DISTRIBUTION AGREEMENT Exhibit 10.19
This Distribution Agreement (the "Agreement") is entered as of October 1, 2000
and made between AVANTICORP. HONG KONG LIMITED (the "Company"), with its
principal place of business at Xxxx 0000, Bank of Xxxxxxxx Xxxxx, 00 Xxxxxxxx
Xxxx, Xxxx Xxxx, and DAVANTECH CO. (the "Distributor"), with its principal
place of business at 7th, Duam, #000-0, Xxxxxxxx-Xxxx, Xxxxxx-xx, Xxxxx,
138-190:
RECITALS:
A. The Company has obtained an exclusive license in the distribution (via
sub-licensing) of certain Avant! software-based electronic design
automation products, including documentation and manuals therefor.
B. The Company wishes to appoint the Distributor as an exclusive distributor
and 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 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's 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 or a licensor of the
Company;
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(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).
"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 issued by the Company from time to
time for the Use of the Software;
"END USER" means a customer who has signed an End User License Agreement;
"END USER LICENSE AGREEMENT" means the End User Software and Service License
Agreement provided by the Company from time to time;
"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 [quarterly/annual]
licensing commitment of Products and M&S Services as set out in Attachment 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 LICENSING REVENUE" means the gross fee for any Product and fees for any
purchased M&S Services recognised by the Distributor under US GAAP, less any
direct costs (including but not limited to discounts to Distributors as set out
in Exhibit B, warehousing allowances, insurance and transportation charges,
taxes, rebates, cancellations and returns). The Net Licensing Revenue shall not
include any interest or finance charges;
"PRODUCTS" means the Software together with the corresponding Documentation;
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"RECOMMENDED PRICE LIST" means the list setting out the Recommended Price
for the Products and M&S Services to be charged by the Distributor to the
End Users;
"REVISIONS" means upgrades, error corrections and updates of the Software
in object code form made generally available to End Users of the Software.
"SOFTWARE" means the computer software programs in object code form only
as set out in Attachment C;
"TERM" means the term as set out in clause 18;
"TERRITORY" means the territory as set out in Attachment D;
"TRADE XXXX" means any trade xxxx, service xxxx, trade name, symbols and
logos owned or authorized to be used by the Company;
"USE" means in relation to the Software, its loading, displaying, running,
transmission or storage for the purpose of processing the instructions
contained in the Software.
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
to:
(i) market and distribute the Products to End Users (by way of
sub-license) solely for use in the Territory;
(ii) install the Products for End Users; and
(iii) provide M&S Services to End Users.
No source code for the software will be deemed as included, by
inference or otherwise, in the License granted by this Agreement.
The Company shall not appoint any person or entity other than the
Distributor as its distributor, representative or agent, excluding
OEM's or VAR's for the distribution of Products in the Territory.
2.2 (i) Subject to applicable terms and conditions, including fees, to
be agreed on a case by case basis, the Distributor hereby grants
the Company (or its other distributors as the case may be) a
non-exclusive right within the Territory for the Term of this
Agreement to:
(a) distribute the Products directly to End Users; and
(b) grant such End Users the right to use the Products.
For purpose of this Clause, End Users shall be Multinational
Customers of the Company or its other distributors (as the case
may be).
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(ii) Where the Multinational Customer is an End User of the
Distributor 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 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
(a) distribute the Products directly to such Multinational
Customers; and
(b) grant such Multinational Customer the right to use the
Products.
2.3 An End User 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 End User'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 of
the Products at any time provided that the Distributor is given ninety
(90) days prior written notice. Any Revision, enhancement or
improvement of a Product that is generally made available by 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 Attachment C as a new Product. In addition
to the foregoing, any products developed by the Company 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; provided, however, that
if any such new product is competitive with any non-Company products
that Distributor is distributing, Distributor shall have thirty (30)
days to decide whether to distribute Company's new product, or the
non-Company product Distributor is then currently distributing. If
Distributor decides to distribute the non-Company product, then
Distributor, for the remainder of the term of this Agreement, will be
a non-exclusive Distributor of the Products and Company shall, at its
discretion, appoint other distributors, representatives or agents for
the distribution of Products in the Territory. The Distributor shall
have the right and freedom to distribute any non-competitive software
products or services.
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 pursuant to Clause 2.2 above).
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3.2 The Distributor shall not tamper with the packaging of the Products
and shall only sub-license the Products as packaged by the Company.
4. LICENSE TO DISTRIBUTOR
4.1 This Agreement shall operate as a limited and non-transferable
License for the Distributor to Use [ten (10)] copies of the Products
for demonstration, internal training, testing, providing M&S
Services. The Distributor may make a single copy of each Product for
archival purposes.
