EXHIBIT 10.29

 

LARSCOM, INC.

 

AND

 

SPARQTRON MANUFACTURING CORP.

 

AGREEMENT FOR

 

ELECTRONIC MANUFACTURING SERVICES

 

1

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MANUFACTURING AGREEMENT

 

Table of Contents

 

1.

  

Definitions

  

p.3

2.

  

Manufacture of Products

  

p.5

3.

  

Consigned Materials

  

p.6

4.

  

License Grant

  

p.6

5.

  

Subcontractor

  

p.6

6.

  

Delivery

  

p.6

7.

  

Acceptance

  

p.7

8.

  

Inspection by LARSCOM

  

p.7

9.

  

Engineering Change Order

  

p.8

10.

  

Repair

  

p.8

11.

  

Price

  

p.8

12.

  

Payment

  

p.8

13.

  

Attrition.

  

p.8

14.

  

Testing Failures

  

p.8

15.

  

Warranty

  

p.8

16.

  

Indemnity

  

p.9

17.

  

New Products

  

p.10

18.

  

Forecasts

  

p.10

19.

  

Purchase Orders

  

p.11

20.

  

Schedule Changes

  

p.11

21.

  

Cancellation

  

p.11

22.

  

Minimum Order Components and Materials

  

p.12

23.

  

Long Lead-Time Components and Materials

  

p.12

24.

  

Non-Cancelable Non-Returnable Components and Materials (NCNR)

  

p.12

25.

  

Excess Inventory

  

p.12

26.

  

Safety Stock

  

p.13

27.

  

LARSCOM Property

  

p.13

28.

  

Terms

  

p.13

29.

  

Termination

  

p.13

30.

  

Effect of Termination

  

p.14

31.

  

Liability Limitation

  

p.14

32.

  

Relationship of Parties

  

p.14

33.

  

Ownership

  

p.14

34.

  

Dispute Resolution

  

p.14

35.

  

Confidentiality

  

p.15

36.

  

Equitable Relief

  

p.16

37.

  

Force Majeure

  

p.16

38.

  

Governing Law

  

p.16

39.

  

Assignability

  

p.16

40.

  

Insurance

  

p.16

41.

  

Amendment

  

p.17

42.

  

Notice

  

p.17

43.

  

Waiver

  

p.17

44.

  

Severability

  

p.17

45.

  

Mutual Agreement

  

p.17

46.

  

Entire Agreement

  

p.17

    

Signature Page

  

p.18

    

Exhibit A-Product Price List

  

p.19

    

Exhibit B-Minimum Order Quantity Components and Materials

  

p.20

    

Exhibit C-Long Lead Time Components and Materials

  

p.21

    

Exhibit D-Non-Cancelable, Non-Returnable Components and Materials

  

p.22

    

Exhibit E-List of Prods and Revs; and Price for Rework

  

p.23

    

Exhibit F-Consigned Tooling and Equipment

  

p.24

    

Exhibit G–Excess Inventory Calculation

  

p.25

 

 

 

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MANUFACTURING AGREEMENT

 

This Manufacturing Agreement (“Agreement”) is entered into on October 21, 2002,
(the “Effective Date”) by and between LARSCOM, INC., (“LARSCOM”), a California
Corporation, with its principal place of business at 1845 McCandless Drive,
Milpitas, CA 95035 and Sparqtron Manufacturing Corporation (“Sparqtron”), a
California Corporation, with its principal place of business at 5079 Brandin
Ct., Fremont, CA 94538. LARSCOM and Sparqtron are referred to collectively as
the “Parties”, and individually as a “Party”.

 

Whereas, Sparqtron is in the business of providing manufacturing services that
include the custom manufacture of SMT and PTH electronic printed circuit board
assemblies and/or box level assemblies (the “Product”); and

 

Whereas, the Parties desire to establish the terms and conditions that will
apply to LARSCOM’s purchase of Sparqtron’s manufaacturing services for certain
SMT and PTH electronic printed circuit board assemblies and/or system level
assemblies;

 

In consideration of the foregoing and the Agreements contained herein, LARSCOM
and Sparqtron hereby agree as follows:

 

1.0    Definitions.

 

1.1    “Approved Vendor List” shall mean LARSCOM’s list of vendors that shall be
used to supply Inventory listed on the Bill of Materials included with the
Specifications.

 

1.2    “Attrition” shall mean the documented material lost to production fallout
and test failures.

 

1.3    “Bills of Materials (BOM)” shall mean LARSCOM’s listing or reference for
the Components and Materials included in or required for the
manufacture/assembly of Products based on Specifications.

 

1.4    “Components” shall mean the parts, materials and supplies included in or
required for each Product, as stipulated in the Bills of Materials. Components
may be supplied by LARSCOM as defined herein, if so indicated in the Bills of
Materials.

 

1.5    “Days” shall mean calendar days, unless otherwise specified, include
Saturdays, Sundays and United States Government recognized holidays. “Business
Days” do not include Saturdays, Sundays or United States Government recognized
holidays.

 

1.6    “Delivery Date” shall mean a date for which delivery of a Product is
requested in a LARSCOM Purchase Order or is otherwise mutually established by
the Parties.

 

1.7    “Downside” shall mean the percentage decrease in the quantity of Products
that LARSCOM may purchase less than the quantities in any Purchase Order.

 

1.8    “Engineering Change Order” (ECO) shall mean the document that details a
change in the Specifications and/or design of a Product.

 

1.9    “Excess Inventory” shall mean those components listed in the
Specifications which, are in Sparqtron’s or its subcontractor’s possession,
whose quantity exceed LARSCOM Purchase Order requirements, at a referenced date
and/or termination. (Note Section 25.0)

 

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1.10    “Finished Goods Inventory (FGI)” shall mean the finished Products that
LARSCOM requests that Sparqtron temporarily store on site. (Note Section 6.2)

 

1.11    “Intellectual Property “ shall mean all rights held by either Party in
its Products and/or Confidential Information, including, but not limited to each
Party’s patent rights, copyrights, trade secret rights, mask work rights and
other intellectual property and proprietary rights, including the right to
impose restrictions on the manufacture, assembly or distribution of the Products
or the subsequent use, sale or repair of the Products as purchased by LARSCOM
from Sparqtron, anywhere in the World.

 

1.12    “Inventory” shall mean raw materials, supplies, and components that
comprise Product pursuant to this Agreement.

 

1.13    “Long Lead Time Components and Materials” shall mean the Inventory used
in the manufacture of the Products that require a longer time to procure than
the time from Purchase Order acceptance to production start time. (Note Section
23.0)

 

1.14    “Minimum Order Components and Materials” shall mean the Inventory that
is procurable only in minimum quantities that exceed the quantities required for
LARSCOM Purchase Orders. (Note Section 22.0)

 

1.15    “Non-cancelable Non-Returnable (NCNR) Components and Materials shall
mean (i) Inventory listed on the Bills of Materials that is to be procured from
suppliers that will not accept returns or cancellations once such Inventory is
ordered or (ii) Inventory that may not be returned because the right of return
has expired. (Note Section 24.0)

 

1.16    “Premium Charge” shall mean the charge for particular documented
services hereunder including, but not limited to time incurred at the then
current shop rate, off-hour work, weekend or holiday work, additional material
handling, storage, re-inventorying and re-stocking.

