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Manufacturing Agreement

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SOURCEFIRE INC | Premio, Inc

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Title: Manufacturing and Supply Agreement
Governing Law: Maryland     Date: 3/12/2010
Industry: Software and Programming     Sector: Technology

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Exhibit 10.22

Manufacturing and Supply Agreement

     This Manufacturing and Supply Agreement (the “ Agreement ”) dated as of March 10, 2010 (the “ Effective Date ”), is entered into by and between Sourcefire, a Delaware corporation with its principal office located at 9770 Patuxent Woods Drive Columbia, MD 21046 (“ Sourcefire ”) and Premio, Inc., an Illinois corporation with its principal office located at 918 Radecki Court, City of Industry, CA 91748 (“ Premio ”). Sourcefire and Premio may each also be referred to herein as a “ Party ” and collectively the “ Parties ”.

      WHEREAS , Premio is a contract manufacturer that performs manufacturing services for the production and delivery of technology products;

      WHEREAS , Sourcefire desires to engage Premio to have Premio provide non-exclusive manufacturing services to Sourcefire; and

      WHEREAS , Premio desires to provide Sourcefire with non-exclusive manufacturing services pursuant to which Premio will manufacture products in accordance with specifications prescribed by Sourcefire.

      NOW, THEREFORE , in consideration of the mutual promises contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound, hereby agree as follows:

DEFINITIONS

As used herein, the following capitalized terms will have the meanings set forth below:

“AVL” or the “Approved Vendor List” means the list of third party vendors approved by Sourcefire that Premio may purchase component parts from.

“Bill of Materials” means the complete and detailed list of all components, materials, and other items, including but not limited to, processors, motherboards, chassis, disk drive, power supplies, the Software Image, cable and mounting brackets, labels and documentation that are necessary for the manufacturing, processing and packaging the Products pursuant to the Specifications.

“Confidential Information” means any and all information and materials disclosed by one Party (“ Discloser ”) to the other Party (“ Recipient ”) (whether in writing or in oral, graphic, electronic or any other form) that are marked or described as, identified in writing as, or provided under circumstances indicating that such information and materials are confidential or proprietary. The Confidential Information of Sourcefire includes, without limitation, the Bill of Materials, all Specifications and all information and materials provided by Sourcefire relating to Customers. Information or materials shall not be considered Confidential Information to the extent such information or materials can be shown by the Recipient to have been: (a) available to the public prior to the date of Discloser’s disclosure to Recipient or to have become available to the public thereafter without any unauthorized act or omission by Recipient; (b) rightfully

 


 

in Recipient’s possession prior to the date of Discloser’s disclosure to Recipient and not otherwise restricted as to disclosure; or (c) disclosed to Recipient without restriction by a third party who had a right to disclose and was not otherwise under an obligation of confidence. Information or materials shall not be deemed to be “available to the public” or to be “in Recipient’s possession” merely if such information or materials can be reconstructed, combined or pieced together from multiple sources that are available to the public or Recipient if no one of those sources actually leads one to the entire combination, together with its meaning and importance.

“Customer” means a third party customer of Sourcefire specified in an Order.

“Do Not Ship List” means a continually updated list of individuals, entities and jurisdictions to which Products and Other Products are forbidden to be shipped pursuant to applicable Laws.

“Intellectual Property” means all present and future copyrights, trade secrets, trademarks, service marks, patents, patent rights, utility models, industrial property rights, mask works, inventions, processes, designs, methods and all other intellectual and proprietary rights, including all applications and registrations with respect thereto, arising under the laws of any country or jurisdiction worldwide.

“Law” means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive, guideline, policy or rule of common law, or any governmental requirement or other governmental restriction or similar form of decision or determination, or any interpretation or administration of any of the foregoing by any national, state or local government (or any association, organization or institution of which any of the foregoing is a member, or to whose jurisdiction any thereof is subject, or in whose activities any thereof is a participant), whether now or hereafter in effect.

