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Page 1 Version 1 THIS IS A COMPLEX SAMPLE DOCUMENT- MODIFY TO SUIT YOUR SPECIFIC NEEDS PURCHASE AND LICENSE AGREEMENT OF CUSTOM SOFTWARE PROGRAM This Agreement is entered into this day of __________, 20___ (the "Execution Date") between ___________________________ (herein referred to as "______________"), a ____________________ Limited Liability Corporation, with its principal business offices at ___________, ________, ____________________ and _______________, an individual residing at _________________, ___________, ____________________ (herein referred to as _________). 1. CERTAIN DEFINITIONS: Unless the context otherwise requires, as used herein the following terms have the meaning specified below: (a) ``Product'' means that certain custom software program and related materials developed and to be further developed under this Agreement, the data base design for which is more fully set forth on Schedule I hereto, including, without limitation, all existing and hereafter developed Software, Documentation, Ancillary Materials, Work Product, and Derivatives. (b) ``Software'' means the source code and object code developed for the Product, including any corrections and Derivatives, whether prepared by ___________ or _________________ or third parties, including, but not limited to the specifications for the Product, including functional capabilities, operating system and language specifications, hardware platforms, data structures, memory requirements, program designs, computer processes and algorithms and related code and code libraries, graphics specifications, user control and interface features, and expansion characteristics relating to the Product. (c) ``Documentation'' means all written materials developed in connection with the design of the Product, including, without limitation, specifications, programmers' notes, documentation, and other materials incorporated in or related to the Product. (d) ``Ancillary Materials'' means other materials designed to be packaged with the Product, including, without limitation, user manuals and any copy describing the Product. (e) ``Intellectual Property Rights'' means all copyrights (including, without limitation, the exclusive right to reproduce, distribute copies of the copyrighted work and to prepare derivative works), copyright registrations and applications, trademark rights (including, without limitation, registrations and applications), patent rights, trade names, mask-work rights, trade secrets, moral rights, author's rights, algorithms, rights in packaging, goodwill and other intellectual property rights, and all renewals and extensions thereof, regardless of whether any of such Page 2 Version 1 rights arise under the laws of the United States or any other state, country or jurisdiction, and all Derivatives of any of the forgoing. (f) ``Work Product'' means any and all existing or to-be-developed parts, components or aspects of the Product that are designed, created or contributed to by ___________. (g) ``Derivative'' means: (i) any Software, work, product, service, improvement, modification, alteration, enhancement, new version, sequel, translation, adaptation, design, concept, visual display, materials and documentation, in any medium, format or form whatsoever that is derived in any manner, directly or indirectly, from the Product or any part or aspect thereof or that uses or incorporates the Product or any part or aspect thereof; (ii) all ``derivative works'' of the Product as defined in the Copyright Law of the United States, Title 17 U.S.C. § 101 et. seq. (``Copyright Law''); and (iii) all materials and documentation related to each of the foregoing. (h) “PRAD Code” means the Proprietary Rapid Application Development Code used by ___________ as a general framework to develop the Product Software and which is incorporated into and made a part of the Product Software. Specifically, “PRAD Code” means the following file names and code modules only, which are more fully described and set forth on Schedule II hereto: 1) FrmAppObject.frm; 2) FrmExport.frm; 3)FrmSetup.frm; 4) FrmGridEdit.frm; 5)FrmPrint.frm; 6) FrmSignon.frm; 7) FrmWizard.frm; 8) ModAppObject.bas; 9) ModDatabase.bas; and 10) ModMain.bas. 2. GRANT OF RIGHTS: (a) PRAD Code. In accordance with the terms of this Agreement, ___________ hereby grants a worldwide, fully paid-up, perpetual, royalty-free, non-exclusive license to _________________ to use, reproduce, copy, alter, change, and modify the PRAD Code. _________________ shall have the right to sublicense and the foregoing rights to third parties. (b) Derivative Works. ___________ hereby grants _________________ a worldwide, fully paid-up, perpetual, royalty-free, non-exclusive license to create derivative works based on the PRAD Code which shall be the sole and exclusive property