 

1.17    “Product” shall mean the completed products (which may include, without
limitation,Components, Printed Circuit Board Assemblies and/or Box Assemblies)
as identified by the LARSCOM part number or assembly identification specified in
each Purchase Order issued under this Agreement and as described in the
Specifications. There can be multiple versions of a Product, based on
differences provided for the Bills of Materials.

 

1.18    “Program” shall mean the manufacturing services to be performed by
Sparqtron to LARSCOM pursuant to this Agreement.

 

1.19    “Program Management” shall mean the dedicated resources that the Parties
will provide to manage the overall effort on the Program. (Note Section 2.1)

 

1.20    “Program Reviews” shall mean the scheduled review meetings (monthly
and/or quarterly) to review the overall Program status. LARSCOM and Sparqtron
shall meet to develop the frequency, agenda and contents of these meetings.

 

1.21    “Purchase Order” shall mean the LARSCOM written authorization submitted
to Sparqtron and accepted by Sparqtron as identified herein stipulating the
product(s), Engineering Change and/or Revision level, quantity, pricing, and
requested delivery date(s). The terms of this Agreement shall control over
printed terms on any Purchase Order, quotation, acknowledgement, confirmation or
invoice. (Note Section 19.0)

 

1.22    “Purchase Price Variance” or “PPV” shall mean the difference between the
standard cost agreed upon by the Parties for the Components and actual purchase
price for Components. Where such actual purchase price is less than such
standard cost, the PPV shall be considered favorable. Where such actual purchase
price exceeds such standard cost, the PPV shall be considered unfavorable.

 

1.23    “Specifications” shall mean the written specifications provided by
LARSCOM for the manufacture and testing of the Products including, without
limitation, the current revision number, approved vendor list (AVL), bills of
material (BOMs), manufacturing procedures, schematics, testing procedures,
drawings and documentation.

 

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1.24    “Upside” shall mean the percentage increase in the quantity of Products
that LARSCOM may purchase above the quantities in any Purchase Order.

 

1.25    “Exhibits” shall include the following;

 

Exhibit A         Product Price List

Exhibit B         Minimum Order Quantity Components and Materials

Exhibit C         Long Lead Time Components and Materials

Exhibit D         Non-Cancelable Non-Returnable (NCNR) Components and Materials

Exhibit E         List of Products and Revision Level; and Prices for Rework

Exhibit F         Consigned Tooling and Equipment

Exhibit G         Excess Inventory Calculations

 

sThe Parties agree to work in good faith and mutually agree on the final
contents of the Exhibits, set forth herein. The final Exhibits will be
incorporated by reference into this Agreement, within ninety (90) days after the
date of execution of this Agreement. Each Exhibit may be amended from time to
time by the Parties.

 

2.0    Manufacture of Products.    During the term of this Agreement, Sparqtron
shall manufacture and test the Products in accordance with the Specifications
and as requested pursuant to LARSCOM purchase orders, under Section 19.0, and
maintain manufacturing and test records in accordance with reasonable industry
standards. Sparqtron shall manufacture and build Products to IPC-A-610-Rev. C,
Class 2. All inventory and equipment required in connection with such
manufacture and testing will be acquired or supplied by Sparqtron pursuant to
the Specifications, except for certain inventory or tooling and equipment that
may be supplied by LARSCOM (“LARSCOM Inventory” and “LARSCOM Property,”
respectively). Sparqtron will purchase inventory and/or special dedicated
equipment upon receipt of the relevant Purchase Orders and as necessary to fill
Purchase Orders.

 

2.1    Program Management.    Each Party shall appoint a technical coordinator
as the technical liaison with the other Party in connection with the initial
coordination and implementation of the manufacture of the Products as well as
ongoing support issues thereafter. This coordination will include all technical
aspects of the Program, but not limited to the release of the manufacturing
specifications, design or engineering of the Products, pending ECOs and release
dates, and the status of the manufacturing program. The Parties shall agree in
writing as to the frequency (monthly or quarterly) of these business performance
reviews which include but are not limited to documentation, quality, delivery,
field quality, communications, responsiveness, costs, payments and other related
issues. The Program Managers will coordinate these meetings.

 

2.2    Quality Requirements.    Sparqtron agrees that the manufacture of the
Products under the terms of this Agreement will be in accordance with the
Quality Standards IPC-A-610-Rev. C, Class 2. Sparqtron agrees to maintain and be
responsible for ISO 9002 and TL 9000 certifications.

 

2.3    Product Training.    LARSCOM and Sparqtron will jointly develop a program
specifying the process for training Sparqtron personnel on the Products, the
number of personnel and where they are to be trained on the Products. In
addition, during the term of this Agreement, Sparqtron will maintain a
sufficient trained staff of personnel to adequately support all the requirements
set forth in this Agreement.

 

3.0    Consigned Materials.    LARSCOM may supply certain LARSCOM components and
materials (“Consigned Materials”) to Sparqtron for use in manufacturing the
Products. If LARSCOM supplies Consigned Materials to Sparqtron, LARSCOM will use
commercially reasonable efforts to ensure that that all Consigned Materials
shall be delivered to Sparqtron in sufficient time and in sufficient quantities,
taking into account mutually agreed to Attrition levels by the Parties, to allow
Sparqtron to meet scheduled Delivery Dates for the applicable Products. LARSCOM
will use commercially reasonable efforts to ensure that all Consigned Materials
shall be in good condition, meet Products Specifications, be packaged in a
readily usable format, and be free of any material defects or deficiencies.
Premium Charges may apply in the event of late delivery of Consigned Materials,
or the delivery of materially defective Consigned Materials, if such late
delivery directly and materially impacts the original Delivery Date where such
original Delivery Date is required to be maintained by LARSCOM. LARSCOM may
agree to extend such Delivery Date mutually agreed to by the Parties, in which
event, the Premium Charges will not apply. LARSCOM shall retain all rights,
title and interest in the Consigned Materials, and the Consigned Materials shall
be used by Sparqtron, without modification, unless directed in writing by
LARSCOM, and used only in filling Purchase Orders from LARSCOM. Sparqtron shall
bear all risk of damage or loss for the Consigned Materials until such LARSCOM’s
Consigned Materials are returned to LARSCOM, or otherwise leaves the care and
custody of Sparqtron at LARSCOM’s request. Sparqtron shall keep the Consigned
Materials segregated from other

 

5

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components and materials for tracking and inventory management purposes, and to
the extent practical, and shall clearly identify all Consigned Materials with
“Property of LARSCOM” or a similar marking, and shall use at least the same
degree of care in managing and protecting the Consigned Materials it uses in
managing and protecting its own inventory, but no less care than reasonable
care. LARSCOM may request to transfer certain Components to Sparqtron at cost;
however, this will in good faith be separately discussed and mutually agreed to
in writing. Sparqtron shall not be obligated to purchase any Excess Consigned
Materials.