“Manufacturing Facility” means (a) a manufacturing facility owned and controlled by Premio, or (b) a third party manufacturing facility affiliated with Premio that has been approved for use pursuant to Section 13.3 at which (in either case) Premio will manufacture, assemble and ship Products and Other Products, as applicable, for a particular Order.

“Order” means a purchase order submitted by Sourcefire to Premio that specifies the Product(s) that are to be manufactured by Premio and shipped by Premio to a Customer and/or the Other Product(s) that are to be shipped by Premio to a Customer.

Other Product(s) ” means a product or component identified either in: an SOW as an “Other Product”, a product or component that is consigned to Premio by Sourcefire or Sourcefire’s supplier, and that is not a “Product” to be manufactured by Premio which in either case is to be distributed by Premio to Customers as requested by Sourcefire pursuant to an Order.

Other Product Price ” means the price of the Other Product(s) as referenced in an SOW.

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“Product” each Sourcefire product identified in an SOW that will be manufactured by Premio in accordance with the Specifications, excluding any Other Product (as defined above).

“Product Price” means the sale price of the completely manufactured Product as referenced in an SOW to be charged to Sourcefire by Premio which price includes the cost of all components, manufacturing and assembly costs, packaging costs and all related services, but excludes carrier shipping costs, freight charges, any customs duties and value added tariffs and similar type of taxes.

“Specifications” means the design, engineering, functional and/or technical specifications for each Product including, but not limited to, Bill of Materials, assembly drawings, process documentation, test specifications, current revision number and all applicable third party components. The Specifications for each Product will be set forth in the applicable SOW and other documentation provided by Sourcefire.

“Software Image” means the applicable software for each Product provided by Sourcefire which when integrated by Premio with the hardware components listed in the Bill of Materials, will form such Product.

“SOW” means each Statement of Work attached to this Agreement that sets forth the scope of services to be provided by Premio to Sourcefire with respect to the manufacturing, packing, delivery and warranty returns of Products and Other Products, as applicable.

1. RELATIONSHIP OVERVIEW

1.1. Manufacture and Supply Relationship . This Agreement will govern all transactions between the Parties with respect to (a) the supply of all components included in the Bill of Materials, (b) the manufacture of Products by Premio including, but not limited to, the design, testing and configuration services, production and supply chain process and quality control procedures to be implemented by Premio while manufacturing Products, (c) the shipment of Products and Other Products by Premio to Customers, and (d) the return of Products and Other Products by Customers to Premio.

1.2. Statements of Work . The Parties may enter into one or more SOWs during the term of this Agreement which may set forth the Specifications and other relevant details with respect to the design, testing, manufacturing, shipment, delivery and warranty return procedures for each Product and any Other Products. Each SOW will expressly reference this Agreement, shall be signed by both Parties and will be attached hereto as an exhibit and incorporated by reference into this Agreement. The Parties may enter into one SOW for all the Products and Other Products, or enter into separate SOWs for one or more Products and Other Products. In the event of a conflict between the terms of this Agreement and the terms of an SOW, the terms of the SOW will control with respect to such conflict, unless specifically set forth otherwise in this Agreement.

1.3. Program Manager/Team . Sourcefire and Premio each shall designate a program manager (each, a “ Program Manager ”) who shall be the principal point of contact for each Party for all matters relating to this Agreement.

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2. PRODUCT MANUFACTURING

2.1. Product Specifications . Premio shall provide Sourcefire with Premio’s proposed manufacturing procedure instructions (“ MPI ”), testing procedure instructions (“ TPI ”) and quality management system (“ QMS ”) before manufacturing Products, unless specified otherwise in an SOW. Premio shall manufacture all Products in accordance with (a) the Specifications, (b) the manufacturing requirements set forth in Section 2.4, and (c) the quantities and other terms set forth in each Order.

