EXHIBIT 10.13
SOFTWARE LICENSE
AGREEMENT
FOR
PALM OS SOFTWARE
This Software License Agreement is
entered into by and between Palm, Inc. (“ Palm
”), a Delaware corporation with a place of business at 5470
Great America Parkway, Santa Clara, CA 95052, Palm Ireland
Investment, a company organized and existing under the laws of The
Republic of Ireland with a place of business at 25-28 North Wall
Quay, International Financial Services Centre, Dublin 1, Ireland
(referred to individually as “ Palm Ireland ” or
collectively with Palm, Inc. as “ Palm ”) and
AlphaSmart, Inc. (“ Licensee ”), a California
corporation with a place of business at 20400 Stevens Creek Blvd.,
Suite 300, Cupertino, CA 95014. The effective date of this
Agreement shall be the date last executed below (“
Effective Date ”), provided that this Agreement shall
not be effective in the absence of any and all required
governmental approvals.
RECITALS
A. Palm or its suppliers are the
owners of software and other technology related to the Palm OS
platform.
B. Licensee is a developer,
manufacturer and marketer of, among other things, handheld
computing products.
C. Licensee desires to obtain a
license to certain Palm software and technology, as more
particularly described in Exhibit A (Palm Deliverables), in
order to develop, manufacture and market certain handheld computing
and communications products incorporating, and compatible with,
such Palm software and technology. Palm is willing to grant
Licensee such a license upon the terms and conditions set forth
below.
AGREEMENT
NOW, THEREFORE, the parties agree as
follows:
1. Definitions
1.1 “ API ” means
technology which provides a set of functions for developing
software and hardware intended to interface in an integrated manner
with the Palm Software, whether this technology is in the form of
an application program interface or otherwise.
1.2 “ Confidential
Information ” means that information of either party
(“ Disclosing Party ”) which is disclosed to the
other party (“ Receiving Party ”) pursuant to
this Agreement in written form and marked
“Confidential,” “Proprietary” or similar
designation, or if orally disclosed, that information which the
Receiving Party should reasonably discern, by an objective
examination of the disclosure and the surrounding facts and
circumstances, to be confidential in nature. Confidential
Information shall include, but not be limited to, trade secrets,
know-how, inventions, techniques, processes, algorithms, software
programs, schematics, designs, contracts, customer lists, financial
information, product plans, sales and marketing plans and business
information. References to either party as a Receiving Party or a
Disclosing Party shall also include all of such party’s
present and future subsidiary and parent companies, subject to the
restrictions contained in this Agreement.
1.3 “ Derivative Works
” means any software programs, and copies thereof, which are
developed by Licensee and which are based on or incorporate any
part of the Palm Software delivered by Palm hereunder, including
without limitation any revision, modification, translation
(including compilation or recapitulation by computer), abridgement,
condensation, expansion, or any other form in which the Palm
Software may be recast, transformed or adapted, and that, if
prepared without Palm’s authorization, would constitute a
copyright or trade secret infringement of the Palm
Software.
1.4 “ Licensee Products
” means those certain products specified in Exhibit D
(Licensee Products, Royalties and Fees) developed by Licensee which
contain the Palm Software, in whole or in part, as the sole
operating system and which are combined with Licensee’s added
value as described on Exhibit D . The parties agree that
such exhibit may only be amended by a writing signed by both
parties.
1.5 “ Licensee Software
” means any software developed, acquired, or licensed by
Licensee, or for Licensee by a third party, for the Licensee
Products.
1.6 “ Net Revenue
” [*] .
1.7 “ New Version
” means a new release of the Palm Software for which the
number to the left of the decimal point is increased. For example,
Palm Software version 5.0 would be a New Version following Palm
Software version 4.x.
1.8 “ Palm Compatibility
Trademarks ” means the Palm compatibility trademarks
listed in Exhibit H.
1.9 “ Palm Device
Applications ” means the applications files described in
Section A.1.2 of Exhibit A (Palm Deliverables).
1.10 “ Palm Device
Applications SDK ” means Palm’s commercially
available software development kit for applications for the Palm OS
platform as described in Section A.2 of Exhibit A (Palm
Deliverables).
1.11 “ Palm Desktop
Software ” means the HotSync manager and conduit software
described in Section A.1.3 of Exhibit A (Palm Deliverables)
and the desktop applications software described in Section A.1.4 of
Exhibit A (Palm Deliverables).
1.12 “ Palm Development
Environment ” means the development and debugging tools
relating to the Palm OS Software described in Section A.3 of
Exhibit A (Palm Deliverables), including a list of certain
third-party development tools that are commercially available
relating to the Palm OS Software, provided that Licensee shall be
responsible for obtaining any necessary rights for such third-party
development tools.
