OEM Purchase Agreement

EXHIBIT 10.8



*Material has been omitted pursuant to a request for confidential treatment. Such material has been filed separately with the Securities and Exchange Commission.



OEM Purchase Agreement

Sonic Systems, Inc. and Ramp Networks



THIS AGREEMENT is entered into between Sonic Systems, Inc. a California corporation principally located at 5400 Betsy Ross Drive, Suite 206, Santa Clara, CA 95054 ("Sonic") and Ramp Networks, a California corporation located at

----- 3100 De La Cruz Blvd., Santa Clara, CA 95054 ("Ramp") is made as of this 5th day

---- of January 1999 ("Effective Date").

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Sonic has developed an Internet Security appliance called SonicWALL. Ramp wishes to OEM the standard version of the 2-port SonicWALL with minor cosmetic modifications. Sonic has agreed to provide this customized version of the 2- port SonicWALL to Ramp subject to the terms of this Agreement and in reliance upon Ramp's representation that it has the technical, marketing, financial, and business capabilities to fulfill Ramp's obligations set forth in this Agreement.



1. Definitions.

-----------



Channel Partners. "Channel Partners" shall mean any third party authorized

---------------- by Ramp to resell the Product and includes, but is not limited to, distributors, resellers, value-added resellers, system integrators, and OEMs.



Confidential Information. "Confidential Information" means any data or

------------------------ information, oral or written, treated as confidential that relates to either Party's (or, if either Party is bound to protect the confidentiality of any other person's information, such other person's) past, present, or future research, development, or business activities, including any unannounced products and services, and including any information relating to services, developments, inventions, processes, plans, financial information, customer and supplier lists, forecasts, and projections. Confidential Information also includes the terms of this Agreement. Notwithstanding the foregoing, Confidential Information is deemed not to include information that: (i) is publicly available or in the public domain at the time disclosed; (ii) is or becomes publicly available or enters the public domain through no fault of the Party receiving such information; (iii) is rightfully communicated to the recipient by persons not bound by confidentiality obligations with respect thereto; (iv) is already in the recipient's possession free of any confidentiality obligations with respect thereto (excluding, however, any copies of the Product that may be in Ramp's possession prior to the date of this Agreement); (v) is independently developed by the recipient; (vi) is approved for release or disclosure by the disclosing Party without restriction; or (vii) is required to be disclosed or is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that the recipient shall provide prompt notice thereof to the disclosing Party to enable the disclosing Party to seek a protective order or otherwise prevent or restrict such disclosure.



Deliverables. "Deliverables" shall mean the items listed in Exhibit A.

------------



*Material has been omitted pursuant to a request for confidential treatment. Such material has been filed separately with the Securities and Exchange Commission.

Derivative Works. "Derivative Works" means programming or design changes

---------------- made to the Product.



Documentation. "Documentation" shall mean the user manual associated with

------------- the Products.



End User. "End-User" means end user customers located within the Territory

-------- who receive the Product.



Enhancements. "Enhancements" means any modification or addition that, when

------------ made or added to the Product, materially changes its utility, efficiency, functional capability, or application, but that does not constitute solely an Error Correction. Enhancements may be designated by Sonic as minor or major, depending on Sonic's assessment of their value and of the function added to the preexisting Product.



Error. "Error" means the failure of the Product to conform in all material

----- respects to its functional specifications as published from time to time by Sonic, the current version of which is attached as Exhibit C hereto. However, any nonconformity resulting from Ramp's or its customers' misuse, improper use, alteration, or damage of the Product is not an Error.



Error Correction. "Error Correction" means either a modification or an

---------------- addition that, when made or added to the Product, establishes material conformity of the Product to its Specifications



First-Tier Support. "First-Tier Support" shall mean technical support of

------------------ the Product directly to End Users.



Initial Purchase Order. "Initial Purchase Order" shall mean the first

---------------------- purchase order submitted by Ramp and accepted by Sonic and dated ___________.



Licensed Upgrades. "Licensed Upgrades" shall mean any upgrade for the

----------------- Product for which there is a defined upgrade price in Exhibit B and for which Sonic will provide to Ramp a software upgrade key to enable such upgrade.



Modifications. "Modifications" means any changes to the Product made by

------------- Sonic.



NRE. "NRE" means non-recurring engineering.

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Options. "Options" shall mean Product Software add-ons that may be made

------- available to customers from time to time for an additional charge.



Party or Parties. "Party" or "Parties" means Sonic or Ramp, as applicable,

---------------- or both Sonic and Ramp as parties to this Agreement.



Products and Prices. "Products" and "Prices" shall mean the Products (as

------------------- modified for Ramp in accordance with Exhibit A and Section 5) and Prices listed in Exhibit B. Products includes all





*Material has been omitted pursuant to a request for confidential treatment. Such material has been filed separately with the Securities and Exchange Commission. Documentation, Software, Enhancements, Error Corrections, Modifications, Licensed Upgrades, and Releases Sonic makes available to Ramp hereunder.