2.2. Changes to Product Specifications . At any time and from time to time, Sourcefire may, by written change order, request changes to the Specifications for any Product (“ Requested Change Order ”). Upon receipt of the Requested Change Order, the Parties agree that: (a) Premio shall notify Sourcefire in writing of any impact information as deemed relevant and material by Premio, particularly with respect to any terms of this Agreement or any SOW, including, without limitation, cost, Bill of Materials, inventory, delivery time and lead times, Product Prices, labor costs and any other additional costs associated therewith; and (b) Premio will not proceed with a change in the manufacturing process to implement the requested modified Specifications for such Product until: (i) the Parties further agree to a final written change order for such Specifications (“ Final Change Order ”) incorporating any and all of the Requested Change Order and any changes to the Quarterly Forecast (as defined in Section 5.1), this Agreement and the applicable SOW reflecting the impact information provided by Premio including, without limitation, Product Prices, delivery and lead times, Bill of Materials and costs and the effective date of such Final Change Order; and (ii) Sourcefire authorizes the manufacturing of the Products based upon the Final Change Order commencing on the effective date of such Final Change Order. Premio will not refuse to implement any changes to any Specifications unless Premio reasonably determines that the requested changes are incapable of being implemented in a commercially reasonable manner.

2.3. Approval of Launch Processes . Premio will adhere to the following production process in addition to the processes set forth in each applicable SOW for each Product:

     (a)  Prototype . Premio will initially build a prototype of each Product based on the Specifications for such Product. Premio will then test such prototype in accordance with the testing requirements set forth in the TPI and SOW. Sourcefire shall clearly specify all tests that are required to be performed on the Product by Premio in this Agreement or any SOW, and any additional testing or certifications not identified in this Agreement or SOW shall be at Sourcefire’s expense. Upon Sourcefire’s request, Premio will submit to Sourcefire any available test results that are derived from the tests required by this Agreement and all SOWs.

     (b)  First Article Production . If Sourcefire, in its sole discretion, determines that the prototype of a Product conforms to all Specifications and satisfies all of Sourcefire’s testing requirements, then Premio shall proceed to the first article production of at least twenty (20) units of such Product, unless Sourcefire requests fewer units be produced. Premio shall not undertake the first article production for any Product until Sourcefire has approved the prototype for such Product. During the first article production A

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process for any Product, Sourcefire shall have the right to be present at the Manufacturing Facility where the first article production takes place. Following completion of the first article production of a Product, Sourcefire shall then determine, in its sole discretion, if Premio has successfully achieved first article production for such Product based on the Specifications and all other testing requirements. If Sourcefire approves the first article production for a Product, then Premio shall be permitted to manufacture and ship such Product to Customers upon receipt of an Order from Sourcefire. If Sourcefire does not approve the first article production for a Product due to the failure to conform with the Specifications or testing requirements provided in the SOW, Sourcefire shall provide Premio with the reasons (in reasonable detail) as to why Premio did not successfully achieve the first article production for such Product and also provide any necessary and specific suggestions and guidelines to assist Premio in achieving approval for first article production. Thereafter, Premio shall proceed again with the aforementioned first article production and approval process set forth in this Section 2.3(b) until the first article production for such Product is approved by Sourcefire.

     (c)  Production at Manufacturing Facilities . Premio shall be required to follow the prototype and first article production approval process in Section 2.3(a) and 2.3(b) at each Manufacturing Facility for each Product.

2.4. Manufacturing Requirements . Each Product manufactured by Premio must conform to the Specifications as provided in the applicable SOW before the Product can be shipped by Premio to a Customer. If any Product manufactured by Premio does not conform to the Specifications or pass the applicable testing requirements as provided in the SOW, then Premio shall correct all deficiencies and/or non-conformities and replace or repair such defective Product, at no additional charge to Sourcefire, before such Product is shipped to a Customer. Sourcefire shall have the right, at any time in its sole discretion, to observe Premio’s performance of required testing, provided that such observation does not interfere with Premio’s operations.

2.5. Production Records . Premio shall maintain all quality records and test results required by an SOW for all manufactured Products and deliver them to Sourcefire upon request by Sourcefire. Premio will use commercially reasonable efforts to maintain the accuracy of all such records and test results.

