Document:

exv10w18

 

Exhibit 10.18

[ALCATEL LOGO]

Aruba / Alcatel

OEM Agreement

March 18, 2005

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TABLE OF CONTENTS

	 	 	 	 	 
	APPOINTMENT OF RESELLER
	 	 	6	 
	PURCHASE AND SALE
	 	 	7	 
	FORECASTS, COMMITMENTS AND EXCLUSIVITY
	 	 	8	 
	RESCHEDULING AND CANCELLATION
	 	 	8	 
	MANUFACTURING
	 	 	8	 
	COMMERCIAL TERMS
	 	 	11	 
	SUPPORT SERVICES
	 	 	15	 
	RELATIONSHIP MANAGEMENT
	 	 	15	 
	PRODUCT MANAGEMENT
	 	 	16	 
	ESCROW
	 	 	17	 
	ELECTRONIC DATA INTERCHANGE
	 	 	19	 
	CONFIDENTIALITY
	 	 	19	 
	INTELLECTUAL PROPERTY
	 	 	20	 
	LIAIBILITY
	 	 	22	 
	TERM AND TERMINATION
	 	 	23	 
	AUDITS AND DISPUTES
	 	 	24	 
	MISCELLANEOUS
	 	 	25	 
	EXHIBIT 1 ADOPTION AGREEMENT
	 	 	28	 
	SCHEDULE 2.2.1 NON-COMPETITION BUSINESS PARTNERS
	 	 	30	 
	SCHEDULE 3.1 PRODUCTS AND PRICES
	 	 	33	 
	SCHEDULE 4.1 INITIAL FORECAST
	 	 	35	 
	SCHEDULE 6.5 LOANED EQUIPMENT
	 	 	36	 
	SCHEDULE 6.6 SERIALIZATION PROCEDURES
	 	 	37	 
	SCHEDULE 7.4 PACKAGING SPECIFICATIONS
	 	 	38	 
	SCHEDULE 8.1 SUPPORT SERVICES
	 	 	43	 
	SCHEDULE 10.2 END USER LICENSE AGREEMENT
	 	 	47	 

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OEM SUPPLY AGREEMENT

     This OEM SUPPLY AGREEMENT (this “Agreement”) is made and entered into as of March 18, 2005, by
and between Alcatel Internetworking, Inc., a corporation organized under the laws of the State of
California (“Alcatel”), and Aruba Wireless Networks, Inc., a corporation organized under the laws
of the State of Delaware (“Supplier”).

WITNESSETH:

     WHEREAS, Alcatel desires to purchase certain products from Supplier for resale to Alcatel’s
customers, and Supplier desires to sell those products to Alcatel, upon the terms and subject to
the conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

     1.1. Defined Terms. Each term set forth below shall have the meaning given to it below when used in this
Agreement with initial capital letters:

     “Affiliate” means any company that Controls, is Controlled by or is Controlled by a party’s
parent company. “Alcatel” shall have the meaning given to it in the introductory paragraph of this
Agreement.

     “Alcatel Indemnities” shall mean Alcatel and each of its Affiliates and its and their
directors, officers, employees and agents.

     “Alcatel Infringement Allegation” shall mean any allegation that any Specifications delivered
by Alcatel to Supplier infringe any Intellectual Property Right of any third party.

     “Bankrupt Party” shall have the meaning given to it in Section 16.2(c).

     “Breaching Party” shall have the meaning given to it in Section 16.2(b).

     “Change of Control” shall mean (i) any consolidation or merger of Supplier with or into any
other corporation or other entity or person, or any other corporate reorganization, in which the
stockholders of Supplier immediately prior to such consolidation, merger or reorganization, own
less than 50% of the voting power of the surviving entity immediately after such consolidation,
merger or reorganization; (ii) any transaction or series of related transactions to which Supplier
is a party in which in excess of fifty percent (50%) of Supplier’s voting power is transferred; or
(iii) a sale, lease or other disposition of all or substantially all of the assets of Supplier;
provided, however, that a Change of Control shall expressly not include any
consolidation or merger effected exclusively to change the domicile of Supplier, or any transaction
or series of transactions principally for bona fide equity financing purposes in which cash is
received by Supplier or indebtedness of Supplier is cancelled or converted or a combination
thereof.

     “Confidential Information” shall mean (a) information that is (i) disclosed by Disclosing
Party, or its Affiliate or other designee, to Recipient, or its designee, in connection with the
purpose of this Agreement in (A) written, electronic, photographic or other tangible form or (B)
oral or visual form and

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summarized in written form within 30 calendar days after its disclosure and (ii) marked to indicate
that it is confidential or proprietary, and (b) information that is disclosed by Disclosing Party
to Recipient, or its designee, in connection with the purpose of this Agreement as a result of
access to the products or information systems of Disclosing Party. Notwithstanding the foregoing,
any information disclosed in connection with this Agreement shall not constitute Confidential
Information to the extent that the information (a) is known to Recipient before receipt thereof,
(b) is generally available to the public at the time of receipt thereof (or thereafter becomes
generally available to the public without the breach by Recipient of any obligation to Disclosing
Party or any third party), (c) is received by Recipient from a third party after receipt thereof
without the breach by the third party of any obligation to Disclosing Party or (d) is independently
developed by Recipient after receipt thereof without the use of thereof or any other Confidential
Information.

     “Control” shall mean, with respect to an entity, the power to control more than 50% of the
voting power and otherwise direct the management and decisions of such entity.

     “Disclosing Party” shall mean the party that discloses to Recipient, or its designee, any
Confidential Information.

     “Documentation” shall mean any documentation delivered by Supplier to Alcatel with respect to
any Product.

     “Electronic Signature” shall mean an electronic identification consisting of symbols or codes
adopted by either party in accordance with this Agreement.

     “Escrow Agent” shall mean a commercial escrow agency as defined and selected by the Parties in
Section 11.1 below.

     “Escrow Agreement” shall mean an agreement entered into between the parties and the Escrow
Agent as described in Section 11.

     “First Escrow Deposit” shall consist of the technical or other information and documentation
required to permit Alcatel or its designated manufacturer to make, test and support the Product
including without limitation all hardware designs, and all source code related to the base AirOS
including RF Management.

     “Forecast” shall mean a non-binding written or electronic forecast that sets forth the
quantities of the Products that Alcatel, in good faith, estimates it will order during the 12-month
period beginning on the date of the forecast and the estimated delivery dates for those Products.

     “Hardware Supply Failure” shall mean, with respect to a hardware Product, failure by the
Supplier to deliver such Product to Alcatel in accordance with the terms and conditions of this
Agreement (including without limitation Supplier’s obligation to act in good faith in accordance
with Section 3.2 (b)), and such failure materially impairs Alcatel’s ability to comply with its
contractual obligations to any of its customers with respect to any such Product.

     “Intellectual Property Right” shall mean any patentable or unpatentable invention, copyright,
trade secret or other intellectual property right (or any registration of copyright, application
for patent or patent that may issue thereunder).

     “Invoice” shall mean any invoice delivered by Supplier to Alcatel in accordance with this
Agreement.

     “Loaned Documentation” shall mean, with respect to any Loaned Equipment, any documentation
delivered by Alcatel to Supplier with respect to the Loaned Equipment.

     “Loaned Equipment” shall mean the test equipment described on Schedule 6.5.

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     “Loaned Software” shall mean, with respect to any Loaned Equipment, any software or firmware
incorporated into the Loaned Equipment.

     “Order Acknowledgment” shall mean any written or electronic notice delivered by Supplier to
Alcatel in accordance with this Agreement to the effect that Supplier has received and accepted a
Purchase Order and provided Alcatel a scheduled shipping date.

     “Products” shall mean the products made by Supplier only for Alcatel which are the Alcatel
brand version of Supplier Products which are set forth on Schedule 3.1 as amended from time to
time.

     “Purchase Order” shall mean any purchase order delivered by Alcatel to Supplier in accordance
with this Agreement.

     “Recipient” shall mean the party that receives from Disclosing Party, or its Affiliate or
other designee, any Confidential Information.

     “Second Escrow Deposit shall consist of all software Products not included in the First Escrow
Deposit (including the source code therefore).

     “Software” shall mean any software or firmware incorporated in any Product.

     “Software Support Failure” means with respect to a Product, a substantial failure by Supplier
that continues for more than 30 days to comply with its support obligations (including obligations
contained in support agreements as listed in Schedule 3.1) under this Agreement, and such failure
materially impairs Alcatel’s ability to comply with its contractual support obligations to any of
its customers with respect to such Product. Software Support Failure may also occur when Supplier
has failed to provided Level 3 support as defined in Section 8.1 to the standard that is commonly
acceptable in the industry. A software Support Failure can be willful or not willful.

     “Specifications” shall mean, with respect to any Product, the mutually agreed drawings,
designs and manufacturing and test specifications for the Product, as in effect on the date of the
related Purchase Order.

     “Supplier” shall have the meaning given to it in the introductory paragraph of this Agreement.

     “Supplier Indemnities” shall mean Supplier and each of its Affiliates and its and their
directors, officers, employees and agents.

     “Supplier Infringement Allegation” shall mean any allegation that (a) any Product infringes
any Intellectual Property Right of any third party or (b) any process used to design, develop or
manufacture any Product infringes any Intellectual Property Right of any third party.

     “Supplier Products” means products sold by Supplier that are not branded with the Alcatel
brand name.

     “Supplier Royalty” shall mean, for a particular Product, the difference between Supplier’s
cost of goods sold for such Product at the time of a Hardware Supply Failure or at the time of a
Software Support Failure and the price at which Alcatel obtains such Product from Supplier, as set
forth in this Agreement.

     “Supply Failure — Delivery” shall mean a Hardware Supply Failure or a Software Support Failure
or both.

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“Supply Failure — Change of Control” shall mean a Change of Control that would cause, Alcatel to
purchase Products from an entity that is an Alcatel competitor.

     “Support Services” shall mean the technical and other support services with respect to the
Products set forth on Schedule 8.1.

     “Third-Party Purchaser” shall mean any distributor, reseller, contract manufacturer,
subcontractor or other service provider of Alcatel.

     “Warranties” shall mean the warranties made by Supplier in Section 7.7

     1.2. Articles, Sections and Attachments. Except as otherwise provided in this Agreement, any reference in this Agreement to any
Article, Section, Exhibit, Schedule or other attachment is a reference to the specified article,
section, exhibit, schedule or attachment of or to this Agreement.

ARTICLE II

APPOINTMENT OF RESELLER

     2.1. Appointment. Upon the terms and subject to the conditions set forth in this Agreement, Supplier hereby
appoints Alcatel to be the exclusive reseller of the Products worldwide. Alcatel shall use
reasonable commercial efforts to sell the Products for worldwide use. Supplier shall not, directly
or indirectly, sell any Product to any Supplier customer or third party, or permit any third party
to sell any Product, without the prior consent of Alcatel. Notwithstanding the foregoing, Supplier
is authorized to sell Supplier Products.

     2.2. Marketing. (a) Supplier shall cooperate with Alcatel in connection with any marketing activities
undertaken by Alcatel with respect to the Products and shall provide to Alcatel the technical
marketing and sales support with respect to the Products that Alcatel reasonably requests in
connection with those activities. Supplier shall deliver to Alcatel (i) a reasonable quantity of
the promotional materials that Supplier generally makes available to its customers with respect to
the Products and (ii) electronic copies of those promotional materials. Alcatel may (i) use such
materials in connection with any marketing activities undertaken by Alcatel with respect to any
Product and (ii) make copies of any such materials to the extent reasonably necessary to permit
Alcatel to conduct those activities or for backup and archival purposes. If Alcatel makes any
copies of any such materials, then Alcatel shall reproduce on those copies all confidential or
proprietary markings.

     2.2.1 Non-Competition. Supplier agrees that it will not enter into “channel or business
partner” relationships directly with the channels or business partners set forth on Schedule 2.2.1
to this Agreement. Alcatel may modify the channel or business partners list as set forth on
Schedule 2.2.1 from time to time provided that none of the channel or business partners added to
Schedule 2.2.1 has an existing channel or business partner relationship with Supplier (unless
mutually agreed upon by the parties), and shall not include partners who are not certified for WLAN
solutions and/or are not actively engaged in the promotion and sale of such solutions to third
parties. Notwithstanding the foregoing, the parties acknowledge that Aruba may (upon the mutual
agreement of the parties) enter into relationships and agreements with parties that may resell or
sell to the channel and business partners set forth on Schedule 2.2.1 and that such relationships
do not violate this Section 2.2.1.

     2.2.2 POS Report. Alcatel agrees to provide a Point of Sale Report (POS) for the
exclusive use of Supplier to construct sales compensation programs so that Supplier’s sales
resources are compensated in an equivalent and financially neutral manner for sales of Products as
for sales of

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Supplier’s own products. Additionally, Supplier agrees to define specific management objectives
related to the sale of Products for its sales force.

     2.3. Trademarks. Alcatel may use any Supplier trademark, trade name or trade dress in accordance with
Supplier’s reasonable written instructions in connection with any marketing activities undertaken
by Alcatel with respect to the Products. Except as otherwise provided in this Agreement, nothing
in this Agreement shall be construed to grant to Alcatel any right in any Supplier trademark, trade
name or trade dress affixed to any Product.

ARTICLE III

PURCHASE AND SALE

     3.1. Products. (a) Upon the terms and subject to the conditions set forth in this Agreement, Supplier
shall sell to Alcatel the Products that Alcatel orders by the delivery to Supplier of a Purchase
Order.

     (b The initial Products are set forth on Schedule 3.1. If Alcatel requests Supplier to quote
a price for the sale to Alcatel under this Agreement of any Supplier Product other than the
Products, then Supplier shall deliver the quote to Alcatel within five business days after receipt
of the request and all information reasonably necessary to permit Supplier to deliver the quote.
Alcatel shall use reasonable commercial efforts to accept or reject any such quote within five
business days after the receipt of the quote. If Alcatel accepts any such quote, then (i) Schedule
3.1 shall be amended to add the related Supplier Product as a Product thereto, and (ii) Alcatel
shall promptly deliver to Supplier a copy of the amended Schedule. Alcatel’s right to sell or
distribute any Supplier Products shall be nonexclusive.