Releases. "Releases" means new versions of the Software or Product, which

-------- may include, without limitation, Error Corrections, Enhancements, and Modifications.



Second-Tier Support. "Second-Tier Support" shall mean technical support of

------------------- the Product directly to Channel Partners.



Severity I Bug. "Severity I Bug" shall mean any demonstrable Error in the

-------------- Product that: (i) causes the Product to have a significant loss of intended function as set forth in the applicable Specifications; (ii) causes or is likely to cause data to be lost or destroyed; or (iii) prevents the Product from being installed or executed on the properly configured environment.



Software. "Software" shall mean the computer programs and/or firmware

-------- which are necessary in order to cause the Products to operate properly, which are described on Exhibit A, and which Sonic will provide to Ramp hereunder.



Specifications. "Specifications" shall mean the specifications for the

-------------- Products set forth on Exhibit A, Exhibit C, and as otherwise mutually agreed upon by the Parties in writing.



Third-Tier Support. "Third-Tier Support" shall mean technical support of

------------------ the Product directly to Ramp.



Territory. The "Territory" is the world, subject to the export

--------- restrictions covered in Section 11.1.



2. Rights and Restrictions.

-----------------------



2.1 License Grants. Sonic hereby grants to Ramp a non-exclusive, world-

-------------- wide right to reproduce the Documentation and to use, support, sell, modify (as set forth in Section 3.4), and distribute the Products. Ramp does not have the right to re-license the Products to a third party for purposes of manufacturing the Products. However, should a case arise where Ramp needs manufacturing rights or to convey manufacturing rights to a third party in order to secure a large OEM opportunity, the Parties agree to negotiate such an arrangement in good faith.



2.2 Use of Trademarks/Logos. No license is granted to Ramp to use any

----------------------- Sonic trademarks, service marks or logos, or those trademarks or logos of any of Sonic's OEMs without the prior, express written permission of Sonic.



2.3 Ownership of Intellectual Property in Products. The Sonic Products,

---------------------------------------------- including any associated intellectual property rights and/or Derivative Works, are and remain the sole property of Sonic. Ramp shall from time to time take any further action and execute and deliver any further instrument, including documents of assignment or acknowledgment, that Sonic may reasonably request in order to establish and perfect its exclusive ownership rights in such Products, including any associated intellectual property rights.





*Material has been omitted pursuant to a request for confidential treatment. Such material has been filed separately with the Securities and Exchange Commission.





2.4 Software License Restrictions. Ramp shall not reverse compile or

----------------------------- disassemble object code versions of the Software included in the Product or otherwise create, attempt to create, or permit or assist others to create a source code of the Software.



2.5 Independent Developments. It is understood that the Parties have

------------------------ performed and will continue to perform substantial independent development relating to networking products and associated technologies. Each Party also understands that, over time, the other Party's employees may gain familiarity with the general concepts and ideas in the other Party's technology disclosed under the Agreement from independent sources. Consequently, each Party acknowledges that each Party shall be free to use such independently developed or received concepts and ideas free of all restrictions, other than those set forth in this Section 2.



3. Consideration.

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3.1 Purchase from Sonic. Products may be purchased by Ramp at the Prices

------------------- listed in Exhibit B. Ramp shall issue individual purchase orders for each Product listed in Exhibit B. Each purchase order must be received 60 days in advance of the applicable shipping date and must be non-cancelable; however, the purchase orders may be increased by up to 50% in quantity of Products being ordered upon not less than 30 days notice prior to the scheduled shipping date. A non-binding 90 day forecast must accompany all purchase orders covering the three consecutive months following the current purchase order. All Products are fully tested and verified in accordance with existing manufacturing procedures. All Products are shipped in bulk packaging in anti-static bags individually wrapped, FOB Sonic's factory in San Jose, CA. However, the second shipment against the Initial Purchase Order, due to arrive at Ramp no earlier than April 1, 1999, shall be F.O.B. Ramp's location in Fremont, California. All other shipments shall be F.O.B. Sonic's factory in San Jose, CA. Title and risk of loss for the Product shall pass to Ramp once it is turned over to Ramp's shipping agent or freight forwarder.



3.2 Terms of Purchase. Terms of purchase shall be net 30 days. Sonic

----------------- will grant such credit approval to Ramp, provided Ramp meets Sonic's credit approval standards. However, payment terms for only the first shipment against the Initial Purchase Order (due January 29, 1999) shall be net 45 days.



3.3 Minimum Purchase Orders. Each purchase order presented to Sonic must

----------------------- be for a minimum of [* * * ] of Product to be delivered in a single shipment.



