Sample Business Contracts

OEM Purchase Agreement - Audiocodes Ltd. and Clarent Corp.

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                            OEM PURCHASE AGREEMENT

     THIS AGREEMENT ("Agreement") is entered into and made effective as of
December 1, 1998, by and between AUDIOCODES, LTD., a corporation organized under
the laws of the State of Israel and having its principal place of business at 4
HaHoresh Road, Yehud, 56470, Israel (hereinafter referred to as "Seller"), and
CLARENT CORPORATION, a corporation organized under the laws of the State of
California, USA and having its principal place of business at 700 Chesapeake
Drive, Redwood City, CA 94063, USA (hereinafter referred to as "Buyer").

1.   BACKGROUND AND SUMMARY OF AGREEMENT.  Buyer is in the business of producing
and marketing Computer systems and software designed to digitize and packetize
voice and to transport such packets to a destination over an Internet Protocol
(IP network).  Seller manufactures and sells products related to the business of
Buyer, and Buyer desires to purchase certain products from Seller for resale.
Seller agrees to grant, and hereby grants, to Buyer the right to sell the
products identified herein during the term of this Agreement, subject to the
terms and conditions set forth in this agreement.  Seller will sell such
products to Buyer, subject to the terms and conditions set forth in this
Agreement, to which the parties hereby agree.

2.   DEFINITIONS.  The following terms, in singular and/or plural form of the
same term as and wherever used herein, shall have the meanings set forth in this

     2.1  "PRODUCTS"  The list of products, software, service and supplies
identified and described in the Specifications, including any and all
modifications, changes and improvements made to such Products during the term of
this Agreement.

     2.2  "NEW PRODUCTS"  Those products, software and supplies which are added
to this Agreement by mutual agreement of the two parties following its
execution.  When such New Products are added to this Agreement (e.g., as a
result of a Purchase Order placed in compliance hereto) then for purpose of this
Agreement, such New Products shall be considered "Products".

     2.3  "PART"  Any component, subassembly or other module of the Products.

     2.4  "PURCHASE ORDER" OR "ORDER"  Any purchase order issued by Buyer and
confirmed by Seller for the purpose of ordering Products or Parts pursuant to
this Agreement.

     2.5  "SELLER INTELLECTUAL PROPERTY RIGHTS"  All United States and foreign
patents, applications for patents, copyrights, mask works, trade secrets and
other intellectual property rights relating to the design and manufacture of
Products and Parts, and which are now or


hereafter owned, controlled or possessed by Seller, including any such rights
licensed to Seller by any third party.

foreign patents, applications for patents, copyrights, mask works, trade secrets
and other intellectual property rights relating to the design and manufacture of
Products and Parts, and which are NOT now or hereafter owned, controlled or
possessed by Seller.

     2.7  "SELLER KNOW-HOW"  All information and data of Seller (whether
confidential or not) which is necessary and sufficient to manufacture, assemble,
test, operate, maintain and repair Products and Parts, and which is now or
hereafter owned, controlled or possessed by Seller, including all drawings,
specifications, test information, software (including source and object code
listings and supporting documentation), manuals, basic process steps and vendor

     2.8  "SELLER TECHNICAL ASSISTANCE"  Assistance provided to Buyer by Seller
in making use of the Seller Know-How in the manufacture, assembly, testing,
operation, application, maintenance and repair of Products and Parts.

     2.9  "SPECIFICATIONS"  This OEM Agreement covers AudioCodes' TP-100B, TP-
200B VOIP compression board as more fully described in Exhibit A of this
Agreement, the AudioCodes AVP-04 VOIP compression board and other products
supplied by Seller to Buyer hereunder.

     2.10 "SUBSIDIARY"   (a) Any corporation, associated company or other sales
or manufacturing entity in which Buyer owns or controls the majority of the
outstanding capital or has the right to appoint the majority of the members of
the board of  directors, and (b) any authorized distributor of Buyer products.
Unless the context otherwise requires, "Buyer" as and whenever used herein shall
refer to either or both Buyer or any subsidiary of Buyer.


     3.1  PLACEMENT OF PURCHASE ORDERS, FORECASTS.  Seller agrees to sell
Products to Buyer in accordance with the terms and conditions of this Agreement.
Specific quantities of Products shall be ordered by Buyer for purchase by the
placement of Purchase Orders that shall be confirmed by Seller. Buyer shall, no
later than 30 days prior the end of each calendar quarter, use commercially
reasonable efforts to provide to Seller a six (6) month rolling forecast of
specific quantities of Products that Buyer intends to order during each month
during the forecast period.  No such forecast shall be binding on Buyer, such
binding obligations only to be in the form of confirmed Purchase Orders
submitted by Buyer to Seller. In the event of any discrepancy between the terms
of any confirmed Purchase Order and this Agreement, the terms of the confirmed
order shall govern.


