{"id":42626,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/oem-purchase-and-development-agreement-3com-corp-and-sonic.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"oem-purchase-and-development-agreement-3com-corp-and-sonic","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/oem-purchase-and-development-agreement-3com-corp-and-sonic.html","title":{"rendered":"OEM Purchase and Development Agreement &#8211; 3Com Corp. and Sonic Systems Inc."},"content":{"rendered":"<pre>\n\n                    OEM PURCHASE AND DEVELOPMENT AGREEMENT\n                    --------------------------------------\n\n                           BETWEEN 3Com CORPORATION\n                           ------------------------\n\n                                      and\n                                      ---\n     \n                              SONIC SYSTEMS, INC.\n                              -------------------\n\n\n\nContents\n                                                                                            \nRECITALS........................................................................................2\n\nTERMS AND CONDITIONS............................................................................3\n\n     1     Definitions..........................................................................3\n\n     2     Development of the Products..........................................................3\n\n     3     Purchase of Product; Software License; Support Services..............................4\n\n     4     Order Forecast.......................................................................5\n\n     5     Purchase Orders......................................................................5\n\n     6     Pricing; Taxes.......................................................................7\n\n     7     Delivery Terms.......................................................................7\n\n     8     Invoicing and Payment................................................................8\n\n     9     Quality Acceptance...................................................................8\n\n     10       Compliance with Specifications....................................................9\n\n     11       Regulatory Agency Compliance......................................................9\n\n     12       Compliance with Environmental Laws................................................9\n\n     13       Product Changes...................................................................9\n\n     14       Export Law Compliance; Commodity Classification..................................10\n\n     15       Warranty.........................................................................11\n\n     16       Indemnification; Insurance.......................................................12\n\n     17       Limitation of Liability..........................................................13\n\n     18       Confidentiality..................................................................13\n\n     19       Publicity........................................................................14\n\n     20       Federal Acquisition Regulations..................................................14\n\n     21       Term and Termination.............................................................14\n\n     22       Manufacturing Rights; Escrow.....................................................15\n\n     23       General..........................................................................16\n\n\n \n\n                                                                                            \nExhibit A......................................................................................19\n\n     (1)      Product list-prices; lead time; royalty and repair charges.......................19\n\n     (2)      Non-Binding Forecast.............................................................19\n\n     (3)      Unique Materials Leadtime (see Section 5.4.2)....................................20\n\n     (4)      Sonic's Replenishment Cycle Time (see Section 5.4.2).............................20\n\nExhibit B  PRODUCT SPECIFICATIONS..............................................................21\n---------\nExhibit C  Reserved............................................................................21\n\nExhibit D  SUPPORT SERVICES....................................................................22\n\nExhibit E  Reserved............................................................................28\n\nExhibit F  PRODUCT ACCEPTANCE CRITERIA.........................................................28\n\nExhibit G  THREE-PARTY ESCROW AGREEMENT........................................................31\n\nExhibit H  Development of the Product..........................................................41\n\n\n\n         This OEM Purchase and Development Agreement (\"Agreement\") is entered\ninto effective as of July 1 1999 (\"Effective Date\") between 3Com Europe Ltd.\n(\"3Com\"), a UK company located at Boundary Way, Hemel Hempstead, Herts. HP2 7YU\nUK and Sonic Systems, Inc. (\"Sonic\"), a California corporation located at 5400\nBetsy Ross Drive, Santa Clara, CA 95054.\n\n                                    RECITALS\n\n         WHEREAS, Sonic manufactures and sells or licenses certain hardware and\nsoftware products;\n\n         WHEREAS, 3Com is manufacturer of computer hardware and software\nproducts;\n\n         WHEREAS, 3Com now desires to have the option to purchase, and Sonic\ndesires to grant 3Com the option to purchase, the Products, as defined below,\nfrom Sonic on the terms and subject to the conditions set forth in this\nAgreement.\n\n         NOW, THEREFORE, in consideration of the mutual promises contained\nherein the parties agree as follows:\n\n \n                             TERMS AND CONDITIONS\n\n1.   Definitions\n\n     1.1  \"Non-Binding Forecasts\" means the minimum shipment numbers listed in\nExhibit A(2) and used in conjunction with procedures outlined in Sections 2.4\nand 6.2.\n\n     1.2  \"Products\" means the products set forth in Exhibit A(1) attached\n                                                     ------------\nhereto. Products shall include any updates to or enhancements of the Product as\nwell as any product introduced by Sonic during the term of this Agreement which\nis a new version of or functional replacement for (regardless of price or\nperformance) any Product.\n\n     1.3  \"Specifications\" means specifications for the Products as set forth in\nExhibit B.\n---------\n\n     1.4  \"3Com\" means 3Com Corporation and all its present and future\nsubsidiaries and affiliated companies.\n\n     1.5  \"Unique Component\" means a component which is sold by Sonic\nexclusively to Buyer on behalf of 3Com or is only included in a Product which is\nexclusively sold to Buyer on behalf of 3Com. A Unique Component is one which\nSonic has purchased exclusively for resale to Buyer on behalf of 3Com (whether\nindividually or as part of a Product) and is not purchased by any of Sonic's\nother customers.\n\n     1.6  \"Software Programs\" means firmware embedded in the Products.\n\n     1.7  \"Work In Progress\" means. Product which has started manufacture at\nSonic or Sonic's subcontractor(s) but is not yet shipped to 3Com or held in\nSafety Stock.\n\n     1.8  \"Replenishment Cycle Time\" means the time from arrival of all\nmaterials at Sonic or Sonic's manufacturer, to completion of fully packaged\nproduct on Sonic's shipping dock ready for shipment to 3Com.\n\n     1.9  \"3Com Unique Material\" means the components listed in 3Com document no\n1007-053 which are not used on the Sonic SonicWALL product and are used to build\nthe Product to 3Com specifications.\n\n2.   Development of the Products\n\n     2.1  Develop Products to Specifications. The Products shall be designed and\ndeveloped by Sonic in accordance with the agreed upon Specifications listed in\nand attached hereto as Exhibit B.\n\n     2.2  Ownership of Works Developed for 3Com. The parties agree that subject\nto the payment mentioned in Section 2.1.3, 3Com solely will own the works listed\nin and attached hereto Exhibit H (the \"Works Developed for 3Com\"). The parties\nagree that 3Com solely shall own all intellectual property rights (including,\nwithout limitation, patent, design, and copyright rights) in and to the Works\nDeveloped for 3Com. In this regard, Sonic agrees to assign and does hereby\nexpressly assign to 3Com all right, title and interest world-wide in and to the\nWorks Developed for 3Com, including all copyright, patent, trade secret, mask\nwork and all other intellectual property rights associated therewith. During\nthis Agreement Sonic will assist 3Com in every reasonable way, at 3Com's\nexpense, to secure, perfect, register, maintain, and defend for 3Com's benefit\nall copyrights, patent rights, mask work rights, trade secret rights, and other\nproprietary rights in and to the Works Developed for 3Com. Sonic hereby\nirrevocably agrees not to assert against 3Com or its direct or indirect\ncustomers, assignees or sublicensees, any claim of intellectual property rights\nof Sonic affecting the Works Developed for 3Com. Sonic, to the best of its\nknowledge, represents and warrants that the Works Developed for 3Com do not\ninfringe any intellectual property rights (including, without limitation, any\npatent, copyright and trade secret rights) of any third party. 3Com represents\nand warrants that to the best of the knowledge of the 3Com Legal Department, the\nmechanical specifications which 3Com will provide to Sonic under the terms of\nthis Agreement do not infringe the patent, copyright or trade secret rights of\nany third party.\n\n \n     2.3  Title: No Conflict. Sonic and 3Com represent and warrant that each has\nsufficient right, title and interest to enter into this Agreement and to perform\nits obligations hereunder. Further, Sonic represents and warrants that it has\nnot granted to any third party any rights which conflict or interfere with or\nsupersede the rights granted to 3Com hereunder.\n\n     2.4  Consideration. As full consideration for the development of the Works\nDeveloped for 3Com and the rights transferred and licensed hereunder, 3Com will\npay to Sonic the fees listed in Exhibit H. Sonic shall invoice 3Com for amounts\ndue under Exhibit H, and 3Com shall pay any such invoice within thirty (30) days\nafter receipt of a correct invoice and after 3Com's acceptance of the\nDeliverable(s) covered by the invoice. All payments hereunder shall be in US\nDollars. In return for said consideration, Sonic further agrees to refrain from\nentering into an OEM agreement prior to 30 April 2000 relating to any product\nsimilar in construction and operation to the Product(s) covered by this\nAgreement (i.e., having the same CPU architecture as the current SonicWALL or\nSonicWALL Plus DMZ products or derivatives of these products, including products\nwhich may include a network hub) with the following companies or subsidiaries\nthereof: (i) Cisco Systems Inc; (ii) Intel Corporation; (iii) Nortel Networks\nCorporation; provided further, that Sonic sha!I be relieved of this obligation\nin the event 3Com fails to purchase the quantity of Products on a monthly basis\nthrough the month in which a claim is made under this Section 2.4 found in the\nNon-Binding Forecast in Exhibit A(2) to this Agreement_ In the event that\ndelivery of the OfficeConnect Internet Firewall 25 (3C 16770) is delayed by more\nthan one month from the agreed date (01 November 1999) then the Non-Binding\nForecast numbers will also be reduced to the previous month's number (Sonic will\nonly be relieved of this obligation if December quantities are less than the\nNovember Non-Binding Forecast number, and so on). In no event will this\nobligation be extended beyond 30 April 2000.\n\n3.   Purchase of Products; Software License; Support Services\n\n     3.1  Purchase of Products. Sonic agrees to sell the Products to 3Com and to\naccept purchase orders for the Products from 3Com under the terms and conditions\nof this Agreement. It is expressly understood that notwithstanding the\nprovisions of Section 2.4 above, 3Com has no obligation to purchase any Products\nhereunder. Further, nothing in this Agreement shall prevent 3Com from\nmanufacturing or procuring from other sources like or comparable products.\n\n     3.2  Software License. Sonic hereby grants 3Com, a worldwide, perpetual,\nfully-paid and royalty-free license to use, reproduce, support, demonstrate and\ndistribute directly and indirectly all software, including all subsequent\nupdates or enhancements thereto or replacements therefor delivered as part of or\ntogether with the Products or otherwise provided under this Agreement, with full\nrights to sublicense and have sublicensed such software and the rights granted\nto 3Com hereunder to third parties, including, but not limited to, 3Com's end-\nuser customers, distributors, OEM's, resellers and systems integrator customers\nin connection with the purchase of the Products. In the event that Section 22,\nManufacturing Rights; Escrow, is invoked, Royalties will be paid per Exhibit A\n\n     3.3  Documentation License. Sonic hereby grants 3Com, a worldwide,\nperpetual, fully-paid and royalty-free license to use, reproduce, modify, create\nderivative works based on, support, demonstrate and distribute directly and\nindirectly all documentation, including all subsequent updates or enhancements\nthereto or replacements therefor delivered as part of or together with the\nProducts or otherwise provided under this Agreement, with full rights to\nsublicense and have sublicensed such documentation and the rights granted to\n3Com hereunder to third parties, including, but not limited to, 3Com's end-user\ncustomers, distributors, OEM's, resellers and systems integrator customers in\nconnection with the purchase of the Products. In the event that Section 22,\nManufacturing Rights; Escrow, is invoked, Royalties will be paid per Exhibit A\n\n     3.4  Support Services. Training and support services for the Products shall\nbe provided as set forth in Exhibit D.