EXHIBIT 10.8
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
OEM Purchase Agreement
Between
Sonic Systems, Inc. and Ramp Networks
THIS AGREEMENT is entered into between Sonic Systems, Inc. a California
corporation principally located at 0000 Xxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxx
Xxxxx, XX 00000 ("Sonic") and Ramp Networks, a California corporation located at
-----
0000 Xx Xx Xxxx Xxxx., Xxxxx Xxxxx, XX 00000 ("Ramp") is made as of this 5th day
----
of January 1999 ("Effective Date").
--------------
Background
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Sonic has developed an Internet Security appliance called SonicWALL. Ramp
wishes to OEM the standard version of the 2-port SonicWALL with minor cosmetic
modifications. Sonic has agreed to provide this customized version of the 2-
port SonicWALL to Ramp subject to the terms of this Agreement and in reliance
upon Ramp's representation that it has the technical, marketing, financial, and
business capabilities to fulfill Ramp's obligations set forth in this Agreement.
1. Definitions.
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Channel Partners. "Channel Partners" shall mean any third party authorized
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by Ramp to resell the Product and includes, but is not limited to, distributors,
resellers, value-added resellers, system integrators, and OEMs.
Confidential Information. "Confidential Information" means any data or
------------------------
information, oral or written, treated as confidential that relates to either
Party's (or, if either Party is bound to protect the confidentiality of any
other person's information, such other person's) past, present, or future
research, development, or business activities, including any unannounced
products and services, and including any information relating to services,
developments, inventions, processes, plans, financial information, customer and
supplier lists, forecasts, and projections. Confidential Information also
includes the terms of this Agreement. Notwithstanding the foregoing,
Confidential Information is deemed not to include information that: (i) is
publicly available or in the public domain at the time disclosed; (ii) is or
becomes publicly available or enters the public domain through no fault of the
Party receiving such information; (iii) is rightfully communicated to the
recipient by persons not bound by confidentiality obligations with respect
thereto; (iv) is already in the recipient's possession free of any
confidentiality obligations with respect thereto (excluding, however, any copies
of the Product that may be in Ramp's possession prior to the date of this
Agreement); (v) is independently developed by the recipient; (vi) is approved
for release or disclosure by the disclosing Party without restriction; or (vii)
is required to be disclosed or is disclosed pursuant to the order or requirement
of a court, administrative agency, or other governmental body; provided,
however, that the recipient shall provide prompt notice thereof to the
disclosing Party to enable the disclosing Party to seek a protective order or
otherwise prevent or restrict such disclosure.
Deliverables. "Deliverables" shall mean the items listed in Exhibit A.
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*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
Derivative Works. "Derivative Works" means programming or design changes
----------------
made to the Product.
Documentation. "Documentation" shall mean the user manual associated with
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the Products.
End User. "End-User" means end user customers located within the Territory
--------
who receive the Product.
Enhancements. "Enhancements" means any modification or addition that, when
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made or added to the Product, materially changes its utility, efficiency,
functional capability, or application, but that does not constitute solely an
Error Correction. Enhancements may be designated by Sonic as minor or major,
depending on Sonic's assessment of their value and of the function added to the
preexisting Product.
Error. "Error" means the failure of the Product to conform in all material
-----
respects to its functional specifications as published from time to time by
Sonic, the current version of which is attached as Exhibit C hereto. However,
any nonconformity resulting from Ramp's or its customers' misuse, improper use,
alteration, or damage of the Product is not an Error.
Error Correction. "Error Correction" means either a modification or an
----------------
addition that, when made or added to the Product, establishes material
conformity of the Product to its Specifications
First-Tier Support. "First-Tier Support" shall mean technical support of
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the Product directly to End Users.
Initial Purchase Order. "Initial Purchase Order" shall mean the first
----------------------
purchase order submitted by Ramp and accepted by Sonic and dated ___________.
Licensed Upgrades. "Licensed Upgrades" shall mean any upgrade for the
-----------------
Product for which there is a defined upgrade price in Exhibit B and for which
Sonic will provide to Ramp a software upgrade key to enable such upgrade.
Modifications. "Modifications" means any changes to the Product made by
-------------
Sonic.
NRE. "NRE" means non-recurring engineering.
---
Options. "Options" shall mean Product Software add-ons that may be made
-------
available to customers from time to time for an additional charge.
Party or Parties. "Party" or "Parties" means Sonic or Ramp, as applicable,
----------------
or both Sonic and Ramp as parties to this Agreement.
Products and Prices. "Products" and "Prices" shall mean the Products (as
-------------------
modified for Ramp in accordance with Exhibit A and Section 5) and Prices listed
in Exhibit B. Products includes all
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
Documentation, Software, Enhancements, Error Corrections, Modifications,
Licensed Upgrades, and Releases Sonic makes available to Ramp hereunder.
Releases. "Releases" means new versions of the Software or Product, which
--------
may include, without limitation, Error Corrections, Enhancements, and
Modifications.
Second-Tier Support. "Second-Tier Support" shall mean technical support of
-------------------
the Product directly to Channel Partners.
