Authorized International Distributor Agreement

Exhibit 10.7


SYNPLICITY, INC.
----------------
AUTHORIZED INTERNATIONAL DISTRIBUTOR AGREEMENT
----------------------------------------------


This Agreement is made between Synplicity, Inc., a California corporation with its principal place of business at 465 Fairchild Drive, Suite 115, Mountain View, California 94043, United States of America ("Company"), and Pacific
------- Design, Inc., a Japanese corporation maintaining its principal place of business at Satake Building 3F, 12-8 Motayoyogi-cho, Shibuya-ku, Tokyo 151, Japan ("Distributor"). -----------


RECITALS
--------


A. Company develops, manufactures and distributes certain computer software products, including the products listed in Exhibit A ("Company
--------- ------- Products"). This Agreement pertains only to "Company Products" as listed in -------- Exhibit A and not to any other products developed, manufactured or distributed --------- by Company, except as otherwise provided herein.


B. Company and Distributor desire that Distributor be authorized to act as an independent distributor of Company Products under the terms and conditions set forth below.


NOW, THEREFORE, Company and Distributor agree as follows:


1. Appointment as Authorized Company Distributor.
----------------------------------------------


(a) Appointment. Subject to the terms of this Agreement, Company appoints
----------- Distributor, and Distributor accepts such appointment, as an independent, non- exclusive distributor of Company Products in and limited to the territory set forth in Exhibit B (the "Territory") solely and directly to end users for their
--------- --------- own internal business purposes, during the term of this Agreement.


(b) Limited Rights. Distributor's rights in Company Products will be limited to those expressly granted in this Agreement. Company reserves all other rights with respect to Company Products.


(c) Subdistribution. Distributor may not appoint subdistributors to
--------------- distribute or provide service or support for Company Products without Company's prior written approval.


(d) Nature of Distribution. To the extent that any Company Product contains
---------------------- or consists of software, Distributor's appointment only grants to Distributor a license to distribute such Company Product, and does not transfer any right, title or interest to any such Company Product to Distributor or Distributor's customers. Company will sell Company Products to Distributor only to the extent that such Products consist of non-software items on the terms specified herein. Use of the terms "sell," "license," "purchase," "license fees" and "price" will be interpreted in accordance with this Section.


(e) Marketing and Technical Material. At Distributor's request Synplicity
-------------------------------- shall provide Distributor with marketing and technical information concerning the Products as well as reasonable quantities of brochures, instructional material, advertising literature and other Company Product data. Additional quantities can be purchased at Company's cost. All such materials will be printed in the English language.


2. Obligations of Distributor
--------------------------


(a) Marketing and Support. Distributor will use its best efforts to
--------------------- aggressively advertise, promote, and distribute Company Products, including at trade shows, at Distributor's expense, to end users. Distributor will provide installation assistance, technical training for end-users and first level pre- and post-sales support and maintenance services, which will include resolving problems not caused primarily by Company Product's malfunction. Distributor will satisfy reasonable criteria and policies with respect to Distributor's marketing and support obligations under this Agreement communicated in writing to Distributor by Company from time to time.


(b) Initial Purchase. Distributor will purchase a minimum of twenty (20) of
---------------- the Company Product "Synplify" as its initial inventory within thirty (30) days after the date of this Agreement. Thereafter, Distributor will maintain a reasonable inventory of Company Products sufficient to respond to customer requirements.


(c) Training. Periodic training to maintain or increase technical
-------- competence on Company Products may be provided from time to time by Company. Distributor will send personnel to this periodic training, as reasonably requested by Company, and bear all related travel and living expenses.


(d) Company Packaging. Distributor will distribute Company Products with
----------------- all packaging, warranties and disclaimers and license agreements intact as shipped from Company, unless otherwise instructed in writing by Company, and will instruct its customers as to the terms of such documents applicable to Company Products.


(e) No Modification or Reverse Engineering. Distributor will not modify or
-------------------------------------- enhance Company Products without


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Company's prior written consent. Company shall own all proprietary rights in any such modifications or enhancements and Distributor transfers and assigns to Company all proprietary rights, including copyright, patent, and wade secret rights, to any such modifications or enhancements. In addition, Distributor agrees not to reverse engineer or decompile Company Products or request others to reverse engineer or decompile Company Products.