\n\n     3.5  Trademark Rights. 3Com requests and Sonic agrees to provide certain\nmarkings and identification, which includes the trademark(s) and\/or tradename of\n3Com, on the Products ordered and\n\n \ndelivered to 3Com. Such markings and identification shall be strictly in\naccordance with the requirements of 3Com as set 3Com's Trademark Guidelines, as\nprovided to Sonic and as may be updated from time to time by 3Com. Sonic is not\nauthorized to use the trademark(s) and tradenames of 3Com on any products, other\nthan Products ordered by and delivered to 3Com, or for any other purpose. Sonic\nis hereby granted a limited trademark license with respect to the 3Com\ntrademarks set out in the above-mentioned markings and identification, solely\nfor the above-mentioned use. All other use is prohibited. This license shall\nterminate on the termination of this Agreement. Sonic shall obtain no rights to\nor interest of any kind in any 3Com trademarks or tradenames other than the\nlimited right to use set out above.\n\n4.   Order Forecast\n\n     3Com shall provide Sonic with a nine (9) month forward-looking rolling\nforecast (the \"Order Forecast\") and update such Order Forecast on a monthly\nbasis. Sonic shall use such Order Forecast for internal inaterial planning\nrequirements only. Such Order Forecast does not represent any commitment by 3Com\nto purchase Products. Further, Sonic shall view all Order Forecasts as\nConfidential Information in accordance with Section 18 below.\n\n5.   Purchase Orders\n\n     5.1  Leadtime. Sonic agrees to supply Products to 3Com within the leadtime\nstated in Exhibit A(1). Sonic will notify 3Com immediately upon any changes in\nleadtime.\n\n     5.2  Purchase Orders. Purchases shall be initiated by 3Com's written or\nelectronically dispatched purchase orders referencing the quantity, the Product,\napplicable price, shipping instructions and requested in-house delivery dates.\nAll purchase orders for Products placed by 3Com hereunder shall be governed by\nthe terms and conditions of this Agreement. In the event of a conflict between\nthe provisions of this Agreement and the terms and conditions of 3Com's purchase\norder or Sonic's acknowledgment or other written communications, the provisions\nof this Agreement shall prevail\n\n     5.3  Issuance and Acceptance. Sonic shall notify 3Com of receipt of a\npurchase order by e-mail or facsimile within one (1) business day of receipt.\nSonic shall confirm acceptance or denial (stating the reason (s) for a denial)\nof a purchase order by a writing or facsimile within one (1) business day after\nreceipt, or the purchase order is deemed accepted.\n\n     5.4  Change Orders. 3Com shall transmit change orders to a purchase order\nby e-mail or facsimile. Sonic shall notify 3Com of receipt of a change order by\ne-mail or facsimile within one (1) business day of receipt. Sonic shall confirm\nacceptance or denial (stating reason(s) for a denial) within two (2) business\ndays of receipt, or the change order is deemed accepted.\n\n          5.4.1  Cancellation. 3Com may cancel any purchase order up to thirty\n(30) days prior to original ship date upon written notice to Sonic with\nliability for such cancellation limited to the value of Work in Progress and\nUnique Components only. Rescheduled orders may not be cancelled.\n\n          5.4.2  In the event 3Com: (i) terminates this Agreement; or (ii)\nnotifies Sonic in writing that 3Com will not any longer purchase a particular\nProduct (\"Terminated Product\"), then 3Com shall be liable to Sonic up to a\nmaximum amount equal to the cost of any applicable Unique Components, whether in\nthe form of raw materials or Work In Progress, in Sonic's inventory or on order\nas of the effective date of such termination or notification, less any such\nUnique Components and Work In Progress in Sonic's inventory or on order which\nare in excess of the Order Forecast based on Sonic's Replenishment Cycle Time\nand the Unique ComponenVs Lead Time, set forth in Exhibit A(3).\n\n     5.4.3 Sonic agrees to minimize 3Com's liability hereunder by utilizing the\nOrder Forecast to proactively adjust Sonic's inventory and production schedules\nand to reschedule and\/or cancel future\n\n \ndeliveries of Unique Components on a weekly basis. Prior to 3Com's payment of\nany sums hereunder, Sonic will use its best efforts to cancel any outstanding\norders for Unique Components and return any Unique Components to Sonic's\nsuppliers or sell or otherwise dispose of any Unique Components and otherwise to\nmitigate its costs and losses, for which Korn may be liable. To the extent Sonic\nis unsuccessful, Sonic shall work with 3Com to negotiate termination liability\ndamages based upon Sonic's good faith adherence to this Section 9.4 and Sonic's\npurchase, disposal and handling of Unique Components. In no event will 3Com be\nliable for any purchases of Unique Components by Sonic in excess of applicable\nOrder Forecast based on Sonic's Replenishment Cycle Time and Unique Component\nLead Time\n\n          5.4.4  Rescheduling. 3Com shall be entitled to reschedule delivery of\nProducts at any time up to a maximum of sixty (60) days from original delivery\ndate. Sonic shall accommodate a request to expedite the ship date, if reasonably\nable to do so. Subject to Section 7.6, Sonic may ship before the scheduled\nshipment date, but not to arrive earlier than 3Com's requested delivery date.\n\n6.   Pricing; Taxes\n\n     6.1  Prices. The prices charged by Sonic for the Products shall be those\nset forth as Exhibit A(1), less the applicable discount, if any, stated in said\nexhibit. All prices are F.O.B. origin (Sonic's shipping dock). Prices are\nexclusive of costs of transportation, insurance, taxes, customs, duties,\nlanding, storage and handling fees, and\/or documents or certificates required\nfor exportation or importation.\n\n     6.2  Quarterly Market Price Reviews. Sonic and 3Com agree to meet each 3Com\nfiscal quarter (3Com's fiscal year is June through May) and review prices of\neach Product. Prices may be adjusted up or down to reflect: (i) substantial\nincrease or decrease in volume from the Order Forecast at the previous Quarterly\nMarket Price Review (or at the first review, the Order Forecast issued with\nfirst production orders); (ii) change in market conditions of either components\nor end user sales price of Products;(iii) pass through of cost increases or\nreductions from Sonic to 3Com; and (iv) a decrease in the U.S. price of\nSonicWALL Plus DMZ equal to or greater than fifteen percent ( 15%) which will\nnecessitate good faith negotiations between the Parties regarding the pricing of\nthe \"three-port\" Product which is the subject of this Agreement, so as to help\nenable 3Com to market a competitively priced product. Price Changes resulting\nfrom these reviews will take effect for all deliveries after the start of 3Com's\nnext fiscal quarter (1 June, 1 September, 1 December, 1 February of each year)\n\n     6.3  Reserved\n\n     6.4  Reserved.\n\n     6.5  Taxes and Duties. The prices for the Products are exclusive of all\ntaxes. 3Com shall pay all import duties, customs fees, sales (unless an\nexemption certificate is furnished by 3Com to Sonic), use, and value added taxes\n(except for taxes imposed on Sonic's net income) with respect to any products\nsold or licensed and any services rendered to 3Com in respect of this Agreement.\nSuch taxes, when applicable, will appear as separate items on Sonic's invoice.\nIf applicable law requires 3Com to withhold any taxes levied by the United\nStates on payments to be made pursuant to this Agreement (\"Withholding Tax\"),\n3Com shall be entitled to deduct such Withholding Tax from the payments due\nSonic hereunder. If Sonic is eligible to take advantage of the reduced\nWithholding Tax provided for by an applicable United States tax treaty then in\nforce, Sonic shall furnish 3Com with all appropriate forms, documents and\npaperwork required under the treaty to obtain such reduced Withholding Tax,\nincluding a completed US Internal Revenue Service (IRS) Form 1001, Certificate\nof Reduced Withholding, otherwise 3Com will apply the non-treaty withholding tax\nrate on applicable payments.\n\n     6.6  Most Favored Purchaser. For purposes of this section, \"Comparable\nCustomer\" is defined as a customer that: (i) has signed an OEM Agreement with\nSonic with terms and conditions substantially the same\n\n \nas this agreement; (ii) has purchased less product in the most recently\ncompleted one (I ) year period under its OEM agreement than the Order Forecast\nfor the comparable period, and (iii) is obligated to total minimum purchase\ncommitments no less than seventy five percent (75%) of said Order Forecast.\nSonic will evaluate each of its OEM customers on each anniversary date of the\napplicable OEM agreement to determine if any OEM qualifies as a Comparable\nCustomer. This evaluation will be performed by comparing the most recent year of\nactivity under the agreement (the \"Evaluation Period\") to the comparable year of\nthe 3Com OEM Agreement (i.e. year 1 compared to year 1, year 2 compared to year\n2, etc.). If Sonic has sold products listed in Exhibit A(1) to a Comparable\nCustomer at prices more favorable than those listed in Exhibit A(1), then the\nprices in Exhibit A(l) will be adjusted to these more favorable prices for all\npurchase orders issued by 3Com subsequent to the Evaluation Period. If in a\nsubsequent Evaluation Period it is determined that no OEM qualifies as a\nComparable Customer, then the original pricing in Exhibit A(1) will be\nreinstated.\n\n7.   Delivery Terms\n\n     7.1  F 0. B. Point. All shipments shall be F.O.B. origin (Sonic's shipping\ndock). Title and risk of loss shall pass to 3Com upon Sonic's tender of delivery\nto the common carrier or 3Com's designee.\n\n     7.2  Shipping. All shipments are freight collect. Sonic may ship partial\norders provided Sonic notifies 3Com and 3Com agrees prior to shipment. 3Com's\npurchase order shall specify the carrier or means of transportation or routing,\nand Sonic will comply with 3Com's instructions. If 3Com fails to provide\nshipping instructions, Sonic shall select the best available carrier, on a\ncommercially reasonable basis.\n\n     7.3  Packing Instructions. All Products shall be packaged and prepared for\nshipment in a manner which: (i) follows the requirements set forth in Exhibit B\n                                                                      ---------\nand 3Com's purchase order; (ii) follows good commercial practice; (iii) is\nacceptable to common carriers for shipment; and (iv) is adequate to ensure safe\narrival. Sonic shall mark the outside of each shrink wrapped pallet with the\napplicable 3Com part numbers and any necessary lifting and handling information.\nEach shipment shall be accompanied by a packing slip which will include 3Com's\npart numbers, purchase order number, Sonic's part number and the quantity\nshipped. 7.4 Responsibility for Export Licensing. Subject to all the rules and\nregulations stated in Section 14, Sonic agrees, upon 3Com's request, to deliver\nProducts to 3Com's freight forwarder for export from the country of origin.\nSubject to the terms of this Agreement, 3Com will be responsible for obtaining\nthe appropriate licenses or permits necessary to export Products from the\ncountry of origin. Sonic shall furnish 3Com or 3Com's designee with the\ninformation necessary for 3Com to timely obtain all required export and import\ndocumentation. 7.5 Delivery Schedule. Delivery shall be pursuant to the schedule\nset forth in 3Com's purchase order so long as it is no sooner than the standard\nleadtime contained in this agreement, unless agreed to in writing in advance by\nSonic. Sonic shall immediately notify 3Com in writing of any anticipated delay\nin meeting the delivery schedule, stating the reasons for the delay. If Sonic's\ndelivery fails to meet the committed delivery schedule, then Sonic, upon 3Com's\nrequest, shall expedite the routing at Sonic's expense, however, if Sonic's\ndelivery fails to meet the schedule by in excess of twenty (20) days, then 3Com,\nat its sole option and without penalty or any additional expense, may :(i)\nrequire Sonic to expedite the routing by the fastest available commercial\ncarrier; (ii) reschedule the delivery; or (iii) cancel the delivery in whole or\nin part.\n\n     7.6  Early Delivery. Sonic shall not deliver any Products earlier than\nthree (3) business days prior to the scheduled delivery date, without 3Com's\nwritten consent, and 3Com may return early or excess shipments to Sonic at\nSonic's sole risk and expense.