Severity I Bug. "Severity I Bug" shall mean any demonstrable Error in the
--------------
Product that: (i) causes the Product to have a significant loss of intended
function as set forth in the applicable Specifications; (ii) causes or is likely
to cause data to be lost or destroyed; or (iii) prevents the Product from being
installed or executed on the properly configured environment.
Software. "Software" shall mean the computer programs and/or firmware
--------
which are necessary in order to cause the Products to operate properly, which
are described on Exhibit A, and which Sonic will provide to Ramp hereunder.
Specifications. "Specifications" shall mean the specifications for the
--------------
Products set forth on Exhibit A, Exhibit C, and as otherwise mutually agreed
upon by the Parties in writing.
Third-Tier Support. "Third-Tier Support" shall mean technical support of
------------------
the Product directly to Ramp.
Territory. The "Territory" is the world, subject to the export
---------
restrictions covered in Section 11.1.
2. Rights and Restrictions.
-----------------------
2.1 License Grants. Sonic hereby grants to Ramp a non-exclusive, world-
--------------
wide right to reproduce the Documentation and to use, support, sell, modify (as
set forth in Section 3.4), and distribute the Products. Ramp does not have the
right to re-license the Products to a third party for purposes of manufacturing
the Products. However, should a case arise where Ramp needs manufacturing
rights or to convey manufacturing rights to a third party in order to secure a
large OEM opportunity, the Parties agree to negotiate such an arrangement in
good faith.
2.2 Use of Trademarks/Logos. No license is granted to Ramp to use any
-----------------------
Sonic trademarks, service marks or logos, or those trademarks or logos of any of
Sonic's OEMs without the prior, express written permission of Sonic.
2.3 Ownership of Intellectual Property in Products. The Sonic Products,
----------------------------------------------
including any associated intellectual property rights and/or Derivative Works,
are and remain the sole property of Sonic. Ramp shall from time to time take
any further action and execute and deliver any further instrument, including
documents of assignment or acknowledgment, that Sonic may reasonably request in
order to establish and perfect its exclusive ownership rights in such Products,
including any associated intellectual property rights.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
2.4 Software License Restrictions. Ramp shall not reverse compile or
-----------------------------
disassemble object code versions of the Software included in the Product or
otherwise create, attempt to create, or permit or assist others to create a
source code of the Software.
2.5 Independent Developments. It is understood that the Parties have
------------------------
performed and will continue to perform substantial independent development
relating to networking products and associated technologies. Each Party also
understands that, over time, the other Party's employees may gain familiarity
with the general concepts and ideas in the other Party's technology disclosed
under the Agreement from independent sources. Consequently, each Party
acknowledges that each Party shall be free to use such independently developed
or received concepts and ideas free of all restrictions, other than those set
forth in this Section 2.
3. Consideration.
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3.1 Purchase from Sonic. Products may be purchased by Ramp at the Prices
-------------------
listed in Exhibit B. Ramp shall issue individual purchase orders for each
Product listed in Exhibit B. Each purchase order must be received 60 days in
advance of the applicable shipping date and must be non-cancelable; however, the
purchase orders may be increased by up to 50% in quantity of Products being
ordered upon not less than 30 days notice prior to the scheduled shipping date.
A non-binding 90 day forecast must accompany all purchase orders covering the
three consecutive months following the current purchase order. All Products are
fully tested and verified in accordance with existing manufacturing procedures.
All Products are shipped in bulk packaging in anti-static bags individually
wrapped, FOB Sonic's factory in San Jose, CA. However, the second shipment
against the Initial Purchase Order, due to arrive at Ramp no earlier than April
1, 1999, shall be F.O.B. Ramp's location in Fremont, California. All other
shipments shall be F.O.B. Sonic's factory in San Jose, CA. Title and risk of
loss for the Product shall pass to Ramp once it is turned over to Ramp's
shipping agent or freight forwarder.
3.2 Terms of Purchase. Terms of purchase shall be net 30 days. Sonic
-----------------
will grant such credit approval to Ramp, provided Ramp meets Sonic's credit
approval standards. However, payment terms for only the first shipment against
the Initial Purchase Order (due January 29, 1999) shall be net 45 days.
3.3 Minimum Purchase Orders. Each purchase order presented to Sonic must
-----------------------
be for a minimum of [* * * ] of Product to be delivered in a single shipment.
3.4 Inventory Balancing. Ramp will have the right to modify Product in
-------------------
its inventory as needed via a software key to increase or decrease the number of
users per model (for example, if Ramp needs 25-user units and only has 5-user
units in inventory, Ramp can use a software key to upgrade the 5-user units to
25-user units). The detailed mechanics of how such upgrade shall be done will
be mutually agreed to by the Parties. The charge or credit to Ramp (depending
on the nature of the upgrade/downgrade) shall be the actual price difference
between the models, and shall be reconciled and paid no later than fifteen (15)
days following the end of each calendar quarter.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
4.0 Upgrade License Accounting Reports and Audit Rights.
---------------------------------------------------
4.1 Accounting Reports. Ramp shall maintain an accurate list of Licensed
------------------
Upgrade units based on the Product's serial number associated with each copy of
the Licensed Upgrades described in Exhibit B for a period of three (3) years
after such Licensed Upgrade is made in accordance with Section 3.4. Within
fifteen (15) days after the end of each calendar quarter, Ramp shall complete
and submit to Sonic a detailed report setting forth all sales of the Licensed
Upgrades during such calendar month and remit to Sonic the appropriate license
or other fee payments due based on such report. If necessary and at Sonic's
discretion, Ramp shall allow a mutually agreed upon, third party auditor to
review Ramp records associated with such Licensed Upgrades per the Audit Rights
in Section 4.2 below.
