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SOFTWARE DISTRIBUTION AGREEMENT

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Source: http://www.sec.gov/Archives/edgar/data/1282724/000093639204000394/a97792orexv10w7.txt

EX-10.7

a97792orexv10w7.txt

EXHIBIT 10.7

Exhibit 10.7

*** 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.

SOFTWARE DISTRIBUTION AGREEMENT

This Software Distribution Agreement ("Agreement"), effective as of the

17th day of March, 2003 (the "Effective Date"), is entered into by and between

Lindows, Inc., a Delaware corporation ("Supplier"), and Livin' On The Edge, Co.,

Ltd., a Japanese corporation ("Distributor").

RECITALS

A. Distributor is in the business of licensing and distributing software

products in Japan, and desires to distribute Supplier's Product (as defined

below) in Japan.

B. Supplier is in the business of developing and licensing software

products and services, and desires to authorize Distributor to distribute the

Product (as defined below) in Japan. The parties agree as follows:

1. DEFINITIONS

(a) "Customer" shall mean an end-user who purchases the Product

within the Territory.

(b) "Documentation" shall mean the end-user manuals relating to

the Software and services and related materials provided by Supplier to

Distributor hereunder.

Documentation listed on Exhibit "A" attached hereto, including any

modifications, improvements, alterations, translations, localizations,

innovations, or changes of any kind performed on the Software or Documentation

by Distributor or agents, sub-licensees, contractors, or employees of

Distributor.

(d) "Release Date" shall mean the earlier of (1) the actual date

on which Distributor first releases the Localized Product for sale, or (2) 60

days after the Effective Date.

(e) "Software" shall mean the computer program(s) listed in

Exhibit A in machine executable object code format.

(f) "Territory" shall mean the Nation of Japan.

(g) "Updates" shall mean versions of the Software, including

version patches, subsequently released to the public for the purpose of

correcting errors and fixing software bugs that Supplier generally makes

available to its customers free of charge. "Updates" does not include subsequent

versions of the Software that contain new features or functionality, or which

are considered a new software product.

2. APPOINTMENT

Supplier hereby appoints Distributor, and Distributor hereby accepts

the appointment, as Supplier's [***] distributor [***] to distribute the Product

to Customers in the Territory. The period of this grant shall begin on the

Release Date and shall continue for [***] or until the termination of this

Agreement. This grant shall include the following permitted uses:

(a) Copying the Software from the Golden Master into copies of CD

Rom disks and repackaging such Software for distribution for retail sale within

the Territory.

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(b) Distribution of the Product through retail locations within

the Territory or via electronic transfer through servers controlled and

maintained by Supplier, through an Internet domain address jointly chosen by

Distributor and Supplier.

into appropriate Japanese language. Supplier reserves the sole and exclusive

right to terminate this Agreement in the event that the Product, as translated

and localized by the Distributor, does not satisfy Supplier's reasonable

requirements. Provided, however, that Supplier shall provide reasonable notice

to Distributor with regard to this subsection and Distributor shall have ten

(10) days to respond to such notice. Distributor shall have forty-five (45) days

after responding to the notice to satisfy such requirement(s).

(d) Authorizing dealers to distribute the Product on behalf of

Distributor, provided said dealers distribute the Product consistent with the

limitations, terms, and conditions contained herein.

(e) Sublicensing the Product to Customers pursuant to an end user

license agreement (the "End User Agreement") with terms consistent with the

terms set forth in Exhibit "B" attached hereto.

(f) Using the Product for the purpose of providing customer

support services, demonstrations and marketing purposes.

3. OBLIGATIONS OF DISTRIBUTOR

(a) Diligence. Distributor shall use commercially reasonable

efforts to promote the marketing and distribution of the Product to realize the

maximum sales potential for the Product in the Territory. Except as expressly

set forth herein, Distributor shall be solely responsible for all costs and

expenses related to the advertising, marketing, promotion, and distribution of

the Product and for performing its obligations hereunder.

(b) Repackaging. Any retail repackaging of the Product must be

approved by Supplier before the distribution of the Product in the Territory,

provided, however, that such approval shall not be unreasonably withheld.

localize the Product into the Japanese language, provided, however, that

Supplier retains all ownership rights in and to such translated/localized

versions of the Product (the "Localized Product"), subject to the termination

provisions set forth in Section 2(c), above. Distributor shall provide a copy of

any and all publicly released versions of the Product containing such

translations/localizations within five (5) days of the Release Date.

