Exhibit
10.21


 


SEMI-PHOTONICS
CO., LTD.


 


INTERNATIONAL DISTRIBUTION AGREEMENT


 


This
International Distribution
Agreement (the “Agreement”) is made and entered into
effective December 20, 2006 (the “Effective Date”) between SEMI-PHOTONICS
CO., LTD., a company with offices at 7F, No.13 Ke Jung Rd., Chu-Nan Site,
Hsinchu Science Park, Chu- Nan 350, Taiwan (“Company”), and NANOTECO
CORP., a Japanese company with offices at 408 Mitaka Sangyo Plaza, 3-38-4
Shimorenjaku, Mitaka, Tokyo, 181-8525 Japan (“Distributor”).


 


WHEREAS
Company is engaged in the business
of LED, general illumination, lighting, projector, projection display and related products; and


 


WHEREAS
Distributor wishes to act as an independent
distributor of Products in the Territory to Customers.


 


NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth below, the parties agree as follows:


 


1.             Definitions.


 


1.1           “Assigned Accounts” means the companies having
their manufacturing facilities/subsidiaries inside or outside the Territory but
having their purchasing decision making authority in the Territory as listed in
Exhibit A attached
hereto. Any addition to the list of Assigned Accounts shall be agreed in
writing by the Company and Distributor.


 


1.2           “Customer” means an Assigned Account,
and its wholly-owned
subsidiaries and affiliates,
other than a House Account, that purchase the Products.


 


1.3           “Products” means
those Company LED chips and LED related products described in Exhibit B.


 


1.4           “House Account” means an account which
is the sole responsibility of Company and which is listed in Exhibit C
of this Agreement.  Company has the absolute right to designate (or remove) certain additional Customer accounts which are not originally listed in Exhibit A
as House Accounts at any time
during the term of this Agreement upon thirty (30) days’ written notice to
Distributor.  Upon such notice, the
additional House Accounts so designated shall be deemed added to (or removed from) the list set forth in Exhibit C. Notwithstanding the
foregoing, the Company shall not designate Assigned Accounts to
House Account by way of direct or indirect manner whatsoever, including
but not limited to, sell Products through buying agent(s) of Customer
or any other distributor with offices inside or outside of the Territory
to the same Customer.


 


1.5           “Territory” means that geographic area identified
in Exhibit D attached
hereto.


 


2.             Appointment of Distributor or Sales Representative.


 


2.1           Appointment as Distributor.  Company hereby
appoints Distributor as a


 


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distributor
in the Territory as well as Company’s exclusive Distributor of the Products to
the Assigned Accounts within the Territory. Notwithstanding the foregoing,
Distributor may not solicit or take orders for the sale of Products to a House
Account. Distributor shall have the right during the term of this Agreement to
represent to the public that it is a sole authorized independent distributor of
the Products to the Assigned Accounts. Distributor shall have the right to
obtain confidential technical information on Products from Company that is necessary for sales by distributor.


 


2.2           Independent Contractor. 
Distributor is and at all times
shall be an independent contractor in
all matters relating to this Agreement. Distributor and its employees
are not agents of Company for any
purposes and have no power or authority
to bind or commit Company in any way.


 


3.             Distributor’s General Duties.  The Distributor shall use its best efforts to introduce, promote the sale of, solicit and obtain orders for the Products from the Assigned Accounts in
accordance with the terms of this Agreement. 
The Distributor shall bear the entire cost and expense of
conducting any and all of its
activities under this Agreement.


 


4.             The Distributor’s Specific Duties and Prohibitions.  Without in any way limiting the generality of
the preceding paragraph, the Distributor agrees as follows:


 


4.1           Facilities. 
The Distributor shall maintain its own office space and facilities, with the entire cost of these items and activities to be borne solely by the Distributor.


 


4.2           Personnel. 
The Distributor shall provide and maintain, at
its own expense, a competent and adequately
trained, skilled and motivated
sales organization for the sale of Products to Customers.  The Distributor shall employ sufficient
technical resources to support Company’s
product line.


 


4.3           Records.  The
Distributor shall maintain complete and accurate
books and records.  Company and its agents shall have the right at any time during the terms of this
Agreement and for a period of six months after its termination or expiration to examine and copy such books, records, correspondence, quotations, orders and other documents which pertain to Company’s business and the fulfillment of the Distributor’s obligations hereunder, as it may
deem necessary or appropriate upon reasonable advance notice to Distributor.


 


4.4           Sales and Distribution
of Products.  The
Distributor shall purchase Products from Company at the price
to be determined by the Company from time to
time.  Company reserves the
right to change the Products prices by
consulting with Distributor in good faith.


 


4.5           Reports.  The Distributor shall prepare and submit to Company periodic reports relating to its activities as Distributor by
the 5th working day of the following quarter as follows:


 


(a)           Forecasts. 
On the fifth (5th) day after the
end of each quarter, Distributor
will provide Company with a
12-month rolling forecast, setting forth its estimated requirements for
shipment by month for each Product.  Such
forecasts are for planning purposes
only, and will not be binding on either party.