2.6 Rework . In the event any Rework (hereinafter defined) is required by Sourcefire, Sourcefire agrees and acknowledges that such Rework may result in an increased Product Price not contemplated by the Parties in an SOW, or an excusable delay for Premio with respect to its delivery and lead times and materials liability. “ Rework ” shall mean any change or rework requested by Sourcefire that is not specified in an SOW (and amendments thereto), any software patch or reloading of any software image, and any rework of the Product prior to delivery.

3. MATERIALS MANAGEMENT

3.1. Materials Fulfillment . Except for the Software Image for each Product and any Other Products, each of which may be provided by Sourcefire to Premio, Premio will procure and supply all components listed in the Bill of Materials necessary to

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manufacture, process, pack and deliver all Products ordered by Sourcefire. Premio may not use any component parts not listed in the Bill of Materials to manufacture the Products without the prior written consent of Sourcefire. Premio will use its commercial best efforts to manage its inventory of such components and purchase such components, except that Premio shall manage such inventory pursuant to any Sourcefire forecast and SOW. Premio shall provide Sourcefire with an inventory report of all finished Products, Products-in-process and components listed in the Bill of Materials on a real time basis upon request. Premio also hereby grants to Sourcefire a non-exclusive, fully paid-up right and license to access and use, on a real time basis, Premio’s on-line supply chain management, enterprise resource planning (ERP) and such other software systems customarily provided to Premio’s customers used to track component and Product inventories and the ordering, production and shipment of all Orders.

3.2. Material Liability . Premio will be responsible for procurement and management of all components and finished Products and Other Products inventory to meet Sourcefire’s requirements and Orders. Premio will use commercially reasonable efforts with the intent to fulfill Sourcefire’s forecasts and requested buffers pursuant to any forecasts provided by Sourcefire under this Agreement or an SOW. Notwithstanding anything to the contrary in this Agreement, if Quarterly Forecast or Order changes by Sourcefire result in unordered but originally forecasted inventory of finished Products or component parts that Sourcefire does not order and purchase within the applicable period of such Quarterly Forecast, Sourcefire may be required by Premio to repurchase these inventories provided such inventory was maintained pursuant to such forecast provided by Sourcefire.

3.3. Approved Vendor List . Premio agrees to procure the component parts listed in the Bill of Materials only from vendors listed on the AVL. Sourcefire may amend the AVL at any time upon prior written notice to Premio, except that in the event such amendment materially impacts and affects, as determined by Premio, the terms and conditions of this Agreement and any SOW including, without limitation, the manufacturing costs, Bill of Materials, delivery and lead times, then the Parties shall amend this Agreement and SOW as necessary. Premio will not deviate from the AVL without Sourcefire’s prior written approval.

4. LICENSES

4.1. License Grant . Sourcefire hereby grants Premio a worldwide, non-exclusive, non-transferable, non-sublicensable and royalty free license under all Intellectual Property rights owned by Sourcefire with respect to the Products to use such Intellectual Property and Confidential Information of Sourcefire solely to manufacture the Products at the Manufacturing Facilities and to perform the services required by this Agreement.

4.2. Restrictions; Reservation of Rights . Each Party agrees to use the other Party’s Intellectual Property and Confidential Information only to manufacture Products or to perform its obligations or exercise its rights under this Agreement. Premio shall not (a) license, distribute or otherwise make the Software Image available to any third party that has not been approved by Sourcefire, or (b) reverse engineer, decompile, disassemble or otherwise attempt to determine the source code of the Software

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Image. Any rights in Sourcefire’s Intellectual Property and Confidential Information not expressly granted to Premio under this Agreement are reserved by Sourcefire; any rights in Premio’s Intellectual Property and Confidential Information not expressly granted to Sourcefire under this Agreement are reserved by Premio.

4.3. Information Exchange . Each Party shall provide the other Party with such Confidential Information as it determines in its sole discretion is necessary to facilitate Premio’s manufacturing of the Products. At either Party’s request, each Party shall answer all reasonable questions with respect to the Confidential Information disclosed by the other Party. All information disclosed by Sourcefire with respect to the Specifications shall constitute the Confidential Information of Sourcefire.