(d) Product Support.

(i) Distributor shall provide reasonable technical

support to Customers, including without limitation (x) maintaining trained and

competent technical and engineering support personnel for the Product who are

sufficiently knowledgeable with respect to the Product to answer Customer

questions regarding the use and operation of Product, (y) responding promptly to

requests for technical support from Customers, and (z) providing technical

support services to address and resolve Customers' support requests with respect

to the Product.

(ii) Distributor shall ensure that all Customer questions

regarding the use or operation of Product are initially addressed to and

answered by Distributor. Unless otherwise agreed in

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writing by Supplier, Distributor shall not represent to any third party that

Supplier is available to answer questions from any Customer directly.

(e) End User License. Prior to providing any Customer with any

Software, Distributor shall ensure that each Customer has read and agreed to the

terms and conditions of the End User Agreement contained in each Software unit .

Distributor shall not conduct, support, or permit, and shall not authorize any

third party to conduct, support, or permit, the copying, modification,

alteration, reverse engineering, disassembly or decompiling of the Product.

4. OBLIGATIONS OF SUPPLIER

(a) Product Support and Training. Supplier shall provide

Distributor with engineering and technical support for the Product, including

providing corrections or workarounds to correct defects, bugs, or errors in the

Product. In the event a critical defect is discovered, Supplier agrees to use

best efforts to correct the defect and provide such correction within fifteen

(15) calendar days after notice thereof. A critical defect is generally defined

as one which causes the Product not to function for which there is no known

workaround. Supplier shall maintain a telephone number and technicians to

receive calls from Distributor's technical staff for so long as Supplier has

technicians responding to product support calls, currently 8 a.m. to 6 p.m.

Pacific Standard Time (USA). Supplier shall also provide Distributor with a

pager number pursuant to which Supplier's technician shall respond within four

(4) hours to any page received from Distributor, twenty-four (24) hours a day

seven (7) days a week concerning problems and questions. Supplier shall respond

to email questions regarding product support and training sent by Distributor

within twenty-four (24) hours. Supplier shall also provide training with respect

to the use, reproduction, installation and distribution of the Software as

contemplated under the Agreement.

(b) E-commerce transaction services and infrastructure. Supplier

shall provide Distributor with such e-commerce transaction services and

infrastructure necessary for the sale of the Product through any Internet web

site through which the parties agree to distribute the Product.

reasonable marketing support, including providing reasonable quantities of

Supplier's advertising and promotional materials, pricing information and

technical data related to the Product. Supplier may also from time to time

provide, at Supplier's sole discretion, monetary support for certain marketing

and promotional activities involving the Product, such as exhibitions,

conventions, trade shows and advertisements.

(d) Japanese Language Click-N-Run Warehouse Aisle. Within thirty

(30) days of the Effective Date of this Agreement, Supplier shall establish and

maintain an aisle within the Click-N-Run Warehouse containing references to

software applications which may be of interest to Japanese-speaking end-users.

Supplier exercises its sole and absolute discretion as to which software

application titles to place within the Japanese language aisle.

(e) Software and Click-N-Run Memberships. Within fifteen (15) days

of the Effective Date of this Agreement, Supplier shall provide the following to

Distributor: (x) a golden master for the LindowsOS ;(y) a golden master for the

Click-N-Run Express; (z) the Click-N-Run Membership identification numbers for

the Click-N-Run Warehouse in the amount consistent with the number of

memberships ordered by Distributor as described in Section 6(a). In the event

that Distributor purchases additional memberships, or makes additional payment

pursuant to Section 6(a) below, Supplier shall provide the membership

identification numbers within ten (10) days of receipt of Distributor's payment

for such memberships.

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(f) Software Updates. Supplier shall make available to Distributor

for distribution any Updates to the Software within ten (10) days after release

to the public. Supplier shall deliver a golden master for each Update to

Distributor.

(g) Post-termination Obligations. After the termination of this

Agreement, Supplier shall continue to provide Distributor with engineering and

technical support pursuant to Section 4(a) [***]. After the termination of this

Agreement, Supplier shall continue to provide warranty coverage to Customers of

the Product up to the expiration of the Customers' warranty period. Supplier

shall further continue to provide Click-N-Warehouse membership privileges for

Customers up to the expiration of such membership privileges.

