EXHIBIT 10.3



INTERNATIONAL
 DISTRIBUTOR AGREEMENT



This Distributor Agreement (the “Agreement”) is made and effective as
of November 30, 2004 by and between Micro Linear Corporation, having its
principal place of business at 2050 Concourse Drive, San Jose, CA  95131
(hereinafter referred to as “MANUFACTURER”) and Clavis, a division of
Macnica, Inc. 1-6-3 Shin Yokohama, Kohoku-ku, Yokohama, 222-8561, Japan
(hereinafter referred to as “DISTRIBUTOR”).



          In consideration of
the mutual promises herein contained, the MANUFACTURER and DISTRIBUTOR agree as
follows:



1.       APPOINTMENT



          A.          Subject
to the terms stated herein, MANUFACTURER appoints DISTRIBUTOR, and DISTRIBUTOR
hereby accepts such appointment, as an authorized MANUFACTURER’S
distributor for the Products in the territory (as defined in Section 3A
below).



          B.          The
relationship of MANUFACTURER and DISTRIBUTOR established by this Agreement is
that of independent contractors.  Nothing contained in this Agreement shall
be construed to give either party the power to direct and control the day-to-day
activities of the other, or constitute the parties as partners, joint ventures,
co-owners or otherwise as participants in a joint or common undertaking. 
DISTRIBUTOR, its agents, and employees are not the representative of
MANUFACTURER for any purpose except as expressly set forth in the
Agreement.  They have no power or authority as agent, employee, or in any
other capacity to represent, act for, bind, or otherwise 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 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 free and harmless from any and all claims,
damages, or lawsuits arising solely out of the acts of DISTRIBUTOR, its
employees, and its agents.



2.       DEFINITION OF
“PRODUCTS”



          A.          The
term “Products” shall mean all products offered for sale by
MANUFACTURER as set forth and described in MANUFACTURER’S current published
Distributor Price List.



          B.          Additional
Products may be added to this agreement, including products specified in
MANUFACTURER’S Published Price List but not approved for DISTRIBUTOR
stocking, by mutual agreement between the parties.


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3.       DEFINITION OF “TERRITORY”



          A.          The
term “Territory” shall mean the geographic area known as Japan and in
addition shall include subsidiaries of Japanese customers located in Singapore
Taiwan, Hong Kong, China and South Korea in those instances where the design win
was transacted with their respective Japanese parent companies.  
Manufacturer and Distributor agree, however, that coverage of this geographic
area shall be non-exclusive and that Manufacturer and Distributor shall agree in
a separate writing on the customers to be serviced by Distributor  under
the terms of this Agreement.



4.       TERM



          

The term of this Agreement shall commence upon the Effective Date set forth for
the initial period of one year and shall be automatically renewed unless
terminated by either party giving at least thirty (30) days written notice per
Section 28 (Twenty-Eight) of this agreement.



5.       DISTRIBUTOR ACTIVITIES



          A.          DISTRIBUTOR
agrees to actively and diligently solicit the trade in the territory, and in
general make all reasonable efforts to sell MANUFACTURERS Products.



          B.          
During the term of this Agreement, DISTRIBUTOR shall have the right within the
Territory to indicate to the public that it is an authorized DISTRIBUTOR of the
Products and to advertise such items under the trademarks, service marks, and
trade names that MANUFACTURER may adopt from time to time
(“MANUFACTURER’S Trademarks”).  DISTRIBUTOR shall not alter
or remove any MANUFACTURER’S Trademarks applied to the Products. 
Nothing herein shall grant to DISTRIBUTOR any right, title or interest in
MANUFACTURER’S Trademarks.  All uses of MANUFACTURER’S Trademarks
by DISTRIBUTOR shall inure to the benefit of MANUFACTURER.  At no time
during the term of this Agreement shall DISTRIBUTOR challenge or assist others
in challenging MANUFACTURER’S Trademarks or the registration thereof nor
attempt to register any trademarks, service marks or trade names confusingly
similar to those of MANUFACTURER.



          C.          Upon
termination of this Agreement, DISTRIBUTOR shall forthwith cease any further use
of any trademark, service mark, or trade name for which consent to use had been
granted by MANUFACTURER.



          D.          DISTRIBUTOR
agrees to examine, or cause to be examined, all Products shipped by MANUFACTURER
promptly upon receipt thereof, and to immediately file or cause to be filed a
claim with the carrier upon delivery for any damage to or shortage in the
Products, and to notify MANUFACTURER within ten (10) days after receipt of the
Products of any such claim pertaining thereto.



          E.          DISTRIBUTOR
agrees to comply with all applicable laws and regulations currently existing in
the territory relating to the Products.


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          F.          DISTRIBUTOR
will pass on to its customers MANUFACTURER’S warranty with respect to all
products purchased by customers.  DISTRIBUTOR will not pass on to its
customers any warranty that exceeds the scope of MANUFACTURER’S written
warranty.  DISTRIBUTOR shall indemnify and hold MANUFACTURER harmless from
and against any and all claims and liabilities, costs, and expenses (including
the reasonable fees of attorneys and other professionals) incurred by, or
threatened against, MANUFACTURER in connection with any representation by
DISTRIBUTOR or DISTRIBUTOR’S personnel or agents inconsistent with or
broader than the warranties and disclaimers set forth in this
Agreement.



