Exhibit 10.9
Computer Access Technology Corporation
DISTRIBUTOR AGREEMENT
This Distributor Agreement (the "Agreement") is entered into in Santa
Clara, California, as of 13 August, 1997, by and between Computer Access
Technology Corporation, a California corporation with offices at 2403 Walsh
Avenue, Santa Clara, CA 95051-1302 ("Manufacturer"), and Toyo Corporation with
offices at 1-2, Hongokucho 1-chome, Nihonbashi, Chuo-ku, Tokyo 103 Japan.
("Distributor").
IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, THE PARTIES AGREE
AS FOLLOWS:
1. DEFINITIONS
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1.1. "Product" shall mean all of Manufacturer's products listed in Appendix
A attached hereto, including "Software", "Software Copy", and
"Hardware" as defined herein.
1.2. "Software" shall mean the most current version of the software products
listed in Appendix A attached hereto.
1.3. "Software Copy" or "Software Copies" shall mean an object code copy or
copies of any of the Software products, together with a copy or copies
of any user manual or other documentation customarily supplied to End-
Users by Manufacturer with the Software Copy.
1.4. "Hardware" shall mean any non-Software products, together with a copy
or copies of any user manual or other documentation customarily
supplied to End-Users by Manufacturer with the Hardware.
1.5. "End-User" shall mean any third party which obtains Hardware, Software,
or a Software Copy solely in order to fulfill its own needs.
1.6. "End-User License" shall, at any time during the term of this
Agreement, mean Manufacturer's then standard license agreement pursuant
to which End-Users are granted the right to utilize Hardware, Software,
or a Software Copy.
1.7. "Territory" shall mean that geographic area(s) known as "Japan".
1.8. All references in this Agreement to the "sale" of or "selling" of
Software or Software Copy shall mean the granting of a license to use
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such Software or Software Copies. All references in this Agreement to
the "purchase" of Software or Software Copies shall mean the obtaining
of a license to use such Software or Software Copy.
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CATC/Toyo 1997 Distribution Agreement Page 2
2. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR
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2.1. Appointment. Subject to the terms and conditions set forth herein,
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Manufacturer hereby appoints Distributor as Manufacturer's
distributor for the Product in the Territory, and Distributor
hereby accepts such appointment. As distributor, Distributor shall
have the right to obtain Product from Manufacturer and to market and
distribute such Product for delivery to End-Users. The Territory
appointment, shall be reviewed at the end of each 12 month period
following the inception of this agreement. This review is to
determine any or all Distributor Territory additions, deletions,
changes in status, or modifications and to review Distributor
performance in the Territory.
2.2. Sub-distributor. Distributor may exercise its distribution rights
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through the use of third party sub-distributors, resellers, dealers
or sales representatives ("Sub-distributors") subject (i) to the
written agreement by each such Sub-distributor to the restrictions
on Distributor contained in this Agreement and (ii) Manufacturer's
written approval of the Sub-distributor. Distributor may only grant
sub-distributors the right to make sales directly to End Users.
2.3. Territorial Responsibility. Distributor shall pursue aggressive sales
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policies and procedures to realize the maximum sales potential for
the Product in the Territory. Distributor shall not advertise, market
or promote the Product outside the Territory or establish a repair or
maintenance facility outside the Territory without the prior written
consent of Manufacturer.
2.4. Conflict of Interest. The parties acknowledge that any efforts by
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Distributor to sell competing products would constitute a conflict of
interest with respect to Distributor's obligations to market the
Product. If Distributor chooses to distribute products that compete
with the Product, Distributor shall notify Manufacturer of its intent
at least sixty (60) days prior to commencing such activity. In the
event Distributor promotes, markets or distributes a product which
Manufacturer, in its sole judgement, determines is competitive with
any of the Product, Manufacturer shall have the right to terminate
this Agreement upon thirty (30) days notice to Distributor. Failure
to so notify Manufacturer shall be deemed to be a breach of this
Agreement.
2.5. Independent Contractors. The relationship of Manufacturer and
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Distributor established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be
construed to (i) give either party the power to direct and control
the day-to-day activities of the other, (ii) constitute the parties
as partners, joint venture's, co-owners or otherwise as participants
in a joint or common undertaking, or (iii) allow Distributor to
create or assume any obligation on behalf of Manufacturer for any
purpose whatsoever. All financial obligations associated with
Distributor's business are the sole responsibility of Distributor.