5. PRICE/PRICE CHANGE

(a) Price. Distributor shall pay Supplier [***]. Distributor shall

maintain records of any and all Customer returns, including the name, address,

telephone number, and e-mail address of the Customer returning the Product, the

date of the return and reason for the return. Distributor shall maintain such

records for a period of one (1) year after termination of this agreement and

shall permit inspection and copying of such records by Supplier upon ten (10)

days notice by Supplier.

(b) [***]

membership or membership renewal sold by Distributor through the e-commerce

infrastructure provided for in Section 4(b), Supplier shall pay Distributor, in

regular monthly intervals, [***]. All Click-N-Run membership renewals or

stand-alone memberships sold pursuant to this Agreement [***].

(d) Price Decreases. The parties may negotiate in good faith a

discount to the Price in order to allow Distributor to be competitive in

obtaining certain distribution accounts, such as accounts with OEMs.

(e) Taxes. Prices do not include any Japanese taxes, including

franchise, sales and use taxes, if any. Distributor shall be solely responsible

for payment of any and all such taxes or obligations, including any fines,

penalties, or interest relating thereto.

6. [***]

(a) [***]

(b) [***]

7. PAYMENT TERMS

(a) Payment Terms. All payments shall be in U.S. Dollars via

certified check or electronic wire transfer and shall be submitted together with

an accounting statement indicating all sales of the Product for such period.

Provided, however, that all payments made by Supplier to Distributor pursuant to

sales processed by Supplier under Section 7(b) shall be made in Japanese yen.

(b) Payments for Sales Processed by Supplier. For all retail sales

occurring through the e-commerce infrastructure provided by Supplier and

discussed in Section 4(b), Customers shall make

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payments directly to Supplier or Supplier's agent designated to process such

ecommerce transactions. Supplier shall provide Distributor an accounting of and

reimbursement for all such sales as follows:

(i) [***]

(ii) [***]

(iii) [***]

the Product to Customers, retail outlets, OEMs, or otherwise, which occur

outside of the e-commerce infrastructure provided for in Section 4(b), above,

payments shall be made to Distributor. [***] Distributor shall provide Supplier

an accounting of all such sales at regular monthly intervals.

(d) Notices. Distributor shall maintain an accounting and all

records of sales of the Product and [***]

(e) OEM Distribution. The parties are currently negotiating an

agreement pursuant to which Supplier shall grant Distributor the right to

distribute the Product to OEMs. In the event that the Parties execute such an

agreement for OEM distribution, all units sold pursuant to such agreement shall

be included in the minimum product purchase amounts set forth in Section 6(a).

(f) Books and Records; Audit. Both parties shall maintain complete

books, records and accounts relevant to computation and accounting for amounts

payable under this Agreement. Each party agrees to allow an independent

certified public accountant the right to audit and examine such books, records

and accounts during normal business hours no more than once per year upon ten

(10) days notice at such examining party's expense, to verify the accuracy of

the reports and payments made under this Section 7.

8. LIMITED WARRANTY

(a) Limited Warranty. Subject to the provisions of this Section 8

below, Supplier warrants that for a period of sixty (60) days ("Warranty

Period") the Software will conform to the specifications set forth in the

Documentation, manuals and any relevant data sheet or promotional literature

provided by Supplier. In the event that the Software fails to conform to such

specifications during the Warranty Period, Supplier shall use best efforts to

repair and correct such errors so that the Software conforms to such

specifications.

(b) Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN

SECTION 8(a) ABOVE, SUPPLIER MAKES NO WARRANTIES OR CONDITIONS, EXPRESS,

STATUTORY, IMPLIED, OR OTHERWISE, AND SUPPLIER SPECIFICALLY DISCLAIMS THE

IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A

PARTICULAR PURPOSE. NOTWITHSTANDING THE FOREGOING, SUPPLIER DOES NOT EXCLUDE

LIABILITY TO THE EXTENT THAT SUCH LIABILITY MAY NOT BE EXCLUDED OR LIMITED BY

LAW.

applicable law, Distributor shall not grant to its Customers a warranty of

greater scope or protection than the warranty (including the limited remedy,

exclusions, and limitation of liability) set forth in this Section 8 and Section

13 below.

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(d) Customer Claims. Distributor shall ensure that all Customer

claims for warranty, repair, or replacement are addressed to Distributor and not

to Supplier.

