<PAGE>
EXHIBIT 10.18
DISTRIBUTOR Name:
BSQUARE CORPORATION
MS Agreement Number:
*
Effective Date:
OCTOBER 1, 2005
Expiration Date:
SEPTEMBER 30, 2006
Distributor's MS ID Number:
*
Territory:
*
MICROSOFT OEM DISTRIBUTION AGREEMENT FOR
SOFTWARE PRODUCTS FOR EMBEDDED SYSTEMS
This MICROSOFT OEM DISTRIBUTION AGREEMENT
FOR SOFTWARE PRODUCTS FOR EMBEDDED
SYSTEMS ("Agreement") is made and entered
into as of the effective date set
forth above ("Effective Date"), by and
between MICROSOFT LICENSING, GP ("MS")
and the company identified below
("DISTRIBUTOR") as of the Effective Date.
This Agreement consists of the
following:
- this Signature Page
- Addresses Schedule
- General Terms and Conditions
- Performance Rebate Program Schedule
- OEM Volume Royalty Program Schedule
- Use of MOO and ECE Schedule
- Virtual Warehouses Schedule
By signing below, DISTRIBUTOR represents
and warrants that the information
DISTRIBUTOR provides below and on each of
the attached forms is accurate, and
that DISTRIBUTOR has read and understood,
and will act in accordance with, all
of the terms set forth in the attached
documents.
MICROSOFT LICENSING, GP
BSQUARE CORPORATION
A general partnership organized
under the laws of: State of Nevada, USA
A company
organized under the laws
of:
WASHINGTON, USA
By:
By: /s/
Brian T. Crowley
_______________________________
______________________________
(signature)
(signature)
Name:
Name: BRIAN T.
CROWLEY
________________________________
______________________________
(printed)
(printed)
Title:
Title: PRESIDENT & CEO
________________________________
______________________________
(printed)
(printed)
Date:
Date: 8 - 3 - 5
________________________________
______________________________
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
Form 2.8.48
Document Tracking Number: *
<PAGE>
ADDRESSES SCHEDULE
SHIPPING, BILLING, REBATES, SUPPORT
DISTRIBUTOR "SHIP TO" ADDRESS
DISTRIBUTOR BILLING ADDRESS
*
*
BSQUARE CORPORATION
*
110 110th Ave. N.E.
BSQUARE CORPORATION
Suite 200
110 110th Ave. N.E.
Bellevue, WA 98004
Suite 200
UNITED STATES
Bellevue, WA 98004
UNITED STATES
Telephone: *
Fax: *
Telephone: *
E-mail: *
Fax: *
E-mail: *
DISTRIBUTOR "MS EMBEDDED ADMINISTRATOR
CONTACT"
ADDRESS
DISTRIBUTOR TECHNICAL SUPPORT NUMBER
*
425-519-5900
*
PAYMENT
DISTRIBUTOR shall include applicable MS
invoice number(s) on all Payments
SEND PAYMENTS VIA WIRE TRANSFER ONLY
TO:
Microsoft Licensing, GP
*
*
*
*
*
*
*
Or to such other address or account as MS
may specify from time to time.
2
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
DISTRIBUTOR "MOO AND ECE ADMINISTRATOR"
DISTRIBUTOR designates as its ECE and MOO
Customer Administrator(s) the
following individual(s).
1. ECE and
MOO Customer Administrator Name:
*
*
BSQUARE CORPORATION
110 110th Ave. N.E.
Suite 200
Bellevue, WA 98004
UNITED STATES
Telephone: *
Fax: *
E-mail: *
2. *
BSQUARE CORPORATION
10525 Vista Sorrento Parkway
Suite 100
San Diego, CA 92121
UNITED STATES
Telephone: *
Fax: *
E-mail: *
NOTICES
Any written notices related to this
Agreement must be addressed to the contact
and locations outlined below, or such other
contact or addresses as either party
may hereafter specify in writing.
DISTRIBUTOR INFORMATION
MS INFORMATION
*
Microsoft Licensing, GP
*
*
BSQUARE CORPORATION
*
110 110th Ave. N.E.
*
Suite 200
Attention: *
Bellevue, WA 98004
Phone Number: *
UNITED STATES
Fax Number: *
Telephone: *
Fax: *
E-mail: *
3
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
WITH A COPY TO:
COPIES OF ALL DISTRIBUTOR NOTICES
SHALL BE SENT TO:
Microsoft Corporation
*
*
Attention: *
Re: *
With an additional copy to:
Microsoft Corporation
*
*
Attention: *
4
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
GENERAL TERMS AND CONDITIONS
1. DEFINITIONS.
"Additional Licensing Provisions for MS
Distributor" means licensing terms and
conditions for the Licensed Product as set
forth by MS in the Royalty Rate List.
