simulations_10ka-ex1041.htm


    
      
        

      

    

    EXHIBIT
10.41

     

     

    TECHNOLOGY TRANSFER
AGREEMENT

     

    This
Technology Transfer Agreement (the “Agreement”) is made as of the 19th day of
December, 2003 is by and between Sam Communications, LLC, a Nevada limited
liability company (“Seller”), with its principal place of business at 117 N. 4th
Street #564, Las Vegas, NV 89101, and Simulations Plus, Inc., a California
Corporation (“Buyer”), with its principal place of business at 1220 W. Avenue J,
Lancaster, California 93534.

    


    WITNESSETH

     

    WHEREAS,
Seller owns all right, title, and interest in and to the Software Technology (as
defined in Section 1 below), and the Hardware Technology (as defined in Section
1 below) the functional specifications for which are set forth in Exhibit “B”
attached hereto;

     

    WHEREAS,
Seller owns the Marks (as defined in Section 1 below), including, without
limitation, “Say-it! SAM”, and logo associated therewith;

     

    WHEREAS,
Seller owns the Domain Names (as defined in Section 1 below) that use the Marks,
including, without limitation, “sayitsam.com”; and

     

    WHEREAS,
Buyer desires to purchase all rights, title, and interest of Seller in and to
the Software Technology, Hardware Technology, the Marks and the Domain Names as
well as ongoing support from Seller in accordance with the terms and conditions
of this Agreement.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller and Buyer, intending to be legally bound,
hereby agree as follows:

     

    Section
1.   DEFINITIONS

     

    Say-it!
SAM Software. “Say-it! SAM Software” means all speech output communication
computer programs for personal digital assistants (“PDAs”), palmtop computers,
tablet computers, notebook computers and desktop computers based on the Say-it!
SAM software programs provided by Seller to Buyer for evaluation, and the
support software, including, but not limited to the Installer and Layout
Designer programs described in Exhibit B.

     

    Software
Technology. “Software Technology” means the Say-it! SAM Software, including all
source codes for all computer platforms and operating systems and all
intellectual property associated therewith developed by Seller and known as
Say-it! SAM as currently embodied in the operating versions of such software
provided by Seller to Buyer for evaluation, including such additional
modifications listed in Exhibit A which Seller agrees to perform in a timely
manner as part of this agreement, and all future enhancements to the Software
Technology that may be developed by Seller pursuant hereto, with the consent of
Buyer or pursuant to a separate written agreement between Buyer and
Seller.

     

    Hardware
Technology. “Hardware Technology” means the modified PDA sleeve for all Compaq
iPAQ PDAs that are compatible with the CompactFlash Expansion Pack for the iPAQ
3800, 3900, 5100 and 5500 series, including, but not limited to all circuitry,
design, manufacturing know-how and related intellectual property that provides
amplified sound output from a PDA running the Say-it! SAM software or other
sound-generating software. Nothing in this Agreement shall preclude Buyer from
developing its own hardware technology to replace the Hardware Technology being
acquired from Seller.

     

    
      
         

      

      
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    Support:
“Support” means the ongoing maintenance of the Software Technology to correct
bugs or design flaws that may be discovered as the product is used in the field
or through in-house testing by Buyer.

     

    Purchased
Assets.  “Purchased Assets” means, collectively, the Software
Technology, the Hardware Technology, the Marks and the Domain
Names.

     

    Marks.  “Marks”
means the trademarks, service marks, trade names, brand names, logos, slogans
and trade references, in each case whether registered, under application or
otherwise, owned by Seller that include the sequential letters "sayitsam”,
together with (i) any licenses with respect thereto; (ii) the goodwill and the
business appurtenant thereto; (iii) any rights, claims or chose in action,
related to or deriving from any of the foregoing; and (iv) any file histories,
correspondence, application documents, search reports, documents concerning the
prosecution history, enforcement or maintenance of rights, or restrictions on
use, with respect to the trademarks, service marks, trade names, brand names,
logos, slogans and trade references set forth in this Section, including without
limitation any such documents with respect to applications or registrations
abandoned on or before the Acceptance Date.

     

    Development:
“Development” means the addition of new functionality or features to the
Software Technology that extend or enhance its utility and market
appeal.

     

    Domain
Names.  "Domain Names" means all Internet domain names registered to
Seller that include the sequential letters "sayitsam”, including, without
limitation, “sayitsam.com.”  "Domain Names" shall also be deemed to
include (i) all goodwill associated therewith and inhering therein, (ii)
originals of all files, correspondence and other records relating to or
reflecting Seller's registration of the Domain Names or any and all right and
interest therein, (iii) all claims of Seller against any third parties relating
to the Domain Names and all documentation and records relating to such claims,
(iv) any and all intellectual property and any other proprietary rights
associated therewith existing at any time under the laws of any jurisdiction
anywhere in the world, including, without limitation, any trademark, service
mark, trade name, brand name and/or copyright rights relating thereto, all
registration and pending applications to register such rights, together with all
such rights inhering in or protecting names and marks derivative of or similar
to the Domain Names and the right to register any of the foregoing anywhere in
the world, and (v) any and all rights of Seller pertaining to the Domain Names
arising under its agreements with any and all domain name registrars, including
without limitation Network Solutions, Inc.