9. TERM AND TERMINATION

(a) Term. This Agreement shall commence upon the Effective Date

and continue in full force and effect for a fixed term of [***], unless earlier

terminated in accordance with the provisions of this Agreement and [***]. If a

party is in material breach of this Agreement and has failed to cure such

material breach within thirty (30) days after receiving written notice from the

other party of such material breach, the party not in breach may terminate this

Agreement. Distributor may also terminate this Agreement in accordance with

Section 11(c). Without limiting the foregoing, either party may terminate this

Agreement effective upon written notice to the other party stating such party's

intention to terminate, in the event the other party:

(i) ceases to function as a going concern or to conduct

operations in the normal course of business;

(ii) has a petition filed by or against it under any

bankruptcy or insolvency law which petition has not been dismissed or set aside

within sixty (60) days of its filing; or

(iii) fails to perform any of its obligations under this

Agreement so as to be in default hereunder and fails to cure such default within

thirty (30) days after written notice of such default.

(b) Customer Support. Distributor may continue to use the Product

after termination of this Agreement to provide customer support services set

forth in Section 3(d).

law, in the event of termination of this Agreement by either party in accordance

with any of the provisions of this Agreement, neither party shall be liable to

the other, because of such termination, for compensation, reimbursement or

damages on account of the loss of prospective profits or anticipated sales or on

account of expenditures, inventory, investments, leases or commitments in

connection with the business or goodwill of Supplier or Distributor. Termination

shall not, however, relieve either party of obligations incurred prior to the

termination.

(d) Survival. Distributor may sell Product existing in its

inventory as of the effective date of termination of this Agreement for a period

of ninety (90) days after the effective date of such termination ("Wind-Down

Period"). During the Wind-Down Period, the provisions of Sections 7 and 10 shall

survive. In addition to the provisions set forth in this Section 9(d), the

following provisions shall survive expiration or any termination of this

Agreement: Sections 4(g), 8, 9(b)-(e), 10, 11, 13, 15 and the last sentence in

Section 12(b).

(e) Return of Materials. All Product, trademarks, marks, trade

names, patents, copyrights, designs, drawings, formulas or other data,

photographs, samples, literature, and sales and promotional aids of every kind

shall remain the property of Supplier. Within thirty (30) days after the

effective date of termination of this Agreement, Distributor shall at Supplier's

option destroy all tangible items bearing, containing, or contained in, any of

the foregoing, in its possession or control and provide written certification of

such destruction, or prepare such tangible items for shipment to Supplier or

Supplier's designee, as Supplier may direct, at Supplier's expense. Distributor

shall not make or retain any copies of any Confidential Information (as defined

in Section 10, below) which may have been entrusted to it.

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10. CONFIDENTIALITY AND PROPRIETARY RIGHTS

(a) Confidential Information. The term "Confidential Information"

means any information disclosed by one party to the other pursuant to this

Agreement that is in written, graphic, machine readable or other tangible form

and is marked "Confidential", "Proprietary" or in some other manner to indicate

its confidential nature. Confidential Information may also include oral

information disclosed by one party to the other pursuant to this Agreement,

provided that such information is designated as confidential at the time of

disclosure and is reduced to writing by the disclosing party within a reasonable

time (not to exceed 30 days) after its oral disclosure, and such writing is

marked in a manner to indicate its confidential nature and delivered to the

receiving party.

(b) Confidentiality. Each party shall treat as confidential all

Confidential Information of the other party, shall not use such Confidential

Information except to exercise its rights and perform its obligations under this

Agreement herein, and shall not disclose such Confidential Information to any

third party. Without limiting the foregoing, each of the parties shall use at

least the same degree of care it uses to prevent the disclosure of its own

confidential information of like importance, to prevent the disclosure of

Confidential Information of the other party. Each party shall promptly notify

the other party of any actual or suspected misuse or unauthorized disclosure of

the other party's Confidential Information.

that: (i) was in the public domain at the time it was disclosed or has become in

the public domain through no fault of the receiving party; (ii) was known to the

receiving party, without restriction, at the time of disclosure, as demonstrated

by files in existence at the time of disclosure; (iii) is disclosed with the

prior written approval of the disclosing party; (iv) was independently developed

by the receiving party without any use of the Confidential Information; (v)

becomes known to the receiving party, without restriction, from a source other

than the disclosing party, without breach of this Agreement, by the receiving

party; or (vi) is disclosed generally to third parties by the disclosing party

without restrictions similar to those contained in this Agreement. The receiving

party may disclose the other party's Confidential Information to the extent such

disclosure is required by order or requirement of a court, administrative

agency, or other governmental body, but only if the receiving party provides

prompt notice thereof to the disclosing party to enable the disclosing party to

seek a protective order or otherwise prevent or restrict such disclosure.