All sales and other agreements between Distributor and its Sub-
distributors and customers are Distributor's exclusive responsibility
and shall have no effect on Distributor's obligations under this
Agreement. Distributor shall be solely responsible for, and shall
indemnify and hold Manufacturer
CATC/Toyo 1997 Distribution Agreement Page 3
free and harmless from, any and all claims, damages or lawsuits
(including Manufacturer's attorneys' fees) arising out of the acts
of Distributor or its employees, agents or Sub-distributors.
3. PRODUCT DISTRIBUTION
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3.1. Packaging. Each Product shall be delivered to Distributor in a shipping
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package (the "Package") containing the Product including the End-User
License and/or user manual for such Product. Distributor may open the
Package to inspect and test the Product before delivering it to its
customers. Distributor will be responsible to re-package the Product
before delivering it to the End-User.
3.2. Demonstration Copies. Distributor shall have the right to order Product
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to be used for demonstration purposes by Distributor ("Demonstration
Product") provided Distributor shall pay Manufacturer's then current
charges for any such Demonstration Product, and provided that the right
to use such Demonstration Product will be governed by the terms of the
End-User License.
3.3. Title to Software and Related Matters. Title to the Product (including
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the user manual, diskette and software contained herein) shall remain
with Manufacturer. Distributor shall not (and shall require that its
Sub-distributors do not) remove, alter, cover or obfuscate any copyright
notices or other proprietary rights notices placed or embedded by
Manufacturer on or in any Package or any of the items contained therein.
4. TERMS OF PURCHASE OF PRODUCT BY DISTRIBUTOR
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4.1. Terms and Conditions. All orders of Product by Distributor from
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Manufacturer during the term of this Agreement shall be subject to the
terms and conditions of this Agreement. Nothing contained in any
purchase order or like document submitted by Distributor to
Manufacturer shall in any way modify or add to the terms and conditions
contained in this Agreement.
4.2. Prices. All prices are F.O.B. Manufacturer's facility currently located
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at the address listed for Manufacturer at the beginning of this
Agreement ("F.O.B. Point"). Manufacturer may, upon thirty (30) days
notice to Distributor, designate another Manufacturer or other facility
as the F.O.B. Point. The price to Distributor for each of the Product
(the "Discount Price") shall be as set forth in Appendix A attached
hereto. The difference between Distributor's Discount Price and
Distributor's selling price to its customers shall be Distributor's sole
remuneration for distribution of the Product.
4.3. Distributor Product Discount Schedule (Appendix A). Manufacturer may
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from time to time, at its sole discretion, with thirty (30) days advance
written notice to Distributor, issue new revisions to the Distributor
Product Discount Schedule. These new revisions of Distributor Product
Discount Schedule will replace Appendix A and will become part of this
agreement. Manufacturer has the right at any time to add Products, to
remove Products, to revise Products version and description, and to
revise the Product prices in
CATC / Toyo 1997 Distribution Agreement Page 4
Appendix A. Such revisions shall apply to all orders received after
the effective date of revision. Price changes shall not affect
unfulfilled orders accepted by Manufacturer prior to the effective
date of the price change. Distributor may purchase at any time only
the Products that are listed in the latest revision of Appendix A.
4.4. Taxes. Distributor's Discount Prices are payable in full to
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Manufacturer without deduction and are net of taxes (including
any withholding tax) and customs duties. In addition to such amounts,
Distributor shall pay sums equal to taxes (including, without
limitation, sales, withholding, value-added and similar taxes) and
customs duties paid or payable, however designated, levied, or based
on amounts payable to Manufacturer hereunder or on an end user's use
or possession of the Product under or in accordance with the
provisions of this Agreement, but exclusive of United States federal,
state, and local taxes based on Manufacturer's net income.