 

4.0    License Grant.    Subject to the terms and conditions of this Agreement
and during the term of this Agreement, LARSCOM grants Sparqtron a
non-transferable, non-exclusive, royalty-free license with the right to grant
sublicenses, as set forth in Section 5.0, under LARSCOM’s Intellectual Property
Rights to (i) use the Specifications and any other proprietary information,
documents and materials including software, drawings bills of materials, test
procedures and manufacturing procedures provided by LARSCOM to Sparqtron
(collectively, the LARSCOM Materials) internally and solely to manufacture the
Products and otherwise perform its obligations as expressly authorized
hereunder, and (ii) reproduce and install in the Products any software provided
by LARSCOM. Except as permitted herein, Sparqtron will not use, reproduce,
modify, create derivative works of, sublicense, distribute, or otherwise
transfer any LARSCOM Materials.

 

5.0     Subcontractor.    Sparqtron may grant sublicenses under the license
granted in Section 4.0; provided however, (i) any sublicense shall be subject to
the prior written approval of LARSCOM, which approval shall not be unreasonably
withheld, and (ii) such sublicense shall bind such subcontractor to the same
terms and conditions of this Agreement; and (iii) Sparqtron will be responsible
for sublicense’s compliance with the terms and conditions of this Agreement.

 

6.0    Delivery.    Delivery of Products to LARSCOM’s principal place of
business as listed above, shall be F.O.B. destination shipped via Sparqtron’s
choice of transport at no cost to LARSCOM or its customers, if located within
twenty (20) miles from Sparqtron’s principal place of business as listed above.
Title and risk of loss to all Products shall pass to LARSCOM upon receipt of the
shipment by LARSCOM or its customers at the destination.

 

6.1    This Section 6.1 shall apply only to deliveries over twenty (20) miles
from Sparqtron’s principal place of business as listed above, which deliveries
shall be F.O.B. Sparqtron’s plant. Title and risk of loss to all Products shall
pass to LARSCOM upon delivery to the common carrier specified by LARSCOM.
Sparqtron shall assist LARSCOM in arranging any desired shipping and insurance
(in amounts that LARSCOM shall determine). All costs of shipping, insurance and
freight and customs, duties, taxes, insurance premiums, and other expenses
relating to such transportation and delivery, shall be at LARSCOM’s expense.

 

6.2    Sparqtron shall deliver Products on or no earlier than three (3) days
before the mutually agreed upon Delivery Date and no later than the Delivery
Date. If circumstances arise that prevent Sparqtron from such timely delivery of
Products, Sparqtron shall immediately notify LARSCOM of the nature of the
problem, the methods taken to overcome the problem and the estimated time of
delay. If the delay was caused by Sparqtron, Sparqtron may be requested to
employ accelerated measures such as material expediting fees, premium
transportation costs and/or labor overtime to minimize lateness at no additional
cost to LARSCOM.

 

6.3    Finished Goods Inventory (FGI). Should LARSCOM choose to establish a
Finished Goods Inventory at Sparqtron, any Product destined for the FGI shall be
invoiced as it is delivered to the FGI. Any storage charges for Product
remaining in FGI over thirty (30) days will in good faith be mutually determined
and agreed to in writing at least ninety (90) days prior to establishment of the
Finished Goods Inventory. Storage of FGI for thirty (30) days or less will be at
no charge. Sparqtron shall keep all Products in the FGI segregated from other
products for tracking and inventory management purposes in a separate area,
clearly identified “Property of LARSCOM” or a similar marking, and shall use at
least the same degree of care in managing and protecting such Products as it
uses in managing and protecting its own inventory, but no less care than
reasonable care. Prior to the establishment of the FGI the Parties will agree in
good faith and set forth in writing the specifics regarding delivery of Products
in the FGI to LARSCOM’s customer or LARSCOM.

 

7.0    Acceptance.    All Products supplied by Sparqtron under this Agreement
shall conform to the Specifications. Notwithstanding any prior inspection or
payment by LARSCOM, LARSCOM may reject any portion of any shipment of Products
which is not conforming to the Specifications as determined by LARSCOM following
quality control tests and inspection or as otherwise found to be defective
including defects in workmanship. Any Products so returned to Sparqtron shall be
repaired or replaced, at Sparqtron’s option and expense, within ten (10)
business days of receipt by Sparqtron of the rejected Product; provided that (i)
LARSCOM

 

6

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obtains a Return Material Authorization (“RMA”) from Sparqtron prior to
returning the Products and which Sparqtron shall provide to LARSCOM a RMA number
promptly upon request, (ii) the Products are returned within sixty (60) days of
the date the Product was delivered to LARSCOM by Sparqtron, and (iii) the
failure analysis, or summary thereof, conducted by LARSCOM shall accompany the
Product.

 

7.1    LARSCOM’s Customers Acceptance. Rejection of any portion of any shipment
of Products which does not conform to the Specifications as determined by
LARSCOM’s direct or indirect customers (whether they are resellers,
distributors, OEMs or end users) and confirmed by LARSCOM, shall be returned to
Sparqtron, in accordance with procedures as set forth in Section 7.0, above.

 

8.0    Inspection by LARSCOM.    Upon request by LARSCOM, from time to time, and
with at least one (1) business day notice and during normal business hours,
Sparqtron will grant access to its manufacturing facilities. Sparqtron agrees to
keep complete and accurate books and records relating to its obligations under
this Agreement for the term of this Agreement and for a period of one (1) year
thereafter (“Audit Period”). During the Audit Period, Sparqtron shall allow such
inspectors to inspect such books and records related to the manufacturing,
quality control and testing operations and records, compliance procedures,
relating to the Products, as well as inventory levels to ensure that Sparqtron
can meet LARSCOM’s future orders for Products, and is otherwise satisfying its
obligations under and complying with the terms of this Agreement. Sparqtron
shall promptly implement corrective action to remedy deficiencies identified by
LARSCOM during such inspections or in order to comply with the Specification.

 

8.1    Inspection by LARSCOM’s Customer. Any request from LARSCOM’s customers
shall be processed through LARSCOM with a written request to Sparqtron.
Sparqtron shall grant access to its manufacturing facilities and records, etc.,
as set forth in Section 8.0, above.

 

9.0    Engineering Change Order (ECO).     An ECO is required when the form, fit
or function for the design of the Product and/or Specifications are affected.
Sparqtron agrees to promptly implement, at LARSCOM’s expense, any change in the
Specifications or the design of a Product reasonably requested by LARSCOM
pursuant to an ECO. Sparqtron shall provide a written response in the form of an
“Assembly Change Notice” form to LARSCOM if such changes affect the per-unit
price and/or delivery of a Product, within three (3) business days of receiving
the ECO. LARSCOM shall respond with a written acceptance or rejection of the
Sparqtron “Assembly Change Notice” form within three (3) business days
thereafter. Sparqtron shall not implement the change to the design or
Specifications of any Product or materials, equipment, manufacturing and quality
assurance procedures, methods and techniques used to produce a Product, without
LARSCOM’s prior written approval in the form of a Purchase Order.

 

10.0    Intentionally Left Blank.

 

11.0    Price.    Price for the Products shall be as set forth in Exhibit A of
this Agreement, which is subject to change by mutual Agreement in writing of the
Parties hereto. The Parties shall review this list, at least, on a monthly
basis.

