DISTRIBUTION AGREEMENT Exhibit 10.18
This Distribution Agreement (the "Agreement") is entered into as of October 1,
2000 and made between AVANT! JAPAN CORPORATION (the "Company"), with its
principal place of business at Nittochi Shin-yurigaoka Building, ▇▇, ▇-▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇, ▇▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇, and MAINGATE
ELECTRONICS INC. (the "Distributor"), with its principal place of business at
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇/▇, ▇-▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇▇▇▇-▇▇▇, Kanagawa
222-0033, Japan.
RECITALS:
A. The Company has obtained an exclusive right to distribute certain Avant!
software-based electronic design automation products, including
documentation and manuals therefor.
B. The Company wishes to appoint the Distributor as a sub-distributor and the
Distributor wishes to acquire from the Company the right to distribute,
market and support such products in the Territory (as defined below).
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS
In this Agreement, the following terms shall have the following meanings:
"CONFIDENTIAL INFORMATION" includes information which the Company has
maintained as confidential and revealed to the Distributor by clearly
indicating the Company name and "Confidential" or similar proprietary
marking and which may or may not be related to the Products including but
not limited to: technical information such as computer programs,
characterization, formulae, algorithms, process, performance, interface
information, proprietary command architecture, proprietary scheme
constructs, including commands, format, syntax and semantics, defects,
bugs, proprietary circuit behavior information, the Company supplied data,
circuit and logic elements and business information, including
confidential future product information, confidential basic concepts,
marketing and sales information, sales volume, pricing and accounting
information. Confidential Information shall also include oral information
disclosed by the Company to the Distributor pursuant to this Agreement,
provided such information is summarized in writing and is clearly marked
with the Company name and "Confidential" or similar proprietary marking
and delivered to the Distributor within thirty (30) days of disclosure.
Confidential Information does not include information which:
(i) has come into the public domain without breach of the confidence by
the Distributor or any other person, firm or entity;
(ii) is or becomes publicly known through no wrongful act of the party to
whom such information was disclosed;
(iii) is received by the Distributor from a third party without
restrictions on its use in favor of the Company;
(iv) is independently developed by the Distributor's employee, agent or
contractor without use of Confidential Information;
(v) is acknowledged in writing by the Company to be non-confidential; or
(vi) is required to be disclosed pursuant to any statutory requirement or
court order (except that the Distributor shall give the Company
prompt notice of such statutory requirement or court order such that
the Company may request protection therefrom);
"CUSTOMER" means a customer who has signed a Customer Agreement;
"CUSTOMER AGREEMENT" means the Customer Software and Service Agreement
provided by the Company from time to time;
"DOCUMENTATION" means the user guides, instruction manuals, tutorials,
on-screen user assistance available in the operation of the Software and
other documents whether in written or machine-readable form provided by
the Company from time to time for the Use of the Software;
"INTELLECTUAL PROPERTY RIGHTS" means all designs patents, copyrights,
inventions, enhancements, revisions, updates, adaptations, secret and
confidential information, know-how, technical data, trade secrets,
specifications, designs, whether or not in documentary form, functional
and detailed design specifications and all other intangible property
(whether or not in documentary form and whether or not registrable,
patentable, copyrightable for otherwise protectable under applicable laws)
relating to the Products;
"M&S SERVICES" means the maintenance and support services to be provided
by the Distributor pursuant to Clause 7 herein;
"MINIMUM PURCHASE COMMITMENT" means the value of minimum
[annual/quarterly] purchase commitment of Products and M&S Services as set
out in Exhibit A;
"MULTINATIONAL CUSTOMERS" shall mean customers who use the Products
concurrently both within and outside the Territory, including use of the
Products on a wide area network;
"NET REVENUE" means the gross fee for any Product and fees for any
purchased M&S Services, as set out in Exhibit B. The Net Revenue shall not
include any interest or finance charges;
"PRODUCTS" means the Software and Revisions together with the
corresponding Documentation as may be provided by the Company from time to
time;
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"RECOMMENDED PRICE LIST" means the list setting out the Recommended Price
for the Products and/or M&S Services to be charged by the Distributor to
the Customers;
"REVISIONS" means upgrades, error corrections and updates of the Software
made generally available to Customers of the Software;
"SOFTWARE" means the computer software programs as set out in Exhibit C in
object code only;
"SUPPLIER" means Avant! Corporation with its principal place of business
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ U.S.A., and its subsidiaries
and licensees;
"TERM" means the term as set out in clause 18;
"TERRITORY" means the territory as set out in Exhibit D;
"TRADE ▇▇▇▇" means any trade ▇▇▇▇, service ▇▇▇▇, trade name, symbols and
logos owned by the Supplier and authorized to be used by the Company;
"USE" means in relation to the Software and Revisions, its loading,
displaying, running, transmission or storage for the purpose of processing
the instructions contained in the Software and Revisions.
2. APPOINTMENT
2.1 Subject to the terms of this Agreement, the Company hereby grants to
the Distributor and the Distributor hereby accepts an exclusive
right for Products set out in Exhibit C to:
(i) market and distribute the Products to Customers solely for use
in the Territory;
(ii) install the Products for Customers; and
(iii) provide M&S Services to Customers.
No source code for the Software to be distributed by this Agreement
will be deemed as included by inference or otherwise.