\n\n     7.7  In-Stock Minimum. At 3Com's request, Sonic agrees to carry in \"Safety\nStock\", defined as a minimum of two weeks supply (as set forth in the Order\nForecast) of completed units of each of the Products to accommodate any\nunforeseen or expedited demand on the part of 3Com. In the event 3Com: (i)\nterminates this\n\n \nAgreement for any reason other than non-conformity of Products (as defined in\nSection 9); or (ii) notifies Sonic in writing that 3Com will not any longer\npurchase a particular Product (\"Terminated Product\"). then 3Com shall be liable\nto Sonic for the Safety Stock.\n\n     7.8  Country of Manufacturer Sonic represents and warrants that the\nProducts are manufactured in the USA. Sonic shall promptly advise 3Com at least\nninety (90) days prior to a change in country of manufacture or any addition to\nmanufacturing locations.\n\n     7.9  Commodity Classification. Sonic shall provide 3Com with a copy of the\nCommodity Classification for the Products or, if this is not available, Sonic\nshall provide 3Com with the Export Control Classification Number (\"ECCN\") that\nwas used by Sonic for self-certification. A copy of the Commodity Classification\nis required for any Product containing security or encryption technology. In\naddition, Sonic shall advise 3Com as to General License type pursuant to which\nthe Product may be exported.\n\n8.   Invoicing and Payment\n\n     Subject to acceptance of Products as provided in Section 9, invoices shall\nbe due and payable thirty (30) days after the date of actual receipt of the\nProducts or Sonic's invoice, whichever is later; provided, however, if payment\nis made by 3Com on or prior to ten (10) days after such date, the aggregate\npurchase price for the Products shall be reduced by two percent (2%). Payment\nshall not constitute acceptance of the Products by 3Com. Payments shall be made\nin US Dollars.\n\n9.   Quality Acceptance\n\n     9.1  At 3Com's Facility in Santa Clara. All Products are subject to 3Com's\ninspection and test at 3Com's facility. Within thirty (30) days after receipt of\nProduct(s) at 3Com's facility, 3Com shall inspect the Products(s). Product(s)\nwill be presumed accepted upon shipment unless 3Com rejects in writing any such\nproduct within the same timeframe as a result of any Product delivered hereunder\nfailing to conform to the Specifications set forth in Exhibit B or with 3Com's\n                                                      ---------\ntesting and acceptance criteria set forth in Exhibit F. Any return of such\n                                             ---------\ndefective Product(s) are subject to the Return Material Authorization (\"RMA\")\nprocedures outlined in Exhibit D, section 4.5. Sonic shall have up to five\nbusiness (5) days to deliver to 3Com conforming Products. If Sonic fails to\ndeliver conforming Products within such five-day period, 3Com shall have the\nright, without liability, to either cancel purchase orders for that Product and\nany other Products, the acceptance of which is impractical in 3Com's reasonable\nopinion, as a result of Sonic's failure to meet the Specifications, or require\nexpedited shipping of the conforming Products at Sonic's sole cost.\n\n     9.2  At Sonic's Facility. 3Com shall have the right to perform vendor\nqualifications and\/or on-site source inspections at Sonic's manufacturing\nfacilities and Sonic shall reasonably cooperate with 3Com in that regard. If an\ninspection or test is made on Sonic's premises, Sonic shall provide 3Com's\ninspectors with reasonable facilities and assistance at no additional charge.\n\n     9.3  ISO 9002 Certified Supplier. Sonic represents that any sub-contractors\nused by Sonic in the manufacture of Products presently have ISO 9002\ncertification. Should Sonic's sub contractors lose the ISO 9002 certification,\nSonic will notify 3Com immediately. Sonic's sub contractors will then have sixty\n(60) days to be recertified.\n\n     9.4  Epidemic Failure. \"Epidemic Failure\" shall mean those substantial\ndeviations from the Specifications which seriously impair the use of Products\nexisting at the time of delivery but which are not reasonably discernible at\nthat time and which are evidenced by an identical, repetitive defect due to the\nsame cause and occurring in the same series of the Products. In the case of an\nEpidemic Failure, Sonic shall, within five (5) business days, propose an action\nplan to fix the failure of any affected Product(s) and to implement this action\nplan immediately upon 3Com's acceptance thereof. If the action plan is not\nacceptable to 3Com, 3Com\n\n \ncan require Sonic to repair or replace, at Sonic's option, the affected\nProducts. The repair or replacement shall be done at mutually agreed-upon\nlocation(s);.provided, however, that costs of repair or replacement together\nwith the shipping, transportation and other costs of gathering and\nredistributing the Products shall be borne by Sonic. In addition to bearing the\ncosts associated therewith, if requested by 3Com. Sonic shall support and\nprovide at Sonic's expense a sufficient number of Products to permit the field\nexchange or \"hot swap\" of Product(s) at customer sites. The parties agree to\nmake all reasonable efforts to complete the repair or replacement of all of the\naffected Products within twenty (20) business days after written notice of\nEpidemic Failure by 3Com to Sonic. Sonic also agrees that 3Com will be supported\nwith accelerated shipments of replacement Product to cover to 3Com's supply\nrequirements.\n\n10.  Compliance with Specifications\n\n     All Products delivered hereunder shall fully comply with: (i) the Product\nSpecifications as agreed to in Exhibit B; (ii) the End User documentation; and\n                               ---------\n(iii) all applicable United States and foreign laws, rules and regulations.\n\n11.  Regulatory Agency Compliance\n\n     All Products delivered hereunder shall fully comply with the regulatory\nagency requirements listed in Exhibit B. Product Specifications. Sonic will\n                              ----------------------------------\nobtain all required agency certifications and approvals for the Products in\n3Com's name. Sonic will further ensure that the Product remains compliant with\nthose regulatory agency requirements. 3Com agrees to work with Sonic in\nobtaining these certifications and approvals, and will supply 3Com Model numbers\nto Sonic whenever appropriate. Prior to shipment of production units, Sonic will\nsubmit to 3Com sufficient proof of the certifications and approvals.\n\n12.      Compliance with Environmental Laws\n\n         Sonic represents and warrants to 3Com that upon and after the Effective\nDate of this Agreement, Sonic will not provide any Product to 3Com which has\ncome into physical contact with: (i) a Class I substance, as defined in Section\n611 of the Federal Clean Air Act (the \"Act\"), during any portion of the\nmanufacturing process; or (ii) a Class 11 substance, as defined in the Act and\nTitle 40, Code of Federal Regulations, Section 82 (the \"Code\"), during any\nportion of the manufacturing process, where there has been a determination by\nthe U.S. Environmental Protection Agency that there is a substitute product or\nmanufacturing process for such Product which does not rely on the use of such\nClass II substance, that reduces overall risk to human health and the\nenvironment, and that is currently or potentially available, in accordance with\nthe Code.\n\n     Sonic further represents and warrants that 3Com shall not be subjected to\nany warning or labeling requirements regarding a Class I substance or a Class II\nsubstance pursuant to the Act or any regulation promulgated under the Act as a\nresult of any Product provided by Sonic to 3Com under this Agreement.\n\n     Without limitation to the foregoing, Sonic represents and warrants that in\nall respects, the manufacture and sale of the Products comply and will\nthroughout the term of this Agreement comply with all applicable environmental\nlaws, regulations and other regulatory requirements.\n\n     If Sonic discovers a breach of any of the representations and warranties in\nthis Section 12. it shall immediately notify 3Com of such breach in writing,\nexplaining the circumstances constituting the breach and identifying the\nProduct(s) involved. Further, Sonic shall defend, indemnify and hold harmless\n3Com and its officers, directors, employees, agents, representatives, successors\nand assigns from any liabilities, losses, demands, claims or judgments arising\nfrom the breach of any of Sonic's representations\n\n13.      Product Changes\n\n \n     13.1 Engineering Change. In the event that 3Com finds or becomes aware of a\nsituation which in its opinion necessitates or would benefit from an engineering\nchange in any of the Products, 3Com shall suggest such proposed engineering\nchange to Sonic and Sonic and 3Com agree to work with each other in good faith\nto determine whether such change will be made and if so will work with each\nother on the implementation of such change. Sonic agrees to work with 3Com in\ngood faith to upgrade or alter the Product to changing market requirements. If\napplicable, any price increase associated with engineering changes will be\nnegotiated in good faith between the Parties.\n\n     13.2 Engineering Change Orders. Should Sonic change, improve, or add any\nenhancements or updates to the Products or any related products at any time\n(Engineering Change Order Or \"ECO\"), Sonic shall provide at least ninety (90)\ndays' prior written notice to 3Com of any such ECO that affects the form, fit or\nfunction of any Product or related product or any changes to Sonic's part number\nfor the Product prior to its implementation. The notice period may be reduced if\nthe ECO improves safety or reliability. 3Com shall respond to the requested ECO\nwithin forty-five (45) days or the ECO will be deemed accepted. For an emergency\nECO to the Product(s)which are the result of major problems, Sonic shall provide\nfifteen (15) days' prior written notice to 3Com of any such ECO and 3Com shall\nrespond to the requested ECO within seven (7) days or the ECO will be deemed\naccepted.\n\n     13.3 Rejection of Engineering Change Orders. Upon rejection of any proposed\nECO, 3Com shall be entitled to: (i) terminate in whole or in part, without cost\nor penalty, any affected Product remaining undelivered under accepted Releases\nor require delivery by Sonic of some or all of such unchanged Product; and (ii)\nplace a last-time purchase for the unchanged Product for delivery in amounts\nrequested by 3Com over a six (6) month period following such implementation.\n\n     13.4 Unauthorized Engineering Change Orders. If an ECO is implemented\nwithout the written approval of 3Com, Sonic shall be liable for repair and\/or\nrework of all Product(s) affected, including to, but not limited to, product in\ntransit, Product in finished goods inventory, and any Product(s) located with a\nreseller or at an end user location.\n\n     13.5 New Features and Functions. New features and functions developed for\nSonic products comparable to the Cerberus products will be made available to\n3Com. The parties agree to negotiate in good faith the price of these features\nand functions.\n\n14.  Export Law Compliance; Commodity Classification\n\n     14.1 Neither party will export\/reexport, directly or indirectly, any\nProduct(s) or technical data acquired under this Agreement or the \"direct\nproduct\" of software programs or such technical data to any country for which\nthe United States Government or any agency thereof, at the time of export,\nrequires an export license or other governmental approval, without first\nobtaining such license or approval. The term \"direct product\" as used herein\nmeans the immediate product (including processes and services) produced directly\nby the use of the technical data or software programs. Both parties will\ncooperate, to effect compliance with all applicable import and\/or export\nregulations. In addition, the parties agree to comply with all applicable local\ncountry import and\/or export laws or regulations in the country(ies) of\nprocurement, production and\/or end destination of the Product(s). Both parties\nunderstand that the foregoing obligations are legal requirements and agree that\nthey shall survive any term or termination of this Agreement.\n\n     14.2 Sonic shall provide 3Com with a copy of the U.S. Department of\nCommerce, Bureau of Export Administration, Commerce Control List classification\n(ECCN, Export Control Classification Number) for all products, software and\ntechnical data contemplated under this Agreement with 3Com. If this confirmation\nof classification was not obtained for the Products, or, if this is not\navailable, Sonic shall provide\n\n \n3Com with the ECCN self certified by a knowledge technical\/regulatory resource\nwith sufficient supporting technical parameters for 3Com to confirm the\nclassification. A copy of the Commerce issued Commodity Classification is\nrequired for any Product containing a security or encryption technology. In\naddition, Sonic shall advise 3Com as to qualifying criteria for the Product(s)\nfor any license exception or \"mass market\" qualification under which the\nProduct(s) may be exported. Sonic shall provide 3Com with the Harmonized Tariff\nSchedule Classification for the Product (s) and a Certificate of Manufacture\ncertifying to the country of origin of the Product(s) subject to this Agreement.\n\n15.  Warranty\n\n     15.1   Hardware Products.