Staroffice Software Oem License And Distribution Agreement

Exhibit 10.5


*** CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT (INDICATED BY
ASTERISKS) HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER 17 C.F.R.
SECTIONS 200.80(B)(4), 200.83 AND 230.406.


JN MICROSYSTEMS, INC. PROPRIETARY AND CONFIDENTIAL


Agreement Number 115804


STAROFFICE SOFTWARE OEM LICENSE AND DISTRIBUTION AGREEMENT


This StarOffice Software OEM License and Distribution Agreement ("Agreement") is made and entered into by and between Sun Microsystems, Inc., a Delaware corporation, located at 901 San Antonio Road, Palo Alto, California 94303 ("Sun)" and Customer set forth below ("Customer"):


Customer: Lindows.com
Address: 9333 Genesee Avenue, 3rd Floor
San Diego, California 92121
U.S.A.
Tel: 858-587-6700
Fax: 858-587-8095
E-mail: Kevin@lindows.com


WHEREAS, Sun designs, develops and markets office productivity software and documentation.


WHEREAS, Customer desires to license from Sun the Software (as defined below) and distribute the same on the terms and conditions herein.


IN CONSIDERATION of the mutual promises and covenants contained in this Agreement and the Attachments attached hereto and incorporated herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows:


This Agreement includes the terms and conditions set forth herein and the following attachments (collectively, "Attachments"):


ATTACHMENT 1 AGREEMENT DETAILS
ATTACHMENT 2 END USER BINARY CODE LICENSE AGREEMENT
ATTACHMENT 3 TRADEMARK LICENSE AGREEMENT


Notices as described in Section 12.8 ("Notices") shall be delivered to Customer at the above address and to Sun at the above address, Mailstop: SCA12-101, Attention: StarOffice Software OEM Sales Department, with a copy to Sun Legal Dept., Attn. Vice President Software Legal at the above address, Mailstop: SCA14-210. Royalty reports and payments should be sent to Sun Microsystems, Inc., Software Royalty Accounting Group, PO Box 10903, Palo Alto, CA 94303.


IN WITNESS WHEREOF the parties have caused this Agreement to be executed by their duly authorized representatives.


SUN: LINDOWS.COM


By: /s/ Sheila Kerr By: /s/ Kevin Carmony
--------------------------- ------------------------------- Name: Sheila Kerr Name: Kevin Carmony
------------------------- -----------------------------
(printed or typed) (printed or typed)


Title: Manager - STS Sales Ops Title: President


Date: 6/29/02 Date: 6-28-02


GENERAL TERMS AND CONDITIONS


1.0 DEFINITIONS


1.1 "Binary Code License" or "BCL" means an End User license to use the Software pursuant to the terms set forth in Attachment 2 ("End User Binary Code License Agreement"). The BCL must be provided with each copy of the Software distributed.


1.2 "Confidential Information" means that information which Customer and/or Sun desire to protect against unauthorized disclosure or use and which the disclosing party designates as confidential (i) in writing, if communicated in writing, or (ii) orally, prior to any oral disclosure of the Confidential Information. The terms and conditions of this Agreement shall be considered Confidential Information of Sun.


1.3 "Customer Marketing Collateral" means all materials created by Customer and used in connection with promoting or marketing Customer's Product, including but not limited to, advertising, press releases, brochures, data sheets, web pages, trade show and event materials, and ad pillars, in any medium, including but not limited to print and online media.


1.4 "Customer's Product(s)" means the hardware system(s), software and/or components manufactured by or for Customer which have material value independent from the Software, and incorporate or include the Software as an integral element of Customer's hardware system, software or component, pre-installed from Master Media.


1.5 "Distributor" means an entity that distributes Customer's Products and which is under a contractual obligation to Customer as set forth in this Agreement, for example, a retail distributor.


1.6 "Effective Date" shall have the meaning set forth in Section 3.1 ("Term").


1.7 "End User" means the person or entity to whom the BCL applies and to whom Customer and/or Distributors furnish the Software for use with and as part of Customer's Products for internal use and not for resale, marketing, or leasing.


1.8 "End User Documentation " means users' manuals, programmers' guides and system guides which Sun may provide for use with the Software, and which are specified in the Attachments hereto and/or the Price List.


1.9 "Error" means any reproducible failure of the Software to perform its intended functions or any material inaccuracies in the End User Documentation.


1.10 "Error Correction " means a modification, addition, procedure or routine intended to correct the practical adverse effect of an Error.