     3.2. Purchase Orders. (a) Each Purchase Order shall set forth the Alcatel part number of the ordered Product
(including the revision designation, if applicable), the ordered quantity, the price in effect on
the date of the Purchase Order, the delivery date and destination, the method of shipment, the name
of the carrier, the Purchase Order number.

     (b) Supplier shall acknowledge in writing receipt of Purchase Orders (PO) within twenty-four
(24) hours of delivery to Supplier and shall accept or reject each Purchase Order within forty
eight (48) hours of delivery of the Purchase Order to Supplier. If Supplier accepts the Purchase
Order, it will deliver to Alcatel an Order Acknowledgment. Supplier shall act in good faith to
meet Alcatel PO delivery dates. If Supplier rejects the Purchase Order because it determines that
it is unable to comply with the ordered quantity or delivery date set forth in any Purchase Order,
then Alcatel and Supplier shall negotiate in good faith with respect thereto.

If Supplier does not acknowledge receipt of the PO within twenty-four (24) hours, the PO will be
deemed not delivered. If Supplier has confirmed receipt of PO within twenty-four (24) hours of
delivery to Supplier and Supplier does not accept or reject the Purchase Order within forty eight
(48) hours from delivery, the Purchase Order is deemed accepted and acknowledged by Supplier.

If Alcatel and Supplier subsequently agree with respect to the ordered quantity and delivery date
applicable to the Purchase Order, then (i) Alcatel shall modify the Purchase Order accordingly and
deliver it to Supplier, and (ii) Supplier shall accept the Purchase Order by the delivery to
Alcatel of an Order Acknowledgment. Neither Alcatel nor Supplier shall have any rights or
obligations with respect to any Purchase Order unless and until Supplier has accepted the Purchase
Order.

     (c) Where Alcatel has accepted a customer order containing liquidated damages, Alcatel shall
notify Supplier in writing of this fact concurrently with the delivery of a Purchase Order. Where
Alcatel has notified Supplier in writing of Alcatel’s acceptance of an order containing liquidated
damages, Supplier shall provide a written notice separate from the Purchase Order Acknowledgement
within forty eight (48) hours, notifying Alcatel of Suppliers acceptance or rejection of the order.
An order is not

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consider accepted by Supplier unless Supplier provides, (i) Purchase Order Acknowledgement, and
(ii) Supplier’s separate written acceptance of the liquidated damages associated with a specific
Purchase Order. Notwithstanding the above, If Supplier has not accepted or rejected the liquidated
damages associated with a specific Purchase Order within forty eight (48) hours of receipt of the
Purchase Order, the Purchase Order and liquidated damages associated with it are not accepted by
Supplier.

ARTICLE IV

FORECASTS, COMMITMENTS AND EXCLUSIVITY

     4.1. Forecasts. (a) On a monthly basis, Alcatel shall deliver to Supplier a Forecast. The initial Forecast
is set forth on Schedule 4.1. Alcatel may modify any Forecast at any time by the delivery to
Supplier of notice to such effect.

     (b) Supplier shall use reasonable commercial efforts to maintain sufficient manufacturing
capacity to permit it to deliver the Products to Alcatel in accordance with the applicable
Forecast. However, Supplier shall not consider any Forecast to be a commitment by Alcatel (i) to
purchase any Product or (ii) to reimburse Supplier for any capital expenditure incurred by Supplier
or any employee hired by Supplier.

     4.2. No Commitments. Except as otherwise expressly provided in this Agreement, (a) Alcatel shall have no
obligation to deliver to Supplier any Purchase Order with respect to any Product, and (b) subject
to any minimum quantities established by Supplier with respect to any single Purchase Order,
Alcatel shall have no obligation to otherwise purchase any minimum quantity of any Product during
the term of this Agreement.

     4.3. No Exclusivity. Notwithstanding any provision of this Agreement to the contrary, Alcatel may purchase any
product produced by a third party, whether Alcatel branded or not, that is a substitute for or
competes with any of the Products.

ARTICLE V

RESCHEDULING AND CANCELLATION

     5.1. Rescheduling. (a) Upon the request of Alcatel, Supplier shall use reasonable commercial efforts to
accelerate the mutually agreed delivery date for any Product set forth in any Purchase Order.

     (b) Alcatel may delay the mutually agreed delivery date for any Product set forth in any
Purchase Order one time for up to thirty days for the originally scheduled delivery date by
delivering to Supplier notice to such effect at least five business days prior to the mutually
agreed delivery date. The price of any such rescheduled Product shall be the price in effect as of
the date of the originally-scheduled shipping date.

     5.2. Cancellation. (a) Alcatel may cancel the sale of any quantity of any Product set forth in any Purchase
Order by the delivery to Supplier of notice to such effect at least 30 calendar days prior to the
mutually agreed delivery date.

ARTICLE VI

MANUFACTURING

     6.1. Homoloqation. (a) As Alcatel intends to distribute the Product worldwide, Supplier will work in good
faith to enable Alcatel to benefit from appropriate country certifications completed by Supplier
(e.g. utilize Supplier’s AP homologation where possible). Country certifications and homologation
beyond that which is available per the above, will be accomplished for Products through

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engineering effort as appropriate by either party, and the cost of (re)certification of Products
shall be borne by Alcatel. Supplier will bear the cost and responsibility for Supplier Products
which require (re)certification as a result of integration of Alcatel Intellectual Property Rights.

     (b) Sole Distribution. For countries where Supplier has not received certification
and does not intend to start to obtain certification within a six (6) month time period, the
parties agree that where Alcatel proceeds to obtain certification at its own cost, Alcatel shall
have sole distribution rights for Products into that country for a period of twenty-four (24)
months. Supplier may, at its discretion, reimburse Alcatel for 110% of the fees paid by Alcatel
for certification in a specific country after which Alcatel’s sole rights to distribution in that
country will no longer be in effect.

     6.2. Certifications. (a) For the purpose of manufacturing, Supplier shall only engage companies to manufacture
Products and Supplier Products that maintain the applicable ISO9001:2000 certification and TL9000
certification.

     (b) ISO9001:2000 and TL9000. Supplier shall use its best efforts to have its contract
manufacturer that manufactures the Product deliver or make available to Alcatel any documentation
with respect to the ISO9001:2000 and TL9000 certifications that Alcatel reasonably requests to
verify compliance therewith. Upon the request of Alcatel at least two business days in advance,
Supplier shall permit Alcatel and its directors, officers, employees and agents to have access
during normal business hours to the facilities of Supplier and its subcontractors for the purpose
of inspecting the ISO9001:2000 and TL9000 compliance, and Supplier shall reasonably cooperate with
Alcatel in connection therewith. Upon the request of Supplier in connection with any such
inspection, Alcatel shall cause its directors, officers, employees and agents to execute and
deliver to Supplier and its subcontractors (contract manufacturers) an appropriate nondisclosure
agreement.

     6.3. Quality-Assurance Program. (a) Supplier shall, and shall cause each of its subcontractors to, implement and maintain a
comprehensive process and quality-assurance program in accordance with Alcatel’s quality and
workmanship specifications, as in effect from time to time. Upon the receipt of a copy of the
current version of Alcatel’s quality and workmanship specifications, Supplier shall acknowledge
receipt thereof. If Alcatel modifies its quality and workmanship specifications, then Alcatel
shall promptly deliver to Supplier a copy of the modified specifications. Supplier shall deliver
to each of its subcontractors copies of Alcatel’s quality and workmanship specifications, as in
effect from time to time.

     (b) Supplier shall deliver or make available to Alcatel any documentation with respect to
Supplier’s quality-assurance program that Alcatel reasonably requests to verify compliance
therewith. Upon the request of Alcatel at least two business days in advance, Supplier shall
permit Alcatel and its directors, officers, employees and agents to have access during normal
business hours to the facilities of Supplier and its subcontractors for the purpose of inspecting
Supplier’s quality-assurance-program compliance, and Supplier shall reasonably cooperate with
Alcatel in connection therewith. Upon the request of Supplier in connection with any such
inspection, Alcatel shall cause its directors, officers, employees and agents to execute and
deliver to Supplier an appropriate nondisclosure agreement.

     6.4. Industry Standards. Supplier shall, and shall cause each of its subcontractors to, comply with industry
standards applicable to the Products.

     6.5. Loaned Equipment. (a) Promptly after the date hereof, Alcatel shall deliver to Supplier, on a loan basis, the
Loaned Equipment to the extent that it has not already done so. The initial Loaned Equipment is
set forth on Schedule 6.5. If Alcatel delivers to Supplier, on a loan basis, any other test
equipment, then (i) Schedule 6.5 shall automatically be amended to include the equipment, and (ii)
Alcatel shall promptly deliver to Supplier a copy of the amended Schedule. Upon the request of
Alcatel, Supplier shall return to Alcatel any Loaned Equipment in good condition, normal wear and
tear excepted, in accordance with Alcatel’s instructions.

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     (b) During the period when Supplier maintains custody of any Loaned Equipment, except as otherwise
mutually agreed, Supplier shall (i) maintain the Loaned Equipment in accordance with Alcatel’s
instructions, (ii) bear all risk of loss to the Loaned Equipment, (iii) maintain with reputable
insurance companies casualty insurance covering the Loaned Equipment with policy limits equal to,
or in excess of, the fair market value of the Loaned Equipment (and upon the request of Alcatel,
deliver to Alcatel an applicable certificate of insurance that evidences the existence of the
insurance) and (iv) use the Loaned Equipment solely to test the Products.

     (c) Alcatel hereby grants to Supplier a non-exclusive, fully paid-up license to use any Loaned
Software solely with the Loaned Equipment. Notwithstanding any provision of this Agreement to the
contrary, Supplier may make copies of any Loaned Software only to the extent reasonably necessary
for backup and archival purposes. Supplier shall not disassemble, reverse compile, reverse
engineer or otherwise expose the source code of any Loaned Software. Upon the request of Alcatel,
Supplier shall deliver to Alcatel all copies of any Loaned Software in accordance with Alcatel’s
instructions.

     (d) Alcatel hereby grants to Supplier a non-exclusive, fully paid-up license to use any Loaned
Documentation solely with the Loaned Equipment. Notwithstanding any provision of this Agreement to
the contrary, Supplier may make copies of any Loaned Documentation only to the extent reasonably
necessary for backup and archival purposes. Upon the request of Alcatel, Supplier shall deliver to
Alcatel all copies of any Loaned Documentation in accordance with Alcatel’s instructions.

     6.6. Labeling and Serialization. (a) Supplier shall affix to each Product the applicable Alcatel trademarks, trade names and
trade dress, and otherwise label each Product, in accordance with the Specifications. Supplier
shall not use any Alcatel trademark, trade name or trade dress delivered to Supplier in connection
with this Agreement except as permitted by this Agreement. Nothing in this Agreement shall be
construed to grant to Supplier any right in any Alcatel trademark, trade name or trade dress
affixed to any Product. Supplier agrees to undertake, at its cost, “Alcatelization” of the
Supplier products that will be sold by Alcatel. This means, among other items, bringing the
hardware and software products to a point where branding, splash and menu screens, CLI, external
appearance, system messages, and supporting documentation says Alcatel.

     (b) Supplier shall serialize each Product in accordance with Alcatel’s serialization
specifications and the procedures set forth on Schedule 6.6. Supplier hereby acknowledges receipt
of a copy of the current version of Alcatel’s serialization specifications. If Alcatel modifies
its serialization specifications, then Alcatel shall promptly deliver to Supplier a copy of the
modified specifications.

     6.7. RoHS Directive (2002/95/EC). Supplier understands that the RoHS Directive (Restriction of Certain Hazardous Substances)
became law in the European Union countries in February 2003. Member states must implement the law
by August 2004 and product deadline for compliance is July 2006. This directive also applies to
those manufacturers wishing to sell products in Europe.

The purpose of the RoHS Directive is the restriction of the use of certain hazardous substances and
to reduce the waste management problems linked to substances likely to pose risks to health and the
environment. The RoHS Directive specifically addresses the reduction of use and ultimate banning
of the following substances:

	 	•	 Cadmium
	 
	 	•	Hexavalent Chromium
	 
	 	•	Lead
	 
	 	•	Mercury
	 
	 	•	PBBs (Polybrominated biphenyls)
	 
	 	•	PBDEs (Polybrominated diphenyl ethers)

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Supplier agrees to use manufacturers for Products who comply with the RoHS Directive by December
31,2005.

ARTICLE VII

COMMERCIAL TERMS

     7.1. Prices. (a) The initial price of each Product and the Support Service fee for each Product is set
forth on Schedule 3.1. Those prices do not include any foreign, federal, state or local sales, use
or excise taxes, duties, fees or similar charges imposed upon the sale, delivery or use of any
Product under this Agreement. Alcatel shall pay any and all such charges, except for those imposed
on Supplier’s income or as otherwise required by applicable law or provided in this Agreement.
[***] All payments shall be made in the USA and in United States Dollars.

     (b) Favorite Nation. If Supplier agrees to sell to any third party that purchases the
same or similar volumes of a Supplier Product that is substantially the same as the Product upon
the same or similar terms and conditions as those set forth in this Agreement at a lower price,
then (i) Schedule 3.1 shall automatically be amended to change the price of the Product to the
lower price, and (ii) Supplier shall promptly deliver to Alcatel a copy of the amended Schedule.

     (c) Demo Pricing. Supplier agrees to sell to Alcatel Product for demonstration,
marketing, evaluation, internal use, or testing at the discount prices listing in Schedule 3.1.
Alcatel agrees not to sell such systems with this discounted price.