4.5. Order and Acceptance. All orders for Product submitted by Distributor
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shall be initiated by written orders mailed or faxed to Manufacturer
and requesting a delivery date during the term of this Agreement. To
facilitate Manufacturer's production scheduling, Distributor shall
submit purchase orders to Manufacturer at least fifteen (15) days
prior to the requested day of delivery. No order shall be binding
upon Manufacturer until accepted by Manufacturer in writing, and
Manufacturer shall have no liability to Distributor with respect to
purchase orders that are not accepted. Manufacturer shall use its
reasonable efforts to notify Distributor of the acceptance or
rejection of an order and of the assigned delivery date for accepted
orders within two (2) days of receipt of the order. No partial
shipment of an order shall constitute the acceptance of the entire
order, absent the written acceptance of such entire order.
Manufacturer shall use its reasonable efforts to deliver Product at
the times specified either in its quotation or in its written
acceptance of Distributor's orders.
4.6. Payment. Manufacturer shall submit an invoice to Distributor upon
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shipment of each Product ordered by Distributor and as set forth
below. The invoice shall cover Distributor's Discount Price for the
Product in a given shipment plus any freight, taxes or other
applicable costs initially paid by Manufacturer but to be borne by
Distributor. The full invoiced amount shall be due for payment within
sixty (60) days of the date of invoice. Any invoiced amount not
received within sixty (60) days of the date of invoice shall be
subject to a service charge of two and one-half percent (2.5%) per
month. Distributor shall pay all of Manufacturer's costs and expenses
(including reasonable attorneys' fees) to enforce and preserve
Manufacturer's rights under this Subsection 4.6.
4.7. Shipping. All Product delivered pursuant to the terms of this
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Agreement shall be suitably packed for shipment in Manufacturer's
standard shipping cartons, marked for shipment at Distributor's
address set forth above, and delivered to Distributor or its carrier
agent at the F.O.B. Point, at which time risk of loss shall pass to
Distributor. Unless otherwise instructed in writing by Distributor,
Manufacturer shall select the carrier. Distributor agrees to
undertake all import formalities required to import the Product into
the Territory. All customs, freight, insurance, and other shipping
expenses,
CATC/Toyo 1997 Distribution Agreement Page 5
as well as any special packing expense, shall be paid by Distributor.
Distributor shall also bear all applicable taxes, duties, and similar
charges that may be assessed against the Product after delivery to the
carrier at the F.O.B. Point.
5. TRAINING, INSTALLATION, AND SERVICE
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5.1. Sub-distributor and End-User Inquiries. Distributor is responsible for
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supporting all Product it distributes to End-Users. Distributor shall
maintain onsite staff support personnel sufficiently knowledgeable
with respect to the Product to answer Sub-distributor, End-User and
other customer questions regarding the use and operation of Product
marketed by Distributor. Distributor shall ensure that all questions
regarding the use or operation of Product marketed by Distributor are
initially addressed to and answered by Distributor. Any Sub-
distributor or End-User service questions resulting from Distributor's
sales will be referred by Manufacturer back to Distributor.
5.2. Training. Distributor shall arrange with Manufacturer, for at least
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two (2) qualified employees of Distributor to attend Manufacturer's
training program in the use and operation of the Product. This
training is to be performed semi-annually, although additional
training sessions may be arranged. Manufacturer will arrange to
provide, and Distributor will receive one training session at the
Distributor appointed facility and Manufacturer will arrange to
provide, and Distributor will receive one training session at the
Manufacturer's appointed facility. In the event of termination of the
employment of any such trained employee, Distributor shall notify
Manufacturer in writing of such termination, and of the name of
another qualified employee, who shall, at Distributor's expense,
attend and complete Manufacturer's training program within Thirty (30)
days of the date of such termination.
5.3. Manufacturer Support. Manufacturer will provide consultation to
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Distributor, via all possible communications means, to include
telephone, fax, mail, personal visits and other electronic means to be
mutually defined between Distributor and Manufacturer, with respect to
any Sub-distributor or End-User questions which Distributor cannot
adequately answer. Distributor will not represent to any third party
that Manufacturer is available to answer questions from any Sub-
distributor, End-User or other customer directly. It shall be
considered a breach of this Agreement if Distributor fails to support
its customers with technical assistance.