1.13 “ Palm End-User
Documentation ” means the end-user documentation related
to the Palm Software as described in Section A.4 of Exhibit
A (Palm Deliverables).
1.14 “ Palm Installation CD
Files ” means the artwork, guided tour files, and other
files and related elements of the Palm installation CD as described
in Section A.5 of Exhibit A (Palm Deliverables).
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treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
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1.15 “ Palm Materials
” means the Palm End-User Documentation, the Palm Technical
Documentation, and any Palm end user materials provided hereunder,
English language versions thereof.
1.16 “ Palm OS Software
” means the Palm operating system software files and builds
tools described in Section A.1.1 of Exhibit A (Palm
Deliverables), which may be updated by Palm from time to time. All
Palm OS Software shall be provided in object code form only, except
as may be agreed by the parties in writing or as otherwise set
forth in this Agreement.
1.17 “ Palm Software
” means the items described in Section A.1 through A.1.6 of
Exhibit A (Palm Deliverables), which may be updated by Palm
from time to time. All Palm Software shall be provided in object
code form only, except as may be agreed by the parties in writing
or as otherwise set forth in this Agreement. Palm Software includes
any Updates, Upgrades or Upgrades of any of the
foregoing.
1.18 “ Palm Source Code
” means certain source code for Palm Software which Palm, at
its sole option, may elect to provide to Licensee from time to
time.
1.19 “ Palm Source Code
Documentation ” means certain technical documentation
relating to Palm Source Code which Palm, at its sole option, may
elect to provide to Licensee from time to time.
1.20 “ Palm Technical
Documentation ” means the technical documentation, repair
manuals, service manual, engineering schematics, and other
materials relating to the Palm Software as described in Section A.6
of Exhibit A (Palm Deliverables).
1.21 “ Palm Trademarks
” means the Palm Compatibility Trademarks (as defined in
Section 2.3(c) (Trademark License)) and the Other Palm Trademarks
listed in Exhibit H , attached hereto.
1.22 “ Update ”
means a new release of the Palm Software which, for reason of
additional functionality, the number to the right of the decimal
point is increased. For example, Palm Software 4.1 would be an
Update to Palm Software 4.0.
1.23 “ Upgrade ”
means a bug fix, workaround, or patch to correct any reproducible
error in the Palm Software for which the number to the right of the
second decimal point is increased. For example, Palm Software 4.0.1
would be an Upgrade to Palm Software 4.0.
2. Licenses
2.1 Development and Documentation
License . Subject to the terms and conditions of this
Agreement, Palm hereby grants to Licensee a personal, limited,
non-exclusive, non-transferable, fully-paid license to the
following solely to develop, manufacture, test and support the
Licensee Products (and the Licensee Software to the extent such
Licensee Software is incorporated in the Licensee Products): (a)
use the Palm Development Environment and the Palm Device
Applications SDK in object code form only, and (b) use and
reproduce the Palm Software, in object code form only, and the Palm
Materials.
2.2 Distribution License .
Subject to the terms and conditions of this Agreement, Palm hereby
grants to Licensee a personal, limited, non-exclusive,
non-transferable, worldwide (subject to Section 2.8(a)),
royalty-bearing license to use, reproduce, and distribute, directly
and indirectly through its standard distribution channels: (a) the
Palm OS Software and Palm Device Applications, in object code form,
solely when embedded into Licensee Products; (b) the Palm Desktop
Software and Palm Installation CD Files, in object code form, and
Palm End-User Documentation solely when bundled with Licensee
Products; and (c) any Upgrades, Updates and New Versions, in object
code form only, on a stand-alone basis to be used
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solely with Licensee Products. Licensee
certifies that, except as provided in Section 2.2(c), it will
distribute the Palm OS Software and Palm Device Applications only
as incorporated into Licensee Products which, by an objective
examination of such factors as cost, product features and pricing,
represent a significant enhancement of such Palm Software (with
regard to both value and function). Licensee acknowledges and
agrees that at such time it elects to distribute any Upgrade.
Update or New Version, whether contained in or bundled with a
Licensee Product or on a stand-alone basis pursuant to the terms of
this Section, Licensee shall distribute the complete New Version,
Update and Upgrade in its entirety and may not distribute only a
subset of same.
2.3 Compatibility and Trademark
License .
(a) Compatibility Testing .
