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BUSINESS AGREEMENT
CONCERNING DISTRIBUTION AND SUPPORT
OF
HPL PRODUCTS AND SERVICES IN JAPAN
BY
CANON SALES CO., INC.
==============================================================================
Page 1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1 DISTRIBUTION AGREEMENT DECLARATIONS................................ 6
2 APPOINTMENT OF DISTRTIBUTOR; TERMS OF PRODUCT AND SERVICES SALES... 6
2.1 Appointment and Exclusive Right............................... 6
2.2 Limited Agent Authority of Distributor........................ 6
2.3 Supplier Obligations Regarding Customers in Territories
Assigned to Distributor..................................... 6
2.4 Limitations Regarding Customers Outside Territories Assigned
to Distributor.............................................. 7
2.5 Limitations on Products Purchased Outside Territories......... 7
2.6 Supplier Obligations Regarding Distribution Conflict.......... 7
2.7 Product Rights and Restrictions............................... 7
2.8 Transfer Price................................................ 7
2.9 Distributor Pricing to Customers in the Territories........... 8
2.10 Payment Collection............................................ 8
2.11 Tax Collection and Tax Payment Responsibilities of Distributor 8
2.12 New Products Notification and Information to Distributor...... 8
2.13 Notification, Information and Support Regarding Products
Withdrawn................................................... 8
2.14 Purchase Orders............................................... 8
3 OBLIGATIONS AND COVENANTS OF SUPPLIER.............................. 9
3.1 New Products.................................................. 9
3.2 Supplier Suggested International Price Schedule............... 9
3.3 Product and Service Promotional Materials..................... 9
3.4 Supplier Support of Distributor Marketing Programs............ 9
3.5 Trade Show Responsibilities of Supplier....................... 9
3.6 Product Localization.......................................... 9
3.7 Product Shipment.............................................. 10
3.8 Supplier Compliance with Applicable Export Laws............... 10
3.9 Supplier Support for Importation of Products.................. 10
3.10 Obsolete Demonstration Products............................... 10
3.11 Technical Support Information and Materials................... 11
3.12 Technical Seminars and Training............................... 11
3.13 Product Warranty.............................................. 11
3.14 Product Technical and Application Support..................... 11
3.15 Confidentiality of Information................................ 12
3.16 Supplier Master License Agreement............................. 12
4 OBLIGATIONS AND COVENANTS OF DISTRIBUTOR........................... 12
4.1 Business Processes and Marketing of Products by Distributor
in the Territories.......................................... 12
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
4.2 Marketing and Sales Process Activities........................ 12
4.3 Customer Demonstration and Evaluation Product Order by
Distributor................................................. 13
4.4 Use of Supplier Trade Names, Trademarks and Logotypes......... 14
4.5 Assessment of Customer Requirements........................... 14
4.6 Reports and Forecasts......................................... 14
4.7 Records Requirements.......................................... 14
4.8 Product Identification Maintenance by Distributor............. 14
4.9 Product Technical and Operational Knowledge................... 14
4.10 Support Engineering........................................... 15
4.11 Distributor Service Program................................... 15
4.12 Warranty Restrictions......................................... 15
4.13 Confidential Information...................................... 15
4.14 Distributor Compliance with Laws and Regulations.............. 15
4.15 Competitive Product Restrictions.............................. 15
5 TERM AND TERMINATION............................................... 16
5.1 Term of the Agreement......................................... 16
5.2 Notice of Termination......................................... 16
5.3 Termination Prior to Completion of the "Initial Period"....... 16
5.4 Termination for Breach........................................ 16
5.5 Causes of Termination......................................... 16
5.6 Termination Rights of Distributor............................. 17
5.7 End of Distributor Representation of Supplier upon Termination 17
5.8 Continuity Upon Termination................................... 17
5.9 Limitations of Liability...................................... 18
6 INDEMNIFICATION AND LIMITATION OF LIABILITY........................ 19
6.1 General Indemnification....................................... 19
6.2 Supplier Limited Warranty..................................... 19
6.3 Limitations and Disclaimers As Essential Basis of Bargain..... 19
7 RELATIONSHIP OF THE PARTIES........................................ 19
8 ASSIGNMENT......................................................... 20
8.1 No Assignment Without Consent................................. 20
8.2 Distributor Affiliate Assignment.............................. 20
9 FORCE MAJEURE...................................................... 20
10 NOTICES............................................................ 20
11 WAIVER AND SURVIVAL................................................ 21
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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11.1 Waiver Limitations............................................ 21
11.2 Survival of Agreement Provisions.............................. 21
12 COMPLETE AGREEMENT................................................. 21
13 COUNTERPARTS....................................................... 21
14 ARBITRATION AND LAW APPLICABLE..................................... 21
14.1 Dispute Resolution via Arbitration............................ 21
14.2 Rights Regarding Arbitration Documents Review................. 21
14.3 Arbitration Law to be Applied................................. 22
14.4 Governing Language............................................ 22
EXHIBIT A. STANDARD PRODUCTS PRICING................................. 23
EXHIBIT B. TERRITORIES ASSIGNED UNDER THIS AGREEMENT................. 25
EXHIBIT C. SUPPORT OBLIGATIONS....................................... 26
EXHIBIT D. DEMONSTRATION AND EVALUATION PRODUCT ORDER BY
DISTRIBUTOR............................................. 27
EXHIBIT E. SPLIT COMPENSATION FOR MULTI-TERRITORY SALE AND SUPPORT
RESPONSIBILITY SHARING.................................. 28
</TABLE>
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 4
<PAGE>
1 DISTRIBUTION AGREEMENT DECLARATIONS
THIS AGREEMENT is made and entered into on this 15th day of March by and
between HPL INC., a corporation organized and existing under the laws of
the UNITED STATES OF AMERICA with its principal place of business at
2033 GATEWAY PLACE, SAN JOSE, CA 95110 (hereafter "Supplier") and CANON
SALES CO., INC., a corporation organized and existing under the laws of
Japan, with its principal place of business at 22-12-23, KONAN,
MINATO-KU, TOKYO 108-0075, JAPAN (hereafter "Distributor").
WHEREAS, Supplier is the owner of certain computer programs and is the
provider of related service Products, for use in the semiconductor
industry (the "Products"), which Products are more particularly described
in Exhibit A attached hereto; and wishes to expand its market for the
Products in the geographical areas (the "Territories") set forth in
Exhibit B attached hereto;
WHEREAS, Supplier wishes to appoint Distributor and Distributor wishes
to accept such appointment, as the independent, exclusive (except for
possible direct OEM customers of supplier as described herein)
distributor of the Products in the Territories on the terms and
conditions set forth herein; and
WHEREAS, Distributor wishes to assign this Agreement to those of its
subsidiaries and affiliates in the respective Territories more
particularly described in Exhibit B attached hereto and Supplier
acknowledges the benefits of that assignment.