5. FORECASTING AND ORDERING

5.1. Forecast . On or before the forty-fifth (45 th ) day prior to the beginning of each calendar quarter, Sourcefire will provide Premio with a non-binding quarterly forecast which shall include a forecast for the next calendar quarter and guidance with respect to the calendar quarter following such next quarter (each, a “ Quarterly Forecast ”) to assist Premio in managing its inventory of components and production planning for the next two (2) calendar quarters. All Quarterly Forecasts shall be by region and Product, unless set forth otherwise in an SOW. Sourcefire may also submit periodic updates to a Quarterly Forecast which updates shall be deemed to amend, and be incorporated into, such Quarterly Forecast. Premio shall have five (5) business days from receipt of a Quarterly Forecast (or any update thereto) to provide notice to Sourcefire that in Premio’s reasonable judgment that Premio will be unable to manufacture and deliver all of the Products required by such forecast. If Premio does not provide Sourcefire with any such notice within the required 5-day period, then Premio shall be deemed to have accepted such forecast. Sourcefire acknowledges that (a) certain products have long component lead times (10 – 13 weeks), and (b) the transit time to the APAC and/or EMEA regions may add up to five (5) weeks to a production schedule, thus Sourcefire will use commercially reasonable efforts to provide Premio with a forecast that takes such lead times into account. Notwithstanding anything to the contrary in this Agreement or any SOW, Sourcefire acknowledges and agrees that (a) Premio may maintain appropriate inventories of finished goods, components or parts for the manufacture of the Products pursuant to the Quarterly Forecasts provided by Sourcefire which includes any Quarterly Forecast and guidance that Sourcefire provides to Premio with respect to any quarter that follows the quarter for which the then most current Quarterly Forecast has been provided; and (b) Sourcefire shall be liable to Premio for any such inventories maintained by Premio pursuant to the Quarterly Forecasts and related guidance provided by Sourcefire even if such forecasts and guidance are later amended or updated.

5.2. Orders . Sourcefire shall have the right under this Agreement to purchase Products and request delivery of the purchased Products and the Other Products to Customers by issuing Premio an Order. Each Order will include the following information: (a) the Order number; (b) the quantity of each Product ordered and Other Products to be delivered; (c) Customer name and delivery location; (d) requested shipment and delivery dates; and (e) if applicable, Sourcefire’s commercial invoice for international shipments. Sourcefire may place Orders by mail, e-mail, facsimile or pursuant to an

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on-line supply chain ordering system that can readily be accessed by Sourcefire and Premio.

5.3. Manufacturing Capacity . This section 5.3 shall only apply to Products manufactured by Premio and shall not apply to any Other Products. Based on the Quarterly Forecasts provided by Sourcefire under Section 5.1 of this Agreement, Premio will ensure that its manufacturing capacity is able to reasonably support Sourcefire’s demand for all Orders, except for any change orders (other than a Final Change Order) or any Rework. In the event Sourcefire’s Orders for Products exceeds a Quarterly Forecast that Premio relied upon to forecast Premio’s manufacturing capacity, Premio shall review its manufacturing capacity and inform Sourcefire within five (5) business days or as soon as reasonably practical as to whether Premio is able to manufacture and sell to Sourcefire each Product identified in such Order. Premio will also reasonably attempt to ensure that materials are available to satisfy and support the planned delivery dates and other service and support requirements of this Agreement pursuant to the Quarterly Forecasts. Unless otherwise agreed to in an Order or an SOW, Premio shall use the Manufacturing Facility that (a) is the most cost effective with respect to production, shipping and delivery costs, and (b) allows for timely delivery of an Order to a Customer. Notwithstanding the foregoing, Sourcefire shall have the right to determine which Manufacturing Facility shall be used to manufacture any Products for a particular Order, subject to Premio’s manufacturing capacity.

5.4. Suspension of an Order and Cancellation . If Premio fails to deliver any Product or Other Product within five (5) business days after the agreed delivery date, and the delay is not caused by Sourcefire, or excused by Sourcefire due to a force majeure condition or a common carrier delay, then Sourcefire may immediately suspend the applicable Order and cancel, in whole or in part, the delayed portion of such Order.