"Additional Licensing Provisions for OEM
Customer" means licensing terms and
conditions for the Licensed Product as set
forth by MS on the "Additional
Licensing Provisions" label affixed to the
Runtime License package. Courtesy
copies of the Additional Licensing
Provisions for OEM Customer are available on
the ECE; however, in case of conflicting or
inconsistent terms between the
Additional Licensing Provisions for OEM
Customer set forth on the Runtime
License packaging and the courtesy text on
the ECE, the former shall control.
"Additional Rights Agreement" means a
supplemental agreement that describes such
additional OEM Customer rights as MS may
identify from time to time (for
example, Microsoft OEM Customer License
Agreement For Use Of Third Party
Installer).
"Associated Product Materials" or "APM"
means materials as MS shall designate
from time to time that are acquired from an
Authorized Replicator, such as COAs,
the end user manual, recovery media, and
external media.
"Authorized Replicator" or "AR" means an
MS-authorized supplier of Licensed
Products. A listing of ARs may be posted at
the ECE, and such listing may be
updated by MS from time to time. MS will
make commercially reasonable efforts to
provide prior notice to DISTRIBUTOR of the
termination of an AR's authorization
to supply Licensed Products.
"Benefits" has the meaning specified in
Section 16(h).
"Certificate of Authenticity" or "COA"
means a non-removable sticker designated
by MS which is specific to the Licensed
Product. "Claim" has the meaning
specified in Section 12(a).
"CVC" means the customer value chain, a
customer relationship management system
that tracks the progress of prospective
customers through a structured sales
lifecycle. DISTRIBUTORS access the system
through the following URL:. *
"Embedded Application" means industry- or
task-specific software programs and/or
functionality, not generally available to
consumers, that (i) provide the
primary functionality of the Embedded
System, (ii) are designed to meet the
functionality requirements of the specific
industry into which the Embedded
System is being marketed, and (iii) offer
significant functionality in addition
to the Licensed Product software.
"Embedded System" means an OEM
Customer's
computer system or computing device that
(i) is based on the Licensed
Product(s), (ii) utilizes not more than 2
central processor units, (iii) is
designed for use with an Embedded
Application, (iv) is not marketed as general
purpose personal computing device, and (v)
is not useable as a commercially
viable substitute for a general purpose
computing device such as a personal
computer or multi-function server.
"Force Majeure" has the meaning specified
in Section 22(f).
"Included Jurisdictions" means Australia,
Canada, the European Union, Japan,
Norway, Switzerland and the United
States.
"Image" means the Licensed Product binaries
and the OEM Customer's binaries
(including, without limitation, an Embedded
Application) that are installed on
the Embedded System.
"Indemnifiable Payments" has the meaning
specified in Section 16(h).
"Licensed Product" means the Microsoft
product(s) identified as licensed in the
Product Viewer Tool within MOO and in the
form as available to DISTRIBUTOR from
an AR and/or a MS affiliate for
redistribution to OEM Customers. A Licensed
Product may include APM, software, tools,
utilities and related documentation
and/or other items identified by MS as
components of the Licensed Product.
"Material Discrepancy" has the meaning
specified in Section 18(c).
"Minimum Requirements" means *
"Mobile and Embedded Communications
Extranet" or "ECE" means the web site
located at * (or such successor URL as MS
may designate from time to time).
DISTRIBUTOR's user name and initial
password for the ECE will be sent to the ECE
and MOO Administrator email address
provided by DISTRIBUTOR in the Notices
section of the Addresses Schedule.
"MS OEM Online" or "MOO" means the Internet
site located at * (or such successor
URL as MS may designate from time to time)
accessed and used by DISTRIBUTOR in
connection with certain aspects of its
performance under this Agreement.
"MS Representative" means MS, Suppliers
and/or their respective officers,
employees and agents.
"MSCORP" means Microsoft Corporation, a
general partner or the direct or
indirect parent of MS, as applicable.
"OEM Customer" means an original equipment
manufacturer of one or more Embedded
Systems that (i) has signed a current OEM
Customer Agreement provided by
DISTRIBUTOR or for which DISTRIBUTOR has
received verification of current OEM
Customer status from MS, and (ii) is
located within the Territory.
"OEM Customer Agreement" means the
pre-printed, serialized OEM Customer License
Agreement for Embedded Systems as made
available by MS from time to time. For
additional information on the OEM Customer
Agreement, DISTRIBUTOR should contact
its Microsoft account manager.
"OEM Volume Royalty Program" has the
meaning specified in OEM Volume Royalty
Schedule. "Product Viewer Tool" means the
Microsoft OEM Online Product Viewer, a
search tool that allows users to search for
MS part numbers, and bills of
materials for Licensed Products that are
associated with active OEM Customer
Agreements.
"Quarterly Review Date" has the meaning
specified in Section 22(h) (iii).