NOW, THEREFORE, Supplier and Distributor agree as follows:
2 APPOINTMENT OF DISTRIBUTOR; TERMS OF PRODUCT AND SERVICES SALES
2.1 Appointment and Exclusive Right
Subject to all of the terms and conditions of this Agreement, Supplier
hereby appoints Distributor, and Distributor hereby accepts such
appointment, an exclusive right to solicit and collect orders for
licensed use of the Products by others ("Licensed Users") within the
Territories. Said exclusivity, however, shall not apply to sale to and
licensed use of the Products by customers of Supplier OEM customers,
which sell Product use licenses as standard or optional elements of
either hardware or software Products under an OEM agreement with
Supplier. An OEM (Original Equipment Manufacturer) is defined as an
entity that purchases products and incorporates them into their own
products. For example, HP bundles Supplier's BitMapView with their
Agilent Versatest Series.
2.2 Limited Agent Authority of Distributor
Distributor shall hold itself out to customers only as a limited agent
of Supplier. Distributor shall have no authority to accept on behalf of
Supplier any offer except as provided herein. Distributor shall make no
warranties with respect to the Products which exceed the Warranties made
by Supplier, except as by written agreement by Supplier.
2.3 Supplier Obligations Regarding Customers in Territories Assigned to
Distributor
Supplier shall not sell the Products directly to end-use customers in
the Territories. Supplier shall refer to Distributor, within two weeks,
all orders and inquiries relating to the Products
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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originating from within or outside the Territories to the extent such
orders or inquiries relate to Products destined for use within the
Territories.
2.4 Limitations Regarding Customers Outside Territories Assigned to Distributor
Distributor shall not sell the Products directly to customers outside
the Territories and shall refer to Supplier within two weeks all orders
and inquiries relating to the Products originating from within or
outside the Territories to the extent such orders or inquiries relate to
Products destined for use outside the Territories. In the event of
purchase of Products by customer inside the Territories for use outside
the Territories Distributor will be compensated for sales process
portion of the sales as specified in Exhibit E.
2.5 Limitations on Products Purchased Outside Territories
In any License Agreements outside the Territories subsequent to the date
of this Agreement, Supplier will require that the Products purchased
elsewhere may not be installed within the Territories of this Agreement
without appropriate compensation to Distributor as provided in Exhibit E.
2.6 Supplier Obligations Regarding Distribution Conflict
In negotiation or renegotiations of any agreement with any of its other
distributors, agents or employees subsequent to the date of this
Agreement, Supplier will insist upon a covenant that such other
distributor, agent or employee will not seek customers or establish a
branch or maintain any distribution outlet in conflict with the terms of
this Agreement during the term of this Agreement.
2.7 Product Rights and Restrictions
Distributor recognizes and agrees that the Products and all
reproductions thereof, or any parts hereof, including all translations
and derivatives, are and shall be the exclusive and confidential
property and trade secrets of Supplier. Distributor may not alter the
Products without the prior written permission of Supplier. Neither the
Products nor any parts thereof shall be copied or modified by
Distributor for any purpose outside the scope of this Agreement.
2.8 Transfer Price
The Transfer Price paid by Distributor to Supplier for Products,
licenses and services shall be determined by standard discount terms
applied as a function of customer purchase order price (for standard
software Products) as compared to the suggested international list
prices published by Supplier as described in Exhibit A. Supplier
Suggested International List Prices shall generally apply and discount
terms to Distributor shall be reviewed and considered for adjustment as
described in Exhibit A. Supplier may make changes to its Supplier
Suggested International List Price schedule at any time upon 30 days
written notice to Distributor. However, outstanding customer quotations
based upon the price list in effect prior to a price change shall be
honored for up to 90 days from the date of notice of the price change.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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2.9 Distributor Pricing to Customers in the Territories
Prices charged customers for standard Products sold by Distributor in
the Territories shall be at the discretion of Distributor. Price
quotations shall include, in addition to prices for standard Product
software licenses all Distributor and Supplier Support costs not
otherwise quoted as a separate line item for the customer. All support
services required by Distributor on behalf of the licensed customer
shall be the financial responsibility of the Distributor except as
otherwise noted and agreed by Supplier and Distributor in writing in
conjunction with specific customer cases.
2.10 Payment Collection
Distributor shall collect full payment for the orders received and will
pay Supplier the Supplier's portion in US Dollars, as set out in Exhibit
A attached hereto. Distributor agrees to pay Supplier portion in
electronic transfer within 30 days of shipment of Product to Distributor.
2.11 Tax Collection and Tax Payment Responsibilities of Distributor
All orders quoted by Distributor shall include value added tax (V.A.T.)
as required by the local government as well as any and all import and/or
export taxes levied by any government which imposes taxes on the
transaction or shipment and delivery processes. The responsibility for
collecting these taxes and any other local taxes or duties imposed, and
the subsequent payment to the government responsible for the taxation
belongs entirely with Distributor, and Supplier will in no way be
involved with this process or liable for any unpaid taxes. Appropriate
uplift of prices quoted and charged customers above the "International
Price" in order to cover all taxes imposed is the sole responsibility of
the Distributor. "International Prices" provided by Supplier are to be
always taken as exclusive of all taxes.
2.12 New Products Notification and Information to Distributor
Supplier shall provide written notice of any new Product to be released.
Supplier will provide sufficient information to update Product (as
described in Exhibit A) and price lists and will not unreasonably
withhold agreement on such changes as reflected in updated Distributor
Pricing Schedule. Updated Product price list will be sent to Distributor
the earlier of the following two scenarios: market conditions change
significantly or quarterly (every 3 months). Product price list is an
addendum and should not be part of the Distributor Agreement.
2.13 Notification, Information and Support Regarding Products Withdrawn
Supplier shall provide written notice of any Product to be withdrawn
from Supplier's Marketing Program. Supplier shall maintain support for
said withdrawn Product for three years following the effective date of
withdrawal from marketing, provided the customer has maintained an
on-going service and maintenance agreement with Distributor on an
uninterrupted basis.