          G.          DISTRIBUTOR
shall use its reasonable best efforts, consistent with prudent business
practice, to maintain a representative inventory of Products in reasonable
sufficient quantities to provide reasonably adequate and timely delivery to
DISTRIBUTOR’S customers.



          H.          DISTRIBUTOR
and its employees shall participate, when and to the extent appropriate, in such
training programs as may be offered by Supplier, to the extent that such
participation does not materially detract from the conduct of DISTRIBUTORS
business.



          I.          DISTRIBUTOR,
at its election, may translate MANUFACTURER promotional materials into local
languages.  DISTRIBUTOR will promptly provide MANUFACTURER with a soft and
hard copy of all translated materials and revisions thereto for
MANUFACTURER’S approval, which approval shall not be unreasonably withheld
or delayed.  DISTRIBUTOR may publish or distribute such translated
materials only after MANUFACTURER has approved their use in writing.  The
copyright on all such translations shall be owned by MANUFACTURER by virtue of
the “work for hire” doctrine or shall be transferred to
MANUFACTURER.



6.       MANUFACTURER OBLIGATIONS



          A.          MANUFACTURER
shall maintain a policy of engaging in Product merchandising and advertising on
a worldwide basis to provide a continuing demand for MANUFACTURER
Products.  MANUFACTURER will, at its sole discretion, include DISTRIBUTORS
name in such advertising from time to time, with prior approval.



          B.          MANUFACTURER
shall furnish DISTRIBUTOR with price lists, sales literature, books, catalogues,
product briefs, advanced product information, data sheets, and the like, as
MANUFACTURER may prepare for national distribution at no cost to DISTRIBUTOR.
MANUFACTURER shall also provide DISTRIBUTOR with such technical and sales
support as may be necessary to assist DISTRIBUTOR in effectively carrying out
its activities under this Agreement.



          C.          MANUFACTURER
agrees that its facilities will be regularly and actively employed to the mutual
benefit of MANUFACTURER and DISTRIBUTOR and to assist DISTRIBUTOR in whatever
manner is deemed proper by MANUFACTURER for the sale of Products.


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          D.          MANUFACTURER
shall ship, mark and pack all Military Products in accordance with the relevant
specifications.



          E.          MANUFACTURER
shall refer to DISTRIBUTOR: customers and potential customers for quantities of
the Products customarily handled by distributors.



          F.          MANUFACTURER
shall establish and maintain such quality control procedures, electrostatic
discharge sensitivity procedures, testing of Products and other customary
programs as are necessary to ensure that the Products, as manufactured and sold
to DISTRIBUTOR, are of the highest quality and reliability.



7.       MANUFACTURER - DISTRIBUTOR LIABILITY



          A.          Neither
MANUFACTURER nor DISTRIBUTOR shall be liable for failure to perform any
obligation under this Agreement if such failure is caused by circumstances not
directly under the party’s control, including failures resulting from force
majeure, acts of God, acts of public authorities, war and war measures, strikes,
fires, or failures or delays of suppliers or carriers. 



          B.          MANUFACTURER’S
TOTAL LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR THE SALE OF ANY PRODUCT
SHALL NOT EXCEED THE DISTRIBUTOR PRICE FOR THE PRODUCT GIVING RISE TO THE
LIABILITY.  IN NO EVENT SHALL MANUFACTURER BE LIABLE FOR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE.  IN NO EVENT SHALL MANUFACTURER
BE LIABLE TO DISTRIBUTOR OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL, OR INDIRECT DAMAGES OR LOST PROFITS, HOWEVER CAUSED, WHETHER
PURSUANT TO A THEORY IN BREACH OF CONTRACT, NEGLIGENCE, OR OTHERWISE, AND
WHETHER OR NOT MANUFACTURER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.  THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.  THE ESSENTIAL PURPOSE OF THIS
PROVISION IS TO LIMIT THE POTENTIAL LIABILITY OF MANUFACTURER ARISING OUT OF
THIS AGREEMENT AND DISTRIBUTION OF PRODUCTS.



8.       COMPLIANCE WITH LAWS



          A.          DISTRIBUTOR will comply with all laws and governmental regulations, which prohibit export or diversion of MANUFACTURERS products to certain countries, and not knowingly assist or participate in any such diversion or other violation of applicable U.S. laws and regulations.



          B.          DISTRIBUTOR
understands and acknowledges that MANUFACTURER is subject to regulation by
agencies of the U.S. Government, including the U.S. Department of Commerce,
which prohibits export or diversion of certain products and technology to
certain countries.  Any and all obligations of MANUFACTURER to provide
products or documentation or any media in which any of the foregoing is
contained, as well as any technical assistance, shall be subject in all respects
to MANUFACTURER’S compliance with such United States laws and regulations
as shall from time to time govern the license and delivery of technology and
products abroad by persons subject to the jurisdiction of the United States,
including the Export Administration Act of 1979, as amended, any successor
legislation, and the Export Administration Regulations issued by the Department
of Commerce, Bureau of Export Administration.


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          C.          Without
limiting the foregoing, DISTRIBUTOR certifies that unless prior written
authorization is obtained from the United States Bureau of Export Administration
or the Export Administration Regulations explicitly permit the re-export without
such written authorization, it will not export, re-export, or transship,
directly or indirectly, the Products to country groups D-1 or E-2 (as defined in
the Export Administration Regulations), which currently consist of Albania,
Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia, China (PRC), Cuba, Estonia,
Georgia, Kazakhstan, Kyrgyzstan, Laos, Latvia, Libya, Lithuania, Moldova,
Mongolia, North Korea, Romania, Russia, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan and Vietnam, or to Iran, Iraq or Syria or to any other country as to
which the U.S. Government has placed an embargo against the shipment of
products, software or technology which is in effect during the term of this
Agreement.  This Section 8.C. shall survive any termination of this
Agreement.