 

11.1    Purchase Price Variance. In cases where the actual purchase price of any
Component is more than ten percent (10%) greater than the standard cost agreed
upon by the Parties for such Component, Sparqtron shall contact LARSCOM for
written approval before the purchase of any such Component is made. LARSCOM
shall respond to such PPV request within two (2) business days. Sparqtron shall
provide LARSCOM with a quarterly summary of the PPV. The Parties shall in good
faith review and mutually agree upon its financial disposition. (i.e., If the
PPV is favorable, Sparqtron shall reimburse LARSCOM; if the PPV is unfavorable,
LARSCOM shall issue a purchase order to Sparqtron).

 

12.0    Payment.    Terms of payment shall be net Thirty (30) Days from the date
of invoice or receipt of the applicable Products, whichever is later, payable in
U.S. dollars. Invoices past due shall incur late charges at the rate of three
quarter of one-percent (0.75%) per month past due.

 

13.0    Attrition.    The reasonable costs of manufacturing fallout and testing
component failures relating to the manufacture of the Products, is included in
the material cost.

 

14.0    Testing Failures.    LARSCOM agrees to provide sufficient support to
help resolve anytesting,engineering or design issues.

 

7

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15.0    Warranties.

 

15.1    Sparqtron Warranty.

(a) Sparqtron represents and warrants to LARSCOM that all work and service
provided pursuant to this Agreement will be provided in a timely, professional
and workmanlike manner and all Products when delivered by Sparqtron to LARSCOM,
(i) shall conform to the then current Specifications, and (ii) shall be free
from defects in manufacturing and workmanship for a period of twelve (12) months
from the date the Products are delivered to LARSCOM’s designated location. Any
Products that do not meet the foregoing warranty shall be repaired or replaced
at Sparqtron’s sole option and expense or Sparqtron shall refund to LARSCOM or
credit LARSCOM’s account for the purchase price of the Products,within ten (10)
business days of receipt by Sparqtron of the returned Products; provided that
(i) LARSCOM obtains a Return Material Authorization (“RMA”) from Sparqtron prior
to returning the Products, which Sparqtron agrees to provide promptly upon
request therefore, (ii) the Products are returned within twelve (12) months of
the date the Product was delivered to LARSCOM by Sparqtron, and (iii) the
failure analysis, or summary thereof, conducted by LARSCOM or a summary of
defects shall accompany the Product. Such warranty will not apply if LARSCOM
alters, misuses, neglects, or abnormally stresses the Products. With respect to
any components acquired or supplied by Sparqtron that are incorporated into the
Products, Sparqtron makes no representation or warranty, except that Sparqtron
agrees to pass through to LARSCOM the warranty, if any, originally provided to
Sparqtron by the manufacturer of such components and agrees to cooperate in
processing and seeking applicable third Party warranty claims and in taking
advantage of and seeking remedies, if any, available from the original sources
of the components.

 

(b) This warranty does not apply to situations where LARSCOM wants their Product
ECO upgraded or repaired due to LARSCOM’s mishandling or misuse; such Products
are to be returned with a Purchase Order.

 

(c) Sparqtron further represents and warrants that (i) it has good and clear
title to the Products, free and clear of all liens, claims and encumbrances, and
the right to grant the rights granted hereunder, (ii) Sparqtron has not
infringed on any Intellectual Property of any third Party in connection with its
performance under this Agreement, and (iii) Sparqtron has the right and power to
enter into this Agreement.

 

(d) SPARQTRON WARRANT DISCLAIMER. EXCEPT FOR THE WARRANTIES PROVIDED IN SECTION
15.1, SPARQTRON MAKES NO OTHER WARRANTIES, EXPRESSED OR IMPLIED, WITH RESPECT TO
THE COMPONENTS, PRODUCTS OR ANY SERVICES PROVIDED UNDER THIS AGREEMENT, AND
DISCLAIMS ALL OTHER WARRANTIES INCLUDING THE WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

 

15.2    LARSCOM Warranty.

(a) LARSCOM represents and warrants to Sparqtron that (i) it owns or has the
right to the use the LARSCOM Components as contemplated herein, (ii) to its
knowledge, LARSCOM Intellectual Property provided to Sparqtron hereunder,
including without limitation, the Specifications, does not infringe the
proprietary rights of any third Party, and (iii) LARSCOM has the right and power
to enter into this Agreement.

 

(B) LARSCOM’S WARRANT DISCLAIMER. EXCEPT FOR THE WARRANTIES PROVIDED IN SECTION
15.2, LARSCOM MAKES NO OTHER WARRANTIES WITH RESPECT TO THE LARSCOM INTELLECTUAL
PROPERTY, LARSCOM COMPONENTS, LARSCOM PROPERTY, THE LICENSES GRANTED HEREUNDER
OR OTHER MATERIALS OR DOCUMENTATION PROVIDED BY LARSCOM HEREUNDER AND DISCLAIMS
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, OR
ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICE.

 

16.0    INDEMITY

 

16.1    Indemnity by Sparqtron. Sparqtron agrees to indemnify and hold LARSCOM
and its customers harmless from and against any and all losses, liabilities,
damages, expenses and costs (including reasonable attorney’s fees and court
costs) to the extent that they are based upon; (a) a breach or alleged breach of
any of representations and warranties made by sparqtron in Section 15.1; (b) a
claim that Sparqtron manufacturing process infringes or misappropriates any
third party’s U.S. patent or copyright or miss appropriates any trade secret
recognized as such under the Uniform Trade secrets Act; (c) any product
liability or similar claim arising from or resulting from any manufacturing
defect in any Product. Sparqtron will pay those costs and damages finally
awarded against LARSCOM or its customer in any such action that are specifically
attributable to such claim or

 

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those costs and damages agreed to in a monetary settlement or any such claim.
This indemnity shall not apply if (i) LARSCOM fails to give Sparqtron prompt
notice of any such claim or threatened claim and such failure materially
prejudices Sparqtron, or (ii) Sparqtron is not given the opportunity to assume
control of the defense or settlement, and (iii) LARSCOM does not provide
reasonable assistance to Sparqtron at sparqtron expense. Furthermore, if
Sparqtron assumes such control, it shall only be responsible for the legal fees
and litigation expenses of the attorneys it designates to assume control of the
litigation. However, LARSCOM may participate in the defense or settlement of
such claim at its own expense. Nothing in this Agreement is intended to be or to
serve as a grant of authority or power in the indemnifying Party to bind the
indemnified Party to act or refrain from acting in any way at any time. This
Section states that LARSCOM’s entire liability and Sparqtron’s sole and
exclusive remedy of all indemnity claims and actions against Sparqtron provided
in this Section.