 


(b)           Quarterly Reports.  Distributor will submit to Company quarterly


 


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sales information. 
Such sales information will include, at a minimum, date shipped,
quantity of Product sold and quantity used
internally, the Customers’ names, addresses, contact information, and quantities sold to each such Customer, and remaining
inventory.


 


(c)           Feedback Reports.  Distributor will submit to Company, upon receipt of such information and upon request
by Company, any competitive
information, problems, complaints or suspected defects with respect to the
Product, and any feedback from any
Customer.


 


4.6           Non-Competition. 
Distributor may distribute with prior written approval from Company products that compete with the Products, provided that Distributor
maintains separate sales and support personnel for the Products and competing
product(s).


 


4.7           Assignment.  The Distributor shall not transfer, pledge, or assign this Agreement or enter into any form of
sub-sales distributor agreement concerning any of its obligations hereunder
without the prior written consent of Company.


 


4.8           Secrecy.  The
Distributor shall not during the term of this Agreement or thereafter for three
(3) years, disclose to any third party any invoice value or Products sold
by Company to the Distributor, sales
policies for any other business information of Company acquired from
or as a consequence of
transactions under this Agreement, without the prior written consent of Company.


 


4.9           Matters Not Provided For.  With respect to any matters for which this
Agreement does not provide, or if any questions arise with respect
to the interpretation of the matters provided in this Agreement, Company and the Distributor shall
exercise their best efforts to resolve
such questions by consulting with each other in good faith.


 


5.             Company’s General Duties.  The Company shall use its
best efforts to supply the Products in
good quality with competitive price in accordance with the terms of this
Agreement.


 


6.             Product Manufacture and Order Placement.


 


6.1           Additions to and Deletions
from Products.  Company may, in its sole discretion, discontinue the manufacture of any or all Products or make whatever changes to those Products it deems necessary, desirable or
appropriate.  Company may, in its sole discretion, delete Products from the list of
Products described in Exhibit B
upon thirty (30) days’ written notice to the Distributor.


 


6.2           Purchase Orders and Acknowledgements.


 


(a)           Purchase Orders. 
Purchase orders shall be in writing or a mode agreeable to both parties, subject to the terms of this Agreement, and must contain the following: (a) description of the Product to be
purchased, (b) quantity to be purchased, (c) delivery schedule, (d) bill-to
and ship-to destinations, (e) price,
(f) payment terms, and (g) routing
instructions.  All Products must be
ordered in the minimum multiples quantities as specified per Product in Exhibit B only.  All Purchase orders submitted by Distributor
shall be governed exclusively by the terms and conditions of
this Agreement. Any preprinted terms and conditions in
Distributor’s purchase order in addition to or inconsistent with those
contained in this Agreement shall be of no force and effect unless
Company specifically and expressly


 


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agrees
in writing to such terms.  Distributor
shall submit all Purchase Orders to Company, 7F, No.13,
Ke Jung Road, Chu-Nan Site, Hsinchu Science Park, Chu-Nan 350, Miao-Li County,
Taiwan, fax +886-37-586788 or such
other address as is designated by Company.


 


(b)           Order Acknowledgments.  Company will notify
Distributor if an order is not
accepted.  No purchase order shall be
binding on Company unless and until so accepted in writing by Company.  Company will use
commercially reasonable efforts to fill all orders submitted by Distributor
during the term of this Agreement.


 


(c)           Refusal of Orders. 
Company may withhold shipments
because of the Distributor’s general financial condition and/or conditions of
the Distributor’s account with Company.  Such withholding shall not be construed as a
breach of this Agreement.  Company reserves the right at all times either generally or with respect to
any specific order to vary, change or limit the
amount or duration of credit to be allowed to the Distributor.


 


(d)           Shipping. 
Products shipped pursuant to the terms of this Agreement will be
suitably packed for shipment in Company’s standard packaging,
marked for shipment to Distributor’s address as designated by Distributor.  Risk of loss and title shall
pass to Distributor upon delivery of the Products to the freight forwarder at
Company’s facility, as specified in Company’s shipping and freight guidelines. 
Distributor will be responsible for payment (or reimbursement of Company) of all freight, insurance, taxes, customs duties and other shipping expenses after such point.


 


(e)           Product Acceptance. 
Distributor will inspect all Products for obvious physical damage
promptly upon receipt thereof and may reject
any Product that fails in a material way to meet Company’s specifications for
such Product.  Any Product not properly
rejected within 30 days of receipt of that Product by Distributor will be
deemed accepted.  Distributor will return
any rejected Products pursuant to Company’s Return Merchandise Authorization
Procedures, a copy of which is attached hereto as Exhibit E
(“RMA Procedure”).  As promptly as
practicable after receipt by Company of properly
rejected Products, Company will, at its
option and expense, replace the
Products and return such replaced
Product to Distributor or credit Distributor’s account at the current price for
the rejected Product.  Improperly rejected
Products will be returned to Distributor at Distributor’s expense and will be subject to a service and handling fee.  Company reserves the right to discontinue the manufacture of any
Product.