          D.          DISTRIBUTOR
shall at all times during the term of the Agreement have in effect all licenses,
permits, and authorizations from all governmental agencies necessary to the
performance of its obligations hereunder, and shall comply with all applicable
laws, rules, and regulations affecting its activities hereunder.



9.       TERMS OF PAYMENT



          A.          MANUFACTURER
will invoice DISTRIBUTOR upon shipment of each order. Payment for all products
shipped and invoiced by MANUFACTURER are due by the 20th of the month
following the month of shipment.



          B.          All
payments shall be made in the currency set forth in MANUFACTURER’S
Distributor Price List.  DISTRIBUTOR represents and warrants that no
currency control laws applicable in the Territory prevent the payment to
MANUFACTURER of any sums due under this Agreement.   In the event that
any such laws come into effect and the local government of the Territory does
not permit that payment be made in the currency described above, DISTRIBUTOR
will notify MANUFACTURER immediately, and if so instructed by MANUFACTURER,
deposit all monies due MANUFACTURER to the account of MANUFACTURER in a local
bank of MANUFACTURER’S choice in the Territory.


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10.     APPLICATION OF CREDITS



          A.          MANUFACTURER
reserves the right to apply any outstanding credits due to DISTRIBUTOR as a
set-off against any debit due from DISTRIBUTOR to MANUFACTURER.



          B.          In
the event DISTRIBUTOR is entitled to a credit from MANUFACTURER hereunder, and
the amount of such credit exceeds DISTRIBUTOR’S obligation to MANUFACTURER
at the time, MANUFACTURER shall forthwith pay the amount of such excess to
DISTRIBUTOR.



11.     REPORTS



          A.          Inventory
Reports -



                        The
DISTRIBUTOR will submit a monthly inventory report covering all of MANUFACTURERS
products on hand in each stocking location.  This is to be supplied along
with the Point of Sales (“POS”) report described in paragraph
11B.



          B.          POS
Reports -



                        DISTRIBUTOR
agrees to submit monthly reports to MANUFACTURER showing total sales of
MANUFACTURER Products by complete part number, quantity sold, unit price, price
extension, and customer identification and location.  Each monthly report
shall be submitted by the fifteenth (15th) of the month immediately following
the close of the preceding business month.



12.     PRICES



          A.          The
prices to be paid by DISTRIBUTOR for Products purchased for resale shall be
those prices set forth in MANUFACTURER’S established Distributor Price List
in effect at the time of shipment from the Factory.  For special prices
negotiated with the MANUFACTURER, all sales are final.



          B.          Prices
quoted in MANUFACTURER’S Distributor Price List do not include Federal,
State, Local, Sales, Use, Value Added (VAT), Excise, Customs, Import or similar
taxes or duties imposed by any governmental agency that has jurisdiction over
the import, export, or purchase over the Products.  DISTRIBUTOR shall be
liable for and shall pay all applicable taxes, duties, license fees or other
charges incident to the sale of Products when MANUFACTURER has the legal
obligation to collect such taxes.  The appropriate amount shall be added to
MANUFACTURER’S invoice and paid by DISTRIBUTOR unless DISTRIBUTOR provides
MANUFACTURER with a valid tax exemption certificate authorized by the
appropriate taxing authority.  In the event that DISTRIBUTOR is required by
law to make deductions or withholdings from payments to MANUFACTURER, then
DISTRIBUTOR shall pay such additional amounts to MANUFACTURER as may be
necessary to assure that the actual amount received by MANUFACTURER after
deduction or withholding (and after payment of any additional taxes due as a
consequence of such additional amount) shall equal the amount that would have
been received if such deduction or withholding were not required.


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          C.          All
prices shall be subject to change or withdrawal at the discretion of
MANUFACTURER with sixty (60) day advance notice, subject to the provisions of
Section 14.  Notice of any changes in prices shall be given DISTRIBUTOR by
furnishing new Distributor Price Lists or written advises.



          D.          MANUFACTURER
represents and warrants that the prices and discounts, if any, extended to
DISTRIBUTOR in connection with the Products comply with all applicable laws and
are not, and will not be, less favorable than those extended to other purchasers
of similar quantities of Products from MANUFACTURER, or other
distributors.



13.     F.O.B.



          A.          All
prices are F.O.B. MANUFACTURER’S domestic shipping facility.



          B.          The
mode of shipment from MANUFACTURER to the DISTRIBUTOR will be as directed by the
DISTRIBUTOR.  MANUFACTURER will ship via the best way consistent with the
delivery schedule and MANUFACTURER’S requirement for
traceability.



14.     PRICE CHANGES AFFECT ONLY STANDARD PRODUCT SOLD
AT STANDARD DISTRIBUTOR COST



          A.          Price Increases -



          Prior to the
effective date of a price increase, DISTRIBUTOR may order Products for delivery
within the term of this Agreement.  All Products shipped under orders
submitted by DISTRIBUTOR prior to the effective date of any price increase will
be shipped and invoiced at the price in effect at the time of order
placement.