1.11 "Installed Base" means Customer's pre-existing End User customers who are already in possession of and using Customer's Product under a current and valid license. Such installed Customer Products shall be referred to as "Installed Systems."


1.12 "Licensed Trademarks" means the StarOffice Logos, STAROFFICE word mark, and the Sun Logo depicted in Attachment 3-A or such additional or replacement mark(s) as Sun may provide under the Trademark Agreement, and no other logo, mark or designation.


1.13 "Master Media" means the Software delivered to Customer for the purpose of mass duplication in accordance with Section 2.0 ("Binary License Rights; Terms and Conditions") herein.


1.14 "Price List" means the then-current, geographical, specific release of the Sun Software OEM and Reseller License Fee and Royalty Schedule including any subsequent price changes made by Sun pursuant to Section 4.4 ("Price Changes").


1.15 "Royalty Bearing Event" means the license, grant of right to use, or other authorized transfer of the Software. There will be only one (1) Royalty Bearing Event for each copy of the Software shipped.


1.16 "Single Incident" means an End User question about the Software relating to a specific, discrete issue (for example, installation, launch, configuration, troubleshootnig, usability, etc.) that can be answered by violating its origin to a single cause.


1.17 "Software" means the binary, machine-readable, executable code for the Sun software product and End User Documentation listed in Attachment 1 ("Agreement Details") hereto, and Updates or Error Corrections provided to Customer, if any.


1.18 "Sun Marketing Collateral" means all materials created by or for Sun and used in connection with promoting or marketing Sun's Software, including but not limited to, advertising, press releases, brochures, data sheets, web pages, trade show and event materials, and ad pillars, in any medium, including but not limited to print and online media.


1.19 "Sun Trademarks" means the Licensed Trademarks and all iPlanet-, Java-, Jini-, Solaris-, Sun-, and StarSuite-based names, marks, logos, trade dress and other brand designations used by Sun and its related companies.


1.20 "Tax" means sales, use, rental, receipt, personal property, value-added, consumption, goods and services, or other tax which may be levied or assessed in connection with this Agreement, excluding tax based on Sun's income.


1.21 "Territory" means the jurisdiction(s) where Customer may market, advertise, and distribute Customer's Product containing the Software as set forth in Attachment 1 ("Agreement Details"), and shall include no other countries except Japan, the Peoples Republic of China (excluding Hong Kong), Korea or Taiwan unless otherwise agreed by Sun in writing.


1.22 "Technical Support Entitlement" means that Sun will provide to Customer for inclusion with Customer's Product, a text file (e.g., "Read Me" file), splash screen, dialogue box or other collateral that will entitle the End User to technical assistance with the Software (End User questions about the Software relating to specific, discrete issues such as installation, launch, configuration, usability, etc.) within a specified timeframe. Sun may also provide End User Software training.


1.23 "Update" means a release of the Software, if any, which is designated by Sun in its sole discretion as containing substantially only Error Corrections, or minor new features, functionality and/or performance enhancements. An Update is generally signified by a change of version designation to the right of the decimal point, for example, version 6.0 to version 6.1.


2.0 BINARY LICENSE RIGHTS; TERMS AND CONDITIONS


2.1 Binary License Grant. Subject to and conditioned upon Customer's compliance with the payment obligations, limitations and restrictions set forth in this Agreement, with respect to Software, Sun grants to Customer a personal, non-transferrable, and nonexclusive, royalty-bearing, limited right and license as follows:


(a) to make copies of the Software from Master Media, install those copies in Customer's Products as part of the manufacturing process prior to shipment, and distribute such copies as part of Customer's Products in accordance with the terms of this Agreement;


(b) to copy Software from Master Media onto separate packaged product storage media such as CD-ROMs ("White-CD") and distribute for use with Customer's Product one White-CD with each Customer's Product incorporating Software installed from Master Media;


(c) to the extent Updates are made available, to distribute unbundled Updates to Customer's Installed Base for use only with Installed Systems. Updates will be made available solely at Sun's discretion. Such distributions, if any, must be made pursuant to an agreement with each End User restricting use of the Update to Installed Systems.