2.14 Purchase Orders
Purchase orders from the customer for the Products in the Territories
are to be addressed to Distributor. Distributor shall in turn place a
purchase order with Supplier for the amount of the Supplier's portion,
and Supplier will ship the Products to the Distributor except as
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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otherwise specified by the Distributor in the purchase order to the
supplier. Distributor shall provide a copy of original customer purchase
order to Supplier along with the order placed by Distributor to Supplier
on behalf of the customer. If customer purchase order is delayed the
Distributor can still place an order with Supplier on behalf of the
customer, as described above, with the exception that the Distributor
now has up to ninety (90) days to provide Supplier with a copy of
customer's original purchase order to Distributor.
3 OBLIGATIONS AND COVENANTS OF SUPPLIER
3.1 New Products
Supplier will develop new and updated Products to meet industry
requirements and provide technological advances. Supplier shall provide
Distributor a schedule for release of new and revised Products. This
schedule shall be made available as an element of the annual business
plan for the Territories and shall be updated as to any changes on a
quarterly basis during the last week of each quarter.
3.2 Supplier Suggested International Price Schedule
Supplier shall advise Distributor of Supplier schedule of suggested list
prices for customers outside the US, within 30 days of signing this
agreement, and Supplier shall also advise Distributor of any changes to
said prices within 30 days of such changes being made.
3.3 Product and Service Promotional Materials
Supplier will supply Distributor with a reasonable quantity of current
promotional materials, such as demo disks, literature, catalogues,
posters and panels, and other advertising materials relating to the
Products. Distributor shall have the right to incorporate Supplier's
literature into Distributor's literature. Distributor may offer any such
combined work Product to Supplier for its prior review in the interest
of assuring accuracy and completeness of the information therein.
3.4 Supplier Support of Distributor Marketing Programs
From time to time, Distributor may engage in intensive marketing
activities such as trade shows, seminars, direct mailings, or special
promotions. With suitable notice, Supplier shall support such activities
with brochures and materials, special demonstration software, presenters
and experts. Insofar as such campaigns benefit both parties, Supplier's
support will be provided at its own expense.
3.5 Trade Show Responsibilities of Supplier
At trade shows within the Territories, show costs (booth rental, booth
design, set-up, dismantling, entertainment, etc.) will be borne by
Distributor. Supplier shall be responsible for travel costs of its
personnel and transportation costs of its equipment to and from the show
place. Distributor will allocate space for representation of Supplier
Products and services at all semiconductor industry trade events in
which the Distributor participates.
3.6 Product Localization
3.6.1 Definition of Product Localization
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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Product Localization refers to any development, marketing or sales
activity required to adapt the core Product, marketing and sales
programs which Supplier has undertaken for the US market, to the primary
language, culture, practices or specific customer requirements in the
Territories.
3.6.2 Standard Level of Localization of Supplier Products in the
Territories
The standard language of Product user interface, documentation, and
labeling is English. The Products shall be developed and tested to run
properly on the version of the Windows operating system implemented in
the primary language of the Territories. The Product shall support data
formats consistent with support of the local language according to the
capabilities of localized versions of the combination of the Windows
operating system, data base and other system software utilized by the
Supplier Product but which is outside the development control of the
Supplier.
3.6.3 Extended Localization
Extended Localization refers to modifications to the Product, marketing
and sales programs for the Territories beyond Standard Localization as
defined in 3.6.1. If requested by Distributor, Supplier will localize
the Product as well as marketing and sales programs for the Territories,
including but not limited to modifications to the License Agreement and
country-specific labeling or packaging. Unless otherwise agreed in
writing, Costs for Extended Localization shall be borne and paid by the
Distributor.
Supplier and Distributor shall both agree that proposed Extended
Localization actions are commercially viable and such agreement shall
not be unreasonably withheld. Any Extended Localization programs as
agreed by the Parties shall be documented in writing as to
specifications, schedule and cost responsibility of both Supplier and
Distributor for the specified Extended Localization.
3.7 Product Shipment
Supplier shall ship the Products to fulfill orders in the Territories to
the Distributor or according to Distributor instructions in the purchase
order submitted to Supplier by Distributor.
3.8 Supplier Compliance with Applicable Export Laws
Supplier agrees to comply with all applicable export control laws and
regulations relating to the Products. Supplier will also use its best
efforts to provide information necessary for Distributor to comply with
all applicable export control laws and regulations relating to the
Products.
3.9 Supplier Support for Importation of Products
Supplier will use its best efforts to assist Distributor to facilitate
any import processing by providing Distributor with all required
documents and information.
3.10 Obsolete Demonstration Products
Supplier shall replace by exchange obsolete Demonstration Products
either purchased by Distributor or otherwise supplied to Distributor by
Supplier. Such Demonstration Products which are superseded by new or
updated Products, shall be exchanged by Supplier for the upgraded
Product at no additional charge upon return of the outdated Product to
Supplier.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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3.11 Technical Support Information and Materials
Supplier will supply all information and material required for
Distributor to provide the necessary technical support. This can
include, but is not limited to, Products, replacement parts including
diskettes, CDs, license security devices, user manuals, special software
or documents for installation or problem analysis. Supplier shall
provide such information and material free of charge. In cases where
replacement parts are necessary, Distributor shall return all bad or
obsolete parts to Supplier.
3.12 Technical Seminars and Training
Where appropriate and commercially reasonable, Supplier will conduct
technical seminars for existing and potential users and provide training
for sales and services related to the Products for the benefit of
Distributor's employees. Each party shall be responsible for the
expenses, including salaries, cost of transportation, meals and lodging,
incurred by its own employees attending such seminars or training.
3.13 Product Warranty
Supplier shall remove all defects in the Products, including parts
thereof, which arise within 12 months of installation and acceptance
verification (according to the criteria of the PO, if any) by the
Licensed Customer, provided that the customer does not unduly delay
installation of the Product or acceptance testing according to schedule
milestones specified in the Purchase Order. In the case of an
installation or acceptance test delay mandated by the customer, the
warranty period shall begin 30 days following receipt of the software by
the customer.
During the Warranty Period, Supplier personnel shall answer and log all
questions regarding bug fixes, known faults, and available fixes or
workarounds. In the event of an occurrence of bugs or faults in the
software during the Warranty Period, Customer Support shall be provided
by the Supplier according to the severity of the problem experienced.
When a Licensed User's ability to operate the Product or perform his
normal business is impacted by a defect in the Product, Supplier must
promptly advise what action is planned to correct the problem, when it
will be complete, and if an interim workaround is possible.
