International Distributor Agreement Dated 11/10/99

EXHIBIT 10.17
-------------


INTERNATIONAL DISTRIBUTOR AGREEMENT


THIS INTERNATIONAL DISTRIBUTOR AGREEMENT ("Agreement") is made and entered into as of the date of the last signature to this Agreement ("Effective Date") by and between VERISITY Design, Inc., a California corporation with principle offices at 2041 Landing Drive, Mountain View, CA 94043 ("VERISITY") and DAVAN TECH CO., LTD., a South Korea corporation with principle offices at
-------------------- ----------- 7th Fl., Duam Bldg., #174-6, Seokchon-Dong, Songpa-Ku, Seoul, Korea, 138-190 ---------------------------------------------------------------------------- ("Distributor").


WHEREAS, VERISITY has developed and continues to develop certain technology and products related to the design and verifying of electronics logics.


WHEREAS, Distributor is engaged in the business of marketing such products and desires to become a marketing representative for VERISITY's Products (as defined below) in the Territory (as defined below); and


WHEREAS, VERISITY desires to engage Distributor for the purpose of soliciting and procuring orders for VERISITY's Products in the Territory.


NOW, THEREFORE, the parties agree as follows:


1. Appointment. VERISITY hereby appoints Distributor for the term of this
----------- Agreement, and Distributor hereby agrees to act for VERISITY, as an exclusive Distributor for the Products and services (as hereinafter defined) only within the territory described in Schedule A (the "Territory"), subject to all of the terms and conditions of this Agreement. Except as expressly allowed by VERISITY in writing, Distributor agrees not to solicit orders, procure orders or otherwise act as VERISITY's representative with respect to any Products or establish or allow any office to do so unless such office is located within the Territory and all such activity is conducted solely within the Territory. Distributor may solicit and procure orders for Products only from customers located and taking delivery within the Territory.


2. Products; Prices.
----------------


a. The products and services covered by this Agreement ("Products") are those listed on Schedule B hereto and updates, enhancements and new versions which are substantially similar thereto and which are marketed under the same model number and product nomenclature. Schedule B shall also include the prices and terms of sale for the Products, which may be updated from time to time by VERISITY.


-1-


b. For purposes of this Agreement, "Software Products" are (i) computer programs or instructions (including those fixed in electrical circuits) which are Products or included in Products and (ii) documentation provided by VERISITY which is related to the Product. End-User Documentation is documentation specifically identified in writing by VERISITY as provided for end-users. Software Products are licensed not sold; any references herein to the sale or price of any Software Products or any copy thereof refers to the license or license fee thereof. Distributor will in no event be entitled to receive or have any access to any source code of the Software Products.


c. The prices, charges, and terms of sale of the Product shall be those established by VERISITY. In soliciting and procuring orders for the Products, Distributor shall quote only the prices and terms on Schedule B. Quotation of any other prices than those in the published Price List must be authorized in writing by VERISITY. VERISITY reserves the right, at its sole discretion, to establish or change the prices, Price List, terms and conditions of sale, delivery and packing charges for the Products at any time during the term of this Agreement.


3. Commission.
----------


a. In consideration for the covenants of Distributor contained herein, and as the entire compensation of Distributor for its services under this Agreement, VERISITY will pay Distributor a commission equal to a percentage (as specified in Schedule C) of the Net Revenues (as defined below) actually collected by VERISITY (and not subject to refund or other contingency) on account of shipments on bona fide firm orders, acceptable to VERISITY, in the Territory, for the Products.


b. Commissions will not be paid for current or future sales of spare parts, tools or services unless such spare parts, tools or services are Products in Schedule B. Commissions on Net Revenues received in a calendar month will be paid within thirty (30) days after the end of such calendar month by check or wire transfer to the account stipulated by Distributor.


c. For purposes of this Agreement, "Net Revenues" shall mean the revenue actually received from the sale, license or other disposition of Products in the Territory during the applicable month, less all applicable Deductions and Allowances (Deductions and Allowances are defined in Schedule D attached). Deductions and Allowances do not include withholdings of local income taxes for which VERISITY receives credits applicable against its U.S. income taxes).


d. All invoices in connection with orders solicited by Distributor shall be rendered by VERISITY directly to the customer.


e. Nothing in this Agreement shall be construed as limiting in any manner VERISITY's marketing or distribution activities of any kind in the Territory.


-2-


f. VERISITY shall have the right, without any liability to Distributor for a commission, to:


(1) reject any order obtained by Distributor;


(2) approve or disapprove any credit to be extended to any customer; and


(3) accept the return of Products or to make any Allowances or Deductions as VERISITY shall deem appropriate.


g. All shipments are contingent upon VERISITY obtaining an appropriate export license from the United States Department of Commerce. If requested by VERISITY, Distributor shall provide reasonable assistance in securing such export license.


