Software License Agreement

SOFTWARE LICENSE AGREEMENT


This Agreement, dated as of September 28, 2004, is made and entered into by and between Primus Knowledge Solutions, Inc., a Washington corporation ("Primus HQ") and Primus Knowledge Solutions, K.K., a corporation organized under the laws of Japan ("Primus KK"), on the other hand. Primus HQ and Primus KK agree as follows:


Section l. Definitions


Whenever used in this Agreement, the following terms will have the following specified meanings:


"Affiliate" means, with respect to any person or entity, any other person or entity (including, without limitation, any officer, director, shareholder, partner, employee, agent or representative of such person or entity) that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first person or entity. For purposes of this definition, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ownership of voting securities or partnership or other ownership interests, by contract, by law or otherwise.


"Confidential Information" means the Source Code, together with any and all other confidential or proprietary information of Primus HQ, whether of a technical, business or other nature (including, but not limited to, trade secrets, know-how, technology, and information relating to the customers, marketing plans, finances and business affairs of Primus HQ) disclosed by written, graphic, oral or other means to or otherwise learned by Primus KK.


"Derivative Work" means any "derivative works" and "compilations" of the Licensed Software within the meaning of such terms as defined in the U.S. Copyright Act (17 U.S.C. Section 101 et seq.) that are created by or for Primus KK as permitted under Section 2.1 below.


"Documentation" shall mean any and all currently available Primus HQ owned system and user documentation that describes or relates to the Licensed Software and are either necessary or useful for Primus KK to exercise the rights granted it under this Agreement, including without limitation manuals of all types; training materials; drawings; schematics; technical data; manufacturing and production instructions, processes, and techniques; build procedures; testing instructions and procedures; specifications; and any other printed or graphic material for development, installation, use, operation, maintenance, and support of the Licensed Software.


"Improvements" shall mean any modifications or enhancements to, or Derivative Works, in each case resulting in a Japanese language product, based upon, any part or all of the Licensed Software, Documentation, or Know-How (as defined below).


"Know-How" shall mean all Primus HQ owned knowledge in any form conveyed by Primus HQ to Primus KK and tangible information whether patentable or not, related to the development of the Licensed Software and Documentation, including but not limited to trade secrets and other confidential and proprietary information, technical information, formulations, data, designs, and research and development information.


"Licensed Software" means (a)_the Japanese language version of Primus HQ's computer programs known as eServer 4.0f, eServer 4.0 SP1 and SP2 and eServer 5.2 SP1 and SP2 and the Japanese


language version of eServer 5.2 SP3, if Primus HQ commercially releases eServer 5.2 SP3 to its customers and Primus KK elects to license eServer 5.2 SP3 pursuant to Section 3.2; and (b) Documentation; and (c) Know-How.


"Source Code" means the human-readable, uncompiled source code form of the Licensed Software.


"TCI" means Trans Cosmos Inc., a Japanese corporation.


"Term" means the term of this Agreement as described in Section 5.1.


"Transition Period" means the time period between the date of this Agreement and March 31, 2005.


"Unauthorized Use" means any use, possession, knowledge, viewing, inspection, examination, copying or other activity involving any Source Code to the Licensed Software, Documentation or Know-How or any portion of original source code developed or owned by Primus HQ contained in a Derivative Work that is not expressly authorized under this Agreement or otherwise in writing by Primus HQ.


Section 2. License


2.l Grant


Subject to the terms and conditions of this Agreement, Primus HQ grants to Primus KK an exclusive (except as provided in Section 2.2) perpetual, royalty-free, nontransferable (except as provided in Section 4.4) license to:


(a) use, reproduce, operate, support and maintain, modify or have
modified (as permitted herein), and make or have made (as permitted
herein) Improvements to the Source Code of the Licensed Software;


(b) use, reproduce, sublicense and otherwise distribute only in
Japan in any manner not restricted by this Agreement, including without
limitation, directly or through resellers either as standalone versions,
or in combination with other products, as an integrated component of a
Primus KK product, service, or platform, or as an application service
provider, Japanese language versions of the Licensed Software, including
any Improvements incorporated therein and created by (or for, as permitted
herein) Primus KK in machine-executable, object code form; and


(c) use the terms "Primus" and "eServer" as a brand for the Licensed
Software in Japan for a period of up to March 31, 2006 (the "Primus Marks
Usage Period").