2.2 Subject to applicable terms and conditions, including fees, to be
agreed on a case by case basis, the Company hereby grants and/or
shall use its reasonable commercial effort to procure any relevant
third party to grant, the Distributor a non-exclusive right outside
the Territory for the Term of this Agreement to distribute the
Products directly to Customers with prior approval by the Company.
For purpose of this Clause, Customers shall be Multinational
Customers of the Distributor.
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2.3 A Customer within the Territory, who desires to have the right to
use the input/output ("I/O") format files of the Products in order
to develop and distribute an interfacing product between the
Product(s) and third parties' software programs solely for use
within the Customer's internal design flow, may submit a request to
the Distributor. The Distributor will forward such request to the
Company. The Company has the sole discretion in deciding whether or
not to grant such right and terms and conditions attached to such
right if granted.
2.4 The Company reserves the right to change, modify or discontinue any
Product at any time provided that the Distributor is given ninety
(90) days prior written notice. Any Revisions, enhancement or
improvement of a Product that is generally made available by the
Supplier through the Company, that is substantially similar to such
Products and that is marketed under the same product number and
nomenclature as such Product shall be added to Exhibit C as a new
Product. The Company reserves the right to charge for Revisions. In
addition to the foregoing, any products developed by the Supplier
other than the substantially similar products referenced above,
shall be considered as a new product and the Company shall decide
whether the Distributor is authorized to distribute this new
product. The Distributor shall have the right and freedom to
distribute any non-competitive software products or services;
provided, however, that if any such new product is competitive with
any non-Company products that the Distributor is distributing, the
Distributor shall have thirty (30) days to decide whether to
distribute the Company's new product, or the non-Company product the
Distributor is then currently distributing.
2.5 All rights not expressly granted are hereby reserved by the Company.
3. RESTRICTIONS ON THE APPOINTMENT
3.1 The Distributor may only distribute the Products to persons and
entities located and taking delivery within the Territory (except
for Multinational Customers as provided in Clause 2.2 above).
3.2 The Distributor shall not tamper with the packaging of the Products
and shall only distribute the Products as packaged by the Company.
4. USE OF PRODUCTS BY DISTRIBUTOR
4.1 The Distributor may Use reasonable number packages of the Products,
free of charge, for demonstration, internal training, testing,
providing M&S Services.
4.2 Except as provided in Clause 4.1, the Distributor may not Use the
Products for its own internal use without prior written permission
of the Company.
4.3 Except as provided in Clause 4.1 and 4.2, the Distributor is
prohibited to Use the Products.
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5. USE BY CUSTOMER
5.1 Prior to the delivery of the Products to a Customer, such Customer
shall execute an appropriate Customer Agreement for the Products.
5.2 The Distributor shall obligate each Customer, by execution of the
Customer Agreement, not to:
(i) create or attempt to create by reverse engineering or
otherwise, the source code or internal structure of the
Products or any part thereof from the object code or from the
information available to it; and
(ii) modify, amend, add to or in any way alter any Product supplied
to it under the Customer Agreement.
6. RESPONSIBILITIES OF DISTRIBUTOR
6.1 The Distributor shall meet the Minimum Purchase Commitment as
specified in Exhibit A hereto.
(i) If the Distributor exceeds its Minimum Purchase Commitment to
the Company by at least 50% via large volume purchase or
Corporate Partnership (i.e. minimum US$1M per order), the
Company shall consider granting additional discount amount for
Products to the Distributor; if the Distributor exceeds its
annual purchase commitment by at least 50% in small volume
purchase, no additional discount for Products will be
considered.
(ii) If the Distributor fails to meet the Minimum Purchase
Commitment for two (2) consecutive years from January 1, 2001,
the Company may terminate this Agreement without consequences
on either party by giving one (1) month prior written notice
to the Distributor. The decision to exercise this right of
termination will be solely at the discretion of the Company.
6.2 The Distributor shall continuously maintain adequate resources and
equipment and a fully dedicated team of experienced and competent
sales, marketing and technical employees to fulfill the obligations
of the Distributor hereunder. The Distributor shall comply with all
certification requirements of its technical staff as requested by
the Company.
6.3 The Distributor shall provide M&S Services to Customers pursuant to
Clause 7 below.
6.4 The Distributor shall comply with all local laws and regulations and
conduct business at all times in an honest and straightforward
manner and make its best effort to achieve high customer
satisfaction.
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6.5 The Distributor may not appoint any sub-distributor or sub-contract
any third party to perform its obligations under this Agreement
without the prior written approval of the Company.
7. M&S SERVICES
7.1 During the Term of the Agreement, the Distributor shall:
(i) use reasonable commercial effort during regular local business
hours, Monday through Friday, to provide direct technical
support service to Customers by telephone and/or electronic
mail to answer questions of Customers regarding the
installation and Use of the Products;
(ii) provide Customers with Revisions;
(iii) provide training by personnel certified by the Company for any
Customers regarding the installation and Use of the Products;
and
(iv) promptly replace any corrupted or damaged Product.
7.2 The Distributor shall charge the Customer applicable fees for the
M&S Services provided. The Distributor shall pay the Net Revenue to
the Company for the M&S Services performed pursuant to Clause 9
below.
7.3 The Distributor shall only provide M&S Services and training to
Customers by qualified or certified staff as required by the
Company.