 


(f)            Company’s Modifications to Exhibits.  Company may, from time
to time, revise or amend Exhibits B,
C  and E, or any of the foregoing, and will provide Distributor with no less than 30 days prior written
notice of such changes.  The revised Exhibits shall be deemed
incorporated herein and made a part of this Agreement.


 


6.3           Title and Delivery of
Product.


 


(a)           Delivery of the Products to the Distributor shall be
completed upon delivery of the Products to the Distributor’s freight forwarder
at a location specified by Company.  All shipments shall be EXFACTORY from such
location.  In all cases, Company’s title and the risk of loss or damage to any Product, shall pass to the
Distributor upon delivery of the Products to the Distributor’s freight
forwarder.


 


Shipping
dates are approximate and are based
upon prompt receipt of all necessary information from the Distributor.  In no event shall Company be liable for any reprocurement costs for


 


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delay
in delivery or non-delivery, due to causes beyond Company’s control.  In the event of any such delay, the date of
delivery shall automatically be extended for a period equal to the time lost by
reason of the delay.  In any event, Company shall not be in default for failure to deliver unless Company does not respond to the Distributor with a revised delivery
commitment within fifteen (15) days after receipt of written notice of failure
to deliver from the Distributor.  The
Distributor’s sole remedy for such default shall be cancellation of the
order.  Company further
reserves the right to allocate production deliveries among its customers in a
fair and reasonable manner.


 


(b)           Company may make partial shipments against the Distributor’s purchase orders upon mutual
agreement of the parties.


 


(c)           Company shall have
the right to make substitutions and modifications
in the specifications of Products sold by Company upon not less
than ninety (90) days notice in writing to Distributor, provided that such
substitutions or modifications will not materially affect overall
Product form, fit, or function.


 


7.             Cancellation/Reschedules.


 


(a)           Company will work
with the Distributor on a case by case basis to resolve issues related to
market changes and potential impact on orders placed with Company.


 


(b)           No cancellations shall be allowed within forty-five (45)
days of scheduled ship date unless prior approval is obtained in writing from
Company.


 


(c)           If the Distributor cancels a portion of an order, the balance of that
order, shipped and unshipped,
will be repriced to reflect the appropriate volume price.  Company will invoice
the Distributor for any price increase on Products previously shipped against
the order.


 


(d)           In the event that the Distributor wishes to terminate all
or a portion of an order made in accordance herewith or to make any change in the scope of the order, such termination or change will be accepted only with the specific approval of Company in writing.


 


8.             Payment Terms.


 


8.1           Company will supply
the Distributor with price quotations, at Distributor’s request, for
Products.  Unless otherwise specified on
the price quotation, quoted prices shall remain in effect for ninety (90) days.


 


8.2           Payment for all orders shipped by Company during a
calendar month will be due on or before the 15th day of the
following month.  All payment shall be made
in United States dollars in immediately available funds by wire transfer to
Seller’s bank account at                                       ,
ABA#                               in
favor of Semi-Photonics Co., Ltd., Account
#                        .


 


8.3           Company will invoice
the Distributor for Products when Company ships such
Products.


 


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9.             Compensation. 
The difference between Distributor’s purchase price for the Products and Distributor’s price to its customers will be Distributor’s sole
remuneration for the purchase and sale of the
Products hereunder.  Distributor shall
have no right to receive any other payment or compensation from Company for the purchase and sale of the
Products or to receive reimbursement of any expenses or other costs incurred by
Distributor in connection therewith, unless specifically and expressly provided
for hereunder.


 


10.           Limited Warranties; Disclaimer; Limited Liability.


 


10.1         Except for the warranty of title, Company warrants only that
each Product to be delivered hereunder shall, under normal use and conditions, at the time of delivery and for one
hundred twenty (120) days thereafter conform substantially to Company’s
specifications therefore.  However, the
Company will have no
responsibility for any such defect arising from, relating to, or in combination
with, components, parts, or materials
not produced or not provided by the Company, including
without limitation Distributor’s products, and this limited
warranty is void if the defect resulted from accident, abuse, or misapplication
of the Products.