     (d) [***]

     (e) [***]

     7.2. Payment. Upon the shipment of any Product, Supplier shall deliver to Alcatel an Invoice that sets
forth the date, the name and address of Supplier, the related Purchase Order number, a detailed
description of the ordered Product (including the Alcatel part number and description and, if
applicable, any marks, numbers, symbols or trade names used by Supplier to the trade), the quantity
shipped, the price in effect on the shipping date (including an itemization of all applicable
freight, insurance, commission, packing and other charges and all applicable discounts, rebates,
drawbacks and bounties), the payment terms, the country of origin, the delivery destination, the
method of shipment, the number of packages, the way bill number and a reference to this Agreement.
The amount due under each undisputed Invoice shall be due and payable by Alcatel upon the
expiration of 45 calendar days after the date of the Invoice. If Alcatel disputes any portion of
any Invoice, then Alcatel shall promptly deliver to Supplier a notice that sets forth the basis of
the dispute. Upon the receipt of any such notice, Supplier shall deliver to Alcatel a replacement
Invoice that omits the disputed portion of the original Invoice. If the dispute arises out of any
ordering or other error made by Alcatel, then the amount due under each such replacement Invoice
shall be due and payable by Alcatel upon the expiration of 45 calendar days after the date of the
original Invoice. If the dispute arises out of any billing or other error made by Supplier, then
the amount due under each such replacement Invoice shall be due and payable by Alcatel upon the
expiration of 45 calendar days after the date of the replacement Invoice. Alcatel shall have no
obligation

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to pay any amount under any Invoice that includes a dispute unless and until the dispute has been
resolved. Any payment obligations shall survive the termination of this Agreement.

     7.3. Delivery and Shipping. (a) Supplier shall deliver the ordered quantity of each Product so that it arrives at
Alcatel’s dock at the delivery destination set forth in the related Purchase Order no more than
four (4) business days prior to, and no later than, the mutually agreed delivery date. Except as
otherwise mutually agreed, Supplier shall ship each Product in accordance with the method of
shipment set forth in the related Purchase Order via the carrier named in the Purchase Order. If
the shipment of any Product originates from outside of the United States, then Supplier shall ship
the Product FCA (as defined in Incoterms 2000) Supplier’s dock. Otherwise, Supplier shall ship
each Product FOB Supplier’s dock.

     (b) Upon the request of Alcatel, Supplier shall deliver to Alcatel, in the manner that Alcatel
reasonably requests, any United States customs and other similar documentation and information
regarding any Product delivered to Alcatel pursuant to this Agreement, including without limitation
certificates of origin and drawback documentation and information.

     (c) If any shipment of any Product is, or in Supplier’s opinion is likely to become, delayed
so that the Product will not be delivered in accordance with this Section 7.3, then Supplier shall
immediately deliver to Alcatel a notice that sets forth the cause for the delay. Upon the request
of Alcatel after receipt of such a notice, Supplier shall (i) ship any quantity of the Product (but
not in excess of the ordered quantity) to the applicable delivery destination in accordance with
any alternative method of shipment designated by Alcatel and (ii) bear any and all additional
shipping costs in connection therewith. Notwithstanding the foregoing, Supplier shall not be
liable for any such costs if the delay is a direct result of any act or omission of Alcatel.
Supplier may, with the consent of Alcatel (which shall not be unreasonably withheld), deliver to
Alcatel partial shipments of any Product.

     (d) Time is of the essence of this Agreement. Supplier hereby acknowledges that Alcatel may
incur liquidated or other similar damages if Supplier fails to deliver Product by the delivery date
specified in a Purchase Order that Supplier has accepted with an Order Acknowledgment. If Supplier
fails to deliver Product by such delivery date and Alcatel pays liquidated or similar damages
because of such failure by Supplier, then promptly after the request of Alcatel, Supplier shall
reimburse Alcatel for the liquidated or similar damages incurred and paid by Alcatel. The amount
of liquidated or similar damages paid by Supplier to Alcatel shall not exceed [***].
Notwithstanding the foregoing, Supplier shall not be liable for any such damages if the late
delivery is a direct result of any act or omission of Alcatel or if Alcatel failed to inform
Supplier of the liquidated or similar damages clause in the written notice. Alcatel shall use
reasonable commercial efforts (i) to negotiate contracts with its customers that do not obligate
Alcatel to incur liquidated or other similar damages and (ii) to otherwise minimize the liquidated
or other similar damages incurred by Alcatel.

     7.4. Packaging. (a) Supplier shall package each Product in accordance with Alcatel’s packaging
specifications, as in effect from time to time. The current versions of Alcatel’s packaging
specifications are listed on Schedule 7.4. Supplier hereby acknowledges receipt of a copy of the
current version of those specifications. If Alcatel modifies its packaging specifications, then
Alcatel shall promptly deliver to Supplier a copy of the modified specifications.

     (b) Supplier shall (i) attach to the exterior of each shipment of any Product a detailed
packing list that sets forth the number of packages shipped, a detailed description of the shipped
Product (including the Alcatel part number and description), the quantity shipped and, if
applicable, the related Purchase Order number and corresponding line item number on the Purchase
Order, and (ii) enclose in the first package included in the shipment a copy of the packing list
and a list that sets forth the serial numbers of each Product included in the shipment.

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     7.5. Transfer of Title and Risk of Loss. (a) Supplier shall transfer to Alcatel all of Supplier’s right, title and interest in and
to each Product, free and clear of any security interest, lien or other encumbrance, upon delivery
to the applicable carrier at Supplier’s dock. Alcatel shall assume all risk of loss to each
Product in accordance with the applicable shipping terms. If Alcatel elects to assert any claim
against any carrier to recover any loss to any Product, then Supplier shall cooperate with Alcatel
in connection therewith.

     (b) Except as otherwise expressly provided in this Agreement, nothing in this Agreement shall
be construed to grant to Alcatel any right in any Software or Documentation, and all software is
licensed and not sold.

     7.6. Inspection and Acceptance. (a) Prior to the delivery of any Product to Alcatel, Supplier shall inspect and test the
Product in accordance with a test plan approved by Alcatel. Upon the request of Alcatel, Supplier
shall deliver or make available to Alcatel any inspection and test documentation with respect to
any Product to verify compliance with the test plan. Upon the request of Alcatel, Supplier shall
permit Alcatel and its directors, officers, employees and agents to have access during normal
business hours to the facilities of Supplier and its subcontractors for the purpose of inspecting
any Product, and Supplier shall reasonably cooperate with Alcatel in connection therewith. Upon
the request of Supplier in connection with any such inspection, Alcatel shall cause its directors,
officers, employees and agents to execute and deliver to Supplier an appropriate nondisclosure
agreement.

     (b) Alcatel may inspect each Product within a reasonable time after the receipt thereof in
accordance with Alcatel’s standard test plan for the Product, as in effect from time to time.
Supplier hereby acknowledges receipt of a copy of the current version of Alcatel’s standard test
plan for each Product. If Alcatel modifies its standard test plan for any Product, then Alcatel
shall promptly deliver to Supplier a copy of the modified test plan. If Alcatel fails to reject
any Product in accordance with Alcatel’s standard test plan within 30 calendar days after the
receipt thereof or fails to state the basis for the rejection, then Alcatel shall be deemed to have
accepted the Product.

     (c) If Alcatel rejects any Product prior to acceptance, then Alcatel shall deliver to Supplier
a notice that sets forth the reasons for the rejection. Within five business days after the
receipt of any such notice by Supplier, Supplier shall (i) replace the rejected Product and deliver
its replacement to Alcatel and (ii) deliver to Alcatel authorization to return the rejected Product
to Supplier. Promptly after the receipt of any such authorization, Alcatel shall return the
rejected Product to Supplier at Supplier’s expense and otherwise in accordance with Supplier’s
instructions and Supplier shall assume all risk of loss to the Product upon delivery to the carrier
at Alcatel’s dock. Notwithstanding the foregoing, if Supplier reasonably determines that any
Product returned to Supplier in accordance with this Section 7.6(c) complies with the applicable
test plan approved by Alcatel, then Alcatel shall reimburse Supplier for any transportation costs
incurred by Supplier in connection with the return of the Product to Supplier.

     7.7. Warranty. (a) Supplier hereby warrants as follows:

          (i) Each Product has not been used by any end customer;

          (ii) For a period of [***] after the acceptance by Alcatel of each Product, the Product (other
than any Software incorporated into the Product) shall conform to the Specifications and be free
from defects in design, materials and workmanship; and

          (iii) For a period of [***] after the acceptance by Alcatel of each Product, the Software
incorporated into the Product shall conform to the Specifications.

Notwithstanding the foregoing, Supplier shall have no warranty obligation under this Section 7.7(a)
with respect to any Product to the extent that (i) the Product has been modified by any party other
than Supplier, or (ii) any defect in the Product was caused by (A) any improper use, maintenance,
repair or

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installation of the Product by any party other than Supplier or (B) the compliance by Supplier with
any Specifications delivered to Supplier by Alcatel.

     (b) If any Product does not conform to any Warranty during the applicable warranty period,
then Alcatel shall deliver to Supplier notice to such effect. Prior to the close of business on
the next business day after the receipt of any such notice by Supplier, Supplier shall deliver to
Alcatel authorization to return the non-conforming Product to Supplier. Promptly after the receipt
of any such authorization, Alcatel shall return the non-conforming Product to Supplier at
Supplier’s expense and otherwise in accordance with Supplier’s instructions and Supplier shall
assume all risk of loss to the Product upon delivery to the carrier at Alcatel’s dock.
Notwithstanding the foregoing, if Supplier reasonably determines that any Product returned to
Supplier in accordance with this Section 7.7(b) conforms to the Warranties, then Alcatel shall
reimburse Supplier for any transportation costs incurred by Supplier in connection with the return
of the Product to Supplier. Within 10 business days after the receipt of any such Product by
Supplier, Supplier shall, at its option, (i) repair the Product and return it to Alcatel or (ii)
replace the Product and deliver its replacement to Alcatel. If Supplier fails timely to repair or
replace any such Product after the use of reasonable commercial efforts, then promptly after the
request of Alcatel, Supplier shall (i) refund to Alcatel the price of the Product or (ii) grant to
Alcatel a credit in the amount of the price of the Product.

     (c) If [***] of units of the same Product repeatedly does not conform to the same Warranty for
the same specific reason during the applicable warranty period, or [***] of units of the same
Product repeatedly does not conform to the same Warranty for the same specific reason after the
expiration of the applicable warranty period and the nonconformity was not discoverable by
Alcatel’s standard acceptance test plan, then in addition to the other remedies set forth in this
Section 7.7, (i) Supplier shall deliver to Alcatel a reasonable plan to correct the nonconformity,
and (ii) promptly after the request of Alcatel, Supplier shall repair or replace any additional
units of the Product that Alcatel reasonably believes to be nonconforming and are found to be
non-conforming by Supplier. Upon the acceptance of any such plan by Alcatel, Supplier shall
implement the plan and deliver to Alcatel progress reports relating thereto.

     (d) If any Product does not conform to any Warranty after the expiration of the applicable
warranty period, then Alcatel may engage Supplier to repair or replace the Product upon reasonable
prices, terms and conditions.

     (e) To the extent that Supplier has the legal and contractual right to do so, Supplier hereby
transfers to Alcatel any and all warranties made by Supplier’s vendors to Supplier with respect to
the materials incorporated into the Product. If Alcatel elects to assert any warranty claim
against any such vendor, then Supplier shall enforce the applicable warranty against the vendor for
the benefit of Alcatel and otherwise cooperate with Alcatel in connection therewith.

     (f) If Supplier discovers any defect in any Product during the applicable warranty period or
after the expiration thereof, then Supplier shall immediately deliver to Alcatel notice to such
effect.

     (g) EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, SUPPLIER MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND WITH RESPECT TO ANY PRODUCT, AND SUPPLIER HEREBY DISCLAIMS ANY AND ALL IMPLIED
WARRANTIES RELATING THERETO, INCLUDING WITHOUT LIMITATION ANY AND ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY INTENDED OR PARTICULAR PURPOSE.

     (h) The provisions of this Section 7.7 shall survive the expiration of the term, or sooner
termination, of this Agreement.

     7.8. DOA Period. Products which are defective during the first sixty (60) days from delivery to Alcatel (the
“DOA period”) during the applicable Warranty Period, shall be Advance Replaced by Supplier.
“Advanced Replaced” means that Supplier shall ship replacement products, within one (1) Business
Day of notice of a defective Product during the DOA period. Supplier shall provide a prepaid
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return of the defective Product. During the DOA period, all products must be new Products and
subject to the original warranty of Hardware. To accomplish the replacement of the defective
Product, Alcatel will carry sufficient inventory to replace such defective Product and Supplier
will send such Advanced Replaced Product to Alcatel to replace its inventory and Alcatel agrees to
use reasonable commercial efforts to return any defective Product to Supplier within thirty (30)
days of requesting the Advanced Replaced Product.

ARTICLE VIII

SUPPORT SERVICES

     8.1. Support Responsibilities

Support Levels are defined as follows:

     (a) LEVEL 1 SUPPORT: the ability to provide general pre-sales and post-sales support, operate
on-site hardware replacement, perform base problem determination, provide regular problem
resolution status reports to the End User, maintain record of End User installed base.

     (b) LEVEL 2 SUPPORT: the ability to troubleshoot, to isolate problem and determine Product
specification defect, to resolve the majority of mis-configurations and to have the capability to
diagnose and solve problem remotely.

     (c) LEVEL 3 SUPPORT: generating workarounds for hardware and software problems that are beyond
the scope of Level 2 Support. Perform complex problem reproduction and development engineering
support to create, test, and implement, maintenance code patches to remedy identified problems.

Support Responsibilities

Level 1: Alcatel or Alcatel Channel

Level 2: Alcatel

Level 3: Supplier (per the terms of the service and support terms set forth in Schedule 3.1)

Support Escalation and Integration

Within 60 days after the execution of this Agreement, Alcatel and Supplier shall define a mutually
acceptable Escalation process for resolving support issues and integrating support processes
between Alcatel and Supplier

ARTICLE IX

RELATIONSHIP MANAGEMENT

     9.1. Meetings. Upon the request of Alcatel, Supplier shall cause its senior management to meet with
Alcatel’s senior management at mutually agreed locations to review and discuss strategic planning,
manufacturing capacity, performance goals, product management, supply-chain management and any
other matter relating to the business relationship of the parties.