\n\n            15.1.1 Hardware Warranty. Sonic warrants that all hardware Products\n(including associated firmware) sold by Sonic to 3Com under the terms of this\nAgreement will be free from defects in workmanship and materials and conform to\nthe Specifications under normal use and service for a period of three (3) years\nafter delivery to 3Com. If it appears that any Product, or part thereof,\ncontains a defect in materials or workmanship, or otherwise fails to conform to\nthe Specifications, during the warranty period, Sonic shall at its expense\ncorrect any such defect by repairing such defective Product or part or, at\n3Com's option, by delivering to 3Com an equivalent Product or part replacing\nsuch defective Product or part. In the event a Product completely fails to\nfunction within the first forty-eight (48) hours of installation (dead-on-\narrival or DOA), Sonic agrees to replace the failed Product with a new Product\nand will ship replacement within five (5) days of notification. Sonic shall\nwaive any expedite charges to 3Com in order to effect earliest reasonable\nreplacement of such defective Product(s).\n\n            15.1.2 Return of Products. 3Com will notify Sonic of nonconforming\nProduct(s). Such notification shall include serial numbers and reason for\nnonconformance. Nonconforming Products will be repaired as specified in Exhibit\nD, section 3. Sonic will be responsible for repair and transportation charges\nfor all Products returned to 3Com and 3Com shall be responsible for return of\nProducts to Sonic.\n\n     15.2   Software Programs\n\n            15.2.1 Software Warranty. Sonic warrants that the software programs\nlicensed hereunder will perform in substantial conformance to the user\ndocumentation and other related documentation, including without limitation the\nSpecifications and other related engineering documentation program\nspecifications therefor. The warranty period applicable to software programs\nshall be as specified in Exhibit D, but in no event shall the warranty period be\nless than ninety (90) calendar days after delivery to an end user.\n\n            15.2.2 Reserved\n\n     15.3   Year 2000 Warranty. Sonic represents and warrants that the Products\nprovided under this Agreement: (i) will record, store, process and display and\nreceive calendar dates failing on or after January 1. 2000, in the same manner,\nand with the same functionality as such software records, stores, processes,\ndisplays and receives calendar dates failing on or before December 31, 1999;\n(ii) shall include without limitation date data century recognition,\ncalculations that accommodate same century and multi-century formulas and date\nvalues, and date data interface values that reflect the century; and (iii) be\ncapable of correctly processing, providing and\/or receiving data and date\nrelated data within and between the twentieth and twenty-first centuries;\n\n     15.4   Warranties Exclusive. THE FOREGOING WARRANTIES, TERMS OR CONDITIONS\nARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, TERMS OR CONDITIONS.\nEXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR\n\n \nOTHERWISE, INCLUDING WARRANTIES, TERMS OR CONDITIONS OF MERCHANTABILITY AND\nFITNESS FOR A PARTICULAR PURPOSE.\n\n     15.5 Warranty Exclusions. SONIC SHALL NOT BE LIABLE UNDER THIS WARRANTY IF\nITS TESTING AND EXAMINATION DISCLOSES THAT THE ALLEGED DEFECT IN THE PRODUCT\nDOES NOT EXIST OR WAS CAUSED BY 3COM OR ITS END USER'S MISUSE, NEGLECT. IMPROPER\nINSTALLATION OR TESTING, UNAUTHORIZED ATTEMPTS TO REPAIR, OR BY ACCIDENT, FIRE.\nLIGHTNING OR OTHER HAZARD.\n\n16.  Indemnification; Insurance\n\n     16.1 Patent, Copyright, Trademark Indemnification\n\n          16.1.1  Indemnity.  At its expense, Sonic shall defend, indemnify, and\nhold harmless 3Com and its officers, employees, agents and direct or indirect\ncustomers, from and against any claims, suits, losses. liabilities, damages,\ncourt judgements and\/or awards (notwithstanding Section 17) and the reasonably\nrelated costs and expenses (including reasonable attorney's fees incurred by\n3Com or for which 3Com is judged liable), incurred because of actual or alleged\ninfringement by a Product supplied hereunder of any patent, copyright, trade\nsecret, trademark, mask work right or other proprietary right(s) of a third\nparty. Upon its receipt of notice of such claim, suit or action, 3Com shall\npromptly tender said defense to Sonic, and thereafter, upon Sonic's request,\n3Com shall render reasonable assistance at Sonic's expense to Sonic for defense\nof same. Sonic shall undertake said defense with counsel reasonably experienced\nin such matters; at its option, 3Com may obtain separate counsel at its expense\nin such proceedings. Notwithstanding the foregoing, Sonic shall have no\nobligation(s) described above in this section 16. 1.1 with respect to any claim\nof infringement if- (a) 3Com or any end-user has modified the Product(s)\noriginally delivered by Sonic to 3Com or if said Product has been combined,\noperated, or used contrary to its specifications or with other than its\nrecommended equipment, and (b) no such infringement would have occurred absent\nsuch combination, operation, or use.\n\n          16.1.2  Additional Obligations. If the use of any Product by 3Com or\nits customers shall actually, or threatened to, be enjoined, or if Sonic so\ndecides, then at its option and expense, Sonic may: (i) substitute a fully\nequivalent non-infringing replacement unit for the Product; (ii) modify the\ninfringing Product so that it no longer infringes but remains functionally\nequivalent; (iii) obtain for 3Com or its customers the right to continue use of\nsuch Product; or (iv) if none of the foregoing choices is selected, then Sonic\nmay refund to 3Com the purchase price previously paid for such infringing\nProduct units in exchange for return by 3Com of all such previously delivered\nunits.\n\n          16.1.3  Exclusions. Sonic's indemnification obligations shall not\napply to infringement arising from changes made to the Product(s) by 3Com; in\nsuch case 3Com shall defend, indemnify, and hold harmless Sonic and Sonic's\nofficers, employees, and agents from and against any claims, suits, losses,\nliabilities, damages, court judgements and\/or awards (notwithstanding Section\n17) and the reasonably related costs and expenses (including reasonable\nattorney's fees incurred by Sonic or for which Sonic is judged liable), incurred\nbecause of actual or alleged infringement by a Product so changed by 3Com, all\non the same terms and conditions as set forth above under 16.1.1 with Sonic's\nand 3Com's respective rights and obligations correspondingly reversed.\n\n     16.2 Sonic's Indemnity.\n\n          16.2.1  Sonic shall defend, indemnify, and hold harmless 3Com from and\nagainst any and all third party claims, suits, and\/or causes of action for\nlosses, liabilities or damages (including reasonable attorneys fees incurred if\nSonic shall not assume the defense of same) suffered by 3Com arising out of\nSonic's: (i) breach of warranty as to Product specifications or infringement of\nproprietary rights; (ii) any actual or alleged Product design defect; or (iii)\nor any intentional or negligent act of Sonic's officers, employees,\nrepresentatives or agents in discharge of Sonic's duties under this Agreement.\n3Com shall promptly tender\n\n \ndefense of such claim upon receipt thereof to Sonic. provided, however, that if\nthe specifications were furnished by 3Com and such specifications result in such\nlosses, liabilities or damages. then Sonic shall have no such indemnification\nobligations hereunder, and in such case, if Sonic shall suffer a third party\nclaim, suit or cause of action which results in a loss, liability or damage,\nthen 3Com shall indemnify Sonic on the aforementioned terms.\n\n          16.2.2 Insurance. Sonic shall carry and maintain, under commercially\nreasonable terms. liability insurance coverage to satisfactorily cover its\nobligations under this Agreement. Upon 3Com's request. Sonic shall provide 3Com\nwith a Certificate of Insurance evidencing such coverage.\n\n17.  Limitation of Liability\n\n     IN NO EVENT, WHETHER BASED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE) SHALL\nEITHER PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL. INDIRECT OR SPECIAL\nDAMAGES OF ANY KIND OR FOR LOSS OF PROFITS OR REVENUE OR LOSS OF BUSINESS\nARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH THEREOF, WHETHER OR\nNOT THE PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. ANY DAMAGES OF\nEITHER PARTY TO THE OTHER ARE LIMITED TO THE VALUE OF THE PRODUCTS PURCHASED OR\nDURING THE FIRST YEAR OF THE TERM OF THIS AGREEMENT TO A MAXIMUM OF THREE\nMILLION DOLLARS ($3,000,000.), WITH THE EXCEPTION OF DAMAGES ARISING FROM: (i) A\nBREACH OF SECTION 12, RELATING TO ENVIRONMENTAL LAWS; (ii) A BREACH OF SECTION\n14, RELATING TO EXPORT LAW VIOLATIONS; (iii) A BREACH OF SECTION 18, RELATING TO\nCONFIDENTIALITY; AND (iv) DEATH OR PERSONAL INJURY CAUSED BY NEGLIGENCE.\n\n18.  Confidentiality\n\n     18.1 Confidential Information. Information that is transmitted by one party\nto the other in connection with the performance or implementation of this\nAgreement and, if in written form, is marked \"confidential\" or with a similar\nlegend by the disclosing party before being furnished to the other, or if\ndisclosed orally or visually is identified as such prior to disclosure and\nsummarized, in writing, by the disclosing party to the receiving party within\nthirty (30) days shall be deemed to be confidential information of the\ndisclosing party. Each party agrees that it shall use the same degree of care\nand means that it utilizes to protect its own information of a similar nature,\nbut in any event not less than reasonable care and means, to prevent the\nunauthorized use or the disclosure of such confidential information to third\nparties. The confidential information may be disclosed only to employees or\ncontractors of a recipient with a \"need to know\" who are instructed and agree\nnot to disclose the confidential information and not to use the confidential\ninformation for any purpose, except as set forth herein. Recipient shall have\nappropriate written agreements with any such employees or contractors sufficient\nto allow the recipient to comply with the provisions of this Agreement. Each of\nthe parties further agrees to make no use of such confidential information\nexcept as expressly permitted by this Agreement. The obligations of\nconfidentiality and restricted use set forth in this Section 18.1 shall survive\nthe expiration or any earlier termination of this Agreement for a period of\nthree (3) years.\n\n     18.2 Exceptions. The confidential information of a party shall not include\nand the foregoing obligation shall not apply to data or information which: (i)\nwas in the public domain at the time it was disclosed or falls within the public\ndomain, except through the fault of the receiving party, (ii) was known to the\nreceiving party at the time of disclosure without an obligation of\nconfidentiality; (iii) was disclosed after written approval of the disclosing\nparty; (iv) becomes known to the receiving party from a source other than the\ndisclosing party without breach of this Agreement by the receiving party; (v) is\nfurnished to a third party by the disclosing party without an obligation of\nconfidentiality; or (vi) was independently developed by the receiving party\nwithout the benefit of confidential information received from the disclosing\nparty. Nothing in this\n\n \nAgreement shall prevent the receiving party from disclosing confidential\ninformation to the extent the receiving party is legally compelled to do so by\nany governmental investigative or judicial agency pursuant to proceedings over\nwhich such agency has jurisdiction; provided, however, that prior to any such\ndisclosure, the receiving party shall: (a) assert the confidential nature of the\nconfidential information to the agency; (b) immediately notify the disclosing\nparty in writing of the agency's order or request to disclose; and (c) cooperate\nfully with the disclosing party in protecting against any such disclosure and\/or\nobtaining a protective order narrowing the scope of the compelled disclosure and\nprotecting its confidentiality.\n\n19.  Publicity\n\n     Sonic shall not disclose, advertise, or publish the existence or the terms\nor conditions of this Agreement, financial or otherwise, without the prior\nwritten consent of 3Com, except as required under the rules and regulations of\nthe Securities Exchange Commission with connection to any filings made by Sonic\nat it's discretion 3Com and Sonic agree that at some point before first customer\nship of the Products, one press release will be issued announcing the\nrelationship between the two companies. Such press release must be approved by\nboth parties and acceptance will not be unreasonably withheld.\n\n20.  Federal Acquisition Regulations\n\n     In furnishing the Products hereunder, Sonic agrees to comply with all\napplicable Federal Acquisition Regulations (FARs) and related laws, rules,\nregulations and executive orders in connection with its activities under this\nAgreement, including, without limitation, the following FAR clauses: \n52.222-26- Equal Opportunity, 52.222-35-Affirmative Action for Special Disabled\nand Vietnam Era Veterans and 52.222-36-Affirmative Action for Handicapped\nWorkers. If Sonic has no place of business within the United States, the FAR\nclauses will not be applicable to Sonic.\n\n21.  Term and Termination\n\n     21.1 Term.  