          B.          Price
Decreases -



          In the event
MANUFACTURER decreases the price of any Product, DISTRIBUTOR shall be entitled
to a credit equal to the difference between the price paid for the Product by
DISTRIBUTOR, less any prior credits granted by MANUFACTURER on such Products,
and the new decreased price for the Product, multiplied by the quantity of such
Product in DISTRIBUTOR’S inventory on the effective date of the
decrease.  Similar price adjustment, if appropriate, will also be made on
all Products in transit to DISTRIBUTOR on the effective date of the price
decrease and, for sixty (60) days after such effective date, on all Products
returned to DISTRIBUTOR.  DISTRIBUTOR shall submit to MANUFACTURER, within
sixty (60) business days following the effective date of such price decrease or
the date DISTRIBUTOR actually receives notice thereof, whichever occurs later, a
report of the Products subject to the price decrease.  All Products shipped
after the effective date of any price decrease will be shipped and invoiced at
the price in effect at the time of shipment.


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15.     ORDERS



          A.          Orders
for Products placed by DISTRIBUTOR shall be accepted subject to those terms set
forth in this Agreement.  Any terms and conditions presented on orders
placed by DISTRIBUTOR, which are in conflict with this Agreement, shall be
inapplicable to the sale without the express written approval of
MANUFACTURER.



          B.          Orders
shall describe the Products ordered, the quantities, shall request delivery
dates, shall set forth prices and shall provide shipping instructions. 
MANUFACTURER will acknowledge each such order in writing at the earliest
possible date, but in any event within ten (10) business days following
receipt.  In such acceptance, MANUFACTURER will confirm the requested
shipment date or specify an acknowledged shipment date.  If the
acknowledged shipment date is more than thirty (30) days later than
DISTRIBUTOR’S requested shipment date, DISTRIBUTOR, at its election, may
cancel the order without penalty.



          C.          Cancellations
and Reschedules -



                        1)          Orders
may not be canceled or rescheduled within thirty (30) days of acknowledged
delivery.



                        2)          DISTRIBUTOR
may, upon at least thirty (30) days prior written notice, reschedule the
Acknowledged Shipment Date of, or cancel, any order.  Any such rescheduling
or cancellation of deliveries shall be at no charge to DISTRIBUTOR.



          D.          Drop
Shipments -



          Shipments to a
DISTRIBUTOR customer will be made only if the quantity exceeds the last column
pricing established by the MANUFACTURER.



          E.          Early Shipments -



          If any Products are
delivered more than 2 weeks prior to their Acknowledged Shipment Date,
DISTRIBUTOR shall have the right in its discretion to accept or reject any such
delivery.  If MANUFACTURER is notified of DISTRIBUTOR’S intention to
return any such delivery, it shall promptly issue a Return Material
Authorization.  Notwithstanding the acceptance of such delivery or any
other term or provision in this Agreement, DISTRIBUTOR shall not become
obligated to pay any invoices submitted therefore until forty-five (45) days
after the Acknowledged Shipment Date.



16.     TITLE AND RISK OF LOSS



          A.          The
title, risk of loss and right of possession to any Product sold to the
DISTRIBUTOR shall remain a part of MANUFACTURER until shipped F.O.B. Factory to
DISTRIBUTOR.  The title, risk of loss and right of possession to any
Product returned to MANUFACTURER by DISTRIBUTOR, which return is authorized by
MANUFACTURER, shall remain in DISTRIBUTOR until received by MANUFACTURER at its
plant, whereupon title and risk of loss shall pass to MANUFACTURER.


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          B.          Until
the purchase price and all other charges payable to MANUFACTURER hereunder have
been received in full, MANUFACTURER hereby retains and DISTRIBUTOR hereby grants
to MANUFACTURER a security interest in the Products delivered to DISTRIBUTOR and
any proceeds there from.  DISTRIBUTOR agrees to promptly execute all
documents reasonably requested by MANUFACTURER to perfect and protect such
security interest.  In the event DISTRIBUTOR fails promptly to execute such
documents, DISTRIBUTOR hereby appoints MANUFACTURER its attorney-in-fact for the
sole purpose of executing such documents, which appointment shall be a power
coupled with an interest and shall be irrevocable.



          C.          DISTRIBUTOR
shall inspect all Products upon receipt thereof, and DISTRIBUTOR may reject any
item that fails substantially to conform to the then current Product
specifications.  To reject a Product, DISTRIBUTOR shall within five (5)
working days of receipt of such Product notify MANUFACTURER in writing or by
facsimile of its rejection and request a Return Material Authorization (R.M.A.)
number.  Within ten (10) working days of receipt of the R.M.A. number,
DISTRIBUTOR shall return the rejected Product to MANUFACTURER’S designated
return facility, freight prepaid and properly insured, in its original shipping
carton with the R.M.A number displayed on the outside of the carton.



          D.          If
MANUFACTURER confirms the defect, MANUFACTURER shall, at MANUFACTURER’S
option and expense, either repair or replace the Product.  MANUFACTURER
shall reimburse DISTRIBUTOR for the shipping charges to return properly rejected
Products and shall pay the shipping charges for the delivery of such repaired or
replacement Products to DISTRIBUTOR; otherwise, DISTRIBUTOR shall be responsible
for all shipping charges.