of _________________, with _________________ owning all rights, title, and interest therein and thereto. _________________ shall have the right to sublicense the foregoing rights to third parties. (c) With the exception of the PRAD Code, as defined herein, ___________ hereby sells, grants, conveys and assigns to _________________, its successors, licensees and assigns exclusively and forever, all rights (including all Intellectual Property Rights and Derivative rights) and any and all allied and ancillary rights, throughout the universe, in and to the Product Software and in and to the copyright and patent thereof and all renewals and extensions of copyright and patent. With the exception of the PRAD Code, as defined herein, all right, title and interest in and to the Product Software, as well as all Intellectual Property Rights embodied in or pertaining in any way to any of the foregoing, shall be the sole and exclusive property of _________________ free and clear of any and all rights and claims whatsoever by ___________ or any other person, firm or corporation. Accordingly, _________________ shall have the sole and exclusive right to do and authorize any and all of the acts set forth in Section 106 of the Copyright Law, including, without limitation, to copyright the Product Software in its name, as the owner and author thereof, and to secure any and all renewals and extensions of such copyrights. For purposes of this Agreement, ___________ and Page 3 Version 1 persons rendering services to ___________, if any, in connection with the design and development of the Product Software shall be deemed to work under the direct supervision and control of ___________ and, accordingly, all Work Product shall be ``works made for hire'' within the meaning of the Copyright Law. Nevertheless, ___________ shall, upon _________________'s request, execute and deliver any and all assignments of rights, title and interest in and to the Product Software, as well as all Intellectual Property Rights embodied in or pertaining in any way to the Product Software (or any portion thereof), as _________________ deems necessary or appropriate, and hereby designates _________________ as its attorney-in-fact for the purpose of executing such assignments in the name of ___________. Included among the rights granted to _________________ hereunder (without in any way limiting the grant of rights hereinabove made) are the following sole and exclusive rights throughout the universe: (i) Right to Make Changes: ___________ agrees that _________________ shall have the unlimited right to vary, change, alter, modify, add to and/or delete from the Product Software, and to rearrange and/or transpose the Product Software and change the sequence thereof and to use a portion or portions of the Product Software in conjunction with any other material of any kind.. ___________ hereby waives the benefits of any provision of law known as the ``droit moral'' or moral rights or any similar law in any country of the world and agrees not to permit or prosecute any action or lawsuit on the ground that any version of the Product Software, its assignees or licensees, in any way constitutes an infringement of any of ___________’s ``droit moral'' or moral rights or is in any way a defamation or mutilation of the Product Software or any part thereof or contains unauthorized variations, alterations, modifications, changes or translations. (ii) Duration and Extent of Rights Granted: _________________ shall enjoy, solely and exclusively, all the rights, licenses, privileges and property granted under paragraphs 2(c) and 2(c)(i) hereunder throughout the world, throughout the universe, in perpetuity, as long as any rights in the Product Software are recognized in law or equity, except insofar as such period of perpetuity may be shortened due to any now existing or future copyright by ___________ of the Product Software and/or any adaptations thereof, in which case _________________ shall enjoy its sole and exclusive rights, licenses, privileges and property hereunder to the fullest extent permissible under and for the full duration of such copyright or copyrights, whether common law or statutory, and any and all renewals and/or extensions thereof, and shall thereafter enjoy all such rights, licenses, privileges and property exclusively in perpetuity throughout the world. The rights granted herein are in addition to and shall not be construed in derogation of any rights which _________________ may have pursuant to any other agreement. All rights, licenses, privileges and property granted herein to _________________ are irrevocable and not subject to rescission, restraint or injunction under any circumstances. 