3.14 Product Technical and Application Support
During the first year of system operation, it shall be required that a
mandatory paid support program for the Product is in force under the
terms of the Purchase Order. Under the terms of this paid support
program Supplier shall answer detailed technical and application
questions posed by the Customer through trained Distributor application
engineering personnel. Continuation of Supplier Product Technical and
Application Support after expiration of the mandatory first year
technical support program shall be provided only if the maintenance and
support program is renewed for ensuing annual periods following the
expiration date of the mandatory support program.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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3.15 Confidentiality of Information
Without Distributor's prior written consent, Supplier will not use,
reproduce, disclose or otherwise make available to any person, other
than Supplier's employees or agents who have a need to know such
information, any and all information, written or oral, which is
disclosed by Distributor to Supplier, identified as confidential
information and not generally available to the public. All such
information in written form deemed Confidential shall be explicitly
marked as "CONFIDENTIAL" on each page of the confidential document.
Confidential information provided orally to Distributor personnel, shall be
identified at the time of the disclosure in written memo form, signed by
appropriate Supplier and Distributor personnel engaged in an oral
Confidential Disclosure situation.
3.16 Supplier Master License Agreement
The Supplier Master License Agreement, which must be accepted by each
Licensed Customer prior to utilization of the software Products, shall
be modified by Supplier to appropriately reflect the role of the
Distributor in representing the Supplier as the independent, exclusive
(except for possible direct OEM customers of Supplier) distributor of
the Products in the Territories. This modification shall be made and
approved in writing by both Supplier and Distributor prior to granting
of any paid Product Licenses in the Territories.
4 OBLIGATIONS AND COVENANTS OF DISTRIBUTOR
4.1 Business Processes and Marketing of Products by Distributor in the
Territories
Distributor shall use best efforts to plan the business and market the
Products in the Territories. Distributor shall prepare, adopt, and
implement a business, marketing and sales plan of reasonable scope and
detail, and shall dedicate sufficient personnel and resources for the
advancement and accomplishment of such plan. Supplier shall review such
plan (and its updates). The plan will encompass both businesses,
marketing and sales processes including but not limited to such
endeavors as follows:
4.1.1 Business Process Activities
Business process activities refers to those practices which relate to
modeling and understanding the market environment, setting strategy and
tactical plans, setting sales goals and targets for the period and
forecasting overall financial performance, challenges and issues.
Generally these practices are exercised for 2-3 year periods at a time
on an annualized basis with details enumerated for one year out and
generalized trends and goals for the second and third year of the three
year planning period. In addition, the detailed annual plans are
typically updated on a quarterly basis as necessary to reflect required
short-term changes to the plan as dictated by market conditions such as
competitor or customer moves. A forecast summary, projecting sales and
known or estimated customer budgeting information, shall be prepared and
provided to Supplier during the first week of each calendar quarter.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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4.2 Marketing and Sales Process Activities
These processes refer to those practices and programs, which relate to
messaging to and awareness development of customers and to the actual
tactical activities, which relate directly to creating customers and
orders. Distributor will comply with Supplier's standard policies and
procedures for marketing the Products, with due consideration for the
local marketing environment in the Territories. For the first year in
which this agreement is in effect, it is expected that planning and
execution of these will be via close cooperation of Supplier and
Distributor. Later, when Distributor personnel and experience have
developed (nominally over the course of one year) it is anticipated that
Distributor will become more independent in the planning and execution
of these processes and activities.
4.2.1 Marketing
Key marketing activities expected but not limited to in the first
year of this agreement include:
- Participation in Semiconductor Trade Shows in the Territories.
- Strategic Account Visits to Present HPL Products and Services
according to an agreed upon account presentation plan.
- Planning and execution of seminars on HPL Products and services
(one per quarter in 2000 recommended).
- Direct mail campaign to alert customers to new HPL-Canon
relationship.
- Release of press releases in the Territories.
- Distribution of Product and company literature in the territories
to major customer prospects.
4.2.2 Sales
Distributor shall prepare a quarterly plan for sales activities
including follow-through planned for existing sales opportunities
as well as a new prospects "hit list." Distributor sales
personnel shall provide a report on sales activity on a monthly
basis via email to the VP of Business Development and Sales of
Supplier. Distributor sales personnel shall maintain a customer
profile sheet (sometimes referred to as a blue sheet) on each
customer documenting location, requirements, budgets, contacts,
assessment of opportunities and forecast. Distributor agrees to
update customer profile sheets on a monthly basis and send
updates via email to Suppler VP of Business Development and Sales.
Supplier and Distributor shall cooperate aggressively to close
sales as quickly as reasonably possible.
4.3 Customer Demonstration and Evaluation Product Order by Distributor
Distributor agrees to purchase an initial suite of Supplier software
Products for utilization in Distributor customer demonstration and
evaluation activities. This Purchase shall encompass a single sample of
all unique and new Products to be handled by Distributor in the
Territories. The list of Products purchased shall be consistent with the
Products being made available to Distributor as represented in Exhibit D
and which are of immediate interest to potential Distributor customers.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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Customer Demonstration and Evaluation Products may be exchanged at their
purchase value for credit toward new Products or may be sold to
customers (up to twice per year per Product) at the discretion of the
Distributor. Customer demonstration software purchased by Distributor
shall be supported in terms of defect fixes and upgrade according to
Supplier's normal warranty and paid support policies.
In addition to the Customer Demonstration and Evaluation software
purchased by Distributor, Supplier may make available special
demonstration versions of the software as well as Distributor internal
use copies at no charge to Distributor. All copies of the software
purchased from or otherwise provided by Supplier to Distributor shall be
subject to the license control measures then in use by Supplier.
Discount and payment terms for Customer Demonstration and Evaluation
Products shall be the same as specified herein for end user software
license purchase except that the discount granted on Customer
Demonstration and Evaluation Products shall be 40% (this discount is
specifically applicable only to software licenses).
4.4 Use of Supplier Trade Names, Trademarks and Logotypes
During the term of this agreement, Distributor may use, and agrees to
use in marketing the Products, Supplier's trade names, trademarks, and
logotypes. Each such use shall contain a notice that the trademarks are
the property of Supplier.
4.5 Assessment of Customer Requirements
Distributor will assist Supplier in assessing customer requirements for
the Products and in developing modifications and improvements of the
Products.