17.     NEW PRODUCT STOCKING



          A.          MANUFACTURER
and DISTRIBUTOR shall agree on the appropriate initial minimum level of
inventory of each Product to be stocked by DISTRIBUTOR.  Each new Product
of MANUFACTURER shall also be subject to stocking at a mutually agreed initial
minimum inventory level.  Non-periodic return within first year of slow or
non-moving recommended inventory is available to DISTRIBUTOR.



          B.          For
the first twelve (12) months after appointment, a new DISTRIBUTOR will have the
right to return an amount up to 50% of their initial stocking order with no
restocking charge or offsetting order required.



          C.          Products
in this section shall not be counted as “stock rotation” for purposes
of computing the amount of Products returnable by DISTRIBUTOR.


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18.     STOCK ROTATION APPLIES ONLY TO STANDARD PRODUCT BOUGHT AT STANDARD DISTRIBUTOR COST



          A.          Slow-moving
inventory, as defined by DISTRIBUTOR, may be returned for a credit up to a value
of five (5) percent of the prior 6-month purchases, with approval of
MANUFACTURER and subject to the following conditions:



                        1)          Product
shall be returned freight pre-paid at the DISTRIBUTOR’S expense within 30
days of authorization by MANUFACTURER.



                        2)          The
period for stock rotations will be twice every twelve (12) months and will be
allowed only within MANUFACTURER’S Fiscal Month of February and
MANUFACTURER’S Fiscal Month of August in accordance with the
MANUFACTURER’S annual calendar.



                        3)          An
offsetting purchase order for an equal dollar month must accompany the request
for the return.  The requested delivery schedule of the offsetting purchase
order must be within 60 days of the order placement and is
non-cancelable.



                        4)          All
Products returned must be in the original condition as shipped by
MANUFACTURER.



          B.          DISTRIBUTOR
may apply to MANUFACTURER for authorization to return that portion of its
inventory in an amount not exceeding five (5) percent of Net Total Dollar
Purchases of MANUFACTURER Products by DISTRIBUTOR during the immediately
preceding six (6) month period.  Credit issued for such returned Products
will be based upon the price paid by DISTRIBUTOR less any prior credits granted
by MANUFACTURER on the returned Product.



19.     NEW PRODUCT



          MANUFACTURER will
give DISTRIBUTOR at least thirty (30) days prior notice of the introduction of
any new Products that preclude or materially limit DISTRIBUTOR from selling like
Products in its inventory and shall work with DISTRIBUTOR to move the effected
inventory through resale for ninety (90) days.  If, after the above
efforts, effected Product still remains in DISTRIBUTOR’S inventory,
MANUFACTURER agrees to replace it with the new products within one hundred
twenty (120) days of the official public announcement of such new products or
MANUFACTURER’S first shipment of the New Product, whichever occurs
first.


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20.     DISCONTINUANCE AND OBSOLESCENCE



          A.          MANUFACTURER
reserves the right to discontinue the manufacture or sale of, or otherwise
render or treat as obsolete, any or all of the Products covered by this
Agreement upon at least thirty (30) days prior written notice to
DISTRIBUTOR.



          B.          DISTRIBUTOR
may, within sixty (60) days following receipt of such notice, notify supplier in
writing of its intention to return any or all discontinued or obsolete Products
which remain in its inventory and shall receive a credit for such Products equal
to the net price paid by DISTRIBUTOR, less any prior credits granted by
MANUFACTURER on the returned product.  DISTRIBUTOR may make such returns
from one or more stocking locations.  Products must be returned within 30
days of the date of DISTRIBUTOR’S receipt of MANUFACTURER’S Return
Material Authorization.



          C.          MANUFACTURER
shall pay all freight and shipping charges in connection with any such returns
for discontinuance or obsolescence.  DISTRIBUTOR shall not count returns of
Products under this section as “stock rotation” for purposes of
computing the amount of Products returnable.



21.     MODIFICATION OF PRODUCTS



          A.          MANUFACTURER
shall give DISTRIBUTOR at least ninety (90) days prior written notice of all
engineering modifications that will affect Products in DISTRIBUTOR’S
inventory if such changes affect form, fit, or function.  If these
modifications preclude or materially limit DISTRIBUTOR’S inventory from
selling once the engineering modifications are implemented.  MANUFACTURER
will work with DISTRIBUTOR to move the affected inventory through resale or
repurchase for ninety (90) days.  If after the above efforts, affected
Product still remains in DISTRIBUTOR’S inventory, MANUFACTURER agrees to
replace it with upgraded Products within one hundred twenty (120) days of the
official public announcement of such modification or MANUFACTURERS first
shipment of the modified Product, whichever occurs first.



          B.          MANUFACTURER
shall pay all freight and shipping charges in connection with any such return or
replacements.  DISTRIBUTOR shall not count returns of Products under this
section as “stock rotation” for purposes of computing the amount of
Products returnable.



22.     RETURN MATERIAL AUTHORIZATION



          A.          All
authorized returns shall be shipped to MANUFACTURER’S domestic facility,
and must display the appropriate MANUFACTURER Return Material Authorization
number on containers in which the returned Product is shipped.



          B.          Unauthorized
returns will be reshipped to DISTRIBUTOR Freight Collect.


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          C.          Upon
final approval by MANUFACTURER of credit for any returned Product, such credit
shall be computed on the basis of the price paid by DISTRIBUTOR, less any prior
credits granted by MANUFACTURER.



23.     WARRANTY



          A.          The
“Warranty Term” for a particular Product is twelve (12) months from
the date of DISTRIBUTOR’S delivery of such Product F.O.B. to the end
customer.