7.4 The Company shall coordinate between the Supplier and the
Distributor with reasonable assistance in its provision of M&S
Services on an "AS AVAILABLE" basis. The Company reserves the right
to charge for the support it agrees to provide to the Distributor
and the Distributor may reject such offer.
7.5 The Company shall provide the Distributor with Revisions, and
reserves the right to charge for the Revisions. The Distributor
shall be responsible to distribute the Revisions to Customers that
are receiving M&S Services.
8. ORDERING AND DELIVERY OF THE PRODUCTS
8.1 The Distributor shall furnish its order sheet for the purchase of
the Products to the Company. Such order shall be binding upon the
parties hereto unless the Company otherwise notifies the Distributor
in writing within seven (7) days after the Company's receipt of such
order. In the event of any discrepancy between the provisions of
this Agreement and any order, unless expressly approved in writing
signed by both parties, the provisions of this Agreement shall
prevail.
8.2 During the term of this Agreement, subject to the other terms and
conditions of this Agreement, the Company will use its reasonable
efforts to deliver (by full or partial shipment) the Products within
fourteen (14) days from receipt of
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written orders, which are accepted by the Company at its main
office, or at the Distributor specified shipment dates insofar as
practical and consistent with the Company's then current lead-time
schedule, shipping schedule, access to supplies on acceptable terms
and allocation of available products and capacity among the Company
customers.
8.3 The Company shall be entitled to select the carrier and the method
of shipment of all Products hereunder and the Distributor shall be
responsible for all domestic transportation charges and insurance
premiums. Risk of loss shall pass to the Distributor upon delivery
of the Products to the Distributor.
8.4 The Company shall accept returns of defective media of Products.
8.5 The Company reserves the right to amend the list of Software and
change, modify or discontinue any Products at any time upon giving
the Distributor thirty (30) days prior written notice provided that
the Company shall fulfill all purchase orders for discontinued
Products accepted prior to the date of notification.
8.6 The Distributor shall submit the necessary documents for Purchase
Order instructed by the Company.
9. BILLING AND SETTLEMENT PROCEDURES
9.1 For each unit of Product distributed or M&S Services provided, the
Distributor shall pay the Net Revenue. The Company shall issue
invoice(s) to the Distributor for the total Net Revenue payable.
Payment shall be made by the Distributor in Japanese Yen within
thirty (30) days after such Net Revenue has been collected by the
Distributor from Customers. Notwithstanding above, the Company has
the right to issue invoice(s) for the total Net Revenue payable to
the Distributor after one hundred and fifty (150) days even though
the revenue has not been collected from Customers. Such payment
shall be made by the Distributor within thirty (30) days after
invoice(s) has been issued. Late payments shall accrue interest at
the rate of 1% per month or the maximum rate of interest allowed by
law whichever is less. The Company has the right to change the
billing condition to the Distributor mentioned the above upon giving
the Distributor thirty (30) days advance notice in writing.
9.2 The Distributor shall be responsible for rendering bills to and
collecting the revenue from Customers for the distribution of the
Products and M&S Services and shall be fully responsible for any
payment delinquencies or non-payment by Customers.
9.3 The discounts set forth in Exhibit B shall be reviewed every year by
the parties hereto. Notwithstanding the above, the Company reserves
the right to revise the said discounts, the Net Revenue and the
Recommended Price List at any time upon giving the Distributor
thirty (30) days advance notice in writing; provided that in no
event should the discounts be less than twenty (20)% of the
Recommended Price in the Recommended Price List for Products; nor
should
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the discounts be less than fifteen (15)% for M&S Services. New price
changes will apply to all orders made after such notice period.
9.4 The Distributor shall be responsible for paying all charges,
including without limitation domestic transportation charges,
insurance premiums, consumption taxes, service taxes and all other
taxes, duties and government assessments and relating to the
distribution of Products and the supply of M&S Services in the
Territory.
10. CONFIDENTIAL INFORMATION
10.1 Upon execution of this Agreement, the Company may disclose to the
Distributor Confidential Information for which the Distributor has a
need to know under this Agreement. Without obtaining the Company's
prior written consent, the Distributor shall not copy or duplicate
any Confidential Information by any means or technique. Except as
specifically provided in this Agreement, the Distributor shall not
acquire any right, title or interest in or to any Confidential
Information or any files, lists, records, documents, drawings,
specifications, equipment, or other tangible things that incorporate
or refer to all or a portion of the Confidential Information.
10.2 Unless with the prior written consent of the Company, the
Distributor shall not disclose or facilitate disclosure of such
Confidential Information to any person, firm or entity except its
employees. The Distributor shall take all steps necessary or
appropriate to protect the Confidential Information against
unauthorized disclosure and misappropriation, including, without
limitation, causing all persons, firms and entities with access to
any Confidential Information to enter into a confidentiality
agreement in a form acceptable to the Company. The Distributor shall
use the standard of care generally appropriate for the industry (but
not less than reasonable care) in order to avoid unauthorized
disclosure or misappropriation of such Confidential Information.
10.3 The Distributor shall not use any Confidential Information for any
purposes or activities other than those expressly provided in this
Agreement or any other written agreement entered into by and between
the parties.