6. WARRANTY TO DISTRIBUTOR'S CUSTOMERS
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6.1. Standard Limited Warranty. Pursuant to the End-User, Manufacturer
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makes a limited warranty to the End-User regarding the Product
obtained by such End-User (the "Limited Warranty"). The End-User
Limited Warranty warrants the Product to be free from defects in
material, content, and workmanship, agrees to repair or replace any
part of the Product that proves defective and specifically disclaims
all other warranties relating to the Product, including all warranties
with respect to the performance of the Product. DISTRIBUTOR SHALL NOT
MAKE OR PASS ON TO ANY PARTY (AND SHALL REQUIRE THAT ITS SUB-
DISTRIBUTORS DO NOT MAKE OR
CATC/Toyo 1997 Distribution Agreement Page 6
PASS ON TO END-USERS) ANY WARRANTY OR REPRESENTATION ON BEHALF OF
MANUFACTURER OTHER THAN OR CONSISTENT WITH THE LIMITED WARRANTY.
6.2. No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH ABOVE,
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MANUFACTURER GRANTS NO OTHER WARRANTIES, EXPRESS OR IMPLIED, BY
STATUTE OR OTHERWISE, REGARDING THE PRODUCT, THE FITNESS FOR ANY
PURPOSE, THE QUALITY, THE MERCHANTABILITY, OR OTHERWISE.
6.3. Warranty Period. Manufacturer's End-User Limited Warranty is in effect
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for a period of time specified in the Product manual or warranty card.
The warranty period starts at the delivery of the Product to the
carrier at the F.O.B. Point.
6.4. Warranty Product Returns. In the event a Manufacturer Product under
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warranty is found to be defective by the End-User and reported to the
Distributor, the following procedure will be used to assure proper
tracking and handling of the defective goods and the replacement
Product.
6.4.1. The Distributor will notify Manufacturer about the occurrence
of defective or non-operational product via FAX to the
attention of the Customer Support Manager.
6.4.2. The Distributor will test and confirm the defective or non-
operational status of the product as instructed by
Manufacturer.
6.4.3. Manufacturer will issue to the Distributor a Return
Merchandise Authorization (RMA) number for each confirmed
defective or non-operational product. This RMA number is to be
used for all correspondence and shipping documents that relate
to the associated product.
6.4.4. The Distributor will ship and defective or non-operational
products to Manufacturer monthly, or after accumulating a
minimum of 10 RMAs. Distributor is responsible for shipping
cost of RMA products to Manufacturer.
6.4.5. With each RMA shipment, the Distributor will send to the
attention of the Manufacturer Customer Service Manager an
itemized list of all products returned in that shipment,
including the associated RMA number(s).
6.4.6. Both Manufacturer and the Distributor are to maintain the RMA
number(s) in a RMA database itemizing the customer from who
the product is returned together with the date and the problem
description of the returned products.
6.4.7. Upon receipt of the returned product, Manufacturer will verify
the RMA shipment with the Distributor, and test the product to
assure the defective or non-operational status. The
Distributor will maintain a No Problem Found (NPF) percentage
for all RMAs not to exceed 20%. NPFs in excess of 20% will be
billed to the Distributor for Manufacturer testing time.
CATC/Toyo 1997 Distribution Agreement Page 7
6.4.8. Manufacturer will either send replacement product, or credit
the product cost to the Distributor upon receipt the RMA. All
product returned to the Distributor will be referenced to the
original RMA for which it is replacing. Manufacturer is
responsible for shipping costs of replacement products to the
Distributor.
7. ADDITIONAL OBLIGATIONS OF DISTRIBUTOR
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7.1. Sales and Inventory Reports. Distributor agrees to provide
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Manufacturer with a quarterly point-of-sale and inventory report
showing, at a minimum, date sold, quantity of each type of Product
sold, serial number, and the buyers' names and addresses, as well as
the quarter-end inventory position on hand for each type of Product.
This report must be forwarded to Manufacturer within twenty (20) days
of the close of each quarter.
7.2. Demonstrations and Staff Training. Distributor agrees to provide its
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staff and Sub-distributors with adequate training regarding the use
and operation of the Product, and to also provide its staff and Sub-
distributors with regular training regarding updates of the Product.
Distributor further agrees to cause Sub-distributors to provide their
staff with adequate training regarding the use and operation of the
Product and updates of the Product. Distributor agrees, and further
agrees to cause Sub-distributors to agree to dedicate a computer
workstation for supplementary staff training, demonstrations and
support of Product.
