CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MANUFACTURING AGREEMENT
Exhibit 10.7
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN
SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This MANUFACTURING AGREEMENT (the “Agreement”) dated as the 1st day of November, 2008
(the “Effective Date”), is entered into by and between Aruba Networks, Inc., a Delaware corporation
with its principle place of business at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (“Buyer”), and
SerComm Corporation, a Taiwan corporation formed under the laws of the Republic of China, with a
place of business at 0X, Xx. 0-0,XxxxXx Xx., Xxxxxxx, Xxxxxx 000, Xxxxxx, Xxxxxxxx of China.
(“SERCOMM”).
RECITALS
Whereas, SERCOMM desires to manufacture Product for Buyer under this Agreement and Buyer desires to
purchase from SERCOMM, certain products (“Products”), parts (“Parts”) and software (“Product
Software”) which are set forth in Appendix A on the terms contained in this Agreement. All section
references below in the Special Terms are to sections of the General Terms which follow the Special
Terms.
NOW, THEREFORE, in consideration of the terms and conditions set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
SPECIAL TERMS
1. Identification of Parties and Addresses
| Buyer: | Company Name: | Aruba Networks, Inc. | ||||
| Attention: | Xxxxx Xxxxx | |||||
| Tel. No.: | 000-000-0000 | |||||
| Fax. No.: | 000-000-0000 | |||||
| SERCOMM: | Attention: | Xxxxxxx Xxx | ||||
| Tel. No.: | x000-0-0000-0000 | |||||
| Fax. No.: | x000-0-0000-0000 |
All notices, including notices of address change, to be given under this Agreement shall be
addressed to the address set forth above and shall be deemed to have been received (a) when
received if hand delivered, (b) three (3) calendar days after being sent by overseas or overnight
courier, or (c) immediately after being sent by confirmed telecopy or facsimile transmission.
2. Product
“Product” mean the products may, from time to time, increase under this Agreement, including parts
and components thereof, and be manufactured for Buyer in accordance with the Specifications as
hereinafter defined in Appendix C by both parties.
3. Order Lead Time
Order Lead Time is thirty (30) calendar days after SERCOMM’s confirmation of Purchase Order.
4. Purchase Order Rescheduling Terms
As used in this Agreement, “ex factory date” will mean the date specified on the purchase order on
which the Products are to be available at SERCOMM’s factory to be picked up by the freight
forwarder/carrier.
A purchase order may be rescheduled to a new delivery date that is no more than forty five (45)
calendar days after the originally scheduled delivery date. If additional out-of-pocket expenses
such as handling fees and warehouse charges are required for the performance of the reschedule,
Buyer shall pay for such expenses upon SERCOMM’s invoice.
5. Rolling Monthly Forecast
Buyer will provide SERCOMM with a six-month rolling forecast, the first three (3) months will be
considered a Production Forecast, and the second three (3) months will act as a Planning Forecast.
Buyer will deliver updates to this six (6) month forecast on a monthly basis or as needed by
SERCOMM and/or Buyer.
By the second week of each month, Buyer will provide a six (6) month rolling forecast for Products
to be delivered to Buyer during months Xx0, Xx0, Xx0, Xx0, Xx0 and N+6. The following percentages
of each forecast will be binding and month N+1 of this binding rolling forecast means Buyer’s firm
order:
N = then-current month
| Month | Percentage of Forecast which is binding | |||
N+1 |
100 | % | ||
N+2 |
75 | % | ||
N+3 |
50 | % | ||
N+4 |
0 | % | ||
N+5 |
0 | % | ||
N+6 |
0 | % | ||
6. Initial Term of Agreement
Initial term (duration of initial term of Agreement): one (1) year.
Initial term (duration of initial term of Agreement): one (1) year.
7. Miscellaneous
a. Attach list of Product Software, Unique Materials, Products, Parts, and Minimum Order
Quantities (before and after phase-out) for Products and Parts, and initial Pricing as Appendix A
(to be provided by SERCOMM).
b. Attach description of how SERCOMM will customize the Products for Buyer, NRE and the
materials and assistance, if any, to be provided by Buyer as Appendix B.
c. Attach product specifications as Appendix C.
d. Attach tooling for the manufacture of Product as Appendix D.
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GENERAL TERMS
1. SERCOMM’s Manufacturing Services
1.1 Customization Process. If applicable, SERCOMM will customize the existing
Products for Buyer as further described in Appendix B and Buyer will pay to SERCOMM the fee set
forth in Appendix B for SERCOMM to develop and customize the Products as the compensation of
non-recurring engineering work (“NRE”). SERCOMM will manufacture the Products according to the
mutually agreed upon specifications for the Products (“Specifications”) as set forth in Appendix C
attached to this Agreement.
1.2 Unique Materials. The parties agree that SERCOMM may have to acquire or
manufacture materials (“Unique Materials” as set forth in Appendix A) which are unique to the
manufacture of Products for Buyer and not readily usable by SERCOMM for its other customers. Buyer
understands that SERCOMM may at times decide to purchase Unique Materials in large quantities
because of favorable pricing and authorizes SERCOMM to purchase Unique Materials up to a quantity
necessary to fulfill then-outstanding purchase orders without obtaining Buyer’s further
authorization. Upon Buyer’s further authorization, SERCOMM may purchase a quantity of Unique
Materials which exceeds the quantity necessary to fulfill then outstanding purchase orders up to
the dollar value of Unique Materials authorized by Buyer. For long lead-time components and Buyer
Unique Materials, Parts and Product which SERCOMM is unable to resell to others at a reasonable
price, Buyer agrees to remain fully liable for all of any losses that may occur as a direct result
of the change of Buyer Forecast or purchase orders (including the reschedule or cancellation of any
purchase order) and/or end-of-life of Product as determined by Buyer.
