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EXHIBIT 10.12
*CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AND THE NON-PUBLIC
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
DISTRIBUTION AGREEMENT
This AGREEMENT is made and entered into as of the October 1st 1998,
(hereinafter called "Effective Date") by and between Seiko Instruments Inc. a
corporation organized and existing under the laws of Japan, and having its
registered office at 0-0 Xxxxxx, Xxxxxx-xx, Xxxxx-xxx, Xxxxx 000 Xxxxx
(hereinafter called "SII"), and Virage Logic Corporation, a corporation
organized and existing under the laws of California, and having its registered
office at 00000 Xxxxxxxx Xxxx., Xxxxxxx, XX. 00000 XXX (hereinafter called
"VIRAGE").
1. Definition
1.1 As used in this Agreement, "Agreement" shall mean this agreement
and all attachments and addendum hereto.
As used in this Agreement, "SLA" shall mean software license
agreement which is concluded between SII and SII's customers
according to Article 3 hereof.
As used in this Agreement, "Maintenance Agreement" shall mean
software maintenance agreement which is concluded between SII and
SII's customers according to Article 13 hereof. As used in this
Agreement, "LOI" shall mean the document which is concluded on
March 11th 1998, between SII and VIRAGE for the purpose of
confirming the mutual intent of the parties for the distribution
of Product(s) in Japan.
As used in this Agreement, "Product(s)" shall mean the software
set forth in Appendix A hereto which SII is authorized by VIRAGE
hereunder and its derivatives to sell and market in Japan.
2. Distribution Rights. VIRAGE shall grant SII the non-exclusive right to
market and distribute Products and to provide customers with technical
support in Japan.
3. SLA. SII shall conclude and execute with its customers for the
Product(s) a Japanese version of the attached and VIRAGE approved SLA
with its customers when SII sells Products to customers. VIRAGE
recognizes, as authorized, the standard SLA prepared by SII which is
written in Japanese and shall be governed by and interpreted in
accordance with the laws of Japan. SII shall use no other form of SLA
without VIRAGE prior written consent, which shall nor be unreasonably
withheld. SII shall indemnify and hold VIRAGE harmless from all losses,
damages, costs (including reasonable attorney's fees) and expenses from
any license or warranty term which was nor authorized by VIRAGE in
writing.
4. Term of Agreement. This Agreement, unless terminated in accordance with
Article 17 hereof, shall continue for a period of three (3) years from
Effective Date, and shall be automatically renewed and continued one (1)
year thereafter on a year-to-year basis unless either party gives at
least thirty (30) days prior written notice to terminate this Agreement
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to the other party before the expiration of the original term or
extension period of this Agreement.
5. Responsibilities of VIRAGE
5.1 VIRAGE shall provide quantities of Products sufficient to meet
the requirements of SII.
5.2 VIRAGE agrees to provide, free of charge, product training for
SII personnel at VIRAGE offices as well as technical support to
aid in SII's sales of Products.
5.3 VIRAGE agrees to provide and distribute to SI, free of charge,
two copies of the latest released version of each Product
considered for demonstration, evaluation and technical purposes.
These copies shall nor be used for sales, or for internal SSI
design.
6. Responsibilities of 511
6.1 SII agrees to make its best efforts to promote the distribution
of Products in Japan and to provide its customers with such
support as set forth in Article 6.3 hereof
6.2 SII shall nor represent any other manufacturers of devices,
components or other products which are competitive with those
manufactured by VIRAGE.
6.3 SII shall offer its customers under the maintenance agreement set
forth in Article 13.3 the following technical support in relation
to the use of Products.
(a) Telephone support, through which the customers are
provided with necessary advice and information during
SII's business hours;
(b) On-site support, through which SII personnel are
dispatched to address customers' problems;
(c) Product training, through which the customers are given
necessary instruction on the proper usage of Products;
6.4 SII shall provide to VIRAGE, on a quarterly basis, forecasts for
Products for the three (3) month period following the date of the
forecast.
6.5 SII shall quote to its customers and potential customers' prices
for VIRAGE's products based on direct solicitation from the
VIRAGE's main office.
7. Purchase Order. SII shall issue purchase orders to VIRAGE at least seven
(7) days prior to the date of delivery required by such purchase orders.
VIRAGE shall issue a notice of acceptance or non-acceptance to each
purchase order
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in writing within three (3) business days from the receipt of such
order. Any and all purchase orders shall be deemed accepted by VIRAGE
unless a notice of non-acceptance is issued during such period. Accepted
orders shall not be allocated, changed or canceled without mutual
agreement of both parties hereto.