 

16.2 Indemnity by LARSCOM. LARSCOM agrees to indemnify Sparqtron and hold
Sparqtron harmless from and against any and all losses, liabilities, damages,
expenses and costs (including reasonable attorney’s fees and court costs) to the
extent that they are based upon; (a) a breach or alleged breach of any
representations or warranties made by LARSCOM in Section 15.2; (b) a claim that
any LARSCOM Materials infringes any U.S. Patent or copyright or misappropriates
any trade secrets recognized as such under the Uniform Trade Secret Act. LARSCOM
will pay those costs and damages finally awarded against Sparqtron in any such
action that are specifically attributable to such claim or those costs and
damages agreed to in a monetary settlement of such action. This indemnity shall
not apply (i) if Sparqtron fails to give LARSCOM prompt notice of any such claim
or threatened claim and such failure materially prejudices LARSCOM, or (ii)
unless LARSCOM is not given the opportunity to assume control of the defense or
settlement, and (iii) Sparqtron does not provide reasonable assistance to
LARSCOM at LARSCOM expense. Furthermore, if LARSCOM assumes such control, it
shall only be responsible for the legal fees and litigation expenses of the
attorneys it designates to assume control of the litigation. However, sparqtron
may participate in the defense or settlement of such claim at its own expense.
Nothing in this Agreement is intended to be or to serve as a grant of authority
or power in the indemnifying part to bind the indemnified Party or act or
refrain from acting in any way at any time. If any LARSCOM Material becomes, or
in LARSCOM’s opinion is likely to become the subject of an infringement claim,
LARSCOM may, at its option and expense, either (a) procure for Sparqtron the
right to continue exercising the rights licensed to it under this Agreement; (b)
replace or modify the LARSCOM Material so that it becomes non-infringing; or (c)
if neither option (a) or (b) is available, terminate this Agreement.
Notwithstanding the foregoing, LARSCOM will have no obligation under this
Section or otherwise with respect to any infringement claim based upon any
unauthorized use, reproduction or distribution of any LARSCOM Material or any
modification of any LARSCOM Material by any other person than LARSCOM. This
Section states LARSCOM’s entire liability and Sparqtron’s sole and exclusive
remedy for all indemnity claims and actions against Sparqtron provided in this
Section.

 

17.0    New Products.    The Parties acknowledge and agree that LARSCOM may from
time to time, request in writing the manufacture and testing of prototypes,
pre-production units, test units or other similar products (“Odd Units”).
Sparqtron makes no representation or warranty, except for workmanship defects,
as to Odd Units identified as such by LARSCOM and assumes no liability for or
obligation related to the yield, performance, accuracy, specifications, defects
of or due to (i) fixtures, designs or instructions produced or supplied by
LARSCOM, (ii) LARSCOM Components, (iii) components or other equipment from any
vendor on the Approved Vendor List or (iv) printed circuit boards or any other
LARSCOM designated components that are manufactured pursuant to LARSCOM’s
specifications.

 

18.0    Forecasts.    During the term of this Agreement, LARSCOM shall deliver
to Sparqtron, on a rolling monthly basis, a six (6) months forecast for the
quantity of Products LARSCOM is anticipating to order from Sparqtron (the
“Forecast”). The first three (3) months of the Forecast will be binding and
covered by firm Purchase Orders and the next three (3) months of the Forecast
shall not be binding. LARSCOM shall issue each succeeding month’s forecast by
the tenth (10th) of each month. Provided, however, that if the 10th day of the
month falls on a holiday, or weekend, then the Forecast shall be delivered on
the first following business day.

 

19.0    Purchase Orders.    During the term of this Agreement, LARSCOM shall
provide Sparqtron with Purchase Orders for the Products to cover the first three
(3) month period, on a rolling monthly basis as provided in the Forecast (as
defined in Section 18.0). LARSCOM shall issue each succeeding month’s Purchase
Order by the tenth (10th) of each month. Provided, however, that if the 10th day
of the month falls on a holiday, or weekend, then the Purchase Order shall be
delivered on the first following business day. Each Purchase Order shall be as
specified in Section 1.21. Notwithstanding the foregoing, Sparqtron’s
performance pursuant to a Purchase Order shall be deemed accepted by Sparqtron
of such Purchase Order and such Specifications or other identifications
(including any ECO’s) unless it is rejected in writing within five (5) business
days of submission by LARSCOM.

 

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Sparqtron shall use best efforts to accept each Purchase Order. In the event of
a rejection, Sparqtron shall provide LARSCOM with written notice setting forth
the reasons for such rejection. The terms and conditions of this Agreement will
control over any terms contained in any quotation, LARSCOM Purchase Order,
written acceptance or acknowledgment by Sparqtron, invoice or any other document
that is not clearly an amendment to this Agreement signed by both Parties.

 

20.0    Schedule Changes.

 

20.1    LARSCOM may not cancel any Purchase Orders or re-schedule the quantity
of Product and/or Delivery Date within thirty (30) days of the scheduled
Delivery Date. LARSCOM may delay all or any portions of the scheduled Product
delivery upon written notification to Sparqtron on the following schedule:

 

20.2    From thirty-one (31) to sixty (60) days prior to the scheduled Delivery
Date, LARSCOM may reschedule out not more than fifty percent (50%) of the
quantity of Product to be shipped up to thirty (30) days without charge or
expense. The balance of the rescheduled Products must be shipped within thirty
(30) days of the rescheduled date.

 

20.3    From sixty-one (61) to ninety (90) days prior to the scheduled Delivery
Date, LARSCOM may reschedule out up to one hundred percent (100%) of the
quantity of Product to be shipped up to sixty (60) days without charge or
expense.

 

20.4    In the event that LARSCOM desires to increase quantities (“Upside”) of
Products scheduled for delivery; Sparqtron will use its commercially reasonable
best efforts to accommodate the desired increases. Each of the foregoing may be
subject to a Premium Charge to be determined on a case-by-case basis, and
subject to LARSCOM’s prior written approval. In any event, notwithstanding the
foregoing, Sparqtron agrees to meet LARSCOM’s Upside requests of (a) up to one
hundred percent (100%) over forecasted quantities if LARSCOM provides Sparqtron
with at least three (3) months notice, and (b) up to three hundred percent
(300%) over forecasted quantities if given at least six (6) months notice.

 

21.0    Cancellation.    LARSCOM may cancel any order, or portion thereof, more
than sixty-one (61) days or more from the scheduled Delivery Date upon written
notification to Sparqtron and on the following schedule:

 

21.1    From sixty-one (61) to ninety (90) days from the scheduled Delivery
Date, Sparqtron shall immediately and use its commercially reasonable best
efforts to (i) return to the suppliers the Inventory that would be used for such
canceled order or otherwise utilize any such inventory, or (ii) cancel
Sparqtron’s order for such inventory and cancel subcontracts related to the
manufacture of the cancelled Products LARSCOM is not obligated to pay Sparqtron
for inventories that are returned or inventories on order which are cancelled at
no cost to Sparqtron. In the event that Sparqtron would be required pay
re-stocking or cancellation fees for such inventory, Sparqtron shall notify
LARSCOM and LARSCOM, at its option, shall have the right to either pay such fees
or purchase and take title to such inventory. In the event Sparqtron cannot
return such inventory to the suppliers, or cannot otherwise utilize or cancel
future orders, LARSCOM shall (i) pay Sparqtron’s cost of all such inventories
that are in Sparqtron’s or its subcontractor’s (which subcontractors must be
approved as required by Section 5.0) possession as of the cancellation date that
have been procured for the canceled order, and (ii) Sparqtron’s cost of all such
inventories used in the manufacture or assembly of the Products that are in
Sparqtron’s or such subcontractor’s possession or on order, and (iv) take title
to those Products and such inventories. Sparqtron shall provide LARSCOM with
documentation to support all such charges. Unless otherwise set forth herein or
agreed upon by the Parties in writing, all determinations required under this
Section shall be made by generally accepted accounting principles. LARSCOM
authorizes Sparqtron to invoice any such costs within sixty (60) days of
LARSCOM’s notification of cancellation. Inventories that become unusable because
of a LARSCOM ECO, shall be treated in a like manner as inventories that become
unusable because of cancellation, as noted above.