3. RESTRICTIONS ON ___________: (a) Covenant Not To Compete. Neither ___________ nor any of his successors, assigns or licensees will create, develop, design, operate, license, or maintain (or encourage Page 4 Version 1 or assist any third party to create, develop, design, operate, license, or maintain) any software that manages trades in the financial industry created through the use of the PRAD Code, defined herein, or similar software programs, for a period of twenty four (24) months commencing on the date of this Agreement’s execution (the "Noncompete Period"). If _________________ successfully executes an Initial Public Offering or completes a merger, reorganization, change in ownership or control or sale or transfer of all or substantially all of its assets during the initial twenty-four (24) month period, The Noncompete Period will be extended so that it will then terminate thirty-six (36) months from the date of this Agreement’s execution. (b) Consent. During the Noncompete Period, ___________ shall not, with out the prior written consent of _________________, prepare, publish, promote, or cause to be prepared, published or promoted any software program which interferes with or injures the sales or licensing of the Product Software (“Competing Work”) by _________________. As used in this Paragraph, "Competing Work" shall mean any software program created for publication which is designed for the same general applications as the Product Software defined herein. Specific application programs and general applications for purposes other than the purposes of the Product Software will not be considered "Competing Work". 4. OBLIGATIONS OF ___________: (a) Deliverables. Within fifteen (15) days after the execution date of this Agreement, ___________ will deliver to _________________ the Order Audit Tracking System module (in source and object code format) and complete bug fixes, the specifications of which are set forth on Schedule III hereto. The Deliverables shall be subject to the inspection and approval of _________________. _________________ shall have five (5) days after receipt of the Deliverables to inspect and approve the Deliverables (the "Rejection Period"). _________________ must notify ___________ in writing or via e-mail of any rejection of the Deliverables, together with the reasons therefor (the "Rejection Notice"). If ___________ does not receive a Rejection Notice during the Rejection Period, then the Deliverables will be deemed to be accepted. ___________ shall correct the deficiencies identified by _________________ and resubmit the Deliverables to _________________ within five (5) days after receiving a valid Rejection Notice. 5. CONTINUING OBLIGATIONS OF ___________: (a) Maintenance and Enhancement of Product Software. Upon _________________'s request, ___________ hereby agrees to negotiate in good faith to reach an agreement to perform any programming maintenance and/or enhancements to the Product Software. ___________ agrees to charge not more than a current discounted contract labor rate of $75(US) per hour, which is guaranteed not to increase prior to _______________. All such enhancements shall be the exclusive property of _________________, and ___________ hereby assigns and transfers (and agrees to assign and transfer) to _________________ all right, title and interest in and to such enhancements. 6. OBLIGATIONS OF _________________: Page 5 Version 1 (a) Cash. _________________ agrees to pay to ___________ a total of ______________________ Dollars US ($_________), which will be paid as follows__________________Dollars US ($_________) will be due on _________________'s execution of this Agreement and _____________ Dollars US ($__________ US) will be due upon _________________’s acceptance of the Deliverables as set forth in paragraph 4(a), above. 7. INDEMNIFICATION: (a) Copyright and Patent Infringement. ___________ hereby agrees to defend, indemnify and hold _________________ harmless against any and all liability, claims, penalties, damages, costs, attorney's fees or other expenses of any nature whatsoever paid or incurred in connection with claims by any person (including claims of copyright or patent infringement, trade secret misappropriation) arising from _________________'s exercise of the rights granted in paragraph 2 of this Agreement or otherwise relating to Product Software. If any demand, claim, or suit is asserted or instituted with respect to which _________________ may be entitled to indemnification under this section, then _________________ shall promptly notify ___________ of the full details to the extent then known. _________________ shall be entitled, at its own expense, to employ counsel to defend such demand, claim, or suit or to participate in the defense of such asserted demand, claim, or suit. Any proposed settlement of any such demand, claim, or suit must be approved by both _________________ and ___________ with such approval not to be unreasonably withheld. The parties agree to