8. Price and Payment
8.1 VIRAGE transfer prices from VIRAGE to SII for Products shall be
in accordance with Appendix B attached hereto.
8.2 The delivery of Products hereunder shall be made on the condition
of CIF, Kameido, Tokyo.
8.3 VIRAGE shall give SII written notice at least ninety (90) days
prior to any and all price changes in the U.S. Price List. VIRAGE
shall provide SII with the latest U.S. Price List as it becomes
available.
8.4 Terms of payment by 311 shall be sixty (60) days after SII's
receiving invoice from VIRAGE. Amounts payable to VIRAGE will be
paid to VIRAGE in United States dollars by wire transfer in
immediately available funds to an account designated in writing
by VIRAGE from time to time. As of Effective Date,
VIRAGE's account is:
Bank name: Silicon Valley Bank
Bank Address: 0000 Xxxxxx Xxxxx Xxxxx Xxxxx, XX. 00000
Account Number: ***
ABA Number: ***
Contact Name: Xxxxx Xxxxxx
Telephone Number; 0-000-000-0000
All bank charges and commissions associated with payment inside Japan
hereunder will be borne by SII
8.5 All trade terms provided in this Agreement shall be interpreted
in accordance with the latest Incoterms of the International
Chamber of Commerce.
8.6 SII shall pay withholding tax by deducting the same from amounts
of transfer price. SII shall send VIRAGE an official certificate
evidencing such payment.
8.7 The Yen-Dollar exchange rate used is T.T.S. rate of Fuji Bank on
the last day of the previous month of the payment.
9. Title and Risk of Loss. Title and risk of loss to any Products shall be
passed from VIRAGE to SII at the C.T.F point Kameido, Tokyo.
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10. Advertising and Promotion. VIRAGE may advertise products and lists SII's
name in its advertising from time to time.
SII may likewise advertise and hold itself our as an authorized
distributor of the VIRAGE and may promote the sale of the VIRAGE's
products through all appropriate media.
VIRAGE shall supply, free of charge, masters of advertising materials
for marketing of the products, such as catalogs, brochures, pamphlets,
and the like.
11. Proprietary Rights
11.1 VIRAGE retains all titles and reserves all rights of ownership to
the documentation, manuals, information, and promotional
materials furnished by VIRAGE to SII, and to all intellectual
property rights in or to Product.
11.2 VIRAGE hereby grants SII the right to translate documentation
attached to Products into Japanese and distribute such
translations to customers for the sale and support of Products.
SII and VIRAGE shall own an equal share of the copyright and
ownership of the translated documentation in Japan.
11.3 SII may during the term of this Agreement use any trade xxxx and
trade name registered by VIRAGE in connection with the sale of
Products in Japan. VIRAGE shall possess the sole ownership of the
trade marks and trade name in Japan. Other than SII's right to
promote, distribute and sell the products covered by this
Agreement within the territory granted to SII, no rights or
licenses with respect to VIRAGE's trademarks, service marks,
trade names copyrights, parents and other intellectual property
rights are granted or deemed granted hereunder or in connection
herewith, other than those rights or licenses expressly granted
in this Agreement.
11.4 SII shall not reverse-engineer, copy, disassemble or decompile
any Product and shall make its best efforts to ensure that its
employees arid affiliated companies do not do so.
12. Confidentiality. Both SII and VIRAGE shall keep in the strictest
confidence any and all trade secrets, information and know-how disclosed
by the other party (hereinafter referred to as the "Confidential
Information") and shall not disclose to any third party nor use any
Confidential Information for any other purpose than those provided
herein for a period of seven (7) years from the date of receipt of such
Confidential Information.
This obligation of confidence shall not apply to the following
information;
(1) at the time of such disclosure is in the public domain, or
(2) after such disclosure becomes part of the public domain through
no fault of the receiving party, or
(3) was known to the receiving party without breach of any duty to or
violation of any right of the disclosing
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party before it was obtained from the disclosing party, or
(4) is acquired by the receiving party on a non-confidential basis
from a third party who is not under a secrecy obligation to and
did not violate any obligation of non-disclosure of the
disclosing party, or
(5) is developed by or for the receiving party independently of the
disclosing party's Confidential Information received hereunder,
or
(6) is disclosed by the receiving party under the obligation created
by any country or government action.