10.4 The Distributor understands and agrees that the Confidential
Information constitutes valuable business assets of the Company
and/or the Supplier, the unauthorized use or disclosure of which may
irreparably damage the Company and/or the Supplier. In the event of
threatened or breach violation of a confidentiality obligation, the
Company shall be entitled to an injunction restraining the
Distributor from breaching this Agreement. Nothing in this Agreement
shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened
violation, including recovery of direct and consequential damages
from the Distributor.
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11. INTELLECTUAL PROPERTY RIGHTS
11.1 The Distributor acknowledges that the Supplier is the exclusive
owner and the Company is the authorized licensee of the Intellectual
Property Rights. The Distributor shall not at any time do or cause
to be done, and shall exercise its best efforts to ensure that none
of its representatives does or causes to be done, any act impairing
or tending to impair any part of any right, title or interest of the
Company or the Supplier or to any Intellectual Property Rights
provided. With the exception of the rights expressly granted under
this Agreement, the Distributor shall not acquire any right, title
or interest to or in the Intellectual Property Rights, or any
invention, improvement or development based thereon. The Distributor
further agrees that the Company and the Supplier shall have any and
all right, title, interest in and to any suggested modifications,
design changes or improvements of the Products, without payment of
additional consideration thereof, either to the Distributor, or its
employees agents or customers.
11.2 The Distributor shall at all times conduct business only in its own
name and shall not use any Intellectual Property Rights as part of
its business name.
11.3 The Distributor agrees that, as a condition of the rights granted
under this Agreement and except as otherwise expressly and
unambiguously authorized hereunder, it shall not:
(i) create or attempt to create, by reverse engineering or
otherwise, the source code or internal structure of the
Products or any part thereof from the object code or from the
information made available to it;
(ii) modify, amend, add to or in any way alter any Product supplied
to it under this Agreement;
(iii) remove any product identification or notices of any
confidential or copyright restrictions from the Products or
any support material;
(iv) list or otherwise display or copy the object code of any
Product;
(v) copy the Products, develop any derivative works thereof or
include any portion thereof in any other software program; or
(vi) destroy completely any proprietary information or Confidential
Information contained therein prior to disposing of any media
or apparatus.
11.4 The Distributor agrees that it shall not use the Intellectual
Property Rights except in conjunction with the M&S Services, and in
accordance with any guidelines as may be issued by the Company from
time to time and the terms of this Agreement. The foregoing
notwithstanding, the Distributor may use the Intellectual Property
Rights to market and distribute the Products as set forth in this
Agreement. The Company reserves the right to require the Distributor
to submit to the Company for prior approval any advertising and
sales literature of
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the Distributor that refers to the Products, or otherwise includes
any Intellectual Property Rights. The Distributor shall make all
modifications to the advertising and sales literature deemed
necessary by the Company.
11.5 The Distributor's right to use the Intellectual Property Rights
pursuant to Clause 11.4 shall cease upon termination of this
Agreement.
11.6 (i) The Distributor agrees that it shall immediately notify the
Company of any claims or objections, or indications of claims
or objections, that use of the Intellectual Property Rights by
the Distributor may or will infringe the proprietary rights of
a third party.
(ii) The Distributor agrees that it shall immediately notify the
Company of any infringement, illegal use or misuse by third
parties of the Intellectual Property Rights. Upon notification
by the Distributor of any infringement, illegal use or misuse
by third parties of the Intellectual Property Rights or upon
the Company or the Supplier otherwise learning of such
infringement, illegal use or misuse by third parties, the
Company and/or the Supplier have the right and sole
discretion, but not the duty, to initiate any proceeding
relating to the protection of the Intellectual Property
Rights. Should the Supplier and/or the Company make such an
election to initiate proceedings, the Supplier and/or the
Company (as the case may be) shall bear the full burden of
expenses for such proceedings and shall also take the full
benefit, if any, of such proceedings. Furthermore, in the
event the Supplier and/or the Company should make such an
election, the Distributor shall provide all necessary
assistance required by the Supplier and/or the Company. The
Distributor shall be kept fully informed of the proceedings
but the Supplier and/or the Company shall retain full control
of the proceedings.
12. USE OF TRADE MARKS
12.1 The Distributor shall not acquire any right to or interest in any
Trade Marks. The Distributor may only use the Trade Marks in
carrying out its authorized activities under this Agreement free of
charge, and then only provided that ownership of such Trade Marks is
clearly attributed to the Company or the Supplier.
12.2 The Distributor acknowledges and agrees that the Company is the
authorized user of the Trade Marks and that all goodwill arising out
of use of the Trade Marks by the Distributor pursuant to this
Agreement shall inure to the Company. The Distributor shall not at
any time or in any way indicate ownership of or any right in the
Trade Marks and shall not contest the right of the Company and/or
its affiliates to the use of any of the Trade Marks. The Distributor
shall not, and shall not have the right to, register, or apply for
registration, anywhere in the world, directly or indirectly, any
trade ▇▇▇▇, service ▇▇▇▇, trade name, copyright, company name or
other proprietary or commercial right which is similar to the Trade
Marks or take any other action that jeopardizes the Trade ▇▇▇▇
owner's proprietary rights in the Trade Marks.
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12.3 The Distributor shall at all times conduct business only under its
own name and may not use any of the Trade Marks as part of its
business name.