4. Warranty Disclaimer. TO THE MAXIMUM EXTENT PERMISSIBLE UNDER APPLICABLE
------------------- LAW, VERISITY MAKES NO WARRANTIES TO DISTRIBUTOR WITH RESPECT TO THE PRODUCTS OR ANY SERVICES AND DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.


5. Relationship of Parties. The parties hereto expressly understand and agree
----------------------- that Distributor is an independent contractor in the performance of each and every part of this Agreement and is solely responsible for all of its employees and agents and its labor costs and expenses arising in connection therewith and for any and all claims, liabilities or damages or debts of any type whatsoever that may arise on account of Distributor's activities, or those of, its employees or agents in the performance of this Agreement. Distributor has no authority, right or ability to bind or commit VERISITY in any way (including, without limitation, by accepting orders) or sell any Products and will not attempt to do so or imply that it may do so. VERISITY is in no manner associated with or otherwise connected with the actual performance of this Agreement on the part of Distributor, nor with Distributor's employment of other persons or incurring of other expenses. Except as expressly provided herein, VERISITY shall have no right to exercise any control whatsoever over the activities or operations of Distributor.


6. Responsibilities of Distributor. Distributor's duties hereunder are as
------------------------------- follows:


a. Distributor shall use its best efforts to actively promote, solicit orders for and procure orders for the Products within the Territory on a continuing basis, shall comply with good business practices and all applicable laws and regulations and shall diligently perform all other duties as mutually agreed upon herein. Distributor shall be solely responsible for its own expenses in carrying out its responsibilities under this Agreement. [Distributors efforts shall generate Net Revenues to VERISITY of at least the minimum amounts set forth in Schedule C (the "Minimum Amounts").] Distributor will maintain


-3-


appropriate demonstration equipment and an adequate facility capable of handling technical support and customer demonstrations and provide technical assistance.


b. In its efforts, Distributor will use VERISITY's then current names for the Products (but will not represent or imply that it is VERISITY or is a part of VERISITY and will obtain VERISITY's prior approval of any such use) and will not add to, delete from or modify any sales or marketing documentation or forms provided by VERISITY except with the prior written consent of VERISITY. Distributor will not otherwise use or register (or make any filing with respect to) any trademark, name or other designation relevant to the subject matter of this Agreement anywhere in the world. Distributor will not contest anywhere in the world the use by VERISITY or use authorized by VERISITY of any trademark, name or other designation relevant or similar to the subject matter of this Agreement or application or registration therefor, whether during or after the term of this Agreement. Distributor acknowledges and agrees that Distributor has no interest in or right to VERISITY's names, designations or trademarks, or any label or design or other marks used in connection with VERISITY or the Products. Distributor further acknowledges and agrees that all of its use of such trademarks, names or other designations shall inure to the benefit of VERISITY.


c. Distributor shall maintain an office in the Territory and employ sufficient qualified employees and agents, including adequate engineering and sales staff, to assist in diligently performing all of its duties as mutually agreed upon herein. Distributor shall attend sales conferences and take advantage of technical training programs, if offered, by VERISITY, for such persons at Distributor's expense.


d. Distributor shall keep VERISITY informed as to any problems encountered with the Products and as to any resolutions arrived at for those problems, and shall communicate promptly to VERISITY any and all modifications, design changes, improvements of the Products, or new customer requirements suggested by any entity or person solicited by or making inquiries of Distributor or by any employee or agent of Distributor. Distributor hereby assigns to VERISITY any and all right, title and interest in and to any such suggested modifications, design changes or improvements of the Products held by Distributor, without the payment of any additional consideration.


e. At VERISITY's request, Distributor shall promptly submit to VERISITY reports containing pertinent information about Distributor's customers and the Products and Distributor's activity within the Territory. VERISITY may reasonably request information concerning customers and business volumes, financial information and operating plans. Distributor shall advise and assist VERISITY with respect to sales aids and furnish available information concerning competitive products sold in the Territory.


f. Distributor will provide good faith sales forecasts and business status reports to VERISITY for the Products. The forecasts will be provided in writing and in a format specified by VERISITY on a quarterly basis before the beginning of the new quarter.


-4-


g. Distributor will coordinate with customers in establishing irrevocable letters of credit to VERISITY through the bank specified by VERISITY for payment of the Products. Distributor shall also assist VERISITY in the collection of payment should the need arise.


h. Distributor will supply updates of VERISITY software to those customers who are under warranty or annual maintenance at no charge, and which updates will be supplied by VERISITY to the Distributor.


i. Distributor will obtain the appropriate signatures on the evaluation agreement as shown in Schedule G by any customer before the installation of any evaluation software at the customer site and return same to VERISITY within ten (10) days of such installation. Furthermore, Distributor will obtain the appropriate signatures on any technology license agreements as shown in Schedule H by any customer on each sale of Products and return same to VERISITY within ten (10) days of such installation.


j. Distributor will not engage in, cause or permit the reverse engineering, disassembly or recompilation or similar manipulation of the Products; provided, however, that the foregoing restriction is limited so that it prohibits such activity only to the maximum extent such activity may be prohibited without violating applicable law relating to computer software.