1.3 Engineering Changes. Buyer may request that SERCOMM incorporate engineering
changes into the Product by providing SERCOMM with a description of the proposed engineering change
sufficient to permit SERCOMM to evaluate its feasibility and cost (“Engineering Change Request” or
“ECR”). Upon receipt of an ECR, SERCOMM will provide Buyer with a response within five (5)
business days of receipt advising Buyer of the likely impact of an ECR (including but not limited
to the impact on the delivery, scheduling and Product pricing). SERCOMM will proceed with
engineering changes when the parties have agreed upon the changes to the Specifications, delivery
schedule and Product pricing and Buyer has issued a Purchase Order for the implementation costs
(“Engineering Change Order” or “ECO”). All non-recurring costs of implementing ECO’s (including,
without limitation, premium costs of materials; material handling charges; process and tooling
charges; engineering charges; and evaluation testing costs and other costs which result form the
ECO) will be the responsibility of Buyer, except as otherwise mutually agreed to in writing between
the parties. Neither party will unreasonably withhold or delay agreement to an ECO and the parties
agree to use commercially reasonable efforts to implement at the earliest opportunity ECO’s
relating to personal and product safety.
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1.4 Quarterly Business Review. The parties will conduct a Quarterly Business Review
(“Quarterly Business Review” or “QBR”) meeting at least once each calendar quarter for the purpose
of reviewing the parties’ performance and the business matters to be addressed quarterly as set
forth in the specific provisions of this Agreement. Commercially reasonable efforts will be made
by SERCOMM and B uyer to have at least one executive level participant in attendance for each QBR.
To the extent possible, these meetings will be scheduled in order to permit in-person attendance by participants and they will be conducted at the location where Buyer’s products
are manufactured, unless mutually agreed to otherwise by the parties.
1.5 Tooling. Buyer hereby authorizes SERCOMM to purchase tooling for Buyer
specific design elements as identified in Appendix D. Buyer agrees to pay and wire transfer for
fifty percent (50%) payment of cost of tooling as quoted and pay the balance upon acceptance of
sample parts from the tooling. Upon full payment, tooling in Appendix D will be the property of
Buyer and each piece of the tooling shall be conspicuously identified at the premises and on the
tooling as being the property of Buyer. All software that Buyer provides to SERCOMM or any test
software that Buyer engages SERCOMM to develop as mutually agreed in statement of work “SOW” or its
equivalent is provided as is and shall remain the property of Buyer.
1.6 Trademarks. The Products may be marketed under trademarks, trade names or the
like (“Buyer’s Marks”) now or hereafter adopted by Buyer. SERCOMM acknowledges and agrees that,
except for affixing Buyer’s Marks to the Products, nothing in this Agreement grants or transfers to
SERCOMM any right or interest in Buyer’s Marks. SERCOMM agrees to affix Buyer’s Marks to the
Products as specified by Buyer. Buyer is entitled to refer to the Products, in all advertising
literatures and promotional materials, as Buyer’s own products.
2. Quality Control.
SERCOMM agrees to implement industry standard Quality Control (“QC”) and Quality Assurance
(“QA”) programs for all the Products delivered hereunder. SERCOMM further agrees to maintain all
the relevant QC and QA file and/or documents for Buyer’s reference as requested by Buyer during the
term of this Agreement. Buyer is entitled to perform source inspection of the Product at SERCOMM’s
facility by Buyer’s employees, agents or representatives or any independent third party assigned by
Buyer and approved by SERCOMM during normal business hours and upon reasonable advance notice.
3. Purchasing.
3.1 Purchase Orders. All purchase orders submitted by Buyer for Products and Parts
(“Purchase Orders”) shall be in writing in a form acceptable to SERCOMM. Purchase Orders shall
reference this Agreement, and shall contain the following: (a) a description of the Products and
Parts to be purchased (b) the quantity of Products and Parts to be purchased, (c) requested
delivery dates with an order lead time equal to or greater than the order lead time set forth in
the Special Terms, (d) destination, (e) confirmation of price, (f) shipping method and (g)
requested ex factory date. All Purchase Orders shall be governed exclusively by the terms and
conditions of this Agreement, and any terms or provisions on Buyer’s purchase order forms or the
like or SERCOMM’s acknowledgements thereof that are inconsistent with those contained in this
Agreement shall have no force or effect whatsoever.
Furthermore, provided that both parties agree to implement EDI under this Agreement and EDI
system is established, all Buyer “Purchase Orders” shall be submitted by Buyer or any of its
representatives who has been previously authorized or designated by Buyer, and SERCOMM agrees to
receive the respective Purchase Orders, by fax or Electronic Data Interchange (“EDI”). All costs
incurred by both parties to implement such EDI system and to maintain such EDI capability shall be
at either party’s sole cost, expense and risk. Buyer agrees that it shall not contest the validity
or enforceability of EDI documents based on their electronic format. EDI documents or printouts
thereof shall constitute originals when maintained in the normal course of business. Buyer agrees that Buyer will assume any risks and damages incurred by
Buyer as a result of implementing EDI under this Agreement.
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3.2 Order Rescheduling. Buyer shall have the right to reschedule Purchase
Orders according to the schedule, percentage limitations and other terms set forth in the Special
Terms.
3.3 Minimum Order Quantity. The minimum quantities per Purchase Order for
the Products and Parts are set forth in Appendix A attached to this Agreement.
3.4 Rolling Monthly Forecast. Buyer shall provide the rolling monthly forecast as
specified in the Special Terms.
3.5 No Obligation to Purchase Product. Buyer shall have no obligation to purchase
Product from SERCOMM, except in accordance with this Agreement and as expressly set forth in
Purchase Orders duly executed on behalf of Buyer, and accepted by SERCOMM. Except as set forth in
this Agreement, Buyer shall not be required to purchase any minimum quantities, nor shall Buyer be
held responsible for any restocking fees, xxxx backs for not ordering any estimated purchase
volume, or any other such cost or fee.
3.6 Purchase of Products By Buyer’s Nominee. SERCOMM hereby acknowledges that Buyer
may, from time to time, designate in writing one or more contract manufacturers or others (each a
“Nominee”) to purchase Products from SERCOMM (on such Nominee’s own behalf) for the purpose of
performing services and manufacturing goods for Buyer. In such event the provisions of this
Agreement governing the purchase, sale, and continuing obligations regarding Products shall be
deemed to extend to and for the benefit of such Nominees, and such Nominees shall be entitled to
exercise the rights granted to Buyer under this Agreement regarding the purchase of Products. The
Parties agree that each Nominee purchasing Products will agree to be bound by the terms and
conditions of this Agreement, and will have the same rights and obligations as Buyer would have if
Buyer was purchasing such Products, regarding the right to place Purchase Orders, the rights and
obligations which accrue with respect to ordering, payment and delivery of such Products. Buyer
will be responsible for Nominee’s performance and compliance with the terms of this Agreement.