12.4 The Distributor shall not attach, remove or disfigure any Trade
Marks on the media containing the Product (or that appear as the
result of executing the Product) nor attach any additional marks to
the media containing the Product except as otherwise agreed by the
Company in writing.
12.5 The Distributor agrees not to alter, remove or obscure any copyright
or other proprietary notices on or in the media containing the
Product (or that appear as the result of executing the Product) or
related documentation or materials.
12.6 The Company reserves the right to require the Distributor to submit
to the Company for prior approval any and all advertising and sales
literature of the Distributor that refers to the Company, to the
Products, or otherwise includes any of the Trade Marks. The
Distributor shall make all modifications to the materials deemed
necessary by the Company to protect the goodwill associated with the
Trade Marks. The Distributor shall also comply with any guidelines
relating to use of the Trade Marks as may be furnished to the
Distributor and revised by the Company from time to time.
12.7 The Distributor's right to use the Trade Marks shall immediately
cease upon termination or expiration of this Agreement.
13. COMPANY COVENANTS AND REPRESENTATIONS
The Company represents and agrees to:
13.1 provide such assistance the Distributor in its marketing programs as
the Company thinks fit;
13.2 furnish the Distributor with forty (40) sets of marketing materials
at no charge, and to provide additional copies at cost;
13.3 provide the Distributor with timely responses regarding plans to
correct bugs and enhance the Products;
13.4 use reasonable commercial efforts to procure the Supplier to send
one application engineer to the Distributor during the earlier
stages of the Product release to provide the Distributor with
additional support, the terms and timing of this support will be
mutually agreed upon;
13.5 provide a mutually agreed upon Field Application Engineer's
Qualification Program including training, performance evaluation,
and correction actions;
13.6 use reasonable efforts to procure the Supplier's group of companies
to send a representative to Japan to conduct face to face meetings
with both the Distributor and customer to understand, evaluate and
advise the Distributor; and
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13.7 provide the Distributor with a reasonable number of demonstration or
customer evaluation copies of the Product for customer purchase
evaluations at no charge to the Distributor.
14. DISTRIBUTOR COVENANTS AND REPRESENTATIONS
The Distributor represents and agrees:
14.1 to provide the Company with (a) two-quarter rolling forecast by the
end of each calendar quarter, (b) monthly sales forecast update by
the end of each month and (c) monthly distribution and account
activities reports;
14.2 to use its best efforts to market and distribute the Products
(including without limitation, inclusion of the Products in the
Distributor's catalogs and other promotional materials) and provide
M&S Services (including installation, training and other customer
support) on a continuing basis and to comply with good business
practices and all laws and regulations relevant to this Agreement or
the subject matter hereof;
14.3 to keep the Company informed as to any problems encountered with the
Products and any resolutions arrived at for those problems, to
participate in management reviews, and communicate promptly to the
Company any and all modifications, design changes or improvements of
the Products suggested by any Customer, employee or agent;
14.4 not to incur any liability on behalf of the Company or in any way
pledge or purport to pledge the Company's credit or purport to make
any contract binding upon the Company;
14.5 to immediately bring to the attention of the Company any information
received by the Distributor which is likely to be of interest, use
or benefit to the Company in relation to the marketing and/or
support of the Products;
14.6 to keep full, proper and up to date books of accounts and records
showing clearly all inquiries, transactions, proceedings and
Customer calls relating to the Products and will allow a duly
authorized representative of the Company to have access to the said
books and records and take such copies thereof as such
representatives may require;
14.7 that neither this Agreement (or any term hereof) nor the performance
of or exercise of rights under this Agreement is restricted by, or
contrary to, in conflict with any prior obligations of the
Distributor to any third parties; and
14.8 to provide Company Operations VP with written account activity
report in English (including account situation, activity planning
and change, technical support, customer requests, travel plans etc.)
at the end of each month;
14.9 to arrange face-to-face meeting between major account executives
(Division General Manager level or above, i.e., above Director
level) with the Company and/or the Supplier's President and CEO
minimum once each quarter;
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14.10 to qualify all Distributor Application Engineers through Field
Application Engineers Qualification Program provided by the Company;
14.11 to communicate with the Company through the defined official
communication channels, to Company Operations VP when necessary;
14.12 to attend the Company and/or the Supplier's annual Sales Meeting at
the Company and/or the Supplier's designated location at the
Distributor's expense. The Distributor shall make strong efforts to
visit the Company and/or the Supplier group of companies' marketing
and/or R&D facilities on a regular basis to maintain good
communications;
14.13 that neither this Agreement (or any term hereof) nor the performance
of or exercise of the rights under this Agreement, is restricted by,
contrary to, in conflict with, ineffective under, or affects the
Company and the Supplier's proprietary rights (or the duration
thereof) under, or will require any termination payment or
compulsory licensing under, any law or regulation of Japan. The
Distributor shall make any filings required under Japanese laws and
regulations; and
14.14 to commit the following personnel for the promotion of the Company
in Japan: (i) full time senior sales manager who also functions as
the overall vendor project manager, (ii) full time sales
representatives, (iii) full time application engineers, and (iv)
full time administrative supporting staff.
15. LIMITED WARRANTY AND DISCLAIMER
15.1 The Company warrants that the program media of each Product will
materially conform to the current Documentation for three (3) months
after it is delivered to a Customer, provided the Products are
maintained to the Company's maintenance recommendation in a manner
specified by the Company. The Company shall replace any defective
media within such period, provided the Distributor bears the cost of
freight and insurance to the point of repair. The Company will bear
the cost of freight and insurance for the return of the Products to
the Distributor.