5.5. Best Effort . Notwithstanding the foregoing, Premio shall use its commercial best efforts to deliver delayed products expeditiously.

6. PACKING, SHIPPING AND DELIVERY

6.1. Packing . Premio shall pack, mark and prepare each Product and Other Product for shipment in a manner that is commercially reasonable to attempt to prevent damage under normal handling during loading and unloading, shipping and storage in accordance with any shipping/delivery instructions provided by Sourcefire under an SOW. Sourcefire shall be responsible for (a) providing Premio with the Other Products that Sourcefire desires to be shipped to Customers, and (b) the costs of any additional packaging materials, designs, or requirements of Sourcefire which are beyond those ordinarily provided by Premio or beyond those agreed upon in an SOW.

6.2. Shipping Documentation . The Order number and quantity of Products and Other Products contained in each package shall be marked on all packing cartons, shipping papers and subordinate documents. A packing list must be included for every Sourcefire shipment and it will identify the total number of Products and Other Products included in the shipment and the listing of the unique product serial numbers applicable to the shipment.

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6.3. Do Not Ship List . Premio shall not ship any Products or Other Products in violation of any export or import Laws. In furtherance of this objective, Premio shall (a) obtain, and at all times use, a Do Not Ship List from a reputable third party provider, (b) compare the destination and recipient specified in each Order to such Do Not Ship List, and (c) not ship any Products or Other Products to any individuals, entities or jurisdictions that are on the Do Not Ship List.

6.4. Shipping . Premio shall notify Sourcefire at the time of each shipment as to the quantity of Products and Other Products shipped and the specific shipping information. Shipping quantities may not vary from those established by the Order unless otherwise mutually agreed upon in writing by the Parties. In the event any shipment is delayed and may not be timely, Sourcefire may direct Premio to ship such Order by premium transportation designated by Sourcefire and Premio shall bear the expense of any difference in cost due to such premium transportation, provided that such delay: (i) is not in any way caused by Sourcefire and delay by Sourcefire may include, without limitation, any change orders, Rework or any change in forecast, and (ii) is due to Premio’s fault, except that any delay caused by a third party carrier or supplier shall not be Premio’s fault and Premio shall not bear the expense of any difference in cost due to such premium transportation. Premio shall ship all Products and Other Products to the delivery address(es) set forth in the applicable Order. Sourcefire may, from time to time, instruct Premio to deliver all or a portion of an Order to a different location, or to store all or portions of an Order for subsequent shipment at Premio’s facility without charge for up to ninety (90) days following packaging and thereafter subject to charge. Until a Product or Other Product, as applicable, is shipped, Premio shall store such Product and Other Product separately from any other material stocks and in accordance with Sourcefire’s storage requirements, provided Sourcefire provide such storage requirements to Premio in this Agreement or any SOW. Premio assumes all responsibility and liability for any loss or damage to such Product and Other Product while stored at Premio. Unless specifically set forth in an SOW, all freight and transportation costs for the Products and Other Products shall be the responsibility of Sourcefire.

6.5. Delivery . Premio will use reasonable best efforts to meet the requested shipment and delivery dates set forth in each Order, except that, notwithstanding anything to the contrary in this Agreement or any SOW, the Parties agree to reasonably delay as an excusable delay any shipment and delivery dates for any (a) Orders that exceed the requirements of a Quarterly Forecast that has been accepted by Premio (as provided under Section 5.1), (b) changes to Specifications (as provided under section 2.2), any Rework (as provided under section 2.6) or (c) any delay caused by a third party carrier or supplier. If any shipment or delivery dates are at risk, Premio will notify Sourcefire and work out the best possible delivery schedules with Sourcefire. Premio will deliver all Orders in accordance with the packaging, labeling and shipping requirements set forth in the Specifications, SOW and other reasonable instructions provided by Sourcefire from time to time. Premio shall track all Orders through delivery and shall not ship or deliver partial Orders without the prior approval of Sourcefire.

6.6. Requests for Delayed Delivery . Sourcefire shall notify Premio as soon as possible


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