"Royalty Rate List" means the list of
royalty-bearing Licensed Products,
corresponding royalty rates, Additional
Licensing Provisions for MS Distributor
and other information that MS provides as
part of the Royalty Rate List.
"Recovery Image" means a copy of the Image
as originally installed on the
Embedded System that may be used to
reinstall such Image.
5
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
"Resource Guide" means the Microsoft
Embedded Distributor Resource Guide, which
is the guide provided by MS in connection
with the Agreement and published on
the ECE. The Resource Guide contains
general licensing, operational and product
ordering information. MS reserves the right
to modify the Resource Guide with 60
days notice.
"Runtime License" means a license to
distribute a single Image on an Embedded
System.
"Suppliers" means MSCORP and other
licensors or suppliers of the Licensed
Product or portions thereof.
"Supplemental Code" means additional or
replacement code of any portion of a
Licensed Product as MS may provide access
to DISTRIBUTOR from time to time. Any
additional license rights or limitations
related to the Supplemental Code will
be described in the Additional Licensing
Provisions for OEM Customer or in the
applicable EULA provided when the
Supplemental Code is downloaded from ECE by
the OEM Customer.
"Territory" means the specific country(s)
or region(s) of the world set forth on
the Signature Page into or within which
DISTRIBUTOR may distribute the Licensed
Product. Additional countries may be added
to the Territory upon approval by
DISTRIBUTOR's MS regional channel manager,
and subsequent updates have been made
to MOO.
"Third Party Installer" means a third party
entity approved by MS in writing to
perform certain activities for OEM
Customer(s).
"Update Image" means an Image that consists
of an updated version of the
Licensed Product binaries (or the
previously distributed version thereof) and an
updated version of the OEM Customer's
binaries (or the previously distributed
version thereof).
"VAT Number" means Value Added Tax or sales
tax number.
"Virtual Warehouse" means an offsite
warehouse (approved by MS in writing) for
Licensed Products established by
DISTRIBUTOR in accordance with the Virtual
Warehouse schedule.
2. LICENSE GRANT AND LIMITATIONS.
------------------------------
(a) Subject to all terms and conditions of
this Agreement, MS grants to
DISTRIBUTOR a non-exclusive, limited
license to distribute Licensed Product(s)
into or within the Territory only to OEM
Customers, Third Party Installers, and
Virtual Warehouses, and other entities that
MS may authorize in writing to
DISTRIBUTOR, provided that DISTRIBUTOR
shall:
(i) order and acquire from an AR or MS Affiliate only Licensed
Products
listed on the Product Viewer Tool;
(ii) if MS has removed a Licensed Product from the Product Viewer
Tool,
only continue to distribute the Licensed
Product until the earlier of:
(A) DISTRIBUTOR's inventory of the Licensed Product is
exhausted;
(B) a final shipment date from DISTRIBUTOR to its OEM Customers is
set
or advised by MS; or
(C) termination or expiration of this Agreement;
(iii) accept orders
from OEM Customers, MS approved Third Party
Installers, and third party procurement
companies;
(iv) distribute the Licensed Product in the unopened form/packaging
as
received from the AR and/or MS Affiliate
and only to OEM Customers, Third Party
Installers, and Virtual Warehouses, but not
to third party procurement
companies;
(v) not modify or delete the contents
or packaging of the Licensed Product;
(vi) track the COA serial numbers distributed to OEM Customers,
Third
Party Installers, and Virtual Warehouses
and submit such information to MS upon
request;
(vii) maintain a level of security sufficient to prevent loss
or
unauthorized distribution of Licensed
Product (including COAs and other APM). In
the event DISTRIBUTOR fails to account for
distribution of Licensed Product
delivered to DISTRIBUTOR, DISTRIBUTOR shall
pay MS in US Dollars for such
missing Licensed Product in accordance with
the terms set forth in Section 4(k)
below, less undistributed Licensed Product
that can be shown to the reasonable
satisfaction of MS to have been destroyed
due to a Force Majeure event; and
(viii) order and acquire from an AR on behalf of OEM Customers,
and
deliver to such OEM Customer, Recovery
Images and Update Images that are based
on Licensed Products listed on the then
current Royalty Rate List.
(b) DISTRIBUTOR shall not provide to OEM
Customer any document, information or
contractual provisions that contradict,
conflict with or purport to supersede
the terms and conditions of the OEM
Customer Agreement, any Additional Rights
Agreement or the Additional Licensing
Provisions for OEM Customer.
(c) DISTRIBUTOR shall comply with the
Additional Licensing Provisions for MS
Distributor set forth in the Royalty Rate
List.