Prior to the release of each of the Licensee Products and for each
Update, Upgrade and New Version that Licensee may embed into such
products, Licensee shall submit the Licensee Products [*] to
any of Palm’s approved independent compatibility testing labs
(“ Approved Testing Lab ”) for compatibility
testing in accordance with the test criteria attached hereto as
Exhibit B (the “ Test Criteria ”). If the
Approved Testing Lab rejects the Licensee Products because of a
nonconformance with the Test Criteria, then such testing lab will
provide Licensee and Palm a detailed written statement of the
reasons for such rejection (“ Statement of Errors
”). Upon receipt of the Statement of Errors, Licensee shall
use reasonable efforts to modify the Licensee Products to conform
to the Test Criteria. The parties acknowledge that the contents of
the Test Criteria may need to be changed from time to time if major
new functionality is added to the Palm Software. Palm shall use its
reasonable discretion in determining new Test Criteria for such
Palm Software with such new functionality and will apply such new
Test Criteria to its internal customers and to Licensee and its
other licensees of the Palm Software.
(b) Compatibility Certification
Requirement . Licensee agrees that it shall not release or
distribute any Licensee Products incorporating any part of the Palm
Software which have not received compatibility certification
pursuant to subsection (a) above from an Approved Testing Lab in
accordance with the Test Criteria (“ Compatibility
Certification ”). Each version of a Licensee Product
shall be required to pass the Test Criteria only once, regardless
of Palm’s subsequent modifications to the Palm Software.
However, in order to obtain Compatibility Certification for Palm
Software with new functionality and new Test Criteria as described
in Section 2.3(a), Licensee may submit Licensee Products for
compatibility testing against such new Test Criteria in accordance
with Section 2.3(a). Licensee may indicate Compatibility
Certification for Licensee Products only with respect to the
version(s) of the Test Criteria which the Licensee Products have
passed. If Licensee creates a foreign language version (“
Localized Version ”) for the United Kingdom (English
language only), France, Italy, Germany or Spain of a Licensee
Product that has received Compatibility Certification, then
Licensee may, at its option [*] , conduct the compatibility
testing of such Localized Version itself (i.e. without using an
Approved Testing Lab), provided that all of the following
conditions are met:
(i) The Localized Version does not
contain any incremental operating system software or functionality
which was not contained in the primary Licensee Product which
received Compatibility Certification from an Approved Testing
Lab.
(ii) None of the Approved Testing
Labs could commit to completing the Compatibility Certification for
the Localized Version within thirty (30) days from receipt of such
Localized Version. If an Approved Testing Lab commits to such
deadline, but the compatibility testing exceeds such
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treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
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time period, because the Approved Testing Lab
issued a Statement of Errors, then the Approved Testing Lab shall
be afforded an additional period of time to complete such testing
as may be reasonably required to fix such errors and retest, taking
into consideration both the nature of such errors and
Licensee’s timeliness and responsiveness in correcting such
errors.
(iii) Licensee shall conduct the
compatibility testing of the Localized Version strictly in
accordance with the Test Criteria and using the compatibility test
suite provided by Palm for the primary version of the Licensee
Product which received Compatibility Certification from an Approved
Testing Lab.
(iv) At least five (5) days prior to
the date Licensee first releases such Localized Version, Licensee
delivers to Palm a copy of the compatibility test results, together
with a written statement by an officer of Licensee certifying that
the Localized Version satisfied the Test Criteria and qualifies for
Compatibility Certification pursuant to the terms
hereof.
(v) Palm may at any time audit the
compatibility test results and/or Licensee’s compatibility
testing procedure to verify Licensee’s compliance with the
terms of this Section 2.3.
Licensee acknowledges and agrees that it shall
be a material breach of this Agreement for purposes of Section 15.3
(Right to Terminate) if Licensee releases a Licensee Product which
has not first strictly satisfied the requirements of Compatibility
Certification hereunder.
(c) Trademark License .
Subject to subsections (a) and (b) above and the other terms and
conditions of this Agreement, Palm hereby grants to Licensee a
personal, limited, non-exclusive, non-transferable, fully-paid
license to use, subject to the guidelines set forth in Palm’s
Trademark Policy Guidelines attached hereto as Exhibit C ,
the Palm compatibility trademarks listed in Exhibit H (Palm
Compatibility Trademarks) (the “ Palm Compatibility
Trademarks ”) in connection with the marketing and sale
of Licensee Products which incorporate the Palm Software and that
have received Compatibility Certification, provided that Licensee
will first obtain Palm’s prior written approval for the
publication of any statements referring to Palm’s trademarks
or products, including but not limited to any statements displayed
on Licensee’s website. Palm shall have the right to change
the Palm Compatibility Trademarks upon written notice to Licensee.