4.6 Reports and Forecasts
Distributor shall furnish to Supplier, on a quarterly basis, reports as
to actual and forecast sales, market conditions and competitive
activity. In addition, Supplier shall provide on an annual basis, due by
January 15 each year, an annual summary of results, market conditions
summary in the Territories and marketing and sales plans for the coming
year. Strengths, weaknesses, opportunities and threats should be
identified as well in the annual report along with recommendations for
improving business in the Territories. All pertinent information, which
will help ameliorate Product(s), provided by customer to Distributor,
whether oral or written, should be conveyed to the Supplier within one
month.
4.7 Records Requirements
Distributor will maintain, for at least two years after termination of
this Agreement, its records, contracts and accounts relating to
distribution of the Products, and will permit examination thereof by
authorized representatives of Supplier at all reasonable times.
4.8 Product Identification Maintenance by Distributor
Distributor will market and sell the Products without removing or
altering any labels, trade names, trademarks, notices, labels, serial
numbers or other identifying marks, symbols or legends affixed to any of
the Products or their containers or packages.
4.9 Product Technical and Operational Knowledge
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 13
<PAGE>
Distributor personnel assigned to marketing, sale and support of the
Products will become familiar with the technical and operational
functions and features of the Products prior to selling them.
4.10 Support Engineering
Distributor will provide support engineering personnel to acquire
sufficient training to supervise and execute technical support
activities throughout the Territories to meet all requirements as
provided in the support policies and support plans for the Territories.
Costs for such training are borne by Distributor and Supplier each for
their own personnel. In the case of training in the U.S., Distributor
pays expenses of the airfare, hotel, meal and labor of Distributor's
attendees. In the case of training in Japan, Supplier pays expenses of
the airfare, hotel, meals, and labor of Supplier's personnel required to
execute the training.
4.11 Distributor Service Program
Distributor shall maintain and operate the service program for the
Products, as described in Exhibit C, and respond to and complete all
service calls from its Licensed Users in a reasonable, prompt, and
workmanlike manner.
4.12 Warranty Restrictions
Distributor shall make no warranties with respect to any of the Products
that exceed the Warranties made by Supplier. Those Warranties may be
modified by mutual agreement and upon reasonable notice, provided,
however, that such amended Warranties will have no effect for Products
sold or Products which Distributor has entered into a contract to sell
but has not yet delivered, except as agreed in writing by Supplier.
4.13 Confidential Information
Distributor shall not use, reproduce, disclose or otherwise make
available to any person, other than Distributor's employees or agents
who have a need to know such information for the performance of its
obligations hereunder, any and all information, written or oral, which
is disclosed by Supplier to Distributor, identified as confidential
information and not generally available to the public. Written
confidential information provided exchanged between Supplier and
Distributor shall be marked "CONFIDENTIAL" on each page of the document.
Confidential information exchanged on an oral basis, shall be identified
at the time of the exchange in written memo form, signed by appropriate
Distributor and Supplier personnel involved in the oral exchange.
4.14 Distributor Compliance with Laws and Regulations
Distributor will comply with all applicable international, national,
state, regional and local laws and regulations in performing its duties
hereunder and in any of its dealings with respect to the Products. In
this regard, Distributor acknowledges that the Products including
documentation and other technical data are subject to export controls
imposed by the U.S. Export Administration Act of 1979, as amended (the
"Act"), and the regulations promulgated thereunder. Distributor will not
export or re-export (directly or indirectly) any Products or
documentation or other technical data therefor without complying with
the Act and the regulations thereunder.
4.15 Competitive Product Restriction
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 14
<PAGE>
Distributor shall not represent and/or distribute any software products,
competing in whole or in part with Supplier's Product(s). The
Distributor shall always inform the Supplier of any competing software
that Distributor plans to sell, give away, install, transfer, copy,
distribute, to current or potential customer(s) or client(s) within
Distributor's territory. Software is considered "conflicting software"
if five per cent (5%) or more of its total functionality is identical to
Supplier software(s). This five percent (5%) identical functionality
shall be applied on the entire existing Supplier Product line and
Products that are intended to be available within the next eighteen (18)
months.
5 TERM AND TERMINATION
5.1 Term of the Agreement
Unless and until sooner terminated as provided for herein, this
Agreement shall continue for a term of three full years after the date
of the agreement (the "Initial Period") from March 1, 2000 to March 31,
2003 and will be deemed automatically renewed on an annual basis for an
additional year and on the same conditions beginning on April 1 of the
year of expiration.
5.2 Notice of Termination
After the "Initial Period" either party may terminate this Agreement by
giving the other party 6 months written notice of termination.
5.3 Termination Prior to Completion of the "Initial Period"
Prior to the completion of the Initial Period as defined above, neither
Distributor nor Supplier may choose to terminate this Agreement except
as specified for "Breach" as defined in following sections of this
agreement. In the event that, prior to completion of the "Initial
Period," results of efforts to market and sell the Product in the
Territories proves unsatisfactory to either party, the dissatisfied
party may pursue a process of independent arbitration as described below
in Section 14. A duly appointed arbitrator shall decide, upon
examination of business process documentation between the two parties
and assessment of market conditions, whether, indeed either party has
failed to pursue the business according to written plans and
expectations and shall make recommendations as to corrective actions,
conditions for continuance of the agreement or termination of the
agreement.
5.4 Termination for Breach
In the event of a breach of any material provision, this Agreement may
be terminated upon 60 days' written notice given by the terminating
party to the other party, which notice shall specify the breach on which
the termination is based, provided, however, that in such event this
Agreement shall continue in full force and effect without regard to such
notice if the other party cures the breach specified in the notice
within the said 60-day period.
5.5 Causes of Termination
This Agreement will terminate upon the occurrence of any of the
following events:
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 15
<PAGE>
5.5.1 All or any substantial part of the property of either party shall
be condemned, seized or otherwise appropriated, or the custody or
control of such property shall be assumed by any person or agency
acting or purporting to act under authority of any government (de
jure or de facto) or either party shall have been prevented from
exercising normal managerial control over all or any substantial
part of its property by any such person or agency;
5.5.2 Either party shall (i) apply for or consent to the appointment of
a receiver, trustee or liquidator for its business or of all or
any substantial part of its assets, or (ii) be unable, or admit
in writing its inability, to pay its debts as they mature, (iii)
make a general assignment for the benefit of creditors, (iv) be
adjudicated as bankrupt or insolvent, or (v) file a voluntary
petition in bankruptcy or a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to
take advantage of any insolvency law, or file an answer admitting
the material allegations of a petition filed against either party
in any bankruptcy, reorganization or insolvency proceeding, or
take corporate action for the purpose of effecting any of the
foregoing;
5.5.3 An order, judgement or decree shall be entered without the
application, approval or consent of the subject party by any
court of competent jurisdiction, approving a petition seeking
reorganization of the party or appointing a receiver, trustee or
liquidator of its business or of all or any substantial part of
its assets; or
5.5.4 An order or notice shall be published by any government or
inter-government authority requiring the cessation of trading
activities with the subject party as a result of the violation of
export controls or other regulatory laws.