(d) DISTRIBUTOR shall perform the following
steps for each potential OEM
Customer as a function of its role in the
licensing process. DISTRIBUTOR shall:
(i) ensure that it uses the most current forms of the OEM
Customer
Agreement and any Additional Rights
Agreement(s) made available by MS to provide
additional rights to the OEM Customer;
(ii) notify each potential OEM Customer that only an authorized
signatory of the prospective OEM Customer
may execute the OEM Customer
Agreement, or any Additional Rights
Agreement;
(iii) provide the OEM Customer a courtesy copy of all
Additional
Licensing Provisions for OEM Customer as
posted on ECE before the OEM Customer
first acquires any Licensed Product;
(iv) verify that (A) the information provided by the potential
OEM
Customer is complete and correct, (B) no
changes or alterations have been made
to the OEM Customer Agreement or any
Additional Rights Agreement, and (C) each
such agreement has been properly completed
and executed by an authorized
representative of the potential OEM
Customer;
(v) comply with the instructions regarding Additional Rights
Agreement(s) described in the Resource
Guide if the OEM Customer requests
Additional Rights Agreement(s) from
DISTRIBUTOR;
(vi) provide Recovery Images and Update Images to OEM Customers
as
received from an AR and in accordance with
the Resource Guide;
(vii) provide Supplemental Code on external media as received from
an AR
and any related Additional Licensing
Provisions for OEM Customer only in the
manner set forth in the applicable
Supplemental Code letter from MS; and
(viii) at the end of each business week, express mail to MS both
OEM
Customer-signed originals of the OEM
Customer
6
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
Agreements and any Additional Rights
Agreements returned to DISTRIBUTOR during
the previous week, provided that each such
OEM Customer is located in the
Territory.
(e) MS agrees that between the time
DISTRIBUTOR obtains the OEM Customer's
signature on the OEM Customer Agreement and
such date as MS countersigns (i)
DISTRIBUTOR may distribute Licensed
Product(s) to the OEM Customer and (ii) as
between MS and DISTRIBUTOR, the OEM
Customer Agreement shall be deemed
countersigned by MS.
(f) DISTRIBUTOR shall instruct each OEM
Customer that the OEM Customer may only
distribute Licensed Product(s) (including
APM):
(i) with the OEM Customer's Embedded Systems; (ii) that were
obtained by
the OEM Customer directly from an MS-
authorized distributor; and (iii) in
accordance with the OEM Customer
Agreement.
(g) DISTRIBUTOR shall instruct each OEM
Customer that the OEM Customer may only
distribute Recovery Images:
(i) on external media included with the Embedded System or via
COMPANY's
restricted website as a download;
(ii) together with additional software, provided that such
additional
software is necessary for the installation
or operation of the Recovery Image,
and provided that OEM Customer owns or
maintains effective licenses for such
additional software; and
(iii) in accordance with the OEM Customer Agreement.
(h) DISTRIBUTOR shall not remove or obscure
any copyright, trademark or patent
notices that appear on the Licensed Product
as delivered to DISTRIBUTOR.
(i) DISTRIBUTOR shall not use any name or
trademark confusingly similar to or
undertake any other action that will
interfere with or diminish MS' or MSCORP's
right, title or interest in, any Licensed
Product trademark(s) or trade name(s),
and will comply with reasonable guidelines
provided by MSCORP from time to time
for reference to, and use of, such Licensed
Product mark(s) or name(s).
(j) DISTRIBUTOR shall not use or display
any logo of MS or its Suppliers
(including without limitation any stylized
representation of the Microsoft name
used by MS or MSCORP or any Licensed
Product name or logo) in DISTRIBUTOR's
materials or packaging unless authorized in
a logo license between DISTRIBUTOR
and MS or its Suppliers.
To obtain additional information regarding
availability of logo(s) and logo
licenses, DISTRIBUTOR should contact its MS
account manager.
(k) Upon notice from MS, DISTRIBUTOR shall
promptly discontinue distribution of
Licensed Product to an OEM Customer or to a
potential customer. DISTRIBUTOR
shall cooperate with MS in investigating
instances of distribution of Licensed
Product(s) in violation of this Section 2
and make reasonably commercial efforts
to retrieve any Licensed Product(s)
previously distributed to the OEM Customer
or potential customer.
(l) DISTRIBUTOR shall not reverse engineer,
decompile or disassemble any
Licensed Product except and only to the
extent that such activity is expressly
permitted by applicable law notwithstanding
this limitation. To the extent
applicable legislation implementing Article
6 of the European Community's
Directive for the Legal Protection of
Computer Programs, OJL 122/42 (17 May 1991
(the "Directive") may provide COMPANY the
right to decompile the Product or OPK
software in order to obtain information
necessary to achieve the
interoperability of an independently
created computer program, prior to
exercising any such possible rights under
the Directive COMPANY agrees to (i)
first notify MS of COMPANY's good faith
belief that information necessary to
achieve the interoperability of an
independently created computer program is not
otherwise available and that decompilation
is indispensable within the meaning
of the Directive; and (ii) provide MS with
a commercially reasonable amount of
time to respond to COMPANY regarding the
foregoing assertions.