SERCOMM agrees to negotiate in good faith with the Nominee to enter into a binding agreement to
supply the Nominee under the same terms and conditions as provided to Buyer under this Agreement.
4. Acceptance and Delivery.
4.1 Purchase Order Acceptance. Purchase Orders shall be confirmed by SERCOMM within
three (3) SERCOMM business days after receipt of the Purchase Order by SERCOMM, if such Purchase
Order is placed in accordance with this Agreement. SERCOMM shall accept a Purchase Order if a
Purchase Order is consistent with the terms of this Agreement.
4.2 Delivery. The delivery terms under this Agreement is EX WORKS (“EXW”)
according to “Incoterms” as published in 2000 by the International Chamber of Commerce.
4.3 Title and Risk of Loss. Title and risk of loss shall pass to Buyer upon
the delivery of the applicable Products to the applicable shipping carrier.
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4.4 Delivery Schedule. Time is of the essence in the contract. SERCOMM shall use best commercially reasonable efforts to meet all performance and shipping dates. Delivery will
be strictly in accordance with Buyer’s schedule. SERCOMM will immediately notify Buyer of any
delays in shipping. If delivery of items or rendering of services is not completed by the time
promised due to reasons attributable to SERCOMM and such delay is not cured within thirty (30) days
after SERCOMM’s receipt of Buyer’s written notice specifying such delay, Buyer reserves the right
without liability, in addition to the Buyer’s other rights and remedies, to terminate this contract
by written notice effective when sent by Buyer and to purchase substitute items or services
elsewhere and charge the SERCOMM with any loss and additional expense incurred. Any provision
herein for delivery of articles or rendering of service by installment shall not be construed as
making the obligations of SERCOMM severable. Any failure by Buyer to exercise its remedies with
respect to any installment shall not be deemed to constitute a waiver with respect to subsequent
installments. All shipments must equal exact amounts ordered unless otherwise agreed in writing by
Buyer.
4.5 Buyer Acceptance.
| 4.5.1 | Quality Standards. SERCOMM shall provide Buyer, and
maintain in accordance with industry standards, written quality control
standards for the Products. SERCOMM shall tender to Buyer for acceptance only
Products that have been inspected and deemed to meet its quality control
standards. |
| 4.5.2 | Inspection. Buyer may during normal business hours
and following reasonable advance written notice and subject to SERCOMM’s
security and confidentiality requirements, visit the SERCOMM’s facility where
the Products are manufactured and review the quality control procedures related
to manufacture of the Products as reasonably necessary to satisfy itself of
compliance with its obligations under this Agreement. |
| 4.5.3 | Rejection. All Products shall be subject to
inspection and testing by Buyer within thirty (30) days after the delivery of
Products to Buyer (the “Inspection Period”), and Buyer shall inform SERCOMM of
any non-conforming Product within the Inspection Period; otherwise, such
non-conforming Product shall be deemed accepted. In case latent defects of
any Product is found beyond the Inspection Period not to conform to the
Documentation due to reasons attributable to SERCOMM, is defective in materials
or workmanship in violation of the limited warranty set forth in Section 8, or
is otherwise damaged (“Non-Conforming Product”), such Product may be returned.
If Product(s) are returned by Buyer as described in this section, or Section 8
below, Buyer shall obtain a Return Material Authorization (“RMA”) number from
SERCOMM, and shall return such Products to SERCOMM. For RMA products returned
to SERCOMM, shipping and insurance charges for return of non-conforming Product
shall be at Buyer’s expense, and shipping back to Buyer shall be at SERCOMM’s
expense. If the Product is reasonably demonstrated by SERCOMM to be conforming
such as no trouble found products, then Buyer will reimburse SERCOMM for the
actual and reasonable shipping and insurance charges. SERCOMM shall bear the
responsibility to repair the defective products to be fully functional;
however, upon mutual agreement SERCOMM shall either replace or repair any such
defective Product or refund the purchase price in full. The replaced portion
of Product shall conform with all Documentation and be functionally equal to
or better than the returned unit. The replaced portion of Product affected
during the Product warranty period shall be warranted, as provided above,
for the remainder of the Product warranty period or for 15 months from the
date of replacement, whichever is longer. The replaced portion of Product
affected made after expiry of the Product warranty period shall be
warranted, for a period of 6 months from the date of repair at Buyer’s
cost. |
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5. Prices.
Pricing for the Products is based on the EXW delivery terms. The initial prices for the
Products are as specified in Appendix A attached to this Agreement. Pricing may be reviewed by the
parties from time to time based on then-current market conditions. The parties agree that the
prices in effect as of the date a Purchase Order is acknowledged by SERCOMM shall be applied to
such Purchase Order regardless of any subsequent price change. SERCOMM agrees that Buyer shall
receive the best pricing provided by SERCOMM to any other purchaser of Product, provided that such
other purchaser has purchased volumes similar to the aggregate Product purchases by Buyer. For
purposes of this Section 5, the Product price shall be deemed to include all Product discounts,
rebates, cooperative advertising programs and other similar programs provided by SERCOMM.
6. Payment Terms: Method of Payment.
Buyer shall make payments for Product purchased under this Agreement in full without deduction
or offset in U.S. Dollars before/within forty five (45) days of shipment from SERCOMM’s factory by
telegraphic transfer (T/T). Provided that both parties agree to implement EDI in this Agreement
and EDI system is established, SERCOMM shall send invoice via EDI to Buyer. Buyer acknowledges
that SERCOMM may sell or assign its account receivables under this Agreement for the purpose of
financial factoring. SERCOMM reserves the right to withhold any shipments if Buyer fails to make
payment under this Agreement. Any direct costs that SERCOMM suffers from the past dues shall be
compensated by Buyer. SERCOMM is entitled to withhold any or all shipments of Product and/or not
to perform any other obligations as provided in this Agreement, including but not limited to its
warranty obligation, provided that Buyer does not fully perform its payment obligation under this
Agreement. Unless otherwise provided in this Agreement, all currency stated in this Agreement
shall be U.S. dollars.