cooperate in good faith in the defense of settlement of any such demand, claim, or suit. 8. REPRESENTATIONS, WARRANTIES AND LIMITATIONS: (a) ___________ Warranties: ___________ represents and warrants that: (i) He has all necessary rights and authorization to enter into and perform this Agreement, to provide the scheduled Deliverables and to grant to _________________ all rights purported to be granted herein, and nothing contained in this Agreement or in the performance of the Agreement will place ___________ in breach of any other contract or obligation; (ii) Nothing that ___________ provides that is or will be contained in the Product Software does or will violate or infringe any intellectual property right of any third party; (iii) ___________ has not sold, assigned, leased, licensed or in any other way disposed of or encumbered the rights granted to _________________ hereunder, and ___________ will not sell, assign, lease, license or in any other way dispose of or encumber any such rights; (iv) There is no demand, claim, suit, action, arbitration or other proceeding pending or threatened which questions or challenges the ability or right of ___________ to enter into this Agreement or to perform any of his obligations hereunder, nor does there exist any reasonable basis for any such demand, claim, suit, action, arbitration or other proceeding; Page 6 Version 1 (v) The Product Software and Deliverables are free of viruses and other harmful code; and (vi) The Product Software and Deliverables are Year 2000 Compliant. "Year 2000 Compliant," with respect to Software, means that the occurrence in or use by the Software of dates on or after January 1, 2000 ("Millennial Dates") and will not adversely affect its performance at any level with respect to date-dependent data, computations, output, or other functions. (b) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOSS OF PROFITS OR BUSINESS, ARISING OUT OF THIS AGREEMENT. IN NO EVENT SHALL EITHER PARTY'S LIABILITY EXCEED THE VALUE OF THE COMPENSATION PAID AND PAYABLE BY _________________ TO ___________ UNDER THIS AGREEMENT. 9. CONFIDENTIALITY: (a) Confidentiality. ___________ recognizes and acknowledges that the grant of rights to the Product Software contained in paragraph 2(c) hereof is confidential and proprietary to _________________. ___________ also recognizes that _________________'s customer lists, supplier lists, proposals, business plans and procedures are confidential and are the property of _________________. All of these materials and information and documentation will be referred to below as "Proprietary Information.” (b) Non-Disclosure. Except as directed by _________________, ___________ agrees that he will not, at any time, disclose to any person or use, directly or indirectly, for ___________’s own benefit or the benefit of others, any Proprietary Information, or permit any person to examine or make copies of any documents or software which may contain the Proprietary Information. (c) Possession. Upon request by _________________, ___________ agrees to turn over to _________________ all Software code (including all source and application code), all documents, all papers or other material in ___________’s possession or control that may contain the Proprietary Information, together with all documents, notes or ___________’s Work Product that is connected with or derived from ___________’s development of the Product Software. All copies of Product Software (including source) shall be either turned-over to _________________ or, as appropriate, permanently destroyed. 10. ASSIGNMENT: (a) This Agreement will be binding upon and inure to the benefit of the parties and their respective successors and assigns. ___________ shall have no right to assign any of his rights or obligations hereunder. ______________ may assign any of its rights or obligations, provided that no such assignment shall relieve___________of its obligations to make the payments provided for in paragraph 6. 11. ADDITIONAL DOCUMENTATION: (a) ___________ agrees to execute and procure any other and further instruments Page 7 Version 1 necessary to transfer, convey, assign, copyright and patent all rights in the Product Software granted herein by ___________ to _________________ in any country throughout the world. If it shall be necessary under the laws of any country that copyright registration be acquired in the name of ___________, _________________ is hereby authorized by ___________ to apply for said copyright registration thereof; and, in such event, ___________ shall and does hereby assign and transfer the same unto _________________, subject to the rights in the Property reserved hereunder by ___________. ___________ further agrees, upon written request, to duly execute, acknowledge, procure and deliver to _________________ such short form assignments as may be