     9.2. Performance Goals. Alcatel and Supplier shall establish and periodically review mutually agreed performance
goals relating to quality, pricing, delivery and any other matters reasonably requested by Alcatel.

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ARTICLE X

PRODUCT MANAGEMENT

     10.1. Product Changes. (a) If Alcatel requests Supplier to modify the Specifications for any Product to add any
feature or enhancement to the Product, then (i) Alcatel shad deliver to Supplier notice to such
effect, and (ii) Alcatel and Supplier shall jointly review Alcatel’s request. If Supplier desires
to comply with any such request, then as promptly as practicable after the receipt of the request,
Supplier shall deliver to Alcatel a proposal that sets forth engineering specifications, cost
estimates and implementation schedules with respect to the requested modification. If Alcatel
desires to accept any such proposal, then (i) Alcatel shall deliver to Supplier notice to such
effect, and (ii) Supplier shall implement the modification upon mutually agreed prices, terms and
conditions. Notwithstanding any provision of this Agreement to the contrary, (i) Supplier shall
have no obligation to comply with any such request, and (ii) Alcatel shall have no obligation to
accept any such proposal.

     (b) If Alcatel proposes to modify the Specifications for any Product to reduce the
manufacturing cost of the Product, then (i) Alcatel shall deliver to Supplier notice to such
effect, and (ii) Alcatel and Supplier shall jointly review Alcatel’s proposal. If Supplier accepts
any such proposal, and the proposal reduces Supplier’s cost for the related Product, then Schedule
3.1 shall automatically be amended to reduce the price of the Product by an amount equal to [***]
of the reduction of the cost. Notwithstanding any provision of this Agreement to the contrary,
Supplier shall have no obligation to accept any such proposal.

     (c) If Supplier proposes to modify the Specifications for any Product, then Supplier shall
deliver to Alcatel notice to such effect as far in advance of the implementation of the
modification as practicable, but no less than [***] prior to the implementation or as mutually
agreed to by the parties in writing.

     (d) If Supplier makes available for general commercial availability a modification to any
Supplier Products, including without limitation the addition of a new software release for such
Supplier Products, Supplier shall concurrently make available to Alcatel similar modifications to
the comparable Products. Such obligation to modify the Supplier Products shall be considered a
support obligation for the purposes of Section 1.1 definition of Software Support Failure.

     (e) If Supplier implements any modification of any Specifications that affect form fit or
function for any Product, then Supplier shall (i) test the modified Product in accordance with a
mutually agreed test plan, (ii) deliver or make available to Alcatel any test documentation with
respect to the modified Product that Alcatel may reasonably request to verify compliance with the
test plan and (iii) deliver to Alcatel a copy of the modified Specifications.

     10.2. End-of-Life (EOL). (a) If, during the term of this Agreement, Supplier desires to discontinue any Product,
then Supplier shall deliver to Alcatel notice to such effect as far in advance of the
implementation of the discontinuation as practicable but no less than [***] prior to the
implementation or as mutually agreed to by the parties in writing. Upon the request of Alcatel
after receipt of such a notice, Supplier shall (i) sell to Alcatel the Product in reasonable
quantities in accordance with this Agreement or (ii) deliver to Alcatel the information with
respect to the Product that Alcatel reasonably requests to permit Alcatel to purchase and support
acceptable substitutes and (iii) support the Product hardware for [***] after the EOL date.

     (b) If, in Alcatel’s reasonable opinion, the alternatives set forth in Section 10.2(a) would
be inadequate to permit Alcatel to comply with its obligations to its customers, then upon the
request of Alcatel, Supplier shall on the date that the EOL notice is submitted pursuant to Section
10.2 (a) (i) grant to Alcatel a perpetual non-exclusive, worldwide license to make, use and sell
the Product solely to permit Alcatel to comply with its obligations to its customers, (ii) obtain
for Alcatel or a third-party manufacturer designated by Alcatel any rights held by third parties
required to permit Alcatel or its designated manufacturer to make, use and sell the Product, upon
reasonable prices, terms and conditions, solely to

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permit Alcatel to comply with its obligations to its customers, (iii) deliver to Alcatel or its
designated manufacturer any technical or other information and documentation required to permit
Alcatel or its designated manufacturer to make, test and support the Product solely to permit
Alcatel to comply with its obligations to its customers, (iv) make available to Alcatel or its
designated manufacturer any unique equipment held by Supplier to manufacture, test and support the
Product solely to permit Alcatel to comply with its obligations to its customers or (v) otherwise
cooperate with Alcatel to transition the manufacture, testing and support of the Product to Alcatel
or its designated manufacturer. In the event that this Section 10.2(b) occurs, Alcatel may only use
the license granted pursuant to this Section to make, use and sell Product to existing customers
who have previously purchased the Products.

     (c) Alcatel shall only distribute the Product pursuant to the terms of a license agreement
that is at least as protective of Supplier, the Product and the intellectual property rights in the
Product as the current Supplier end user license agreement attached hereto as Schedule 10.2

ARTICLE XI

ESCROW

     11.1. Agreed Escrow Agent and Escrow Agreement.

Supplier and Alcatel agree to select an Escrow Agent agreeable to both parties within 90 days of
execution of this Agreement. Thereafter, the parties shall negotiate in good faith, and shall
execute an Escrow Agreement within 90 days of the selection of the Escrow Agent. The terms and
conditions of the Escrow Agreement shall include the specific conditions both for delivery into
escrow and release of the technical or other information and documentation, and shall be divided
into two deposits; the First Escrow Deposit, and the Second Escrow Deposit.

     11.2. Supply Failures and Escrow.

     (a) Escrow Deposit. If, in Alcatel’s reasonable opinion, a Supply Failure — Delivery
or Supply Failure — Change of Control will occur with respect to any Product due to (i) Supplier’s
financial distress that is likely to lead them to file, or is likely to consent by answer or
otherwise to the filing against Supplier of, a petition for relief or reorganization or liquidation
(in connection with a bankruptcy or insolvency proceeding) or is likely to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or (ii) Supplier has received an inquiry
concerning a bona fide proposal or offer to effect a Change of Control that may be from an Alcatel
competitor Supplier shall, upon written notice from Alcatel promptly deliver the First Escrow
Deposit and the Second Escrow Deposit to the Escrow Agent.

     (b) Supply Failure — Change of Control. Upon the occurrence of a Supply Failure — Change
of Control (i) the Escrow Agent shall, in accordance with the terms of the Escrow Agreement release
to Alcatel the First Escrow Deposit and Alcatel shall have the rights to use the First Escrow
Deposit as necessary (including the right to modify, update or upgrade and support the Products) to
make, use, market, sell, and support the Products, (ii) Supplier shall make available to Alcatel or
its designated manufacturer any unique equipment held by Supplier to manufacture, test and support
the Products and (iii) Supplier shall otherwise cooperate with Alcatel to transition the
manufacture, testing and support of the Products to Alcatel or its designated manufacturer. The
total price Alcatel shall pay Supplier for Supplier’s performance described in this paragraph shall
be the sum of $1.00 USD.

In addition, upon the occurrence of a Software Support Failure subsequent to a Supply Failure
-Change of Control, the Escrow Agent shall, in accordance with the Escrow Agreement, release the
Second Escrow Deposit to Alcatel and Alcatel shall have the right to use the Second Escrow Deposit
as necessary (including the right to modify, update or upgrade and support the Products) to make,
use, market, sell, and support the Products, The total price Alcatel shall pay Supplier for
Supplier’s performance described in this paragraph shall be the sum of $1.00 USD.

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     (c) Supply Failure — Delivery. Upon the occurrence of a Hardware Supply Failure, the Escrow Agent
shall, in accordance with the terms of the Escrow Agreement, release the First Escrow Deposit to
Alcatel.

Upon the occurrence of a willful Software Support Failure (i) the Escrow Agent shall, in accordance
with the terms of the Escrow Agreement, release the Second Escrow Deposit to Alcatel and Alcatel
shall have the rights to use the First Escrow Deposit and the Second Escrow Deposit as necessary
(including the right to modify, update or upgrade and support the Products) to make, use, market,
sell, and support the Products, (ii) Supplier shall make available to Alcatel or its designated
manufacturer any unique equipment held by Supplier to manufacture, test and support the Products
and (iii) Supplier shall otherwise cooperate with Alcatel to transition the manufacture, testing
and support of the Products to Alcatel or its designated manufacturer.

In the event of a Software Support Failure that is not willful, Alcatel will be entitled to provide
resources to be dedicated to Alcatel software support. These resources will be co-located with the
Supplier engineering and support organizations and will be given full access to everything
necessary -including supplier personnel resources- to provide a cure for to the Software Support
Failure.

During the [***] period following a Supply Failure — Delivery, Alcatel shall pay Supplier a royalty
for all Products sold pursuant to Section 11.2(c) equal to [***] of the Supplier Royalty (Reduced
Royalties) for all such Products sold by Alcatel. The parties agree that upon the expiration of
such [***] period, no further royalties shall be payable to Supplier by Alcatel. Royalties would
not be payable by Alcatel in the case of a willful Software Support Failure.

     (d) General Escrow Provisions.

          (i) Alcatel shall only distribute the Product pursuant to the terms of an end user license
agreement that is at least as protective of Supplier, the Product and the intellectual property
rights in the Product as the current Supplier end user license agreement attached hereto as exhibit
10.2, (such restriction to remain in force only until such time as Supplier is wound up),

          (ii) Supplier will provide to Alcatel on a quarterly basis its limited financial information
sufficient for Alcatel to reasonably assess whether Supplier is in financial distress that may
likely lead them to file, or likely consent by answer or otherwise to the filing against Supplier
of, a petition for relief or reorganization or liquidation (in connection with a bankruptcy or
insolvency proceeding) or is likely to take advantage of any bankruptcy or insolvency law of any
jurisdiction.

          (iii) Prior to Supplier filing for bankruptcy, Supplier will notify Alcatel and Supplier will
authorize Escrow Agent to release to Alcatel First Escrow Deposit and Second Escrow Deposit.

          (iv) Alcatel shall pay Supplier all Reduced Royalties within 45 days after the end of the
calendar quarter in which the Reduced Royalties were incurred.

          (v) Notwithstanding the foregoing, if, upon the mutual agreement of the parties (such
agreement being considered by each party in good faith and not unreasonably withheld), the Software
Support Failure and Hardware Delivery Failure have been cured, then Escrow Deposits shall be
returned to the Escrow Agent and Alcatel shall no longer make use of the Escrow Deposits.

In addition, the parties agree to calculate a and pay compensation payment as follows: Alcatel’s
costs directly resulting from the Supply-Failure — Delivery (including but not limited to the cost
for building internal expertise and operational capabilities for testing, supporting, modifying the
Product, both Hardware and Software, and including cost of goods .and royalties actually paid to
Supplier)” minus “the transfer price payment Alcatel would have paid to Supplier for all Products
sold to Alcatel customers during the period of this Supply Failure -Delivery had such Supply
Failure-Delivery not occurred. If this difference is positive, Supplier shall pay Alcatel this
amount, if this difference is negative Alcatel shall pay

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Supplier this amount By way of example only, if Alcatel’s cost resulting from the Supply Failure -
Delivery equals $185 (comprising $50 cost of goods, $35 royalty actually paid to Supplier and $100
for internal expertise and operational capabilities) and the price Alcatel would have paid to
Supplier for all Products sold had the Supply Failure -Delivery not occurred equals $100, then
Supplier would pay Alcatel $85

ARTICLE XII

ELECTRONIC DATA INTERCHANGE

     12.1. Documents and Standards. Upon the request of Alcatel, Supplier shall use its best efforts to implement and maintain
the capability to transmit documents to, and receive documents from, Alcatel by electronic data
interchange either directly or through an intermediary with twelve (12) months of the execution of
this agreement. Supplier shall maintain ANSI standard electronic data interchange transaction sets
for electronic invoices, electronic funds transfers, forecasts, purchase orders, purchase order
acknowledgments, advance ship notices, purchase order changes, purchase order change
acknowledgments, functional acknowledgments and other transactions reasonably requested by Alcatel.

     12.2. Signatures. Each party shall adopt as its signature an Electronic Signature to be affixed to, or
contained in, any document electronically transmitted by that party to the other party.

     12.3. Transmissions. (a) If either party electronically transmits to the other party any document in connection
with this Agreement, then (i) that party shall use security procedures sufficient to ensure that
the transmission is authorized and protected from unauthorized access, and (ii) the presence of the
Electronic Signature of that party affixed to, or contained in, the transmitted document shall be
sufficient to verify that that party originated and executed the document.

     (b) Any document electronically transmitted by either party to the other party shall be deemed
to have been duly given or delivered upon receipt by the receiving party in readable form. Upon
the receipt by either party of any document transmitted electronically by the other party, the
receiving party shall promptly transmit to the other party a functional acknowledgment of receipt,
and the transmission of the acknowledgment shall constitute conclusive evidence that the document
has been received. Neither the transmitting party nor the receiving party shall have any rights or
obligations with respect to any such document unless and until the receiving party has transmitted
such an acknowledgment.

     (c) If either party receives any electronically transmitted document in an unintelligible or
garbled form, then that party shall promptly deliver to the other party notice to such effect.

     12.4. Enforceability. For purposes of applicable commercial law, (a) any document electronically transmitted by
either party to the other party in accordance with this Article XII shall be deemed to be a
writing, and (b) any such document that contains, or to which is affixed, the Electronic Signature
of that party shall be deemed (i) to have been signed and (ii) when printed from electronic files
or records established and maintained in the normal course of business, to constitute an original.

ARTICLE XIII

CONFIDENTIALITY

     13.1. Exchange of Information. Upon the terms and subject to the conditions set forth in this Article XIII, (a) Disclosing
Party, and its Affiliates and other designees, may disclose to Recipient, and its designees,
Confidential Information, (b) Recipient may use and disclose Confidential Information, and (c)
certain Affiliates, directors, officers, employees and other designees of Recipient may use
Confidential Information. Except as otherwise provided in this Agreement, nothing in this
Agreement shall be construed to grant to Recipient or any other third party any right in any
Confidential Information.