This Agreement shall commence on the Effective Date and shall\ncontinue for three (3) years thereafter, unless otherwise specified herein or\nunless terminated sooner under the provisions set forth herein. Thereafter, this\nAgreement shall automatically be renewed for successive one (1) year terms,\nunless one party requests in writing at least one hundred eighty (180) days\nprior to the expiration of the then current term, that this Agreement not be so\nrenewed. Notwithstanding the foregoing, upon the occurrence of a Producer\nDefault under the Escrow Agreement (as described in Section 22 below), the\nrights and obligations of Sections 3.2, 3.3 and 22 shall continue commencing on\nthe date that 3Com notifies the Escrow Agent of the Producer Default (in\naccordance with Section 4.1 (b)(i) of the Escrow Agreement) and terminating at\nthe end of the period that includes the unexpired term of this Agreement but for\nand as measured from the Producer Default (if any) plus one (1) year.\n\n     21.2 Termination for Cause. With the exception of the continuing\nobligations, as set forth in Section 21.3, herein, either party shall have the\nright to terminate this Agreement for cause as a result of:\n\n          21.2.1 The failure of the other party to perform any material term or\ncondition of this Agreement and to remedy such failure within thirty (30) days\nafter written notice of such failure given by the non-defaulting party; of:\n\n          21.2.2 The filing by or against the other party of a petition for\nreorganization or liquidation under the U.S. Bankruptcy Code or corresponding\nlaws or procedures of any applicable jurisdiction; or\n\n          21.2.3 The filing by or against the other party of any other\nproceeding concerning bankruptcy, insolvency, dissolution, cessation of\noperations, reorganization of indebtedness, or the like by the\n\n \nother party. If such proceeding is involuntary and is contested in good faith,\nthis Agreement shall terminate only after the passage of one hundred twenty\n(120) days without the dismissal of such proceedings; or\n\n          21.2.4 The voluntary or involuntary execution upon; the assignment or\nconveyance to a liquidating agent, trustee, mortgages or assignee of whatever\ndescription; or the making of any judicial levy against a substantial percentage\nof the other party's assets, for the benefit of its creditors; or\n\n          21.2.5 The appointment of a receiver, keeper, liquidator or custodian\nof whatever sort of description, for all or a substantial portion of the other\nparty's assets; or\n\n          21.2.6 The termination, dissolution, insolvency or failure in business\nof the other party, the distribution of a substantial portion of its assets, or\nits cessation to continue all or substantially all of its business affairs.\n\n     21.3 Rights and Obligations Upon Termination or Expiration. The termination\nor expiration of this Agreement shall in no way relieve either party from its\nobligations to pay the other any sums accrued hereunder prior to such\ntermination or expiration. The parties agree that their respective rights,\nobligations and duties under Sections 2, 3.2, 3.3, 3.4, 3.5, 14.1 for events\noccurring prior to contract termination, 15, 16, 17, 18, 19, 20, 21, 22 and 23\nas well as any rights, obligations and duties which by their nature extend\nbeyond the expiration or termination of this Agreement shall survive any\nexpiration or termination and remain in effect for a period of three (3) years\nthereafter or the specific period specified in this Agreement, whichever is\nlonger.\n\n22.  Manufacturing Rights; Escrow\n\n     22.1 Escrow Agreement As a condition to the effectiveness of this\nAgreement, Sonic agrees to execute a Three Party Escrow Agreement with Fort Knox\nEscrow Services, Inc\n\n     22.2 Manufacturing Rights. Sonic hereby grants to 3Com a worldwide,\nirrevocable license for the term of this Agreement to make and have made, use,\ndevelop, import, offer to sell, demonstrate, publicly display, modify,\nreproduce, distribute and sell the Products, and to use Sonic Technology (as\ndefined below) to make and have made, use, develop, import, offer to sell,\ndemonstrate, publicly display, modify, reproduce, distribute and sell the Sonic\nTechnology, which license may be exercised by 3Com in the event Sonic is in\nbreach of (i) Sections 21.2. 2 through 21.2.6.; or (ii) the sale of Sonic\n(including but not limited to substantially all of the assets of Sonic) to, or\nmerger with any of the following (including any subsidiaries thereof). (i) Cisco\nSystems, Inc.; (ii) Intel Corporation, (iii) Nortel Networks Corporation. The\noccurrence of any of the foregoing shall constitute a \"Producer Default\" in\naccordance with the provisions of the Escrow Agreement between Sonic and Fort\nKnox Escrow Services, Inc. which is attached and incorporated herein as Exhibit\nG.\n\n          22.2.1  Royalties. 3Com will pay royalties associated with Section\n22.2 per Exhibit A(1). Royalties shall be paid quarterly, thirty (30) days after\nthe end of each quarter by 3Com and be accompanied by a detailed accounting.\nSonic shall have the right upon twenty (20) days prior notice, to audit 3com's\nrecords reasonably related to or bearing upon royalties due. Such audit shall be\nby a national CPA firm. If there is a discrepancy in the amount due Sonic of\nmore than five percent (5%), 3Com shall pay the audit costs. Otherwise, Sonic\nshall pay the audit costs. The audit right may not be exercised more than once\nin any twelve (12) month period and shall not be exercised more than twelve (12)\nmonths after the Agreement has ended.\n\n     22.3 Sonic Technology. \"Sonic Technology\" means all the Products and all\ninformation, including but not limited to, fabrication drawings for all\nproprietary mechanical parts, bills of material, inventions, works of\nauthorship, source code, object code, mask works, test procedures, test\nspecifications, design specifications, schematics, assembly drawings, artwork,\nand any other information that would be useful to 3Com to modify, manufacture,\ndevelop, distribute, support and\/or maintain the Products, which information is\nnow in Sonic's possession or which during the term of this Agreement comes into\nSonic's possession. \"Sonic Technology\"\n\n \nshall be placed in escrow and updated from time to time in accordance with\nExhibit G - Escrow Agreement, attached hereto and incorporated herein by\n---------\nreference and delivered to 3Com upon a Producer Default under the Escrow\nAgreement.\n\n     22.4 Sonic Support. Sonic agrees that, in the event of a Producer Default\nunder the Escrow Agreement, Sonic shall support 3Com in connection with\nexercising its rights under the license granted 3Com in this Section 22\nincluding, but not limited to, assisting 3Com in setting up facilities and\nprocesses to manufacture, maintain and support the Products and to build\nsoftware products from source code components which are part of the Sonic\nTechnology. Sonic shall be compensated for such services on a time and material\nbasis at $1,000 per man day. Sonic will not be responsible for supporting\nmodifications made to the Product(s) by 3Com. This Section 22.4 shall survive\nthe termination or expiration of this Agreement for a period of two (2) years\nthereafter.\n\n     22.5 Right to Purchase Components. Sonic hereby grants to 3Com the right\n(which right shall be effective upon a Producer Default under the Escrow\nAgreement), at 3Com's option and expense, to purchase or have purchased by\n3Com's designated third party(ies) any or all of the components found in or used\nto manufacture or support the Products (including, but not limited to, ASICs or\nother components not generally commercially available without the approval of\nSonic) from Sonic's suppliers or vendors and Sonic will advice its suppliers or\nvendors in writing of this fact. In the event Sonic fails or refuses to so\nadvise its suppliers or vendors at such time, the parties expressly agree that\n3Com may submit a copy of this Agreement or a portion thereof to any such\nsupplier or vendor and that such supplier or vendor be entitled to rely on this\nSection 22.5 as evidence of Sonic's approval for them to sell such components to\n3Com or its designated third party(ies).\n\n23.  General\n\n     23.1 Relationship of the Parties. Each of the parties shall at all times\nduring the term of this Agreement act as, and shall represent itself to be, an\nindependent contractor, and not an agent or employee of the other.\n\n     23.2 Entire Agreement. This Agreement and Exhibits hereto are intended as\nthe complete, final and exclusive statement of the terms of the agreement\nbetween the parties regarding the subject matter hereof and supersedes any and\nall other prior or contemporaneous agreements or understandings, whether written\nor oral, between them relating to the subject matter hereof. This Agreement may\nnot be modified except in writing executed by both parties. The terms and\nconditions of this Agreement shall prevail notwithstanding any conflict with the\nterms and conditions of any purchase order, acknowledgment or other instrument\nsubmitted by Sonic.\n\n     23.3 Force Majeure. Neither party shall be liable to the other for any\nalleged loss or damages resulting from failure to perform due to acts of God,\nnatural disasters, acts of civil or military authority, government priorities,\nfire, floods, epidemics, quarantine, energy crises, war or riots. Each party\nshall promptly notify the other party of such event. If Sonic is unable to\ndeliver in accordance with agreed delivery schedule, 3Com may either: (i) extend\nthe time of performance; or (ii) cancel the uncompleted portion of the purchase\norder at no cost to 3Com.\n\n     23.4 Notices. Except for purchase orders which may be sent by normal\ncarrier, all notices and communications hereunder are required to be sent to the\naddress or facsimile number stated below (or such other address or facsimile\nnumber as subsequently notified in writing to the other party): (i) by facsimile\nwith confirmation of transmission; (ii) personal same or next day delivery; or\n(iii) sent by commercial overnight courier with written verification of\ndelivery. All notices so given shall be deemed given upon the earlier of receipt\nor one (1) day after dispatch.\n\n     Any notices sent to 3Com hereunder should be sent to:\n\n \n                                    3Com Europe Ltd.\n                                    3Com Centre\n                                    Boundary Way\n                                    Hemel Hempstead\n                                    Herts HP2 7YU\n                                    United Kingdom\n                                    Attn.: Purchasing Manager\n                                    Fax No. +44 1442 438076\n\n          with a copy to:\n\n                                    3Com Corporation\n                                    Legal Department\n                                    5400 Bayfront Plaza\n                                    Santa Clara, CA 95052\n                                    Atm.: General Counsel\n                                    Fax No. (408) 764-6434\n\n          Any notices sent to Sonic hereunder should be sent to:\n\n                                    Sonics Systems, Inc\n                                    5400 Betsy Ross Drive, Suite 206\n                                    Santa Clara, CA 95054-1101\n                                    United States of America\n\n                                    Attn: Sreekanth Ravi\n                                    Fax No. (408) 654 5171\n\n     23.5  Waiver. A waiver of any default hereunder or of any of the terms and\nconditions of this Agreement shall not be deemed to be a continuing waiver or a\nwaiver of any other default or of any other term or condition, but shall apply\nsolely to the instance to which such waiver is directed. The exercise of any\nright or remedy provided in this Agreement shall be without prejudice to the\nright to exercise any other right or remedy provided by law or equity, except as\nexpressly limited by this Agreement.\n\n     23.6  Severability. In the event any provision of this Agreement is found\nto be invalid, illegal or unenforceable, the validity, legality and\nenforceability of any of the remaining provisions shall not in any way be\naffected or impaired.\n\n     23.7  Assignment. Sonic may not assign or transfer this Agreement, whether\nin whole or part, or any of its rights or obligations under this Agreement\nwithout the prior written consent of 3Com. Any attempted assignment without such\nwritten consent shall be null and void. Consent shall not be unreasonably\nwithheld by 3Com\n\n     23.8  Photocopy of Original. Neither party shall object to the use of a\nphotocopy of the original of this Agreement for the purpose of making any\nrequired or allowed public filings.\n\n     23.9  Governing Law THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,\nAND ALL DISPUTES HEREUNDER SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF\nCALIFORNIA. THE PARTIES EXCLUDE IN ITS ENTIRETY THE APPLICATION TO THIS\nAGREEMENT OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL\nSALE OF GOODS.\n\n \n23.10   Attorney's Fees. In any action to enforce this Agreement, the prevailing\nparty shall be awarded all arbitration costs or courts costs and reasonable\nattorney's fees incurred, including such costs and attorneys' fees incurred in\nenforcing and collecting any judgment.