     3.2  ACCEPTANCE OR REJECTION OF PURCHASE ORDERS.  Seller agrees to accept
or reject in writing (such writings to include faxes and messages transmitted by
electronic mail), within [***] business days of receipt by Seller Purchase
Orders placed by Buyer in conformance with the terms of this Agreement. If no
such written confirmation or rejection is received by Buyer during such [***]
day period, it shall be deemed as if not accepted by Seller.  All Purchase
Orders shall specify as a minimum the following information: (i) the Product
name (ii) the software revision number (iii) number of Product units (iv)
targeted delivery date.

     3.3  CANCELLATION OF PURCHASE ORDERS.  Buyer may cancel confirmed Purchase
Order or portion thereof up to a total of [***] of the Product units, on all
outstanding Purchase Orders, (i) without charge or penalty [***] or more days
prior to the scheduled delivery date of that Purchase Order, or (ii) upon
payment of a charge equal to [***] of the invoice price of the canceled Products
if more than [***] days and less then [***] days prior to the scheduled delivery
date of that Purchase Order. Buyer may not cancel any Purchase Order or portion
thereof less than [***] days prior to the scheduled delivery date of that Order,
except as may be specifically set forth elsewhere. Buyer may terminate any
Purchase Order in whole or in part upon written notice to Seller, without
incurring any liability or cost, in the event that any Product (including
software or peripherals for such Product) covered by such Purchase Order is
delayed as to delivery for thirty (30) days or more beyond the scheduled
delivery timetable at the time the Purchase Order is placed except if such delay
is caused by conditions that are beyond the control of Seller and in such event
the thirty day period shall be extended by an additional period not to exceed 30
additional days, or in the event the scheduled release of software or upgrades
for such product, as published by Seller, is delayed by ninety (90) days or

     3.4  RESCHEDULING OF PRODUCTS.  Buyer may increase the quantity of Products
ordered under any Purchase Order by [***], provided notice of such increase is
given to Seller at least [***] days prior to the scheduled delivery date.  Buyer
may defer all or part of the Products ordered under any Purchase Order for as
long as [***] days beyond the scheduled delivery date, provided notice of such
deferral is given to Seller at least [***] days prior to the scheduled delivery
date and provided that the total number of Product units on all outstanding
Purchase Orders, requested for reschedule is less than [***] of the total umber
of units.  If Products rescheduled under this Paragraph 3.4 are subsequently
canceled, cancellation charges provided for in Paragraph 3.3 above shall be
based on the original scheduled delivery date.

     3.5  LIMITED SUPPLY; OTHER SOURCES.  If Seller is unable to completely fill
Buyer's Purchase Order due to limited supply of Products, or for any other
reason, Seller shall give Buyer's Purchase Order "most-favored customer status"
(i.e., provide Buyer with a percentage of its Purchase Order no lower than that
provided any other customer of Seller).


     4.1  PRODUCT AND PART PRICES.  The price for Products purchased hereunder
shall be as agreed to by the parties in writing and specified in a given
Purchase Order or other document.

[***] The designated material has been omitted pursuant to an application for
      confidential treatment and the omitted information has been filed
      separately with the Securities and Exchange Commission.


Guidelines for such prices are contained in Exhibit B hereto. Seller further
confirms that the prices to be provided for products purchased hereunder shall
be at least as favorable as those offered to any other customer of Seller
purchasing the same products according to similar terms and equivalent or lesser
quantities. In the event that Seller makes more favorable prices available to
another customer as aforesaid, Seller agrees to (i) promptly notify Buyer of
such offer and (ii) at Buyer's request, apply such prices to any and all
outstanding but undelivered Purchase Orders for Products.


     5.1  LEAD TIME FOR PRODUCTS. Buyer will use commercially reasonable efforts
to place Purchase Orders for Products of quantities not exceeding [***] units
and not less than [***] units in any calendar month, thirty (30) days in advance
of the required delivery date thereof, unless a shorter Lead Time is mutually
agreed to as to Products covered under specific Purchase Orders. Purchase Orders
for Products of quantities exceeding [***] units shall be placed by Buyer sixty
(60) days in advance of the required delivery date.