This Agreement extends to and covers only Confidential Information which
(1) is marked by the Disclosing Party as confidential or proprietary
nature (e.g., "Confidential"), if the Confidential Information is
disclosed in an tangible form; or (2) is treated, and is notified the
Receiving Party by the Disclosing Party as confidential at the rune of
oral or other intangible disclosure and confirmed in writing provided by
the Disclosing Party within thirty, (30) days after the date of such
disclosure, which writing shall be marked by the Disclosing Party as
confidential or proprietary nature, if the Confidential Information is
disclosed orally or in other intangible form.
13. Warranty and Maintenance
13.1 VIRAGE declares that it owns the copyrights to Products sold
hereunder, and has legal right to sell such product. VIRAGE shall
warrant that Products do not infringe any third party's patents,
copyrights, trade secret or other proprietary right.
13.2 VIRAGE shall warrant that Products distributed by VIRAGE is free
from defects in workmanship as well as materials and conforms to
the technical standards as set forth in the product
specifications defined as Appendix C for a period of one (1) year
from the date of shipment to the customer by SI. For CTMC and
Custom Compilers, the customer may purchase an additional Foundry
Maintenance Agreement which provides updates to the libraries and
compilers as a result of design rule changes, changes in the
spice models or process and updates to EDA tools. Foundry
Maintenance will appear on the price list separately as an
option. The price to SII is in Appendix B.
13.3 After this one (1) year warranty period, customers may enter into
Maintenance Agreement covering any Product with SII. SII will
promote the Maintenance Agreement with customers. SII shall pay
the software maintenance fee stated in Appendix B on a quarterly
basis to VIRAGE for the tern-i of each Maintenance Agreement
only.
13.4 VIRAGE recognizes, as authorized, the standard Maintenance
Agreement prepared by SII which is written in Japanese and shall
be governed by and interpreted in accordance with the laws of
Japan. SII shall use no other form of Maintenance Agreement
without VIRAGE prior written consent, which shall not be
unreasonably withheld.
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13.5 In case SII or the customers finds a defect in Products, VIRAGE
shall according to the SII's or customers' demands repair,
correct or replace for such Products without charge and/or
compensate for losses incurred thereby during warranty and the
software maintenance period, VIRAGE's and SII's total liability
to any particular SII customer shall be limited to fees received
by SII from such customer.
VIRAGE's non-exclusive warranty shall be:
(i) to repair, correct or replace the Product; or
(ii) to compensate for losses incurred thereby during warranty
and the software maintenance period, provided that
VIRAGE's and SII's total liability to any particular SII
customer shall be limited to fees received by SII from
such customer.
This express warranty granted is in lieu of all other warranties,
express or implied, including the implied warranties of merchantability
and fitness for particular purpose. VIRAGE shall not be liable to any
other party for special, incidental, or consequential damages (including
any claims for lost profits or disruption of business or loss of use).
VIRAGE's total liability to SII shall be limited to all fees received by
VIRAGE from SII.
13.6 During warranty and the software maintenance period which means
an effective period specified on Maintenance Agreement entered in
customers and 511, VIRAGE shall provide the following maintenance
and support services:
(a) SII may report to VIRAGE any error that may be found in
Products and VIRAGE shall rectify such error or to provide
a work-around solution.
(b) VIRAGE will provide to SII any new versions of Products,
the documentation and manuals that are released and SII
will be granted to use such new Versions in accordance
with this Agreement.
13.7 VIRAGE shall provide any new versions of Products free of charge
for all Products which include the Products of SII's inventory,
the demonstration Products referred in the Article 5.3 hereof and
the Products lent to the customers from SII.
13.8 In the event of a resumption of any Maintenance Agreement under
Section 13.9, SII shall pay VIRAGE a maintenance fee under the
same conditions as 13.9. The payment shall be made within sixty
(60) days of the last day of each quarter.
When a Maintenance Agreement is entered into in the middle of a
quarter, the maintenance fee for the quarter shall be prorated
according to the exact number of days between the effective date
of the Maintenance Agreement and the last day of the quarter.
13.9 With regard to the resumption of any Maintenance Agreement,
VIRAGE shall agree to the following conditions:
After the termination of the Maintenance Agreement, the customer
may resume the Maintenance Agreement within three (3) years from
the date of termination of the Maintenance Agreement on the
condition that the
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customer pays an amount 1.3 times the maintenance fee
retroactive to the date of termination. This resumption policy
is not applicable, if longer than three (3) years has passed
since the date of termination of the Maintenance Agreement.