5.6 Termination Rights of Distributor
Upon termination of this Agreement, Distributor shall no longer have the
right to act as a distributor of the Products in the Territories.
5.7 End of Distributor Representation of Supplier Upon Termination
Upon termination of this Agreement, Distributor shall cease to represent
itself as being a distributor of Supplier. Within 60 days after
termination Distributor will return to Supplier all promotional
materials and samples and demonstration models of the Products.
5.8 Continuity Upon Termination
Notwithstanding termination of this Agreement upon notice as provided in
preceding clauses, Supplier shall continue to provide Products in
conformity with and on the terms of this Agreement. Further, in the
period of six months (the "Transition Period") following a termination
upon notice.
5.8.1 Distributor will inform all Licensed Users of the termination of
this Agreement and inform them to contact Supplier directly for
further Information.
5.8.2 Distributor will complete all sales activities commenced prior to
the start of the transition period. Distributor shall notify
Supplier, by the termination date, of a list of
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 16
<PAGE>
all such accounts. The Terms of Product Sales as provided in
Section 2 will apply to any ensuing sales in these accounts.
5.8.3 Distributor will not commence any new sales activities.
5.8.4 Distributor will complete any existing maintenance contracts
explicitly made in writing or as a standard element of a sale or
licensing provision between Customers and Distributor in
conjunction with Supplier Product sales or support in the
territories, until such time as Supplier has designated an
alternative for completing such contracts acceptable to the
Distributor and Supplier.
5.8.5 Any requests for new maintenance contracts will be directed to
Supplier.
5.8.6 Except as necessary to support Licensed-users, property of either
party in the possession of the other party and all copies thereof
will be returned to the owner and no further use will be made of
said property.
5.8.7 Distributor is free to engage in commercial activities involving
competitive products after 24 months have passed following the
date of termination of this agreement.
5.9 Limitations of Liability
NEITHER SUPPLIER NOR DISTRIBUTOR WILL BE LIABLE TO THE OTHER ON ACCOUNT
OF TERMINATION OR EXPIRATION OF THIS AGREEMENT FOR REIMBURSEMENT OR
DAMAGES, FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, THE LOSS OF GOODWILL,
PROSPECTIVE PROFITS OR ANTICIPATED INCOME, OR ON ACCOUNT OF ANY
EXPENDITURES, INVESTMENTS, LEASES OR COMMITMENTS MADE BY EITHER SUPPLIER
OR DISTRIBUTOR OR FOR ANY OTHER REASON WHATSOEVER BASED UPON OR GROWING
OUT OF SUCH TERMINATION OR EXPIRATION.
Distributor acknowledges that:
(i) DISTRIBUTOR WAIVES ANY RIGHT IT MAY HAVE TO RECEIVE ANY
COMPENSATION OR REPARATIONS ON TERMINATION OR EXPIRATION OF THIS
AGREEMENT UNDER THE LAW OF THE TERRITORIES OR OTHERWISE, OTHER
THAN AS EXPRESSLY PROVIDED IN THIS AGREEMENT
(ii) Distributor has no expectation and has received no assurances
that any investment by Distributor in the promotion of the
Products will be recovered or recouped or that Distributor will
obtain any anticipated amount of profits by virtue of this
Agreement, and
(iii) Distributor will not have or acquire by virtue of this Agreement
or otherwise any vested, proprietary or other right in the
promotion of the Products or in "goodwill" created by its efforts
hereunder.
THE PARTIES ACKNOWLEDGE THAT THIS SECTION HAS BEEN INCLUDED AS A
MATERIAL INDUCEMENT FOR SUPPLIER TO ENTER INTO THIS AGREEMENT
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 17
<PAGE>
AND THAT SUPPLIER WOULD NOT HAVE ENTERED INTO THIS AGREEMENT BUT FOR THE
LIMITATIONS OF LIABILITY AS SET FORTH HEREIN.
6 INDEMNIFICATION AND LIMITATION OF LIABILITY
6.1 General Indemnification
Distributor hereby agrees to indemnify and hold Supplier harmless from
and against any and all damages, liabilities, fines or expenses incurred
by Supplier as a result of Distributor's breach of any provision hereof.
6.2 Supplier Limited Warranty
SUPPLIER MAKES NO WARRANTIES OR REPRESENTATIONS AS TO PERFORMANCE OF
SUPPLIER PRODUCTS OR AS TO SERVICE TO DISTRIBUTOR OR TO ANY OTHER
PERSON, EXCEPT AS SET FORTH IN SUPPLIERS LIMITED WARRANTY ACCOMPANYING
DELIVERY OF THE PRODUCTS. SUPPLIER RESERVES THE RIGHT TO CHANGE THE
WARRANTY AND SERVICE POLICY SET FORTH IN SUCH LIMITED WARRANTY, OR
OTHERWISE, AT ANY TIME, WITHOUT FURTHER NOTICE AND WITHOUT LIABILITY TO
DISTRIBUTOR OR TO ANY OTHER PERSON. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, SUPPLIER HEREBY EXCLUDES ALL IMPLIED WARRANTIES,
INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
REGARDLESS WHETHER ANY REMEDY SET FORTH HEREIN OR IN SUPPLIER'S LIMITED
WARRANTY ACCOMPANYING DELIVERY OF THE PRODUCTS FAILS OF ITS ESSENTIAL
PURPOSE OR OTHERWISE, SUPPLIER WILL NOT BE LIABLE FOR ANY LOST PROFITS
OR FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR
OTHER SPECIAL DAMAGES SUFFERED BY DISTRIBUTOR, ITS CUSTOMERS OR OTHERS
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PRODUCTS, FOR ALL
CAUSES OF ACTION OF ANY KIND (INCLUDING TORT, CONTRACT, NEGLIGENCE,
STRICT LIABILITY AND BREACH OF WARRANTY) EVEN IF SUPPLIER HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6.3 Limitations and Disclaimers as Essential Basis of Bargain
Distributor acknowledges that Supplier has set its prices and entered
into this Agreement in reliance on the disclaimers of liability, the
disclaimers of warranty and the limitations of liability set forth in
this Agreement and that the same form an essential basis of the bargain
between the parties.