2.2 Binary License Terms and Conditions. Each distribution of the Software by Customer or its Distributors to an End-User must be made pursuant to the unmodified terms and conditions of the BCL, including the supplemental terms and conditions relating to the Software. It is expressly acknowledged and agreed that in the United States and in other jurisdictions where an enforceable copyright protection covering the Software exists, such license may be a written agreement on or accompanying the package containing the Software media that is fully visible to the End-User before the package is opened, that the End-User accepts by opening the package and that complies with applicable law relating to agreements of such type. In all other jurisdictions, such license must be a written agreement signed by the End-User. Sun does not undertake to inform Customer of the jurisdictions where such copyright protection exists. In the event the End User, upon reading the BCL, elects to return the product as provided in the product packaging, Customer will accept return of the Software and shall refund the license fee to the End User.


2.3 Distribution Agreements.


(a) Prior to Customer furnishing any Software to any of its Distributors, Customer shall obtain a signed agreement from its Distributors substantially similar to the terms and conditions of this Agreement and sufficient to allow protection of the intellectual property rights of Sun and its licensors.


(b) Customer shall use commercially reasonable efforts comparable to those it uses for its own products to monitor and enforce any agreements with Distributors and End Users of the Software entered into by Customer or its Distributors, and Customer shall promptly inform and consult with Sun if Customer becomes aware of any substantial non-compliance. If a Distributor or End User fails to fulfill any of its material obligations with respect to the Software under such agreement, Sun may, upon its election and in addition to any other remedies that it may have, notify Customer in writing of such breach and require Customer to terminate all the rights granted in such agreement with respect to the Software by thirty (30) days written notice to such Distributor or End User specifying the breach, unless the breach is remedied within such thirty (30) day period. In the event that Customer fails to satisfy the foregoing obligations with regard to the Software, subject to Section 8.0 ("Limitation of Liability"), Customer shall be responsible for all reasonable costs incurred by Sun, including without limitation, attorneys' fees, in connection with such enforcement actions undertaken by Sun. In those jurisdictions where Sun does not have standing to bring an action in its own name or under the intellectual property laws of such jurisdiction, Customer shall assign those rights to Sun reasonably necessary to allow Sun to bring an action under any legal theory available to Customer.


2.4 End User Documentation Distribution; Modification.


(a) End User Documentation Distribution. Electronic documentation is included with Software. Customer may reprint documentation included on Master Media only.


(b) Modification of End User Documentation. Customer may not modify the End User Documentation.


2.5 Trademarks, Logos and Product Designs; Proprietary Notices.


(a) Customer may refer to Software by the associated Sun Trademarks, provided that such reference is not misleading and complies with the then-current Sun Trademark and Logo Requirements, currently located at http://www.sun.com/policies/trademarks. Customer shall not remove, alter, or add to any Sun Trademarks, nor shall it co-logo Software. Customer is granted no right, title or


license to, or interest, any Sun Trademarks or any name, mark, logo, trade dress or brand designation of Sun and its related companies in this Agreement or any Attachment. Customer acknowledges Sun's rights in Sun Trademarks and agrees that any use of Sun Trademarks by Customer shall inure to the sole benefit of Sun. Customer agrees not to (i) challenge Sun's ownership or use of, (i) register, or (iii) infringe any Sun Trademarks, nor shall Customer incorporate any Sun Trademarks into Customer's trademarks, service marks, company names, internet addresses, domain names, or any other similar designations. If Customer acquires any rights in any Sun Trademarks by operation of law or otherwise, it will immediately at no expense to Sun assign such rights to Sun along with any associated goodwill, applications, and/or registrations.


(b) As between Sun and Customer, Customer acknowledges and agrees that Sun is the sole owner of the Sun Trademarks and all associated goodwill and intellectual property rights. Customer further agrees that any use of Sun Trademarks by Customer shall inure to the sole benefit of Sun. Customer agrees not to: (i) challenge Sun's ownership, use of or the validity of the On Trademarks; (ii) attempt or register any mark or logo identical or substantially similar to any Sun Trademark; (iii) remove, alter or add to any of Sun Trademark; (iv) incorporate any of Sun Trademarks into Customer's trademarks, product names, service marks, company names, slogans, domain names or any other similar designations for use on or in connection with any computer and/or internet-related hardware, software, technologies or services or any other products or services likely to cause confusion with or dilute the Sun Trademarks; or (v) infringe any Sun Trademark or associated intellectual property rights. If Customer acquires any rights in any Sun Trademarks by operation of law or otherwise, it will immediately at no expense to Sun assign such rights to Sun along with any associated goodwill, applications, and/or registrations.


(c) Customer agrees to enter into and comply with a Trademark License Agreement appended as Attachment 3. Customer shall use the STARSUITE word mark, the StarSuite Logos and the Sun Logo in strict compliance with the terms and conditions of the Trademark License Agreement.