\n\n23.11   Counterparts. This Agreement may be executed in two or more\ncounterparts, each of which shall be deemed an original, but all of which shall\nconstitute one and the same instrument.\n\n23.12   Choice of Language. The original of this Agreement has been written in\nEnglish and the governing language of this Agreement shall be English.\n\n23.13   List of Exhibits:\n\n        Exhibit A  Product List and Prices; Royalty; Non-Binding Forecast;\n        ---------  Unique Materials Leadtime; Replenishment Cycle Time\n        Exhibit B  Product Specifications \n        ---------\n        Exhibit C  Reserved \n        ---------\n        Exhibit D  Support Services   \n        ---------\n        Exhibit E  Reserved  \n        ---------\n        Exhibit F  Product Acceptance Criteria  \n        ---------\n        Exhibit G  Escrow Agreement  \n        ---------\n        Exhibit H  Development of Product\n        ---------\n\n     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be\nexecuted by their duly authorized representatives effective as of the date first\nabove written.\n\n\n\n3Com Corporation                        Sonic Systems, Inc.\n\n\nBy:_________________________________    By: _________________________________\n                                        \nPrinted Name:_______________________    Printed Name: _______________________\n                                            \nTitle :_____________________________    Title: ______________________________\n                                        \nDate: ______________________________    Date: _______________________________\n\n \n                                   Exhibit A\n\n(1)  Product list- prices; lead time; royalty and repair charges\n\nDescription of Products\n\n3C 16770       OfficeConnect Internet Firewall 25 \n3C 16771       OfficeConnect Internet Firewall DMZ\n3C 16772       OfficeConnect Web Site Filter for Internet Firewalls\n\nPrice, Specification, Lead time, Royalty, Repair Charges:\n\n \n \n----------------------------------------------------------------------------------------------------\n    Product       Initial 3Com        Spec No.        Lead Time       Royalty       Repair Charge\n    -------       ------------        --------        ---------       -------       -------------\n                   price (US$)\n                   -----------\n----------------------------------------------------------------------------------------------------\n                                  (see Exhibit B)   (see Section   (see Section    (out of\n                                  ---------------   ------------   ------------    -------\n                                                    5.1)           22.2.1)         Warranty\n                                                    ----           -------         --------\n                                                                                   repairs only)\n                                                                                   -------------\n----------------------------------------------------------------------------------------------------\n                                                                      \n----------------------------------------------------------------------------------------------------\n    3C 16770        See below             1007-015       [*]            $[*]             $[*]\n----------------------------------------------------------------------------------------------------\n    3C 16771           $[*]               1007-015       [*]            $[*]             $[*]\n----------------------------------------------------------------------------------------------------\n    3C 16772           $[*]               1007-045       [*]            $[*]              [*]\n----------------------------------------------------------------------------------------------------\n \n\nThe initial 3Com price for the 3C 16770 product will be calculated as follows:\nThe total cost to Sonic of the 3Com Unique Material including shipping, duties\nand taxes will be agreed by both parties and added to an agreed base cost of\n$[*].\nIn addition, an overhead charge of [*]% of the total cost of the 3Com Unique\nMaterial will be added to the above price to cover Sonic's costs of acquiring\nthis material.\n\nOut of Warranty Repairs will incur a fixed charge as above\n\n(2)  Non-Binding Forecast\n\nThe Non-Binding Forecast quantities for Products 3C 166770 and 3C 16771 combined\nare:\n\n \n \n                    ---------------------------------------\n                                         Quantity          \n                    ---------------------------------------\n                                       \n                      Nov-99                [*]            \n                    ---------------------------------------\n                      Dec-99                [*]            \n                    ---------------------------------------\n                      Jan-00                [*]            \n                    ---------------------------------------\n                      Feb-00                [*]            \n                    ---------------------------------------\n                      Mar-00                [*]            \n                    ---------------------------------------\n                      Apr-00                [*]            \n                    --------------------------------------- \n \n\n \n(3)  Unique Materials Leadtime (see Section 5.4-2)\n\nLeadtimes listed below are still unconfirmed at the Effective Date. Actual\nleadtimes and costs will be agreed by both parties before 1 November 1999.\n\n \n \n--------------------------------------------------------------------------------------------------\nMaterial                                                           Lead Time     Value (US$)\n--------------------------------------------------------------------------------------------------\n                                                                              \nLong lead time capacitors                                       [*]                  [*]\n--------------------------------------------------------------------------------------------------\nPower Regulation Components, Chassis,                                                   \nPlastic Mouldings                                               [*]                  [*]\n--------------------------------------------------------------------------------------------------\nPackaging, etc.                                                 [*]                  [*]\n--------------------------------------------------------------------------------------------------\n \n\nMaterial liability for cancellation, etc. will be based on actual prices paid by\nSonic at the time.\n\n(4)  Sonic's Replenishment Cycle Time (see Section 5.4.2)\n\n         4 weeks\n\n \n                                   Exhibit B\n                                   ---------\n\n                            PRODUCT SPECIFICATIONS\n\n \n                                                                         \n------------------------------------------------------------------------------------------------------------\n3C 16770          OfficeConnect Internet Firewall 25                          3Com Document no. 1007-015\n------------------------------------------------------------------------------------------------------------\n3C 16771          OfficeConnect Internet Firewall DMZ                         3Com Document no. 1007-015\n------------------------------------------------------------------------------------------------------------\n3C 16772          OfficeConnect Web Site Filter for Internet Firewalls        3Com Document no.1007-045\n------------------------------------------------------------------------------------------------------------\n \n\nIn all cases, the latest issue level signed and approved by 3Com and Sonic is\napplicable.\n\n\n\n                                   Exhibit C\n\n                                   Reserved\n\n \n                                   Exhibit D\n\n                               SUPPORT SERVICES\n\n1    Definitions:\n\n     Authorized Caller. \"Authorized Caller\" means a person or persons designated\nby 3Com as the technical\/engineering support interface for the Products.\n\n     Designated Support Engineer. \"Designated Support Engineer\" means a person\nor persons designated by Sonic as the technical\/engineering support interface\nfor the Products.\n\n     End User. \"End User\" means a company or organization that uses 3Com\nproducts in the operation of their business.\n\n     Error. \"Error\" means a defect in the Product which is reproducible and\nwhich causes such Product not to function substantially in conformance with the\nSpecifications, end user documentation, or other related documentation,\nincluding without limitation any functional specifications or other engineering\ndocumentation for the Product, or commonly accepted operating principles as\ndefined by industry standards. Errors are classified according to the Problem\nseverity.\n\n     Incident. \"Incident\" means a situation which necessitates an End User to\ncontact 3Com for assistance.\n\n     Problem. \"Problem\" means any error, or any actual or perceived failure or\nfunctional impairment that causes reduced functionality to the Product. Problems\nare assigned a classification at the time of 3Com's initial contact with Sonic.\nProblem classifications may be changed based upon new information or customer\nsituation. Problems are classified by 3Com according to Severity level, based\nupon Technical and\/or Customer Sensitivity as follows:\n\n     Severity 1: Technical: Production network failure which results in a\ncritical impact to business operations. No viable workaround is known. Customer\nSensitivity: Customer account is in jeopardy, and there is risk of losing\nbusiness.\n\n     Severity 2: Technical: Critical production network service interruption or\ndegradation creating difficulty in the execution of a network function which\nresults in a critical impact to business operations. Customer acceptable\nworkaround is available. Customer Sensitivity: There is potential risk of losing\nactual or future business.\n\n     Severity 3: Technical: Significant system problems which prevent some\nnetwork functions from meeting the production specifications or cause particular\nfeatures or functionality to be inoperative. Some business operations are\nimpaired, but the network continues to function. Customer acceptable workaround\nis available. Customer Sensitivity: The problem is impacting the customer's day\nto day business, there is no risk of losing business.\n\n     Severity 4: Technical: Enhancement requests for hardware, software, manuals\nor electronic services. Customer Sensitivity: The problem is not currently\nimpacting the customer's day to day business, but may in the future; there is no\nrisk of losing business.\n\n     Repair. \"Repair\" means the repair or replacement of a Product or part.\n\n \n     Software Patch. \"Software Patch\" refers to executable software created and\nmade available to correct an Error or malfunction identified in a specific\nversion of software.\n\n     Software Update. \"Software Update\" means a formal software release (i)\nwhich providees functionality enhancements, reliability enhancements, and other\nmodifications to the Product software or (ii) that is a maintenance release that\ncorrects deficiencies and\/or bugs affecting performance to the published\nspecifications.\n\n     Technical Support Levels. \"Level\" means a certain class of service provided\nto authorized resellers and end users. Definitions are as follows:\n\n          Level One: First call support on all customer calls, technical support\nstaff answers technical inquiries regarding Products, and provides problem\ndiagnostics services for identifying Problems and generic application faults,\nanalysis, and where possible, Problem resolution.\n\n          Level Two: Specialist level technical support, technical\nsupport\/escalation staff performs Problem isolation and replication, lab\nsimulations and interoperability testing, provides remote diagnostics\ncapabilities and on-site troubleshooting, if required, and implements a solution\nfor a Problem that is not the result of a Product Error. In the case of a\nProduct Error, the technical staff is able to identify the source of the Error,\ncreate a reproducible test case, and document the details of the Error for\nescalation to Sonic.\n\n          Level Three: Backup engineering and technical support; staff isolates\na Problem\/Error and implements a solution, including, but not limited to, a\nProduct change.\n\n     Workaround. A \"Workaround\" is a feasible change in operating procedures\nwhereby an end user can avoid any deleterious effects of an Error.\n\n2    Technical Support Services\n\n     2.1  Support Services. 3Com shall provide Level One and Level Two support\n          ----------------          \nservices to its authorized resellers and End Users. Sonic shall provide Level\nThree back-up technical support to 3Com, and shall make support available to\n3Com via telephone, FAX or E-Mail to 3Com's Authorized Caller(s). Sonic will\nprovide such support during normal business hours (8:30-5:30 Pacific Time),\nexcluding holidays. Sonic will provide support via pager outside of normal\nbusiness hours for Severity 1 and Severity 2 Problems. 