          B.          MANUFACTURER
shall warrant each Product against defects in material and workmanship under
normal use and service during the Product’s Warranty Term. Provided that
MANUFACTURER has received a request in writing or by facsimile authorization for
warranty service not later than thirty (30) days after the expiration of the
Warranty Term, MANUFACTURER shall repair or replace any defective Product, or
issue a credit or refund, based on the purchase price paid.  MANUFACTURER
shall have the right to elect which of the foregoing options it wishes to
invoke.  MANUFACTURER shall pay, or refund the amount of, shipping charges
for any defective Products returned under this section.



          C.          The
express warranties set forth in this Section 23 specifically exclude and do not
apply to defects to a Product:  (a) caused through no fault of
MANUFACTURER during shipment to or from DISTRIBUTOR; (b) caused by the use
or operation of Products in an application or environment other than that
specified by MANUFACTURER; (c) caused by modifications or alterations made
to the Products by DISTRIBUTOR or any third party; (d) caused by
maintenance performed on the Products by DISTRIBUTOR or any third party; or
(e) which are the result of the Products being subjected to unusual
physical or electrical stress.  



          D.          
EXCEPT FOR THE ABOVE EXPRESS LIMITED WARRANTIES, MANUFACTURER MAKES AND
DISTRIBUTOR RECEIVES NO WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS,
IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION
WITH DISTRIBUTOR.  MANUFACTURER SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY
OR CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 
MANUFACTURER MAKES THE FOREGOING LIMITED WARRANTY SOLELY TO DISTRIBUTOR FOR
DISTRIBUTOR’S SOLE BENEFIT. 



          E.          DISTRIBUTOR
shall not make any representation, promise guarantee or warranty, nor is
authority given to assume to create obligations on behalf of MANUFACTURER.




          F.          In
all warranty or quality returns, final approval by MANUFACTURER as to credit, or
replacement shall depend upon inspection and/or testing of the returned Product
by MANUFACTURER.  No credit or replacement will be given for returned
Product that falls into one or more of the exclusions set forth in Section 23
and such Product will be returned to DISTRIBUTOR, Freight Collect.


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24.     REPURCHASES



          By mutual agreement
between MANUFACTURER and DISTRIBUTOR, and upon receipt of written request by
MANUFACTURER, DISTRIBUTOR shall deliver F.O.B. point of origin such reasonable
quantities of products out of DISTRIBUTOR’S inventory to such regular
customers of MANUFACTURER with whom MANUFACTURER has an agreement as may be
designated by MANUFACTURER and as are called for under orders issued by such
customers.



25.     SPECIAL PURCHASES



          MANUFACTURER and
DISTRIBUTOR may at any time during the term enter into separate agreements for
the special purchase of other Products including non-standard Products and
Products in greater quantities than those set forth in MANUFACTURER’S then
current Published Price List, and such agreements shall be subject to all terms
and conditions hereof.


 26.     RESTRICTION
ON RECRUITMENT OF EMPLOYEES



          MANUFACTURER and
DISTRIBUTOR agree not to solicit for employment the employees of the other
party, and shall reject any requests for employment made any employees of the
other party and will refuse employment to all such employees of the other party,
as long as this provision does not violate the provisions of any law which
either party is subject to.  The terms of this provision shall remain in
effect for the length of this Agreement and shall survive the termination of
this Agreement for an additional one (1) year.  



27.     NOTICES



          All notices, except
for termination, shall be sent by mail, postage pre-paid to MANUFACTURER and
DISTRIBUTOR to the addresses stated at the outset of this Agreement, or such
other places as either party may designate in writing.  Notification of
Termination must be sent by Registered Mail.



28.     TERMINATION



          A.          MANUFACTURER
or DISTRIBUTOR may at any time terminate this Agreement without cause and for
its convenience by giving thirty (30) days prior written notice to the other,
via Registered Mail.  Both MANUFACTURER and DISTRIBUTOR represent that they
have considered the making of expenditures in preparing to perform under this
Agreement, as well as the possible losses, which might result in the event of
any termination of the Agreement.  Both parties acknowledge that neither
party shall in anyway be liable to the other for any loss, expense or damage,
including special, consequential, or incidental damages, by reason of any
termination of this Agreement.  Without limiting the foregoing, 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.


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          B.          This
Agreement shall also terminate, immediately upon notice by
MANUFACTURER:



                        1)          In
the event that any legislation or exchange controls then in effect under
applicable law preclude DISTRIBUTOR from making payments to MANUFACTURER in
United States currency for a period of sixty (60) days; provided, however, that
termination under this subsection shall not relieve DISTRIBUTOR of its payment
obligations under this Agreement; or



                        2)          Upon
the enactment of any law, decree, or regulation by the government of the
Territory which would impair or restrict (A) the right of MANUFACTURER to
terminate or elect not to renew this Agreement as herein provided,
(B) MANUFACTURER’S right, title, or interest in the Products or the
intellectual property rights therein, (C) MANUFACTURER’S rights to
receive the payments under this Agreement, or (D) MANUFACTURER’S or
DISTRIBUTOR’S ability to market, sell, or distribute the Products in the
Territory.