3.4 Inventory Balancing. Ramp will have the right to modify Product in

------------------- its inventory as needed via a software key to increase or decrease the number of users per model (for example, if Ramp needs 25-user units and only has 5-user units in inventory, Ramp can use a software key to upgrade the 5-user units to 25-user units). The detailed mechanics of how such upgrade shall be done will be mutually agreed to by the Parties. The charge or credit to Ramp (depending on the nature of the upgrade/downgrade) shall be the actual price difference between the models, and shall be reconciled and paid no later than fifteen (15) days following the end of each calendar quarter.





*Material has been omitted pursuant to a request for confidential treatment. Such material has been filed separately with the Securities and Exchange Commission.

4.0 Upgrade License Accounting Reports and Audit Rights.

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4.1 Accounting Reports. Ramp shall maintain an accurate list of Licensed

------------------ Upgrade units based on the Product's serial number associated with each copy of the Licensed Upgrades described in Exhibit B for a period of three (3) years after such Licensed Upgrade is made in accordance with Section 3.4. Within fifteen (15) days after the end of each calendar quarter, Ramp shall complete and submit to Sonic a detailed report setting forth all sales of the Licensed Upgrades during such calendar month and remit to Sonic the appropriate license or other fee payments due based on such report. If necessary and at Sonic's discretion, Ramp shall allow a mutually agreed upon, third party auditor to review Ramp records associated with such Licensed Upgrades per the Audit Rights in Section 4.2 below.



4.2 Audit Rights. Sonic has the right to direct a mutually agreed upon

------------ third party auditor to conduct, during normal business hours and upon reasonable prior written notice to Ramp, an audit of the appropriate records of Ramp to verify the accuracy of Ramp's reports to Sonic; provided, that Sonic shall conduct no more than one (1) such audit during any twelve (12) month period. Such audit shall be at Sonic's expense, unless the adjustment to the Licensed Upgrade or other fees owing from Ramp is greater than [* * * ] of fees reported by Ramp, in which case Ramp shall pay all expenses associated with the audit. Within ten (10) days after receipt of notice from Sonic, Ramp shall remit to Sonic all amounts found in any such audit to be due to Sonic and not previously paid by Ramp.



5. Customization and Deliverables.

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5.1 Customization. Sonic agrees, at no charge to Ramp, to make specific

------------- minor cosmetic and pre-configuration modifications to Sonic's pre-existing products as set forth on Exhibit A.



5.2 Deliverables. The Deliverables are fully described in Exhibit A

------------ attached. Sonic will deliver all Deliverables to Ramp in accordance with the schedule set forth on Exhibit D. Ramp will have the right to test the Deliverables for a period of five (5) working days following Ramp's receipt of such Deliverables to determine whether the Deliverables conform to the Specifications. If Ramp determines the Deliverables fall to conform to the Specifications, Ramp will notify Sonic, and Sonic will use its best efforts to correct such defect within two (2) days. At the end of this period, Sonic will submit the corrected Deliverables to Ramp for acceptance by Ramp under this Section 5.2; provided, however, that if the corrected Deliverables fail to conform to the Specifications, Ramp will have the right to terminate this Agreement upon written notice to Sonic. The procedure set forth in this Section 5.2 will repeat until Ramp either accepts or permanently rejects the Deliverables.



6. Support Obligations, Product Updates, and Product Upgrades.

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6.1 Scope of Services. During the term of this Agreement, Sonic shall

----------------- render certain services in support of the Products, during Sonic's normal working hours (Monday through Friday, 9am to 5pm, PST, excluding holidays).



(a) Sonic shall maintain a trained staff capable of rendering the services set forth in this Agreement.





*Material has been omitted pursuant to a request for confidential treatment. Such material has been filed separately with the Securities and Exchange Commission.

(b) Ramp shall provide First-Tier Support and Second-Tier Support.



(c) Sonic shall only provide Third-Tier support. Under no circumstances shall Sonic be obligated to directly support a Ramp Channel Partner or an End User of the Product.



6.2 Updates and Upgrades. During the term of this Agreement Sonic, at its

-------------------- own discretion, shall release Product updates and upgrades and shall make such updates and upgrades available to Ramp. Sonic shall not charge Ramp for such upgrades or updates unless Sonic generally charges its customers for such upgrades and updates.



(a) Sonic is responsible for using all reasonable diligence to correct verifiable and reproducible Errors when reported to Sonic by Ramp in accordance with Sonic's standard reporting procedures communicated in writing to Ramp. Sonic shall, within two (2) days of verifying that such an Error is present, initiate work in a diligent manner toward development of an Error Correction. Following completion of the Error Correction, Sonic shall make such Error Correction available to Ramp and shall include the Error Correction in all sub ...