Licensee shall use the Palm Compatibility Trademarks in conjunction
with the distribution, promotion, and marketing of any and all
Licensee Products that have received Compatibility Certification,
consistent with the guidelines set forth in Exhibit C . The
foregoing license shall be limited to use of the Palm Compatibility
Trademarks for the purposes of Section 8.3 (Branding). Further, the
foregoing license to the mark “Palm OS” shall be
strictly limited to the applicable version number of the Palm OS
Software designated by Palm and Licensee shall have no license to
use a New Version name/number in connection with the distribution,
promotion or marketing of any Licensee Product or related material
(including, without limitation, on the Licensee Product or in any
advertising, promotional or packaging materials) until such time as
the Licensee Product has received Compatibility Certification for
such New Version. The rights granted to Licensee in this license
will terminate upon any termination or expiration of this
Agreement. Upon such termination or expiration, Licensee will no
longer make any use of any Palm Compatibility
Trademarks.
(d) Trademark Ownership .
Licensee acknowledges that Palm owns exclusive rights in the Palm
Trademarks. Licensee will not use PALM as part of any of its
product, service, domain or company names and will not take nor
authorize any action inconsistent with Palm’s exclusive
trademark rights during the term of this Agreement or thereafter.
Nothing in this Agreement grants Licensee ownership or any rights
in or to use the Palm Trademarks, except in accordance with the
license set forth in Section 2.3(c). Palm will have the exclusive
right to own, use, hold, apply for registration for, and register
the Palm
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Trademarks during the term of, and after the
expiration or termination of, this Agreement in any country
worldwide; Licensee will not use any of the Palm Trademarks to
directly or indirectly promote or distribute handheld computing
products not designed for the Palm OS platform. Unless otherwise
instructed by Palm, Licensee will use a legend on its website and
all printed materials and products bearing the Palm Trademarks
similar to the following: “[Licensee name] uses the [Palm
Trademark used] under express license from Palm,
Inc.”
(e) Quality Maintenance .
Licensee agrees that the overall quality of the Licensee Products
and all related advertising, promotional and other related uses of
the Palm Trademarks shall conform to or exceed industry standards.
Licensee agrees to cooperate with Palm in facilitating Palm’s
quality control. Palm shall have the right to receive free samples
of all advertising and promotional materials and reasonable numbers
of sample production [*] of the Licensee Products and
related Licensee documentation on which such trademarks are used to
ensure that Palm’s quality standards are maintained. Licensee
will provide Palm with drafts of all significant revisions to such
materials (including press releases) using the Palm Trademarks
before making such materials publicly available. Licensee shall
comply with all requests from Palm to correct any quality
deficiencies in such materials and its website.
2.4 No Right to Sublicense or Use
Contract Manufacturers . Licensee shall have no right to, and
shall not, sublicense any of its rights under this Agreement to
OEMs, consultants, contractors, or any other third parties.
Licensee shall have the right to use those third parties identified
on Exhibit I (Approved Contractors) attached hereto (the
“ Approved Contractors ”) to manufacture,
develop, test, or support the Licensee Products. Except for the
Approved Contractors, Licensee shall have no right to, and shall
not, use third parties to manufacture, develop, test, or support
any Licensee Products without Palm’s prior written approval.
Exhibit I (Approved Contractors) shall only be updated upon
the mutual written agreement of the parties, such agreement not to
be unreasonably withheld. Notwithstanding Palm’s permission
to use the Approved Contractors, Palm’s affirmative
obligations under this Agreement will be limited to Licensee.
Licensee hereby guarantees the performance of the Approved
Contractors under this Agreement and any breach by any Approved
Contractors of the terms of this Agreement shall be deemed a breach
by Licensee.
2.5 No Reverse Engineering .
Licensee shall not reverse engineer, reverse compile, disassemble
or otherwise attempt to derive the source code to any Palm
Software.
2.6 Inspection Rights . Palm
shall have the right, upon reasonable advance notice, to inspect
Licensee’s books, records and facilities with respect to the
manufacture of the Licensee Products hereunder and to receive
sample [*] thereof in order to verify that (i) such
manufacturing is within the scope of this Agreement, (ii) there are
appropriate security procedures to protect Palm’s
Confidential Information, (iii) Licensee is in compliance with
Section 2.5, and (iv) Licensee is in compliance with its other
obligations under this Agreement, including, but not limited to
those obligations set forth in Section 2.9 (Source Code). Palm
shall treat all materials and information received under this
Section 2.6 as “Confidential Information” of
Licensee’s under Section 12, whether or not such materials
and information are marked or identified as such. Licensee shall
secure similar rights with respect to any contract manufacturers
permitted by Palm under Section 2.4 (No Right to Sublicense or Use
Contract Manufacturers) above that permit a third party independent
auditor selected by Palm to perform such inspections.
