of the federal and state c ourts of _______________________ with respect to any dispute arising out of this Agreement. 20. NOTICES. All notices, demands or consents required or permitted under this Agreement shall be in writing and delivered personally or sent by certified or registered mail to the respec tive party at the addresses set forth on the first page of this Agreement or at such other address as shall be given by eit her party to the other in writing. 21 . ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof, superseding all prior negotiations and discussions. 22. WAIVER AND AMENDMENTS . No waiver, amendment or modification of any provision of this Agreement shall be effective unless consented to by both parties in writing. No fail ure or delay by either party in exercising any right, power or remedy under this Agreement shall operate as a waiver of a ny such right power or remedy. 23. AGENCY. Nothing in this Agreement shall constitute a partnership nor make either party the age nt or representative of the other. Neither party has the authority to bind the other or to incur any liability on behalf of the other. 24. TITLES AND HEADINGS. The titles and headings of each section are intended for convenience only and shall not be used in construing or interpreting the meaning of any particular clause or section. IN WITNESS WHEREOF , the parties hereto have executed this Agreement by their respective officers duly authorized in their behalf as of this day of 19___. Optioner _______________________________________ Optionee_______________________________________