1. IIT CASE STUDY Benefits to Canada JUNE 2008 Dr. George Forester, CLP Business Development Coordinator

2. Background NRC’s Institute for Information Technology Researches and Creates Novel Software Technologies IIT(NRC) licences the Technology for Commercial Exploitation ( Preferably to Canadian Enterprise) We have three ways to licence technology 1. free downloads( research and evaluation) no commercial use 2. fixed price licencing (non exclusive ) –multiple licencees 3. negotiated terms and conditions ( from non exclusives to exclusive, field of use, geographic limitations, complex royalty rates, complex business deals

3. The Licence Template

4. Elements of Software (Technology) Licence SOFTWARE DISTRIBUTOR'S LICENCE THIS AGREEMENT, made in duplicate BETWEEN NATIONAL RESEARCH COUNCIL OF CANADA (called “NRC”), Head1200 Montreal RoadParticipating Institute for Information Office:Ottawa, OntarioInstitute:Technology (IIT) K1A 0R6 OF THE FIRST PART AND ddddddddddddddddd (called the “Distributor”). a corporation under the laws of Province whoseuuuuuuuuuuuu address is:uuuuuuuuuuuuuu Canada OF THE SECOND PART WHEREAS (a)NRC, in its Institute for Information Technology has developed software called UUUUUUUUUR Version xx, which is intended :­­­­­­­­­­­­­­“­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­-­­­­-------- (called the "SOFTWARE") and described further in Annex A. (b)The SOFTWARE and related technology are trade secrets of NRC, or are protected by copyright, or both. (c)The Distributor desires to make the SOFTWARE available on a commercial basis.

5. 1. DELIVERY BY NRC 1.1 NRC will provide to the Distributor: (a) computer files containing the source code for the SOFTWARE; (b) documentation created by NRC to aid in the application and use of the SOFTWARE, selected in the discretion of NRC and delivered when the relevant source code is delivered; 2. GRANT OF LICENCE 2.1NRC licenses the Distributor non-exclusively, without geographic limitation, (a) to use the SOFTWARE; (b) to modify the SOFTWARE, and modified versions of it are included within the meaning of "the SOFTWARE" in this Agreement; (c)to disclose the SOFTWARE as object code or executable code and sub-license its use to any person, but only on a commercially reasonable basis; (d) to modify, reproduce and sell documentation in which the copyright belongs to NRC, if it relates to the SOFTWARE; (e)to provide training and other services with respect to the SOFTWARE. 2.2 NRC also licenses the Distributor non-exclusively, without geographic limitation, to incorporate the SOFTWARE with other computer programs so that the whole assembly may be made available to third parties as a unit, called in this Agreement a "PACKAGE", but this licence is conditional on the source code of the SOFTWARE not being available to third parties by extraction from the PACKAGE.

6. FEES and Royalties 3. INITIAL FEE AND ROYALTIES 3.1 The Distributor must pay to NRC an initial fee of $XXXXXXXX ($XXXXXXXX) before receiving the SOFTWARE. 3.2 The Distributor must pay to NRC a royalty on all Revenue relating to the SOFTWARE. For Revenue that is based XXXXXXXX, the royalty rate is 40 % xxxxxxxxxxx of Revenue in each calendar year and

7. Canadian Content and Diligence Canadian Content: {OPTION 1) The Licensee shall perform all manufacturing of Products in Canada, and shall use Canadian-made materials in Products to the extent that they are reasonably available. Canadian-based sub- licensees shall be subject to the same requirement. Foreign- based sub-licensees are not so restricted, but they shall not be permitted to sell Products that will be imported into Canada. {OPTION 2.} The Licensee shall make diligent efforts to produce Products in Canada or to maximize the use of Canadian-made materials in Products to the extent that they are reasonably available. Canadian-based sub-licensees shall be subject to the same requirement. Foreign-based sub-licensees are not so restricted

8. Copyright and Improvements. COPYRIGHT, IMPROVEMENTS AND ROYALTY OBLIGATIONS 5.1 Copyright and other rights in the SOFTWARE and documentation provided by NRC remains with NRC. NRC claims no ownership of improvements, modifications, functional changes, updates and upgrades (hereinafter called improvements) made entirely by the Distributor or others. However, the Distributor acknowledges that it is the SOFTWARE that enabled the Distributor to evolve and make profits, that the royalties payable to NRC under this Agreement reasonably reflect the value given by the Distributor to the SOFTWARE as it exists at the time of signature of this Agreement and that consequently, such royalties must also apply to the Revenue from the improvements made to the SOFTWARE for the duration of this Agreement.

9. GENERAL CONDITIONS This Agreement may not be assigned in whole or in part by either Party without the written consent of the other Party. Any assignment made without consent is of no force or effect.

10. After The Licence has been in Effect Synopsis of a letter received Dear IIT Business Development Office This is to advise you that our Company, XXX, which has licensed Technology TTT on XXX, 2XXX will be acquired by the Company GGGG as of VVVV, 2XXX. Please arrange for the transfer of the license to the new Company Sincerely Hh CEO

11. The Scenario gggg purchases stock of YYY gggg controls YYYY Company gggg Company YYY NRC Tech purchase

12. What we need to know gggg purchases stock of YYY gggg controls YYYY Company gggg Company YYY NRC Tech purchase Is YYY Intact as a Company ? Does it still have address, staff, etc? BRANDING ?

13. The Reality Check Software firms see takeovers as a cost of doing business: report Ottawa Citizen May 15th Business Section BY DEREK ABMA The independent life of a new Canadian software company is apparently not meant to be a long one. A vast majority of emerging software firms (95 per cent) expect to be acquired within the next four years, according to a report released yesterday by PricewaterhouseCoopers. “Current activity levels and deal pipelines suggest that deals are still very much on the boardroom agenda of technology companies,” Peter Matutat, PwC’s national emerging company practice leader, said in a statement. “The larger buyers are looking for well-placed emerging companies to diversify or complement their current product and service offerings.”

14. What did IIT/NRC DO 1. checked with NRC Lawyer on actual T and C’s in THIS licence 2. queried Company on details of takeover( in writing) Stock purchase ? Is company intact ? Will they carry out business under parent company name ? Who will be responsible for Royalty Payments ? who are the company officers ? 3. Determined that NRC did not have to be consulted on give permission for takeover of SW Company 4. Notified Company

15. Summary Expectation that licenced technology will move from Company to Company because of M and A’s Account for Possibility in Licencing Terms Track Benefits to Canada if it is critical technology Must not interfere too much in Business of Licensees Yet should promote Impact( +ve) in Canada