(d) Proprietary Rights. Distributor agrees that Supplier retains

all of its right, title and interest in and to all patent rights, trademarks,

trade names, inventions, copyrights, know-how and trade secrets relating to the

Product, including modifications, translations, and/or localizations of the

Product performed by Distributor, or the product lines that include the Product,

and the design, manufacture, operation or service of the Product. To the extent

that the Product contains or incorporates intellectual property of parties other

than Supplier, Distributor agrees to respect such third party rights and abide

by any terms and conditions contingent upon grant and use of such rights, and

that such third parties retain any such rights, if applicable. The use by

Distributor of any of these property rights is authorized only for the purposes

herein set forth and upon termination of this Agreement for any reason such

authorization will cease, subject to Section 9(d). Distributor shall not (and

shall require that its Customers do not) remove, alter, cover or obfuscate any

Supplier on or in any Product.

11. PATENT/COPYRIGHT/TRADEMARK WARRANTY AND INDEMNIFICATION

(a) Indemnity. Supplier represents and warrants that the Product

or any part thereof, and any of its patents, copyrights, trademarks, trade

secrets or other proprietary rights related thereto, do not violate or infringe

any patent, copyright, trademark, trade secret or other proprietary right of any

third party. Supplier shall defend and hold Distributor harmless against any

loss, liability or expense

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(including reasonable attorney's fees) paid to third parties arising from any

action, proceeding or claim brought or threatened against Distributor alleging

that the Product infringes any third party's patent, copyright, trademark

(provided Distributor adheres to the Branding Guidelines provided by Supplier),

trade secret or other intellectual property right (an "Action"). Supplier will

have sole control of any such Action or settlement negotiations, and Supplier

agrees to pay, subject to the limitations hereinafter set forth, any final

judgment entered against Distributor on such issue in any such Action defended

by Supplier. Distributor shall notify Supplier promptly in writing of such

Action, give Supplier authority to proceed as contemplated herein, and give

Supplier proper and full information and assistance to settle and/or defend any

such Action. If it is adjudicatively determined, or if Supplier believes, that

the Product, or any part thereof, infringe any patent, copyright or trademark

(provided Distributor adheres to the Branding Guidelines provided by Supplier),

or if the sale or use of the Product, or any part thereof, is, as a result,

enjoined, then Supplier may, at its election, option, and expense: (i) procure

for Distributor the right under such patent, copyright or trademark to sell or

use, as appropriate, the Product or such part thereof; (ii) modify the Product

or part thereof; or (iii) cease distribution of the Product, or part thereof,

and refund any payments (including any minimum product purchases under Section

6) paid by Distributor for such Product.

(b) Modifications to Branding Guidelines. Supplier reserves the

right to modify the Branding guidelines from time to time, and shall give

Distributor notice of any such modifications. Within thirty (30) days of receipt

of notice of any modifications to the Branding guidelines, Distributor shall act

to assure that all Product, Product marketing materials or other promotional

matter complies with the Branding Guidelines. If at any time Distributor fails

to follow the Branding Guidelines, Lindows.com shall be relieved of any

obligation set forth in Section 10 relating to or resulting from such failure.

11(a), in the event that any trademark or service mark containing the terms

"Lindows" or "LindowsOS" are held by a court to infringe upon the trademark or

service mark of a third party, the use of such trademarks or service marks are

enjoined by a court, or Supplier changes such trademarks or service marks in

connection with a third party infringement action, claim or dispute, Distributor

shall have the option to immediately terminate this Agreement and Supplier shall

(i) indemnify Distributor for all liability and costs in connection with such

infringement (including damages and reasonable attorneys fees) and (ii) shall

also remunerate Distributor for the difference between the amount of any advance

payments paid to Supplier under Section 6 and the amount of payments received

from Customers for Product purchased from Supplier by Distributor pursuant to

such advance payments.