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     13.2.Use and Disclosure. Recipient may (a) use Confidential Information solely for the purpose of this Agreement and
(b) disclose Confidential Information solely to those Affiliates, directors, officers, employees or
other designees of Recipient that (i) are not competitors of Disclosing Party and (ii) have a need
to know for the purpose of this Agreement and obligations to use the Confidential Information
solely for that purpose and not to further disclose the Confidential Information. Recipient shall
cause each of its Affiliates, directors, officers, employees and other designees that receive
Confidential Information to comply with such obligations.

     13.3. Prevention. Recipient shall prevent the unauthorized use or disclosure of Confidential Information by
using the same degree of care to safeguard Confidential Information as it uses for its own
confidential information of like importance, but no less than reasonable care. If Recipient
discovers any such unauthorized use or disclosure, then Recipient shall promptly notify Disclosing
Party and take any and all actions necessary to prevent any further unauthorized use or disclosure,
including the enforcement of the obligations of its Affiliates, directors, officers, employees and
other designees with respect to the Confidential Information.

     13.4. Required Disclosures. Notwithstanding any provision of this Agreement to the contrary, Recipient may disclose any
Confidential Information to the extent required by applicable law only if, prior to the disclosure,
Recipient (a) delivers to Disclosing Party notice to such effect promptly after receipt by
Recipient of a request for disclosure and (b) takes reasonable actions, and provides reasonable
assistance to Disclosing Party, to secure confidential treatment of the Confidential Information by
a protective order or otherwise.

     13.5. Copies. Recipient may make copies of Confidential Information only to the extent necessary for the
purpose of this Agreement and only if all confidential or proprietary markings are reproduced on
those copies.

     13.6. Return. Promptly after the request of Disclosing Party, Recipient shall, at its option, (a) return
to Disclosing Party all originals, copies and excerpts of any Confidential Information or (b)
destroy those originals, copies and excerpts if Recipient delivers to Disclosing Party notice to
such effect. Notwithstanding the foregoing, Recipient’s legal counsel may retain one copy of the
Confidential Information for use solely as a record of the disclosure.

     13.7. No Representations or Warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, DISCLOSING PARTY MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO ANY CONFIDENTIAL INFORMATION.

     13.8. Survival. Upon the expiration of the term, or sooner termination, of this Agreement, Recipient shall
have no further right to use or disclose Confidential Information under this Agreement.
Thereafter, Recipient shall not permit any of its Affiliates, directors, officers, employees or
other designees that received Confidential Information to use or disclose it.

ARTICLE XIV

INTELLECTUAL PROPERTY

     14.1. Ownership. Except as otherwise expressly provided in this Agreement, nothing in this Agreement is
intended or shall be construed to grant to either party any right, title or interest in or to any
Intellectual Property Right of the other party. Except as otherwise mutually agreed or expressly
provided in this Agreement, if, during the term of this Agreement, any employee, agent or
subcontractor of Alcatel first discovers, creates or develops any Intellectual Property Right in
connection with the transactions contemplated by this Agreement, then nothing in this Agreement
is intended or shall be construed to grant to Supplier any right, title or interest in or to the
Intellectual Property Right. Except as otherwise mutually agreed or expressly provided in this
Agreement, if, during the term of this Agreement, any employee, agent or subcontractor of Supplier
first discovers, creates or develops any Intellectual Property Right in connection with the
transactions contemplated by this Agreement, then nothing in this Agreement

20 of 47

 

is intended or shall be
construed to grant to Alcatel any right, title or interest in or to the Intellectual Property
Right. No rights or licenses are granted except as expressly set forth in this Agreement.

     14.2. Ancillary Licenses. (a) If any Product contains any Software, then Supplier shall grant to Alcatel an
irrevocable, paid-up, non-exclusive, transferable, worldwide license to use, sublicense and
distribute the Software solely with the Product unit with which it was delivered. Alcatel shall
not (nor shall it authorize others to) disassemble, reverse compile, reverse engineer or otherwise
expose the source code of any Software, provided, however, where Alcatel has received the source
code pursuant to Section 11 of this Agreement, this sentence shall not apply. Notwithstanding any
provision of this Agreement to the contrary, Alcatel may make copies of any Software to the extent
reasonably necessary (i) to permit Alcatel to use, sublicense or distribute the Software solely
with the related Product as contemplated by this Agreement or (ii) for backup and archival
purposes. If Alcatel makes any copies of any Software, then Alcatel shall reproduce on those
copies all confidential or proprietary markings.

     (b) If Supplier delivers to Alcatel any Documentation with respect to any Product, then
Supplier hereby grants to Alcatel an irrevocable, paid-up, non-exclusive, transferable, worldwide
license to use, sublicense and distribute the Documentation solely with the Product.
Notwithstanding any provision of this Agreement to the contrary, Alcatel may make copies of any
Documentation to the extent reasonably necessary (i) to permit Alcatel to use, sublicense or
distribute the Documentation solely with the related Product as contemplated by this Agreement or
(ii) for backup and archival purposes. If Alcatel makes any copies of any Documentation, then
Alcatel shall reproduce on those copies all confidential or proprietary markings.

     14.3. Supplier Infringement. (a) Supplier shall indemnify and defend the Alcatel Indemnities against, and hold the
Alcatel Indemnities harmless from, any and all claims, actions, proceedings, liabilities,
obligations, losses, damages, costs or expenses (including reasonable attorneys’ fees) incurred by
the Alcatel Indemnities to the extent resulting from, or arising out of or in connection with, any
Supplier Infringement Allegation.

     (b) If any Product becomes, or in Supplier’s opinion is likely to become, the subject of any
Supplier Infringement Allegation, then Supplier shall promptly (i) obtain for Alcatel the right to
continue to use and sell the Product and obtain for Alcatel’s customers the right to continue to
use the Product, or (ii) modify the Product to make it non-infringing if the modified Product
otherwise complies with this Agreement, or (iii) replace the Product with one or more
non-infringing substitutes if those substitutes otherwise comply with this Agreement.

     (c) If Alcatel receives notice of any claim, action or proceeding resulting from, or arising
out of or in connection with, any Supplier Infringement Allegation, then (i) Alcatel shall (A)
promptly deliver to Supplier notice to such effect, (B) grant to Supplier the sole authority,
through counsel chosen solely by Supplier, to assume the defense thereof and to settle the claim,
action or proceeding to the extent that the settlement would not adversely affect the right of
Alcatel to continue to use and sell the Product or the right of its customers to continue to use
the Product and (C) reasonably cooperate with Supplier in connection therewith, and (ii) Alcatel
may participate, at its expense, in the defense or settlement of the claim, action or proceeding.

     (d) Notwithstanding any provision of this Section 14.3 to the contrary, Supplier shall have no
obligation under this Section 14.3 with respect to any Supplier Infringement Allegation to the
extent that the infringement results from, or arises out of or in connection with, (i) the use of
any Product for any purpose not reasonably contemplated by this Agreement, (ii) the modification of
any Product by Alcatel or any third party, (iii) the compliance by Supplier with any Specifications
delivered to Supplier by Alcatel, (iv) the combination of the Product with any other product where
the infringement would not have occurred without such combination.

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     (e) Notwithstanding any provision of this Agreement to the contrary, the provisions of this
Section 14.3 shall constitute the sole remedy of Alcatel under this Agreement with respect to any
Supplier Infringement Allegation.

     14.4. Alcatel Infringement. (a) Alcatel shall indemnify and defend the Supplier Indemnities against, and hold the
Supplier Indemnities harmless from, any and all claims, actions, proceedings, liabilities,
obligations, losses, damages, costs or expenses (including reasonable attorneys’ fees) incurred by
the Supplier Indemnities to the extent resulting from, or arising out of or in connection with, any
Alcatel Infringement Allegation.

     (b) If Supplier receives notice of any claim, action or proceeding resulting from, or arising
out of or in connection with, any Alcatel Infringement Allegation, then (i) Supplier shall (A)
promptly deliver to Alcatel notice to such effect, (B) grant to Alcatel the sole authority, through
counsel chosen solely by Alcatel, to assume the defense thereof and to settle the claim, action or
proceeding and (C) reasonably cooperate with Alcatel in connection therewith, and (ii) Supplier may
participate, at its expense, in the defense or settlement of the claim, action or proceeding.

     (c) Notwithstanding any provision of this Agreement to the contrary, the provisions of this
Section 14.4 shall constitute the sole remedy of Supplier under this Agreement with respect to any
Alcatel Infringement Allegation.

     14.5. Survival. The provisions of this Article XIV shall survive the expiration of the term, or the sooner
termination, of this Agreement.

ARTICLE XV

LIABILITY

     15.1. Supplier Indemnity. (a) Supplier shall indemnify and defend the Alcatel Indemnities against, and hold the
Alcatel Indemnities harmless from, any and all claims, actions, proceedings, liabilities,
obligations, losses, damages, costs or expenses (including reasonable attorneys’ fees) for personal
injury or property damage incurred by the Alcatel Indemnities to the extent resulting from, or
arising out of or in connection with any act or omission constituting gross negligence or willful
misconduct by Supplier or any of its subcontractors, directors, officers, employees or agents
during the performance of its obligations under this Agreement

     (b) If Alcatel receives notice of any claim, action or proceeding resulting from, or arising
out of or in connection with, any such breach, act or omission, then (i) Alcatel shall (A) promptly
deliver to Supplier notice to such effect, (B) grant to Supplier the sole authority, through
counsel chosen solely by Supplier, to assume the defense thereof and to settle the claim, action or
proceeding and (C) reasonably cooperate with Supplier in connection therewith, and (ii) Alcatel may
participate, at its expense, in the defense or settlement of the claim, action or proceeding.

     15.2. Alcatel Indemnity. (a) Alcatel shall indemnify and defend the Supplier Indemnities against, and hold the
Supplier Indemnities harmless from, any and all claims, actions, proceedings, liabilities,
obligations, losses, damages, costs or expenses (including reasonable attorneys’ fees) for personal
injury or property damage incurred by the Supplier Indemnities to the extent resulting from, or
arising out of or in connection with, any act or omission constituting gross negligence or willful
misconduct by Alcatel or any of its subcontractors, directors, officers, employees or agents during
the performance of its obligations under this Agreement.

     (b) If Supplier receives notice of any claim, action or proceeding resulting from, or arising
out of or in connection with, any such breach, act or omission, then (i) Supplier shall (A)
promptly deliver to Alcatel notice to such effect, (B) grant to Alcatel the sole authority, through
counsel chosen solely by Alcatel, to assume the defense thereof and to settle the claim, action or
proceeding and (C) reasonably

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cooperate with Alcatel in connection therewith, and (ii) Supplier may participate, at its expense,
in the defense or settlement of the claim, action or proceeding.

     15.3. Limitation of Liability. EXCEPT FOR LIABILITY ARISING UNDER ARTICLE 13 AND SECTIONS 14.3 AND 14.4 AND AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER PARTY RESULTING FROM, OR ARISING
OUT OF OR IN CONNECTION WITH, THIS AGREEMENT.

     15.4. Survival. The provisions of this Article XV shall survive the expiration of the term, or sooner
termination, of this Agreement.

ARTICLE XVI

TERM AND TERMINATION

     16.1. Term. The term of this Agreement shall commence on the date hereof and expire upon the
termination of this Agreement in accordance with Section 16.2.

     16.2. Termination. This Agreement may be terminated as follows:

     (a) By the mutual agreement of the parties;

     (b) By either party upon the delivery to the other party (the “Breaching Party”) of notice to
such effect if (i) the Breaching Party has breached any of its material obligations under this
Agreement and (ii) the breach has not been cured within 30 calendar days after the receipt by the
Breaching Party of notice to such effect;

     (c) By either party if the other party (i) has filed, or consented by answer or otherwise to
the filing against such other party (the “Bankrupt Party”) in a court of competent jurisdiction of,
a petition for relief or reorganization or liquidation (in connection with a bankruptcy proceeding)
under the bankruptcy laws of the United States of America, and such proceeding is not dismissed
within 90 days of the date such petition is first filed is such jurisdiction, (ii) has made a
general assignment for the benefit of its creditors, or consented to the appointment of a
custodian, receiver, trustee or other officer with similar powers for the Bankrupt Party or for any
material part of the Bankrupt Party properties, unless in each case such appointment is made in
connection with a petition covered by clause (i) above and the 90 day time period specified therein
has lapsed without such petition being removed, (iii) a court or governmental authority of
competent jurisdiction has, without the consent of the Bankrupt Party, appointed a custodian,
receiver, trustee or other officer with similar powers with respect to the other party, unless each
case such appointment is made in connection with a petition covered by clause (i) above and the 90
day time period specified therein has lapsed without such petition being removed, or (iv) an order
for relief has been entered against the Bankrupt Party in any case or proceeding for liquidation or
ordering the dissolution, winding-up (in connection with a bankruptcy or insolvency proceeding) of
the Bankrupt Party.

     (d) By Alcatel upon the delivery to Supplier of notice to such effect if Supplier has been
acquired in a Change of Control, [***];

     (e) By Alcatel upon the expiration of [***] after the delivery to Supplier of notice to such
effect; or

     (f) By Supplier upon the expiration of [***] after the delivery to Alcatel of notice to such
effect.

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	 	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.

 

     16.3.Effect of Termination. (a) Upon the termination of this Agreement pursuant to clause (a), (b), (c) or (d) of
Section 16.2, the terminating party may, without liability (except as otherwise provided in this
Section 16.3), cancel any portion of any Purchase Order with respect to any Product that has not
been delivered to, and accepted by, Alcatel. If the terminating party does not exercise such
right, then the obligations of each of Alcatel and Supplier under this Agreement with respect to
any Purchase Order that has been accepted by Supplier shall survive the termination of this
Agreement until those obligations have been fully performed.