7.3. Forecasts. On or before the first day of every month, Distributor
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shall provide Manufacturer with a four (4) month rolling forecast
showing prospective orders by Product and intended submittal date.
7.4. Promotion of the Product. Distributor shall, at its own expense,
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vigorously promote the distribution of the Product within the
Territory. Such promotion shall include but not be limited to
advertising the Product in trade publications within the Territory,
participating in appropriate trade shows, and directly soliciting
orders from customers for the Product.
7.5. Finances and Personnel. Distributor shall maintain a net worth and
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working capital sufficient, in Manufacturer's reasonable judgment, to
allow Distributor to perform fully and faithfully its obligations
under this Agreement. Distributor shall devote sufficient financial
resources and technically qualified sales and service personnel to the
Product to fulfill its responsibilities under this Agreement.
7.6. Customer and Sales Reporting. Distributor shall, at its own expense
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and consistent with the marketing and distribution policies of
Manufacturer:
7.6.1. place the Product marketing and distribution in Distributor's
catalogues as soon as possible and feature the Product in any
applicable trade show that it attends;
7.6.2. provide adequate contact with existing and potential customers
within the Territory on a regular basis, consistent with good
business practice;
CATC/Toyo 1997 Distribution Agreement Page 8
7.6.3. assist Manufacturer in assessing customer requirements
for the Product, including modifications and improvements
thereto, in terms of quality, design, functional
capability, and other features; and
7.6.4. submit market research information, as reasonably
requested by Manufacturer, regarding competition and
changes in the market within the Territory.
7.7. Standard of Business Practices. Distributor shall establish and
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maintain, and shall cause its Sub-distributors, employees, consultants
and agents to establish and maintain a high standard of ethical
business practices in connection with its distribution of Product in
the Territory.
8. ADDITIONAL OBLIGATIONS OF MANUFACTURER
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8.1. Marketing Materials. Manufacturer shall promptly provide Distributor
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with marketing and technical information concerning the Product as
well as reasonable quantities of brochures, instructional material,
advertising literature, and other Product data.
8.2. Response to Inquiries. Manufacturer shall promptly respond to all
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inquiries from Distributor concerning matters pertaining to this
Agreement.
8.3. Delivery Time. Manufacturer shall minimize delivery time as much as
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possible and use its reasonable best efforts to fulfill delivery
obligations as committed in acceptances.
8.4. New Developments. Manufacturer shall inform Distributor of new product
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developments.
8.5. Product Upgrade/Maintenance. Manufacturer will provide Distributor
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with appropriate Product upgrades and maintenance, and Distributor
will incorporate any and all Manufacturer provided Product upgrades
and maintenance, such that the Distributor Product inventory is
representative of the latest Product offerings or revisions available
from the Manufacturer.
9. TERM AND TERMINATION
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9.1. Term. This Agreement shall continue in force for a fixed term of two
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(2) years from the Effective Date hereof unless terminated earlier
under the provisions of this Section 9. At the end of the fixed term,
this agreement shall terminate automatically without notice unless
prior to that time the term of the agreement is extended by mutual
written consent of the parties.
9.2. Termination for Convenience. This Agreement may be canceled by either
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party for any reason or no reason, whether or not extended beyond the
first year, by giving the other party written notice ninety (90) days
in advance.
1997 Distribution Agreement Page 9
9.3. Termination for Cause. If either party defaults in the performance of
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any provision of this Agreement, then the non-defaulting party may
give written notice to the defaulting party that if the default is not
cured within thirty (30) days the Agreement will be terminated. If the
non-defaulting party gives such notice and the default is not cured
during the thirty-day period, then the Agreement shall automatically
terminate at the end of that period.
9.4. Termination for Insolvency. This Agreement shall terminate, without
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notice, (i) upon the institution by or against Distributor of
insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of Distributor's debts, (ii) upon
Distributor's making an assignment for the benefit of creditors, or
(iii) upon Distributor's dissolution.
9.5. Fulfillment of Orders upon Termination. Upon termination of this
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Agreement, Manufacturer may, but shall not be obligated to, fulfill,
subject to the terms of Sections 3 and 4 above and subject to
Manufacturer's right to require prepayment, all orders accepted by
Manufacturer prior to the date of termination.