4.2 Except as provided in Clause 4.1, Distributor may not use the
Products for its own internal use without prior written permission of
the Company.
5. LICENSE TO END USER
5.1 The Distributor shall ensure that each customer has executed an
appropriate End User License Agreement for the Products as provided
by the Company. Any changes to the End User License shall require
prior written consent from the Company.
5.2 The Distributor shall obligate each End User, by execution of the End
User License 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;
(ii) modify, amend, add to or in any way alter any Product supplied
to it under the End User License Agreement; and
(iii) make any copy of the Products without the prior consent of the
Distributor (except one copy thereof for archival purpose).
6. RESPONSIBILITIES OF DISTRIBUTOR
6.1 The Distributor shall meet its Minimum Purchase Commitment to the
Company during the Term of this Agreement.
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 End Users pursuant to
Clause 7 below.
6.4 The Distributor shall 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) provide End Users with upgrades, error corrections and Revisions
of the Products as and when they become available from the
Company;
(ii) provide training for any End Users regarding the installation
and Use of the Products; and
(iii) promptly replace any corrupted or damaged Product.
7.2 The Distributor shall charge the End User a fee for the performance of
the M&S Services according to the Recommended Price List. The
Distributor shall pay to the Company for the M&S Services pursuant to
Clause 9.
7.3 The Distributor shall only provide M&S Services and training to End
Users by qualified or certified staff as required by the Company.
7.4 The Company shall provide reasonable assistance to the Distributor 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. It is
expected that the Distributors shall use its best efforts to
familiarize itself with the Products and such that the assistance to
be provided by the Company will be minimal.
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 End Users that are
receiving M&S Services.
8. ORDERING AND DELIVERY OF THE PRODUCTS
8.1 Distributor shall furnish its order sheet for the purchase of the
Products to Company. Such order shall be binding upon the parties
hereto unless Company otherwise notifies 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 Products are delivered F.O.B. Korea from the Company's applicable
warehouse or place of production to Distributor. During the term of
this Agreement, subject to the other terms and conditions of this
Agreement, Company will use its reasonable efforts to deliver (by full
or partial shipment) the Products within three (3) days from receipt
of written orders, which are accepted by Company at its main office,
or at Distributor specified shipment dates insofar as practical
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and consistent with Company's then current lead-time schedule,
shipping schedule, access to supplies on acceptable terms and
allocation of available products and capacity among 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 shipping costs and insurance premiums. Risk of
loss shall pass to the Distributor upon delivery of the Products to
the carrier.
8.4 The Company shall accept unlimited returns of defective media of
Products.
9. BILLING AND SETTLEMENT PROCEDURES
9.1 (a) For each unit of Products or M&S Services distributed in the
Territory, the Distributor shall pay to the Company the Net
Licensing Revenue. The Company shall issue invoice(s) to the
Distributor for the total Net Licensing Revenue payable. Payment
shall be made by the Distributor in US dollars within ninety (90)
days after the Net Licensing Revenue has become "recognized
revenue" to the Distributor in accordance with United States
generally accepted accounting principles. For special cases and
upon mutual agreement, the parties may extend the credit period
from the said ninety (90) days to one hundred and eighty (180)
days. The payment amount and the discount are based on a fixed
exchange rate that is specified in Attachment B.
(b) In the event that the exchange rate exceeds +/- five percent (5%)
the effect of such excess shall be borne equally by Company and
Distributor. By way of example, if the fixed exchange rate is 105
won to 1 dollar the Distributor shall make payment based on an
exchange rate of 110 won to one (1) dollar, (10/2 = 5; 5 + 105 =
110). By way of further example, of the fixed exchange rate is
105 won to one (1) dollar and the exchange rate on the date the
customer pays the Distributor is between 99 to 111 won to one (1)
dollar the Distributor will make payment based on an exchange
rate of 105 won to one (1) dollar. Company and Distributor shall
review the fixed exchange rate annually and mutually agree on a
fixed exchange rate for the following year. If the parties do not
review the fixed exchange rate or do not agree on a new fixed
exchange rate, then the fixed exchange rate for the prior year
will remain in effect.
9.2 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
to grant additional discount amount for Products to Distributor, if
the Distributor exceeds its Minimum Purchase Commitment by at least
50% via aggregate of small volume purchases, no additional discount
for Products will be considered.
9.3 The discounts set forth in Attachment 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 Licensing Revenue and
the Recommended
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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 20% off the Recommended Price in the
Recommended Price List; Provided further that for M&S Services, the
parties shall negotiate in good faith an appropriate increase or
decrease in price. 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 transportation charges and insurance
premiums, and all local import duties, value added taxes, service
taxes and all other taxes, duties and government assessments relating
to the distribution of Products and the supply of M&S Services in the
Territory.