 


10.2         As the Company’s sole liability and Distributor’s
exclusive remedy for breach of the limited warranty in Section 10.1, Company shall, at its option, (a) repair or replace at its expense
(including return shipment) any Product found by Company to be non-conforming to warranty, or (b) reimburse Distributor
for the purchase price allocable to such products less reasonable deductions
for usage and general market
depreciation; provided that Distributor first notifies Company in writing of the alleged defective Products and then, at Distributor’s expense, returns such Products to Company’s
designated return facility within the applicable warranty period along with a
brief statement explaining the alleged defect and a reference
to the return material authorization number (“RMA #”) issued by Company.  Returned Proucts that are
found by Company to conform to
such warranty or are returned out-of-warranty will be repaired or replaced at Company’s
standard charges and shipped back to Distributor at Distributor’s expense.  The warranty under this Section 10 shall
not be valid if Company determines
that the Product has been abused, modified, altered, subjected to damage from
accident or acts of nature or otherwise used in breach of this Agreement or in
a manner not in accordance with the Company’s specifications or
description.  THE FOREGOING STATES
DISTRIBUTOR’S AND CUSTOMER’S SOLE REMEDY AND THE COMPANY’S SOLE LIABILITY FOR
BREACH OF THE WARRANTY SET FORTH IN THIS SECTION 10.  In no event shall Company be liable for any consequential or incidental damages.  The Distributor shall have no right or
authority, express or implied, directly or indirectly, to alter, enlarge or
limit the representations or guarantees expressly contained in Company’s most
current written Product warranty as distributed by
Company for the applicable
Product.


 


10.3         EXCEPT FOR THE LIMITED WARRANTY PURSUANT TO SECTION 10.1
ABOVE, THE COMPANY DOES NOT MAKE ANY WARRANTIES WITH RESPECT TO THE PRODUCTS OR
OTHERWISE UNDER THIS AGREEMENT.  THE
COMPANY PROVIDES THE PRODUCTS TO DISTRIBUTOR “AS IS,” WITHOUT WARRANTY OF ANY
KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND AGAINST
INFRINGEMENT.


 


10.4         COMPANY SHALL IN NO EVENT BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT


 


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OF
OR RELATING TO THE SALE OR USE OF ITS PRODUCTS, WHETHER OR NOT COMPANY HAS
ADVANCE NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.  IF COMPANY BREACHES ANY PROVISION OF THIS
AGREEMENT, COMPANY’S SOLE AND EXCLUSIVE MAXIMUM LIABILITY, WHETHER BASED IN
CONTRACT, TORT, OR OTHERWISE, AND TOGETHER WITH ANY OTHER LIABILITIES RELATING
TO THE PRODUCTS, SHALL NOT IN ANY EVENT EXCEED THE CONTRACT PRICE FOR THE
PARTICULAR PRODUCTS DURING THE TWELVE MONTH PERIOD PRIOR TO THE FINAL
AJUDICATION SETTING FORTH THE LIABILITY AMOUNT.


 


11.           Proprietary Right. 
Ownership and all right,
title and interest in and to any trademarks, trade names or service marks which
are valid and enforceable, used with any
Product are and shall remain
vested solely in Company.  Company grants to the
Distributor a limited license to use the trade name of Company and Company logo solely to identify the Distributor as an independent distributor of Company.  The Distributor shall provide to Company, at no cost to Company, examples of
all its uses of Company’s trade name and logo and shall modify such use if requested by Company.  The Distributor shall not adopt any
trademark, trade name or service mark which
is confusingly similar to the trademark, trade name or service mark used by Company to sell or
assist in the sale of its Products.  Upon
termination of this Agreement, the Distributor will immediately cease all
further use of Company’s trademarks, trade names or service marks except as may be required in the sale of Products in
inventory.  The Distributor’s rights and license under this Section 11 shall not survive the termination of this Agreement. 
All products authorized by Company which are
sold by the Distributor directly or through its sales distribution channel must
bear an authorized Company name, trademark or logo, and no other
except those authorized by Company in
writing.  The Distributor may not put any
Company trademark, trade name,
logo etc. on any product other than as authorized by Company in writing.


 


12.           Confidential Information.


 


12.1         During the term of this Agreement, each party (the “Receiving
Party”) may be provided with or
otherwise learn confidential and/or proprietary information of the other party
(the “Disclosing Party”) (including,
without limitation, certain information
and materials concerning the
Disclosing Party’s business, plans, technology, and products) that is of substantial value to the Disclosing Party, which is identified as confidential
at the time of disclosure or which ought in good faith to be considered
confidential (“Confidential Information”). All Confidential Information remains
the property of the Disclosing Party.  The Receiving Party may disclose
the Confidential Information of the Disclosing Party only to its
employees and contractors who need to
know the Confidential Information for purposes permitted under this Agreement and who are bound by written confidentiality agreements with terms at
least as restrictive as those provided in this Agreement.  The Receiving Party will not use
the Confidential Information without the Disclosing Party’s prior written
consent except in performance under this
Agreement.  The Receiving Party will take measures to maintain the confidentiality of the
Confidential Information similar to those measures the Receiving Party uses to maintain the confidentiality of its own confidential
information of like importance but in no
event less than reasonable measures. 
Distributor will not disclose or publish any technical description of
the Product or technology beyond the description published by the Company for general dissemination.  The
Receiving Party will give
immediate notice to the Disclosing Party of any
unauthorized use or disclosure of the Confidential Information and agrees to assist the Disclosing Party in remedying
such unauthorized use or disclosure.