     

    Acceptance
Date. “Acceptance Date” means December 23, 2003.

    


    Section
2.   CONVEYANCE
OF RIGHTS

     

    Subject to the following terms and
conditions, Seller, effective as of the Acceptance Date, hereby sells,
transfers, and conveys to Buyer all rights and title to the Purchased Assets,
free and clear of all claims, mortgages, pledges, liens, security interests, or
other encumbrances of any character.

     

    
      
         

      

      
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    Section
3.   DELIVERY
OF PHYSICAL OBJECTS & OTHER ACTIONS

     

    3.1   Seller,
on or before the Acceptance Date, shall deliver to Buyer (1) a master copy of
the Software Technology in source code and executable form for each computer
platform and operating system, which shall be in a human readable form suitable
for copying; and (2) all system and user documentation pertaining to the
Software Technology and Hardware Technology, including design or development
specifications, technical papers, presentations, schematics, specialized
manufacturing instructions, error reports, and related correspondence and
memoranda. Seller shall retain a copy of the source code only for the purposes
of performing software maintenance and development of enhancements under this
Agreement.

     

    3.2   Promptly
following the date hereof, Seller shall, from time to time, take all steps
reasonably requested by Buyer, and execute such documents as reasonably
requested by Buyer, to promptly transfer the Domain Names from Seller to
Buyer.

     

    Section
4. REPRESENTATIONS
AND WARRANTIES OF SELLER

     

    Seller hereby represents, warrants and
covenants to Buyer on and as of the date hereof, unless stated to the contrary
below, and on and as of the Acceptance Date as follows:

     

    4.1   Seller is
a limited liability company duly organized and in good standing under the laws
of the State of Nevada.  Seller has the power to own or lease its
properties and to carry on its business in the places where such properties are
now owned, leased or operated, and such business is now conducted.

     

    4.2   Seller
has all requisite power and authority, and has obtained the consents, approvals
and authorizations necessary to enter into and perform this Agreement and
consummate the transactions contemplated hereunder.  All necessary
notices, consents and actions by Seller (including any necessary notices,
consents or actions of the members of Seller) have been
obtained.  This Agreement has been duly executed and delivered by
Seller and is a valid and binding obligation of Seller, enforceable in
accordance with its terms.

     

    4.3   Neither
the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, shall conflict with or result in a breach of
or constitute or result in (a) a default under any of the terms, conditions or
provisions of Seller’s Articles of Organization or Operating Agreement, (b) a
violation under any law, rule, or governmental regulation to which Seller is
subject or result in a default under any judgment, order, injunction, ruling or
decree of any court or governmental authority by which Seller is bound, or any
regulation or ruling of any governmental body or authority, (c) the breach or
default of any contract or agreement to which Seller is a party or by which it
is bound or to which any of the Purchased Assets is subject (or result in the
imposition of any lien or encumbrance upon any of the Purchased Assets); (d) the
triggering of any rights of first refusal, preferential purchase, or similar
rights; or (e) the creation or imposition of any lien, charge or encumbrance
under any law, judgment, order or decree binding on Seller.

     

    4.4   Seller
has, good and indefeasible title to all of the Purchased Assets, free and clear
of all claims, mortgages, pledges, liens, security interests, or other
encumbrances of any character.  The Software Technology and Hardware
Technology was developed internally by Seller or acquired by Seller, and was not
misappropriated from another.  Upon delivery of the Purchased Assets,
good and valid title to the Purchased Assets, free and clear of all mortgages,
liens, claims, pledges, security interests or other encumbrances, will pass to
Buyer.

     

    
      
         

      

      
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    4.5   There are
no actions at law or in equity, or arbitration proceedings, or claims or
investigations of which Seller has received notice, pending or to Seller’s
knowledge threatened, or state of facts existing, which gives Seller any
reasonable basis to anticipate any such action, proceeding, claim or
investigation.  There are no proceedings, pending or to Seller’s
knowledge threatened, against Seller and related to the Purchased Assets by or
before any governmental board, department, commission, bureau, instrumentality
or agency, or state of facts existing which gives Seller any reasonable basis to
anticipate any such proceeding; and Seller is not subject to any judgment, order
or decree entered in any lawsuit or proceeding that has had, or that can be
reasonably be expected to have, an adverse effect on the Purchased Assets or on
its ability to enter into this Agreement.

     

    4.6   All tax
returns and reports of Seller required by law to have been filed have been duly
filed, and all taxes due and owing with respect to the time periods for such
returns, have been paid in full.  There are no liens for any taxes
upon any of the Purchased Assets.  Seller is not a party to any
pending action or proceeding, and to Seller’s knowledge, there is no action or
proceeding threatened by any government or authority that subjects or might
subject Seller, or any of the Purchased Assets, to any claim or lien relating to
the payment of taxes.

     

    4.7   No
representation or warranty made by Seller in this Agreement contains any untrue
statements or a material fact or omits to state any material fact necessary to
make the statements herein not misleading.

     

    4.8   Seller
has the complete and unrestricted power and the unqualified right to sell,
transfer, convey, assign and deliver the Purchased Assets to Buyer.