(m) MS reserves all rights not expressly
granted in this Agreement.
(n) DISTRIBUTOR shall make no
representation, nor any express or implied
warranty to third parties (including,
without limitation, to any OEM Customer or
end users), on behalf of MS. DISTRIBUTOR
shall defend, indemnify and hold MS and
its Suppliers harmless against all damages
and costs, including reasonable
attorneys' fees that MS and its Suppliers
incur in connection with any warranty
or representation by DISTRIBUTOR.
(o) This Agreement does not give
DISTRIBUTOR title to any Licensed Product,
packaging, papers, materials, and/or other
property of MS related to a Licensed
Product. In particular:
(i) MS has and will retain title to all Licensed Product (and
related
papers and materials) from the time that
the Licensed Product is acquired by
DISTRIBUTOR from ARs and MS Affiliates
until DISTRIBUTOR distributes the
Licensed Products in compliance with the
Agreement.
(ii) As MS owns all Licensed Product(s) in the possession and
control of
DISTRIBUTOR (including inventory held in a
Virtual Warehouse), MS may take
possession of or destroy all Licensed
Product inventory (and related papers and
materials) when this Agreement expires or
is canceled, or after the final
shipment date as set forth in Section
2(a)(ii)(B), even if an intervening
bankruptcy or insolvency case is filed by
or against DISTRIBUTOR or a receiver
or trustee is appointed to operate or
liquidate DISTRIBUTOR.
(iii) In no circumstances will any receiver or trustee of
DISTRIBUTOR be
entitled to sell or distribute any Licensed
Product obtained by DISTRIBUTOR
pursuant to the Agreement except in strict
compliance with the terms of the
Agreement, and only with the express
written consent of MS.
(p) Unless otherwise provided in writing
from MS, DISTRIBUTOR may not deliver
APM to any other distributor who has an
effective Microsoft OEM Distribution
Agreement for Software Products for
Embedded Systems. Upon written approval to
do so, DISTRIBUTOR will follow the
reporting provisions for the deliveries as
specified therein.
(q) DISTRIBUTOR agrees that it has received
and reviewed a courtesy copy of the
Minimum Requirements (if applicable in the
Territory). DISTRIBUTOR further
agrees to achieve and maintain compliance
with the Minimum Requirements (if
applicable in the Territory) within * days
of the Effective Date.
3. ROYALTY RATE LIST.
-----------------
(a) At least *days prior to the first day
of each month, MS will post on the
ECE, or provide to DISTRIBUTOR by
electronic notice (email) or written notice,
or such other website as MS may designate
from time to time, the Royalty Rate
List for the upcoming month.
7
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
(b) MS may modify the Royalty Rate List
upon notice to DISTRIBUTOR. Submission
of Licensed Product orders to AR(s) or
distribution of Licensed Product after
the effective date of any modifications to
the Royalty Rate List shall
constitute DISTRIBUTOR's acceptance of such
modifications. New royalty rates
will be effective upon such notice or on
the date specified on the Royalty Rate
List.
(c) The royalty rate(s) and Additional
Licensing Provisions for MS Distributor
for any Licensed Product removed from the
Royalty Rate List shall be as stated
on the last Royalty Rate List that included
the Licensed Product.
(d) If DISTRIBUTOR elects to participate in
the OEM Volume Royalty Program as
described in the OEM Volume Royalty
Schedule, DISTRIBUTOR shall comply with the
terms and conditions set forth in the OEM
Volume Royalty Program Schedule, or in
any fully executed side letter agreement
between the parties.
4. REPORTS AND PAYMENTS.
--------------------
(a) DISTRIBUTOR agrees that it will
maintain a tracking system for a period of
*years after the expiration or termination
of this Agreement, which allows for
complete tracking of shipments by:
(i) Licensed Product - including quantity, COA sticker serial
numbers,
shipment dates, and APM. Upon MS request,
DISTRIBUTOR will provide a
reconciliation that will account for
beginning and ending COA inventory,
Licensed Product and APM inventory,
acquisitions from ARs and MS Affiliates,
distribution to OEM Customers, Third Party
Installers, and Virtual Warehouses,
customer returns, and COAs, Licensed
Product and APM that cannot be distributed
for any reason;
(ii) OEM Customer - including contact name, address, and
telephone
number, and OEM Customer Agreement number.
DISTRIBUTOR shall take all steps
necessary to ensure that DISTRIBUTOR's
collection and provision of information
as required by the Resource Guide is in
compliance with all applicable national
data protection laws.