9.6. Return of Materials. All trademarks, trade names, patents,
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copyrights, designs, drawings, formulas or other data, photographs,
samples, literature, and sales aids of every kind shall remain the
property of Manufacturer. Within thirty (30) days after the
termination of the Agreement, Distributor shall prepare all such items
in its possession for shipment, as Manufacturer may direct, at
Manufacturer's expense. Distributor shall suitably package the
materials for shipment in accordance with standard shipment practice
for the type and size of the Product(s) to be returned. Distributor
shall not return product to Manufacturer without prior receipt of a
Return Merchandise Authorization. Distributor shall not make or retain
any copies of any confidential items or information which may have
been entrusted to it. Effective upon the termination of this
Agreement, Distributor shall cease to use all trademarks, marks, and
trade names of Manufacturer.
9.7. Limitation on Liability. In the event of termination by either party
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in accordance with any of the provisions of this Agreement, neither
party shall be liable to the other, because of such termination, for
compensation, reimbursement or damages on account of the loss of
prospective profits or anticipated sales or on account of
expenditures, inventory, investments, leases or commitments in
connection with the business or goodwill of Manufacturer or
Distributor. Termination shall not, however, relieve either party of
obligations incurred prior to the termination.
9.8. Inventory Disposition. Upon termination, Manufacturer will purchase
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back from Distributor, at the current Distributor price as defined in
Appendix A less any credits or Product price adjustments, all Product
in Distributor inventory that is in unopened, unused, and in otherwise
like new condition. Distributor shall suitably package the Product for
return shipment to the Manufacturer in accordance with standard
shipment practice for the type and size of the Product(s) to be
returned. Distributor shall not
CATC/Toyo 1997 Distribution Agreement Page 10
return product to Manufacturer without prior receipt of a Return
Merchandise Authorization. Distributor will bear all transportation,
duties and other costs associated with the Product return to
Manufacturer.
9.9. Survival of Certain Terms. The provisions of Sections 2.5, 3.3, 6, 9,
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10, 11 and 13 shall survive the termination of this Agreement for any
reason. All other rights and obligations of the parties shall cease
upon termination of this Agreement.
10. LIMITED LIABILITY TO DISTRIBUTOR AND OTHERS
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10.1. MANUFACTURER'S LIABILITY UNDER ANY CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR UNDER ANY INDEMNITY CONTAINED IN THIS AGREEMENT SHALL NOT
EXCEED THE AMOUNTS RECEIVED BY MANUFACTURER FROM DISTRIBUTOR DURING
THE IMMEDIATELY PRECEDING TWELVE (12) MONTH PERIOD.
10.2. IN NO EVENT SHALL MANUFACTURER HAVE ANY LIABILITY TO DISTRIBUTOR OR TO
END USERS OR ANY OTHER THIRD PARTY, FOR ANY LOST PROFITS OR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY OTHER
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF
THE PRODUCTS, OR THE FAILURE OF THE PRODUCTS TO PERFORM, OR FOR ANY
OTHER REASON. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING THE
FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
11. PROPERTY RIGHTS AND CONFIDENTIALITY
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11.1. Property Rights. Distributor agrees that Manufacturer owns all right,
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title, and interest in the Product and in each Product now or
hereafter subject to this Agreement and in all of Manufacturer's
patents, trademarks, trade names, inventions, copyrights, know-how,
and trade secrets relating to the design, manufacture, operation or
service of the Product. The use by Distributor of any of these
property rights is authorized only for the purposes herein set forth,
and upon termination of this Agreement for any reason such
authorization shall cease, except to the extent necessary for
Distributor to provide maintenance to its existing Product customers.
11.2. Confidentiality. Manufacturer and Distributor each acknowledge that by
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reason of the relationship hereunder each entity will have access to
certain information and materials concerning the other entity's
business, plans, customers, technology, and products that are
confidential and of substantial value to each, which value would be
impaired if such information were disclosed to third parties.