2.2 Exclusivity Covenant and Revenue Share


Primus HQ will not grant rights to the Source Code or object code of the Japanese language version of eServer 5.2 (or any prior Japanese language versions of eServer or any Japanese language Derivative Work based substantially on such Source Code) to any third party for use or resale; provided, however, that Primus HQ may continue to sell and support the Japanese versions of eServer in connection with a sale of additional products and with an obligation to pay Primus KK a royalty of fifty percent (50%) of the net proceeds from its license of Japanese eServer (where net proceeds equals the amount actually received by Primus HQ, less direct costs of sale, including sales commissions and third party royalties). Primus HQ will certify its calculations of net proceeds along with each royalty report (to accompany each royalty payment) and Primus KK will have customary rights to audit Primus HQ's records related to royalty payments at Primus KK's expense.


2.3 Prohibited Use


Without limiting the restrictions set forth elsewhere in this Agreement, Primus KK will not have the right to sell, sublicense, market or in any other way commercially exploit the Licensed Software or any Derivative Work outside of Japan or in any language other that Japanese.


2.4 Delivery


Within five (5) business days after the date of this Agreement, Primus HQ will deliver to Primus KK one (1) reproducible electronic copy of the Source Code as it exists on the date of this Agreement and related Documentation. Further, if Primus HQ commercially releases eServer 5.2 SP3 to its customers and Primus KK elects to license eServer 5.2 SP3 pursuant to Section 3.2, within five (5) business days after Primus HQ receives payment from Primus KK pursuant to Section 3.2, Primus HQ will deliver to Primus KK one (1) copy of the Source Code for the Japanese language version of eServer 5.2 SP3 and related Documentation.


2.5 Third Party Software


Primus KK acknowledges that the Licensed Software contains intellectual property owned or licensed by third parties. The parties will work together to obtain any required consents, assignments or direct licenses to Primus KK from such third parties. During the Transition Period, Primus KK shall be deemed to be a royalty-free distributor of the Licensed Product and will remit any required third party royalty or other charge to Primus HQ for Primus HQ to remit to the applicable third party. If, after the Transition Period and despite the mutual efforts of the parties to obtain ongoing rights, such licenses are not obtainable, then such third party technology will be removed from the Licensed Software. All obligations of confidentiality hereunder will apply to such third party technology. Primus KK will pay all third party royalties related to its use, license or sale of the Licensed Software (whether directly to the applicable third party or to Primus HQ if such third party technology is used under sublicense).


2.6 Transition Period Assistance


During the Transition Period, Primus HQ will use its reasonable efforts to:


(a) provide engineering consulting services at the cost set forth in Section 3.4 to assist in knowledge transfer to Primus KK concerning the use and support of the Source Code;


(b) assist Primus KK in supporting existing customers in Japan covered under existing maintenance agreements with Primus HQ (that is, existing at the date this Agreement is signed) until the earlier of the end of the term of such maintenance agreements or December 31, 2004, at no additional charge to Primus KK. Primus HQ shall have the right to retain any prepaid, but unused maintenance and support payments it has received under such agreements; and


(c) With respect to new customers of Primus KK acquired after September 30, 2004 for which Primus KK requests support, Primus may elect, in its discretion, to provide second line support at the cost set forth in Section 3.4 or as otherwise separately agreed.


2.7 Transfer of Primus KK Equity Interest


Upon the execution of this Agreement, Primus HQ will transfer to TCI, for the agreed consideration of Twenty Five Thousand United States Dollars ($25,000), the equity interests held by Primus HQ in Primus KK.


2.8 Bankruptcy Provision


Primus HQ and Primus KK acknowledge that this Agreement and all rights and licenses granted to Primus KK under or pursuant to this Agreement are, and will otherwise be deemed to be, licenses of rights to "intellectual property" as defined under Section 101 of Title 11, United States Code (the "Bankruptcy Code"). The parties agree that Primus KK, as a licensee of such rights under this Agreement will retain and may fully exercise all of its rights and elections under the Bankruptcy Code. Primus HQ acknowledges that if Primus HQ as a debtor in possession, or a trustee in bankruptcy in the case under the Bankruptcy Code, rejects the licenses granted to Primus KK in this Agreement, Primus KK may elect to retain its rights under such licenses as provided in Section 365(n) of the Bankruptcy Code. The parties also agree that, after the commencement of a case under the Bankruptcy Code by or against Primus HQ and unless and until the licenses granted herein are terminated or expired, upon written request of Primus KK to Primus HQ or the trustee in bankruptcy, Primus HQ or the trustee in bankruptcy will not interfere with the rights of Primus KK as provided under this Agreement.


Section 3. Compensation


3.l License Fee


Primus KK will pay to Primus HQ a one-time license fee of One Hundred Thousand United States Do ...