(b) DISTRIBUTOR shall ensure that all
reports submitted by DISTRIBUTOR to MS
under this Agreement: (i) are accurate and
complete, (ii) are in compliance with
the requirements set forth in the Resource
Guide, and (iii) if applicable in the
Territory, are in compliance with the
Minimum Requirements
(c) Within *days after the end of each
calendar month, and *days after the
termination or expiration date of this
Agreement for the final full or partial
month, DISTRIBUTOR shall complete and
electronically submit a sales-out report,
in accordance with the Resource Guide.
(d) (i) For each calendar month,
DISTRIBUTOR shall remit payment(s) to MS as
specified in the Payment and Reporting
section of the Addresses Schedule.
Subject to applicable law, a *% monthly
charge will be assessed on all amounts
that are past due.
(ii) If MS is required by any tax authority to collect value added
tax
or other transactions tax on royalties, MS
will include the tax on its invoice
and DISTRIBUTOR must pay the amount in
full.
(iii) All payments must be in U.S. dollars and amounts owed will
not be
satisfied by a tender or any recovery
pursuant to any judgment that is expressed
in or converted by MS to any currency other
than the full amount of U.S. dollars
payable under this Agreement.
(e) For each unit of Licensed Product
distributed by DISTRIBUTOR, DISTRIBUTOR
agrees to pay MS in US Dollars the royalty
rates set forth in the Royalty Rate
List in effect during the month in which
Licensed Product is shipped by
DISTRIBUTOR. DISTRIBUTOR shall pay
royalties within * days after the end of each
calendar month in which Licensed Product
was shipped. DISTRIBUTOR shall pay
royalties within * days after the
termination or expiration date of this
Agreement for all Licensed Product
distributed in the final full or partial
month, as well as all inventory remaining
in all Virtual Warehouses.
(f) Upon request by MS, DISTRIBUTOR shall
provide MS with DISTRIBUTOR's current
audited financial statements. After review
of DISTRIBUTOR's financial condition,
payment history and overall credit
worthiness, MS may require any combination of
the following payment assurances:
(i) An initial payment amount equal to the estimated Licensed
Product
royalties for the first calendar quarter of
the Agreement. DISTRIBUTOR may not
recoup such initial payment amount against
royalties due to MS or apply it
against payments to any AR. If DISTRIBUTOR
has complied with all material terms
of this Agreement when it expires, MS will
refund the initial payment amount
(net of amounts due MS) within 45 days of
DISTRIBUTOR's final royalty report and
payment for Licensed Products distributed
during the term of this Agreement.
Until any required deposit amount is
received and accepted by MS, MS may suspend
DISTRIBUTOR's right to (A) place orders by
notifying the ARs and/or (B) deliver
packages; or
(ii) a third party guarantee, performance bond, letter of
credit,
prepayment of royalties, or other security;
or
(iii) periodic updated financial statements; or
(iv) written assurances of due performance.
Until the payment assurances are received
and acceptable to MS, MS may suspend
DISTRIBUTOR's license rights or require ARs
to refuse to fill DISTRIBUTOR's
orders. MS reserves the right to review
DISTRIBUTOR's financial condition,
payment history, and overall credit
worthiness during the term of this
Agreement. DISTRIBUTOR's acceptance of this
Agreement specifically authorizes MS
to access any credit bureaus or agencies to
inquire about DISTRIBUTOR's
financial condition.
(g) DISTRIBUTOR's obligations to pay MS
royalties and to pay charges from ARs
are unconditional. For the first
noncompliant payment, DISTRIBUTOR will have an
additional * days from MS' notice thereof
to correct the problem. After the
second noncompliant payment, MS may invoice
DISTRIBUTOR monthly based on reports
submitted to MS by the AR(s). If
DISTRIBUTOR does not meet MS payment terms, MS
may, without limiting its remedies, do any
of the following:
(i) require the AR to suspend all pending DISTRIBUTOR orders;
or
(ii) terminate this Agreement.
(h) If DISTRIBUTOR discovers an
over-reporting error, DISTRIBUTOR shall report
the error to MS in writing within 2
calendar months after the end of the
calendar month in which the Licensed
Product was distributed to be eligible for
an adjustment of the royalty amount paid to
MS.
(i) MS may require ARs to refuse or limit
orders placed by DISTRIBUTOR that, in
MS' sole opinion, are in quantities greater
than DISTRIBUTOR will be able to
distribute or make timely payment for in
compliance with this Agreement.
8
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
(j) Royalties are separate from, and in
addition to, any charges by the AR for
Licensed Products ordered by DISTRIBUTOR.
Royalties also exclude any taxes,
duties, fees, excises or tariffs imposed on
any of DISTRIBUTOR's activities in
connection with this Agreement. Such
charges, taxes, duties, fees, excises or
tariffs, if any, shall be paid by
DISTRIBUTOR.