Manufacturer and Distributor agree that each will not use in any way
for their own account or the account of any third party, nor disclose
to any third party, any such confidential information revealed as a
result of this Agreement. Manufacturer and Distributor shall take
every reasonable precaution to protect the confidentiality of such
information. Upon request by either Manufacturer or Distributor, each
shall advise whether or not it considers any particular information or
CATC / Toyo 1997 Distribution Agreement Page 11
materials to be confidential. Both Manufacturer and Distributor shall
designate confidential information by clear marking on such
information that denotes the information as confidential. Both
Manufacturer and Distributor shall not publish any technical
description of the Product or information beyond the description
published by Manufacturer or Distributor. In the event of termination
of this Agreement, there shall be no use or disclosure by Manufacturer
or Distributor of any confidential information of Manufacturer and
Distributor, and Manufacturer and Distributor shall not manufacture or
have manufactured any products utilizing any of each other's
confidential information. This confidentiality clause shall survive
the termination of this Agreement and extend a minimum of three (3)
years beyond the date termination.
11.3. Patent Information. Manufacturer has no patents for the Product,
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either granted or pending, at this time.
12. TRADEMARKS AND TRADE NAMES
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12.1. Use. During the term of this Agreement, Distributor shall have the
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right to indicate to the public that it is an authorized distributor
of Manufacturer's Product and to advertise (within the Territory) such
Product under the trademarks, marks, and trade names that Manufacturer
may adopt from time to time ("Trademarks"). Distributor shall not
alter or remove any Trademarks applied at the factory to the Product,
Packages, or other materials contained therein. Nothing herein shall
grant to Distributor any right, title or interest in the Trademarks.
At no time during or after the term of this Agreement shall
Distributor challenge or assist others to challenge the Trademarks or
the registration thereof or attempt to register any trademarks, marks
or trade names confusingly similar to the Trademarks.
12.2. Approval of Representations. All representations of the Trademarks
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that Distributor intends to use shall first be submitted to
Manufacturer for approval (which shall not be unreasonably withheld)
of design, color, and other details or shall be exact copies of those
used by Manufacturer. Upon receipt of Distributors plans and designs
for use of Manufacturer Trademarks, the Manufacturer shall have
twenty-one (21) days to review and approve or reject such
representation(s). If any of the Trademarks are to be used in
conjunction with another trademark on or in relation to the Product,
then Manufacturer's mark shall be presented equally legibly, equally
prominently, and of greater size than the other but nevertheless
separated from the other so that each appears to be a mark in its own
right, distinct from the other mark.
13. PATENT, COPYRIGHT, AND TRADEMARK INDEMNITY
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13.1. Indemnification. Distributor agrees that Manufacturer has the right
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to defend, or at its option to settle, and Manufacturer agrees, at its
own expense, to defend or at its option to settle, any claim, suit or
proceeding brought against Distributor or its customer on the issue of
infringement of any patent, copyright or trademark by the Product
distributed hereunder or the use thereof, subject to the limitations
hereinafter set forth. Manufacturer shall have sole control of any
such action or settlement negotiations, and
CATC/Toyo 1997 Distribution Agreement Page 12
Manufacturer agrees to pay, subject to the limitations hereinafter set
forth, any final judgement entered against Distributor or its customer on
such issue in any such suit or proceeding defended by Manufacturer.
Distributor agrees that Manufacturer at its sole option shall be relieved
of the foregoing obligations unless Distributor or its customer notifies
Manufacturer promptly in writing of such claim, suit or proceeding and
gives Manufacturer authority to proceed as contemplated herein, and, at
Manufacturer's expense, gives Manufacturer proper and full information
and assistance to settle and/or defend any such claim, suit or
proceeding. If the Product, or any part thereof, are, or in the opinion
of Manufacturer may become, the subject of any claim, suit or proceeding
for infringement of any United States patent, copyright or trademark, or
if it is adjudicatively determined that the Product, or any part thereof,
infringe any patent, copyright or trademark, or if the distribution or
use of the Product, or any part thereof, is, as a result, enjoined, then
Manufacturer may, at its option and expense: (i) procure for Distributor
and its customers the right under such patent, copyright or trademark to
distribute or use, as appropriate, the Product or such part thereof; of
(ii) replace the Product, or part thereof, with other suitable Product or
parts; or (iii) suitably modity the Product, or part thereof; or (iv) if
the use of the Product, or part thereof, is prevented by injunction,
remove the Product, or part thereof, and refund the aggregate payments
paid therefor by Distributor within Sixty (60) days upon receipt or
written notice, less a reasonable sum for use and damage. Manufacturer
shall not be liable for any costs or expenses incurred without its prior
written authorization.