12. USE OF TRADEMARKS/TRADE NAMES

(a) Trademarks. During the term of this Agreement, Distributor

shall have the right to indicate to the public that it is an authorized

distributor of Supplier's Product and to advertise such Product under the

trademarks, marks, and trade names of Supplier and in the promotion and

distribution of the Product; provided, however, that upon thirty (30) days prior

written notice to Distributor, Supplier may substitute alternative marks for any

or all of such Supplier's trademarks used by Distributor. All representations of

Supplier's trademarks that Distributor intends to use shall first be submitted

to Supplier for approval (which shall not be unreasonably withheld) of design,

color and other details or shall be exact copies of those used by Supplier. In

addition, Distributor shall fully comply with all reasonable guidelines, if any,

communicated by Supplier concerning the use of Supplier's trademarks.

(b) Use. Distributor shall not alter or remove any of Supplier's

trademarks affixed to the Product by Supplier. Except as set forth in this

Section 12, nothing contained in this Agreement shall grant or shall be deemed

to grant to Distributor any right, title or interest in or to Supplier's

trademarks. All uses of Supplier's trademarks will inure solely to Supplier and

Distributor shall obtain no rights with

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respect to any of Supplier's trademarks, other than the right to distribute

Product as set forth herein, and Distributor irrevocably assigns to Supplier all

such right, title and interest, if any, in any of Supplier's trademarks. At no

time during or after the term of this Agreement shall Distributor challenge or

assist others to challenge Supplier's trademarks (except to the extent expressly

prohibited by applicable law) or the registration thereof or attempt to register

any trademarks, marks or trade names confusingly similar to those of Supplier.

Upon termination of this Agreement, Distributor shall immediately cease to use

all Supplier's trademarks (other than for any remaining inventory to be sold

during the "Wind Down Period").

13. LIMITATION OF LIABILITY

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOST PROFITS, COST OF

PROCUREMENT OF SUBSTITUTE GOODS, OR ANY OTHER SPECIAL, RELIANCE, INCIDENTAL, OR

CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY WHETHER

BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE. THE FOREGOING

LIMITATIONS SHALL APPLY REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE

POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE

OF ANY LIMITED REMEDY STATED HEREIN. NEITHER PARTY'S LIABILITY ARISING OUT OF OR

RELATING TO THIS AGREEMENT SHALL EXCEED THE AGGREGATE AMOUNTS PAID BY

DISTRIBUTOR TO SUPPLIER HEREUNDER. NOTWITHSTANDING THE FOREGOING, THIS SECTION

13 SHALL NOT BE APPLICABLE WITH REGARD TO ANY BREACH OR LIABILITY UNDER SECTIONS

10 AND 11.

14. COMPLIANCE WITH LAWS

(a) Export Control. Distributor understands and acknowledges that

Supplier is subject to regulation by agencies of the United States Government,

including, but not limited to, the U.S. Department of Commerce, which prohibit

export or diversion of certain Product and technology to certain countries. Any

and all obligations of Supplier to provide the Product, as well as any other

technical information or assistance shall be subject in all respects to such

United States laws and regulations as shall from time to time govern the license

and delivery of technology and Product abroad by persons subject to the

jurisdiction of the United States, including the Export Administration Act of

1979, as amended, any successor legislation, and the Export Administration

Regulations issued by the Department of Commerce, Bureau of Export

Administration. Distributor agrees to cooperate with Supplier including without

limitation, providing required documentation, in order to obtain export licenses

or exemptions therefrom. Distributor warrants that it will comply with the

Export Administration Regulations and other United States laws and regulations

governing exports in effect from time to time. Distributor further agrees not to

resell Product to any organization, public or private, which engages in the

research or production of military devices, armaments, or any instruments of

warfare, including biological, chemical and nuclear warfare.

(b) Governmental Approvals. Distributor represents and warrants

that it has obtained all required approvals of the government within the

Territory in connection with this Agreement and that the provisions of this

Agreement and the rights and obligations of the parties hereunder, are

enforceable under the laws within the Territory. Supplier represents and

warrants that it has obtained all required approvals of the United States

government in connection with this Agreement and that the provisions of this

Agreement and the rights and obligations of the parties hereunder, are

enforceable under the laws of the United States of America.

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15. MISCELLANEOUS PROVISIONS

(a) Independent Contractors. The relationship of Supplier and

Distributor established by this Agreement is that of independent contractors,

and neither party is an employee, agent, partner or joint venturer of the other.