 

21.2    LARSCOM may cancel delivery of Products with written notice at least
ninety-one (91) days prior to the scheduled Delivery Date without cost or
penalty, except for cost related to inventories on the Minimum Order Quantity
List, Non Cancelable-Non Returnable List, and Long Lead Time Lists, which shall
be treated in a like manner as inventories that become unusable because of
cancellation, as noted in Section 21.1. Sparqtron shall provide LARSCOM with
documentation to support all such charges.

 

22.0    Minimum Order Quantity Components and Materials.    Sparqtron and
LARSCOM shall agree upon and maintain an approved listing of Minimum Order
Quantity Components and Materials in the form of Exhibit B, as

 

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initially established and may be modified in writing from time to time by the
Parties in accordance with this Agreement. The Parties shall review this
listing, at least, on a quarterly basis.

 

23.0    Long Lead-Time Components and Materials.    Sparqtron and LARSCOM shall
agree upon and maintain an approved listing of Long Lead-Time Components and
Materials in the form of Exhibit C, as initially established and may be modified
in writing from time to time by the Parties in accordance with this Agreement.
The Parties shall review this listing, at least, on a quarterly basis.

 

24.0    Non-Cancelable Non-Returnable Components and Materials.    Sparqtron and
LARSCOM shall agree upon and maintain an approved listing of Non-Cancelable
Non-Returnable Components and Materials in the form of Exhibit D, as initially
established and may be modified in writing from time to time by the Parties in
accordance with this Agreement. The Parties shall review this listing, at least,
on a quarterly basis.

 

25.0    Excess Inventory.    Sparqtron shall identify Excess Inventory, in
accordance with the calculation on Exhibit G, on a monthly basis using the MRP
System Excess Inventory Dollar Report. Sparqtron shall adjust the calculation to
exclude Excess Inventory resulting from any error on Sparqtron’s part. Sparqtron
shall provide the Excess Inventory report to LARSCOM monthly with an explanation
of why Inventory is in Excess. LARSCOM shall review the report and explanations
and notify Sparqtron of its Agreement or disagreement with the calculation. The
Parties shall work together in good faith to resolve any disagreement with the
calculation and determine liability for any associated cost. Upon termination of
this Agreement, LARSCOM shall pay, to the extent not paid or payable, within
sixty (60) days of the date of termination by either Party, either (i)
Sparqtron’s documented cost of the On-Hand Excess Inventory that is in
Sparqtron’s and/or its subcontractor’s possession and that cannot be returned to
the supplier and take title to such non-returnable On-Hand Excess Inventory
and/or (ii) the supplier’s restocking fee of the returnable On-Hand Excess
Inventory. LARSCOM shall have no liability for inventory that was acquired in
Excess of its open purchase orders, except for Minimum Order Quantity components
in Exhibit B, Long Lead Time components in Exhibit C, and for NCNR components in
Exhibit D.

 

26.0    Safety Stock.    If requested by LARSCOM, Sparqtron shall maintain a
stock (“Safety Stock”) of Inventory in an amount that is mutually determined, in
writing, by Sparqtron and LARSCOM. Such Safety Stock will involve the purchase
of Inventory separate from Inventory procured for the purpose of fulfilling
pending Purchase Orders and shall be designated exclusively for LARSCOM Purchase
Orders. Safety Stock will be included in the Excess Inventory calculation
described in Section 25.0 above.

 

27.0    LARSCOM Property.    Any tooling and/or equipment supplied by LARSCOM
(“LARSCOM’s Property”) or developed or procured by Sparqtron at LARSCOM expense,
shall remain the property of LARSCOM and shall (i) be clearly marked or tagged
as the Property of LARSCOM, (ii) be and remain personal property, and not become
a fixture to real property, (iii) be subject to inspection by LARSCOM at any
time, (iv) be used only in filling purchase orders from LARSCOM, (v) be kept
free by Sparqtron of liens and encumbrances, and (vi) not be modified in any
manner by Sparqtron without the prior written approval of LARSCOM and be
maintained by Sparqtron in accordance with LARSCOM’s Maintenance Procedures
including but not limited to periodic calibration. LARSCOM shall retain all
rights, title and interest in the LARSCOM Property, and Sparqtron agrees to
treat and maintain the LARSCOM Property with the same degree of care as
Sparqtron uses with respect to its own valuable tooling and equipment, but no
less care than reasonable care. Sparqtron shall bear all risk of loss or damage
to LARSCOM Property until it is returned to LARSCOM. Upon LARSCOM’s request,
Sparqtron shall deliver all LARSCOM Property to LARSCOM in good condition,
normal wear and tear excepted, without cost to LARSCOM (exclusive of freight
costs); LARSCOM shall determine the manner and procedure for returning the
LARSCOM Property, and shall pay the corresponding freight costs. Sparqtron
waives any legal or equitable right it may have to withhold LARSCOM Property,
and Sparqtron agrees to execute all documents, or instruments evidencing
LARSCOM’s ownership of the LARSCOM Property as LARSCOM may from time to time
request. Such LARSCOM owned tooling and equipment are listed on Exhibit F, which
shall be revised as required.

 

28.0    Terms.    Unless terminated pursuant to Section 29.0 or as otherwise
authorized under this Agreement, this Agreement shall commence upon the
Effective Date and shall continue until either Party terminates this Agreement.
Either Party may terminate this Agreement by providing the other Party with a
ninety (90) days written notice of termination, with or without cause.

 

29.0    Termination.    Either Party for cause, may immediately terminate this
Agreement by providing written notice to the other Party, upon the occurrence of
any of the following events.

 

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29.1    If the other Party ceases to do business, or otherwise terminates its
business operations, excluding any situation where all or substantially all of
such other Party’s assets, stock or business to which this Agreement relates are
acquired by a third Party (whether by sale, acquisition, merger, operation of
law or otherwise) unless such third Party is a competitor of the Party giving
notice of termination; or

 

29.2    If the other Party breaches any material provision of this Agreement and
fails to cure such breach within thirty (30) days of written notice describing
the breach; or

 

29.3    If the other becomes insolvent or seeks protection under any bankruptcy,
receivership, trust deed, creditors arrangement, composition or comparable
proceeding, or if any such proceeding is instituted against the other and such
proceeding is not dismissed within ninety (90) days.

 

30.0    Effect of Termination.     Upon any expiration or termination of this
Agreement, the obligations of either Party that exist pursuant to Sections 8.0,
12.0, 15.0, 20.0, 21.0, 25.0 through and including 27.0 and 30.0 through and
including 45.0 will survive. Notwithstanding the foregoing, Sparqtron shall
continue to fulfill, subject to the terms of this Agreement, all Purchase Orders
and ECO’s placed by LARSCOM and accepted by Sparqtron in accordance with this
Agreement prior to the effective date of termination. Remedies for all breaches
hereunder shall also survive termination of this Agreement.