15.2 The Distributor will handle and be responsible for all warranty
returns from its Customers.
15.3 The Company does not warrant that it will be able to correct all
programming errors or other problems encountered by the Distributor
and the Customers. If the Company cannot, or determines that it is
not practical to repair or replace the returned Product, the Net
Revenue paid by the Distributor shall be refunded.
15.4 THE COMPANY AND THE SUPPLIERS MAKE NO OTHER WARRANTIES WITH RESPECT
TO THE PRODUCTS OR ANY SERVICES AND HEREBY DISCLAIM ALL OTHER
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NON-INFRINGEMENT, TITLE, COURSE OF DEALING,
USAGE OR ERROR FREE OPERATION.
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15.5 The above warranty does not extend to any Product that (i) is
modified or altered, (ii) is operated in a manner other than that
specified by the Company, (iii) has its serial number removed or
altered (iv) is treated with abuse, negligence or other improper
treatment (including, without limitation, use outside the
recommended environment) or (v) is not maintained to the Company's
maintenance specifications. The Distributor's sole remedy with
respect to any warranty or defect is as stated above. The
Distributor is fully responsible for satisfaction of its Customers
and will be responsible for all claims, damages, settlements,
expenses and attorney's fees incurred by the Company with respect to
the Distributor's claims or representations regarding the Products
beyond the Company's above warranty obligations to the Distributor.
16. INDEMNIFICATION
16.1 The Company shall hold the Distributor harmless from any third party
claims for damages and settlements, including reasonable attorneys'
fees and expenses related thereto, resulting from infringement by
the Products of any United States or Japanese patent or any United
States or Japanese copyrights, provided the Company is promptly
notified of any and all threats, claims and proceedings related
thereto and given reasonable assistance by the Distributor and the
opportunity to assume sole control over the defense and all
negotiations for a settlement or compromise; the Company will not be
responsible for any settlement it does not approve in writing.
Notwithstanding the foregoing, the Company is not liable to any
claims of infringement of a patent or copyright in which the
Distributor or any affiliate of the Distributor has an interest or
license.
16.2 If all or any part of the Products is, or in the opinion of the
Company, may become, the subject of a claim or suit of infringement,
the Company may:
(i) modify the Products to render them non-infringing; or
(ii) replace the Products with the Company's other products at
equivalent value with the written request from the
Distributor.
THE FOREGOING IS THE EXCLUSIVE REMEDY FOR DISTRIBUTOR AND IS IN LIEU
OF ANY WARRANTIES OF NON-INFRINGEMENT, WHICH ARE HEREBY DISCLAIMED.
16.3 The foregoing obligation of the Company does not apply with respect
to Products or portions or components thereof:
(i) not supplied by the Company;
(ii) made in whole or in part in accordance to the specifications
of the Distributor or Customer if the alleged infringement is
caused by such specifications;
14
(iii) which are modified (other than by the Company) after shipment
by the Company, if the alleged infringement relates to such
modification;
(iv) combined with other products, processes or materials where the
alleged infringement relates to such combination;
(v) where the Distributor and/or Customers continue allegedly
infringing activity after being notified thereof or after
being informed of modifications that would have avoided the
alleged infringement,
(vi) where the use of the Product is incident to an infringement
not resulting primarily from the Product, or
(vii) where the Product is used in an application or environment for
which such Product was not designed, or where the use is not
strictly in accordance with the pertinent directions.
16.4 The Distributor shall hold the Company harmless from and shall
indemnify the Company and its officers, directors, agents and
employees from all damages, settlements, attorney's Fees and
expenses related to a claim caused by the Distributor's act,
omission, misconduct, negligence or breach of any term of this
Agreement.
17. LIMITED LIABILITY
EXCEPT AS PROVIDED IN CLAUSE 16 ABOVE, NOTWITHSTANDING ANYTHING ELSE IN
THIS AGREEMENT OR OTHERWISE, THE COMPANY AND THE SUPPLIER WILL NOT BE
LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY
FOR
(I) ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE AMOUNTS PAID TO THE
COMPANY HEREUNDER DURING THE EIGHTEEN MONTH PERIOD PRIOR TO THE DATE
THE CAUSE OF ACTION AROSE; OR
(II) ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOST
PROFITS OR LOST OR INACCURATE DATA, EVEN IF THE COMPANY OR THE
SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; OR
(III) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES. THE
COMPANY SHALL HAVE NO LIABILITY FOR ANY FAILURE OR DELAY DUE TO
MATTERS BEYOND ITS REASONABLE CONTROL.
THE DISTRIBUTOR HEREBY ACKNOWLEDGES THAT THE MUTUAL COVENANTS AND
AGREEMENTS SET FORTH IN THIS AGREEMENT REFLECT THIS ALLOCATION OF RISK.