9.5 All payments required to be made to the Company hereunder shall be
made without any withholding tax unless such withholding is required
by any applicable law. If the Distributor is required by law to make
such withholding from any such payment, the relevant sum payable by
the Distributor shall be increased to the extent necessary to ensure
that, after the making of such withholding, the Company receives and
retains (free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have received
and so retained had no such withholding been made or required to be
made.
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,
agents or consultants who have a need-to-know. 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 no less than reasonable care) in order to avoid
unauthorized disclosure or misappropriation of such Confidential
Information.
10.3 The Distributor shall refrain from using or exploiting any and all
Confidential Information for any purposes or activities other than
those expressly provided
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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
its licensor, the unauthorized use or disclosure of which may
irreparably damage the Company and/or its licensor. In the event of
breach of confidence or threatened violation of its obligations under
this Clause 10 by the Distributor, 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.
11. INTELLECTUAL PROPERTY RIGHTS
11.1 The Distributor acknowledges that the Company is the exclusive owner
or 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 its licensor in
or to any Intellectual Property Rights provided, however, that any
challenge of the validity of any item or part of the Intellectual
Property Rights in a legal proceeding shall not be considered to be an
act tending to impair said right, title or interest. With the
exception of the rights expressly licensed 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 shall have any and all right title and interest in and to any
suggested modifications, design changes or improvements of the
Products, without payment of any additional consideration therefore
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
Documentation;
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(iv) list or otherwise display or copy the object code of any Product;
or
(v) copy the Products, develop any derivative works thereof or
include any portion thereof in any other software program;
(vi) prior to disposing of any media or apparatus, to destroy
completely any proprietary information or Confidential
Information contained therein.
11.4 The Distributor agrees that it shall not use the Intellectual Property
Rights except in conjunction with the marketing and distribution of
the Products and the supply of 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 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 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 otherwise learning of such infringement, illegal use or
misuse by third parties, the Company has the right and sole
discretion, but not the duty, to initiate any proceeding relating
to the protection of the Intellectual Property Rights. Should the
Company make such an election to initiate proceedings, the
Company 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 Company should make
such an election, the Distributor shall provide all necessary
assistance required by the Company. The Distributor shall be kept
fully informed of the proceedings but 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 licensed activities under this Agreement, and then only
provided that ownership of such Trade Marks is clearly attributed to
the Company or its licensor(s).
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12.2 The Distributor acknowledges and agrees that the Company is the
owner and/or licensee 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 xxxx, service xxxx, trade name, copyright,
company name or other proprietary or commercial right which is
confusingly similar to the Trade Marks or take any other action
that jeopardizes the Company's proprietary rights in the Trade
Marks.
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 fulfill orders accepted by the Company for the Products in
accordance with this Agreement;
13.3 notify the Distributor as soon as practicable regarding the release
of new or revised Products;
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13.4 furnish the Distributor with forty (40) sets of marketing materials at
no charge, and to provide additional copies at cost;
13.5 provide Distributor with timely responses regarding plans to correct
bugs and enhance the products;
13.6 send one Company application engineer to Distributor during the
earlier stages of the Product release for at least one week to provide
Distributor with additional support; the terms and timing of this
support will be mutually agreed upon;
13.7 provide a mutually agreed upon Field Application Engineer's
Qualification Program including training, performance evaluation, and
correction actions;
13.8 visit Korea at least once each quarter and conduct face to face
meetings with both the Distributor and customer to understand,
evaluate and advise the Distributor; and
13.9 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) weekly sales prospects when possible;
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 to communicate promptly to the
Company any and all modifications, design changes or improvements of
the Products suggested by any End User, 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 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;
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14.6 to keep full, proper and up to date books of accounts and records
showing clearly all inquiries, transactions, proceedings and End
User calls relating to the Products and will allow a duly authorised
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;
14.8 to provide Company Operations VP with written account activity
report (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 Company President and CEO minimum once each quarter;
14.10 to qualify all Distributor Application Engineers through Field
Application Engineers Qualification Program developed by Company;
14.11 to communicate with the Company through the defined official
communication channels to Company Operations VP when necessary;
14.12 to attend Company's annual Sale Meeting at the Company's designated
location at the Distributor's expense. The Distributor shall make
strong efforts to visit the Company in US on a regular basis to
maintain good communication; and
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's proprietary rights (or the duration thereof) under, or
will required any termination payment or compulsory licensing under,
any law or regulation of Korea. The Distributor shall making any
filings required under Korean laws and regulations.