(k) If DISTRIBUTOR distributes any Licensed
Product in violation of this
Agreement or DISTRIBUTOR is unable to
account for missing Licensed Product, then
MS, without limiting its remedies, may
demand and DISTRIBUTOR agrees to pay MS
in US Dollars the full applicable royalty
rate for the Licensed Product(s) plus
an additional royalty equal to *% of the
highest royalty rate for the Licensed
Product(s). In the event the applicable
royalty rate has been paid, DISTRIBUTOR
shall pay an additional royalty equal to *%
of the royalty rate for the
applicable Licensed Product(s). DISTRIBUTOR
shall pay such additional royalty
within * days of receipt of MS'
invoice.
(l) If DISTRIBUTOR is required by any
non-U.S.A. tax authority to withhold
income taxes on payments to MS, then
DISTRIBUTOR may deduct such taxes from the
amount owed MS and shall pay them to the
appropriate tax authority, provided
that within 60 days of such payment,
DISTRIBUTOR delivers to MS an official
receipt for any such taxes withheld or
other documents necessary to enable MS to
claim a U.S.A. Foreign Tax Credit. If
DISTRIBUTOR is located in a jurisdiction
that utilizes a VAT Number for tax
identification purpose, DISTRIBUTOR's VAT
Number shall be provided in the Addresses
Schedule. DISTRIBUTOR shall make
certain that any taxes withheld are
minimized to the extent permitted by
applicable law. DISTRIBUTOR agrees to pay
MS a 1% monthly charge on tax amounts
in receipts or documents that are not
delivered to MS within the * days
identified above.
(m) (i) Pursuant to MS' instructions,
DISTRIBUTOR shall enter data into the CVC
made available by MS including, status of
MSCORP-provided leads, "design-win",
and/or "design-in" information as described
in the CVC instructions. Prior to
submitting such entries, DISTRIBUTOR shall
confirm their accuracy. DISTRIBUTOR's
failure to adequately pursue MSCORP
provided leads is considered a material
breach of this Agreement.
(ii) Upon MS request, DISTRIBUTOR shall provide to MS further
details on
any of the entries made by DISTRIBUTOR in
accordance with subsection 4(m)(i).
(n) For COAs, Licensed Product(s) and APM
damaged irreparably during the
ordinary course of DISTRIBUTOR's business,
DISTRIBUTOR shall
(i) maintain a log in the format specified in the Resource Guide of
each
damaged or destroyed COA, Licensed
Product(s) and APM that includes the date
damaged or destroyed, item's name and
number, and cause of damage or
destruction; and
(ii) return each damaged item to the AR and/or Supplier from which
the
item was acquired.
(o) If DISTRIBUTOR conducts business in the
U.S.A. and qualifies for a state
resale tax exempt certificate, then
DISTRIBUTOR shall provide MS with a copy of
its U.S.A. state resale tax exempt
certificate, if applicable, with this
Agreement when it is returned for signature
by MS.
5. MS OEM ONLINE AND MOBILE AND EMBEDDED
COMMUNICATIONS EXTRANET.
-------------------------------------------------------------
DISTRIBUTOR shall comply with the terms and
conditions set forth in the Use of
MS OEM Online and Mobile and Embedded
Communications Extranet Schedule.
6. LICENSED PRODUCT RECALLS, WITHDRAWALS,
AND SUSPENSIONS.
------------------------------------------------------
(a) DISTRIBUTOR shall immediately stop
distributing a Licensed Product if MS or
its Suppliers notify DISTRIBUTOR that the
Licensed Product is recalled,
withdrawn or suspended.
(b) DISTRIBUTOR shall accept returns of
Licensed Product from OEM Customers if
MS or its Suppliers notify DISTRIBUTOR that
the Licensed Product is recalled,
withdrawn or suspended.
(i) DISTRIBUTOR shall accept returned Licensed Product only in
unopened
packages.
(ii) DISTRIBUTOR shall, at MS' option, issue a credit to the
OEM
Customer's account or replace the returned
Licensed Product.
(iii) DISTRIBUTOR shall, at MS' option, ship the returned
Licensed
Product to an AR or a third party
designated by MS. DISTRIBUTOR shall certify to
MS that the returned Licensed Product was
shipped to an AR or MS' designated
third party.
(iv) If the Licensed Product recall, withdrawal or suspension was
caused
by reasons outside of DISTRIBUTOR's
control, MS will pay for DISTRIBUTOR's
reasonable shipping costs.
(v) DISTRIBUTOR shall promptly arrange for replacement units of
Licensed
Product from the AR.
(c) No royalty accrues for Licensed Product
DISTRIBUTOR distributes to replace
Licensed Product returned due to recalls,
withdrawals or suspensions.