     5.2  SHIPMENT.  All Products purchased and shipped under this Agreement
shall be FOB Seller's factory (EX Works).  The products will be shipped, at
Buyer's expense, to Buyer's customer's destination or to a Buyer location, each
as specified by Buyer, so as to be received, allowing for normal transit times,
in accordance with the delivery schedule specified on the corresponding Purchase
Order. It is agreed that Seller shall not be responsible for any delays in
shipping the Products and its only obligations shall be to provide the Products
for shipment on the agreed upon date.  If Shipment is late due to Seller's fault
(more than 10 days) , Seller shall ship by air freight or other mode specified
by Buyer, at Seller's expense.  Seller shall provide all documentation necessary
to accomplish shipment to such designated locations.  Buyer shall be responsible
for all shipping expenses and fees, including import fees, duties or taxes
incurred in obtaining Products from Seller and shipping the same and the parties
shall provide reasonable documentation and assistance to each other in order to
accomplish shipment and receipt of Products. Buyer shall utilize its export
licenses for purposes of exporting the Products outside the United States.
Buyer agrees to acquire and comply with all necessary export licenses from the
United States Department of Commerce.

     5.3  MODE OF SHIPMENT.  The mode of shipment shall in each instance be by
surface transportation unless otherwise specified by Buyer on the Purchase
Order.  In the absence of specific instructions, Seller will select the surface
carrier for shipment.

     5.4  RISK OF LOSS.  Risk of loss and damage shall pass from Seller to Buyer
upon delivery by Seller to the common carrier or to Buyer's representative at
the FOB point described in Paragraph 5.2 above, and all claims for damage
thereafter shall be filed by Buyer directly with the carrier.

[***] The designated material has been omitted pursuant to an application for
      confidential treatment and the omitted information has been filed
      separately with the Securities and Exchange Commission.


     5.5  PACKAGING.  All Products shall be packed by Seller in accordance with
Seller's packaging procedure, as well as other requirements set forth in the
Specifications.  Each box shall contain Products ordered under a single Purchase
Order, but multiple boxes may be placed in a larger container.

     5.6  INSURANCE.  Buyer shall have the responsibility to pay for insurance
against all risks as of the date of delivery of the Products or the date of the
shipment of the Products, as the case may be.  However, at the request of Buyer,
Seller shall make arrangements for purchase of insurance or supply required
information, as Buyer may direct, to either Buyer or to Buyer's insurance
carrier so as to ensure that Buyer will have timely information to effect
insurance coverage.

     5.7  PAYMENT. It is understood and agreed that the terms of payment for all
Products purchased under this Agreement shall, be net [***] days from the date
of invoice, or as otherwise agreed to by the parties for a given Purchase Order

     5.8  TITLE.    Title of any of the Products not transferred to Buyer's
customers under a bonafide purchase order issued by such customer to Buyer shall
be retained by Seller until full payment of any order is completed and only upon
full payment as aforesaid shall the title to the Products be transferred to the

6.   TAXES

     6.1  TAXES NOT INCLUDED.  Product and Part prices as provided for in this
Agreement are exclusive of all applicable federal, state or local sales, use,
property, excise or similar taxes that may be levied upon Seller as a result of
sale or delivery of any Product sold under this Agreement.  All such taxes shall
be assumed and paid by Buyer.  If a resale certificate or other such document of
exemption is required in order to exempt the sale of Products from any such
taxes, Buyer shall furnish Seller, at Seller's request, with such a certificate
or document prior to shipment by Seller.


     7.1  APPOINTMENT OF PROGRAM MANAGERS.  Each party shall designate a Program
Manager who shall be responsible for all communications with the other party,
including those relating to product qualification under Article 8 and
inspection, testing and quality control procedures under Article  9.

sixty (60) days prior (or other such date as may be mutually agreed) to the
first scheduled shipment to Buyer of any New Products, Seller and Buyer shall
confer, through their respective Program Managers, and agree on a Product
Verification Test (PVT) Procedure.  Such PVT Procedure

[***] The designated material has been omitted pursuant to an application for
      confidential treatment and the omitted information has been filed
      separately with the Securities and Exchange Commission.


shall establish the procedures for qualification testing (Paragraph 8.1),
ongoing inspection and testing (Paragraph 9.1), acceptance, inspection and
testing (Paragraph 9.2) and facility surveys (Paragraph 9.3). Buyer and Seller
agree that the PVT procedure may be accomplished pursuant to the Development
Agreement entered into by them.

     7.3  QUALITY ASSURANCE. Seller shall implement and maintain such quality
assurance standards as are reasonably feasible to produce and deliver to Buyer
Products that are defect-free, as well as to meet any other quality and
reliability standards agreed to between the parties.