15
18. TERM AND TERMINATION
18.1 Subject to Clauses 18.2 and 18.3 below, this Agreement shall be for
a term of non-cancellable eight (8) years from the date of this
Agreement. Thereafter, this Agreement shall be renewed automatically
for successive periods of five (5) years each unless either Party
notifies the other Party of its intention not to renew at least six
(6) months prior to the expiration of the then current term of this
Agreement. If the Distributor fails to meet the Minimum Purchase
Commitment for two (2) consecutive years from January 1, 2001, the
Company may terminate this Agreement without consequences on either
party by giving one (1) month prior written notice to the
Distributor. In addition, the Distributor will not be held
responsible to pay the unfulfilled amounts of Minimum Purchase
Commitment as outlined in Exhibit A. The decision to exercise this
right of termination will be solely at the discretion on the
Company.
18.2 This Agreement may be terminated by a non-breaching party for cause
immediately by written notice to the breaching party upon the
occurrence of any of the following events:
(i) if the other ceases to do business, or otherwise terminates
its business operations or if there is a material change in
control of the other; or
(ii) if the other breaches any material provision of this Agreement
and fails to cure such breach within thirty (30) days of
written notice describing the breach;
(iii) if the other shall fail to promptly secure or renew any
business license, registration, permit, authorization or
approval for the conduct of its business in the manner
contemplated by this Agreement of any such business license,
registration, permit, authorization or approval is revoked or
suspended and not reinstated within thirty (30) days; or
(iv) if the other becomes insolvent or seeks protection under any
bankruptcy, receivership, trust deed, creditors arrangement,
composition or comparable proceeding, or if any such
proceeding is instituted against that party.
18.3 This Agreement may be terminated by the Company pursuant to Clause
6.1(ii).
18.4 Clauses 10, 11, 12, 15, 16, 17, 18, 19 and 20 shall survive
termination of this Agreement.
19. CONSEQUENCE OF TERMINATION
19.1 Upon termination or expiration of this Agreement for any reason
whatsoever, the Distributor shall immediately:
(i) discontinue any use of any Intellectual Property Rights of the
Company;
16
(ii) discontinue all representations or statements from which it
might be inferred that the Distributor is a distributor of the
Products in the Territory or is in any way related to the
Company;
(iii) cease to promote, solicit orders for or procure orders for
Products (but will not act in any way to damage the reputation
of the Company or any Product) or M&S Services;
(iv) provide the Company with details of all Customers so that the
Company may enter into direct contractual relationship with
them regarding the distribution of and support Products in the
Territory with the intent that the Company shall assume all
maintenance and support obligations for the Products to
Customers in the Territory;
(v) return to the Company at the Distributor's expense, all
catalogues and literature of the Company then in possession of
the Distributor; and
(vi) return to the Company at the Distributor's expense, all copies
in whatever media of Confidential Information in the
Distributor's possession, power, custody or control or at the
Company's election, certify the destruction of the same by an
officer of the Distributor.
19.2 Unless expressly provided otherwise herein, each party understands
that the rights of termination hereunder are absolute. Neither party
shall incur any liability whatsoever for any damage, loss or
expenses of any kind suffered or incurred by the other (or for any
compensation to the other) arising from or incident to any
termination of this Agreement by such party which complies with the
terms of the Agreement whether or not such party is aware of such
damage, loss or expenses.
19.3 Upon termination of this Agreement according to clause 18 for other
than Distributor's breach, the Company shall continue to fulfill,
subject to the terms of clause 8 above, all orders accepted by the
Company prior to the date of termination.
19.4 Upon termination, the Distributor shall be entitled to compensation
calculated by the following formula: total amount of income from the
previous twelve (12) months immediately prior to the date of
termination multiplied by the number of months remaining under the
Agreement divided by twelve (12). "Income shall mean total product
revenue earned by the Distributor from distributing products covered
by the Agreement minus total cost of such Product paid to the
Company.
20. MISCELLANEOUS
20.1 Amendment and Waiver: Except as otherwise expressly provided herein,
any provision of this Agreement may be amended and the observance of
any provision of this Agreement may be waived (either generally or
any particular instance and either retroactively or prospectively)
only with the written consent of the parties.
17
20.2 Governing Law and Legal Actions: This Agreement shall be governed by
and construed under the laws of Japan without regard to conflicts of
laws or provision thereof and without regard to the United Nations
Convention on Contracts for the International Sale of goods. Both
parties consent to the non-exclusive jurisdiction of the Japanese
courts and agree that process may be served in the manner provided
for giving of notices or otherwise as allowed by Japanese law. In
any action or proceeding to enforce rights under this Agreement, the
prevailing party shall be entitled to recover costs and attorney's
fees.
20.3 Headings: Headings and captions are for convenience only and are not
to be used in the interpretation of this Agreement.
20.4 Export Laws: The Distributor agrees to comply with all applicable
international and national laws that apply to the export and import
of the Products, including without limitation the US Export
Administration Regulations (or any successor supplement or
regulations) as well as end-user, end-used country destination
restrictions issued by the US Export Administration and other
government. The Distributor shall demonstrate to the Company
compliance with all applicable laws and regulations prior to
delivery thereof by Company.
20.5 Notices: Notices under this Agreement shall be sufficient only if
(x) personally delivered, (y) faxed to the fax number of a party as
it may notify the other party in writing from time to time, with
confirmed answer-back report, or (z) delivered by a major commercial
rapid delivery courier or mailed by certified or registered mail,
return receipt requested to a party at its addresses first set forth
herein or as amended by notice pursuant to this subsection. If not
received sooner, notice by fax shall be deemed received one (1) day
after the date indicated in the answer-back report and notice by
mail shall be deemed received fourteen (14) days after deposit in
the mail.