4.2 Audit Rights. Sonic has the right to direct a mutually agreed upon
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third party auditor to conduct, during normal business hours and upon reasonable
prior written notice to Ramp, an audit of the appropriate records of Ramp to
verify the accuracy of Ramp's reports to Sonic; provided, that Sonic shall
conduct no more than one (1) such audit during any twelve (12) month period.
Such audit shall be at Sonic's expense, unless the adjustment to the Licensed
Upgrade or other fees owing from Ramp is greater than [* * * ] of fees reported
by Ramp, in which case Ramp shall pay all expenses associated with the audit.
Within ten (10) days after receipt of notice from Sonic, Ramp shall remit to
Sonic all amounts found in any such audit to be due to Sonic and not previously
paid by Ramp.
5. Customization and Deliverables.
------------------------------
5.1 Customization. Sonic agrees, at no charge to Ramp, to make specific
-------------
minor cosmetic and pre-configuration modifications to Sonic's pre-existing
products as set forth on Exhibit A.
5.2 Deliverables. The Deliverables are fully described in Exhibit A
------------
attached. Sonic will deliver all Deliverables to Ramp in accordance with the
schedule set forth on Exhibit D. Ramp will have the right to test the
Deliverables for a period of five (5) working days following Ramp's receipt of
such Deliverables to determine whether the Deliverables conform to the
Specifications. If Ramp determines the Deliverables fall to conform to the
Specifications, Ramp will notify Sonic, and Sonic will use its best efforts to
correct such defect within two (2) days. At the end of this period, Sonic will
submit the corrected Deliverables to Ramp for acceptance by Ramp under this
Section 5.2; provided, however, that if the corrected Deliverables fail to
conform to the Specifications, Ramp will have the right to terminate this
Agreement upon written notice to Sonic. The procedure set forth in this Section
5.2 will repeat until Ramp either accepts or permanently rejects the
Deliverables.
6. Support Obligations, Product Updates, and Product Upgrades.
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6.1 Scope of Services. During the term of this Agreement, Sonic shall
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render certain services in support of the Products, during Sonic's normal
working hours (Monday through Friday, 9am to 5pm, PST, excluding holidays).
(a) Sonic shall maintain a trained staff capable of rendering the
services set forth in this Agreement.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
(b) Ramp shall provide First-Tier Support and Second-Tier Support.
(c) Sonic shall only provide Third-Tier support. Under no
circumstances shall Sonic be obligated to directly support a Ramp Channel
Partner or an End User of the Product.
6.2 Updates and Upgrades. During the term of this Agreement Sonic, at its
--------------------
own discretion, shall release Product updates and upgrades and shall make such
updates and upgrades available to Ramp. Sonic shall not charge Ramp for such
upgrades or updates unless Sonic generally charges its customers for such
upgrades and updates.
(a) Sonic is responsible for using all reasonable diligence to correct
verifiable and reproducible Errors when reported to Sonic by Ramp in accordance
with Sonic's standard reporting procedures communicated in writing to Ramp.
Sonic shall, within two (2) days of verifying that such an Error is present,
initiate work in a diligent manner toward development of an Error Correction.
Following completion of the Error Correction, Sonic shall make such Error
Correction available to Ramp and shall include the Error Correction in all
subsequent Releases of the Product. Sonic shall not be responsible for
correcting Errors in any version of the Product other than the most recent
Release of the Product, provided that Sonic continues to support prior Releases
superseded by recent Releases in accordance with Section 6.3.
(b) Sonic may, from time to time, issue new firmware releases of the
Software at no cost to its customers generally, containing error corrections,
minor Enhancements, and, in certain instances if Sonic so elects, major
Enhancements. These new releases shall be provided to Ramp at no additional
charge as new Ramp versions (which replace prior Ramp versions, as customized by
Sonic for Ramp hereunder pursuant to Section 5) within 30 days after the general
release.
(c) Sonic may, from time to time, offer major Enhancements and/or
Options to its customers generally for an additional per unit charge. Ramp, at
its discretion, may choose to purchase and resell these major Enhancements
and/or Options to its customers.
(d) Sonic shall consider and evaluate the custom development of
Enhancements for the specific use of Ramp and shall respond to Ramp's requests
for additional services pertaining to the Product (including, without
limitation, graphical user interface modifications, new custom functionality,
and formatting assistance), provided that such assistance, if agreed to be
provided, is subject to supplemental NRE charges and support fees mutually
agreed to by Sonic and RAMP. The Parties shall negotiate in good faith for
Sonic to accommodate Ramp customization requests and the associated NRE fee, but
Sonic may decline the request due to lack of available engineering resources,
scheduling conflicts, or the nature of the requested customization.