7. Warranties.
7.1 General Warranty. SERCOMM warrants that the Products sold by SERCOMM to Buyer
shall be (i) new and free and clear of all security interests, liens and other encumbrances; (ii)
provided in strict conformity to all requirements, specifications, environmental regulations,
drawings, data, or designs and that the Products will be free from defects in material and
workmanship; (iii) free from any defect in materials and workmanship, design or otherwise,
including without limitation, latent defects and shall conform to and operate in accordance with
the Documentation for a period of fifteen (15) months from the date that the Product is shipped to
Buyer or its Nominee; and (iv) Products furnished by Sercomm, as described in this Agreement and
used in accordance with industry standards and any written instructions provided by Supplier to
Buyer are safe for normal use, are non-toxic and present no abnormal hazards to persons or the
environment. In the event of any breach of this warranty, Buyer shall have the right to return the
defective Product, with freight prepaid, to SERCOMM’s facility in China or Taiwan according to SERCOMM’s then-current RMA procedures. SERCOMM will, at SERCOMM’s option, either replace or repair
the defective Products within thirty (30) calendar days after SERCOMM’s receipt of the defective
Products. SERCOMM will then ship the replacement or repaired Products to Buyer with freight
prepaid. In no event shall the foregoing warranty apply if the defect was caused, in whole or in
part, by misuse, unauthorized modifications, neglect, improper installation or testing,
unauthorized attempts to repair by Buyer or by other than SERCOMM or SERCOMM’s agents or designees,
accident, fire, power fluctuation, or use of the Products in combination with products, equipment
or other items not supplied by SERCOMM.
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7.2 Epidemic Failure. An Epidemic Failure is defined as two percent (2%) or more of
the same Product installed or shipped during any consecutive three (3) month period that contains
an identical, repetitive defect in Supplier supplied material and/or workmanship, as evidenced by
SERCOMM’s failure reports. If during the warranty period Product shows convincing evidence of an
Epidemic Failure, Buyer shall have the right, pending correction of the Epidemic Failure due to
reasons attributable to SERCOMM, to postpone further shipments of such affected Product by giving
written notice of such postponement to Sercomm. Such postponement shall temporarily relieve
Sercomm of its shipment responsibility and Buyer of any payment responsibility for such postponed
shipments. Sercomm shall promptly prepare and propose a corrective action plan addressing
implementation and procedure milestones for remedying such Epidemic Condition(s). Sercomm shall
use best commercially reasonable efforts to implement the remedy in accordance with the agreed upon
schedule. Buyer retains option to xxxx Sercomm for any cost associated with any epidemic failure
due to reasons attributable to SERCOMM.
7.3 Manufacturing Rights. In the event that SERCOMM is unable to manufacture the
Product to the mutually agreed specifications, quality requirements, quantity and price in
accordance with the terms of this Agreement due to reasons attributable to SERCOMM consistently for
three (3) consecutive months and such breach materially results in the discontinuity of the Product
that SERCOMM is unable to cure within ninety (90) days of Buyer’s written notification, Buyer
reserves the right to manufacture the Product itself or through a third party. In such case,
SERCOMM agrees to use commercially reasonable efforts to assist Buyer in effecting a knowledge
transfer to the Buyer’s designated manufacturer in order to support Buyer in maintaining an
uninterrupted supply of the Product.
7.4 Escrow Agreement. Buyer and SERCOMM agree to negotiate in good faith, and shall
execute an Escrow Agreement within ninety (90) days of the date of this Agreement. The terms and
conditions of the Escrow Agreement shall include the specific conditions both for delivery into
escrow and release of the technical or other information and documentation.
7.5 Escrow Release. If, in Buyer’s reasonable opinion and, the conditions set forth
in Section 7.3 have been met, in accordance with the terms of the Escrow Agreement the escrow agent
will release to Buyer the escrow and Buyer shall have the rights to use the escrow as necessary to
make, use, market, sell, and support the Products. In addition SERCOMM shall make available to
Buyer or its designated manufacturer any unique equipment held by SERCOMM at Buyer’s cost to
manufacture, test and support the Products to the extent such assistance will not interfere
SERCOMM’s business and operations with other customers and SERCOMM shall otherwise cooperate with
Buyer to transition the manufacture, testing and support of the Products to Buyer or its designated
manufacturer.
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7.6 Disclaimer. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS AGREEMENT, SERCOMM DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED OR STATUTORY, INCLUDING BUT
NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
SERCOMM DOES NOT PROVIDE A WARRANTY THAT THE PRODUCT WILL MEET BUYER’S AND/OR ITS END USERS’
REQUIREMENTS, OR THAT THE OPERATION OF THE PRODUCT WILL BE UNINTERRUPTED OR ERROR FREE.
8. Product Changes.
8.1 Manufacturing Phase-Out. SERCOMM shall have the right to discontinue any Product
for sale to its customers and may delete such Product from Appendix A upon written notice to Buyer.
During the ninety (90) calendar day period following Buyer’s receipt of such notice, Buyer shall
have the right to place one (1) final binding Purchase Order (in addition to any then-outstanding
Purchase Orders) for such Products for delivery within one hundred twenty (120) calendar days
following SERCOMM’s receipt of such Purchase Order, and SERCOMM will fill such Purchase Order as
soon as such Products become available from SERCOMM’s manufacturing facilities.
8.2 Product Change. SERCOMM shall notify Buyer in writing of any and all proposed
changes to any Specifications or Product that materially affect form, fit or function. If changes
are solely made by SERCOMM, such notices shall be delivered at least ninety (90) days prior to the
date such change is proposed to be incorporated into the Product. If upon evaluation of the
proposed changes, Buyer, in its sole discretion, determines that the changes would render SERCOMM’s
products to no longer operate or to be adversely affected in form, fit and function or material
delay of introduction of its products, SERCOMM will provide Buyer with additional Products
utilizing the current design to fulfill its needs at Buyer’s risk for up to six (6) months from the
date of SERCOMM’s notice.