 


12.2         The confidentiality obligations do not extend to
Confidential


 


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Information
which (i) becomes publicly available without the fault of the Receiving Party; (ii) is independently developed by the Receiving Party without reference to or use of the Disclosing Party’s Confidential
Information; or (iii) was lawfully in the possession of the Receiving Party at the time of disclosure, without restriction on disclosure.  The Receiving Party will have the
burden of proving the existence of any condition in this Section 12.2.


 


12.3         The Distributor and Company have previously or are concurrently executing a separate
confidentiality agreement and
non-disclosure agreement (the “Non- Disclosure Agreement”) which shall be unaffected
by the execution of this Agreement.


 


The
obligations set forth in this Section 12 will be effective from the
Effective Date until three (3) years from the termination or
expiration of this Agreement.


 


13.           Indemnification.


 


13.1         Company agrees to defend
and hold Distributor harmless
against any loss, liability or expense (including reasonable attorneys’ fees)
paid to third parties arising from any action or claim brought or threatened
against Distributor alleging that the Products under normal use infringe any
third party’s United States patent, Japanese patent, copyright, trademark,
trade secret or other intellectual property right; provided that Distributor
provides Company with (a) prompt
written notice of such claim or action, (b) sole control and authority over the defense or settlement of such claim or action and (c) proper and full
information and reasonable assistance to defend
and/or settle any such claim or action. If the Product becomes or in Company’s
opinion is likely to become, the subject of an infringement
claim, Company may, at its option, (a) procure
for Distributor the right to continue using the Product as provided in this
Agreement; (b) modify or replace the Product so that there is no
infringement; or (c) if neither of the foregoing options are reasonably
available to Company, accept the
return of the Products and refund to
Distributor the amounts paid for such Products depreciated over a three year
period on straight line basis. Notwithstanding the provisions set for the
above, Company assumes no liability for
infringement claims to the extent such claims arise from (x) combination
of Products with other products not provided by Company, (y) the
modification of such Products unless such modification was made or authorized
by Company, where such infringement
would not have occurred but for such modifications, or (z) Company’s
compliance with specifications provided by Distributor (the “Excluded Claims”).


 


13.2         THE FOREGOING STATES THE ENTIRE LIABILITY AND OBLIGATIONS OF
COMPANY AND THE EXCLUSIVE REMEDY OF DISTRIBUTOR WITH RESPECT TO ANY ALLEGED OR
ACTUAL INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADE SECRETS, TRADEMARKS OR OTHER
INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS. 
COMPANY’S MAXIMUM LIABILITY UNDER THIS SECTION 13 AND WITH ANY OTHER
SECTIONS UNDER THIS AGREEMENT TOGETHER SHALL NOT EXCEED THE AMOUNT OF THE
PURCHASE PAID BY DISTRIBUTOR FOR THE PRODUCTS THAT GIVES RISE TO THE CLAIM
DURING THE TWELVE- MONTH PERIOD PRIOR TO THE CLAIM.


 


13.3         Other than as to claims for which Company is obligated to indemnify Distributor under Section 13.1 above,
Distributor agrees to defend and hold Company harmless against any damages, loss, liability or expense (including
reasonable attorneys’ fees and costs)
arising from claims brought or threatened against Company by any other party
arising out of or related to (a) the Excluded Claims or otherwise
Distributor’s misuse, modification, alteration, adaptation, promotion,
marketing, sublicensing or distribution of the Product; or (b)


 


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Distributor’s
acts or omissions in breach of this Agreement, including but not limited to
Distributor’s representations and claims
regarding the Products that are contrary to or inconsistent with Company’s
Product descriptions and warranties.


 


14.           Term and Termination.


 


14.1         Term.  The
initial term of this Agreement shall commence on the Effective Date and end two (2) years thereafter, unless earlier terminated as
provided in this Section 14. 
Thereafter, this Agreement shall be extended automatically every year
for an additional period of one (1) year,
unless terminated earlier pursuant to the terms of this Section 14 or
unless either party gives written notice to the other party of its intention
not to renew this Agreement at least thirty (30) days prior to the end of then
current term.


 


14.2         Termination for Convenience.   Either party may terminate this Agreement
for its convenience by giving the other party sixty (60) days prior written
notice of the termination.


 


14.3         Termination for Cause.  Either party may terminate this Agreement
immediately, upon written notice, (a) if the other party materially
breaches any term of this Agreement and fails to cure
such breach within thirty (30) days after receipt by the breaching party of
written notice from the non-breaching party describing such breach, (b) upon
the institution by or against the other party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the settlement of the other
party’s debts not dismissed within 60 days, (c) upon the other party’s
making an assignment for the benefit
of creditors, or (d) upon the other party’s dissolution or ceasing to
conduct business in the normal course, or the other party’s failure to pay its
debts as they mature in the ordinary course of business.