(e) Sonic shall make its best effort to fix Severity I Bugs within 5
working days, and other bugs within 15 working days. The Parties acknowledge
that due to the unpredictable nature of future bugs Sonic can not be expected to
absolutely deliver the fixes within the specified timeframes in every case.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
6.3 Support for Previous Releases. Sonic shall continue to provide Third-
-----------------------------
Tier Support to Ramp for the firmware release immediately preceding the latest
release of firmware for a period of ninety (90) days after delivery of a new
version to Ramp.
7. Confidentiality.
---------------
During the course of performance of this Agreement, and thereafter, either
Party may disclose certain Confidential Information to the other Party. The
Party receiving any such Confidential Information shall maintain the
confidentiality of such Confidential Information and shall not use, disclose, or
otherwise exploit any Confidential Information for any purpose not expressly
contemplated by this Agreement.
8. Representation and Warranties.
-----------------------------
8.1 Non-infringement. Sonic is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of California, and has
full corporate power and authority to enter into this Agreement. In addition,
Sonic has good and marketable tide to all of the Products, free and clear of
restrictions on or conditions to the license, transfer or assignment of the
Products. No person has made a claim against Sonic that any of the Products
infringe any patent, copyright, or proprietary process of interest of another,
and Sonic does not require rights under any patent, copyright (or any
application or registration respecting any thereof), discovery, improvement,
process, formula, know-how, data, plan, specification, drawing or the like
belonging to another. Finally, Sonic represents and warrants that the Products
do not and shall not infringe any patent, copyright, mask right or trade secret
of any third party.
8.2 Warranty. Sonic represents and warrants that the Products will
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perform in accordance with their uses and be substantially free of errors in
their operation for a period of 15 months after the date of shipment by Sonic.
Products that are found to be defective and are under warranty that are returned
to Sonic shall be replaced with new or refurbished Products within 30 days of
receipt. In the event that the Products are found to be modified (except as
specifically permitted under this Agreement), tampered with, or mis-used this
warranty shall not apply.
8.3 Limitation of Liability. EXCEPT AS SET FORTH IN THIS SECTION 8, SONIC
-----------------------
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTIES AS TO THE SUITABILITY OR MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE.
8.4 Indemnification by Sonic. Except to the extent Ramp indemnifies Sonic
------------------------
pursuant to Section 8.5 below, and except for claims which arise from Ramp's
negligence or willful misconduct, Sonic agrees to indemnify and hold harmless
Ramp, its successors and assigns, officers, directors, employees and customers
(collectively "Indemnitees"), from and against any and all claims and causes of
-----------
action arising out of any claims of any third parties with respect to Sonic's
breach of any of its representations, warranties or covenants contained in this
Agreement; provided that Sonic receives prompt written notice of and has sole
control over the defense and settlement of such claims and actions. Sonic shall
pay all costs, expenses and reasonable attorneys fees incurred by Ramp in
connection with any such defense unless Ramp chooses to defend itself, in which
case it would be at Ramp' own cost. In the event of any
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
such claim or suit, unless Ramp chooses to defend itself at its own cost, Sonic
shall have the right to select counsel and the right to control the defense and
settlement of such suit or claim. Sonic further agrees to indemnify and save
harmless Indemnitees from all claims or causes of action based upon defective
design, manufacture, or a failure of the Products to perform according to their
specifications.
8.5 Indemnification by Ramp. Except to the extent Sonic indemnifies Ramp
-----------------------
pursuant to Section 8.4 above, and except for claims which arise from Sonic's
negligence or willful misconduct, Ramp agrees to indemnify and hold harmless
Sonic from any losses from claims of personal injury arising from Ramp' sale and
distribution of the Product, or from its breach of any representations,
warranties or covenants contained in this Agreement; provided that Ramp receives
prompt written notice of and has sole control over the defense and settlement of
such claims and actions. Ramp shall pay all costs, expenses and reasonable
attorneys fees incurred by Sonic in connection with any such defense, unless
Sonic chooses to defend itself. This indemnity shall not expire upon
termination of this Agreement, but shall remain in force and effect thereafter.
8.6 Limitation of Liability. Except for claims which arise from the
-----------------------
negligence or willful misconduct of Sonic or Sonic's employees, officers, or
agents, the maximum cumulative liability owed by Sonic to Ramp under Section 8.4
above shall be limited to the total amount paid by Ramp to Sonic as of the date
a court makes a final determination in any action alleging a breach of Sonic's
rights or representations under Section 8.1 or 8.2. Except for claims which
arise from the negligence or willful misconduct of Ramp or Ramp's employees,
officers, or agents, the maximum cumulative liability owed by Ramp to Sonic
under Section 8.5 above shall be limited to the total amount received by Sonic
from Ramp as of the date a court makes a final determination in any action
brought by Sonic under section 8.5. As used in this section 8.6, a `final
determination' is the date no further appeal is possible in the action at issue.
9. Term & Termination.
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9.1 Term. Subject to Section 9.2, the term of this Agreement begins on
----
the Effective Date and shall continue for a period of 1 year, provided that this
Agreement shall automatically renew for successive one year terms, unless either
Party gives the other Party thirty (30) days written notice prior to the
expiration of the then-current term of such Party's intent to terminate this
Agreement.