8.3 Product Changes from Buyer. Buyer reserves the right to make changes in any one
or more of the following: (a) specifications, drawings, and data incorporated into this Agreement
where the goods to be furnished are to be specially manufactured for Buyer; (b) methods of shipment
or packing; (c) place of delivery; and (d) time of delivery. If any such change causes an increase
or decrease in the cost or time required for performance, an equitable adjustment will be made in
the price or delivery schedule or both. Price increases or extensions of time for delivery issued
and signed by Buyer.
9. Parts.
SERCOMM will make Parts available for the purchase by Buyer at the prices set forth in SERCOMM’s
then-current price list for Product. SERCOMM will make common Parts available for a period of one
(1) year after the earlier to occur of (i) discontinuance of the Product or (ii) expiration or
termination of this Agreement. SERCOMM will make unique Parts (as set forth in Appendix A)
available until the earlier to occur of (i) discontinuance of the Product or (ii) expiration or
termination of this Agreement. During this availability period, SERCOMM shall have the right to
substitute an alternative Part for any Part that is discontinued by SERCOMM’s supplier. During the
sixty (60) calendar day period after the end of the applicable availability period for unique Parts
and common Parts, Buyer shall have the right to place one (1) final binding Purchase Order for
Parts for delivery within one hundred twenty (120) calendar days following SERCOMM’s receipt of
such Purchase Order. Thereafter, SERCOMM agrees to furnish Buyer, upon Buyer’s reasonable request,
related information of SERCOMM’s vendors or suppliers of Parts or pertinent information to assist Buyer to continue procuring and purchasing Parts.
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10. Documentation.
Upon the request of Buyer, SERCOMM shall sell to Buyer copies of SERCOMM’s then-existing
documentation (“Documentation”), including users, operators and service manuals, for the Products
(in English or any other language in which the Documentation are then available) at SERCOMM’s
then-current prices. Buyer acknowledges SERCOMM’s exclusive ownership of copyrights in the
Documentation. SERCOMM grants to Buyer a non-transferable, non-sublicensable, non-exclusive,
worldwide, royalty-free license during the term of this Agreement to prepare derivative works
(including translations) based on the Documentation (such derivative works will be referred to as
the “Buyer Modified Documentation”), subject to SERCOMM’s prior approval of the contents of the
Buyer Modified Documentation. Buyer shall have exclusive ownership of the copyright in the Buyer
Modified Documentation, but Buyer agrees that exclusive ownership of the copyright in the
Documentation as originally provided by SERCOMM shall remain in SERCOMM and in no event shall Buyer
challenge in any way SERCOMM’s exclusive ownership of such copyright. Buyer grants to SERCOMM a
non-exclusive, non-transferable, sublicensable, perpetual, royalty-free, world-wide license to use,
copy, distribute, and prepare derivative works based on the Buyer Modified Documentation.
Notwithstanding anything to the contrary in this Section 10.1, Buyer shall make SERCOMM’s service
manual available only to those customers of Buyer which have been authorized by Buyer to repair
Products. Upon Buyer’s request and payment to SERCOMM of SERCOMM’s charges, if any, SERCOMM shall
provide Buyer with such information as may be necessary for Buyer to prepare the Buyer Modified
Documentation.
11. Term, Termination and Effect of Termination.
11.1 Term. This Agreement will be effective for the initial term set forth in the
Special Terms, subject to early termination under Section 11.2. After such initial term, this
Agreement will automatically be renewed for additional periods of one (1) year unless either party
elects not to renew this Agreement by giving written notice to the other party at least ninety (90)
calendar days prior to the expiration of the then-current term.
11.2 Early Termination. Either party may terminate this Agreement upon written notice
to the other party for any material breach of this Agreement by the other party which the other
party fails to cure within thirty (30) calendar days following the other party’s receipt of written
notice from the non-breaching party specifying such breach.
11.3 Surviving Obligations. Expiration or any termination by either party of this
Agreement shall not affect (a) any other rights of either party which may have accrued up to the
date of such termination or expiration, (b) any licenses granted by Buyer to its customers with
respect to the Product Software prior to such termination or expiration and (c) the rights and
obligations of the parties set forth in Sections 6 (Payment terms), 7 (Warranties), 11.5 (Duties
Upon Expiration or Termination), 12 (Compliance with Laws), 13 (Proprietary Rights), 14
(Indemnification), 15 (Limitation of Liability) and 16.1 (Governing Law; Arbitration and Official
Language).
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11.4 Duties upon Expiration or Termination. Upon any termination of this
Agreement by either party or expiration of this Agreement, each party shall promptly return to the
other party any confidential information of the other party in its possession or under its control
Further, upon:
(a) expiration of this Agreement. Purchase Orders outstanding as of such expiration shall
continue to be binding upon both parties, or
(b) termination of this Agreement by Buyer under Section 11.2, Buyer shall have the right to
cancel, without penalty, any affected Purchase Orders outstanding as of such termination, In which
case Buyer shall not be responsible to purchase any raw material, work-in-process or finished
Products, or
(c) termination of this Agreement by SERCOMM under Section 11.2, SERCOMM shall have the right
to cancel, without penalty, any Purchase Orders outstanding as of such termination, in which case
Buyer shall, upon the written request of SERCOMM, purchase at 105% of SERCOMM’s cost (i)
work-in-process and finished Products which is to be used to fill Purchase Orders outstanding as of
such termination and (ii) any Unique Materials which SERCOMM has in inventory or on order as of
such termination and is to be used to fill Purchase Orders outstanding as of such termination.
12. Compliance with Laws.
Export Control Laws. SERCOMM will comply with, at SERCOMM’s sole expense, all export
control laws necessary to permit SERCOMM to sell the Products’ to Buyer. Buyer hereby acknowledges
that it will not export or re-export any Products. Product Software, related documentation or
technical data (which includes, among other things, any technical information relating to the
Products, Product Software, written or otherwise), or any product incorporating the Products,
Product Software, related documentation or SERCOMM’s technical data, without first complying with
all applicable U.S and non-U.S. export control laws.