3Com will receive most\nfavored class of priority from Sonic. 3Com will have direct access to Sonic's\nLevel Two and Level Three technical support, as well as to Sonic's technical\nmanagement support as required for escalation purposes. The support shall\ncommence as of the Effective Date and shall be provided at no cost to 3Com.\n\n          The Authorized Callers and Designated Support Engineers will be the\nprimary contacts between 3Com's and Sonic's technical support and\/or escalation\ncenters. 3Com will provide a list of Authorized Callers including names,\naddress, phone numbers, and internet e-mail address. Sonic will provide a list\nof Designated Support Engineers. These lists will be reviewed quarterly and\nupdated as required. 3Com will be permitted to register up to ten (10)\nAuthorized Callers; all Authorized Callers shall receive training as set forth\nin Section 5 of this Exhibit.\n\n          3Com shall reasonably attempt to resolve customer problems for the\nProducts prior to contacting Sonic. Sonic will not contact or provide direct\nsupport to 3Com's customers with respect to the Products pursuant to this\nAgreement without 3Com's prior approval. Sonic will provide an initial response\nto all 3Com support inquiries according to the following: one (1) hour for\nSeverity 1 Problems. two (2) hours for Severity 2 Problems, three (3) hours for\nSeverity 3 Problems, and one (1) business day for Severity 4 Problems. If unable\nto resolve, 3Com and Sonic will agree, in good faith, what additional\ninformation and\/or\n\n \ndocumentation will be required for resolution. Sonic shall work with 3Com in\nattempting to reproduce any such problem. Problem resolution shall be managed in\naccordance with Section 2.3.\n\n     2.2  Emergency Technical Support. Except as set forth in Section 9.3 of\n          ---------------------------\nthis Agreement (Epidemic Failure), and in this Exhibit D (Support Services),\nSonic shall have no responsibility for providing technical support directly to\n3Com's authorized resellers and end users.. However, for Severity 1 Problems\ndeemed by Kom to require emergency, on-site support that would be significantly\nfacilitated by Sonic assistance and such support is requested by 3Com, Sonic\nagrees to use its best efforts to provide such emergency support within two (2)\nbusiness days. 3Com will attempt to manage the Incident, such that Sonic's\nassistance will be transparent to the customer and shall reimburse Sonic for its\ntime at mutually agreeable and reasonable rates, plus other reasonable expenses\napproved in advance by 3Com. In situations where the site visit was precipitated\nby a known (but unresolved) or acknowledged Sonic problem, 3Com will not\nreimburse Sonic for costs, labor or other expenses.\n\n     2.3  Problem Resolution\/Error Correction. 3Com and Sonic shall promptly\n          -----------------------------------\nagree in good faith to any information and\/or documentation which may be\nrequired to permit Sonic to identify and resolve Product Problems, including but\nnot limited to Errors. Sonic agrees to respond to identified Problems based on\nthe following correction periods:\n\n          Severity 1. Sonic shall use its best efforts to resolve or reduce the\n          -----------\n          severity via Workaround and\/or Software Patch within two (2) business\n          days of receipt of notice of such Error. Sonic shall provide its\n          action plan within one (1) business day, and regular status updates. A\n          final resolution shall be identified in the action plan. 3Com and\n          Sonic problem managers shall review incident after two (2) business\n          days.\n\n          Severity 2. Sonic shall use its best efforts to resolve or reduce the\n          -----------\n          severity via Workaround and\/or patch within five (5) business days of\n          receipt of notice of such Error. Sonic shall provide an action plan\n          within three (3) business days, and regular status updates. 3Com and\n          Sonic problem managers shall review incident after five (5) business\n          days. A final engineering resolution shall be identified in the action\n          plan.\n\n          Severity 3. Sonic shall use its best efforts to acknowledge the \n          -----------\n          Problem within ten (10) business days of receipt of notice. Sonic\n          shall provide a final engineering resolution within three (3) months\n          or next scheduled release, whichever is sooner.\n\n          Severity 4. Sonic shall use its best efforts to acknowledge the\n          -----------\n          Problem within thirty (30) business days of receipt of notice. A final\n          engineering resolution will be determined and scheduled through mutual\n          agreement between 3Com and Sonic Engineering and Marketing management.\n\n          The prescribed correction periods above may be extended as mutually\nagreed, e.g., if resolution of problem requires timely hardware certification or\ntest, or if resolution represents significant risk to the essential functions.\n\n     2.4  Problem Status. Sonic shall provide 3Com, as a common business\n          --------------\npractice, a mechanism by which 3Com may receive a monthly status report of all\nProblems reported and\/or resolved. This report shall contain known Product\nProblems, Workarounds, fixes and open Effors\/Bugs.\n\n     2.5  Support Tools. At no charge to 3Com, Sonic shall provide diagnostic\n          -------------\nsoftware tools and procedures and a list\/description of test\/diagnostic\nequipment necessary to troubleshoot Problems and assist in Problem\nidentification, isolation and resolution.\n\n \n          Sonic shall also provide the following additional support tools. if\navailable: (i) troubleshooting guide, (ii) technical tips, (iii) compatibility\/\ninter-operability matrix and (iv) supported and not supported configurations\nstatement. Sonic shall further promptly provide to 3Com when available, all\nmodifications or other revisions to such support tools.\n\n     2.6  Support Evaluation. From time to time following acceptance by 3Com\n          ------------------\nof the Products, but no less frequently than once each calendar quarter,\nmanagement-level support representatives from each party will meet to review the\nperformance of, and recommend improvements regarding, the technical support,\nescalation and warranty assistance provided to 3Com under this Agreement.\n\n3    Software Support Services\n\n     3.1  Software Updates. 3Com is entitled to receive or access all Software\n          ----------------\nUpdates for the Products, as provided for in this Exhibit D (Support Services),\nand as required under Section 13 (Product Changes) of the Agreement. 3Com has\nthe right to duplicate both the Software and associated documentation and\ndistribute to customers according to 3Com entitlement process.\n\n     3.2  Sunport for Prior Release. Sonic will provide support hereunder for\n          -------------------------\nthe current and immediately preceding two (2) Major Releases (including all\ninterim Minor, and\/or Maintenance Releases) of the Software.\n\n4    Hardware Support Services\n\n     4.1  Repair Services. 3Com shall have the right to purchase Product Repair,\n          ---------------\nspare parts and upgrade kits as applicable during the term of this Agreement,\nand thereafter, for a period of three (3) years after the last shipment of the\naffected Product hereunder, notwithstanding the expiration of this Agreement.\nSuch purchases shall be governed by the applicable terms and conditions set\nforth herein. The prices charged for such Product Repair, spare parts and\nupgrade kits shall be at the lowest prices then charged by Sonic to any other\ncustomer for similar quantities of the same or comparable items. Should Sonic\nfail to fulfill Repair obligations, then Sonic will provide suitable and form,\nfit, and function compatible replacement products at no additional charge to\n3Com.\n\n     4.2  Inventory Management Requirements. Sonic will provide failure analysis\n          ---------------------------------\ndata for the Products. The data shall include predicted, demonstrated and field\ndata for the whole unit assembly and individual subassemblies (FRUs\/Field\nReplaceable Units), including MTBF\/Mean Time Between Failure data, and how MTBF\nis computed. Sonic will also provide the sparing\/inventory rationale and spares\ninventory recommendations, based on the failure analysis data. This data will\nprovided within ten (10) days after Effective Date.\n\n     4.3  Test and Repair Procedures. At no charge to 3Com. Sonic shall provide\n          --------------------------\ntest specifications, test equipment specifications, test scripts and written\ntest procedures necessary to enable 3Com personnel to verify functional\nfailures, perform adjustments and alignments, as required, and verify functional\nperformance.\n\n     4.4  Product Repairs. Sonic will Repair a defective Product and forward the\n          ---------------\nsame back to 3Com. Sonic will Repair defective product to 3Com standards. Sonic\nwill upgrade Repaired Product to the most recent 3Com approved ECO level,\nexcluding hardware revisions. Sonic shall charge rates as specified in Exhibit\nA(1) and that are equal to or less the largest discount offered to Sonic's other\ncustomers. Any Repair shall be warranted for the remainder of the warranty\nperiod or three (3) months, whichever is longer. This statement excludes Product\nthat has been damaged by accident, abuse or misuse. 3Com reserves the option to\nperform out-of-warranty Repairs at Repair facilities designated by 3Com. In the\nevent 3Com exercises the option to perform Repairs' at such designated\nfacilities, Sonic shall provide all required product specifications, engineering\ndocumentation, and test and Repair procedures.\n\n \n     4.5  Return Material Authorization (RMA). Sonic shall provide 3Com with RMA\n          -----------------------------------\nprocedures. The following procedure shall apply to Sonic's Repair of Products.\n\n          (i)   Management. Sonic will use its best efforts to provide 3Com with\n                ----------\nRMA number within one (1) business day after receipt of request. 3Com Repair RMA\nreturns of Products will be managed through a 3Com Repair center. 3Com will\nreturn defective\/failed Products monthly or in quantities of 5-10 units. 3Com\nshall notify Sonic if it opens more than five (5) such Repair centers. Sonic\nwill provide domestic and international interfaces to manage 3Com returns. 3Com\nshall return Product to Sonic's closest geographic Repair center.\n\n          (ii)  Turn-Around Time. Sonic will Repair the defective\/failed Product\n                ----------------\nand forward the same back to 3Com within five (5), not to exceed ten (10),\nbusiness days after receipt. Sonic will provide expedited Repair service to\naccommodate 3Com emergency requirements at a minimal expedite charge, not to\nexceed five (5%) of Repair charge.\n\n          (iii) Reporting. 3Com Repaired Products will be returned with a\n                ---------\ndetailed Repair report for each unit. Sonic will provide a monthly report of:\n(i) RMAs processed, including failure analysis and (ii) physical inventory of\n3Com owned material. Upon special request, Sonic will provide inventory status\nwithin two (2) business days.\n\n          (iv)  Shipping charges. 3Com will pay shipping charges on Products\n                ----------------\nshipped to Sonic for Repair. Sonic will pay shipping charges on Products\nreturned to 3Com.\n\n          (v)   Packaging requirements. Sonic and 3Com will jointly develop a\n                ----------------------\nRepair shipping process prior to FCS\/First Customer Ship of a Product by 3Com\nthat satisfies packaging requirements for both parties. On all Products returned\nto 3Com, Sonic will affix a label that identifies Product, including model\nnumber, serial number, current hardware and\/or software revision level, and RMA\nnumber.\n\n     4.6  No Problem Found (NPF). Sonic shall provide statistics on Product NPF\n          ----------------------\nreturns on a quarterly basis. In the event that more than twenty-five percent\n(25%) of the Products returned within a six (6) month period are NPF, Sonic may\ncharge the lesser of US$150 per unit or twenty-five percent (25%) of the Repair\nprice of the unit for each unit in excess of the allowed twenty-five percent\n(25%) to cover the costs of testing and administration. Sonic shall waive any\nNPF charges on in-warranty Products returned for Repair. Further, both parties\nagree to work together to reduce the frequency of NPF returns.\n\n5    Training Services\n\n     5.1  Technical Training. During the term of this Agreement, Sonic shall, at\n          ------------------\nits expense, provide 3Com with one (1) course per Product of basic training and\nof advanced training for 3Com employees (including the Authorized Callers)\nengaged in the technical support and training of the Product. Training will be\nconducted at 3Com's facility in Santa Clara, California or at Sonic's facility\nin Santa Clara, California, as mutually agreed. If conducted at other than\n3Com's Santa Clara facility or Sonic's facility, 3Com shall pay all reasonable\ncosts incurred by Sonic's instructor(s) for travel and living expenses during\nthe period of such training.