 


14.4         Effect of Termination.  Upon termination or expiration of this
Agreement, (a) all rights and licenses
granted to Distributor hereunder will immediately cease; (b) Distributor
shall immediately deliver the Quarterly Report as to the
period as yet unreported; (c) Distributor will immediately cease all use,
marketing, promotion and distribution of the Product and return to the
Company all copies of Company’s
Confidential Information in Distributor’s possession, custody or control.  Upon termination or expiration of this
Agreement, each party will promptly return the other party’s Confidential
Information.  The following Sections will
survive expiration or
termination of this Agreement for any reason: Sections 4, 6, 10-12, 14, and 15.


 


14.5         Disclaimer. 
Except as specifically provided herein, if either party is entitled
under local law or otherwise for any special payment or termination indemnity
as a consequence of termination or expiration of this Agreement, such party
hereby waives and disclaims to
the fullest extent permitted by law, any right to such payment or indemnity.


 


15.           General Provisions.


 


15.1         No Waiver.  The
failure of either party to enforce at any time or for any period any of the
provisions of this Agreement shall not be construed to be waiver of those
provisions or of the right of that party thereafter to enforce each and every provision hereof.


 


15.2         Return of Company Property.  Promptly upon the termination of this
Agreement, the Distributor shall turn over to Company all
Confidential Information and all other
Company information and material, including, without limitation, all samples, pamphlets,


 


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catalogs,
booklets and other technical
advertising data and literature
concerning Company
and/or its Products and all copies
thereof, in the possession, custody or control of the Distributor.


 


15.3         Notices.  Any
notice hereunder shall be deemed duly given if delivered personally, facsimiled
with receipt acknowledged, mailed to the other by prepaid registered mail, or
certified mail, return receipt requested, or delivered by a recognized
commercial carrier addressed to the address designated below or last
designated.


 


If
to Company:


 


Semi-Photonics
Co., Ltd.


7F,
No.13, Ke Jung Rd.


Chu-Nan
Site, Hsinchu Science Park


Chu-Nan
350, Miao-Li County


Taiwan (R.O.C.)


Attn:       Legal Counsel


Fax:         +1-408-716-2452


 


If
to Distributor:


 


Nanoteco
Corp.


408
Mitaka Sangyo Plaza


3-38-4
Shimorenjaku


Mitaka,
Tokyo, 181-8525


Japan


Attn:       CTO


Fax:         +81-42-486-5661


 


15.4         Governing Law. 
This Agreement (and any other
documents referred to herein) shall in all respects be interpreted, enforced and governed by and under the
laws of the United States and the State of California applicable to instruments,
persons and transactions which have legal contacts and relationships
solely within the State of California.


 


15.5         United Nations Convention.  The parties hereto
agree that the rights and obligations
of each party under this Agreement shall not be governed by any of the
provisions of the United Nations Convention on Contracts for the International Sale of Goods.


 


15.6         Force Majeure. 
The parties shall not
be liable for any delay or failure of the obligation hereunder (other than
payment of amounts due), in whole or in part, for any
causes beyond the reasonable control of the parties including,
but not limited to, Acts of God, war, riot, civil disturbance, strikes,
lockouts or other labor disputes, accident of transportation or other force majeure.


 


15.7         Dispute.


 


(a)           Dispute Resolution. 
Any and all disputes,
controversies or claims concerning or relating to this Agreement (a “Dispute”)
will be addressed in accordance with the procedures specified in this Section 15.7,
which will be the sole and exclusive
procedures for the resolution of such Disputes. 
All negotiations pursuant to this provision are confidential and shall be treated as compromise and settlement
negotiations for purpose of the


 


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United
States Federal Rules of Evidence and state rules of
evidence.


 


(b)           Negotiation.  The parties will
attempt in good faith to resolve any Dispute promptly by negotiation.  If the Dispute has not been resolved within
sixty (60) days of a party’s request for negotiation, either party may
initiate mediation as provided in Section 15.7(c).


 


(c)           Nonbinding Mediation.  A party may initiate mediation by giving
notice to the other party.  Mediation
will be nonbinding and before the
Judicial Arbitration and Mediation Services, Inc. (“JAMS”) under the then effective JAMS Rules of
Practice and Procedure.  The mediation shall take place in Santa Clara County, California, regardless which party initiates the
mediation.  The parties shall attempt to reach agreement on the appointment of a
mediator.  If they cannot so agree, the
mediator shall be appointed by JAMS and pursuant to
JAMS Rules of Practice and
Procedure.  The mediator will be a former
judge of a federal or state court.  The mediation shall be completed within sixty
(60) days of its initiation, unless the parties otherwise
agree.  The parties will bear
their own costs and expenses for
participating in mediation under this Section 15.7(c), including, without
limitation, attorney’s fees, and shall shares
equally the mediator’s fees and expenses.