7 Relationship of the Parties
Neither Distributor, nor any employee of Distributor, shall be
considered an employee or agent of Supplier for any purpose. Unless
otherwise expressly authorized in writing by the other party hereto,
neither party shall have the right or authority to assume or create any
responsibility, express or implied, on behalf of or in the name of the
other party hereto, or
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 18
<PAGE>
to bind the other party in any manner whatsoever, or to accept payment
from any person on behalf of the other party.
8 ASSIGNMENT
8.1 No Assignment Without Consent
Neither this Agreement nor any right, title, interest or obligation
hereunder may be assigned or otherwise transferred by either party or
their assignees, transferees or successors in interest without the prior
written consent of the other party. This Agreement shall inure to the
benefit of such assignees, transferees and other successors in interest
of the parties in the event of an assignment or other transfer made
consistent with the provisions of this Agreement.
8.2 Distributor Affiliate Assignment
By its signature to the Agreement, Supplier consents to the assignment
of this Agreement to Distributor's affiliated companies in the
respective geographical areas set forth in Exhibit B attached hereto.
9 FORCE MAJEURE
Neither party shall be liable for any breach of this Agreement
occasioned by an act of God, labor dispute, unavailability of
transportation, goods or services, governmental restrictions or actions,
war (declared or undeclared) or other hostilities, or by any other
event, the condition or cause of which is beyond the control of such
party. In the event of non-performance or delay attributable to any such
causes, the period for performance of the applicable obligation
hereunder will be extended for a period equal to the period of delay.
However, the party so delayed shall use its best efforts, without
obligation to expend substantial amounts not otherwise required under
this Agreement, to circumvent or overcome the cause of the delay. In the
event that any such delay exceeds 60 days, either party may at its
option terminate this Agreement effective immediately by giving written
notice thereof to the other party.
10 NOTICES
Any notice required to be given hereunder shall be deemed to have been
effectively given only when delivered personally to an officer of the
applicable party, or when first sent by telex or FAX and confirmed by
registered mail, addressed to the applicable party at its address set
forth below, or at such other address as such party may hereafter
designate as the appropriate address for the receipt of such notice:
To Supplier at: HPL Inc.
2033 Gateway Place
San Jose, CA 95110
USA
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 19
<PAGE>
To Distributor at: Canon Sales Co., Inc.
2-12-23, Konan, Minato-Ku
Tokyo 108-0075, Japan
11 WAIVER AND SURVIVAL
11.1 Waiver Limitations
No waiver by either party of strict compliance with all terms and
conditions of this Agreement shall constitute a waiver of any subsequent
failure of the other party to comply strictly with each and every term
and condition hereof.
11.2 Survival of Agreement Provisions
Those provisions of this Agreement which are intended by their nature to
extend beyond termination shall survive in accordance with their terms.
12 COMPLETE AGREEMENT
This Agreement constitutes the entire agreement between the parties
relating to the subject matter contained herein and it supersedes any
and all prior agreements between them. If any provision, or application
hereof, of this Agreement is held unlawful or unenforceable in any
respect, such illegality or unenforceability shall not affect other
provisions or applications that can be given effect, and this Agreement
shall be construed as if the unlawful or unenforceable provision or
application had not been contained herein. This Agreement may be amended
or otherwise modified only by a written document signed by authorized
representatives of the parties.
13 COUNTERPARTS
This Agreement may be executed in two counterparts, each of which shall
be deemed an original, but both of which shall constitute but one
instrument.
14 ARBITRATION AND LAW APPLICABLE
14.1 Dispute Resolution Via Arbitration
Any dispute between the parties arising out of or in connection with
this Agreement that cannot be settled amicably between the parties,
shall be finally resolved by arbitration. Disputes, subject to
arbitration hereunder, shall be resolved by a panel of three independent
impartial arbitrators, one each to be nominated by the parties
respectively and the third (who shall be Chairman) to be nominated by
the first two arbitrators. Arbitration proceedings shall be conducted in
California, United States of America in the English language, pursuant
to the substantive law of the State of California as if the matter were
between two California residents, without giving effect to choice of law
principles thereof and excluding the Convention on Contracts for the
International Sale of Goods.
14.2 Rights Regarding Arbitration Documents Review
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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<PAGE>
Either party shall have the right to review, prior to the submission of
its case to the arbitration panel, any and all documents in the
possession of the other party which relate to such other party's
performance under, or the conduct of its activities in connection with
this Agreement.
14.3 Arbitration Law to be Applied
The arbitration panel shall apply the substantive laws of The United
States of America to resolve disputes arising hereunder (without giving
effect to the choice of law principles thereof).
14.4 Governing Language
The governing language of this Agreement shall be English.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
<TABLE>
<CAPTION>
DISTRIBUTOR SUPPLIER
----------- --------
<S> <C>
/s/ Hiroshi Shibuya /s/ David Y. Lepejian
Signed ----------------------------- Signed -----------------------------
Hiroshi Shibuya David Y. Lepejian
Print Name ------------------------- Print Name -------------------------
President and Chief Executive
Director & Group Executive Officer
Title ------------------------------ Title ------------------------------
3/24/2000 3/15/2000
Date: ------------------------------ Date: ------------------------------
</TABLE>
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 21
<PAGE>
EXHIBIT A. STANDARD PRODUCTS PRICING
A_1. SUPPLIER SUGGESTED INTERNATIONAL LIST PRICES AND DISTRIBUTOR DISCOUNTS
Supplier shall provide Distributor with a price list specifying the Suggested
International List Price of licenses to utilize its Products. In addition,
Supplier shall provide guidelines as to pricing for support services (such as
mandatory first year technical support, premium levels of technical support,
data integration and installation) and its support Products (turnkey
services, paid evaluations, etc.).
Supplier shall assist Distributor in preparation of Customer price quotations
as required. Distributor may request that quotations for a given set of
customer requirements be prepared by Supplier or Distributor may prepare a
proposed customer quotation and request that Supplier sales support or
marketing personnel check and validate the quotation in question. Negotiation
appropriate to assure the sale, meet competitive challenges and set discount
or other incentives in place shall be the joint responsibility of the
Supplier and Distributor.