After the three year period, the customer will have to buy
Products for upgrade.
13.10 VIRAGE shall not charge SII a maintenance fee for any Products as
in Article 5.3.
14. Products Liability. Should any claim, demand or suit be made or filed
against SII as a result of any defect, whether patent or latent, in
products, under the theory of breach warranty, express or implied, or
under the theory of products liability, Company shall indemnity and hold
SII harmless for any claims suit, demands, proceeding or expenses
including attorney's fees.
15. Notices. All necessary notices or requests to each party in performing
this Agreement shall be sent to the following addresses:
VIRAGE:46824 Xxxxxxxx Xxxx. Xxxxxxx XX. 00000 XXX
SII: SII Kameido Xxxx.-Xxxx 0X, 00-0 Xxxxxxx 0-xxxxx, Xxxx-xx Xxxxx 000,
Xxxxx
Such notices or requests shall be deemed to take effect upon receipt by
the addressee. Each party shall notify the other in writing about an;
changes in address to which all notices or requests shall be sent.
16. Patent and Copyright Indemnity
16.1 VIRAGE shall defend or settle at its expense any action brought
against SII alleging that Products Furnished under this Agreement
infringe on American or Japanese patents, copyrights, and
intellectual proprietary rights such as trade secrets, except
when SII is deemed primarily responsible, and VIRAGE shall pay
all costs, damages and reasonable attorney's fees finally awarded
against SII that are attributed to such claims, provided that
SII:
(a) notifies VIRAGE promptly in writing of the action,
(b) provides VIRAGE all reasonable information and assistance
to settle or defend the action,
(c) grants VIRAGE sole authority and control of the defense or
settlement of the action.
If an injunction is issued as the result of any such alleged
infringement, SII shall permit VIRAGE, at VIRAGE option and
expense, either to (a) replace or modify Products to avert any
infringement or (b) procure for SII or customers the right to
continue distributing or using Products.
VIRAGE shall nor be responsible for any infringement claim due to
any Product change or modification done by SII or a SII customer.
16.2 In the event that VIRAGE provides SII with Products with embedded
products developed and manufactured
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by such third by the third parties, VIRAGE shall warrant that
VIP-AGE is authorized parties to modify such products and
distributed SII for the use of such modified Products.
17. Termination
17.1 This Agreement may be terminated;
(a) by an agreement duly signed by the parties hereto; or
(b) by either party with at least ninety (90) days prior
written notice to the other, with a material breach of
this Agreement in the payment of money that remains
uncured for 15 days after receipt of written notice or a
material breach of any other material term of the
Agreement that remains uncured for 30 days after receipt
of written notice.
Upon any allegation that a breach of this Agreement has occurred
or is likely to occur, both parties agree to cooperate in using
their best efforts to address and attempt to cure or prevent the
alleged breach.
As soon as possible after receiving notice of the alleged breach,
the parties will investigate the circumstances surrounding the
alleged breach and agree upon the steps necessary to remedy the
breach. Throughout the process the parties will share any
relevant information and materials that would be relevant to
determining whether a breach has occurred or the steps necessary
to remedy the breach.
17.2 In the event either party voluntarily files a petition for
bankruptcy or has such a petition involuntarily filed against IT,
or is placed in receivership or recognition proceeding or is
placed in trusteeship involving insolvency, or has ceased regular
business operations, the other party may terminate this Agreement
by giving a termination notice, upon which termination shall
become effective thirty' (30) days after the issuance of such a
notice, if the petition has not been dismissed, withdrawn or
otherwise invalidated during said thirty (30) day period.
Termination of this Agreement by either party shall not be deemed
an ejection of remedies or waivers of any claim relating to the
other party.
17.3 After termination or expiration of this Agreement, VIRAGE shall
take responsibility for distribution, maintenance and support of
Products which SII was distributed from VIRAGE. and sold to
customers.
17.4 If VIRAGE should be acquired by any other company, then SII may,
within thirty (30) days of written notice by VIRAGE to SII of the
acquiSIion, request in writing that VIRAGE shall purchase SII's
inventory at the price paid to VIRAGE upon placement of the
purchase orders for such unsold Products.
17.5 After termination or expiration of this Agreement, SII shall
receive full sales commission as stated in Appendix B for orders
received on quotations issued in the 3 months prior to
termination or expiration of the agreement.
