Software License & Distribution Agreement

SOFTWARE LICENSE & DISTRIBUTION AGREEMENT


This Agreement is made as of the 8th day of December, 1996


BETWEEN: SYNCRONYS SOFTCORP, a Nevada corporation with its principal place of
business at 3958 Ince Boulevard, Culver City, CA, 90232


("Distributor")


AND: ACCELERATION SOFTWARE INTERNATIONAL CORPORATION, a Washington
corporation with its principal place of business at 1223 NW Finn Hill
Road Poulsbo, WA 98370


("Developer")


WITNESS THAT WHEREAS Developer has developed a Windows 95 software program entitled "Superfassst!" which Distributor wishes to distribute pursuant to the terms of this Agreement;


NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual agreements and covenants herein contained (the receipt and adequacy of such consideration is hereby mutually acknowledged by each party), the parties hereby covenant and agree as follows:


Section 1. Definitions


1.01 "Software" shall mean an object copy of the hard drive accelerator called Superfassst! for Windows '95 on a CD-ROM (or other media if available) packaged for retail sale to end users, in retail packaging to be approved by Developer in accordance with Section 2.06, together with modifications, revisions and error corrections which Developer shall make available to Distributor from time to time.


1.02 "End User" shall mean any third party which obtains a copy of the Software to fulfill its own computer aided instruction or tool needs.


1.03 "Sale" or "Selling" or "Purchase" or "Purchasing" of Software or a copy of the Software shall mean, with respect to the intellectual property rights related to such Software, the grant or acquisition, respectively, of a license to use the Software. With respect to tangible property, such terms shall be accorded their common meanings. In either case, such terms shall (i) include all sales, licenses, transfers or other dispositions for value, (ii) include use by Distributor, and (iii) be deemed a sale not later than when recorded as such on the books or records of Distributor which are maintained for financial statement purposes.


1.04 "Site Licenses" shall mean licensing software for multiple computers or multiple users. It is intended that the industry standard usage of selling software to corporations using site, enterprise, server, seat or processor-based licenses and similar transactions be incorporated into the definition of Site Licenses.


1.05 "OEM Bundling" shall mean licensing software for resale only in combination with one or more other items, typically hardware. It is intended that the industry standard usage of selling software via OEM licensing, bundling and similar transactions be incorporated into the definition of OEM Bundling.


1.06 "Direct Marketing" shall mean the promotion and selling of software directly to End Users without using a reseller, specifically using the Internet, online sales, and direct mail. It is intended that the industry standard usage of direct marketing be incorporated into the definition of Direct Marketing.


1.07 "Retail Channel" shall mean all resellers who purchase the Software for ultimate sale to an individual and specifically excludes Site Licenses, OEM Bundling and Direct Marketing.


Section 2. Appointment and Authority of Distributor


2.01 Grant of License. Developer hereby grants to Distributor a license to distribute and market (a) the English language version of the Software into the Retail Channel on an exclusive basis and Direct Marketing on a non-exclusive basis for the United States and Canada, (b) if Distributor achieves the "Launch Plan" described in Section 2.02, the English and German language version of the Software into the Retail Channel on an exclusive basis and Direct Marketing on a nonexclusive basis in Germany, and (c) the English language version of the Software into the Retail Channel and Direct Marketing on a non-exclusive basis for the rest of the world except for France, Poland and Japan (the "License"). Distributor may in its discretion from time to time sub-license, transfer or assign in whole or part an interest in the license in sub-sections (b) and (c) above, to any other person for the purposes of increasing distribution and sales of the Software outside of United States and Canada; provided however, that any such sub-license, transfer or assignment shall be subject to Developer's rights contained in this Agreement and shall not in any way relieve Distributor of its obligations to Developer hereunder.


2.02 Launch Plan. Distributor will use its best efforts to market and sell the Software in a manner to maximize the sales potential of the Software. If Distributor has at least 50,000 copies of the Software placed in the Retail Channel in the United States and Canada with retailers which represent not less than 70% of computer software retail sales as determined by PC Data within three months following the Commencement Date (as defined in Section 10.01), the "Launch Plan" will be deemed to have been met, and Distributor will have the rights in Germany described in Section 2.01(b). Distributor acknowledges that EU trade rules prohibit absolute exclusivity, but if the Launch Plan is met, Developer will not appoint any other distributor of the Software in the Retail Channel for Germany.


2.03 Reservations from Grant.


(a) Developer reserves all rights not specifically granted in Section 2.01, including, without limitation, all rights to OEM Bundling and Site Licenses and non-exclusive rights to Direct Marketing, as well as any and all rights to Developer products other than the Software. All OEM Bundling, Site Licenses and Direct Marketing undertaken by the Developer shall use the name SuperFassst! (or others names that are different from the name selected by Distributor). The version of the Software available on a large scale via OEM Bundling will not be at a higher revision level than the version available in retail updated by free Internet upgrades. Developer shall release major new revisions not less than six (6) months apart.


(b) In the event that Distributor cannot resolve the pre-existing liabilities of Ballard Synergy Corporation to Computer City and Micro Central (in an arrangement approved by Developer) for amounts not more than $60,000 in cash payments plus not more than $60,000 in Developer's foregone revenues (e.g., product credit) before February 15, 1997, Developer retains the right to distribute to Computer City and Micro Central not more than 8,000 units of a premium priced retail version of the Software combined with other software, whose distribution price shall not be less than $38. Such distribution by the Developer shall be done in a way to minimize any negative impact on the sales and marketing of the Software.