 


(d)           Binding Arbitration.  Any Dispute that has not been resolved by
mediation as provided in Section 15.7(c) may be submitted to binding
arbitration by the American Arbitration Association (“AAA”).  There will be one (1) neutral,
independent and impartial arbitrator selected in accordance with the AAA rules and procedures then in effect; provided, however, the arbitrator may not
vary, modify or disregard any of the provisions contained in this Section 15.7.  The parties shall
attempt to reach agreement on the appointment of an
arbitrator.  If they cannot so agree, the
arbitrator shall be appointed by the AAA. 
The arbitration shall take place in Santa Clara
County, California, regardless which party initiates the arbitration.  As part of any
arbitration conducted under this Section 15.7(d), each party may (i) request
from the other party documents and other
materials relevant to the
Dispute and likely to bear on the
issues in such Dispute, (ii) conduct no more than five (5) oral
depositions each of which will be limited to a maximum of seven hours in
testimony, (iii) propound to the other party no more than two sets of
interrogatories comprising a total of 35 questions, and (d) two
sets of requests for admissions comprising a total of 10 requested admissions
maximum. The decision and any award
resulting from such arbitration shall be final and binding.  Any final decision or award from arbitration
will be in writing and
reasoned.  The judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof.  The arbitrator is
not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any right to recover such
damages with respect to any Dispute resolved by arbitration.  Each party shall bear its own expenses
(including attorney’s fees) and an equal share of the expenses of the arbitrator and the AAA fees.


 


(e)           Confidentiality in Dispute
Resolution.  The parties, their representatives, other participants and the mediator and arbitrator shall hold the existence,  content and result of the
mediation and arbitration in
confidence.  All the dispute resolution
proceedings contemplated in this Section 15.7 will be as confidential and private as permitted by law. 
The parties will not
disclose the existence, content or results of any proceedings conducted in
accordance with this Section 15.7, and materials
submitted in connection with such proceedings will not be admissible in any
other proceeding, provided however, that this confidentiality provision will
not prevent a petition to vacate or enforce an arbitration
award,  and shall not bar
disclosures required by law.


 


11

















 


(f)            Injunctions; Waiver.  Nothing in this Section 15.7 shall be
construed to preclude any party from seeking injunctive relief from a court without posting bond or other security, in order to protect its rights
pending mediation or arbitration.  If
either party chooses to seek such relief from a court, the parties
consent to the exclusive jurisdiction and venue of the
courts located in Santa Clara County, California.  A
request by a party to a court for such
injunctive relief shall not be deemed a waiver of the obligation to mediate or
arbitrate.  EACH PARTY ACKNOWLEDGES THAT
THIS AGREEMENT TO ARBITRATE DISPUTES WAIVES THE PARTY’S RIGHT TO TRIAL BY JURY
OR COURT OR TO HAVE DISCOVERY UNDER COURT RULES.


 


15.8         No Representations.  The Distributor represents and acknowledges that it is relying solely on its own judgment, including
its own estimate of the market for Products in Territory, in entering into this
Agreement, and that Company has made no written or verbal representations or warranties, either
express or implied, regarding the subject matter hereof, including, without
limitation, the duration of the distributorship arrangement and any selling representation created hereby, the circumstances under
which this Agreement shall or may be terminated, the size of the market for
Products in Territory or the amount of commissions or profits which the
Distributor will, could or might expect to receive hereunder.


 


15.9         Titles of Paragraphs.  The title of the various paragraphs of this
Agreement are used for convenience of reference only and are not intended to and shall not in
any way enlarge or diminish the rights or obligations of the parties or affect the meaning or construction of this document.


 


15.10       Integration/Modification/Entire
Agreement.  This
Agreement together with the attached Appendixes and the
Nondisclosure Agreement constitute the entire agreement and final understanding of the parties with
respect to the subject matter hereof and supersedes and terminates any and all prior
and/or contemporaneous negotiations, representations, understandings,
discussions, offers and/or agreements between the parties, whether
written or verbal, express or implied, relating in any way to the subject
matter hereof.  This Agreement is
intended by the parties to be a
complete and wholly integrated expression
of their understanding and agreement, and it may not be altered, amended, modified or otherwise changed in any
way except by a written instrument, which specifically identifies the intended
alteration, amendment, modification or other change and clearly expresses the intention to so change this
Agreement, signed by the parties.


 


[Signature Page Follows]


 


12

















 


 


IN
WITNESS WHEREOF, the parties have
executed this Distribution Agreement effective as of the Effective Date.


 


 


	
  SEMI-PHOTONICS
  CO., LTD.