k. Distributor will not modify or otherwise alter the Products and shall not remove any legal notices from any portions of the Products.


l. Distributor warrants and represents that it has no intention of exporting or reexporting outside the Territory any Products, customer designs, customer verification environment, whether for demonstration purposes or not, or Proprietary Information (defined below), any part thereof or any direct product thereof, whether directly or indirectly, and understands that it may not do so under this Agreement. Distributor agrees not to, and not to allow, export or reexport of any Product or Proprietary Information or any part thereof or any direct product thereof directly or indirectly from the U.S. or elsewhere, (a) in violation of any such restrictions, laws or regulations or (b) without all required licenses and proper authorizations, to Cuba, Libya, North Korea, Iran, Iraq or Rwanda or to any Group D:1 or E:2 country (or any national of such country) specified in the then current Supplement No. 1 to part 740 of the U.S. Export Administration Regulations (or any successor supplement or regulations). Licensee shall promptly execute any documents required by Licensor to comply with U.S. export requirements or demonstrate to Licensor its compliance with such requirements. Without limitation of the foregoing, Distributor agrees to commit no act which, directly or indirectly, would violate the U.S. Foreign Corrupt Practices Act (regarding, among other things, payments to government officials) or any United States law, regulation, or treaty


-5-


or any other international treaty agreement, relating to national security or to the export or reexport of any of the Products or associated technical data or products thereof to which the United States adheres. Distributor agrees to indemnify VERISITY against any claim, demand action, proceeding, investigation, loss, liability, cost and expense (including attorneys' fees) suffered or incurred by VERISITY and arising out or related to any violation (whether intentional or unintentional) by Distributor of any of the warranties or covenants in this section.


m. Distributor understands that VERISITY is not bound to any price (whether or not on Schedule B) with respect to an order until VERISITY has accepted such order and Distributor will not imply or represent anything to the contrary to any person or entity; in any event VERISITY will not be liable to Distributor for and Distributor will have no rights with respect to any price change (whether before or after acceptance of an order) or any other matter with respect to the dealings between VERISITY and customers.


n. Distributor shall maintain at each office in the Territory sufficient Products for demonstration purposes. VERISITY will consign or make available to Distributor certain demonstration products on an as-needed basis. In no event shall Distributor be supplied with more than the amount of demonstration products which VERISITY deems necessary hereunder in its sole discretion.


o. During the term of this Agreement, and for a period of ninety (90) days after termination of this Agreement, Distributor shall not:


(1) represent, assist, or provide either directly or indirectly marketing services of any sort, to any individual, firm, corporation, partnership, or other entity which manufactures or distributes products which are competitive with the Products;


(2) market directly or indirectly in the Territory products which are competitive with the Products;


(3) solicit orders for, or deal in, used goods or equipment previously manufactured by VERISITY without written authorization from VERISITY; or


(4) have any financial or managerial interest in another company which represents products directly competitive to those offered by VERISITY.


Distributor may, however, represent within the Territory, an individual, firm, corporation, partnership, or other entity which manufactures or distributes products which are complimentary or related to the Products. [A copy of the list of products currently sold by Distributor, either for itself or for the account of a third party is attached as Schedule F hereto and is true, accurate and complete. Distributor shall provide VERISITY with thirty (30) days prior written notice of any additions it wishes to make to Schedule F.]


-6-


p. During the term of this Agreement and for a period of one (1) year after the termination or expiration of this Agreement, as the case may be, Distributor shall not, directly or indirectly, solicit the employment or services of any employee, representative or agent of VERISITY, or encourage such employees, representatives or agents to leave VERISITY.


q. Distributor warrants and represents to VERISITY that neither this Agreement (or any term hereof) nor the performance of or exercise of rights under this Agreement, is contrary to, in conflict with, ineffective under, or requires registration or approval or tax withholding under, or affects VERISITY's proprietary rights under, any law or regulation of any organization, country, group of countries or political or governmental entity located within or including all or a portion of the Territory. Distributor will take no action inconsistent with the foregoing warranty and will indemnify VERISITY from any losses, damages, claims, settlements, attorneys fees and other expenses incurred by VERISITY which arise due to any allegation or action of any person or entity inconsistent with the foregoing warranty. Furthermore, Distributor agrees to give VERISITY adequate notice of any change in legislation in the Territory which may materially affect the contractual relationship of the Parties.


r. Distributor agrees to hold harmless, defend and indemnify VERISITY and its officers, directors, employees, agents and servants from and against any and all claims, damages and expenses, including reasonable legal fees and expenses, of whatever kind and nature directly or indirectly arising out of or on account of or resulting from Distributor's activities, including but without limitation, any unauthorized representations of Distributor, or out of Distributor's failure to comply with its obligations under this Agreement.


s. The failure by Distributor to comply with any of its obligations as set forth in this Section 6 shall constitute a breach of this Agreement and shall entitle VERISITY to give notice to Distributor requi ...