9.2 Termination. Either Party may terminate this Agreement in the event
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the other Party is in material breach of this Agreement (including any failure
to timely pay amounts owed to a Party) and the breaching Party fails to cure
such breach within thirty (30) days following its receipt of written notice of
such breach from the other Party; provided, however, that such cure period shall
be shortened to a period of five (5) days if Ramp is in material breach of any
of the terms of Section 2 of this Agreement.
9.3 Custom Inventory. In the event of termination of this Agreement by
----------------
either Party, any custom parts in Sonic's inventory that were ordered
specifically to fulfill a purchase order submitted by Ramp and accepted by Sonic
shall be paid for by Ramp to Sonic within 30 days of the termination of this
Agreement.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
9.4 Minimum Quantities. Ramp agrees to use commercially reasonable
------------------
efforts to purchase certain initial, quarterly, and annual minimum quantities.
With the exception of the Initial Purchase Order, these minimum quantities are
not binding financial commitments, except as set forth in Section 9.5(c). Such
minimum quantities include:
(a) Initial Purchase Order. The Initial Purchase Order of [* * * ]
----------------------
units total will be delivered in two batches of [* * * ], the first to have a
requested delivery date of no later than [* * * ], and the second to have a
requested delivery date no earlier than [* * * ].
(b) Quarterly Minimum. From the Effective Date of this Agreement,
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Ramp will use commercially reasonable efforts to purchase [* * *] units per
quarter. The first shipment of [* * * ] on the Initial Purchase Order shall
constitute the entire minimum with respect to the first calendar quarter during
the term of this Agreement and the second shipment of [* * *] shall be counted
towards meeting the minimum with respect to the second calendar quarter.
(c) Annual Minimum. From the Effective Date of this Agreement, of
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[* * *] units per calendar year.
9.5 Default. The following are events of default:
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(a) Failure to Pay or Breach. If either Party is in default of any
------------------------
material term or condition hereunder and such default continues for thirty (30)
days following written notice thereof by the non-breaching Party; or
(b) Insolvency, Assignment or Bankruptcy. If either Party is in
------------------------------------
material default of its obligations to its vendors or suppliers, becomes
insolvent, files or has filed against it a petition under any Bankruptcy Law
(which, if involuntary, is unresolved after sixty days); or
(c) Performance. Should Ramp fail to meet the quarterly minimum of
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[* * *] units as specified in Section 9.4(b) for any two consecutive quarters.
(d) Right to Cure Default. Notwithstanding Sections 9.5(a), 9.5(b),
---------------------
and 9.5(c) above, either Party will have a 30 day right to cure any deficiency
claimed or presented in writing that would constitute default.
9.6 Return of Confidential Information. Upon termination of this
----------------------------------
Agreement and receipt of written request from either Party, each Party shall
return at its expense any and all copies of Confidential Information or
materials in its possession or under its control.
9.7 Purchases after Termination. Upon termination of this Agreement
---------------------------
(except for termination due to breach of contract by Ramp) Ramp shall be able to
continue to purchase the Product and receive Third-Tier Support for a period of
ninety (90) days per the original terms of this Agreement.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
10. Source Code and Hardware Design Escrow.
--------------------------------------
10.1 Escrow Agreement. Sonic agrees to deposit a full and complete
----------------
electronic copy of the source code and hardware design to the Product, and all
updates and enhancements thereto (the "Source Materials"), into escrow with a
----------------
mutually agreed upon escrow services company. The Parties will enter into a
mutually agreeable escrow agreement. Ramp shall pay all fees for such escrow
and Sonic shall bear its own costs in preparing the Source Materials for
deposit. The escrow agreement shall provide for the release of such Source
Materials upon the occurrence of an Event (as defined in 10.2).
10.2 Release Event. The definitive escrow agreement will provide for the
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release of the Source Materials to Ramp in the event of (a) institution by or
against Sonic of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of Sonic's debts, provided such proceeding is not
dismissed within forty-five (45) days after its filing, (b) upon Sonic's making
an assignment for the benefit of creditors, or (c) upon Sonic's dissolution or
ceasing to do business (each of Sections 10.2(a), (b), and (c) an "Event").
-----
10.3 Source Code License. Subject to the terms and conditions of this
-------------------
Agreement, upon release from escrow Ramp shall have a nonexclusive,
nontransferable license to use and modify the Source Materials and distribute
the same in accordance with the licenses herein granted. Title in all Source
Materials shall remain in Sonic and Ramp will take all reasonable precautions to
maintain the secrecy of the Source Materials. Further, upon the release from
escrow of the Source Materials, Ramp shall pay royalties to Sonic, or Sonic's
designate or successor, in the amount of [* * *] per unit shipped which contains
the Source Materials or any portion thereof.
10.4 Right to Use Source Materials. Upon the release from escrow of the
-----------------------------
Source Materials, Ramp agrees to not integrate the Source Materials into
products other than the Products.