(f) No Copying. Distributor will not copy or otherwise reproduce any
---------- Company Products, in whole or in part, except for making reasonable numbers of back-up copies or as expressly authorized by this Agreement.


(g) No Competing Products. Distributor will not represent or distribute
--------------------- during the term of this Agreement any products which in Company's opinion, compete, directly or indirectly with Company Products. Distributor warrants that


Exhibit B lists all of the manufacturers and distributors ("Manufacturers and --------- ----------------- Distributors"), and their respective products, that Distributor represents or ------------ distributes as of the date of this Agreement and, if Distributor undertakes to represent or distribute any additional manufacturers or distributors, or to promote any additional products of the manufacturers and distributors listed in Exhibit B, Distributor will so inform Company by written notice within thirty --------- (30) days of such undertaking.


(h) Distributor Covenants. Distributor will: (i) conduct business in a
--------------------- manner that reflects favorably at all times on Company Products and the good name, good will and reputation of Company; (ii) avoid deceptive, misleading or unethical practices that are or might be detrimental to Company, Company Products or the public; (iii) make no false or misleading representations with regard to Company or Company Products; (iv) not publish or employ, or cooperate in the publication or employment of, any misleading or deceptive advertising material with regard to Company or Company Products; (v) make no representations, warranties or guarantees to customers or to the wade with respect to the specifications, features or capabilities of Company Products that are inconsistent with the literature distributed by Company; and (vi) not enter into any contract or engage in any practice detrimental to the interests of Company in Company Products.


(i) Copies for In-House Use. Company will provide to Distributor a
----------------------- reasonable number of PC and UNIX licenses for Company Products for use by Distributor's employees at Distributor's principal place of business as given on page one of this Agreement. These licenses are intended for use by Distributor's employees in supporting Distributors customers who have purchased Company Products and for demonstrations at Distributor's principal place of business, and are not salable by Distributor to its customers and cannot be used for any purpose other than customer support and demonstrations. These licenses will expire upon termination of this Agreement.


(j) Demonstration Copies. Company will provide to Distributor a reasonable
-------------------- number of PC security keys for Company Products for use during the term of this Agreement. These security keys are intended for demonstration, training and evaluation purposes only and are not salable by Distributor to its customers and cannot be used for any purpose other than demonstration, training and evaluation. Distributor agrees that for each evaluation of the Company Products, the end user will fill out an evaluation receipt for the evaluation materials. This evaluation receipt will include a simplified version of the Company Evaluation Agreement, which has been localized for the language of the Territory by Distributor as described in Section 2(n), and approved by the Company. Distributor agrees to FAX or mail the evaluation receipts to Company within thirty (30) days after their execution by the end user. Distributor must give all end users evaluating Company Products a Quick Start Guide describing, among other things, the use of Company Products. Distributor must maintain records of the whereabouts of these demonstration security keys at all times, and provide this information in its reports as described in Section 3(a). Distributor shall have the right to order the standard Company Evaluation Kits, provided Distributor shall pay Company's then current charges for any such Evaluation Kits, and provided that the right to use such Evaluation Kits will be governed by the terms of their respective end user license agreements, which will be localized for the language of the Territory by Distributor as described in Section 2(n), and approved by the Company. In no event will Distributor allow any end user to use Company Products for more than four (4) months, in aggregate, without purchasing a license for the Company Product.


(k) Costs and Expenses. Except as expressly provided herein or agreed to in
------------------ writing by Company and Distributor, Distributor will pay all costs and expenses incurred in the performance of Distributor's obligations under this Agreement.


(l) Market Conditions. Distributor will advise Company promptly concerning
----------------- any market information that comes to Distributor's attention respecting Company, Company Products, Company's market position or the continued competitiveness of Company Products in the marketplace. Distributor will confer with Company from time to time at the request of Company on matters relating to market conditions, sales forecasting and product planning relating to Company Products.


(m) Compliance with Law. 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 Company Products.