     8.1  QUALIFICATION TESTING.  Qualification testing of any New Products
manufactured by Seller for sale to Buyer shall be conducted and completed prior
to the first scheduled shipment of New Products to Buyer. Seller shall make
available 3-5 units of such New Products to Buyer for such testing at no
additional charge to Buyer.  Such testing shall occur, at the option of Buyer,
either at Seller's facility or on the premises of Buyer and shall be at the
expense of the party on whose premises the testing is conducted.  Qualification
testing shall determine the acceptability of the New Product in accordance with
the Specifications, and shall be conducted in accordance with the PVT Procedure.
Upon written agreement of Seller and Buyer that the qualification tests have
been successfully completed, the initial deliveries of production units of the
New Product shall commence in accordance with the scheduled shipment established
by issued Purchase Orders.

to Buyer any new releases of software produced by Seller no later than
immediately following the first customer availability of such software (FCA).


     9.1  ONGOING INSPECTION AND TESTING.  Notwithstanding the successful
completion of qualification testing under Article 8, all Products shall be
subject, at either Seller's facility or at Buyer's premises, to further
inspection, acceptance testing and review for conformance to ongoing quality
control standards as may be established in the Specifications, PVT Procedure and
other standard industry practices and procedures.

subject to acceptance inspection and testing by Buyer, at Buyer's election, on
Buyer's premises, or at a location selected by Buyer (including the premises of
any customer of Buyer). The inspection and testing shall be in accordance with
the PVT Procedure and other quality control procedures and tests agreed upon by
the parties at such times as Buyer shall determine. Any of the Products
delivered to Buyer shall be deemed accepted if not rejected by Seller during a
15 day period, due to non conformity with the ongoing quality control standards
as may be established in the Specifications or PVT Procedure.


     9.3  FACILITY SURVEYS.  Buyer reserves the right to review, during regular
business hours and following reasonable notice to Seller, Seller's physical
facilities and Seller's quality control procedures, both prior to first Product
deliveries and periodically thereafter (but no more than twice a year), in order
to assure compliance with the Specifications, PVT Procedure and other standard
industry practices and procedures.  Seller shall maintain quality control
procedures mutually agreed upon by Buyer and Seller as a result of such facility

     9.4  ACCEPTANCE TESTING RESULTS.  Buyer shall provide notification to
Seller upon completion of acceptance testing setting forth the specific date of
acceptance or rejection of each Product included in the notification and the
reason for non conformity.  If any Product is rejected, Seller shall thereafter
proceed forthwith to correct the defects indicated by Buyer, either by repairing
the defective Product at the point of delivery or within Seller's facility, if
possible, or by supplying a new Product.  The cost associated with any such
repair or replacement, including transportation charges for return to Seller and
subsequent return to Buyer, shall be borne by Seller unless it shall be
determined that Buyer returned a Product which did meet the acceptance test
criteria, in which case such costs will be borne by Buyer.    In the event any
Product is rejected, Buyer may request the manufacturer of such product to
conduct a failure mode analysis at Seller's expense.

     9.5  FAILURE TO MEET MINIMUM STANDARDS.  If, during either qualification or
acceptance testing, Buyer reasonably determines that the Products cannot comply
with minimum quality standards of the PVT Procedure or as otherwise established
between the parties' respective Program Managers, Seller and Buyer shall
cooperate to make such Products comply as soon as practicable.

     9.6  SELLER PERSONNEL.  Seller shall provide, after coordinating the same
with Buyer, at Buyer's request and expense, and at locations selected by Buyer,
technically competent personnel of Seller to assist in the identification and
resolution of any performance problems which may jeopardize the progress of the
installation or maintenance of the Product, on terms and conditions to be then
agreed between Seller and Buyer.

     9.7  NO WAIVER OF WARRANTY.  In no event shall the inspection,
qualification and acceptance of any Product pursuant to Article 8 or this
Article 9, or the payment for any such Product by Buyer, in any way impair or
reduce Buyer's rights under the warranty of Article 11 of this Agreement or
Buyer's rights to further inspection or testing.


     10.1 CHANGES IN SPECIFICATION.  Upon one hundred twenty (120) days written
notice from Seller to Buyer, the Specifications may be amended or otherwise
changed from time-to-time by written agreement of Buyer and Seller.  Seller
shall consult with Buyer prior to making any material changes in the
Specifications.  Prior to any such change becoming effective, all Products on
order from Seller by Buyer shall conform to the existing Specifications, unless
the parties otherwise agree.  After the parties agree on the effective date of
any change, all Products shipped by Seller shall materially conform to such
changed Specifications. Drawing corrections


and minor changes which have no effect on interchangeability shall not be deemed
to be a change in the Specifications.