13. Proprietary Right.
13.1 Retention of Proprietary Rights. Buyer shall retain all intellectual property
rights in and to (i) the tooling customized for the Product and paid in full by Buyer (ii) the
software, hardware, firmware, and other deliverables furnished by Buyer to SERCOMM and (iii) the
industrial design of the Product being manufactured by SERCOMM if such design is paid in full by
Buyer. Unless provided in this Section 13.1, SERCOMM or its licensor retains for itself exclusive
ownership of all rights, titles and interests in and to the Products, Product Software, and
Documentation (collectively, the “SERCOMM Owned Items”) and all related intellectual and other
proprietary rights embodied in or related to the SERCOMM Owned Items.
13.2. SERCOMM’s Marks. Buyer shall not adopt, use or register any acronym, trademark,
trade name or other marketing name of SERCOMM or any confusingly similar xxxx or symbol as part of
Buyer’s own name or the name of any of its affiliates or the name of any product it markets.
11
13.3 Software. Buyer hereby grants to SERCOMM the right to pre-install
any and all of Product Software provided or designated by Buyer to be incorporated or used in the
Product. If the Product Software includes software from Microsoft Corporation, Buyer shall ensure
that each of its end user customers of the Product and its sub-distributor’s end user customers of
the Product will be bound by a written agreement with terms and conditions at least as restrictive
as those in SERCOMM’s end user license agreement. Buyer (and Buyer’s sub-distributors or the like)
shall not (a) adapt, reproduce, enhance, translate or otherwise modify the Product Software or any
portion thereof without SERCOMM’s express prior written approval, (b) reverse engineer, decompile, disassemble or engage in any other similar manipulation of the Product Software or (c)
remove or otherwise after in any way any trademark, copyright notice or any other proprietary
notice or legend or the like affixed or otherwise attached to the Product Software. Regarding the
trademarks, trade names, logos and product names of third parties from whom SERCOMM licensed the
Product Software, (a) Buyer shall not use or display them in any of its printed materials or
packaging without SERCOMM’s prior written consent, use any trade name confusingly similar to them
or undertake any action that will interfere with or diminish the right, title or interest of those
third parties in them and (b) Buyer acknowledges that any use of them by Buyer will not directly or
indirectly create in Buyer any right, title or interest in them. Buyer is fully and irrevocably
liable for any financial claims and/or compensation claims brought against SerComm in connection
with any and all of software provided or designated by Buyer to be incorporated or used in the
Product.
13.4 CONFIDENTIALITY.
| 13.4.1 | Confidential Information. All documentation, drawings, samples, designs,
specifications, engineering details and information pertaining to the Products or each
Party’s business, the terms and conditions of this Agreement, and all information or
materials disclosed by either Party marked or identified as “Confidential”,
“Proprietary” or the like, whether in oral, written, graphic or electronic form, to the
other party are and shall remain the confidential and proprietary information of the
disclosing Party (collectively, the “Confidential Information”). Without limiting the
foregoing, SERCOMM acknowledges that information related to this Agreement shared by
Buyer employees and contractors with SERCOMM are the Confidential Information and trade
secrets of Buyer. |
| 13.4.2 | Duty Not to Disclose; Restrictions on Use. The Party receiving the
Confidential Information shall (a) not disclose Confidential Information to any
individual or entity except to those directors, officers, employees and contractors
whose duties justify their need to know such information and who have been clearly
informed of their obligation to maintain the confidential, proprietary and/or trade
secret status of such Confidential Information; and (b) use Confidential Information
only for the purposes set forth in this Agreement and not for any other purpose. The
party receiving the Confidential Information (“Receiving Party”) shall use at least the
same degree of care to prevent disclosure of such information as the Receiving Party
uses with respect to its own confidential and/or proprietary information, but in any
event not less than reasonable care. All Confidential Information (and copies thereof)
shall be promptly returned to the Party disclosing the Confidential Information
(“Disclosing Party”) upon request, which shall not interfere with SERCOMM’s performance
of this Agreement, such as warranty and support obligations. |
| 13.4.3 | Exceptions. Notwithstanding the foregoing, the obligations of this Section
13 shall not apply to Confidential Information if and to the extent it can be
documented that such Confidential Information: (i) was rightfully known to the
Receiving Party prior to its receipt, (ii) is or becomes publicly available without
breach of this Agreement or wrongful act of the Receiving Party, (iii) is received by
Receiving Party without an obligation of confidentiality and without breach of this
Agreement, or (iv) is developed independently by the Receiving Party without using
Confidential Information. The Receiving Party may make disclosures required by law or
court order provided the Receiving Party uses diligent reasonable efforts to limit disclosure and to obtain confidential treatment or a protective order, has given
prompt notice to the other party of such required disclosure, and has allowed the
Disclosing Party to participate in the proceeding. |
12
14. Indemnification.
14.1 BUYER shall indemnify SERCOMM and defend or settle any suit or proceeding brought against
SERCOMM based upon a claim that Buyer’s Marks and/or the Product supplied to BUYER by SERCOMM based
on the BUYER designs, drawings and specifications to which BUYER agrees or based on any parts
specified or sold by BUYER for use in Product under this Agreement, alone or in combination with
any other products or component, directly infringes any patent, copyright, trade secret, trademark
or mask work right of any third party, and will pay all damages, cost and attorneys’ fees finally
awarded or reached by settlement against SERCOMM. BUYER’s obligation to defend and indemnify
SERCOMM under this Article 14.1 shall be conditioned upon: (i) SERCOMM promptly notifying BUYER of
such suit or proceeding, (ii) BUYER being given the opportunity to control the defense or
settlement of the suit or proceeding, and (iii) SERCOMM providing necessary information (at BUYER’s
expense). BUYER will have no responsibility for the settlement of any claim, suit or proceeding
made by SERCOMM without BUYER’s prior written approval.