 

The Parties agree in good faith to make every effort to complete the final
transfer of Products, Inventory and LARSCOM Property and complete all financial
transactions within ninety (90) days from the date of termination.

 

31.0    Liability Limitation. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT,
NEITHER PARTY WILL BE LIABLE UNDER ANY SECTION OF THIS AGREEMENT OR UNDER ANY
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR
INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS, EXCEPT
FOR A BREACH OF CONFIDENTIALITY HEREUNDER OR TO THE LIMITED EXTENT THAT THIRD
PARTY DAMAGES AGAINST WHICH A PARTY AGREES TO INDEMNIFY THE OTHER COMPRISE SUCH
DAMAGES OR LOSSES.

 

32.0    Relationship of Parties.    Sparqtron and its subcontractor(s) shall be
deemed to be independent contractors of LARSCOM, and this Agreement does not
create a general agency, joint venture, partnership, employment relationship, or
franchise between Sparqtron and LARSCOM. Each Party assumes full responsibility
for the actions and negligence of its employees, agents or other personnel
assigned by it to perform work pursuant to this Agreement, regardless of their
place of work, and shall be solely responsible for payment of salary, including
withholding of federal and state income taxes, social security, workers’
compensation and the like.

 

33.0    Ownership.    As between the Parties, and except as expressly granted to
Sparqtron in this Agreement, LARSCOM retains and shall exclusively own all title
to, and except as expressly and unambiguously licensed herein, all rights
(including without limitation, all Intellectual Property Rights), title and
interest in the LARSCOM Intellectual Property, Products, the LARSCOM Components,
LARSCOM Property, LARSCOM Inventory, Consigned Materials, LARSCOM Confidential
Information and Specifications and all inventions, discoveries, designs,
modifications, improvements, derivative works (by whomever produced) that are
made, developed, conceived or reduced to practice by LARSCOM or Sparqtron,
solely, jointly or on its behalf, in the course of or arising out of work
performed under this Agreement, and any related toolings and equipment provided
by or on behalf of LARSCOM. Sparqtron hereby assigns any right it may have in
the foregoing to LARSCOM. Sparqtron further agrees to do all things reasonably
necessary to evidence and perfect LARSCOM’s interest therein, as reasonably
requested by LARSCOM.

 

34.0    Dispute Resolution.

 

34.1    Binding Arbitration. Any controversy or claim between the Parties hereto
arising out of this Agreement shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect or alternatively, any other mutually acceptable
method of alternative dispute resolution. The arbitration shall be conducted in
Alameda County, California, before an arbitrator who shall be knowledgeable in
the relevant industry and subject matter of the dispute from the American
Arbitration Association or such other arbitration service as the Parties may, by
mutual Agreement, select. In the event of a disagreement as to the selection of
an arbitrator, each Party will select one arbitrator and each such arbitrator
shall select the third arbitrator, and the arbitration will be conducted before
the panel of three (3)

 

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arbitrators. If the two selected arbitrators are unable to agree on the third
arbitrator, the presiding Judge of the Superior Court having jurisdiction to
enforce the arbitration award shall select the third arbitrator. Judgment on the
award, the arbitrator renders, may be entered in any court having jurisdiction
over the Parties. Each Party shall pay one half of the cost of arbitration.

 

34.2    Attorney’s Fees. The prevailing Party in any legal action or proceeding
to enforce this Agreement shall be entitled to recover from the unsuccessful
Party its reasonable attorneys’ fees and all other costs incurred in connection
with such proceeding or the enforcement of the Agreement.

 

35.0    Confidentiality.

 

35.1    LARSCOM Confidential Information. During the term of this Agreement,
LARSCOM may provide to Sparqtron LARSCOM’s information including, but not
limited to, trade secrets, know-how, inventions (whether patentable or not),
ideas, improvements, materials, data, specifications, drawings, processes,
results, and formulae and all other business, technical and financial
information (“Confidential Information”) shall be LARSCOM’s confidential
information. In particular, but without limitation, the Specifications and the
Product components delivered to Sparqtron by LARSCOM shall be LARSCOM’s
Confidential Information. Sparqtron shall, at all times, both during the term of
this Agreement and thereafter for a period of four (4) years, keep in confidence
as a fiduciary all of LARSCOM’s Confidential Information received by it.
Sparqtron shall not use the Confidential Information of LARSCOM other than as
expressly permitted under the terms of this Agreement or by a separate written
Agreement. Sparqtron shall take reasonable steps to prevent unauthorized
disclosure or use of LARSCOM’s Confidential Information and to prevent it from
falling into the public domain or into the possession of unauthorized persons.
Sparqtron shall not disclose LARSCOM Confidential Information to any person or
entity other than its officers, employees, consultants and subsidiaries who need
access to such Confidential Information in order to perform its obligations
under this Agreement and who have entered into written confidentiality
Agreements which protect the LARSCOM’s Confidential Information. Upon
termination of this Agreement, Sparqtron shall promptly return any and all
LARSCOM’s Confidential Information.

 

35.2    Sparqtron Confidential Information. During this term of the Agreement,
Sparqtron may provide to LARSCOM, Sparqtron Confidential information including,
but not limited to trade secrets, know-how, inventions (whether patentable or
not) ideas, improvements, materials, data, specifications, drawing, processes,
results and formulae and all other business, technical and financial information
(“Confidential Information”) shall be Sparqtron’s confidential information. In
particular, but without limitation, the manufacturing process, testing process,
specifications and equipment shall be the Sparqtron’s Confidential Information.
LARSCOM shall, at all times, both during the term of this Agreement and
thereafter for a period of four (4) years, keep in confidence as a fiduciary all
of Sparqtron’s Confidential Information received by it. LARSCOM shall not use
Sparqtron’s Confidential Information other than as expressly permitted under the
terms of this Agreement or by a separate written Agreement. LARSCOM shall take
reasonable steps to prevent unauthorized disclosure or use of Sparqtron’s
confidential Information and to prevent if from falling into the public domain
or into the possession of unauthorized persons. LARSCOM shall not disclose
Sparqtron’s Confidential Information to any person or entity other than its
officers, employees, consultants and subsidiaries who need access to such
Confidential Information in order to perform its obligations under this
Agreement and who have entered into written confidentiality Agreements which
protect Sparqtron’s Confidential Information. Upon termination of this
Agreement, LARSCOM shall promptly return any and all Sparqtron’s Confidential
Information to Sparqtron.

 

35.3    Exception to Confidential Information. As used herein, “Confidential
Information” shall mean LARSCOM Confidential Information or Sparqtron
Confidential Information as the context requires. Information that is in or
(through no improper action or inaction of Sparqtron or LARSCOM, or any
affiliate, agent, employee or either Party respectively) enters the public
domain and becomes generally known on a non-confidential basis shall not be
Confidential Information hereunder. Without granting any right or license, the
Parties agree that the obligations set forth in Section 35.1 and 35.2 above,
shall not apply to the extent that Confidential Information includes information
which the Parties can document (i) was rightfully in its possession or known by
it prior to receipt from the disclosing Party, or (ii) was rightfully disclosed
to it by another person without restriction on disclosure, or (iii) developed
independently by either Party without use of or reference to the other Party’s
Confidential Information, (iv) is expressly authorized for disclosure by the
disclosing Party, or (v) is disclosed pursuant to the requirement of a court, or
other governmental body, provided the receiving Party provides reasonable
advance notice of such court order to the disclosing Party to enable the
disclosing Party to seek a protective order or otherwise prevent or restrict
such disclosure prior to disclosure, and, in any event, discloses only the
minimum amount of information necessary to comply with such requirements.