                        
3)          In the event that DISTRIBUTOR is in material breach of its obligations under this Agreement and fails to cure such breach within thirty (30) days after written notice, or DISTRIBUTOR makes a general assignment for the benefit of its creditors, appoints or has appointed a receiver, trustee in bankruptcy or similar officer to take charge of all or part of its property, files or has filed against it a petition in bankruptcy, and/or is adjudged to be insolvent or bankrupt.



DISTRIBUTOR agrees to give MANUFACTURER prompt written notice of any law, decree, or regulation covered by Section 28.B.



          C.          Upon termination of this Agreement, DISTRIBUTOR shall make such disposition of price lists, advertising matter and other materials furnished by MANUFACTURER as MANUFACTURER may direct.  MANUFACTURER’S name, MANUFACTURER’S Trademarks, and similar identifying symbols shall not be displayed or used by DISTRIBUTOR thereafter.



          D.          In
the event of any termination, MANUFACTURER shall, if requested to do so by
DISTRIBUTOR, honor any open DISTRIBUTOR purchase order outstanding as of the
date of notice of termination for delivery during a period of up to 90 days
after the effective date of termination.  Notwithstanding anything herein
to the contrary, in the event that DISTRIBUTOR retains by statute the right to
distribute Products in the Territory to any customer or in any country after
expiration or termination of this Agreement, then the terms and conditions of
this Agreement shall remain in effect as to such customers or countries, as the
case may be, until such activities cease.


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          E.          Upon
termination of this Agreement for whatever reason, such termination shall be
without prejudice to any remedy of either party for the recovery of any money
due under this Agreement.



          F.          In
the event of termination of this Agreement by MANUFACTURER, DISTRIBUTOR agrees
to sell and MANUFACTURER agrees to purchase DISTRIBUTOR’S inventory of
Products that are unaltered in any manner from the original form and design,
subject to test, inspection and acceptance by MANUFACTURER.  The price to
be paid by MANUFACTURER for such inventory shall be the price the DISTRIBUTOR
purchased the inventory for, less any prior credits granted by
MANUFACTURER.  MANUFACTURER shall pay all freight and shipping charges in
connection with such repurchase.



          G.          In
the event of termination of the agreement by DISTRIBUTOR, MANUFACTURER agrees to
repurchase all inventories of DISTRIBUTOR at the price the products were
purchased from MANUFACTURER, less any prior credits granted by
MANUFACTURER.  DISTRIBUTOR agrees to ship such inventory F.O.B.
MANUFACTURERS domestic facility.



          H.          Monies
for repurchased inventory will be paid by MANUFACTURER to DISTRIBUTOR within
thirty (30) days of receipt of said inventory.  The credit will be computed
using the price paid by DISTRIBUTOR, less any prior credit granted by
MANUFACTURER.



          I.          The
provisions of Sections 5C, 5F, 5I, 7, 8, 23, 27, 28, 29, 30 and 35 shall survive
termination of this Agreement for any reason.



29.     INDEMNIFICATION



          A.          DISTRIBUTOR
agrees to indemnify, defend, and hold MANUFACTURER and its directors, officers,
employees, and agents harmless from, and against any and all claims (including
those for personal injury or death) and liabilities (including attorneys’
and other professional fees and other costs of litigation) arising out of or
attributable to the marketing, distribution, or sale of Products, where and to
the extent any associated liability for such liability is alleged to have been
caused by the negligence, willful misconduct or other fault of DISTRIBUTOR, or
its employees or agents and/or any breach of this Agreement by
DISTRIBUTOR.  



          B.          DISTRIBUTOR
agrees that MANUFACTURER has the right 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 or misappropriation of any third party
patent, maskwork right, trade secret, copyright or trademark, each of the
foregoing in the Territory, by Products distributed by DISTRIBUTOR in the manner
permitted in this Agreement, subject to the limitations hereinafter set
forth.  MANUFACTURER shall have sole control of any such action or
settlement negotiations, and MANUFACTURER agrees to pay, subject to the
limitations hereinafter set forth, any final judgment entered against
DISTRIBUTOR or its customer on such issue in any such suit or proceeding defended by
MANUFACTURER.


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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 Products, 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 patent, copyright or trademark, or if it is
adjudicatively determined that the Products, or any part thereof, infringe any
copyright or trademark, or if the distribution or use of the Products, 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 Products or such part thereof; (ii) replace the Products, or part
thereof, with other suitable Products or parts; (iii) suitably modify the
Products, or part thereof; or (iv) if the use of the Products, or part
thereof, is prevented by injunction or if the foregoing alternatives cannot be
accomplished on a commercially reasonable basis, require DISTRIBUTOR to return
all of the Products in inventory and refund the aggregate payments paid
therefore by DISTRIBUTOR.  MANUFACTURER shall not be liable for any costs
or expenses incurred without its prior written authorization.



          C.          Notwithstanding
the provisions of Section 29.B., MANUFACTURER assumes no liability for
(i) any infringement claims with respect to any product in or with which
any of the Products may be used but not covering the Products standing alone;
(ii) any trademark infringement involving any marking or branding not
applied by MANUFACTURER or involving any marking or branding applied at the
request of DISTRIBUTOR;  (iii) the modification of the Products, or
any part thereof, unless such modification is made by MANUFACTURER;  or
(iv) infringement resulting from DISTRIBUTOR’S distribution of Products
after a recall as specified in Section 29.B. (iv) above, which distribution
shall be a breach of this Agreement and result in the indemnification used for
this Section 28.A.