2.7 No Other Licenses .
Except as specifically set forth in this Agreement, no other
licenses are granted by Palm to Licensee.
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confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
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2.8 Limitations on Scope of
Agreements . Notwithstanding the other terms and conditions of
this Agreement, the rights granted to Licensee under this Agreement
do not, and will not, include any right or license outside of the
territory and/or field of use specified in Exhibit D for the
applicable Licensee Products.
2.9 Source Code . Upon
Licensee’s request, Palm may at Palm’s sole option,
from time to time, provide Licensee certain portions of the Palm
Source Code and Palm Source Code Documentation, subject to the
provisions of this Section 2.9.
(a) Right to Examine .
Subject to the terms and conditions of this Agreement, Palm hereby
grants to Licensee a limited, non-exclusive, non-transferable,
fully-paid license to examine the Palm Source Code and Palm Source
Code Documentation, for the sole purpose of assisting Licensee in
developing Licensee Products (and Licensee Software to the extent
such Licensee Software is incorporated in the Licensee Products)
within the scope of this Agreement and to reproduce no more than
three (3) copies of such Palm Source Code and Palm Source Code
Documentation.
(b) Right to Modify . Subject
to the terms and conditions of this Agreement, Palm hereby grants
to Licensee a limited, non-exclusive, non-transferable, fully-paid
license to (i) modify those certain portions of the Palm Source
Code identified on an Attachment hereto (collectively, the “
Modifiable Source Code ”), but only for the limited
purpose and such other terms set forth on the applicable
Attachment, and (ii) use, reproduce and distribute any such
modifications (“ Modifications ”) in object code
form only to the same extent that Licensee is permitted to do so
with respect to the Palm OS Software pursuant to Section 2.2,
above. For each set of Modifiable Source Code, the parties shall
execute separate sequentially numbered Attachments (e.g.,
Attachment No. 1, Attachment No. 2, etc.) to this Agreement.
Licensee shall have no right to (a) modify any Palm Source Code
other than the Modifiable Source Code, (b) modify the Modifiable
Source Code for any purpose other than as expressly set forth in
the applicable Attachment, or (c) sublicense any Modification to a
third party except as permitted pursuant to subsection (ii)
above.
(c) Limitations of License .
Licensee shall have no right to (i) sublicense any of its rights
granted under this Sections 2.9 to any third party except as
permitted pursuant to Section 2.9(b)(ii) above, (ii) incorporate
any Palm Source Code or Palm Source Code Documentation in any
technology or products of Licensee or of any third party (except as
expressly permitted under Section 2.9(b) above), (iii) disclose any
Palm Source Code or Palm Source Code Documentation to any third
party, except for the Approved Contractors, (iv) use or reproduce
any Palm Source Code or Palm Source Code Documentation other than
as permitted by subsections 2.9(a) and (b) above, (v) modify or
distribute any Palm Source Code or Palm Source Code Documentation
in any manner, except as set forth in Section 2.9(b)
above.
(d) Confidentiality . Palm
Source Code and Palm Source Code Documentation shall be deemed
Confidential Information of Palm for purposes of this Agreement,
regardless of whether or not it is so marked. Except as permitted
in this Agreement, Licensee shall not use, make, have made,
distribute or disclose any copies of the Palm Source Code or Palm
Source Code Documentation, in whole or in part, or the information
contained therein without the prior written authorization of Palm.
Upon the termination or expiration of this Agreement, Licensee will
deliver such Palm Source Code and Palm Source Code Documentation,
and any materials containing the information therein, to Palm.
Licensee shall inform its employees having access to it of
Licensee’s limitations, duties and obligations regarding
nondisclosure and limited copying and shall obtain or have obtained
their written agreement to comply with such limitations, duties and
obligations. Licensee shall notify Palm in writing of the
identities of any employees having access to such Palm Source Code
and Palm Source Code Documentation and shall maintain accurate and
complete records of the same, together with copies of each such
employee’s written agreement to comply with the
terms
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hereunder; such persons shall be the only
persons entitled to access to the Palm Source Code and Palm Source
Code Documentation. Upon reasonable notice, Palm may audit such
records.
(e) Palm’s Right to
Modify/Replace Source Code . Licensee agrees that any access to
any Palm Source Code and Palm Source Code Documentation will not
limit or restrict Palm’s right to modify or replace such Palm
Source Code and Palm Source Code Documentation in future versions
of the Palm Software.