18. Severability. Except as provided herein, the provisions of this
Agreement can be severed and, if, by stature, regulation, court order or
other action taken by any government or governmental subdivision having
jurisdiction over this
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Agreement, any provision of this Agreement is voided or declared
unlawful, then, within the jurisdiction of the said government or
governmental subdivision, the said provision shall be of no effect and
it shall be as if said provision had never been included in this
Agreement, provided that in the event such statute, regulation, court
order or other action frustrates the economic assumptions of this
Agreement or renders performance impossible, the party affected thereby
shall have the right to terminate this Agreement.
19. Force Majeure. In the event of an occurrence of an emergency or
contingency of a natural disaster constituting a cause of force majeure
to either or both of the parties hereto, with the result that the
performance of any of its or their obligations under this Agreement is
rendered impossible; thereby, neither party shall be liable in any way
for any delay in its performance due to such a cause. Under this
Agreement, a force majeure refers to any cause beyond the parties'
control, including, but not limited to, strikes, lockouts, riots, war,
accidents, failures or breakdowns of components necessary to completing
orders, delays caused by subcontractors, suppliers or customers,
inability to obtain or substantial increases in the cost of labor and/or
manufacturing facilities, fire, Acts of God, curtailment of or failure
to obtain sufficient electrical or other energy, whether valid or
invalid, of any cognizant governmental body or any other instrumentality
thereof, whether presently existing or hereafter created.
20. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all provisions, negotiations,
agreements and commitments in respect thereto, and shall not be
released, discharged, changed or modified in any manner except by
instruments signed by duly authorized officers or representatives of
each of the parties hereto.
21. Waiver. No delay or failure of each party in exercising any right, power
or remedy hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any such right, power or remedy preclude
other or Further exercise thereof or the exercise of any other right,
power or remedy.
22. Arbitration. All disputes, controversies or differences which may arise
between the parties, out of or in relation to or in connection with this
Agreement or for the breach thereof, shall be referred to arbitration.
If the arbitration is initiated by SI, the arbitration shall take place
in Milpitas, California, before three arbitrators selected in accordance
with the Commercial Rules of the American Arbitration Association. If
the arbitration is initiated by VIRAGE, the arbitration shall take place
at the Japan Commercial Arbitration Association in Tokyo in accordance
with the Commercial Arbitration Rules of said Association. The award of
arbitration rendered shall be final and binding upon both parties.
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23. Assignment. This Agreement is not assignable or transferable by either
party in whole or in part without the express written consent of the
other party, which shall not be unreasonably withheld.
24. Governing Law. The validity, construction and performance of this
Agreement and/or each individual contract shall be governed by and
interpreted in accordance with the laws of Japan.
25. Survival. The following provisions shall survive the expiration or
termination of this Agreement, Article 11 (Proprietary Rights), Article
12 (Confidentiality), Article 13 (Warranty and Maintenance), Article 16
(Patent and Copyright Indemnity), Article 17.6 (Termination), Article 18
(Severability), Article 22 (Arbitration), Article 24 (Governing Law) and
Article 24 (Survival) shall survive such expiration or termination.
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Seiko Instruments, Inc. Virage Logic Corporation
By: /s/ Xxxxxxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxxx
-------------------------- ---------------------------
Title: General Manager Title: President & CEO
----------------------- -------------------------
Date: Oct. 1, 1998 Date: 10/7/98
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October 1, 1998
Appendix A
Products
(1) MD-PRO
(2) Custom RAM
(3) Fixed Libraries (STMC,CTMC,MBA)
(4) MD - Pro Maintenance
(5) Foundry Maintenance for Fixed Libraries or Custom RAM
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Appendix B
Prices to SII
The prices to be paid by SII shall be equal to the actual customer purchase
price minus the discount as specified in the following table.
Product discount rate
MD-PRO **%
Custom RAM **%
Fixed Libraries (STMC, CTMC, MBA) **%
MD-PRO Maintenance **%
Foundry Maintenance **%
(1) SII shall place orders to VIRAGE based on Japan list price. The Cap in
Japan xxxx-up should be decided by SII based on the market and/or competitive
price. This pricing is good for a year. After once year, the parties agree to
revisit the discount rate to make necessary adjustments if necessary.
(2) The quotation that VIRAGE has made to Hitachi (back in August 1997)
regarding Ultra Low Power memory compilers on 0.2um process is excluded from
this Agreement.
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Appendix C
VIRAGE shall meet the functions specified on each Product's User's Manual.
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