(d) If DISTRIBUTOR issues a credit to an
OEM Customer for Licensed Product(s)
returned because of recalls, withdrawals or
suspensions, DISTRIBUTOR may claim a
royalty offset based on the royalty rate
originally reported by DISTRIBUTOR for
the returned Licensed Product.
(e) DISTRIBUTOR shall defend, indemnify,
and hold MS and its Suppliers harmless
from and against all damages, costs and
expenses, including reasonable
attorneys' fees, incurred due to
DISTRIBUTOR's continued distribution of
Licensed Product after MS has notified
DISTRIBUTOR to stop distributing the
Licensed Product.
7. RETURNS.
-------
(a) DISTRIBUTOR shall accept returns of
Licensed Product if:
(i) an OEM Customer refuses to accept Additional Licensing
Provisions
for OEM Customer and returns the unopened
Licensed Product package within time
specified in Section 7(b) below; or
(ii) a Licensed Product is incomplete or defective in Licensed
Product
media and/or Licensed Product materials and
OEM Customer returns Licensed
Product within the time specified in
Section 7(b) below; or
(iii) MS has established an end of life date for a Licensed
Product,
DISTRIBUTOR may report returns of such
Licensed Product up to * after its end of
life date.
(b) DISTRIBUTOR shall align its return
policy for Licensed Products with the
over-reporting error report requirements
set forth in Section 4(h).
9
CONFIDENTIAL
Microsoft OEM Distribution Agreement For
Software Products For Embedded Systems
#* dated October 1, 2005 between MS and
BSQUARE CORPORATION
* Confidential Treatment Requested
<PAGE>
(c) Except for returns that DISTRIBUTOR is
expressly authorized or directed to
make by MS, MS will not accept any returns
of Licensed Product. (d) DISTRIBUTOR
shall manage any returns of Licensed
Product in accordance with the then-current
Resource Guide.
8. DELIVERY.
---------
Neither MS nor its Suppliers shall have any
liability for failure to deliver
Licensed Product by any particular
date.
9. NO WARRANTIES. LICENSED PRODUCT IS
PROVIDED "AS IS" AND WITH ALL FAULTS. THE
ENTIRE RISK AS TO SATISFACTORY QUALITY,
PERFORMANCE, ACCURACY, AND EFFORT IS
WITH OEM CUSTOMER. MS AND ITS SUPPLIERS
DISCLAIM ALL REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS, IMPLIED, OR
STATUTORY, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR OF FITNESS
FOR A PARTICULAR PURPOSE AND ANY
IMPLIED WARRANTY ARISING FROM COURSE OF
DEALING OR USAGE OF TRADE. MS AND ITS
SUPPLIERS ALSO DISCLAIM ANY COMMON-LAW
DUTIES RELATING TO ACCURACY OR LACK OF
NEGLIGENCE. THERE IS NO WARRANTY AGAINST
INTERFERENCE WITH DISTRIBUTOR'S
ENJOYMENT OF THE LICENSED PRODUCT OR
AGAINST INFRINGEMENT.
10. DAMAGE EXCLUSIONS / LIMITATION OF
LIABILITY / EXCLUSIVE REMEDY.
--------------------------------------------------------------
(a) DISTRIBUTOR agrees that total,
cumulative liability of MS Representatives to
DISTRIBUTOR, whether in contract,
(including any provision of the Agreement),
tort, or otherwise, for each Licensed
Product, shall not exceed 100% of the
amount paid by DISTRIBUTOR to MS for that
Licensed Product during the term of
this Agreement. DISTRIBUTOR's exclusive
remedy for any breach of the Agreement
by MS or by MS Representatives will be the
recovery of DISTRIBUTOR's direct
damages incurred in reasonable reliance,
limited to the foregoing amount.
(b) EXCLUSION OF CERTAIN DAMAGES AND
LIMITATION OF TYPES OF LIABILITY. EXCEPT AS
PROHIBITED BY LAW, IN NO EVENT WILL MS OR
ANY MS REPRESENTATIVES BE LIABLE TO
DISTRIBUTOR OR TO ANY THIRD PARTY FOR ANY
SPECIAL, CONSEQUENTIAL, INCIDENTAL,
INDIRECT, OR ECONOMIC DAMAGES, REGARDLESS
OF THE THEORY OF LIABILITY (INCLUDING
WITHOUT LIMITATION PRODUCT LIABILITY OR
NEGLIGENCE), OR FOR ANY LOST REVENUE,
PROFIT, DATA, PRIVACY OR SECURITY, OR FOR
ANY PUNITIVE DAMAGES, ARISING OUT OF
OR RELATED TO THE USE OF OR INABILITY TO
USE LICENSED PRODUCT, EVEN IF MS OR MS
REPRESENTATIVES HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. This
exclusion and limitation shall apply even
if any remedy fails of its essential
purpose.
(c) RELEASE. DISTRIBUTOR releases MS
and