(f) Termination of Source Code
License . Except as expressly provided in this subsection
2.9(f), all rights and obligations under this Section 2.9, shall
terminate and be of no further force or effect if there is a
material change in the ownership or control of Licensee such that
twenty percent (20%) or more of the voting equity stock of Licensee
is owned and/or controlled (directly or indirectly) by one or more
Competitors (as defined below). In the event of such termination,
Licensee shall promptly (i) cease all examination and/or
modification of the Palm Source Code and Palm Source Code
Documentation, (ii) return all Palm Source Code and Palm Source
Code Documentation, including, but not limited to, all copies
thereof, to Palm, and (iii) destroy all copies thereof, in whole
and in part, residing within any computers in Licensee’s
control. Notwithstanding the foregoing, in the event of such
termination, in no event shall such termination affect
Licensee’s rights to reproduce and distribute in object code
form Modifications existing as of the effective date of such
termination pursuant to Section 2.9(b)(ii). “
Competitor ” means any entity or entities that
develops, manufactures, markets and/or distributes (i) a handheld
or mobile computing device, and/or (ii) operating systems software
for a handheld or mobile computing device that is licensed to third
parties on a stand-alone basis.
(g) No Other Licenses . The
licenses granted under this Section 2.9 are specifically set forth
herein, and no licenses are granted by Palm to Licensee by
implication or estoppel to the Palm Source Code or Palm Source Code
Documentation.
(h) Survival .
Licensee’s obligations under this Section 2.9 with respect to
any Palm Source Code and Palm Source Code Documentation shall
survive in perpetuity.
3. Delivery
Following Licensee’s payment
to Palm of the initial payment referred to in Section 4.1, Palm
will deliver to Licensee a complete and current set of the
deliverables specified in Exhibit A (Palm Deliverables);
provided, however, that in no event will Palm be required to
deliver any such items to Licensee before (i) Palm has generally
released such deliverables to its customers and (ii) Licensee has
obtained any and all necessary governmental approvals for this
Agreement.
4. Royalties, Fees, and
Reports
4.1 Initial Payment .
Licensee shall pay to Palm immediately upon execution of this
Agreement the non-refundable license fee specified in Exhibit
D (Licensee Products, Royalties and Fees).
4.2 Royalties . Licensee
shall pay to Palm the applicable royalties specified in Exhibit
D (“Royalties”) for each (i) Licensee Product sold
or distributed by Licensee containing; all or any portion of the
Palm Software, and (ii) any Update, Upgrade or New Version sold or
distributed by Licensee on a stand-alone basis. Such royalties
shall be due and payable to Palm regardless of whether Licensee
collects payments for the Licensee Products from Licensee’s
customers. Licensee shall pay Palm a Royalty for at least
the
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minimum number of [*] of Licensee
Products per year specified in Exhibit D (“ Minimum
Annual Shipments ”). If Licensee fails to pay Palm for
the Minimum Annual Shipments, Palm may elect to terminate this
Agreement pursuant to the provisions of Section 15.3 and in the
event of such termination. [*] . Each payment with respect
to the Minimum Annual Shipments will be deemed a [*] payment
by Licensee of Royalties due under this Agreement for the
applicable year. The yearly periods for the Minimum Annual
Shipments shall begin upon the earlier of (a) Licensee’s
first commercial shipment of a Licensee Product, or (b) one (1)
year from the Effective Date, and each anniversary
thereof.
4.3 Maintenance and Support
Fees . Licensee shall pay to Palm fees as specified in Exhibit
D (Royalties and Fees) for maintenance and support of Licensee
Products and Updates, Upgrades and New Versions made available by
Palm to Licensee pursuant to Sections 6.1 and 7 (“
Maintenance and Support Fees ”). Such fees shall be
due and payable by Licensee to Palm [*] for each quarter
during the term [*] . In no event will such fees entitle
Licensee to receive any assistance in integrating any Palm Software
with any Licensee Products (except as expressly set forth in
Section 7.1 (Development Support) below), any custom development
work for Licensee or any Licensee Products, or any modifications to
any Palm Software. Licensee acknowledges that the maintenance and
support fees set forth on Exhibit D apply only with respect
to the support and maintenance of the Licensee Products listed on
Exhibit D . Licensee further acknowledges and agrees that if
Exhibit D is amended by the parties to add additional
Licensee Products, then additional maintenance and support fees
will apply with respect to such Licensee Products.
4.4 Reports . Licensee shall
keep adequate records to verify all reports and payments to be made
to Palm pursuant to this Agreement for a period of [*]
following the date of such reports and payments. Palm shall have
the right to select an independent certified public accountant
mutually agreeable to the parties to inspect no more frequently
than semiannually the records of Licensee on reasonable notice and
during regular business hours to verify the reports and payments
required hereunder. If such inspection should disclose any
underreporting. Licensee shall pay Palm such amount within
[*] of the conclusion of such inspection. The entire cost of
such inspection shall be borne by [*] ; provided, however,
that if Licensee is determined by such inspection to have underpaid
royalties by [*] or more, then the cost of such audit shall
be borne by [*] .