(d) Customer shall not delete, cover or alter, and shall maintain Sun's trademarks, logos, proprietary rights notices and restrictive rights legends included in and on the End User Documentation and Software. Customer shall reproduce any proprietary rights notices of Sun and/or contributing third parties contained in or on all copies of Software, End User Documentation, packaging and related materials, in whole or in part, developed or made by Customer or its Distributors. Customer shall submit its Customer Products containing Software, End User Documentation or other materials licensed hereunder to Sun for approval pursuant to this Section 2.5 ("Trademarks, Logos and Product Designs; Proprietary Notices") prior to distribution, which approval shall not be unreasonably withheld or delayed.


2.6 Intended Purpose. The intended purpose of the Software is for use on, and as an integral component of, Customer's Products. Customer's Product packaging for the Software shall clearly indicate this intended purpose. Customer shall market and distribute the Software only with Customer's Product and directly or indirectly through Customer's Distributors to End Users only if bundled with Customer's Product. Customer and Distributors shall not distribute the Software on a stand-alone basis.


2.7 Governmental Approvals. Customer shall, at its own expense, obtain and arrange for the maintenance in full force and effect of all governmental approvals, consents, licenses, authorizations, declarations, filings and registrations as may be necessary for the performance of the terms and conditions of the Agreement, including without limitation, fair trade approvals, under all laws, regulations and other legal requirements within the jurisdictions that Customer distributes the Software that apply to this Agreement, including tax and foreign exchange legislation.


2.8 No Other Rights. Except as expressly stated herein and in the Attachment(s) hereto, no other license, right or interest is granted to Customer for any other purpose.


3.0 TERM AND TERMINATION


3.1 Term. This Agreement shall commence on: (i) the date of its execution by Sun or (ii) where this Agreement will be void or Sun will be liable for a penalty without an approval, registration, filing as referred to in Section 2.7 ("Governmental Approvals"), or Sun obtaining the necessary US export license, the date of such approval, registration, filing, or US export license, whichever occurs later (the "Effective Date") and shall have an initial term of [***]. [***].


3.2 Termination. If either party fails to comply with any of the material terms and conditions of this Agreement, the other party may terminate this Agreement upon thirty (30) days written notice to the breaching party specifying any such breach, unless the breach specified therein has been remedied within such thirty (30) day period. In the event of Customer's breach, Sun may terminate this Agreement in its entirety or as to any individual Software product.


3.3 Termination for Insolvency. Either party may terminate this Agreement immediately in the event that the other party ceases to conduct its operations in the normal course of business, files for or becomes the subject of a bankruptcy petition, is placed in receivership, or attempts to assign this Agreement to creditors or otherwise without prior written consent of the other party.


3.4 Effect of Termination.


(a) For Breach by Customer: Upon expiration or termination of this Agreement for breach by Customer, Customer shall discontinue issuing BCLs for the Software, shall return all Software and Sun Confidential Information and all copies thereof in its possession to Sun or destroy all Software and all copies thereof in Customer's possession and certify in writing by an officer of Customer that such Software and all copies thereof were so destroyed.


(b) BCLs for the Software issued prior to the effective date of termination shall continue in accordance with their terms and conditions. Customer's obligation to pay royalties accrued prior to the termination of this Agreement shall not terminate.


3.5 No Liability For Termination. To the full extent allowed by any applicable law except as expressly provided in this Agreement, Customer agrees that it shall have no rights to damages or indemnification of any nature due to any expiration or rightful termination of this Agreement by Sun pursuant to its terms. The foregoing restriction shall include without limitation, commercial severance pay whether by way of loss of future profits, expenditure for promotion of the Software, payment for goodwill generated or other commitments made in connection with the business contemplated by this Agreement or other similar matters. Customer will not be entitled under local law or otherwise to receive any payment from Sun, whether for actual, consequential, indirect, special or incidental damages, costs or expenses, whether foreseeable or unforeseeable, any right to which Customer hereby waives and disclaims. Customer EXPRESSLY WAIVES AND RENOUNCES ANY CLAIM TO COMPENSATION OR INDEMNITIES FOR ANY TERMINATION OF BUSINESS RELATIONSHIP BY A FOREIGN BUSINESS ENTITY, WHICH MAY EXIST UNDER THE LAWS OF ANY APPLICABLE JURISDICTION.


3.6 Survival. Rights and obligations under this Agreement which by their nature should survive, will remain in effect after termination or expiration hereof.