Subject to the foregoing, the wholesale price paid for Product or license
fees by Distributor will be calculated according to the end customer purchase
order price and the suggested international list price (SILP) as follows:
<TABLE>
<CAPTION>
CUSTOMER PURCHASE
ORDER PRICE DISCOUNT TO SUPPLIER
----------------- --------------------
<S> <C>
SILP+[***]% or more [***]%
SILP-[***]% to SILP+[***]% [***]%
(SILP-[***]%) to (SILP-[***]%) [***]%
Less than (SILP-[***]%) Negotiated and only by written agreement
</TABLE>
Generally, discounts (if any) which are made available to customers are
applicable to software license fees only. Discounts specifically shall not
apply to support programs, data integration, installation, custom software
development, or hardware. Distributor discounts for support Products and
services are to be specified in the Support Plan for the Territories to be
completed as specified in Exhibit C. All prices provided to Distributor by
Supplier shall be in constant US Dollars.
A_2. PLAN AND PROCESS FOR REVIEW AND REVISION OF PRICING.
Pricing reviews will take place on an annual basis or as mutually agreed to
by the Companies. In the event of a market or business stimulus judged to
require pricing action according to the judgment of either company, a written
request and proposal for pricing review shall be made to the other company
and such request shall be reasonably honored. In the event that pricing
consistent with the current transfer price is not appropriate to the
prevailing competitive environment, the parties will meet to discuss revised
pricing. The principle shall be that if gross margin is reduced in response
to a competitive situation, the parties share the reduction.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 22
<PAGE>
A_3. CURRENCY TO CURRENCY VALUATION ADJUSTMENTS
Distributor shall be responsible for price adjustments pertaining to the
valuation of local currency versus the US Dollar. Payment will be in US
Dollars according to purchase order amounts regardless of the valuation of
local currency vs. the US Dollar.
A_4. PRODUCTS CURRENTLY AVAILABLE
- Memory Yield Director
- Defect YIELDirector
- Parametric YIELDirector
- ABACuS Signature Classification
- BitMap Navigator
- Layout Navigator
- NavigatorPro Navigator
- Yield Projector
- Reflex
- LayoutView w/cross-sectioning
- Safari
- Integrated Yield Management Training and Consulting Services
- Custom Software Development Service
- Custom Configured Solutons Based on above products
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 23
<PAGE>
EXHIBIT B. TERRITORIES ASSIGNED UNDER THIS AGREEMENT
The Territories covered by this Distribution Agreement and the company acting
as the respective distributor in each of those Territories is as follows:
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEOGRAPHIC REGION HPL EXCLUSIVE DISTRIBUTOR FOR NONE OEM PRODUCTS
--------------------------------------------------------------------------
<S> <C>
Japan Canon Sales Co., INC.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 24
<PAGE>
EXHIBIT C. SUPPORT OBLIGATIONS
SUPPORT SERVICES FOR SEMICONDUCTOR YIELD MANAGEMENT SOFTWARE
Supplier and Distributor together acknowledge that a critical success factor
for the Supplier-Distributor business relationship provided for in this
agreement is shared clear understanding and responsibility of customer
support applicable to the Yield Management Software Business. End use
customers of the Products and Services demand a very high standard for
support of the software they apply in their businesses.
During the first 90 days following mutual approval of this agreement,
Supplier and Distributor shall together prepare a support strategy and plan
which ensures that customers for Supplier Products in the Territories may be
fully supported according to equivalent competitive practices and the
expectations of Yield Management Software Products by customers in the
Territories. Distributor discounts and compensation for Support Products and
Services shall be specified according to the Support Strategy and Plan.
Wherever appropriate, support offered in the Territories shall be consistent
with Global Support Programs set in place by Supplier. However, in
recognition of market differences, Distributor shall cite appropriate
business case and customer demand differences which shall be factored into
support programs and strategies for the Territories.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 25
<PAGE>
EXHIBIT D. DEMONSTRATION AND EVALUATION PRODUCT ORDER BY DISTRIBUTOR
As provided in 4.3, Distributor shall place an order to Supplier for
demonstration and evaluation samples upon completion of this agreement as
follows:
<TABLE>
<CAPTION>
Qty Product Name Demo Unit Price
--- ------------ ---------------
<S> <C> <C>
1 ea 3-User Memory Yield Director $[***]
1 ea ABACuS Signature Classification System $[***]
1 ea BitMap Navigator $[***]
1 ea NavigatorPro Navigator $[***]
1 ea Yield Projector $[***]
1 ea LayoutView w/cross-sectioning $[***]
1 ea Defect YIELDirector (3 Users) $[***]
1 ea Parametric YIELDirector (3 Users) $[***]
1 ea Safari (Requires Unix Workstation) $[***]
1 ea Reflex $[***]
TOTAL DEMO/EVALUATION PRODUCT PURCHASE $[***]
DISCOUNTED PRICE TO DISTRIBUTOR (LESS 40%) $[***]
FUTURE NEW DEMO PRODUCTS TO BE PURCHASED DURING CALENDAR YEAR 2000
1 ea YIELD PROJECTOR DDE TBD
1 ea YIELD PROJECTOR S-o-C TBD
</TABLE>
The discount allowed on demo Product purchases is limited to software
licenses only as described in Section 4 and Exhibit A, and does not apply to
installation maintenance nor does it apply to additional custom work.
Note That the Demo units represents the lower bound of software configuration
and pricing. These pricing or configuration should not be used for customer
quotations.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 26
<PAGE>
EXHIBIT E. SPLIT COMPENSATION FOR MULTI-TERRITORY SALE AND
SUPPORT RESPONSIBILITY SHARING
It is likely that Distributor and Supplier may be involved in transactions
involving multi-national customers in which the actual sales process,
evaluation, sale, installation and post-installation support may be spread
across territorial boundaries and shared among multiple distribution and
support partners. In such an event, the terms of revenue sharing should be
agreed among all partners in writing. However, the general approach for split
of software license revenue credit among distributors shall proceed along the
following guidelines:
<TABLE>
<S> <C>
Original Product sales presentations and demonstrations [***]%
Secondary, localized Product sales and presentations process [***]%
</TABLE>
(In the event that both processes are deemed equal in magnitude and decision
impact a total of 30% shall be split evenly between the distributors).
<TABLE>
<S> <C>
Customer Order Submittal Support and Acceptance Processing [***]%
Including Development of Acceptance Criteria and Payment
Terms and Conditions
Local Installation and Acceptance [***]%
On-going Warranty, Maintenance and Application Support [***]%
</TABLE>
Revenue for services, support and hardware generally will be credited to the
Distributor in the territory in which the Supplier software is installed
except as otherwise specified by written agreement among Supplier and
Distributors involved in the multi-national transaction. Supplier vs.
Distributors portions of this revenue shall be governed by the discount price
structure defined in Exhibit A.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 27
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