Software License & Distribution Agreement

EXHIBIT 10.8


SOFTWARE LICENSE AND DISTRIBUTION AGREEMENT


This agreement is entered into and effective as of this 10th day of May, 1996 (hereinafter the "Effective Date") by and between Interlink Computer Sciences and its Affiliates and Subsidiaries (hereinafter referred to as Interlink), with offices at 47370 Fremont Boulevard, Fremont, California 94538; and Legato Systems, Inc., and its Affiliates and Subsidiaries (hereinafter referred to as Legato), with office at 3145 Porter Drive, Palo Alto, California 94304.


WITNESSETH THAT:


WHEREAS, Legato owns or has the right to license certain computer software storage and retrieval programs known as Networker which operate in a networked computer environment and Interlink owns or has the right to license certain computer software storage and retrieval programs known as Harbor which operate in a mainframe computer environment; and


WHEREAS, the parties desire to obtain certain rights, as hereinafter described, to the other's programs such that Interlink will be able to offer customers an solution to data storage and retrieval needs in which the networked system and mainframe system can operate together on an enterprise-wide level (an "Enterprise Solution"); and


WHEREAS, each party is willing to grant such rights to the other party on the terms and conditions of this Agreement;


NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto, intending to be legally bound by the provision hereof, hereby agree as follows:


1. DEFINITIONS.
-----------


1.1 GENERAL. Words shall have their normally accepted meanings as employed
------- in this Agreement. The word "shall" is mandatory, the word "may" is permissive, the word "or" is not exclusive, the words "includes" and "including" are not limiting and singular includes the plural and visa versa.


1.2 "Networker Software" shall mean Legato's computer programs which operate with and interface to Legato's Networker reference ports, including all Corrections and Updates thereto and all translations thereof made by Legato. The Networker Software is more specifically identified in the Specifications (Addendum A).


1.3 "Networker Documentation" shall mean all visually and/or machine readable materials developed by or for Legato for use in connection with the Networker Software including revisions, new and corrected documents and translation. Networker Documentation is more specifically identified in Addendum A.


[CONFIDENTIAL TREATMENT REQUESTED]


1.4 "Subsidiary" shall mean a corporation, company or other entity in which fifty-percent (50%) or more of the outstanding voting control is, now or hereafter, owned or controlled, directly or indirectly, by a party.


1.5 "Affiliate" shall mean a corporation, company or other entity which, now or hereafter, controls or is controlled by a party, provided that such controlling interest is more than ten percent (10%) but less than fifty percent (50%) of the outstanding voting control.


1.6 "Third Party" shall include any party, including dealers, value added resellers, distributors and manufacturers other than Legato or Interlink or their Subsidiaries and Affiliates.


1.7 "End User" shall mean the customers who are granted a license which includes the right to use a software product internally and not for further distribution.


1.8 "Corrections" shall mean changes made in the applicable software product to correct errors or defects in the software or make it conform to its specifications.


1.9 "Update" shall mean a release of the applicable software product subsequent to the initial delivery which incorporates (i) accumulated Corrections, (ii) contains new features or functionality (iii) improves performance or (iv) has been modified to operate with other software products or with other operating systems or platforms, together with new or revised Documentation which properly describes the updated software.


1.10 "Source Code" shall mean software in symbolic programming language(s) in human-readable.


1.11 "Object Code" shall mean the machine executable form of software which results from the compilation and/or assembly of Source Code.


1.12 "Harbor Agent for Networker" or "Harbor Agent" shall mean the software module to be developed by Interlink pursuant to Section 2. 1 which will permit interoperability between the Networker Software and Interlink's Harbor software products including all Corrections and Updates thereto provided by Interlink to Legato.


2. DEVELOPMENT AND LICENSE OF HARBOR AGENT
---------------------------------------


2.1 Development. Interlink will use reasonable commercial efforts to
----------- develop and deliver the Harbor Agent for Networker to Legato and to ensure compatibility of the Harbor Agent for Networker with Legato's server products for Solaris, AIX, HP-UX, NT and Netware operating environments for the duration of this Agreement. Interlink has sole ownership of the Harbor Agent for Networker.


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2.2 Delivery of Networker Source Code and Technical Assistance. Promptly
---------------------------------------------------------- after the Effective Date Legato shall deliver, in English and in reproducible form, the Networker Source Code and Networker Documentation to Interlink. Legato hereby grants to Interlink a limited license to use the Networker Source Code for the purposes of developing and maintaining the Harbor Agent for Networker. Legato will provide Interlink with all technical assistance reasonably requested by Interlink to complete the development of the Harbor Agent.


2.3 Distribution of Harbor Agent.
----------------------------


(a) License to Legato. Interlink hereby grants to Legato a worldwide,
----------------- perpetual, royalty-free, exclusive (subject to the limitations described in (b) below) license to integrate the Harbor Agent for Networker into the Networker Software and to copy and distribute the Harbor Agent, directly or through distributors, as integrated into the Networker Software. Legato may not distribute the Harbor Agent on a standalone basis. Interlink reserves all rights not expressly granted herein.


(b) Distribution by Legato. Legato shall integrate the Harbor Agent
---------------------- into the Networker Software and make any modifications to the Networker Software required to cause the Harbor Agent to operate in accordance with Interlink's specifications. After successful completion of such integration, every copy of the Networker Software for Solaris, AIX, HP-UX, NT and Netware operating environments distributed by Legato during the term of this Agreement shall include the Harbor Agent as a selectable option, including copies distributed as Updates or Corrections to existing customers. If Interlink requests that Legato provide the Harbor Agent to any then-existing Networker customer and Legato refuses or fails to do so within 5 business days, then Interlink shall have the right to provide a copy of the Harbor Agent to such customer. Legato will refer all customer inquiries regarding an Enterprise Solution to Interlink. At such time as Interlink licenses its Harbor software products to a customer which has licensed the Networker Software containing the Harbor Agent, Interlink will enable the Harbor Agent. Interlink will notify Legato that the Harbor Agent has been enabled within a reasonable time period so that Legato may invoice the customer for license fees, if any, relating to the Harbor Agent.