11. Miscellaneous.
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11.1 Export Restrictions. Ramp shall not re-export, either directly or
-------------------
indirectly, the Product (including any technical data, manuals, or other
materials delivered pursuant to this Agreement) to any country or countries to
which such re-exports are prohibited under the laws of the United States or the
laws of any country in the Territory, including but not limited to any
Derivative Works or Modifications. Ramp shall obtain appropriate license
approvals and certifications necessary, if any, to comply with the applicable
export and re-export restrictions of the United States or any country in the
Territory. Ramp understands and recognizes that the Product and other materials
made available to it hereunder may be subject to the Export Administration
Regulations of the U.S. Department of Commerce and other U.S. government
regulations relating to the export of technical data and equipment and products
produced therefrom. Ramp is familiar with and agrees to comply, and to require
Channel Partners and End-Users to, with all such regulations, including any
future modifications thereof.
11.2 Force Majeure. If either Party is prevented from performing any
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portion of the Agreement by causes beyond its control, including labor disputes,
civil commotion, war, governmental regulations or
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
controls, casualty, inability to obtain materials or services, or acts of
God, such defaulting Party shall be excused from performance for a period of
delay and for a reasonable time thereafter.
11.3 Governing Law. This Agreement shall in all respects be governed by
-------------
and interpreted in accordance with the laws of the State of California, without
reference to conflict of law provisions.
11.4 Arbitration. Any controversy or claim arising out of this Agreement
-----------
or a breach thereof shall, on written request of either Party served on the
other, be submitted to binding arbitration before a single arbitrator to be
conducted in accordance with the Rules and Regulations of the American
Arbitration Association (Commercial Division). If the Parties are unable to
agree on an arbitrator within thirty (30) days after a Party has served notice
of a request to arbitrate, then an arbitrator shall be selected by the American
Arbitration Association pursuant to its then current rules, within fifteen (15)
days after the Parties are unable to agree on the arbitrator. Arbitration shall
take place in the County of Santa Clara, California. No discovery shall be
allowed in such arbitration. The maximum number of days of hearing in such
arbitration shall be ten (10), all of which shall occur in a twenty (20) day
period. The arbitrators shall issue a written decision in the arbitration
giving the findings of facts and reasons for the award made by the arbitrator.
The award shall be specifically enforceable in a court of law with jurisdiction
over the Parties and subject matter.
11.5 Attorney's Fees. In any litigation or arbitration between the
---------------
Parties, the prevailing Party shall be entitled to reasonable attorney fees and
all costs of proceedings incurred in enforcing this Agreement.
11.6 Consequential Damages. EXCEPT AS EXPLICITLY SET FORTH IN THIS
---------------------
AGREEMENT, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER OR
ANY OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, OR SPECIAL DAMAGES
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR A PARTY'S PERFORMANCE OR FAILURE
TO PERFORM HEREUNDER.
11.7 The terms of any invoice, acknowledgment, purchase order, or any
other document issued in connection with any transaction under this Agreement
shall be disregarded except for quantities ordered, prices applicable, freight
and insurance charges, and delivery dates specified. The terms of this
Agreement shall supersede and void any and all standard terms and conditions on
each Party's respective forms as described in the first sentence of this Section
11.7.
11.8 Binding Nature and Assignment. Neither Party may assign any of its
-----------------------------
rights or obligations under this Agreement without the prior written consent of
the other Party; provided, that either Party may in its sole discretion assign
its rights and obligations under this Agreement to an entity which acquires all
or substantially all of its assets or to any successor in a merger or
acquisition without the prior written consent of the other Party. Subject to
the foregoing, this Agreement is binding on the Parties and their respective
successors and assigns.
11.9 Amendment and Waiver. No modification, amendment, or waiver of or
--------------------
under this Agreement is binding unless executed in writing by the Party against
whom enforcement of such modification, amendment or waiver is sought. No waiver
of any of the provisions of this
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
Agreement constitutes a waiver of any other provision nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.10 Further Assurances. Each Party shall provide such further documents
------------------
or instruments required by the other Party as may be reasonably necessary or
desirable to give effect to this Agreement and to carry out its provisions.
11.11 Publicity. For purposes of marketing the Products each Party may
---------
publicize the business relationship generally contemplated by this Agreement
only with the prior consent of the other Party.
11.12 Severability. Any provision of this Agreement which is prohibited
------------
or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.13 Entire Agreement. This Agreement, including the Exhibits hereto,
----------------
constitutes the entire agreement between the Parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties pertaining to the subject matter hereof. There are no representations
or warranties of the Parties in connection with the subject matter hereof except
as specifically referenced herein.
11.14 Notices. Any notice, demand or other communication required or
-------
permitted to be given under this Agreement must be in writing and is deemed
delivered to a Party (a) when delivered by hand or courier, (b) when sent by
confirmed facsimile with a copy sent by another means specified in this Section,
or (c) six (6) days after the date of mailing if mailed by certified or
registered mail, return receipt requested, postage prepaid, in each case to the
address of such Party set forth below (or at such other address as the Party may
from time to time specify by notice delivered in the foregoing manner):
If to Sonic:
-----------
Sonic Systems
0000 Xxxxx Xxxx Xxxxx, #000
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxxxxx Xxxx
If to RAMP:
----------
Ramp Networks, Inc.