(b) Assignment. This Agreement will be binding upon and inure to

the benefit of the parties hereto and their respective successors and assigns;

provided, however, that neither party shall assign any of its rights,

obligations, or privileges (by operation of law or otherwise) hereunder without

the prior written consent of the other party.

liable under Section 8 and infringement claims covered by Section 11,

Distributor agrees to indemnify and hold Supplier harmless against any cost,

loss, liability or expense (including attorneys' fees) arising out of third

party claims against Supplier relating to Distributor's use and distribution of

the Product.

(d) No Implied Waivers. The failure of either party at any time to

require performance by the other of any provision hereof shall not affect the

right of such party to require performance at any time thereafter, nor shall the

waiver of either party of a breach of any provision hereof be taken or held to

be a waiver of a provision itself.

(e) Severability. If any provision of this Agreement is held to be

invalid by a court of competent jurisdiction, then the remaining provisions will

nevertheless remain in full force and effect. The parties agree to renegotiate

in good faith those provisions so held to be invalid to be valid, enforceable

provisions which provisions shall reflect as closely as possible the original

intent of the parties, and further agree to be bound by the mutually agreed

substitute provision.

(f) Force Majeure. Except for payment of monies, neither party

shall be liable for failure to fulfill its obligations under this Agreement or

for delays in delivery due to causes beyond its reasonable control, including,

but not limited to, acts of God, acts of terror, man-made or natural disasters,

earthquakes, fire, riots, flood, material shortages, strikes, delays in

transportation or inability to obtain labor or materials through its regular

sources. The time for performance of any such obligation shall be extended for

the time period lost by reason of the delay.

(g) Conflicting Terms. The parties agree that the terms and

conditions of this Agreement shall prevail, notwithstanding contrary or

additional terms, in any purchase order, sales acknowledgment, confirmation or

any other document issued by either party effecting the purchase and/or sale of

Product.

(h) Headings. Headings of Sections herein are inserted for

convenience of reference only and shall not affect the construction or

interpretation of this Agreement.

(i) Notice. Any notice required or permitted to be given under

this Agreement shall be delivered (i) by hand, (ii) by registered or certified

mail, postage prepaid, return receipt requested, to the address of the other

party first set forth above, or to such other address as a party may designate

by written notice in accordance with this Section 15(i), (iii) by overnight

courier, (iv) by email to an officer of such party or (v) by fax with confirming

letter mailed under the conditions described in (ii) above. Notice so given

shall be deemed effective when received, or if not received by reason of fault

of addressee, when delivered.

(j) Entire Agreement. This Agreement contains the entire

understanding of the parties with respect to the subject matter hereof and

supersedes all prior agreements relating thereto, written or oral,

Page 10

between the parties. Amendments to this Agreement must be in writing, signed by

the duly authorized officers of the parties. This Agreement may be executed in

counterparts and delivered by facsimile, all of which shall together be

effective as a single original.

(k) Governing Law. This Agreement shall be governed by and

construed under the laws of the State of California, United States of America,

without regard to conflict of laws principles or the U.N. Convention on

Contracts for the International Sale of Goods. The parties consent to the

jurisdiction of the United States District Court for the Southern District of

California for purposes of any disputes arising out the their relationship.

IN WITNESS WHEREOF, the parties hereto have duly executed this

Agreement effective as of the Effective Date.

SUPPLIER: DISTRIBUTOR:

LINDOWS.COM, INC. LIVIN' ON THE EDGE, CO., LTD.

By: /s/ Kevin Carmony By: /s/ Takafumi Horie

------------------------------ ---------------------------------

Name: Kevin Carmony Name: Takafumi Horie

----------------------------

Title: President and COO Title: President and CEO

---------------------------

Page 11

EXHIBIT A

SOFTWARE

LindowsOS Version 3.0 Membership Edition (both English and Japanese versions)

(Object Code) and any new versions including versions that contain new features

or functionality.

Click-N-Run Installation with pre-determined software applications (Object Code)

MEMBERSHIP SERVICES

[***] membership to "Click-N-Run" Warehouse, a service provided by Lindows.com

enabling users of LindowsOS to access and install software applications provided

by parties other than Provider, valued at [***]. Membership to "Click-N-Run"

Warehouse does not include the cost, if any, of the software which may be

charged for the software provided by such third parties.

DOCUMENTATION

Page A-1

Agreement Categories

Real Estate Agreements

Software & IT Agreements

Business Agreements

Corporate

Employment & HR

Energy Agreements

Family, Marital, Non-Marital & Children

Intellectual Property

Loan Finance & Insurance

Service Agreements

SOFTWARE DISTRIBUTION AGREEMENT