 

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35.4.    The Parties further agree to keep the specific terms of this Agreement
confidential (including, without limitation, all pricing and financial terms)
pursuant to the terms of this Section 34, although it may refer to the existence
of this Agreement and the Parties’ relationship generally and except as required
to be disclosed by law, regulation, acquisition, merger or financing. Each Party
agrees that it will not issue any press release or make any public statement
relating to this Agreement without the other Party’s prior written Agreement,
which will not be unreasonably withheld.

 

36.0    Equitable Relief.    Each Party acknowledges and agrees that due to the
unique nature of the Confidential Information, there can be no adequate remedy
at law for any breach of the obligations regarding Confidential Information
hereunder and that such breach may allow Sparqtron or third Parties to unfairly
compete with LARSCOM resulting in irreparable harm to LARSCOM. Therefore, upon
any such breach or threat of breach, LARSCOM shall be entitled to appropriate
equitable relief in addition to whatever remedies it has at law, without the
necessity of posting a bond. Sparqtron agrees to notify LARSCOM in writing
immediately upon learning of any unauthorized release or breach of its
obligation of nondisclosure hereunder.

 

37.0    Force Majeure.    Neither Party shall be liable for its failure to
perform any obligations under this Agreement if such performance is prevented or
delayed due to causes beyond its reasonable control, including without
limitation, fires, floods, earthquakes, accidents, Acts of God, governmental
laws or regulations, provided that such Party notifies the other Party of the
circumstances causing the delay and to resume performance as soon as possible.

 

38.0    Governing Law.    This Agreement shall in all respects be governed by
and constructed in accordance with the laws of the State of California, without
regard to conflicts of law principles that would require the application of the
laws of any other state.

 

39.0    Assignability.    Neither Party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the prior
written approval of the other Party such approval shall not be unreasonably
withheld, except that a Party may, without the other Party’s consent, assign or
transfer this Agreement and its rights and obligations hereunder to a successor
of all or substantially all of such Party’s assets, stock or business to which
this Agreement relates (whether by sale, acquisition, merger, operation of law
or otherwise), provided, however, that such assignment or transfer is not made
to a competitor of such other Party, in which case prior written consent of such
other Party shall be required before the assignment or transfer may be made. Any
of assignment of this Agreement in violation of this Section will be null and
void.

 

40.0    Insurance.    Throughout the term of this agreement, Sparqtron will
maintain (i) comprehensive general liability insurance covering bodily injury,
property damage, contractual liability, product liability and completed
operations; (ii) Worker’s compensation and Employer’s Liability insurance; and
(iii) automobile insurance, all in such amounts as are necessary to insure
against the risks to LARSCOM. Upon request, Sparqtron will furnish to LARSCOM as
evidence of insurance, certificates of insurance.

 

41.0    Amendment.    Except as otherwise expressly provided herein, any
provision of this Agreement may be amended only with the written consent by an
officer of both Parties.

 

42.0    Notice.    Notices under this Agreement shall be sufficient only if
personally delivered by a major rapid delivery courier service or mailed by
certified or registered mail, return receipt requested to a Party at its
addresses first set forth herein or as amended by notice pursuant to this
subsection. If not received sooner, notice by mail shall be deemed received
three (3) days after deposit in the U.S. mail.

 

43.0    No Waiver.    No waiver of any term or condition of this Agreement will
be valid or binding on either Party unless the same will have been mutually
assented to in writing by an officer of both Parties. The failure of either
Party to enforce at any time any of the provisions of the Agreement, or the
failure to require at any time performance by the other Party of any of the
provisions of this Agreement, will in no way be construed to be a present or
future waiver of such provisions, nor in any way affect the validity of either
Party to enforce each and every such provision thereafter.

 

44.0    Severability.    If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be changed and interpreted to
accomplish the objectives of such provision to the greatest extent possible
under the applicable law and the remaining provisions will continue in full
force and effect.

 

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45.0    Mutual Agreement.    In the event that either LARSCOM or Sparqtron
experiences exceptional circumstances that affect its performance under this
Agreement, LARSCOM and Sparqtron will negotiate in good faith for the purpose of
a joint resolution of the matter.

 

46.0    Entire Agreement.    THIS AGREEMENT, INCLUDING THE EXHIBITS, SETS FORTH
THE ENTIRE AGREEMENT AND UNDERSTANDING OF THE PARTIES RELATING TO THE SUBJECT
MATTER HEREIN AND SUPERSEDES ALL PRIOR DISCUSSIONS BETWEEN THEM.

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year, first above written.

 

“LARSCOM, Inc.”

     

“SPARQTRON MFG. CORP.”

Signature: /s/ Daniel L. Scharre

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Print Name:     Dan Scharre

Title:     CEO and President

Date:     10/21/02         

     

Signature: /s/ Eddy Liu

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Print Name:     Eddy Liu

Title:     President

Date:     10/21/03

 

 

16

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EXHIBIT A

 

Product Price List

 

Assembly No.

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Rev. No.

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Labor Cost

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Material Cost

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Total Cost

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Our Material cost is shared with the LARSCOM on a line item by line item basis.

 

Labor Costs can be quickly quoted, from BOM, Gerber and Test Times.

 

(TO BE COMPLETED BY THE PARTIES)

 

17

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EXHIBIT B

 

Minimum Order Quantity Components and Materials

 

 

Part No.             Description

 

 

 

(TO BE COMPLETED BY THE PARTIES)

 

18

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EXHIBIT C

 

Long Lead Time Components and Materials

 

Part No.             Description

 

 

 

(TO BE COMPLETED BY THE PARTIES)

 

19

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EXHIBIT D

 

Non-Cancelable, Non-Returnable Components and Materials

 

Part No.             Description

 

 

(TO BE COMPLETED BY THE PARTIES)

 

20

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EXHIBIT E

 

List of Products and Revision Level; and Prices for Rework

 

Part No.

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Current Rev. Lvl.

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New Rev. Lvl.

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Cost

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(TO BE COMPLETED BY THE PARTIES)

 

21

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EXHIBIT F

 

Consigned Tooling and Equipment

 

 

Asset No.             Description

 

 

 

(TO BE COMPLETED BY THE PARTIES)

 

22

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EXHIBIT G

 

Excess Inventory Calculation

 

A.    ON-HAND EXCESS INVENTORY–

      

1    TOTAL ON-HAND INVENTORY

  

$

                

2.    MINUS DEMAND PER EXISTING POs

  

$

 

TOTAL

  

$

 

B.    ON-ORDER EXCESS INVENTORY–

      

1.    TOTAL ON-ORDER

  

$

 

2.    MINUS DEMAND PER EXISTING POs

  

$

 

3.    MINUS DEMAND PER FORECAST

  

$

 

TOTAL

  

$

 

 

 

23