14.2 SERCOMM shall indemnify BUYER and defend or settle any suit or proceeding brought against
BUYER based upon a claim that the manufacturing process of manufacturing any Product furnished
hereunder directly infringes any patent, copyright, trade secret, trademark or mask work right of
any third party, and will pay all damages, costs and attorneys’ fees finally awarded or reached by
settlement against BUYER. SERCOMM’s obligation to defend and indemnify BUYER under this Article
14.2 shall be conditioned upon: (i) BUYER promptly notifying SERCOMM of such suit or proceeding,
(ii) SERCOMM being given the opportunity to control the defense or settlement of the suit or
proceeding, and (iii) BUYER providing necessary information (at SERCOMM’s expense). SERCOMM will
have no responsibility for the settlement of any claim, suit or proceeding made by BUYER without
SERCOMM’s prior written approval. This indemnification in this Article 14.2 shall not apply to the
claim or proceeding to the extent it is based on or attributable to (i) BUYER’s design, drawings
and specifications to which BUYER agrees; (ii) Products bundled with or in combination with any
non-SERCOMM software, hardware, devices or any object not furnished by SERCOMM, and the claim or
proceeding would have been avoided if Products has not been so bundled with or in combination with;
(iii) modification of the Products made by BUYER, where such infringement claim would not have
occurred but for such modification made by BUYER, or (iv) derivative work or modification of the
Product made by SERCOMM based on BUYER’S instructions, designs or specifications.
14.3 The foregoing provides the entire set of obligations, liabilities and remedies between
SERCOMM and BUYER arising from any intellectual property claim by a third party.
15. Limitation of Liability.
LIABILITY OF EITHER PARTY UNDER THIS AGREEMENT SHALL BE LIMITED TO DIRECT, ACTUAL DAMAGES AS
DESCRIBED BELOW. IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY FOR ANY INDIRECT OR SPECULATIVE
DAMAGES (INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL, INCIDENTAL AND SPECIAL DAMAGES) INCLUDING,
BUT NOT LIMITED TO, LOSS OF USE, BUSINESS INTERRUPTIONS AND LOSS OF PROFITS OR REVENUE,
IRRESPECTIVE OF WHETHER THE PARTY THAT IS OTHERWISE LIABLE HAS ADVANCE NOTICE OF THE POSSIBILITY OF ANY SUCH DAMAGES.
NOTWITHSTANDING THE FOREGOING, SERCOMM’S TOTAL LIABILITY UNDER ANY OR ALL PROVISIONS OF THIS
AGREEMENT FOR ALL CAUSES OF ACTIONS ON A CUMULATIVE BASIS SHALL NOT EXCEED A SUM EQUAL TO THE
PAYMENTS ACTUALLY MADE TO SERCOMM UNDER THIS AGREEMENT DURING THE IMMEDIATELY PRECEDING TWELVE (12)
MONTH PERIOD FOR THE PRODUCT AFFECTED BY THE PARTICULAR CLAIM, ACTION OR JUDGMENT.
13
16. Miscellaneous.
16.1 Governing Law and Jurisdiction. This Agreement shall be governed exclusively by
the laws of the State of California, excluding its choice of law provisions, and in no event shall
this Agreement be governed by the United Nations Conventions on Contracts for the International
Sale of Goods.
16.2 Relationship of Parties. The parties are independent contractors and are not
employees, agents or legal representatives of the other party. Neither party is authorized to bind
the other party, act as an agent for the other party or otherwise act in the name of or on behalf
of the other party.
16.3 Nonassignabilily: Binding on Successors. Neither party may assign or otherwise
transfer this Agreement without the written consent of the other party, except that SERCOMM may,
without having to obtain the prior written consent of Buyer, assign or otherwise transfer (a) this
Agreement to (i) an affiliate or (ii) a third party which acquires all or substantially all of
SERCOMM’s assets, whether via merger or otherwise, and (b) the right to receive payments under this
Agreement. This Agreement shall be binding upon the executors, heirs, administrators, assigns and
the like of the parties.
16.4 Severability. In the event any provision of this Agreement is held to
be invalid or unenforceable, the valid or enforceable portion thereof and the remaining provisions
of this Agreement will remain in full force and effect.
16.5 Force Majeure. Neither party shall be liable to the other for its
failure to perform any of its obligations under this Agreement, except for payment obligations,
during any period in which such performance is delayed because rendered impracticable or impossible
due to the circumstances beyond its reasonable control, including without limitation earthquakes,
governmental regulation, worldwide shortage of raw materials used to manufacture the Products,
fire, flood, labor difficulties, epidemic, strike, blackout, civil disorder, and acts of God,
provided that the party experiencing the delay promptly notifies the other party of the delay.
16.6 No Third Party Beneficiaries. The parties hereto acknowledge that this
Agreement is not intended to and shall not benefit any third party.
16.7. Rights and Remedies Cumulative. Except as otherwise provided in this
Agreement, the rights and remedies provided in this Agreement shall be cumulative and not exclusive
of any other rights and remedies provided by law or otherwise.
16.8 Waiver. Any waiver (express or implied) by either party of any breach of this
Agreement shall not constitute a waiver of any other or subsequent breach.
14
16.9 Entire Agreement; Amendment. This Agreement and the Appendices attached hereto
constitute the entire, final, complete and exclusive agreement between the parties and supersede
all previous agreements or representations, written or oral, with respect to the subject matter of
this Agreement. This Agreement may not be modified or amended except in a writing signed by a duly
authorized representative of each party.
16.10 Counterparts. This Agreement may be executed in counterparts with the
same force and effect as if each of the signatories had executed the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the Effective Date.
| ARUBA NETWORKS, INC. | SERCOMM CORPORATION | |||||||
By:
|
/s/ Xxxxx Xxxx
|
By: | /s/ Xxx Xxx
|
|||||
| Print Name: Xxxxx Xxxx | Print Name: Xxx Xxx | |||||||
| Title: General Counsel | Title: Executive VP | |||||||
| Date: 3/17/09 | Date: 3/10/2009 | |||||||
15
APPENDIX A
[***]
*** Two (2) consecutive pages from this Appendix A have been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been requested with respect to
the omitted portions.