15. WARRANTY
15.1 The Company warrants that the program media of each Product will
materially conform to the then current Documentation for three (3)
months after it is delivered to an End User, provided the Products
are maintained to the Company's maintenance recommendation and 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.
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15.2 The Distributor will handle and be responsible for all warranty
returns from its End Users. The Company will bear the costs of
freight and insurance for the return of goods to Distributor.
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 End Users. If Company cannot, or determines that it is not
practical to repair or replace the returned Product, the price
therefor paid by Distributor shall be refunded.
15.3 THE COMPANY AND ITS 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.
15.4 The above warranty does not extend to any Product that is modified,
or altered, is not maintained to the Company's maintenance
recommendations, is operated in a manner other than that specified
by the Company, has its serial number removed or altered or is
treated with abuse, negligence or other improper treatment
(including, without limitation, use outside the recommended
environment). 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 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 Korea patent
or any United States or Korea 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
Distributor or any affiliate of 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) secure the right of the Distributor, or End Users to continue
Using the Products;
(ii) modify the Products to render them non-infringing; or
14
(iii) reimburse the Distributor the Net Licensing Revenue paid to the
Company for such infringing Products.
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 End User if the alleged infringement is
caused by such specifications;
(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 End Users 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 ITS 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
15
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 ITS
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.
18. TERM AND TERMINATION
18.1 Subject to Clause 18.2 below, this Agreement shall be for a
non-cancelable term up to 31 December, 2007. Thereafter, this
Agreement shall be renewed automatically for successive periods of
five (5) years 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.
18.2 This Agreement may be terminated by a party for cause immediately by
written notice 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 30 days of written notice
describing the breach; or
(iii) if the other shall fail to promptly secure or renew any license,
registration, permit, authorization or approval for the conduct
of its business in the manner contemplated by this Agreement of
any such 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 Clauses 10, 11, 12, 15, 16, 17, 18, 19 and 20 shall survive
termination of this Agreement.
19. CONSEQUENCE OF TERMINATION
16
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;
(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 End Users so that the
Company may enter into direct contractual relationship with
them regarding the distribution and support of 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, Distributor shall be entitled to compensation to
be 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
17
instance and either retroactively or prospectively) only with the
written consent of the parties.
20.2 Governing Law and Legal Actions: This Agreement shall be governed by
and construed under the laws of the State of California and the
United States without regard to conflicts of laws or provisions
thereof and without regard to the United Nations Convention on
Contracts for the International Sale of goods. Unless waived by
Company in writing for the particular instance (which Company may do
at its option), the sole jurisdiction and venue for actions related
to the subject matter hereof shall be the U.S. federal courts having
within their jurisdiction the location of Company's principal place
of business. Both parties consent to the jurisdiction of such courts
and agree that process may be served in the manner provided for
giving of notices or otherwise as allowed by California State or
federal law. In any action or proceeding to enforce rights under this
Agreement, the prevailing party shall be entitled to recover costs
and attorneys' 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 with all applicable international
and national laws that apply to the export and import of the
Products, including the Department of Commerce and 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 This Agreement and the rights hereunder are not transferable or
assignable without prior written consent of the parties hereto,
except for rights to payment and except to a person or entity who
acquires all or substantially all of the assets or business of a
party, whether by sale, merger or otherwise; any such assignee shall
agree to abide by the terms and conditions of this Agreement.
20.7 Confidentiality: The parties will not disclose the terms of this
Agreement or any attachment 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).
18
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. 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.
20.10 Relationship of Parties: The parties hereto expressly understand
and agree that 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.
COMPANY: DISTRIBUTOR:
By: /s/ XXXX XXX By: /s/ SANCHO PARK
----------------------- ------------------------
Date: Oct. 13, 2000 Date: 10/23/2000
Name: Xxxx Xxx Name: Sancho Park
Title: President Title: Executive Director
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Attachment A
MINIMUM PURCHASE COMMITMENT
--------------------------------------------------------------------------------
MINIMUM PURCHASE COMMITMENT PERIOD [Q/YR]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PLEASE INSERT. NOT STATED IN ORIGINAL CONTRACT]
20
Attachment B
DISCOUNTS AND NET LICENSING REVENUE
Products The discounts for the Products shall be 45% off the Recommended
Price for the relevant Product as set out in the Recommended
Price List.
M&S Services The discounts for the M&S Services shall be 35% off the
Recommended Price for the relevant M&S Services as set out in
the Recommended Price List.
FIXED EXCHANGE RATE
The fixed exchange rate for the purpose of Clause 9.1 of this Agreement shall be
1,050 won to 1 US dollar.
21
Attachment C
PRODUCTS
All Products produced or acquired by the Company 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.
22
Attachment D
TERRITORY
The Territory includes the entire Republic of Korea
23