0000 Xx Xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
11.15 Independent Contractors. The Parties act as independent contractors
-----------------------
of each other. Nothing herein is deemed to constitute Sonic and Ramp as
partners, joint venturers, or principal and agent. Except as expressly
contemplated by this Agreement, the Parties have no authority to bind each other
legally or equitably by contract, admission, acknowledgment, or undertaking or
to represent each other as to any matters.
11.16 No Third Party Beneficiaries. Nothing in this Agreement confers any
----------------------------
rights on any person or entity not a Party to this Agreement.
11.17 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which is deemed an original but all of which taken
together constitute one and the same instrument.
11.18 Survival. Sections 1, 2.3, 2.4, 2.5,4, 8, 9.6, 9.7, 10.3, 11, and
--------
all payment obligations incurred prior to the termination of this Agreement,
will survive the termination or expiration of this Agreement for any reason.
Section 7 will survive the termination of this Agreement for a period of five
(5) years.
IN WITNESS WHEREOF the Parties have entered into this Agreement to take
effect on the date executed by Sonic.
RAMP NETWORKS, INC. SONIC SYSTEMS, INC.
Signature__________________ Signature__________________
Print Name Xxxxxx Xxxxxxx Print Name Xxxxxxxxx Xxxx
---------------- ----------------
Print Title President Print Title President
--------------- ----------------
Date_______________________ Date_______________________
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
EXHIBIT A
---------
Deliverables
PRODUCT OVERVIEW
----------------
Sonic shall deliver a customized version of its two-port SonicWALL product.
There will be three models of this single hardware version, each model software-
keyed to limit it to a particular maximum number of Users. The limit will be
based on the first "x" number of IP Addresses on the LAN that attempt to access
the WAN through the SonicWALL. The three models shall be 5-User, 25-User, and
100-User.
PRODUCT SPECIFICATION
The product specifications for the purposes of this Agreement are as detailed
below. The baseline product is Sonic Systems' current two-port SonicWALL
Internet Security Appliance, Firmware version 3.x Exhibit C attached). Sonic
---------
will make the following modifications:
HARDWARE:
. The Product shall include Sonic's standard SonicWALL Plastic faceplate
. The entire enclosure will have a standard plastic color to match or
complement current Ramp products.
. Product and Ramp company name to be customized on the hardware
SOFTWARE
. Versions shall only be 5-User, 10-User, and 100-User.
. Product and Ramp company name to be customized in the software Graphical User
Interface (GUI)
. Set default IP address to Ramp Default
. Customer registration to be directed to Ramp URL
. [* * *].
MISCELLANEOUS
. Future Sonic charged Options (such as VPN) are not included in the base
Product and are only available if they are list in the Table in Exhibit B.
. An electronic version of the SonicWALL documentation shall be provided by
Sonic to Ramp for Ramp to customize and produce hard copy documentation.
. Only the individual units shall be supplied and bulk shipped by Sonic. Hard
copy documentation, product packaging (other than anti-static bags), and
power supplies are not part of this Agreement.
. Sonic to provide Ramp technical training prior to February 5, 1999
. A list of known bugs shall be provided and updated as available.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
EXHIBIT B
---------
Products and Pricing
--------------------
Product Pricing
------------------------------------------------------------------------------------------------------------------------------
Product Model Per Unit Price
------------------------------------------------------------------------------------------------------------------------------
5-user [* * *]
------------------------------------------------------------------------------------------------------------------------------
25-user [* * *]
------------------------------------------------------------------------------------------------------------------------------
100-user [* * *]
------------------------------------------------------------------------------------------------------------------------------
Upgrade Pricing
Upgrade Per Unit Upgrade Price
------------------------------------------------------------------------------------------------------------------------------
[* * *] [* * *]
------------------------------------------------------------------------------------------------------------------------------
[* * *] [* * *]
------------------------------------------------------------------------------------------------------------------------------
[* * *] [* * *]
------------------------------------------------------------------------------------------------------------------------------
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
EXHIBIT C
---------
Product Specification
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
[Graphic: diagram illustrating set up of network and traffic flow from the
Internet to network]
Business can greatly benefit from the wealth of information that is available on
the Internet. But with that benefit comes the security risk that unauthorized
users may access the network to steal information. Some hackers get their
thrill by crashing or corrupting PCs and servers. To help companies reduce
these security risks, Sonic Systems developed SonicWALL. SonicWALL offers state
of the art software and hardware technology to provide a secure, easy-to-
install, reliable, and affordable firewall for businesses with a few users to
several hundreds of users.
To protect the private network against Internet-based theft, destruction, or
modification of data, SonicWALL implements stateful packet inspection, a
technology similar to that used in enterprise-level firewall products offered by
Check Point and Cisco. SonicWALL will allow data coming from the Internet only
if it's part of a session that was initiated by one of the users on the secure
Local Area Network (LAN). Hackers and other unauthorized users will be stopped
at SonicWALL and not allowed on the private network.