     

    4.9   Seller
has no knowledge of any third-party asserting common law rights or any other
rights to use in any of the Marks. Seller has not granted any license or other
right to use or interest in the Software Technology or Hardware Technology to
any third party.

     

    4.10   Neither
the use, manufacture, modification, copying, disposition, marketing, license,
sublicense, sale, advertising, furnishing, distribution, performance, public
display or intended use of any of the Purchased Assets infringes or
misappropriates any intellectual property right of any other person. There is no
pending, and to the knowledge of Seller, there is no threatened, claim, demand,
or litigation contesting the validity, ownership or right of Buyer (or Seller)
to use, possess, license, sublicense, copy, modify, make derivative works of,
sell, distribute, perform, display publicly, market, advertise or dispose of any
Purchased Assets, nor has Seller received any written notice asserting that any
Purchased Assets or the proposed use, possession, license, sublicense, copying,
modifying, making derivative works of, sale, distribution, performance, public
display, marketing, advertising or disposition thereof conflicts or will
conflict with the rights of any other party, nor, to Seller’s knowledge, is
there any reasonable basis for any such assertion.  Seller has not
received notice from any person claiming that any of the Purchased Assets or the
use thereof constitutes unfair competition or trade practices under any law,
including notice of a third party patent or other intellectual property rights
from a potential licensor of such rights.

     

    4.11   Without
limiting the generality of any other representation contained herein, all
personnel, including employees, agents, consultants, and contractors, who have
at any time directly contributed to or participated in the conception and
development of the Purchased Assets (i) have been employees of Seller, acting
within the scope of their employment, or (ii) have been parties to a
"works-made-for-hire" arrangement or agreement with such Seller, in accordance
with applicable federal and state law, that has accorded Seller full, effective,
exclusive, and original ownership of all tangible and intangible property and
rights thereby arising, have executed appropriate instruments of assignment, in
favor of Seller as assignee that have conveyed to Seller full, effective, and
exclusive ownership of all tangible and intangible property and rights thereby
arising.

     

    
      
         

      

      
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    4.12   On and
after the Acceptance Date, other than pursuant to this Agreement, there are no
and will be no royalties, honoraria, fees or other payments payable by Buyer to
any third person by reason of the ownership, use, possession, license,
sublicense, copying, modifying, making derivative works of, sale, distribute,
performance, public display, marketing, advertising or disposition of any of the
Purchased Assets by Buyer on or after the Acceptance Date, except an agreement
with Possum Controls, LTD, the terms of which are described in Exhibit
C.

     

    4.13   No third
party possesses any copy of any source code to any Software
Technology.  Seller has taken commercially reasonable actions to
protect each item of Purchased Assets.  The consummation of the
transaction contemplated hereby will not result in Buyer being bound by any
non-compete or other restriction on the operation of any business of Buyer or
the granting by Buyer of any rights or licenses to any of the Purchased
Assets.  Seller has not disclosed the source code for any of the
Purchased Assets or other confidential information constituting, embodied in or
pertaining to the Purchased Assets to any person or entity, except pursuant to
effective nondisclosure agreements, and Seller has taken commercially reasonable
measures to prevent disclosure of such source code.

     

    4.14   The
Software Technology and Hardware Technology are fully eligible for protection
under applicable copyright law and have not been forfeited to the public
domain.

     

    4.15   Seller is
acquiring the Securities (as defined in Section 8.1) as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling such Securities or any part thereof.  Seller is acquiring
the Securities hereunder in the ordinary course of its
business.  Seller does not have any agreement or understanding,
directly or indirectly, with any person to distribute the
Securities.

     

    4.16   At the
time Seller was offered the Securities, it was, and at the date hereof it is, an
“accredited investor” as defined in Rule 501(a) under the Securities
Act.  Seller has not been formed solely for the purpose of acquiring
the Securities.

     

    4.17   Seller,
either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such
investment.  Seller has a preexisting personal or business
relationship with Buyer or any of its officers, directors or controlling
persons, or by reason of Seller’s business or financial experience has such
knowledge and experience in financial and business matters that Seller is
capable protecting its own interests in connection with this
investment.

     

    4.18   Seller is
able to bear the economic risk of an investment in the Securities and, at the
present time, is able to afford a complete loss of such investment.

     

    4.19   Seller
acknowledges that it has received and reviewed Buyer’s Form 10-KSB for the
Fiscal Year ended August 31, 2003.

     

    
      
         

      

      
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    4.20   Seller is
not acquiring the Securities as a result of or subsequent to any advertisement,
article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.

     

    4.21   Seller
understands and acknowledges that (i) the Securities are being offered and sold
to it without registration under the Securities Act in a transaction that is
exempt from the registration provisions of the Securities Act and (ii) the
availability of such exemption, depends in part on, and Buyer will rely upon the
accuracy and truthfulness of, the foregoing representations and Seller hereby
consents to such reliance.