4.0 PAYMENTS; TAXES; ACTIVITY LEVEL


4.1 Payment Terms. Except as otherwise specified in the Attachments hereto, and in consideration of the rights granted to Customer hereunder, Customer shall pay to Sun the royalties for each Royalty Bearing Event for the applicable Software licensed or distributed by Customer on a quarterly basis within thirty (30) days following the end of the preceding calendar quarter, accompanied by a report pursuant to Section 5.1 ("Record Keeping") below. Software license and royalty fees are set forth on the Sun Price List. To the extent that Customer orders any Software or other products from Sun


or Sun invoices Customer for any royalties due, Customer shall pay any amounts due to Sun within thirty (30) days from Sun's invoice date except for royalties, which shall always be due within thirty (30) following the end of the preceding calendar quarter. Sun's acceptance of this Agreement and any associated order(s) does not imply Sun's approval of an open line of credit. Credit terms are established by Sun based in part upon Customer's financial and payment records. Sun reserves the right to place Customer on credit hold in the event Customer's financial condition ceases to warrant the credit terms specified above.


4.2 Taxes.


(a) Subject to Section 4.2(b), all amounts payable by Customer under this Agreement are exclusive of any Tax, levy or similar governmental charge that may be assessed by any jurisdiction, whether based on gross revenue, the delivery, possession or use of the Software, the execution or performance of this Agreement or otherwise, except for net income, net worth or franchise taxes assessed on Sun. If, under the local law, Customer is required to withhold any Tax on such payments, then the amount of the payment actually remitted to Sun will be net of all Taxes. Customer will promptly furnish Sun with the official receipt of payment of these Taxes to the appropriate taxing authority. Customer will pay all other Taxes, levies or similar governmental charges or provide Sun with a certificate of exemption acceptable to the taxing authority.


(b) Notwithstanding Section 4.2(a), Customer may deduct from payments any income tax or tax of a similar nature imposed by any non-United States government ("government income tax") on the income of Sun from such payment and actually paid by Customer for the account of Sun. In the event that Customer deducts any such income tax from any such payment, Customer shall furnish Sun with evidence acceptable to Sun and to the United States Government to sufficiently establish that such government income tax has been paid for the account of Sun.


4.3 Updates. The fees specified in this Agreement are for the then-current release of the Software and any Updates. It is within Sun's sole discretion to release and/or distribute Updates to Customer. Sun shall have the right, at its sole discretion and without incurring any liability to Customer, to modify the Software or discontinue its development, manufacture, sale or support and will provide Customer with sixty (60) days prior notice. Such change shall not require Customer's approval.


4.4 Price Changes. Sun reserves the right to change the Price List, discount schedule and/or royalties for any Software at any time. In the event of a price increase, Sun shall provide Customer with thirty (30) days prior notice. Such change shall not require Customer's approval. If, during the term of this Agreement, Sun decreases the royalty rate for any Software(s), all orders for such Software(s) scheduled for shipment or in transit to Customer at the time of such notice shall be adjusted to the decreased royalty rate.


4.5 Customer's Products. Customer shall list in its revenue reports to Sun pursuant to Section 5.0 ("Records; Audit Requirement; Forecast") of the Agreement, Customer's Products shipped in conjunction or associated with the Software hereunder.


5.0 RECORDS; AUDIT REQUIREMENTS; FORECAST


5.1 Record Keeping. Customer shall maintain for a three (3) year period revenue records sufficient to determine that Customer is in compliance with the terms and conditions of this Agreement. Customer shall provide to Sun along with any payments specified hereunder, quarterly revenue reports, in the English language which shall include, at a minimum, the following information: (i) the Names of Software products; (ii) Customer's Product names; (iii) the number of units of each type of Customer's Product shipped with the Software; (iv) the number of Customer's Product units forecasted to be shipped for the next six (6) months; (v) the number of units of Customers Product that were returned to Customer for the reporting period for which Customer is entitled to a credit; and (vi) the royalty amounts due Sun.


For any quarter in which no royalties are paid, Licensee will submit a report so indicating, along with any of the applicable above information. Royalty reports and payments should be sent to the address set forth above unless otherwise indicated by Sun in writing.


5.2 Audit Requirements. The following audit provision shall continue throughout the term of this Agreement and shall survive the termination of this Agreement insofar as applicable to obligations accrued prior to such termination.


(a) Right to Audit. Sun shall have the right to audit the records and accounts of Customer required to be kept in accordance with this Agreement. The auditor shal ...