00
XXXXXXXX X — CUSTOMIZATION SCOPE OF WORK
| Task Name | Description | Deliverable / Acceptance | Responsibility | |||
Product Definition |
||||||
Marketing Requirements
|
Market requirements clearly described with technical features, competitive positioning and timing | PRD approved and reviewed with ARUN engineering | ARUN PLM | |||
| Specification | ||||||
Hardware functional specification
|
Hardware functional requirements | Moscato hardware FDD approved and reviewed with engineering teams (SERCOMM and ARUN) | ARUN Hardware Engineering | |||
| Hardware Development | ||||||
Schematic capture
|
Hardware Schematic | Schematic files (native format and .pdf) provided to ARUN. Schematic reviewed and approved with engineering teams (SERCOMM and ARUN) |
SERCOMM | |||
Industrial design
|
3D industrial design for the following • Wireless enclosure
• Wired enclosure
• Wired desk stand
• Wall mount bracket
|
Design files (ProE, or any standard interchange format) provided to SERCOMM. | ARUN | |||
Mechanical design
|
Mechanical design | Mechanical Design files (ProE, or any standard interchange format) provided to ARUN. Mechanical design reviewed and approved with engineering teams (SERCOMM and ARUN) | SERCOMM | |||
Mechanical Prototype
|
Mechanical Prototype in the form of SLA, machined, or other | Physical samples provided to ARUN. Prototype reviewed and approved with engineering teams (SERCOMM and ARUN) |
SERCOMM | |||
Mechanical First article
|
Mechanical first articles (un-textured) | Physical samples provided to ARUN. First articles reviewed and approved with engineering teams (SERCOMM and ARUN) |
SERCOMM | |||
Mechanical First article (textured)
|
Mechanical first articles (textured) | Physical samples provided to ARUN. First articles reviewed and approved with engineering teams (SERCOMM and ARUN) |
SERCOMM | |||
PCB Layout
|
Hardware PCB Layout — physical layout of the base PCB and mini-PCI radio boards. | Layout files (native format, Xxxxxxx, .tgz) provided to ARUN. Layout reviewed and approved with engineering teams (SERCOMM and ARUN) |
SERCOMM | |||
Prototype allocations
|
Forecast of unit quantities at various program stages | Allocations spreadsheet | ARUN | |||
17
| Task Name | Description | Deliverable / Acceptance | Responsibility | |||
HW Acceptance criteria
|
High-level Acceptance criteria of entry to Aruba Software development team | All hardware sub-systems validated, serial interface, CPU subsystem, PCI interface, USB port, switch ports, and MB82 radio subsystem. CPU booting linux | SERCOMM | |||
HW System Reliability and Availability
|
System reliability and availability calculations to Telcordia SR-332, Issue 2, Parts Stress Method, 50% stress, 25C and 40C ambient | System Reliability and Availability report | SERCOMM | |||
HW delivery
|
Delivery of HW platforms for the target SW | HW prototype | SERCOMM | |||
Hardware DVT
|
Hardware DVT (HALT, ETSOC...) | DVT reports provided to ARUN. Results reviewed and approved with engineering teams (SERCOMM and ARUN) | SERCOMM | |||
| Software Development | ||||||
Software image for regulatory approval
|
Software image for regulatory approval | Binary firmware image provided to SERCOMM | ARUN | |||
AP boot code (apboot)
|
apboot image for loading on the AP | Binary firmware image provided to SERCOMM | ARUN | |||
Software image
|
Software image for system validation | Binary firmware image provided to SERCOMM | ARUN | |||
| Manufacturing Process & Validation | ||||||
Mfg capability review
|
Audit of manufacturing facility for capability, process control, quality | Aruba approval of facility capability | ARUN | |||
Review preliminary Mfg production plan
|
Review initial product manufacturing process plans before implementation | Aruba approval of preliminary plan | ARUN | |||
Prototype BOM/AVL review
|
Mfg to review proto parts list and evaluate suppliers to ensure reliable component and fabricated part selection | Aruba approval of selected suppliers | ARUN | |||
Review prototype mfg process results
|
Audit prototype production results; determine capability of processes and follow-up on improvement plans | Aruba approval for initial results and improvement plans | ARUN | |||
Software diagnostics
|
Manufacturing testing | System validation | SERCOMM | |||
Review final mfg process plan
|
Review final production process documents | Aruba approval | ARUN | |||
Pilot build review
|
Audit first production builds for yields, processes issues and conduct out-of-box audit | Aruba approval to go into full production | ARUN | |||
Approve final mfg plan
|
All first articles and production processes audits complete, any improvement plans complete | Aruba approval | ARUN | |||
18
| Task Name | Description | Deliverable / Acceptance | Responsibility | |||
| Regulatory Approval | ||||||
Basic regulatory approvals
|
USA FCC Part 15 cTUVus Listing or cULus Listing EU EN 300 328 V1.7.1 EN 301 893 V1.4.1 EN 301 489-1 V1.6.1 EN 301 489-17 V1.2.1 EN 60950-1:2001+A11 CB Scheme Reporting of EN 60950-1:2001+A11 RoHS 2002/95/EC WEEE 2002/96/EC |
Regulatory compliance reports provided to ARUN | SERCOMM | |||
Remaining regulatory approvals
|
Additional regulatory approvals for all remaining countries | Regulatory compliance reports | ARUN | |||
| Product & Process Validation | ||||||
Quality Objectives
|
Defines Quality Metrics to be reached for each test phase | Quality Objective Document | ARUN | |||
Product Test Planning
|
Develop Test plan for Product Test | Product Test Plan | ARUN | |||
Product Testing
|
Execute Product Test Plan. Create Problem Reports and validate fixes provided by Engineering | Product Test Report. Product Quality Objectives attained | ARUN | |||
System Test Planning
|
Develop Test plan for System Test | System Test Plan | ARUN | |||
System Testing
|
Execute System Test Plan. Create Problem Reports and validate fixes provided by Engineering |
System Test Report. Product Quality Objectives attained | ARUN | |||
User Documentation
|
Create Installation Guide documentation | Installation Guide section approved | ARUN | |||
19
APPENDIX C — PRODUCT SPECIFICATIONS
[***]
*** Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.
20