     

    Section
5.   REPRESENTATIONS
AND WARRANTIES OF BUYER

     

    5.1   Buyer
represents and warrants to Seller that it is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
and it has the corporate power and is authorized under its Articles of
Incorporation and its Bylaws to carry on its business as now
conducted;

     

    5.2   Buyer
represents and warrants to Seller that it has performed all corporate actions
and received all corporate authorizations necessary to execute and deliver this
Agreement and to perform its obligations hereunder;

     

    5.3   Buyer
represents and warrants to Seller that the execution of this Agreement will not
result in any violation or default of or conflict with: (i) Buyer’s Articles of
Incorporation or Bylaws; (ii) the provisions of any other agreement to which it
is a party or to which it is bound; or (iii) any law, judgment, or regulation of
any governmental authority; and

     

    5.4   Buyer
represents and warrants to Seller that there are no persons who are entitled to
any notice of the transaction contemplated hereunder or whose consent is
required for the consummation of the transaction contemplated
hereunder.

     

    Section
6.   WARRANTY

     

    In addition to Seller’s representations
and warraties contained in Section 4:

    


    6.1   Seller
represents and warrants to Buyer that the Software Technology and Hardware
Technology provided by Seller to Buyer conform in all material respects to the
functional specifications set forth in Exhibit B.

     

    6.2   Among the
remedies available to Buyer at law or in equity for breach of the foregoing
warranties, Buyer can require Seller to correct any material nonconformance to
such specifications within ten (10) days of Seller receiving notice from
Buyer.

     

    Section
7.   CONFIDENTIALITY

     

    7.1   Seller
shall hold in confidence and not at any time disclose (except on a confidential
basis to their employees who need to know and who have signed a confidentiality
agreement) all Proprietary Information received from Buyer in the same manner
and to the same extent as it holds in confidence its own Proprietary Information
(but in no event shall Seller use less than a reasonable degree of care), and
shall not use any such Proprietary Information except for the purposes
contemplated by this Agreement. As used in this Agreement, “Proprietary
Information” shall mean all confidential and proprietary information, including
but without limitation, components, drawings, data, plans, programs,
specifications, techniques, processes, algorithms, inventions or other
information or material owned, possessed or used by Buyer which is at any time
so designated by such party in writing, whether by letter or by the use of a
proprietary stamp or legend, prior to the time any such Proprietary Information
is disclosed Seller, or which, under the circumstances surrounding disclosure,
should reasonably be considered by Seller to be confidential. In addition,
information which is orally disclosed to the other party shall constitute
Proprietary Information if identified as such at such time to be confidential
(or which, under the circumstances surrounding disclosure, should reasonably be
considered by Seller).  “Proprietary Information” includes “trade
secrets” as defined in Uniform Trade Secrets Act, if any, as adopted in the
applicable jurisdiction.  Proprietary Information may take the form of
documentation, drawings, specifications, software, technical or engineering
data, and other forms, and may be communicated orally, in writing, by electronic
or magnetic media, by visual observation and by other means.

     

    
      
         

      

      
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    7.2   Seller
shall take all reasonable steps to safeguard the Software Technology and
Hardware Technology so as to insure that no unauthorized person shall have
access to them, and that no persons authorized to have access shall make any
unauthorized copy. Seller shall promptly report to Buyer any unauthorized
disclosure or any use of the Software Technology or Hardware Technology of which
it becomes aware and shall take such further steps as reasonably may be
requested by Buyer to prevent unauthorized use thereof.

     

    7.3   Notwithstanding
the obligations herein, the obligations herein shall not be applicable to
information which: (i) was in the possession of the receiving party free of any
obligation of confidence or was in the public domain at the time the furnishing
party communicated it to the receiving party, through no fault of the receiving
party; (ii) was rightfully communicated to the receiving party free of any
obligation of confidence or entered the public domain subsequent to the time the
furnishing party communicated it to the receiving party, through no fault of the
receiving party; (iii) was developed by employees or agents of the receiving
party independently and without knowledge of, or access to, any information
which the furnishing party has disclosed in confidence to the receiving party or
to any third party, provided that the receiving party shall have the burden of
so establishing; (iv) is released from confidential treatment by written consent
of the disclosing party; (v) is disclosed to the receiving party by a third
party with the legal right to do so; or (vi) is required to be disclosed
pursuant to any legal proceeding.

     

    Section
8.   PAYMENT

     

    8.1   In
consideration of the acquisition of all of the rights and assets which make up
the Software Technology and Hardware Technology acquired pursuant to this
Agreement, Buyer shall issue to Seller thirty-five thousand (35,000) shares of
Simulations Plus, Inc. restricted common stock (the “Securities”).

     

    8.2   In
consideration of the ongoing Support (as described in Sections 10.2 and 10.3),
Buyer shall pay to Seller a royalty (the “Royalty”) of two hundred fifty dollars
(U.S.$250.00) for each copy of the Say-it! SAM speech output software sold,
exclusive of dealer demo units and units provided to assistive technology
evaluation centers at less than 80% of the customary retail
price.  The Royalty will be computed on the calendar quarter basis,
with the Royalty for each quarter payable in full not later than 45 days
following the close of that quarter.  Subject to the following, the
Royalty shall be paid until such time, if any, as the Royalty is terminated as
provided in Section 13.  Nothing herein shall require Buyer to use any
efforts to sell the Say-it! SAM speech output software sold, and Seller
expressly acknowledges that Buyer may cease selling the Say-it! SAM speech
output software at any time.  Buyer disclaims that any level of sales
will be achieved or that any amount of Royalty will be payable by Buyer to
Seller at any time.