     10.2 BUYER CHANGES.  Buyer may propose changes to the Specifications and,
in such event, Seller shall consider the feasibility of any such proposal.  With
respect to material changes proposed by Buyer, Seller shall, within a reasonable
period of time, not to exceed thirty (30) days after receipt of the Buyer
proposal, furnish to Buyer in writing its comments regarding such proposed
changes, including its willingness to implement the same, the price change, if
any, and the time schedule required for implementation. In order to avoid doubt
it is expressly declared that Seller shall be under no obligations to perform
any changes. With respect to immaterial changes proposed by Buyer, Seller shall
notify Buyer within a reasonable period of time of its approval or rejection of
such change and if any costs are involved in connection with the said change.

     10.3 CHANGE IN SOURCE OF PARTS.  Seller shall notify Buyer at least one
hundred twenty (120) days (or as soon as practicable) in advance of any change
in the source (including addition of new vendors) of purchased Parts which
affect form, fit, function, field maintenance or safety agency approval of the
Products.  Buyer shall have the right to approve or, if practicable, reject such
source change if such change would have a material adverse effect upon the
maintenance and serviceability of a Product.

     10.4 CHANGE INDUCED PROBLEMS.  In the event Buyer determines, after any
engineering or any other change by Seller, that Products do not operate in
accordance with the Specifications or fail to meet the acceptance test
procedures of Article 9, and upon Buyer's request, Seller shall promptly
evaluate any defective Product and shall notify Buyer of the result of its
evaluation and its corrective action plan, if needed, within thirty (30) days
after receipt of such request from Buyer.


     11.1 GENERAL WARRANTY.  Seller warrants that all Products will conform to
the Specifications and will be free from defects in material workmanship and
programming.  Claims for Products not complying with this warranty shall be
submitted by Buyer no later  15 months from delivery date to Buyer.  Seller
shall promptly repair or replace, at its option and expense, non-complying
Products.  The shipment of non-complying Products by Buyer to Seller, and the
return shipment of repaired or replacement Products by Seller to Buyer under
this Paragraph 11.1 shall be at Seller's expense, unless it shall be determined
that Buyer returned a Product that was in compliance, in which case such cost
shall be borne by Buyer and, if paid by Seller, these expenses shall be
reimbursed by Buyer within thirty (30) days of notice by Seller.  Buyer shall
receive a credit for any non-complying Products returned for repair or
replacement. All non complying Products shall be returned to Seller (at its
offices or as otherwise instructed) no later then 45 days as of the date the non
compliance of any such Product has been discovered.


     11.2 SAFETY AND REGULATORY AGENCY REQUIREMENTS.  Seller further warrants
that all Products and Parts will comply with all applicable federal, state and
other governmental safety regulations in effect at the time of manufacture to
the same degree as they complied at the time of execution hereof.  In the event
Buyer decides to sell the Products or Parts in a country that require
regulations other than those of the United States, Seller and Buyer shall agree
in advance on the changes required in the Products and the party to bear the
costs in connection with the said changes.

     11.3 FCC COMPLIANCE.  Seller and Buyer shall cooperate to ensure that all
Products and Parts will comply with current rules and regulations of the Federal
Communications Commission (FCC) concerning Electromagnetic Interference,
including, without limitation, equipment labeling and instruction manual
information requirements.

     11.4 EPIDEMIC FAILURES.  Seller further warrants that Products will comply
with the failure rate and/or reliability requirements set forth in the
Specifications.  Claims for non-compliance will be established from Buyer's
service records for the Product and by showing that the average failure rate of
the monitored Products is not in conformance with the Specifications.  In the
event of such non-compliance, Seller shall (a) correct the cause on all Products
to be shipped thereafter and (b) repair or replace all Products shipped
following the execution of this Agreement.

     11.5 YEAR 2000 WARRANTY. Seller warrants that Products will record, store,
process and present calendar dates falling on or after January 1, 2000, in the
same manner and with the same functionality as it performed before January 1,
2000.   Seller further warrants that the functionality of the Products will be
identical after January 1, 2000 to that found before January 1, 2000.

     11.6 WARRANTY WITHSTANDING ACCEPTANCE.  Seller shall have the warranty
obligations provided in this Article 11 as to all Products and Parts, accepted
by Buyer.