\n\n     Each training course shall commence on a mutually agreed upon date. Such\ntraining shall cover in detail, the installation, configuration, operation,\ntroubleshooting, adjustment, test and maintenance of the Product. Sonic shall\nprovide a reasonable quantity of appropriate Product units as training aids.\nWhen such classes are conducted at 3Com's facilities, 3Com shall provide other\nrequired equipment as training aides. Sonic shall provide copies of the student\ntraining guide, and all other necessary materials to each trainee and to\n\n \n3Com. 3Com may record any or all training courses on video tape and may\nreproduce and distribute such recordings, for internal use only, under 3Com's\nname.\n\n     Upon the release of each new Product or new version of existing Product\nwith substantial functional chances, Sonic shall provide to 3Com, without cost,\ncomplete technical training relating to such new Product or version.\n\n     Sonic shall offer additional training throughout the term of this\nAgreement, at Sonic's most favored pricing to similarly situated customers. If\nconducted at other than 3Com's Santa Clara facility or Sonic's facility, 3Com\nshall pay all reasonable costs incurred by Sonic's instructor(s) for travel and\nliving expenses during the period of such training. Sonic shall pay for the\nsalary of its instructor(s) and all other costs and expenses related to such\ntraining. Sonic shall submit invoices to 3Com after the conclusion of such\ntraining classes which itemize all expenses incurred and shall include copies of\nall receipts therefor. Payment terms shall be net thirty (30) days from receipt\nof invoice.\n\n     5.2  Training Courses and Materials. During the term of this Agreement,\n          ------------------------------\nSonic shall provide 3Com with all materials utilized to provide training in\nconnection with the Products. Training shall include, but is not limited to,\ncustomer reseller and End-User courses. Training materials shall also include,\nbut are not limited to, instructor guides, overheads, student workbooks, and\nmanual\/guides. Sonic shall provide masters of such training materials in both\nhard copy and electronic media. Sonic shall further provide copies of all\nmodifications or other revisions to such training materials as they become\navailable. 3Com is permitted to use such material for its internal use only in\ntraining 3Com's sales and support staff on the Products.\n\n     Sonic hereby grants to 3Com a royalty-free non-exclusive, worldwide license\nto use, modify. create derivative works based upon, reproduce, display,\ndemonstrate and distribute the training materials (whether modified or\nunmodified but excepting proprietary technical information relating to the\nproducts) for course development use solely in connection with the Products\ndistributed under the terms of the Agreement.\n\n6    Product Documentation\n\n     Sonic will provide all documentation for the Products, including, but not\nlimited to, specifications, user manual, troubleshooting guides, etc.\nDocumentation will be provided in suitable electronic format and in hardcopy\nformat.\n\n7.   Manufacturing Discontinued and Support After Termination.\n\n     For Products that have been deemed \"manufacturing discontinued\" and\nfollowing termination of the Agreement, Sonic agrees to provide Support\nServices, as defined in this Exhibit D, to 3Com for a period of three (3) years\nto enable 3Com to support its customers. Sonic will provide all required product\nspecifications, engineering documentation, test specifications, plans and Repair\nprocedures to enable 3Com to support its customers beyond the termination of\nsuch Support Services. Following termination of the Agreement, Sonic agrees to\n                       -------------------------------------------------------\nfulfill subscription obligations for OfficeConnect Web Site Filter for Internet\n-------------------------------------------------------------------------------\nFirewalls Product for a mriod of one (1) Year. Sonic will provide all required\n------------------------------------------------------------------------------\ninformation to enable 3Com to purchase such Product from the originator, i.e.\n-----------------------------------------------------------------------------\nthe source company.\n------------------\n\n \n                                   Exhibit E\n\n\n\n\n\n\n                                   Reserved\n\n                                   Exhibit F\n\n                          PRODUCT ACCEPTANCE CRITERIA\n\nI.   PURPOSE\n\nThis Exhibit establishes the Quality and Reliability provisions which shall\napply to all Products shipped under this Agreement.\n\nII.   SCOPE\n\nIII.  Quality Requirements\nIV.   Reliability Requirements\nV.    Workmanship Standard\nVI.   Quality System Requirements\nVII.  Electrical Overstress \/ Electrostatic Discharge\n\nIII.  QUALITY\n\n      A.  ACCEPTANCE CRITERIA\n\n      Qualification for initial and on-going shipments, including spares, shall\n      require inspection to a mutually agreed upon specification for major\n      defects per section III C. Inspections shall be performed by 3Com\n      personnel or by 3Com's designated representative at 3Com or Sonic's\n      facility. 3Com reserves the right to witness on-going qualification tests\n      as long as witnessing does not cause delay in meeting program goals..\n      Product will be considered acceptable for shipment if it does not contain\n      a major defect as defined per Section III C of this Exhibit F.\n\n \n      B.  REMEDIES FOR EXCEEDING THE ACCEPTABLE DEFECT RATE\n\n      If Major Defects, defined in Section III C, are identified during, an\n      audit at 3Com, Sonic's facility, or as a result of failure to meet\n      physical or electrical specifications at the end user location. the Sonic\n      will assume responsibility for replacement of defective material at\n      Sonic's expense. Further, Sonic is responsible for 100% Audit of all\n      material at 3Com and Sonic's facility if during the audit process or based\n      on the quantity of customer returns, it is determined that the defect\n      number falls below the acceptable level based on an AQL of 1.0.\n\n      C.  MAJOR DEFECT DEFINITIONS\n\n      1)  A system failure when tested to mutually agreed upon test\n          specifications:\n\n      2)  A major cosmetic defect or serious violation of workmanship standards\n          e.g., plastic or sheet metal deformities that are readily visible to\n          end user;\n\n      3)  Failure to meet the safety standards identified in Exhibit B.\n\n      4)  Materially reduces the usability of the products for its intended\n          purpose per the Product Specifications.\n\n      5)  Failure to comply with the EMC standards identified in Exhibit B.\n\n      D.  TESTING BY SONIC\n\n      Should 3Com identify a major defect (as defined above) in Products held in\n      3Com stock or shipped to 3Com customers, and Sonic and 3Com mutually agree\n      that this defect is not detected under Sonic's then current manufacturing\n      test procedures, Sonic agrees to put an action plan in place within 5\n      business days to modify its test procedure to adequately test for that\n      defect in the future.\n\nIV.   RELIABILITY REQUIREMENTS\n\n      A.  RELIABILITY DEMONSTRATION TESTING\n\n      Reliability demonstration may be accomplished by 3Com or its designated\n      representative. The demonstration shall use either field data from an\n      installed base of production version product or data collected from a\n      reliability demonstration test (PDT).\n\n      B.  RELIABILITY MATURITY TESTING\n\n      A reliability maturity test (RMT) may be performed by 3Com or its\n      designated representative on a continuing basis. MTBF must be equal to or\n      greater than that specified in the Specifications.\n\nV.    WORKMANSHIP STANDARD\n\n      Sonic's workmanship standard shall conform to ANSI \/IPC-A-610 Class II.\n\nV1.   QUALITY SYSTEM REQUIREMENTS\n\n      A.  Sonic shall notify 3Com of any major changes in process, process\n          locations and quality practices employed by Sonic that affect this\n          Agreement and that occur after Agreement is signed.\n\n \n      B.   BURN-IN\n\n      All assemblies including field replaceable units shipped under this\n      Agreement require dynamic testing as per product specification.\n\n      C.   MINIMUM INSPECTION REQUIREMENTS\n\n      3Com requires Sonic's inspection of all product. Revisions to this\n      requirements may be accomplished by mutual written agreement between 3Com\n      and the Sonic at any time.\n\n      D.   CORRECTIVE ACTION CONTROL\n\n      Sonic will be responsible for implementation of a Corrective Action\n      Control procedure for all process and component related failure\n      mechanisms. The procedure must cover as a minimum the following:\n\n      1)   Problem Identification\n\n      2)   Assignment of responsibility\n\n      3)   Schedule of completion\n\n      4)   Tracking of corrective actions\n\n      5)   Verification of effectiveness of corrective action.\n\n      NOTE: All in-process corrective action information will be available to\n      3Com upon request.\n\n      E.   COMPLIANCE TO DESIGN STANDARDS\n\n      Sonic is responsible for on going conformance to the Design Standards\n      (Drop &amp; Vibration, Environmental Cooling, Structure and Packaging,\n      Acoustic Noise Limits, Transportability, Electrostatic Discharge &amp; Primary\n      Power Limits, etc.) for all products supplied hereunder.\n\n      F.   INSPECTION AND AUDIT\n\n      Upon at least twenty-four (24) hour notice, 3Com or its designated\n      representative may audit the manufacturing process and products in such a\n      manner as not to be disruptive to normal productions. Any mutually agreed\n      upon out-of-control condition at Sonic's facility will trigger the need\n      for the above audit process. Corrective action is to follow all items\n      listed in section VI item D of this Exhibit.\n\n      VII. ELECTRICAL OVERSTRESS\/ELECTROSTATIC DISCHARGE PROTECTION\n\n      Protection for all components and assemblies shall be accomplished in a\n      manner to prevent damage by ESD. All field replaceable board level\n      assembles shipped to 3Com must be contained in a conductive ESD package.\n      Reasonable precautions must be taken regarding the ESD protection of all\n      other subassemblies.\n\n \n                                   Exhibit H\n\n                          Development of the Product\n\nNon-Recurring Engineering (NRE)\n\nIn return for a consideration of $[*] Sonic will carry out the following: (See\nSection 2.4)\n\nRe-design SonicWALL to fit OfficeConnect format as per product specification\n1007-015\n\n.    New PCB layout to cover both products by population options \n.    New Power Regulation Circuit for 3Com Power Adapter\n.    Noise suppression circuitry for FCC B\n.    Move flash reset switch to external access\n.    Relayout to fit 3Com enclosure\n.    Make modifications to Web Management GUI\n.    Make modifications to Back-end Server GUI\n.    Design and test to product spec 1007-015 **\n.    Supply base manual(s) for 3Com to re-work\n.    Provide five (5) sample units of each version\n\nNRE charee is payable in the following installments\n---------------------------------------------------\n\n               $[*]      at program start\n               $[*]      on prototype acceptance\n               $[*]      on first production shipment\n\n**3Com to bear the cost of any approval fees billed to Sonic by third parties.\nSonic to bill 3Com separately for these fees.\n\nSonic to source designed and completed case and packaging items from 3Com\ndesignated suppliers including, but not limited to, chassis, top covers,\nmanuals, registration cards, boxes, CDs, seals, clips etc.\n\nAdditional Services\n\nIn consideration of $[*], Sonic will provide the following service:\n\n.    Setup of back-end server(s) for Content Filter List, Product Registration\n     and Product updates.\n\nWorks Developed For 3Com\n\nThe following IP will be owned by 3Com at the completion of the development:\n\n.    Design of printed circuit board assembly (PCBA) to fit into 3Com enclosure\n\n.    Specific on-board power regulation circuit design provided to Sonic by 3Com\n\n.    Web Management GUI: Specific combination of colors, fonts, GUI element\n     styles and GUI element locations for the Cerberus web-based management\n     interface.\n\n.    Backend Registration Server: Specific combination of colors, fonts, GUI\n     elements styles and GUI element locations for the web interface to the \n     back-end server user for registration, upgrade activation and other\n     functions.\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6537,8863],"corporate_contracts_industries":[9509],"corporate_contracts_types":[9613,9619],"class_list":["post-42626","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-3com-corp","corporate_contracts_companies-sonicwall-inc","corporate_contracts_industries-technology__networking","corporate_contracts_types-operations","corporate_contracts_types-operations__sales"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42626"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42626"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42626"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}