  	
   

  	
  NANOTECO
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  



 


13

















 


Exhibit A


 


ASSIGNED ACCOUNTS


 


	
   

  	
  English name

  	
   

  	
  Categor 1 die

  	
   

  
	
   

  	
  C
  . I. KASEI CO., LTD

  	
   

  	
   

  	
  1
  2Lamp

  	
   

  
	
   

  	
  SUN
  ELECTRONIC INDUSTRY CO LTD

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  KYOSEMI

  	
   

  	
   

  	
  1

  	
   

  
	
   

  	
  CCS
  Inc

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Sammy
  Co.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Union
  ELECTRONIC INDUSTRY CO LTD

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Prof
  Precision LTD

  	
   

  	
   

  	
  1

  	
   

  
	
   

  	
  LOOP
  CO. LTD

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  NIPPON
  LEIZ Corporation

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  INTERNIX
  Inc

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Shin-Etsu
  Handoutai Co. LTD

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  SEIKO
  EPSON CORPORATION

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Silicon
  technology Co. Ltd

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  NIHON
  COLMO CO , LTD

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Toshiba
  Matsusita Display Technology

  	
   

  	
  ( 1 and 2

  	
   

  	
   

  
	
   

  	
  HOYA
  CORPORATION

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  DENKA

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Japan
  Scantic Technology Management

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  NEC
  Lighting Ltd

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Jupa

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  MK
  Seiko Co.,Ltd

  	
   

  	
  2

  	
   

  	
   

  
	
   

  	
  Iwasaki
  Electric Co., Ltd

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Iwasaki
  Information Systems Co., Ltd

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Techtuit
  Co., Ltd.

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  lida
  Electronics (Tsusho) Co.,Ltd.

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  Jyoyo
  Denshikiki Co., Ltd.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Sankosha
  Corp.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Nippon
  Koki Kogyo Co., Ltd.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Nippon
  Sento Co., Ltd.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Japan
  Outdoor Lighting MFG Co., Ltd.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Contents

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  ICHIKOH
  INDUSTRIES, LTD

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Shibasaki
  Inc.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Kictec
  Corp.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  KIRIN
  TECHNO-SYSTEM Corp.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Schott
  Nippon K.K.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Koizumi
  Lighting Technology Corp.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  LTEL
  Corp.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  OSAKI
  ELECTRIC CO., LTD.

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Denso
  Co..Ltd

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Koito
  Industries.Ltd

  	
   

  	
  1 and 2

  	
   

  	
   

  
	
   

  	
  SAXA, Inc

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Endo
  Lighting Corp

  	
   

  	
   

  	
  2

  	
   

  



 

















 


Exhibit B


 


PRODUCTS


 


Blue
LED Chips:


SL-B60



SL-B40



SL-B28



SL-B24



SL-B15


 


Green
LED Chips:


SL-G40



SL-G28



SL-G24


 


Near
UV:


SL-U40


 

















 


Exhibit C


 


HOUSE ACCOUNTS


 


None


 

















 


Exhibit D


 


TERRITORY


 


Japan


 

















 


Exhibit E


 


RETURN MERCHANDISE AUTHORIZATION PROCEDURES


 


Distributor
must obtain a Return Merchandise Authorization (RMA) number from Company for all Products, prior to returning said Product to Company for repair or replacement, or any other reason.  Failure to obtain an RMA number and follow the procedures below by the Distributor before returning
Product to Company will result
in Company’s refusal of said Product. 
All Product returned for credit will be at Company’s current published
price.


 


(a)           Distributor must submit a request for an RMA number to Company
in writing, and should include the following information:


 


(1)           Distributor Name and Address 


(2)           Requester’s Name, Phone
Number and Fax Number 


(3)           Product Name and Description, Company Part Number or SKU, Quantity 


(4)           Product Current Unit Price and Date of Purchase (if possible) 


(5)           Reason for Product Return 


(6)           Purchase Order Number 


(7)           Debit Memo Number if
Distributor intends to debit Company


 


(b)           Company will issue an RMA number to Distributor when the information required is provided to
Company.  Authorized RMA numbers are
valid for only 30 days, upon which time the RMA will be closed.


 


(c)           The returning Product should be properly packaged for shipment of
electronic parts including anti-static packing for boards.


 


(d)           The RMA number issued by Company must be clearly
referenced on the outside of all ship containers and packing lists
packed and prepared by Distributor so that  identification
is possible when Product is received by Company.


 


(e)           The following are the freight terms & guidelines for all typical
authorized returns:


 


(1)           Distributor pays Freight


(i)            In
warranty - Distributor pays freight one way, inbound to Company.


(ii)           Out
of warranty — Distributor pays freight both ways, in bound &
outbound.


(iii)          DOA’s
(“dead on arrivals”)- Distributor pays freight one way, inbound to
Company for credit only or for credit & replacement.


 


(2)           Company pays Freight


(i)            In
warranty - Company pays freight one way, outbound back to the customer.


(ii)           DOA’s
- Company pays freight one way for REPLACEMENT DOA’s, outbound to the
customer.


(iii)          Company
shipment error - Company pays freight both ways, back from the customer
and replacement product to the customer. 
Company will select the carrier both ways.


 


 

















 


(f)            Any Produce returned to Company that has failed as a
result of abuse, misuse, neglect, unauthorized repair or modification are not
covered under this warranty.  At its
option, Company may refuse said Product or charge Distributor for out of
warranty service.


 


(g)           Any Product returned to Company that is replaced
becomes the property of Company.