     11.7 PRODUCT LIABILITY INDEMNIFICATION.  Seller agrees to protect,
indemnify and hold Buyer harmless from and against liability, expenses and
damages based upon a claim that the Products are defective in any way or were
negligently manufactured, or fail to comply with any applicable law, to the
extent not caused by misuse, abuse or other fault attributable to Buyer or its
customer or any third party using the Products, and provided that Seller is
notified by Buyer of all such claims within a reasonable period of time
following Buyer's initial notification of such claims, and provided further that
Seller is given full control over any negotiation, arbitration or litigation
concerning such claims. In no event shall Seller's liability according to this
section 11.6 exceed the greater of one million dollars ($1,000,000) or the sum
of the payments received by Seller from Buyer at the date any such claim is
initiated. Notwithstanding the above, Seller shall have no liability to
indemnify Buyer for any special, incidental or consequential damages that Buyer
shall claim that have been caused by the Products and/or the use of the
Products, either to the Buyer nor to any third party.


     11.8   PRODUCT LIABILITY INSURANCE.  For as long as Buyer purchases
Products from Seller for no less than a minimum of [***] US Dollars per annum,
Seller shall maintain at its expense the product liability insurance listed
below with respect to claims resulting from Products or Parts sold pursuant to
this Agreement, other than product liability claims relating to Products and
Parts sold and delivered by Buyer prior to the closing date of the Purchase
Agreement, amended on the date hereof, to the extent that such claims are not
attributable to the actions or omissions of Seller and/or any third party that
shall use the Products. Such insurance shall:

            (A) provide limits of at least $1,000,000 for each person,
$3,000,000 for each occurrence of bodily injury, including death, and $1,000,000
for each occurrence of property and consequential damage;

            (B) be maintained during the term of this Agreement, provided Buyer
purchases Products from Seller for no less than a minimum of [***] USD per annum
plus one (1) year thereafter; and


     11.10  SURVIVAL.  The provisions of this Article 11 shall survive the term
and any termination of this Agreement.

12.  BUYER'S LIABILITY.  Buyer agrees to promptly investigate and defend,
indemnify and hold harmless Seller and directors, officers and employees from
and against all claims, damages, liabilities, awards, judgments, decrees and
settlements against them of whatever nature arising out of and to the extent
occasioned by the negligence or intentional acts of Buyer in connection with its
performance pursuant to this Agreement and/or in the use and/or maintenance of
the Products.  If Buyer fails to defend Seller in accordance with this Article
12, Buyer shall reimburse Seller for its reasonable costs and expenses
(including attorneys' fees) of doing so, in addition to any amounts to which
Seller may be entitled under this Article 12.


     13.1   DOCUMENTATION.  With respect to all New Products, Seller shall
promptly furnish, at its expense, the following documentation:

[***] The designated material has been omitted pursuant to an application for
      confidential treatment and the omitted information has been filed
      separately with the Securities and Exchange Commission.


          (A) engineering drawings of all assemblies and schematics, and logic
and timing diagrams;

          (B) complete adjustment, operational and installation specifications;

          (C) service test procedures and a list of any special tools and
service test equipment designed by Seller;

          (D) service, parts identification, service training, maintenance and
operator's manuals;

          (E) All documentation necessary to effect an interface or for hardware
and software maintenance and support purposes;

          (F) engineering drawings, logic diagrams and documentation necessary
for interfacing the Product to the remainder of the system in which it has been
designed for use; and

          (G) Any other documentation concerning the operation and maintenance
of the Product which will permit Buyer to develop a complete set of operator and
service manuals.

     Such documentation shall be of the type which is generally made available
to Seller's customers and/or used by Seller's personnel, shall be in a form
capable of reproduction and shall be updated by new documentation from time-to-
time as it becomes available. Buyer shall have the right to copy, modify and
use, and have copied, modified and used, the documentation provided by Seller
which is appropriate and/or necessary for the purpose of providing desired
manuals or the like concerning the Product, provided that any Seller copyrights
therein are appropriately safeguarded, and Buyer shall have the right to
copyright any such manuals developed by Buyer. Provided that Buyer copyrights
are appropriately safeguarded, Seller may use, with Buyer's written permission
which shall not be unreasonably withheld, any Buyer produced manuals or the like
regarding the Product.

     13.2 PUBLISHED DOCUMENTATION.  Seller shall include with each Product unit
purchased by Buyer hereunder a complete set of documentation relating to the
operation and/or maintenance thereof as is customarily supplied to end users.
Other documentation may be purchased from Seller at a reasonable price per copy.