requested by _________________ for the purpose of copyright recordation in any country, or otherwise. If ___________ shall fail to so execute and deliver, or cause to be executed and delivered, the assignments or other instruments herein referred to within five business days after _________________'s request therefor _________________ is hereby irrevocably granted the power coupled with an interest to execute such assignments and instruments in the name of ___________ and as ___________'s attorney-in-fact. 12. MISCELLANEOUS (a) Force Majeure. Neither party shall be liable in damages or have the right to terminate the Agreement for any delay or default in performing this Agreement if such delay or default is caused by conditions beyond its control, including, but not limited to, acts of God, government restrictions, wars, insurrections, strikes, fire, floods or work stoppages; provided, however, that if such delay or default shall exceed six months, then the party not delaying or defaulting may, so long as the delay or default continues, suspend its performance under this Agreement and the party affected by the conditions beyond its control shall keep the other party fully informed on an on-going basis concerning the matters causing the delay or default, and the prospects of their ending. (b) Survival. Notwithstanding any termination of this Agreement, the terms of paragraphs 2, 7, 8, 9, 10 and 11 shall survive such termination and remain in full force and effect. (c) Entire Agreement. This Agreement contains the entire agreement of the parties and shall not be varied, amended, or supplemented except in writing of subsequent or even date executed by the parties. (d) Enforceability. If any part of this Agreement shall be held unenforceable, the remainder of this Agreement will nevertheless remain in full force and effect. (e) Counterparts. This Agreement may be executed in counterparts which - taken together shall constitute one agreement, and either party may execute this Agreement by signing such counterpart. (f) No Agency. Nothing in this Agreement shall be construed to constitute or appoint either party as the agent or representative of the other party for any purpose whatsoever, or to grant to either party any rights or authority to assume or create any obligation or responsibility, express or implied, for or on behalf of or in the name of the other, or to bind the other in any way or manner whatsoever. Page 8 Version 1 (g) Governing Law. This agreement shall be governed by the laws of the State of ____________________, and both parties consent to jurisdiction and venue in the state and federal courts sitting in the State of ____________________. In any action or suit to enforce any right or remedy under this Agreement or to interpret any provision of this Agreement, the prevailing party shall be entitled to recover its costs, including reasonable attorney's fees. (h) Independent Contractors. The parties are independent contractors, and nothing in this Agreement will be deemed to place the parties in the relationship of employer-employee, principal-agent, or partners or joint venturers. Neither party will under any circumstances be liable for any withholding taxes, payroll taxes, disability insurance payments, unemployment taxes, and other similar taxes or charges on the payments made by the other party to such other party's personnel. (i) Facsimile. This contract can be executed and is binding upon the parties when executed by facsimile machine. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective on the date first written above. _________________ _____________________ By: Date: Managing Member Date: Page 9 Version 1 SCHEDULE I PRODUCT SOFTWARE DATABASE DESIGN (five pages) Page 10 Version 1 SCHEDULE II PRODUCT SOFTWARE PRAD CODE and BUSINESS LOGIC CODE (Forty-two pages) Page 11 Version 1 SCHEDULE III SPECIFICATION FOR DELIVERABLES -- OATS MODULE, etc.,. 1. OATS This module will have the following features: (a) OATS trades will be displayed in the Main Grid (b) If someone double clicks on an OATS trade, the Order Details window appears, with all trade details in it. (c) It will keep track of all OATS events that occurred during the day, including the following: 1) New Order Report; 2) Routing Report; 3) Desk Report (not used in this version); 4) Execution Report; 5) Cancel Report; 6) Cancel/Replace Report; and 7)Combined Order/Execution Report (not used in this version). (d) It will compile a text file at the End Of Day of all of the required OATS reports conforming to the NASD requirements. * This module will not include the module that actually transmits the OATS file to the NASDAQ at End of Day. * For the Modify Order Report, if Routes Exist, the user will have to Cancel all Routes before doing a Modify. 2. Updating of Grids/Transactions - ___________ will correct these “bug fixes.” .