     

    
      
         

      

      
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    Section
9.   RECORDS
AND AUDIT

     

    Buyer
shall maintain complete and accurate records relating to the net revenues
received by Buyer for the Software Technology and Hardware Technology. Such
records shall include information sufficient to determine the royalties due to
Seller. Buyer agrees to allow Seller’s certified public accountants to audit
Buyer’s records pertaining to the Software Technology and Hardware Technology
and verify the accuracy of the royalties due to Seller. Any such audit shall be
permitted by Buyer within twenty (20) days of Buyer’s receipt of Seller’s
written request to audit. Such audit shall be conducted during normal business
hours at a time mutually agreed upon by Buyer and Seller. Buyer’s accounting
information shall be kept confidential by the auditors, and Buyer may require
that Seller’s accountants enter into a written confidentiality agreement
reasonably acceptable to Buyer. Such audits will not exceed one (1) per twelve
(12) month period. In the event that Buyer does not agree with the results of
the audit performed by Seller’s certified public accountant, then Seller and
Buyer will mutually choose an independent third party certified public
accountant who will audit Buyer’s records relating to the net revenues received
by Buyer. The determination of that third party certified public accountant
shall be conclusive and binding upon the Seller and the Buyer. If it is
determined that there was no underpayment by the Buyer of the Royalty for the
period subject to the audit, the Seller shall bear the entire expense of its
certified public accountant and, if applicable, the Buyer’s certified public
accountant and the third party certified public accountant. If it is determined
that there was an underpayment of the Royalty for the period subject to the
audit but that the underpayment was equal to or less than five percent (5%) of
the total Royalty which should have been paid for such period, then each party
shall be responsible for the cost of its own certified public accountant and the
cost of the third party certified public accountant shall be borne in equal
shares by the Seller and the Buyer. If it is determined that there was an
underpayment of the Royalty for the period subject to the audit and if such
underpayment was more than five percent (5%) of the total Royalty which should
have been paid for such period, then the Buyer shall be responsible for the cost
of its certified public accountant, the Seller’s certified public accountant,
and, if applicable, the third party certified public accountant.

    


    Section
10.   DELIVERY,
INSTALLATION AND SUPPORT

     

    10.1   Technical
Support. Seller will deliver and provide installation instructions for the
Software Technology and Hardware Technology with the program documentation at a
time mutually agreed upon by the parties. Seller will provide ongoing technical
support to Buyer relating to the development of the Software Technology and
Hardware Technology for a period of five (5) years following the date of this
Agreement.

     

    10.2   Seller
Maintenance Support. Seller agrees to provide maintenance Support and
enhancements for the Software Technology and Hardware Technology. All revisions,
updates, maintenance and Support of the Software Technology and Hardware
Technology shall be provided to Buyer when such products or services are
available.  All such revisions, updates, maintenance and Support shall
be the property of Buyer, and Seller hereby assigns to Buyer all of its
interest, if any, in such revisions, updates, maintenance and
Support.  Without limiting the generality of the foregoing, Seller
agrees that Buyer shall be the copyright owner of all copyrightable works of
every kind and description (hereinafter collectively referred to as “Works of
Authorship”) created, authored, or developed by Seller during the course of its
performance of its obligations under Sections 10.1 and 10.2.  Seller
acknowledges that all Works of Authorship created at the direction of or for
Buyer, or relate to in any way to the Purchased Assets (or the development
thereof), are “works made for hire,” as that term is defined in the United
States Copyright Act (17 U.S.C., §101).  To the extent that any such
Works of Authorship are deemed not to fall within the statutory definition
of  “works made for hire,” Seller agrees and hereby does assign all of
its right, title and interest in and to the copyright, and related intellectual
property rights in such Works of Authorship.  Seller hereby
irrevocably and forever waives, and agrees never to assert, any Moral Rights in
or to the Works of Authorship which Seller may now have or which may accrue to
Seller’s benefit under U.S. or foreign copyright laws and any and all other
residual rights and benefits which arise under any other applicable law now in
force or hereafter enacted.  The term "Moral Rights" shall mean any
and all rights of paternity or integrity of the Works of Authorship and the
right to object to any modification, translation or use of the Works of
Authorship, and any similar rights existing under the judicial or statutory law
of any country in the world or under any treaty, regardless of whether or not
such right is denominated or referred to as a moral right.

     

    
      
         

      

      
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    10.3           Marketing
and Consulting Services. (a) Seller will provide reasonable assistance at
mutually agreeable times and places in creating worldwide visibility at national
and international symposia and one-on-one visibility with leaders within the
field of augmentative communication and assistive technology. Seller will
provide engineering after-market support, consulting and other related services
to Buyer at mutually agreeable times.

     

    10.4    Expense
Reimbursement. Buyer will reimburse Seller for all out-of­-pocket expenses
reasonably incurred by Seller, and approved in advance by Buyer, in providing
the marketing support and consulting services described in Section
10.3.