(n) Localizations. Distributor will make such changes to Company Products,
------------- at Distributor's expense, as are required by the laws of the Territory or as Company and Distributor agree in writing are appropriate to adapt Company Products for use in


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the Territory, including but not limited to translating Company Product documentation into the language of the Territory (collectively, "Localizations"), and shall package Company Products in accordance with ------------- Company's instructions. At a minimum, Distributor shall translate the Company end user license and evaluation agreements into the language of the Territory. Distributor will submit all Localizations to Company for Company's prior review and approval. If Company notifies Distributor that any Localization is inaccurate in any material respect, Distributor will correct such Localization prior to further publishing or distributing it. Distributor hereby assigns to Company all its right, title and interest in all such translated and modified materials, including but not limited to all related copyrights and moral rights.


(o) Compliance with U.S. Export Laws. Distributor acknowledges that all
-------------------------------- Company 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 reexport (directly or indirectly) any Company Products or documentation or other technical data therefor without complying with the Act and the regulations thereunder.


(p) Governmental Approval. If any approval with respect to this Agreement,
--------------------- or the notification or registration thereof, will be required at any time during the term of this Agreement, with respect to giving legal effect to this Agreement in the Territory, or with respect to compliance with exchange regulations or other requirements so as to assure the right of remittance abroad of U.S. dollars pursuant to Section 5(e) hereof or otherwise, Distributor will immediately take whatever steps may be necessary in this respect, and any charges incurred in connection therewith will be for the account of Distributor. Distributor will keep Company currently informed of its efforts in this connection. Company will be under no obligation to ship Company Products to Distributor hereunder until Distributor has provided Company with satisfactory evidence that such approval, notification or registration is not required or that it has been obtained.


3. Inspections, Records and Reporting.
----------------------------------


(a) Reports. Within ten (10) days of the end of each month, Distributor
------- will provide to Company (i) a "Marketing Report" that describes the Distributor's activities of a marketing nature, such as direct mail, advertising, trade shows, and technical articles during the previous month, and plans for the next month, (ii) a "Customer Report" that identifies each customer who submitted a purchase order during the previous month, (iii) an "Inventory Report" that lists the current inventory levels of Company Products, (iv) a "Sales Forecast" for the next six month period that lists the names and addresses of prospective customers and the expected revenue from each, (v) an "Evaluation Report" listing the end users names and companies that have an Evaluation Kit for Company Products, an(vi) a "Trouble Report" identifying any problems found during the previous month that are believed to be caused by errors in Company Products.


(b) Notification. Distributor will: (i) notify Company in writing of any
------------ claim or proceeding involving Company Products within ten (10) days after Distributor learns of such claim or proceeding; and (ii) notify Company in writing not more than thirty (30) days after any change in the management of Distributor or any transfer of more than twenty-five percent (25%) of Distributor's voting control or a transfer of substantially all its assets.


(c) Records. Distributor will maintain, for at least two years after
------- termination of this Agreement, its records, contracts and accounts relating to distribution of Company Products, and will permit examination thereof by authorized representatives of Company at all reasonable times.


4. Order Procedure.
----------------


(a) Order Instructions and End User License Agreements. Distributor will
-------------------------------------------------- FAX or mail a Distributor purchase order to Company giving the part numbers and prices for the order in a form acceptable to Company. The Distributor purchase order must include information about the customer, including name., address, phone, fax, and email address, if applicable. Maintenance must be ordered for the first year. Orders for Company Products may be refused if the information supplied is incomplete, or. if there are terms that are inconsistent with this Agreement. Distributor agrees to have each end user enter into the Company end user license agreement that has been localized for the Territory, as described in Section 2(n), and to mail a copy of such signed license agreement to Company within sixty (60) days.


(b) Controlling Terms. The terms and conditions of this Agreement and of
----------------- the applicable Company invoice or confirmation will apply to each order accepted or shipped by Company hereunder. The provisions of Distributor's form of purchase order or other business forms will not apply to any order notwithstanding Company's acknowledgment or acceptance of such order.