     13.3 TECHNICAL SUPPORT AND TRAINING.  Seller shall provide, adequate
training and information to Buyer with respect to installation and service of
the Product, including training on any special tools or test equipment.  Such
training shall take place upon the request of Buyer and shall be conducted by
technically competent Seller personnel for the benefit of Buyer instructors,
field service personnel and other Buyer personnel involved with the Product.
Training shall take place at a mutually agreed upon time and location.
Additional training at Buyer's site by a Seller R&D engineer may be purchased by
Buyer at the rate of five hundred dollars ($500) per day, plus reasonable and
actual travel and living expenses. Training at Seller's premises shall be at a


rate of two hundred dollars ($200) per day. Appropriate notice and minimum days
to be agreed upon by the parties.

     13.4  SALES TRAINING. Seller shall provide training and information at
Buyer's expense to Buyer's salespersons at Seller's Premises.

     13.5  SALES AND MARKETING INFORMATION. Seller agrees to provide Buyer, as
far as such are available, with copies of sales publications concerning the
Products and Parts for Buyer to duplicate and translate and use without
restriction or charge.


     14.1  As used in this Section 14, the term "Confidential Information" means
information in which a party claims a proprietary interest and the confidential
nature of which that party has taken reasonable steps to protect; the term
"Owner" means the owner of an item of Confidential Information; and the term
"Recipient" means the party to which Owner discloses an item of Confidential

     14.2  Except as provided in Section 14.5 for a period of five (5) years
from the date of disclosure of an item of Confidential Information that is fixed
in a tangible media, Recipient shall use reasonable efforts to prevent the
disclosure thereof to any other person, firm or corporation, and shall use at
least the same degree of care to avoid disclosure of such information as
Recipient employs with respect to its own Confidential Information of like

     14.3  Any reports or other documents derived from an item of Confidential
Information shall be subject to Section 14.2 to the same extent as is the item
of Confidential Information.

     14.4  All written data delivered by one party hereto to the other party
pursuant to this Agreement shall be and remain the property of such one party,
and all such written data, and any copies thereof, less a single archival copy,
shall be promptly returned to such one party upon written request or destroyed
at such one party's option.

     14.5  Notwithstanding the foregoing, Recipient shall have no obligation
under this Paragraph 14 with respect to any Confidential Information of Owner

           (A) is already known to Recipient and can be properly evidenced as
so; or

           (B) is or becomes publicly known, through publication, inspection or
otherwise, and through no wrongful act of Recipient; or

           (C) is received from a third party without similar restriction and
without breach of any obligation owed to Owner; or

           (D) is independently developed by Recipient and can be properly
evidenced as so; or


           (E) is furnished to a third party by Owner without a similar
restriction on the third party's rights; or

           (F) is approved for release by written authorization of Owner; or

           (G) is disclosed pursuant to the lawful requirement or request of a
Governmental agency or disclosure is permitted by operation of law.

           (H) Disclosure of Confidential Information shall not be construed as
granting or conferring to Recipient any rights by license or otherwise,
expressly, implied or otherwise, for any invention, discovery or improvement
made, conceived, or acquired prior to or after the date of disclosure.

     14.6  Nothing contained in this Agreement shall constitute a commitment by
either party to restrict its efforts to improve its existing products and
systems and to conceive and develop new products and systems.

     14.7  THIRD PARTY CONTRACTORS. Notwithstanding the restrictions of
Paragraph 14, Buyer shall be entitled to provide Confidential Information of
Seller to third party contractors of Buyer who have executed a written
obligation of confidentiality towards the Seller, in a form approved by the
Seller, conforming to that of this Article 14.


     15.1  INDEMNIFICATION. Seller undertakes and agrees that, provided it has
been notified promptly and given authority, information and offered assistance,
Seller will promptly investigate and defend, at its own expense, all claims,
allegations, suits, actions or proceedings in which Buyer or its subsidiaries,
are made defendants or claimed potential defendants for any infringement,
claimed infringement or alleged inducement of infringement, or unauthorized or
unlawful use of any patent, copyright, trademark, trade secret, mask work,
proprietary data or other information, resulting from the sale, use, lease or
other disposition of any Product or Part purchased from Seller under this
Agreement. Seller further agrees to pay and discharge any and all judgments or
decrees which may be rendered in any such suits or proceedings against any such
defendants up to a total not exceeding the payments received by Seller from
Buyer at the date any such claim is initiated. Seller shall have the right to
settle any such suits, actions or proceedings on terms and conditions of
Seller's own selection, provided they are not in conflict with the terms and
conditions provided herein. This indemnity does not extend to any suit or
proceeding which is based upon a patent claim covering a combination of which
the Product purchased under this Agreement is merely an element of the claim
combined with other devices or elements not provided by Seller, unless Seller is
a contributory infringer, nor does it extend to any Product whose infringement
is a direct result of Seller being required to adhere to a specific design
provided by Buyer and not originating with Seller.