     

    Section
11.   INJUNCTIVE
RELIEF

     

    Seller
agrees that in the event of a breach of this Agreement as a result of the
unauthorized use of the Software Technology, Hardware Technology or
dissemination of information regarding the Software Technology and Hardware
Technology, including disclosure of Proprietary Information, Seller shall be
irreparably injured and shall be without an adequate remedy at
law.  Therefore, in the event of such a breach, or threatened or
attempted breach of any of the provisions hereof, Buyer shall be entitled to
enforce the provisions of this Agreement and shall be entitled, in addition to
any other remedies which are available to it at law or in equity, if any, to a
temporary and/or permanent injunction and a decree for the specific performance
of the terms of this Agreement, without the necessity of showing actual or
threatened harm and without being required to furnish a bond or other
security.

     

    Section
12.   ASSIGNMENT

     

    Seller
shall not have the right to assign this Agreement without the prior written
consent of Buyer, which consent may be given or withheld in Buyer’s sole
discretion.  Buyer shall have the unrestricted right to assign this
Agreement, in whole or in part.  When assigned as permitted herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties
hereto.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    Section
13.   TERMINATION

     

    Seller’s
right to receive the Royalty and Seller’s agreement to perform its obligations
set forth in Sections 10.1, 10.2 and 10.3, may be terminated by Buyer upon
written notice to Seller in accordance with the following:

     

    (a)   if Seller
breaches this Agreement and such breach continues for a period of 10 days
following written notice from Buyer to Seller;

     

    (b)   immediately
upon the death or legal incapacity of Patrick Jen; or

     

    (c)   immediately
if Seller breaches Section 7.

     

    Section
14.   INDEMNIFICATION;
SURVIVAL OF REPRESENTATIONS AND WARRANTIES

     

    14.1   Indemnifciation

     

    (a)   Seller
will indemnify, defend, and hold harmless Buyer from any and all claims,
actions, liabilities, damages, costs, and expenses, including reasonable
attorneys’ fees and expenses, that Buyer may ever suffer or incur as the result
of (a) the material breach or inaccuracy of any material representation or
warranty made herein by Seller, (b) the failure or refusal of Seller to comply
with any of its obligations hereunder, or (c) any claim based upon or arising
out of any liability or obligation, contracted or otherwise, of Seller in
connection with the Purchased Assets.

     

    (b)   Seller
will indemnify, defend, and hold harmless Buyer from any and all claims,
actions, liabilities, damages, costs, and expenses, including reasonable
attorneys’ fees and expenses, arising out of any third-party claims of
infringement of any patents, copyrights, licenses, trademarks, service marks, or
any other property right.

     

    (c)   Seller
will defend, indemnify, and save Buyer harmless from any money judgement, costs,
and attorneys’ fees awarded or in settlement to the extent such are due to a
claim that the Purchased Assets as provided by Seller infringe an intellectual
property right, copyright or trade secret right of any third party.

     

    (d)   Seller
shall indemnify Buyer against all liability, loss, damage, and expense
(including but not limited to, reasonable attorneys’ fees and costs) resulting
from injury or death of any person, or loss of or damage to tangible real or
tangible personal property, to the extent that such liability, loss, damage, or
expense was proximately caused by Seller’s negligent act or omission, or willful
act or omission, or those of its agents, employees, or subcontractors, in
connection with the provision or use of the Purchased Assets.

     

    14.2   The
representation and warranties of Seller contained herein shall survive until the
expiration of the applicable statute of limitations.

     

    Section
15.   FURTHER
ASSURANCES

     

    At any time and from time to time after
the date hereof, at Buyer’s request and without further consideration, Seller
shall execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Buyer may reasonably deem
necessary or desirable in order more effectively to convey to Buyer, and to
confirm Buyer’s title to, all of the Purchased Assets, to put Buyer in actual
possession and operating control thereof and to assist Buyer in exercising all
rights with respect thereto.

     

    
      
         

      

      
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Section
16.   REFORMATION,
SEVERABILITY AND SURVIVAL

     

    The
provisions of this Agreement have been negotiated by sophisticated parties with
equal bargaining power and the parties agree that such provisions are fair,
reasonable and necessary under the circumstances. The provisions set forth
herein are intended as separate covenants and if any of these provisions should
ever be adjudicated to exceed the limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum limitations permitted by applicable law. If any one of such
provisions is declared invalid for any reason whatsoever, and if any one of such
provisions cannot be reformed as aforesaid, such ruling shall not affect the
validity of the remainder of the provisions. The other provisions shall remain
in effect as if the provisions had been executed without the invalid provisions.
The parties hereby declare that they intend that the remaining provisions
continue to be effective without any that have been declared invalid and not
reformed as aforesaid.

     

    Section
17.   GOVERNING
LAW AND VENUE

     

    This
Agreement shall be governed by, and construed in accordance with, the internal
substantive laws of the State of California, without regard to choice of law or
conflicts of law principles. Each of the parties hereto recognizes and hereby
irrevocably consents to the exclusive jurisdiction over it or him, as the case
may be, of the Federal District Court for the Central District of California or
the Superior Court of California, County of Los Angeles, in connection with any
action or proceeding (whether it be for contract or tort, at law or in equity,
or otherwise) arising out of or relating in any way to this Agreement, or any
other document relating hereto or delivered in connection with the transactions
contemplated hereby.