     (b) Upon the termination of this Agreement pursuant to clause (a) of Section 16.2, except as
otherwise expressly provided in this Agreement or as otherwise agreed upon by the parties, neither
party shall have any rights or obligations under this Agreement. Upon the termination of this
Agreement pursuant to clause (b) or (c) of Section 16.2, (i) the terminating party may exercise any
or all of the rights and remedies available to it under applicable law, and (ii) except as
otherwise expressly provided in this Agreement, neither party shall have any rights or obligations
under this Agreement. Upon the termination of this Agreement pursuant to clause (d), (e) or (f) of
Section 16.2, except as expressly otherwise provided in this Agreement, neither party shall have
any rights or obligations under this Agreement.

     16.4.
Change of Control. (a) Supplier agrees it will promptly advise Alcatel orally and in
writing at the point of receiving an inquiry concerning a bona fide proposal or offer to affect a
Change of Control and will not without prior notice to Alcatel enter into negotiation concerning
any bona fide proposal or offer to affect a Change of Control.

     (b) Alcatel and Supplier recognize the possibility that a Change of Control may be beneficial
to both Supplier and Alcatel, and that a continuance of Supplier’s relationship with Alcatel may be
considered to be a material incentive to an acquiring party. If Supplier notifies Alcatel of a
potential Change of Control, and Alcatel, in its sole discretion, determines that the potential
Change of Control will be beneficial to both Alcatel and Supplier, Alcatel shall work in good faith
with Supplier to allow Supplier to affect such Change of Control and to avoid disincentive to the
acquiring party.

ARTICLE XVII

AUDITS AND DISPUTES

     17.1. Audit Rights. Supplier shall maintain the systems, books and records that are reasonably necessary to
accurately reflect the performance of its obligations under this Agreement and the amounts payable
by Alcatel in connection therewith. Upon the request of Alcatel, Supplier shall permit Alcatel and
its directors, officers, employees and agents to have access during normal business hours to such
systems, books and records for the purpose of verifying the performance of such obligations and
amounts, and Supplier shall reasonably cooperate with Alcatel in connection therewith. Upon the
request of Supplier in connection with any such verification, Alcatel shall cause its directors,
officers, employees and agents to execute and deliver to Supplier an appropriate nondisclosure
agreement. Notwithstanding the foregoing, Supplier shall have no obligation to breach any
contractual obligation to any third party in connection with any such verification. In the event
that Alcatel obtains a release of materials from escrow pursuant to this Agreement, Alcatel agrees
(and shall require any Alcatel Affiliate to agree) that the Supplier shall thereafter, without
further amendment of this Agreement, have all the same audit rights granted as Supplier has granted
to Alcatel under this Section 17.1.

     17.2. Legal Proceedings. If the parties fail to resolve any dispute relating to this Agreement by the mutual
agreement of the parties, then either party may initiate and prosecute appropriate legal
proceedings.

     17.3. Jurisdiction and Venue. Supplier hereby (a) submits to the personal jurisdiction of the federal and state courts
located in the State of California with respect to any legal proceeding arising out of any dispute
relating to this Agreement and (b) stipulates that venue for the legal proceeding may be in

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Los Angeles County, California. Notwithstanding the foregoing, either party may initiate and
prosecute any legal proceeding relating to this Agreement, or seek enforcement of any judgment
entered in connection with this Agreement, in any proper court having jurisdiction in the United
States or elsewhere.

     17.4. Survival. The provisions of this Article XVII shall survive the expiration of the term, or sooner
termination, of this Agreement.

ARTICLE XVIII

MISCELLANEOUS

     18.1. Costs and Expenses. Except as otherwise provided in this Agreement, each party shall bear any and all costs or
expenses incurred by that party in connection with the performance of its rights and obligations
under this Agreement.

     18.2. Compliance with Laws. Each party shall comply with all applicable laws and regulations in connection with the
performance of its rights and obligations under this Agreement.

     18.3. Written Assurances. Neither party shall export or re-export, directly or indirectly, in any form any equipment,
software or technology that is subject to the United States Export Administration Regulations and
delivered or disclosed to that party by the other party pursuant to this Agreement except in
compliance with those regulations and all other applicable United States federal export laws.

     18.4. Excusable Delays. Notwithstanding any provision of this Agreement to the contrary, neither party shall be
liable to the other party for any failure timely to perform any of its obligations under this
Agreement to the extent that the failure results from, or arises out of or in connection with, any
cause beyond the party’s reasonable control, including without limitation acts of God, acts of
government, embargoes, wars, riots, earthquakes, fires, floods, storms, epidemics or allocations.

     18.5. Publicity. Except as otherwise required by applicable law, neither party shall issue or cause the
issuance of any press release or other publication of the existence of this Agreement or the
transactions contemplated hereby, without the prior written consent of the other party.

     18.6. Notices. Except as otherwise provided in this Agreement, any notices, requests or consents required
or permitted under this Agreement shall be deemed to have been duly given or delivered (a) upon
receipt when personally delivered in writing, (b) upon receipt when sent by electronic transmission
to a party at the e-mail address set forth below for that party, (c) upon receipt when sent by
facsimile transmission to a party at the facsimile number set forth below for that party or (d) two
business days after the day when delivered in writing prepaid to a reputable courier service; in
each case addressed to the party to whom the notice, request or consent is to be given or delivered
at the following addresses, or at the most recent address specified by notice given to the other
party (provided, however, that any notice of an address change shall not be deemed to have been
duly given or delivered until actually received):

	 	 	 
	Alcatel:

	 	Alcatel Internetworking, Inc.
	 

	 	26801 W. Agoura Rd.
	 

	 	Calabasas, California 91301
	 

	 	Attention: Legal Department
	 

	 	e-Mail: legal@ind.alcatel.com
	 

	 	Facsimile: 818 878 3505

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	Supplier:

	 	Aruba Wireless Networks, Inc.
	 

	 	1322 Crossman Ave.
	 

	 	Sunnyvale, California 94089
	 

	 	Attention: Legal Department
	 

	 	E-Mail: rwilmer@arubanetworks.com
	 

	 	Facsimile: 408 227 4550

     18.7. Assignment. Neither party shall assign any of its rights, or delegate any of its obligations, under
this Agreement, without the prior consent of the other party, which shall not be unreasonably
withheld provided, however, that either party may assign any of those rights, or delegate any of
those obligations, to any Affiliate of that party without the consent of the other party

     18.8. Relationship of the Parties. Supplier shall perform its obligations under this Agreement as an independent contractor of
Alcatel. Nothing contained in this Agreement is intended or shall be construed to create any
partnership, joint venture or agency relationship between the parties. Nothing contained in this
Agreement is intended or shall be construed to confer upon or give any person or entity other than
the parties any rights under or by reason of this Agreement.

     18.9. Entire Agreement. (a) This Agreement constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes any previous oral or written agreements with respect to the
subject matter hereof, including without limitation any nondisclosure agreements, memorandums of
understanding or letters of intent between the parties with respect to the subject matter hereof.
No modification of any provision of this Agreement shall be binding upon either party unless
executed in writing by that party.

     (b) In the event of any conflict between any provision of this Agreement and any provision of
any exhibit, schedule or other attachment hereto, (i) the provision of this Agreement shall
prevail, and (ii) to the extent possible, those provisions shall be construed to minimize the
conflict. No provision of any Purchase Order or Order Acknowledgment shall have any force or
effect except to the extent expressly contemplated by this Agreement.

     18.10. Counterparts and Signatures. The parties may execute any number of counterparts to this Agreement, each of which shall
be deemed to be an original, and all of which together shall constitute one and the same agreement.
A copy or facsimile of the signature on this Agreement of any authorized representative of either
party shall have the same force and effect as an original thereof.

     18.11. Governing Law. This Agreement shall be governed by and construed In accordance with the laws of the State
of California, without giving effect to the principles of conflicts of laws thereof. The 1980 UN
Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

     18.12. Alcatel Affiliates-Adoption Agreement. Supplier agrees to sell Products to Alcatel and to any of Alcatel’s Affiliates that have
signed an Adoption Agreement attached hereto as Exhibit 1 and have agreed to be bound by the terms
and conditions of this Agreement and can meet Supplier’s credit requirements.

     The Purchase Orders to be placed with Supplier by Alcatel’s Affiliates shall be executed and
performed under the sole liability of the respective Affiliates having placed the Purchase Orders.
Alcatel will not be held liable for the performance or non-performance of any of its Affiliates
under this Agreement and its Purchase Orders and will not have any liability for any damages
resulting from and any act of omission of any such Affiliate. Each of Alcatel’s Affiliates will
remain fully liable for all acts or omissions under this Agreement and its Purchase Orders.
Notwithstanding the foregoing, Supplier will only accept a Purchase Order from an Alcatel Affiliate
which has agreed in writing to abide by the terms and conditions of this Agreement by signing an
Adoption Agreement.

26 of 47

 

     For all purchases made by Alcatel’s Affiliates that have signed an Adoption Agreement, for the
purposes of such purchase the term “Alcatel” shall refer to such Alcatel Affiliate. All invoices
arising out of sales by Supplier to any Affiliate under any Adoption Agreement shall be submitted
directly to such Alcatel Affiliate for payment. Alcatel assumes no responsibility for the credit
worthiness nor assumes any liability for any debt or claim incurred by any Alcatel Affiliate under
this Agreement.

     If the Alcatel Affiliate that has entered into an Adoption Agreement and Supplier agree to any
variations to the terms of the OEM Agreement, such variations shall apply only between the relevant
Alcatel Affiliate and Supplier, unless otherwise expressly agreed by Alcatel.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth in the
introductory paragraph hereof.

	 	 	 	 	 	 	 	 	 	 	 
	ARUBA WIRELESS NETWORKS, INC.	 	 	 	ALCATEL INTERNETWORKING, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Keerti Melkote
	 	 	 	By:
	 	/s/ Thomas Burns	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name: Keerti Melkote	 	 	 	Name: Thomas Burns	 	 
	Title: Vice-President	 	 	 	Title: President	 	 
	Address: 1322 Crossman Ave, Sunnyvale, CA 94089	 	 	 	Address: 26801 W. Agoura Rd., Calabasas, CA 91301	 	 

27 of 47

 

Exhibit 1

Adoption Agreement

This Adoption Agreement is effective as of                      (“Effective Date”) by and between ARUBA
WIRELESS NETWORKS, INC., a company incorporated under the laws of California, having its principal
office at 1322 Crossman Ave, Sunnyvale, CA 94089 (hereinafter “Supplier”) AND ALCATEL
___(name)___, a company incorporated under the laws of                      having its registered office
at                                          (street) ___,___(city) ___,___(country) ___(hereinafter
referred to as “ALCATEL YYY, each of which is”).

Hereinafter referred individually as a “Party” and collectively as the “Parties”. In consideration
of the premises and the undertakings of the Parties herein contained, it is agreed as follows:

ARUBA NETWORKS, INC. entered into a OEM Agreement with ALCATEL INTERNETWORKING, INC. (“ALCATEL”)
on___,___, (hereinafter referred to as the “OEM Agreement”). The OEM Agreement provides that
an ALCATEL Affiliate’s may enter into an Adoption Agreement indicating its interest to purchase
ARUBA’s Products and Services under the same framework as ALCATEL.

This Adoption Agreement shall incorporate the terms and conditions of the OEM Agreement and govern
the purchase of the ARUBA Products and any Services relating thereto. ARUBA and ALCATEL YYY have
all necessary rights and powers to enter into this Adoption Agreement and to grant the licenses
contained herein.

THEREFORE, in consideration of the premises and the undertakings of the Parties herein contained,
it is agreed as follows:

	1.	 	Definitions. Unless the context clearly requires otherwise and except as expressly
defined herein, words and expressions herein (including in the Preamble) shall have the
meanings as are ascribed to them in the OEM Agreement.
	 
	2.	 	Binding Provisions. ALCATEL YYY and ARUBA hereby agree to be bound to and to comply
with the provisions of the OEM Agreement and will enjoy all the rights granted to and
obligations of ALCATEL and ARUBA, respectively, under the OEM Agreement with respect to
Products purchased by ALCATEL YYY, including without limitation the right to order the ARUBA
Products and Services from ARUBA and to market and distribute the SUPPLIER Products directly
or indirectly through any ALCATEL Affiliate in accordance with the terms and conditions of the
OEM Agreement.
	 
	3.	 	Priority in Interpretation. Priority in interpretation shall be given to the
documents in the order listed below:

1) This Adoption Agreement

2) The OEM Agreement

	4.	 	Effective Date and Term. This Adoption Agreement shall come into full force and
effect as of its Effective Date and shall continue in force until the termination date of the
OEM Agreement.
	 
	5.	 	Special Terms. The parties agree that the following terms and conditions shall apply
solely to this Adoption Agreement:

a) ALCATEL YYY and SUPPLIER shall execute a confidentiality agreement in a similar form to
the nondisclosure agreement executed by ALCATEL and SUPPLIER. Such confidentiality
agreement shall be deemed to be the non-disclosure agreement referenced in the OEM
Agreement.

	6.	 	Notices. Whenever written notice is required under the provisions of this Adoption
Agreement, such written notice shall be sent by prepaid registered airmail, by FedEx or
similar express delivery service, or by facsimile, all with return receipt requested,
addressed to the Parties at their respective addresses, set forth below:

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If to SUPPLIER:

Address

Attn:

Tel.:

Fax:

E-mail:

If to ALCATEL YYY:

Address:

Attn:

Tel:

Fax:

E-mail:

	7.	 	Entire Agreement. This Adoption Agreement and the OEM Agreement constitute the
entire understanding and agreement between the Parties relating to subject matter hereof, and
it supersedes any and all prior contracts, agreements, or understandings -whether written or
oral- relating to the subject matter hereof.
	 
	8.	 	Joint and Several Liability. The Parties agree that ALCATEL and ALCATEL YYY shall
not be held jointly and severally liable by reason of having entered into such Adoption
Agreement.

IN WITNESS WHEREOF, the Parties hereto have caused this Adoption Agreement to be executed by their
duly authorized representatives effective as of on the day and the year first above written.

	 	 	 	 	 
	ARUBA WIRELESS NETWORKS, INC.