          D.          THE
FOREGOING PROVISIONS OF THIS SECTION 29 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 PRODUCTS.



30.     CONFIDENTIAL INFORMATION



          DISTRIBUTOR
acknowledges that by reason of its relationship with MANUFACTURER hereunder it
will have access to certain confidential and proprietary information and
materials concerning the Products and MANUFACTURER, including without limitation
MANUFACTURER’S business, plans, customers and technology that are
confidential and of substantial value to MANUFACTURER, which value would be
impaired if such information were disclosed to third parties.  DISTRIBUTOR
agrees that it shall not use in any way for its own account or the account of
any third party, nor disclose to any third party, any such confidential information disclosed
by MANUFACTURER.


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DISTRIBUTOR shall take every reasonable
precaution to protect the confidentiality of such information, including, at the
request of MANUFACTURER, the entry by DISTRIBUTOR’S agents and employees
into confidentiality agreements in a form approved by MANUFACTURER, prohibiting
any disclosure to third parties of confidential information provided by
MANUFACTURER.  DISTRIBUTOR shall not publish any technical description of
any Product or other confidential information of MANUFACTURER beyond the
description published by MANUFACTURER.  In the event of termination of this
Agreement, DISTRIBUTOR agrees that there shall be no use or disclosure by
DISTRIBUTOR, its agents, or employees of any confidential information of
MANUFACTURER, and DISTRIBUTOR shall not manufacture or have manufactured any
products utilizing any of MANUFACTURER’S confidential information. Upon
such termination, DISTRIBUTOR shall deliver to MANUFACTURER all copies within
its possession or within its control of customer lists, catalogues,
specifications, proposals, quotations, price lists, contracts and all other
documents and data relating to the Products or the conduct of
MANUFACTURER’S business.



31.     FORCE MAJEURE



          Nonperformance under
this Agreement shall be excused, and neither party shall be liable for any loss,
damage, penalty or expense, to the extent that such performance is rendered
impossible or delayed by fire, flood, acts of God or the public enemy, acts of
the Government, labor difficulties, riot, inability to obtain materials or any
other cause where the failure to perform or delay is beyond the reasonable
control of the non-performing party and without the negligence of such
party.



32.     INVALIDITY OF PROVISIONS



          In the event that
any term or provision of this Agreement shall be deemed by a court of competent
jurisdiction to be overly broad in scope, duration or area of applicability, the
court considering the same shall have the power and hereby is authorized and
directed to modify such term or provision to limit such scope, duration or area,
or all of them, so that such term or provision is no longer overly broad and to
enforce the same as so limited.  Subject to the foregoing sentence, in the
event any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or unenforceable
any other provision of this Agreement.



33.     ASSIGNMENT



          Neither party shall
have the right to assign this Agreement or any rights hereunder without the
prior written consent of the other.  For purposes hereof, the term
“assign” shall include, without limitation, a merger, sale of assets
or business, or other transfer of control by operation of law or
otherwise.


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34.     AUTHORITY



          Both parties
represent and warrant to each other that they have the right and lawful
authority to enter into this Agreement, and that there are no other outstanding
agreements or obligations inconsistent with the terms and provisions between the
parties.



35.     GENERAL



          A.          This
Agreement supersedes and cancels all prior Agreements between the parties,
written, oral or implied; except that it shall not relieve either party from the
payment of any debit owed the other party under any prior Agreement there
between.



          B.          No
modification, change or amendment to neither this Agreement, nor any waiver of
any rights in respect hereto, shall be effective unless in writing signed by the
parties.



          C.          In
the event of a conflict or inconsistency between the terms of this Agreement and
those of any order, quotation, solicitation or other communication from one
party to the other, the terms of this Agreement shall be controlling.



          D.          This
Agreement is made under and shall be construed by the laws of the State of
California, U.S.A., without reference to provisions of conflicts of laws. 
If a court of competent jurisdiction deems any provision unenforceable, such
provision shall be severable and the remaining provisions shall continue in full
force and effect. The parties expressly disclaim the application of the United
Nations Convention on the International Sale of Goods.  Each party consents
to the jurisdiction of the state courts and federal courts in the Northern
District of California, U.S.A., which courts shall have the exclusive
jurisdiction and venue to resolve any dispute arising out of this
Agreement.  Each party hereto agrees and consents to service of process by
registered mail to the address listed in this Agreement. 




          E.          This
Agreement shall be made in the English language, which language shall be
controlling in all respects, and all versions hereof in any other language shall
not be binding on the parties hereto.  All communications and notices to be
made or given pursuant to this Agreement shall be in the English
language.



IN WITNESS WHEREOF, THE PARTIES HERETO
BY THEIR DULY AUTHORIZED REPRESENTATIVES HEREBY EXECUTE THIS AGREEMENT


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MICRO LINEAR CORPORATION 
  	
  
 
  	
  

Clavis, a division of   Macnica, Inc.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  

By:
  	
  

/s/ David Neubauer 
  	
  
 
  	
  

By:
  	
  

/s/ Ryuji Tezuka
  
	
   
  	
  


  	
  
 
  	
  
 
  	
  


  
	
  
Name:
  	
  
David Neubauer 
  	
  
 
  	
  
Name:
  	
  
Ryuji Tezuka
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  

Title:
  	
  

V.P., Strategic Sales 
  	
  
 
  	
  

Title:
  	
  

Company President
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Date:
  	
  
December 10, 2004 
  	
   
  	
  
Date:
  	
  
December 2, 2004
  



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