2.04 Market Data. Distributor shall, where available, provide Developer with (a) quarterly Software sales numbers through distributors, resellers, sales representatives and End Users (b) marketing and merchandising programs completed and planned, (c) any other information of benefit to Developer in cooperating with Distributor and developing modifications to the Software or new products.


2.05 Minimum Performance Requirements. Distributor shall purchase a minimum of one hundred


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thousand (100,000) copies of the Software from Developer during the six (6) month period following the Commencement Date, defined in Section 10.01, and one hundred twenty five thousand (125,000) copies for each subsequent six (6) month period, during the term of this Agreement.


2.06 Distributor Responsibilities. Distributor shall, at its cost, produce retail packaging, media label artwork, user's manuals, localization of non-code resources to German if German language rights are granted as per 2.01(b), and sales and marketing materials for the Software and shall use its best efforts to pursue aggressive sales and marketing to realize the maximum sales potential for the Software. All such packaging and materials shall be provided to Developer for its review and approval, such approval not to be unreasonably withheld or delayed. Failure by Developer to approve or disapprove a component within seven (7) business days shall be deemed to be approval for that component. For SuperFassst! the parties have agreed at minimum that (a) Distributor shall not use "SuperFassst!" as the product name, but rather will use a different name of its choice, (b) reference to the "SuperFassst! Technology" will appear in reasonable prominence on the front of the box, (c) Developer's corporate logo and "created by" attribution will appear in reasonable prominence on the back of the box and (d) the appropriate legal trademark and copyright notices will appear in fine print on the box.


2.07 Distributor Representations. Distributor represents to Developer that it has full right and authority to enter into this Agreement and to perform its obligations under this Agreement. This Agreement and Distributor's performance hereunder, do not conflict with or cause a breach under any agreement, license or other instrument, or law, rule, order or regulation to which the Distributor is bound or subject.


Section 3. Production of Software


3.01 Production. Developer shall, at its cost and at a facility of its selection, reproduce the executable code of Software on a electronic media (with media label artwork provided per Section 2.06) in a form suitable for use in retail packaging and shall deliver same to location(s) specified by Distributor. Developer shall use its best efforts to make available a reasonably secure floppy based version of the Software. The parties agree to fully cooperate to minimize delivery costs and production costs, such production costs shall not exceed $1 per media. Under no circumstances shall Distributor replicate or otherwise duplicate Software, on CD-ROM discs or otherwise, or obtain such replicated or duplicated Software from any source other than Developer. Possession by Distributor of a "Gold Disc" or other medium commonly used to replicate or duplicate software shall not be construed as evidence that Distributor has any right to replicate or duplicate Software.


3.02 Orders. Distributor will place written purchase orders with the Developer for the Software with at least five (5) days production lead time and shipping instructions and shall pay for such orders, including shipping and any other associated charges in accordance with Section 6.03.


3.03 Software Returns. Distributor shall have the right not more than once per month to return Software media to the Developer for credit (up to a monthly maximum of half of the average monthly volume of Software media delivered to Distributor for the previous three months) who shall issue to Distributor an RMA for such returns. This Section 3.03 together with Section 7.01 are Distributor's sole and exclusive return rights.


Section 4. End User Restrictions


Distributor shall distribute the Software only in its original, unopened packages and subject to a "shrink-wrap" or other appropriate license agreement, which shall be subject to approval by Developer, such approval not to be unreasonably withheld or delayed.


Section 5. Restrictions on Distributor


Distributor agrees not to reverse assemble, decompile, or otherwise attempt to derive source code from the


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Software, modify the Software or translate the software. Distributor further agrees to comply with all laws, foreign and domestic in connection with the marketing and selling of the Software.


Section 6. Payment


6.01 Payment Amount. Distributor shall pay Developer an amount equal to twenty-five percent (25%) of the Gross Revenues realized by Distributor for the sale of the Software ("Payment Amount"). Gross Revenues shall mean the amount booked less returns as per Section 3.03 and 7.01, less return reserve in accordance with GAAP (the current amount is approximately 10% to 15% of units) and such return reserve will be utilized before the returns allowed in Section 3.03 and 7.01, less freight out and less industry standard cash discounts not to exceed 3%. Both parties agree on an initial Payment Amount of at least five ($5) dollars per unit of Software delivered to Distributor, less the returns specified in 3.03 and 7.01. Distributor will notify Developer of any price changes, however any pricing reduction shall be agreed to in writing by both parties, acting reasonably to maximize long term revenues. The Payment Amount is in addition to reimbursement to Developer of the cost of the Software media and shipping charges


6.02 Advance Payment. Distributor shall, no later than December 20, 1996, pay Developer a non-refundable two hundred and fifty thousand dollars ($250,000) as an advance against the Payment Amount and reimbursement for the cost of the Software media.


6.03 On-Going Payments. Upon depletion of the Advance Payment, the Distributor shall pay the Developer in respect of the Payment Amount and the cost of the Software media $3.00 per CD-ROM disc (or other media) delivered to the Distributor net 15 days with the balance due net 75 days. In the event that the Distributor fails to pay net 15 more than three times in any given year or is eve ...