	 	ALCATEL YYY	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

((Signature)

	 	 

(Signature)
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

(Name)

	 	 

(Name)
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

(Title)

	 	 

(Title)
	 	 

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Schedule 2.2.1

[***]

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	 	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.

 

Schedule 3.1

PRODUCTS, PRICES and DISCOUNTS

[***]

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	 	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.

 

Schedule 4.1

INITIAL FORECAST

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	First Qtr	 	Second Qtr	 	Third Qtr	 	Fourth Qtr	 	First Year
	 	 	Qty Fcst	 	Qty Fcst	 	Qty Fcst	 	Qty Fcst	 	Qty Fcst
	Aruba 800 WLAN switch, 8+1SX ports
	 	 	0	 	 	24	 	 	 	31	 	 	 	39	 	 	 	94	 
	Wireless Intrusion Protection
	 	 	0	 	 	24	 	 	 	31	 	 	 	39	 	 	 	94	 
	Wireless AAA Services
	 	 	0	 	 	24	 	 	 	31	 	 	 	39	 	 	 	94	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Aruba 2400 WLAN switch, 24+2GBIC
ports
	 	 	0	 	 	68	 	 	 	86	 	 	 	107	 	 	 	261	 
	Wireless Intrusion Protection
	 	 	0	 	 	68	 	 	 	86	 	 	 	107	 	 	 	261	 
	Wireless AAA Services
	 	 	0	 	 	68	 	 	 	86	 	 	 	107	 	 	 	261	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Aruba 5000 WLAN switch, 2GBIC
	 	 	0	 	 	18	 	 	 	23	 	 	 	29	 	 	 	70	 
	Wireless Intrusion Protection
	 	 	0	 	 	18	 	 	 	23	 	 	 	29	 	 	 	70	 
	Wireless AAA Services
	 	 	0	 	 	18	 	 	 	23	 	 	 	29	 	 	 	70	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Aruba 5100 WLAN switch, 2GBIC
	 	 	0	 	 	5	 	 	 	7	 	 	 	8	 	 	 	20	 
	Wireless Intrusion Protection
	 	 	0	 	 	5	 	 	 	7	 	 	 	8	 	 	 	20	 
	Wireless AAA Services
	 	 	0	 	 	5	 	 	 	7	 	 	 	8	 	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 
	GBIC-SX
	 	 	0	 	 	192	 	 	 	245	 	 	 	305	 	 	 	742	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wireless Grid Point 60
(monitoring AP)
	 	 	0	 	 	649	 	 	 	828	 	 	 	1,028	 	 	 	2,505	 
	Wireless Grid Point 60 (single
band a or b/g)
	 	 	0	 	 	1,946	 	 	 	2,484	 	 	 	3,083	 	 	 	7,514	 
	Wireless Grid Point 65 (dual band
a/b/g)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,056	 	 	 	2,056	 
	Wireless Grid Point 70 (dual band
a/b/g)
	 	 	0	 	 	1,297	 	 	 	1,656	 	 	 	0	 	 	 	2,954	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL COST
	 	$	0	 	$	1,602,957	 	 	$	2,046,328	 	 	$	2,317,768	 	 	$	5,967,053	 

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Schedule 6.5

LOANED EQUIPMENT

[List Loaned Equipment here.]

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Schedule 6.6

SERIALIZATION PROCEDURES

The Products will meet the following Serial number criteria:

	 	1.	 	Maximum length 20 alpha numeric digits
	 
	 	2.	 	Bar code readable
	 
	 	3.	 	Customer readable
	 
	 	4.	 	Visible and attached on outside of product
	 
	 	5.	 	Visible on outside of packaging box

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Schedule 7.4

PACKAGING SPECIFICATIONS

1.0 SCOPE

1.1 Scope. This document specifies the general requirements for the design, development,
verification and/or continuing manufacture of appropriate packaging for Alcatel products.

1.2 Part number. This document applies to all part-numbered packages delivered to Alcatel
Internetworking.

2.0 APPLICABLE DOCUMENTS

	2.1	 	Issues of Documents. The following documents in effect on the date of invitation for
bids or request for proposal form a part of this specification to the extent specified herein.

			
	2.1.1	 	Standards:

	 	 	 
	ISTA 1A

	 	International Safe Transit Association Tests for
packages with contents less than 150 lbs.
	 
	ISTA 1B

	 	International Safe Transit Association Tests for
packages with contents greater than 150 lbs.
	 
	ASTM Standard D 951

	 	Standard Test Method for Water Resistance of
Shipping Containers by Spray Method.

2.2 Reference Document. In the event of a conflict between this specification and the
references cited herein, this specification shall take precedence.

3.0 DEFINITIONS

	 	 	 
	ASTM

	 	American Society for Testing and Materials
	ESD

	 	Electro Static Discharge
	EPS

	 	Expanded Polystyrene
	FDA

	 	Food and Drug Administration
	ISO

	 	International Standards Organization
	TL9000

	 	Telecommunications Standard of ISO-9000
	USDA

	 	United States Department of Agriculture
	ISTA

	 	International Safe Transit Association
	PCBA

	 	Printed Circuit Board Assembly

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4.0 REQUIREMENTS

4.1 General Description. The supplier shall provide packages consistent of ISTA 1A or 1B
and ASTM Standard D951. The packaging is intended to be reusable. The design must be easily
handled, unpacked, and potentially repacked in the field.

4.2 Alcatel Responsibilities. Alcatel shall provide the product test specimens necessary
to conduct verification tests, when applicable. For new package development, the supplier and
Alcatel shall agree on both the quantity of evaluation material to be originally supplied and the
course of action if specimens are damaged during early verification testing. All test specimens
shall be returned to Alcatel after the verification process. Prior to Alcatel acceptance of the
evaluation package, the supplier and Alcatel shall jointly verify cosmetic, dimensional and
functional fitness of use for the intended product(s).

4.3 Design and Construction.

4.3.1 Design Documentation. The design documentation shall be in accordance with the
manufacturer’s standard practice and shall be provided to Alcatel in electronic format upon
request. This documentation shall include package component drawings, bills of material and
material specifications, including carton-sealing specifications. For new package development,
changes to the original document(s) shall be at no charge to Alcatel unless the change is initiated
at Alcatel’s request.

4.3.2 Materials. All materials for packaging and closure shall be in accordance with the following:

	 	•	 	Use paper based packaging materials that are easily recycled like corrugate, molded pulp, etc.
	 
	 	•	 	Use water-based inks or inks which are FDA/USDA approved.
	 
	 	•	 	Use tapes and starch glues that do not inhibit recycling (Quality Seal type tape
preferred). Primary seams should be stitched.
	 
	 	•	 	Design packages so those components can be easily separated prior to recycling.
Do not bond two or more dissimilar materials together (e.g., urethane pad glued to
corrugate). Avoid free-rise foam in-place.
	 
	 	•	 	Avoid coatings or impregnated of corrugated.

Alcatel must approve the packaging scheme. The product is normally bagged with either a dust cover
or ESD protective materials. Generally, for ESD sensitive items, there must be one conductive or
shielding layer and an ESD warning label in the package structure. There must not be any static
generating packaging materials in the package. Packaging materials and methods must be effective
from -40° C (-40°F) to 60°C (140°F) and shall withstand, without degradation, a relative humidity
from 5% to 95%. The specification of desiccants, if appropriate, is part of the supplier’s design
responsibility.

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4.3.3 Labeling. The following markings shall be preprinted in black on the packaging with
specific location shown:

* on two opposite vertical sides of the package:

	 	•	 	“Heavy Symbol” — International symbol for packages weighing >12 kg. (26.4 lbs.)
	 
	 	•	 	“Keep Dry” International symbol
	 
	 	•	 	“This Side Up” International symbol, if appropriate
	 
	 	•	 	“Fragile” International symbol
	 
	 	•	 	“Stacking” restriction.
	 
	 	•	 	“Mark of Conformity” for the European Union, commonly called “CE Mark”

* on one vertical side of the package:

	 	•	 	Alcatel logo to be printed on 1 side. The logo shall be printed in 1 color
(Black) only, for gift box type on top, for other box types on front.
	 
	 	•	 	Alcatel part number and revision in human readable and barcode on the right side
panel for gift box type and on the lower left corner of front panel for other box
types.

* on the designated bottom of the package:

	 	•	 	Box manufacturer’s certificate and box dimensions on the designated bottom of
the package.

4.3.4 Build to Stock Box. All boxes designed for the products that will be built to stock
and shipped with power cords must have a pop out window in specified location, for insertion of
power cords without opening the box and to be resealed with 300163-10 plastic window.

4.3.5 Shipment Configuration. Package dimensions should consider that multiple products
may be shipped on a 48” x 40” wooden or plastic pallet, not to exceed the stack up height of 62”.
Stacking restriction should be included, where applicable, in the symbology. Units may be shipped
or stacked on any side. Pallet banding shall not cause damage to the package. Container shall
assure that product does not support any stacking loads on any side.

4.3.6 Cushioning. Some commonly used cushioning materials are not effective or prohibitive
in the Field Service environment, and will not be considered as part of a proposed packaging
scheme. Examples are low density foam-in-place polyurethane, EPS foam, and all loose-fill
cushioning materials.

4.3.7 Internal Bracing. Internal bracing may be added to stabilize the product. Bracing,
however, must be easily removable and reusable and must not degrade the cosmetic appearance of the
product after removal.

5.0 DESIGN VERIFICATION

5.1 Responsibility for Design Verification. The manufacturer shall be responsible for
conducting verification tests according to a test plan that is consistent with the requirement
defined in the applicable standards.

5.2 Acceptance Criteria. For new package development, verification tests must demonstrate
that the packaging remains in good condition and the product is damage free; that is, the product’s
original cosmetic appearance (no scratches, abrasions, etc.) has not degraded, product dimensional
relationships shall not have changed and the package continues to maintain product protection and
position. The packaging must not rupture (joints break open), compress to the extent that an
unstable palletized load could exist, or fail closure such that flaps are free to open.

5.3 Distribution Cycle. The packaged products will be shipped internationally. Suppliers
must be aware that the product will be exposed to shock and vibration consistent with manual
handling, warehousing, airplanes, trucks and conveyors, packaged either singly or on a pallet with
other

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products. Alcatel expects the supplier to share responsibility for the viability of the package
design to meet the design intent.

5.4 Test Plan. For new package development, the supplier, in accordance with the
standards specified herein, shall perform acceptance testing per a test plan which includes:

	 	•	 	References to the applicable standard(s).
	 
	 	•	 	A description of the test method.
	 
	 	•	 	The specific tests to be performed.
	 
	 	•	 	The specific tests to be excluded with rationale.
	 
	 	•	 	Equipment used to conduct the test.
	 
	 	•	 	Detailed special test instructions.
	 
	 	•	 	The sequence of tests.

5.5 Test Class. For new package development, testing shall be performed as an individually
packaged product, even though the product could be shipped palletized. The design, however, shall
assure package and product integrity per the shipment configuration.

5.6 Test Replications/Sample Size. For new package development, depending on the product,
test replications may typically vary between three (3) and five (5) in order to achieve an adequate
confidence level that the design meets the requirements. In some cases, the same specimen may be
used for multiple tests so that the sample size may be less than the number of test replications.

5.7 Test Results. For new package development, the supplier shall provide Alcatel with the
final test report in electronic formats. The responsible Alcatel quality engineer shall then
assure retention of test documentation within our document control system for the life of the
product. This is important so that comparisons with field damage, future test standards, or
ISO/TL9000 requirements can be made.

6.0 TEST PROCEDURES:

6.1 Specimen Preparation. The shipping test unit (product and package) should be
mechanically, cosmetically and functionally representative of final production units. For testing
purposes, the packaging may be without labeling requirements.

6.2 Conditioning. Testing may be conducted in the range of 50°F to 80°F without regard to
humidity, unless otherwise required.

6.3 Tests — Mandatory. It is the supplier’s responsibility to fully verify all design
criteria relative to the requirements of ISTA 1A or 1B. As a minimum, however, the following tests
are mandatory:

6.3.1 Vibration — Fixed or Random Frequency

6.3.2 Free Fall Impact

	 	•	 	EXCEPTION: The drop height shall meet twice the height/weight ratio specified in
ISTA spec, not to exceed 40 inches.
	 
	 	•	 	The product shall not experience an acceleration load of greater than 50g’s for
chassis (or packaged-product weight equal to or greater than 21 lbs) and 100g’s for
any PCBA assemblies (or packaged-product weight less than 21 lbs).

6.3.3 Physical Damage. In addition to the Free Fall Impact test, the products with exposed
heatsinks with height of 1.75” or taller must be dropped at the height of 100” and checked for
damages. There shouldn’t be any damages to the unit inside of packaging functionally or
cosmetically.

6.4 Tests — Additional. These tests are not required on product-by-product basis. But the
supplier must certify that the material meets the requirements and verify if required:

6.4.1 Compression — Must meet Common Carrier Regulations for Minimum Fiberboard Requirements.

6.4.2 Rain Test (Perform in accordance with ASTM D-951)

 41 of 47

 

	 	•	 	Test at least three containers, closed and sealed as for shipment. For the purposes
of checking leakage alone, the containers may be tested empty. Spray the containers
for one (1) hour at a medium intensity of 2 ± 1/2 in./hour. The package should be
examined to determine if water leakage occurred resulting in damage and/or if it is
still capable of providing physical protection.

7.0 QUALITY ASSURANCE PROVISIONS

7.1 Qualification Approval. Qualification approval, once granted, shall remain in effect
until withdrawn by the buyer in writing. However, the buyer may make a review of packaging design
at any time, and failure of the packaging to meet the qualification requirements herein shall be
considered as sufficient basis for withdrawal of approval. The buyer reserves the right to
replicate any tests and if nonconformance is evident, the buyer reserves the right to reject the
packaging design without liability. Evidence of noncompliance may result in withdrawal of
approval, or request for re-qualification of the product.

7.1.1 Deviations. Written notification, with subsequent Alcatel approval, shall be
provided to the buyer under these conditions:

	 	(a)	 	Prior to any significant changes in materials, design, processes, or
construction that could result in the packaging not meeting qualification requirements.
	 