13.2 Limitation. Notwithstading the provisions of Subsection 13.1 above,
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Manufacturer assumes no liability for (i) any infringement claims with
respect to any product in or with which any of the Product may be used
but not covering the Product standing alone; (ii) any trademark
infringements involving any marking or branding not applied by
Manufacturer or involving any marking or branding applied at the request
of Distributor; or (iii) the modification of the Product, or any part
thereof, unless such modification was made by Manufacturer.
13.3. Entire Liability. THE FOREGOING PROVISIONS OF THIS SECTION 13 STATE THE
----------------
ENTIRE LIABILITY AND OBLIGATION OF MANUFACTURER AND THE EXCLUSIVE REMEDY
OF DISTRIBUTOR AND ITS CUSTOMERS, WITH RESPECT TO ANY ALLEGED
INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL
PROPERTY RIGHTS BY THE PRODUCT, OR ANY PART THEREOF.
13.4. Notification of Unauthorized Use. Distributor shall promptly notify
--------------------------------
Manufacturer in writing upon its discovery of any unauthorized use or
infringement of the Product or Manufacturer's patent, copyright,
trademark or other intellectual property rights with respect thereto.
Manufacturer shall have the sole and exclusive right to bring an
infringement action or proceeding against a third party, and, in the
event that Manufacturer brings such an action or proceeding, Distributor
shall cooperate and provide full information and assistance to
Manufacturer and its counsel in connection with any such action or
proceeding.
CATC/Toyo 1997 Distribution Agreement Page 13
14. GENERAL PROVISIONS
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14.1. Governing Law. The rights and obligations of the parties under this
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Agreement shall not be governed by the 1980 U.N. Convention on
Contracts for the International Sale of Goods; rather such rights and
obligations shall be governed by and construed under the laws of the
State of California, including its Uniform Commercial Code, without
reference to conflict of laws principles.
14.2. Arbitration. Any dispute or claim arising out of or in connection with
-----------
this Agreement shall be finally settled by binding arbitration in
Santa Clara, California under the commercial Arbitration Rules of the
American Arbitration Association by one arbitrator appointed in
accordance with said rules. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for injunctive relief without breach of this
arbitration provision.
14.3. Entire Agreement. This Agreement sets forth the entire agreement and
----------------
understanding of the parties relating to the subject matter herein and
merges all prior discussions between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the party to
be charged.
14.4. Notices. Any notice required or permitted by this Agreement shall be
-------
in writing and shall be sent by prepaid registered or certified mail,
or other courier, return receipt requested, addressed to the other
party at the address shown at the beginning of this Agreement or at
such other address for which such party gives notice hereunder. Such
notice shall be deemed to have been given ten (10) days after deposit
in the mail, except that notice of change of address shall be
effective only upon receipt.
14.5. Force Majeure. Nonperformance of either party shall be excused to the
-------------
extent that performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, failure of suppliers,
lack of transportation, or any other reason where failure to perform
is beyond the control and not caused by the negligence of the non-
performing party.
14.6. Nonassignability and Binding Effect. A mutually agreed consideration
-----------------------------------
for Manufacturer's entering into this Agreement is the reputation,
business standing, and goodwill already honored and enjoyed by
Distributor under its present ownership, and, accordingly, Distributor
agrees that its rights and obligations under this Agreement may not be
transferred or assigned directly or indirectly without the prior
written consent of Manufacturer. Subject to the foregoing sentence,
this Agreement shall be binding upon and inure to the benefit of the
parties hereto, their successors and assigns.
CATC/Toyo 1997 Distribution Agreement Page 14
14.7. Legal Expenses. The prevailing party in any legal action brought by one
--------------
party against the other and arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable
attorneys' fees.
1997 Distribution Agreement Page 15
14.8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all
of which together shall constitute on instrument.
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"Manufacturer": "Distributor":
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Computer Access Technology Corp. Toyo Corporation
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Signed: /s/ Dan Wilnai Signed: /s/ Kohzo Yumoto
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By (name): Dan Wilnai By (name): Kohzo Yumoto
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Title: PRESIDENT Title: PRESIDENT
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Date: 7 Nov. 1997 Date: 7 Nov. 1997
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