     

    Section
18.   REPRESENTATION
BY COUNSEL

     

    Each
party hereto represents and agrees with the others that it has been represented
by, or had the opportunity to be represented by, independent counsel of its own
choosing, and that it has had the full right and opportunity to consult with its
respective attorneys, that to the extent, if any, that it desired, it availed
itself of this right and opportunity, that each party is fully aware of the
contents thereof and its meaning, intent and legal effect, and that its
authorized officer is competent to execute this Agreement and has executed this
Agreement free from coercion, duress or undue influence.

    


    Section
19.   NOTICES

     

    All
notices, requests, demands and other communications under this Agreement shall
be in writing and shall be deemed to have been delivered three business days
after having been mailed in a general or branch U.S. post office and enclosed in
a registered or certified post­paid envelope; one business day after having
been sent by overnight courier; when telecopied on a business day, or otherwise
on the next succeeding business day thereafter; and, in each case, addressed to
the respective parties at the addresses stated below or to such other changed
addresses the parties may have fixed by notice as provided herein:

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
    

     

    
      	 	To the
    Seller:	
              Sam
      Communications, LLC

              117
      N. 4th Street #564

              Las
      Vegas, NV 89101

              Telephone
      (619) 804-2288

              Facsimile
      (619) 789-5059

            
	 	 	 
	 	To the
      Buyer: 	
              Simulations Plus,
      Inc.

              1220
      W. Avenue J

              Lancaster,
      CA 93534

              Attention:
      Walter S. Woltosz, Chairman and CEO

              Telephone
      (661) 723-7723

              Facsimile
      (661) 723-5524

            
	 	 	 
	 	With a copy to (not
      in lieu of notice to Buyer)
	 	 	 
	 	 	      
              Jeffrey
      Berg, Esq.

              Jenkens
      & Gilchrist, LLP

              12100
      Wilshire Blvd.

              Suite
      1500

              Los
      Angeles, CA  90025

              Telephone         (310)
      820-8800

              Facsimile    (310)
      820-8859

            


    

     

    Section
20.   FEES
AND COSTS

     

    Except as
otherwise provided herein, in the event of any claim or controversy relating to
this Agreement or the breach of this Agreement and any action or proceeding
brought by Seller or Buyer against the other (whether it be for contract or
tort, at law or in equity, or otherwise) the substantially prevailing party in
such action or proceeding will be entitled to recover from the other its
reasonable costs and expenses incurred in taking or defending such action or
proceeding, including the appeal of such action, and including reasonable fees
of attorneys and other technical advisors.

     

    Section
21.   CAPTIONS

     

    The captions used in this Agreement are
solely for the convenience of the parties hereto and such captions do not
constitute a part of this Agreement.

     

    Section
22.   COUNTERPARTS

     

    This
Agreement may be executed by the parties in two or more counterparts, each of
which together shall constitute one and the same instrument.

     

    
      
         

      

      
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    Section
23.   ENTIRE
AGREEMENT

     

    23.1   This
Agreement sets forth the entire agreement of the parties hereto with respect to
the transactions contemplated hereby. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto, and no claimed
amendment, modification, termination or waiver shall be binding unless in
writing and signed by the party against whom or which such claimed amendment,
modification, termination or waiver is sought to be enforced.

     

    23.2   This
Agreement merges and supersedes all prior and contemporaneous agreements,
assurances, representations, and communications between the parties
hereto.

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of
the date shown above.

     

    
      	
              Seller:

               

              Sam
      Communications, LLC

            	
              Buyer:

               

              Simulations
      Plus, Inc.

            
	
               

               

              By:  /s/ Patrick
      Jen                                                

              Name: Patrick
      Jen

              Title: President                                                      
      

               

              Date: December 23,
      2003                                      

            	
               

               

              By:  /s/ Walt
      Woltosz                                            

                   
      Walter Woltosz, Chairman & CEO

               

               

              Date: December 23,
      2003                                        

            


    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    SOFTWARE
TECHNOLOGY MODIFICATIONS

     

    


     

    The
following modifications to the Software Technology will be made by Seller and
are incorporated into the Software Technology purchased by Buyer:

     

    1. Single
switch scanning: The Software Technology will be modified by Seller to enable
users to operate the speech output device by means of a single input switch
closure, following industry standard methods for:

     

    Row-column interrupted and directed
scanning

     

    Linear interrupted and directed
scanning

     

    Group interrupted and directed
scanning

     

    2.
Dedicated version: The Software Technology will be modified by Seller to enable
operating the speech output device as a dedicated unit, unable to execute
customary PDA functions, in accordance with requirements for funding by Medicare
and state Medicaid programs.

     

    3. Other
platforms: The Software Technology will be modified by Seller to operate on
Windows XP and Windows CE (Pocket PC) operating systems for larger computers,
including, but not limited to, notebook computers, desktop computers, palmtop
computers, and tablet computers. Changes to the software will include, for
example, modifications to take advantage of the larger displays on such
computers by allowing increased numbers of symbols per page.

    


    
      
         

      

      
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    EXHIBIT
B

    


    FUNCTIONAL
SPECIFICATION

    


    PURPOSE

    


    The
purpose of the Say-it! SAM software is to provide speech output and other sounds
through a device consisting of a computer platform running the Say-it! SAM
software. The Say-it! SAM software provides the user with both text-to-speech
and recorded speech output which can be selected by graphic symbols and/or text,
using a variety of input methods. The computer platform can be a handheld,
tablet, palmtop, notebook, desktop, or other computer, running Windows CE,
PocketPC, Windows XP, or another operating system.