	 	(b)	 	Prior to receiving materials from a different manufacturer than used to approve
the qualification sample.

7.2 Surveillance. The buyer retains the right to assign agents to the manufacturer’s plant
to perform surveillance functions applicable to the products furnished under this document. Such
agents shall have the prerogative to observe manufacturing operations and tests, and to request
data from any Quality Assurance tests.

7.3 Workmanship. Items shall be manufactured and processed in such a manner as to be
uniform in quality, and free from defects that will affect life or appearance. Substandard
workmanship will be considered sufficient cause for rejection of the product lot without liability
on the part of the buyer.

 42 of 47

 

Schedule 8.1

SUPPORT SERVICES

     1. Training.

     1.1 Skills Training. (a) Supplier will provide Product support training (“Skills
Training”) that is sufficient to permit qualified Alcatel technical personnel to provision,
configure, operate, install, test, maintain, commission and troubleshoot the Product. Supplier
will provide such training within three months after the date of the Agreement.

     (a) Supplier will provide visual aids or reference materials, on-the-job training and
information chalkboard sessions, as typically found in similar support Skills Training programs.
Within 30 calendar days after the date of the Agreement, Alcatel and Supplier will mutually develop
a Skills Training plan that will focus on developing Alcatel’s capabilities pursuant to its support
role as defined herein. Such a plan will reflect the essence of Supplier’s Certification Plan,
where applicable, and include but not be limited to each of the published Product courses Supplier
makes available to its customers.

     (b) Within 10 calendar days after the date of the Agreement, Supplier will provide documented
prerequisites, if any, for such training.

     (c) Supplier will provide the Skills Training at Alcatel’s facility in Calabasas, California
(or at another mutually agreed upon location), at no charge. Alcatel will provide working Products
for such training. Alternatively, upon the request of Alcatel, Supplier will provide an equivalent
amount of training at its own facility and provide training equipment and working Products. Each
party will bear their own travel and lodging expenses.

     (d) Supplier will also provide four (4) System Engineer Training (one (1) per region: east
coast, west coast, AsiaPac and Europe) at no charge.

     1.2 Train the Trainer. (a) Within one month after a request by Alcatel, Supplier will
furnish at no charge a qualified instructor to provide train-the-trainer instruction. Subject to
modification mutually agreed upon at the time of such a request, it is expected that such training
will generally comply with the following guidelines:

          (i) The candidate will take part in a program requiring active participation in course modules
as a student, instructor trainee, and co-instructor and eventually as a certified instructor. This
requires the candidate to first attend the classes as a student to the full extent of participating
in lab work and all standard testing.

          (ii) The candidate next attends the class as an instructor trainee, concentrating on the
syllabus and the actual presentation of the material. Considerable off-line time is spent
one-on-one with the instructor to become fully acquainted with the courseware, learn optional
training exercises, practice the delivery of material, and have expanded hands-on time with the
equipment.

          (iii) Subsequently, the candidate will participate in a class by sharing the platform and
grading duties of the instructor. Time outside of actual class time is utilized as necessary for
the candidate to increase personal familiarity and comfort with the documentation and equipment.

          (iv) Finally, the candidate will conduct an entire class with a certified instructor who is in
the room for evaluative purposes and assistance if required.

Upon successful completion of the above program, Supplier will provide the newly certified
instructor with a single copy of all material used in the instruction.

 43 of 47

 

     (b) Supplier will develop and provide Alcatel, at no charge, a complete set of Product
courseware, including, but not limited to, teaching aids, lab exercises, student guides and
instructor guides for Alcatel customer use. Alcatel may modify, reproduce, and distribute such
training materials pursuant to its support role as defined herein. Such courseware will be
provided in a format and quality equivalent to that level exhibited by Alcatel’s Curriculum
Developer’s or at a standard equivalent to that level specified by Bellcore. Supplier will
incorporate into all courseware Alcatel’s private label specifications. Supplier will provide such
courseware electronically in a format that is compatible with Microsoft Work and PowerPoint for PC
Windows application. Courseware shall be available at least 90 days prior to the first customer
shipment. Supplier will provide courseware and train-the-trainer instruction for the following
courses:

Overview of Product

Operations of Product

Maintenance of Product

Engineering and Planning

Administration and Provisioning

Database

     1.3 Upon the request of Alcatel, Supplier will provide any additional training beyond the
above stated entitlements at mutually agreed prices.

2. Documentation.

     2.1 End-User Documentation. (a) Supplier will provide Alcatel at no charge a complete
set of end-user Product documentation and ongoing updates required to support Alcatel’s customer
documentation requirements. Such documentation will be provided in a standard organization, format
and material quality equivalent to that level exhibited by Supplier Publication Issue___, Month,
Year, entitled                    ___, or in accordance with Alcatel’s Technical Publications Documentation
Standards Guide, or at a standard equivalent to the level specified by Bellcore Technical Reference
TR-TSY-000454, Issue 1, July 1988 and Bellcore Technical Advisory TA-OPT-000454, Issue 3, July
1992.

     (b) Supplier will incorporate all documentation modifications required by Alcatel’s private
label specifications.

     (c) Upon request, Supplier will provide documentation in CD-ROM format.

     (d) Upon request, Supplier will ship appropriate Product documentation intact with each
shipment of Product itself. As applicable, such documentation shall include but not be limited to
installation/user manuals, product user manuals, network diagnostics, soft-copy (diskette or CD
ROM, as requested) and hardcopy of all hardware components within the configuration (including
pin-out diagrams).

     (e) If requested by Alcatel, Supplier will electronically provide, at no charge, end-user
documentation and updates for the purpose of reproduction and distribution to Alcatel’s Product
customers. Such electronic documentation shall be in metafiles, viewable by Interleaf WorldView,
or Acrobat viewing software, or supplied in Interleaf.

     2.2 Changes. Supplier will provide Alcatel all information and related documentation
regarding user impact of design changes (software/hardware) that affect the operation, maintenance
or installation 90 days prior to the effective date of the change.

     2.3 Release Notes. Supplier will provide software load description documents
(“Release Notes”) for every major software release, point release, and maintenance release to
include; a list and description of the major features of the release, description of changes to
system software and related hardware, man-machine interface information, list of customer
deliverables, resolved and open problems, and installation procedures.

 44 of 47

 

3. Customer Support. If requested by Alcatel, Supplier will support the first customer
site installation of each Product release, Supplier software release or significant upgrade. This
support will be provided at no charge, either remotely or on-site, at Alcatel’s discretion.

4. Repair and Return.

     4.1 Warranty. Any replacement or repaired hardware Products shall be warranted for a
period of 120 days, or for the remainder of the unexpired period of the Warranty Period, whichever
is longer. All repaired Products will be brought to the current field revision level if previously
approved by Alcatel.

     4.2 Emergencies. Upon the request of Alcatel, in emergency situations, Supplier will
provide Alcatel with emergency unit level replacement service (advance shipment of replacement unit
as soon as possible, but within 24 hours of request) at no charge to Alcatel 24 hours a day 7 days
a week.

     4.3 Failure Analysis. Supplier will maintain failure analysis data on field returns,
including information with respect to the replaced device, part number, manufacture, date code and
reference designator. Supplier will test all field returns before any updating or repair work is
performed to more accurately identify No Trouble Found (NTF) conditions. On hardware returned to a
third party or supplier’s site for repair, Supplier will work with the third party or manufacturing
to obtain the required failure analysis information within 15 business days after receipt of
returned material. The data collection will include field replaceable units, backplanes, top level
assembly, field return hardware and functional defects on delivered products. Supplier will report
this information to Alcatel on a minimum of a monthly basis.

5. Technical Support.

     5.1 On-Going Support. Supplier shall provide, per the terms of this agreement,
on-going technical support via telephone to Alcatel, 24 hours a day, 7 days a week during the term
of the Agreement or for the term of any support agreement signed under the Agreement or for the
remainder of the end-user’s Warranty period, whichever is longer. Notwithstanding the forgoing all
technical support during the warranty period will be provided at no charge. Such support will be
rendered from a Supplier location approved by Alcatel. This support will be rendered in accordance
with a mutually developed support operation procedure that documents critical support elements,
including without limitation call reporting and closure, remote access control, performance
measurements and reporting, escalation, criticality classification and response, software patch
management, call-out procedures, and engineering complaint responses. Such operating procedures
will be documented within 30 calendar days after the date of the Agreement. Such support will
include software fixes to Alcatel TAC reported problems related to Supplier provided software
within a range to include the current market release to the two prior market releases.

     5.2 Emergencies. In emergency service affecting situations, Supplier will make
available to Alcatel 24 hour on-site technical assistance. Such assistance will be dispatched
within four hours after a request. Such assistance will be provided at no charge during warranty
period, if both parties agree that reasonable remote efforts have been exhausted. Should the
problem not be due to the Product’s performance, Alcatel will reimburse Supplier for actual
expenses incurred.

     5.3 Electronic Bulletin Board. Supplier will provide Alcatel’s TAC organization with
access to its Electronic Bulletin Board to an extent equivalent to that provided to Supplier’s own
Technical Support Group.

     5.4 Effect of Termination. Supplier will pursue to resolution documented problems
referred to Supplier by TAC that were generated during the term of the Agreement and remain
unresolved upon termination of the Agreement, at no charge to Alcatel.

 45 of 47

 

     5.5 Product Support Flow. Supplier shall refer all Alcatel customer service inquiries
directly to Alcatel’s TAC organization at (800) 995-2696, or such other numbers provided by
Alcatel, in support of the intended relationship as depicted in the Attachment to this Schedule.

6. Technical Support Levels.

     6.1 Alcatel Support. Alcatel will provide to its customer the initial point of
contact for technical support through its customer Technical Assistance Center (“TAC”) 24 hours a
day, 7 days a week. Specifically, Alcatel will provide the following initial levels of support:

     (a) LEVEL 1 SUPPORT: the ability to provide general pre-sales and post-sales support, operate
on-site hardware replacement, perform base problem determination, provide regular problem
resolution status reports to the End User, maintain record of End User installed base.

     (b) LEVEL 2 SUPPORT: the ability to troubleshoot, to isolate problem and determine Product
specification defect, to resolve fine majority of mis-configurations and to have the capability to
diagnose and solve problem remotely.

     6.2 Supplier Support. Supplier will provide to Alcatel and its customers the
following levels of support during the Product warranty period or if purchased from Supplier a
Support Service contract:

     (a) LEVEL 3 SUPPORT: generating workarounds for hardware and software problems that are beyond
the scope of Level 2 Support. Perform complex problem reproduction and development engineering
support to create, test, and implement, maintenance code patches to remedy identified problems.

Support Responsibilities

Level 1: Alcatel or Alcatel Channel

Level 2: Alcatel

Level 3: Supplier (per the terms of the service and support terms set forth in Schedule 3.1)

7. Problem Tracking System. The parties agree to negotiate in good faith an electronic
interface between Alcatel’s support component and Supplier’s service call management system for
documentation of troubleshooting efforts.

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SCHEDULE 10.2

End User License Agreement

 47 of 47exv10w19

 

Exhibit 10.19

Aruba/ Alcatel

AMENDMENT #1 TO OEM SUPPLY AGREEMENT

This Amendment is made and entered into as of August 31, 2006 by and between Alcatel
Internetworking, Inc. (“Alcatel”) and Aruba Wireless Networks, Inc. (“Supplier”), and amends the
OEM Supply Agreement dated March 18, 2005 (the “Agreement”). Capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to such terms in the Agreement.

RECITALS

     A.      Alcatel and Supplier desire to amend the Agreement to update and revise the
product price list contained on Schedule 3.1 to the Agreement and establish a mutually agreed upon
royalty structure for certain products Alcatel will be procuring directly from Accton Technology
Corporation.

     B.      In accordance with Section 18.9 (a) of the Agreement, any term of the Agreement may be
amended or waived only with the written consent of both parties.

     The parties agree as follows:

1. Schedule 3.1 (Products Prices and Discounts) to the Agreement is hereby replaced with the
revised Schedule 3.1 attached to this Amendment.

2. Royalty for Purchases from Accton Technology Corporation (“Accton”)

     a)      For each unit of the AP80M, AP80MB, and AP80SB products (the “Accton Products”) that
Alcatel purchases directly from Accton, Alcatel hereby agrees to pay a royalty to Supplier equal to
[***] per unit sold by Alcatel.

     b)      Alcatel agrees to provide reports to Supplier on a monthly basis by the seventh business
day after month end of all sales of the Accton Products above. Reports shall be emailed to
dboles@arubanetworks.com with a copy sent to the attention to Deon Boles, Controller, Aruba
Wireless Networks, Inc., 1322 Crossman Avenue, Sunnyvale, CA 94089.

     c)       Supplier shall have the right to examine and audit Alcatel’s sale records of the Accton
Products once annually at times to be mutually agreed. Prompt adjustments shall be made to
compensate for any errors or omissions disclosed by such review or examination.

3. Notwithstanding Section 18.9 (b) of the Agreement, in the event of any conflict between any
provision of this Amendment and any provision of the Agreement, the provision of this Amendment
shall prevail.

 

 

	 	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.

 

4. Except as provided herein, all other terms and conditions of the Agreement shall remain in full
force and effect.

IN WITNESS WHEREOF, Aruba and Alcatel have each caused this Amendment to be executed by its duly
authorized representative, as of the day and year first above written.

	 	 	 	 	 	 	 
	ALCATEL INTERNETWORKING, INC.	 	ARUBA WIRELESS NETWORKS, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Tom Burns
	 	By:
	 	/s/ Alexa King
	 

	 	 
	 	 	 	 

	 	 	 	 	 	 	 
	Print Name:

	 	Tom Burns
	 	Print Name:	 	Alexa King
	 

	 	 
	 	 	 	 

	 	 	 	 	 	 	 
	Title:

	 	President
	 	Title:
	 	Senior Director, Legal Affairs
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	11-9-06
	 	Date:
	 	Nov. 13, 2006
	 

	 	 
	 	 	 	 

-2-

 

Updated Schedule 3.1

[***]

 

	 	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.

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