(c) Cancellation. Company reserves the right to cancel any orders placed by
------------ Distributor and accepted by Company as set forth above, or to refuse or delay shipment thereof, if Distributor (i) fails to make any payment as provided in this Agreement or under the terms of payment set forth in any invoice or otherwise agreed to by Company and Distributor, or (ii) otherwise fails to comply with the terms and conditions of this Agreement. Company also reserves the right to discontinue the manufacture or distribution of any or all Company Products at any time, and to cancel any orders for such discontinued Company


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Products without liability of any kind to Distributor or to any other person. No such cancellation, refusal or delay will be deemed a termination (unless Company so advises Distributor) or breach of this Agreement by Company.


5. Prices and Payment.
------------------


(a) Prices to Distributor. During the term of this Agreement, Company shall
--------------------- inform Distributor as to current prices to Distributor for Company Products. The initial prices for Company Products and maintenance services are set forth in Exhibit A ("Initial Prices"). Company may change its prices to Distributor from --------- -------------- time to time upon at least sixty (60) days prior written notice.


(b) Price Increase. In the event Company increases the price to Distributor
-------------- for any Company Product, the increase shall apply to: any order received by Company after the effective date of the increase; and any order or portion thereof to be shipped after the effective date of the increase regardless of the date the order was received; provided, however, that any order or portion thereof transmitted by Distributor prior to Company's announcement of the increase and affected thereby, may be canceled without penalty by Distributor by written notice to Company within ten (10) days of such announcement.


(c) Price Decrease. In the event that Company decreases the price to
-------------- Distributor for any Company Product, the decrease shall apply to all units of such product in Distributor's inventory that are in an unopened condition as of the effective date of the decrease, and that had been shipped to Distributor no more than sixty (60) days prior to such effective date. For each unit of product as to which this section applies, Distributor will receive a credit against the price of a subsequent unit purchased from Company within ninety (90) days of the effective date of the price decrease.


(d) Taxes, Tariffs, Fees. Company's prices do not include any national,
-------------------- state or local sales, use, value added or other taxes, customs duties, or similar tariffs and fees which Company may be required to pay or collect upon the delivery of Company Products or upon collection of the prices or otherwise. Should any tax or levy be made, Distributor agrees to pay such tax or levy and indemnify Company for any claim for such tax or levy demanded. Distributor represents and warrants to Company that all Company Products acquired hereunder are for redistribution in the ordinary course of Distributor's business, and Distributor agrees to provide Company with appropriate resale certificate numbers and other documentation satisfactory to the applicable taxing authorities to substantiate any claim of exemption from any such taxes or fees. Distributor will pay any withholding taxes required by applicable law. Distributor will supply Company with evidence of such payment of withholding tax, in a form acceptable to Company to meet the requirements for claiming foreign tax credits on Company's federal income tax return.


(e) Payment Terms. Company will FAX or mail an invoice to Distributor for
------------- products shipped. All payments shall be made in United States dollars within sixty (60) days of the date of invoice (net 60), free of any currency control or other restrictions to Company at the address designated by Company. Distributor will pay by wire transfer to a bank account designated by Company the amount of the aggregate prices of Company Products ordered (plus any applicable taxes, shipping and other charges).


(f) Interest. Interest shall accrue on any delinquent amounts owed by
-------- Distributor for Company Products at the lesser often percent (10%) per annum or the maximum rate permitted by applicable usury law.


(g) No Setoff. Distributor will not setoff or offset against Company's
--------- invoices amounts that Distributor claims are due to it. Distributor will bring any claims or causes of action it may have in a separate action and waives any right it may have to offset, setoff or withhold payment for Company Products delivered by Company.


6. Shipment, Risk of Loss and Delivery.
-----------------------------------


(a) Shipment. All Company Products will be shipped to Distributor's
-------- identified warehouse facilities or freight forwarder, subject to approval in writing by Company in advance of shipment. Unless specified in Distributor's order, Company will select the mode of shipment and the carrier. Distributor will be responsible for and pay all shipping and freight charges, which charges Company may require Distributor to pay in advance.


(b) Title and Risk of Loss. Title, except to the extent Company Products
---------------------- contain or consist of software, and risk of loss or damage to Company Products will pass to Distributor upon delivery of Company Products to the carrier, freight forwarder or Distributor, w ...