    


    FUNCTIONS

    


    In order
to accomplish its purpose, the Say-it! SAM software performs the following
general functions:

    


    Layouts,
Pages and Cells

    


    - Allows
the user to select a screen display layout from a list. A layout is a set of one
or more pages. A page consists of one or more cells. Multiple cells are arranged
in rows and columns. Each cell is an area of the screen which may contain
graphics (symbols, photographs, etc.), text, or both.

    


    -
Provides a means for the user to select a cell on a page. The user can select a
cell by touching a touch screen, or by other methods, such as scanning with one
or more switches.

    


    - When a
cell is selected, the device performs a programmable function specific to that
cell. Selecting the cell can result in speaking a message on a voice
synthesizer, playing a recorded sound file, jumping to another page, jump to an
on-screen keyboard, or a combination of these and other programmable functions.
Cells can also be used in series to build messages from simpler message
elements.

    


    -
Provides a textbox which displays spoken messages and other feedback to the
user.

    


    -
Provides a navigation bar whenever a page is shown, which contains a number of
cells that implement commonly-used functions, such as speaking the contents of
the textbox, clearing the textbox, jumping to the home page or another page, and
opening the setup menus.

    


    - Allows
the user to customize the look and feel of pages and cells with respect to
color, borders, font style, positioning of graphics and letters, and other
properties.

     

    -  Provides
for pages to be password-protected.

     

    
      
         

      

      
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Media

    


    - Manages
voice synthesizer software, and speaks messages associated with selected cells
or typing on a keyboard. Manages a list of alternative spellings for words which
the voice synthesizer would mispronounce.

    


    - Manages
voice and sound recordings, in .wav and other formats, and plays the recording
associated with selecting cells.

    


    -
Provides a silent mode, for displaying textbox messages instead of speaking
them.

    


    - Manages
libraries of symbols and photographs, in .gif, .jpg, .bmp and other formats,
which can be placed on cells.

    


    Keyboard
and Text

    


    -
Provides an on-screen keyboard. The keyboard can be used by the user to create
text messages, or can be used in the menus. Text messages can be created in the
textbox from a combination of cell selections and keyboard
selections.

     

    -
Provides text-based word prediction based on the user’s selections. Word
prediction incorporates first-word prediction, next-word prediction, and word
completion algorithms. The user can accept or ignore the predicted
words.

     

    -
Provides text-based abbreviations based on the user’s selections.

    


    -
Provides text-based phrase prediction based on the user’s selections. The user
can accept or reject the predicted phrases.

    


    -
Provides text-based automatic insertion of punctuation.

    


     Menus

    


    - Allows
the user to build new layouts, or select from a list of layouts.

    


    - Allows
the user to build new pages, or add pages to a layout from libraries of
layouts.

    


    - Allows
the user to create new cell contents, or place existing graphic and text content
onto cells.

    


    - Allows
the user to associate programmable functions with each cell.

    


    - Allows
the user to backup and restore layouts.

    


    - Allows
the user to manage lists of words, abbreviations, phrases, and alternative
pronunciations.

    


    - Allows
the user to customize the cell-selection process, such as the touch screen and
single-switch parameters.

     

    
      
         

      

      
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    - Allows
the user to selectively turn on and off or fine-tune the various text features,
such as word prediction, abbreviation expansion, phrase prediction, and
automatic punctuation.

    


    - Allows
the user to customize the programmable features of the computing device, such as
the hardware buttons.

    


    -
Provides for the user to be locked out from changing the layout or the menu
settings.

    


    Utilities

    


    -
Provides a utility for installing and uninstalling the Say-it! SAM software on a
computer platform. Also provides for updates to the Say-it! SAM software and
media to be installed.

    


    -
Provides a layout designer utility for designing and testing layouts on a
secondary computer platform.

    


    -
Provides a layout manager utility for synchronizing and transferring layouts
between the primary and secondary platform.

    


    -
Provides a utility for generating license key files. The license key file must
be present on the computer platform in order for the Say-it! SAM software to
execute. Each license key file is specific to one computer platform, and will
not unlock the Say-it! SAM software on another computer platform.

    


    -
Provides a limited-capability demonstration version

    


    
      
         

      

      
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    EXHIBIT
C

     

    POSSUM
CONTROLS, LTD DISTRIBUTION

     

    


     

    In order
to honor an agreement between Seller and Possum Controls, LTD (“Possum”) of the
United Kingdom, Buyer agrees to offer Possum an option (“Option”) to purchase
Say-it! SAM Communicator packages, less the PDA, for the existing Compaq iPAQ
PDAs (3900, 5100, and 5500 series) for a period of two (2) years, at the
following prices:

     

    For orders of less than 10 units,
USD$810.00, per unit

     

    For orders of 10 or more units,
USD$770.00, per unit

     

    If Possum
elects to accept the Option within 30 days, then Possum shall be granted
exclusive distribution rights within the U.K. for a period of five (5)
consecutive years, provided that reasonable sales goals, to be negotiated
between Buyer and Possum with 60 days of acceptance and that said are maintained
by Possum.

     

     

    
      
         

      

      
        18