When SonicWALL is installed, the network is protected from Denial of Service
Attacks, such as Ping of Death, SYN Flood, IP Spoofing, and LAND. When new
hacker attacks are discovered, Sonic adds protection from them to the SonicWALL
software. SonicWALL goes an extra step by automatically notifying the
administrator when there is a new software release available. SonicWALL
customers get free software updates.
In addition to stopping unauthorized users form accessing the secure LAN,
SonicWALL allows company management to determine which Internet sites or
Newsgroups should be accessible. The network administrator simply selects the
categories of content to block, such as pornography, intolerance or violence,
and SonicWALL will automatically block the sites that fall under those
categories. SonicWALL uses the highly regarded CyperNOT filter list from
Microsystems Software, also used in products offered by distinguished
organizations such as America Online, AT&T, IBM, Microsoft, Netscape, and The
Scholastic Network.
SonicWALL was designed for ease of installation and administration.
Installation involves simply connecting SonicWALL between the private network
and Internet router, spending a few minutes selecting the filtering options from
the intuitive, Web browser based configuration screen, and the users and network
are secure. No reconfiguration of any PC applications is needed.
[Graphic: Table with product specifications]
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
[Graphic: Picture of SonicWALL Internet Firewall product]
[Graphic: running sidebar with graphics, product marketing quotations,
company contact information]
Internet Firewall Appliance
Firewall Security. SonicWALL uses stateful packet inspection to protect the
private LAN from hackers and vandals on the Internet. Stateful packet
inspection is similar to the algorithms used by enterprise level firewall
vendors, such as Check Point and Cisco, and is widely considered to be the most
effective method of protecting the private LAN.
Hacker Attack Prevention. SonicWALL is pre-configured to automatically detect
and thwart Denial of Service (DoS) attacks such as Ping of Death, SYN Flood,
LAND Attack, IP Spoofing, etc. The goal of a DOS Attack is not to steal
information, but to disable a device or network so users no longer have access
to network resources. For example, "WinNuke," a widely available DoS tool, is
used to remotely crash any unprotected Windows PC on the Internet; SonicWALL
protects the private LAN from WinNuke and many other DoS attacks.
Internet Content Filtering. Content filtering allows businesses to create and
enforce Internet access policies tailored to the needs of the organization. An
option Content Filter List subscription is available which allows the
administrator to select categories of Internet sites, such as pornography or
racial intolerance, to block or monitor access. Automatic weekly updates of the
customizable Content Filter List make sure that access restrictions to new and
relocated sites are properly enforced. Users may be given a password to bypass
the filter, giving them unrestricted access to the Internet.
Network Address Translation (NAT). NAT translates the IP addresses used on the
private LAN to a single, valid IP address that is used n the Internet. This
adds a level of security since the address of a PC on the LAN is never
transmitted on the Internet. NAT also allows SonicWALL to support LANs using
low cost Internet accounts, such as xDSL or cable modems, where only one IP
address is provided by the ISP.
DHCP Server and Client. DHCP Server provides centralized management of IP
clients on the LAN by automatically configuring their IP address, gateway
address, DNS address, and more. DHCP Client allows SonicWALL to acquire its IP
settings (such as IP address, gateway address, DNS address, etc.) from the ISP.
This is ideal when the IP settings, which may change from time to time, are
automatically provided by the ISP, as is the case with some xDSL and cable modem
Internet accounts.
Remote Access Authentication. Users can access Intranet resources on the
private LAN by successfully logging into SonicWALL from the Internet.
Authentication is established using an MD5-based encrypted security mechanism.
Web Browser Management. SonicWALL is easily and securely configured and
monitored through a Web-basd interface. Authentication is established using an
MD5-based encrypted security mechanism.
Network Access Rules. Network Access Rules allow the administrator to extend
SonicWALL's firewall functions. For example, a rule may be created which blocks
all traffic of a certain type, such as Internet Chat (IRC), from the LAN to the
Internet; another rule may be created which gives Internet users access to a
server on the LAN, such as the organization's public Web server.
ICSA Certified. After being subjected to a rigorous suite of tests intended to
expose vulnerabilities to attacks and intrusions, SonicWALL Plus has features
that make it ideally suited for use in larger, enterprise networks.
SonicWALL/10 and SonicWALL/50 may be upgraded to support more users and to add
the following Optional Enterprise Features.
Custom Network Access Rules. The administrator has fine grain control over
network traffic. For example, Custom Network Access Rules may be created
which allow access to a Web server
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
to everyone but competitors, or restrict use of certain protocols, such as
Telnet, to authorized users on the LAN.
Web Proxy Relay. If use of a caching proxy server is required, SonicWALL
Plus may be used to transparently redirect all Web requests to the proxy
without client configuration.
Intranet Support. SonicWALL Plus allows Intranet firewalling by allowing
the administrator to restrict access to certain resources on the LAN. For
example, protectieon may be required for a company's accounting department
against unauthorized access by other users on the same network.
Static Routes. SonicWALL Plus may be configured to support large networks
with internal routers.
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
EXHIBIT D
---------
Deliverables Schedule
The customized version of the software is to be delivered to Ramp no later
than [* * *].
*Material has been omitted pursuant to a request for confidential treatment.
Such material has been filed separately with the Securities and Exchange
Commission.