4.5 Forecasts . Beginning in
the first quarter that Licensee first commercially ships any
Licensee Product and quarterly thereafter during the term of this
Agreement, Licensee shall provide Palm with a [*] forecast
of sales for each Licensee Product at least [*] prior to the
end of each quarter.
Licensee shall use its reasonable commercial
efforts to make such forecasts accurate within a range of
[*] .
4.6 Product Specification .
Licensee shall promptly provide Palm with a written detailed
specification or product plan for each Licensee Product.
5. Payment Terms
5.1 Payment . Payments and
statements shall be sent to Palm according to the following
terms:
(a) Royalties shall accrue
[*] and shall be payable in United States Dollars within
[*] days after the end of each calendar quarter. Each
Royalty payment shall be accompanied by a
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statement of all [*] of Licensee Products
shipped during the relevant period for which a Royalty is due
signed by an authorized representative of Licensee. [*]
.
(b) All payments shall be
accompanied by a statement that shows a breakdown of the (i)
Maintenance and Support Fees, (ii) Royalties (including a
calculation of Net Revenues), (iii) number of [*] shipped of
each Licensee Product broken down by SKUs, and by geographical
regions separated by North America (excluding the United States),
United States, Central and South America, EMEA (Europe, Middle East
and Africa), Asia Pacific (excluding Japan) and Japan, and (iv) the
percentage of [*] sold through direct and indirect channels
during the relevant period for which a Royalty is due, signed by an
authorized representative of Licensee.
(c) All Royalties generated by
Licensee in the continents of North and South America and in Japan
shall be paid by Licensee to Palm, Inc. at the address set forth at
the beginning of this Agreement or such other address as Palm may
designate in writing; all Royalties generated by Licensee outside
the continents of North and South America and Japan shall be paid
by Licensee to Palm Ireland, if Palm so directs, in accordance with
Palm’s instructions. All Maintenance and Support Fees shall
be paid by Licensee to Palm, Inc.
5.2 Royalty-Free [*] of
Licensee Products . For each [*] period during the term
of this Agreement, Licensee shall have the right to manufacture and
distribute up to [*] in total of Licensee Products,
[*] , for the following purposes without incurring a Royalty
obligation to Palm: (a) [*] for testing; (b) [*] with
limited functionality for reseller point of purchase and
demonstration; (c) [*] provided to Palm or other Palm
licensees, (d) [*] used internally by employees or
contractors of Licensee; and (e) [*] given to press and
analysts.
5.3 Taxes .
(a) In addition to any other
payments due under this Agreement, [*] sales, use, excise,
import or export, value added or similar tax or duty, any other tax
not based on Palm’s net income, and any governmental permit
and license fees, customs fees and similar fees levied upon
delivery of the deliverables and/or services hereunder which Palm
may incur in respect of this Agreement.
(b) If applicable law requires
Licensee to withhold any income taxes levied on payments to be made
pursuant to this Agreement (“ Withholding Tax
”), Licensee shall take advantage of the reduced Withholding
Tax provided for by the applicable tax treaty then in force and
shall be entitled to deduct such Withholding Tax from the payments
due to Palm hereunder. Licensee shall promptly effect payment of
the Withholding Tax to the appropriate tax authorities and shall
transmit to Palm within [*] business days of such payment
official tax receipts or other evidence issued by the appropriate
tax authorities sufficient to enable Palm to support a claim for
income tax credits in the United States. Licensee further agrees to
assist Palm, upon request, if Palm contests, by appropriate legal
or administrative proceedings, the validity or amount of the
Withholding Tax. In the event Palm does not receive official tax
receipts or such other evidence within [*] of payment, Palm
shall have the right to invoice Licensee for, and Licensee shall
promptly pay, such Withholding Tax.
6. Update, Upgrades, New
Versions, Additional Components and APIs
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6.1 Updates, Upgrades and New
Versions . Provided that Licensee has paid Palm the Maintenance
and Support Fees, during the term of this Agreement Palm shall
deliver to Licensee: (a) all Updates, Upgrades and New Versions to
the Palm OS Software within [*] after Palm’s
production releases thereof; and (b) all Updates and Upgrades to
the Palm Software, other than to the Palm OS Software, and Palm
Materials within [*] after Palm’s production releases
thereof. Upon delivery of such Updates, Upgrades and New Versions
to Licensee, the licenses granted to Licensee pursuant to Section 2
above shall be deemed to include such Updates, Upgrades and New
Versions.