20.6 Assignment: The Distributor may not assign this Agreement or the
rights thereunder without the prior consent of the Company. The
Company may assign this Agreement by giving notice to the
Distributor.
20.7 Confidentiality: The parties will not disclose the terms of this
Agreement or any Exhibit hereto to any third party without the prior
written consent of the other party (except that either party may
disclose such terms to potential investors, their attorney's and
accountants, and government officials).
20.8 Severability: If any provision of this Agreement is held by a court
of competent jurisdiction to be illegal, invalid or unenforceable,
that provision shall be limited or eliminated to the minimum extent
necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
20.9 Force Majeure: Neither party hereto shall be responsible for any
failure to perform its obligations under this Agreement (other than
any payment obligations) if such failure is caused by acts of God,
war, strikes, revolutions, lack or failure of transportation
facilities, laws or governmental regulations or other causes which
are beyond the reasonable control of such party.
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Obligations hereunder, however, shall in no event be executed but
shall be suspended only until the cessation of any cause of such
failure. In the event that such force majeure should obstruct
performance of this Agreement for more than one (1) month, the
parties hereto shall consult with each other to determine whether
this Agreement should be modified or terminated. The party facing an
event of force majeure shall use its best endeavors in order to
remedy that sensation as well as to minimize its effects. A case of
force majeure shall be notified to the other party by telex or
telefax within five (5) days after its occurrence and shall be
confirmed by a letter. The parties expressly agree that this Clause
20.9 shall not apply to the parties' payment obligations under this
Agreement, which shall in no event be subject to any delay or
suspension.
20.10 Relationship of Parties: The parties hereto expressly understand and
agree that the Distributor is an independent contractor in the
performance of each and every part of this Agreement, is solely
responsible for all of its employees and agents and its labor costs
and expenses arising in connection therewith.
20.11 Entire Agreement: This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, discussions or prior
agreements between or among parties relating to the subject matter
of this Agreement and all past dealing or industry custom.
20.12 Counterparts: This Agreement may be executed in counterparts, each
of which shall be deemed an original, but both of which together
shall constitute one and the same instrument.
MAINGATE ELECTRONICS INC.: AVANT! JAPAN CORPORATION:
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ [SEAL] By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ [SEAL]
---------------------------- ----------------------------
Date: Oct. 1st, 2000 Date: Oct. 1st, 2000
---------------------------- ----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇
---------------------------- ----------------------------
Title: President Title: Representative Director
---------------------------- ----------------------------
MainGate Electronics Inc. Avant! Japan Corporation
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Exhibit A
MINIMUM PURCHASE COMMITMENT
-----------------------------------------------------------------------------------------------------
Minimum Purchase
Period[Q/YR] Commitment Cumulative Revenue
-----------------------------------------------------------------------------------------------------
Product Purchase Q4 2000, (yen)2,000 Million (yen)2,000 Million
ending Dec 31, 2000 ((yen)2.0 Billion) ((yen)2.0 Billion)
-----------------------------------------------------------------------------------------------------
Maintenance Purchase Q4 2000, (yen)300 Million (yen)2,300 Million
ending Dec 31, 2000 ((yen)2.3 Billion)
-----------------------------------------------------------------------------------------------------
Note: The amount of Minimum Purchase Commitment from year 2001 will be
discussed by the Company and the Distributor and determined by the
Company in the beginning of each year.
For purposes of determining whether the Distributor has met its purchase
commitment pursuant to this Exhibit A, purchase shall equal the Japanese
yen amount generated by the Distributor from distributing the Products
under this Agreement and the Product lease under October 1, 2000 Product
Lease Agreement between the Distributor and the Company.
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Exhibit B
DISCOUNTS AND NET REVENUE
Products Discount to the 35.0% of the selling price; the
Distributor Distributor's cost shall be 65.0% of the
selling price for all Products stated in
Exhibit C.
Annual Maintenance discount 35.0% of the maintenance charge; the
to the Distributor Distributor's annual maintenance cost
shall be 65.0% of the maintenance charge
for all the Products stated in Exhibit
C.
The maintenance charge is twelve (12)%
of the product list price.
Note: (i) The Company shall retain the right to change or modify the list
price for Products and Maintenance. The parties agree that the
cost of Products and/or maintenance may fluctuate from time to
time. Accordingly, the parties agree to negotiate in good faith
an appropriate increase or decrease to such fees. For Products
ordered by the Distributor for its own inventory, the
Distributor shall have the right to convert those Products to
the Company's other products at equivalent amount of credit.
(ii) The Company shall instruct the Distributor the discount of
selling price. The Company shall retain the right to approve or
disapprove such discount.
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Exhibit C
PRODUCTS
All Products produced or acquired by the Company and the Supplier as of the date
of this Agreement less those Products to be distributed by third parties, which
are agreed upon between the Company and the Distributor.
Non-exclusive condition Products set out below can be distributed only when they
are bundled with other products.
Star-Hspice family and options
Star-MTB family and options
Polaris family and options
Nova family and options
Design VERIFYer family and options
Note: As exceptional conditions, the Company appoints as a non-exclusive
condition for the distribution of Star-MS family and options.
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Exhibit D
TERRITORY
Entire country of Japan
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