2.4 Maintenance of Networker Source Code and Fee.
--------------------------------------------


(a) Maintenance Releases. Legato shall promptly inform Interlink and
-------------------- shall keep Interlink advised of the status of all Corrections and Upgrades being developed by or for Legato for the Networker Software and Networker Documentation. When any such Corrections or Updates have been completed by Legato, but prior to commercial release, Legato shall provide to Interlink one (1) copy of the Networker Software in Source Code form and Object Code form incorporating such Corrections or Updates. In any event, Legato shall provide such Corrections and Updates to Interlink no later than the time they are provided to any Third Party. Legato shall provide Interlink access to Legato's Source Control System for the purposes of providing advanced access to Corrections and Updates. At a minimum, a "bug" list shall be made available for Interlink's review on a quarterly basis.


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(b) Translations. If any portion of the Networker Software or
------------ Networker Documentation is translated or nationalized by or for Legato, Legato shall notify Interlink of the availability of such version and, if requested by Interlink, Legato shall, within thirty (30) days of such request, deliver two (2) copies of such translated or nationalized version to Interlink.


(c) Source Maintenance Fee. In exchange for continuing access to the
---------------------- Networker Source Code, Interlink shall pay Legato an annual maintenance fee of $[*]. Such fee shall be required for the first year from the Effective Date of this Agreement and will be at Interlink's option after such period. If Interlink fails to pay the annual maintenance fee, Interlink will promptly return the Networker Software Source Code to Legato and shall have no further rights to access such Source Code.


2.5 Maintenance and Technical Support for Harbor Agent.
--------------------------------------------------


(a) Technical Support. Legato will provide first level support to its
----------------- customers relating to the Harbor Agent and will not refer any inquiries directly to Interlink. Interlink will provide back up support to Legato by providing telephone consulting services to Legato's designated personnel during Interlink's standard technical support hours provided to its own customers to assist such personnel in resolving problems, obtaining clarification relating to the Harbor Agent, and providing assistance regarding suspected defects or errors in the Harbor Agent. Interlink will respond to inquiries and requests from Legato and provide corrections or workarounds within its standard response time guidelines which are attached as Addendum B. Where necessary in Interlink's discretion, Interlink will provide such support directly to the End User.


(b) Maintenance. Interlink will provide Legato with Updates and
----------- Corrections of the Harbor Agent from time to time and Legato will promptly distribute such Updates and Corrections to all customers. Legato shall provide Interlink with such technical assistance as is reasonably requested by Interlink in maintaining the Harbor Agent.


(c) Maintenance Fees for Interlink Support. In exchange for
-------------------------------------- Interlink's technical support as described in Section (b) above, Legato shall pay Interlink [*]% of all maintenance fees booked as revenue by Legato which are allocable to the Harbor Agent.


3. OPTION TO LICENSE NETWORKER FOR DSS
-----------------------------------


3.1 Option to License. Beginning on the Effective Date and ending on the
----------------- date 6 months thereafter, Legato grants Interlink an option to license Networker Software Source Code on the terms described in this Section 3 (the "Option"). To exercise the Option, Interlink must provide written notice of exercise to Legato along with delivery of $[*] as a royalty advance. Such amount may be credited by Interlink against royalties due until recovered in full.


[*Confidential Treatment Requested]


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3.2 License Grant. Effective upon exercise of the option, Legato hereby
------------- grants to Interlink a non-exclusive, worldwide, perpetual, license, including the right to sublicense, to use, copy and modify the Networker Software Source Code and to integrate portions thereof with other software to create a distributed storage server ("DSS") software product [for the Solaris, AIX, HP- UX, NT and Netware operating environments] (the "Harbor DSS") and to copy and distribute Harbor DSS directly or through distributors. Legato also grants to Interlink a license to copy, modify and distribute the Networker Documentation in connection with the Harbor DSS. Title to the Networker Software and Networker Documentation shall remain with Legato and Legato reserves all rights not expressly granted in this Agreement. If Interlink integrates Networker clients, Interlink will use reasonable efforts to ensure that Harbor DSS is interoperable with standard Networker clients and will create backup tapes using the Legato open tape format.


3.3 Royalties. Interlink shall pay royalties to Legato equal to [*]% of Net
--------- Revenue received by Interlink. Net Revenue means gross monetary receipts booked as revenue by Interlink which are directly attributable to the sale or licensing or other like disposition of the Harbor DSS product net of all taxes, interest and other finance charges paid by customers, customs duties and other governmental charges, transportation, insurance and storage charges, and discounts and less refunds paid in connection with product returns. It is expressly understood that no royalty shall be due or payable in respect of copies of the Harbor DSS distributed or displayed in connection with sales/marketing presentations and demonstrations, tests, evaluation and support or similar non-revenue generating purposes. If requested by Interlink, Legato agrees to review the royalties payable by Interlink when mutual benefit may be achieved in response to special marketing situations.


3.4 Reporting and Payments. Interlink will provide Legato with quarterly
---------------------- reports within 60 days from the end of each calendar quarter setting forth Net Revenues for the previous quarter and a calculation of the royalties due thereon. Payment of the royalties due shall accompany each such report.


3.5 Audit Rights. During the term of this Agreement, through a mutually
------------ acceptable independent auditor, Legato shall have reasonable access to t ...