6.2 Enhancements and Additional
Components . Licensee acknowledges that during the term of this
Agreement, in addition to Updates, Upgrades and New Versions, Palm
expects to release separate modules and additional components
designed for use with the Palm Software, but which are not included
in the Palm Software, for which Palm may elect to require that
licensees (including Licensee) pay separate consideration and enter
into separate agreements or amendments in order to have any rights
to such modules or components.
6.3 APIs . The parties
acknowledge and agree that the purpose of this Section 6.3 is to
promote and encourage standardized APIs for the Palm Software in
order to (i) assist the developer community by reducing the time,
effort and cost involved in developing applications compatible with
products incorporating the Palm Software, (ii) provide a rich suite
of interoperable applications to the end user community, and (iii)
provide data compatibility between products incorporating the Palm
Software.
(a) Notification . Licensee
will notify Palm within [*] of committing engineering or
other resources to researching and/or developing an API, setting
forth the general nature of the proposed API, including area of
functionality.
(b) Technical
Briefing/Collaboration . The parties agree to promptly meet to
discuss in detail the function and general manner of operation of
such proposed API, and any substantially similar API that Palm may
be researching and/or developing in the same area of functionality,
if any. The parties agree to cooperate in good faith to release a
uniform API, either by way Palm developing such API and including
it in the Palm Software, or licensing such API from, or
co-developing the API with, Licensee on terms to be agreed upon by
the parties, including, without limitation, the parties respective
intellectual property rights in such APIs and responsibilities for
costs, support and maintenance. Notwithstanding the foregoing,
Licensee shall not be required to obtain Palm’s approval
prior to the release of any new API, subject to Section 2.3
(Compatibility and Trademark License) above.
(c) Support of Palm API . If
Licensee releases an API and Palm later releases an API in the same
functional area, Licensee shall support Palm’s API in any
Licensee Product developed after the date Palm released its API,
provided that such Licensee Product receives Compatibility
Certification pursuant to Section 2.3 (Compatibility and Trademark
License) above.
(d) Expanded Screen APIs .
Licensee agrees that in the event Licensee develops APIs for the
expanded screen size of its Licensee Products (the “
Screen APIs ”), Licensee (i) shall not publish the
Screen APIs to public forums, (ii) shall not evangelize the Screen
APIs to the Palm OS platform developer community, and (iii) shall
seek Palm’s prior approval of any public statements made by
Licensee with respect to the Screen APIs.
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7. Support
Palm shall provide Licensee with the
following support during; the term of this Agreement in accordance
with the Palm support terms set forth in Exhibit E (Palm
Support Services), provided that Licensee provides Palm with enough
information to profile the reported error.
7.1 Development Support .
Palm will provide Licensee with a reasonable level of support by
telephone, e-mail, fax or, if mutually agreed by the parties, in
person at Palm’s Santa Clara, California site, during
Palm’s normal business hours (8:00 a.m.—5:00 p.m.
California time, Monday through Friday, excluding holidays) in
connection with Licensee’s use of the Palm Software to
develop and support the Licensee Products, including the use of
reasonable commercial efforts: (i) to answer Licensee’s
questions regarding the proper utilization and optimization of the
Palm Software; and (ii) to provide solutions, workarounds and/or
patches to correct any reproducible error in the Palm Software.
Licensee shall designate up to two qualified individuals to act as
primary technical liaisons for communications with Palm’s
technical support staff. Palm shall designate two qualified
individuals to act as primary and secondary technical liaisons for
communications with Licensee’s technical support
staff.
7.2 Customer Support .
Licensee shall be solely responsible for First Level Support and
Second Level Support of the Licensee Products, provided that Palm
may elect, in its sole discretion, to provide any such support to
the extent that Licensee fails to do so and Palm notifies Licensee
in writing of its election to do so. The parties agree to work
together to develop and facilitate the call handling processes to
provide seamless customer support and technical service to
resellers and end users of the Licensee Product. In addition, Palm
will provide Licensee with Third Level Support during the term of
this Agreement. The definitions of First, Second and Third Level
Support shall be as set forth in Section 7.3 below. During the term
of this Agreement, Palm shall permit Licensee to create hyperlinks
to the Palm website and to display certain Palm end user materials
on Licensee’s website for customer support purposes, subject
to Palm’s prior approval of each proposed use.
7.3 Technical Support
.
(a) Technical Support Levels
. For the purposes of Section 7.2 above, “Level” means
a certain class of service provided for the Licensee Products.
Definitions are as follows:
(i) “ First Level
Support ” means first call support on all customer calls;
technical support staff answers technical inquiries regarding
Licensee Products, performs Licensee Product configuration support,
if applicable, and provides broad troubleshooting
expertise.
(ii) “