     15.2  NON-LICENSED TECHNOLOGY. Buyer acknowledges that the foregoing
indemnity does not apply to any patents pertaining to the ITU-T standards as
listed in Exhibit C, except for such patent rights relating to Seller, DSP
Group, Inc., France Telecom and the University of Sherbrook relating to the ITU-
T G.723.1 standard. At its option, Buyer may enable G.729A,B on a per port card
basis in its product. If G.729A,B is not enabled then no G.729A,B royalty/set
off will be due. However, if G.729A,B is enabled by Buyer, then Seller agrees to
indemnify Buyer for royalty payments on the G.729A Voice Compression if Buyer
pays to Seller the following per port fees:

     per port of G.729A sold  [***] per port

     (Note: the per port fee for G.729A is re-evaluated these days with the
     G.729A consortium)

     The parties further agree that above per port fees related to the G.729A
will be adjusted upward or downward to equal the sum of royalties to be paid to
third party IP holders.

     15.3  SURVIVAL. The provisions of this Article 16 shall survive the term
and any termination of this Agreement.


     16.1  ABSENCE OF RESTRICTIONS. Buyer is not restricted as to its sale of
Products purchased hereunder to any end user or remarketer worldwide, or
purchased for internal use by Buyer worldwide. Further, this Agreement shall not
be construed as preventing Buyer from acquiring at any time products similar or
related to the Products from any other source, including, without limitation,
purchase from any third party vendors or manufacture by Buyer.


     17.1  TERM. This Agreement shall continue for an initial term of five (5)
years from its effective date and shall be automatically renewed for successive
one (1) year period thereafter, unless notice of termination is given by one
party to the other at least one hundred and eighty (180) days prior to the
termination date of the initial term or of any yearly renewal term, or unless
earlier terminated under any other provision of this Agreement. The parties
agree that in the event either party gives the other party at least thirty (30)
days notice prior to the end of the initial term (and only the initial term),
the parties shall negotiate in good faith to reach agreement on terms and
conditions for the extension of the Agreement. In the event the parties do not
reach such agreement prior to thirty (30) days after the initial renewal date,
either party can notify the other party at such time of its intent to terminate
the Agreement and the Agreement shall terminate one hundred and eighty (180)
days following receipt of such notice.

[***] The designated material has been omitted pursuant to an application for
      confidential treatment and the omitted information has been filed
      separately with the Securities and Exchange Commission.


     17.2  TERMINATION FOR DEFAULT. Either party may terminate this Agreement
upon thirty (30) days prior written notice to the other party for failure of
such other party to fulfill any of its material obligations hereunder provided,
however, if during the period of such notice the other party shall have remedied
such failure, this Agreement shall continue in full force and effect as it would
have had such failure not occurred. In the event of termination under this
paragraph, the terminating party shall be entitled to return of any amounts paid
in anticipation of performance not rendered by the other party.

     17.3  TERMINATION FOR OTHER REASONS. This Agreement shall terminate
forthwith, at the option of either party, by notice in writing to the other
party, upon the other party ceasing to carry on its business or in the event the
other party becomes the subject of any proceedings under state or federal law
for the relief of debtors or otherwise becomes insolvent, bankrupt or makes an
assignment for the benefit of creditors, or upon the appointment of a receiver
for the other party or its reorganization for the benefit of creditors.


     18.1  OTHER REMEDIES. Termination of this Agreement by either party shall
not prejudice it or the other party to recover any money amounts or require
performance of any obligations due at the time of such termination, nor shall it
prejudice any confidentiality undertaking by either party.

     18.2  COMPLETED PRODUCTS. In the event of termination of this Agreement by
Buyer under Paragraph 18.2, Seller shall, at Buyer's option, pass title and
deliver to Buyer completed Products in its possession meeting the
Specifications, provided Buyer pays the agreed upon price as if Seller had
delivered those Products according to the terms of purchase hereunder.

     18.3  PURCHASE ORDERS CANCELED. In the event of any termination of this
Agreement under Paragraph 17.2, all outstanding Purchase Orders for Products
previously issued by Buyer under this Agreement shall be automatically and
immediately canceled without penalty, notwithstanding any firm order period,
cancellation penalty or maximum cancellation requirement stated under this

     18.4  MANUFACTURING LICENSE NOT AFFECTED. Termination of this Agreement by
either Seller or Buyer under Paragraph 17.2 or by Buyer under Paragraph 17.3
shall not prejudice or otherwise affect any Manufacturing License to which Buyer
may become entitled.


     19.1  NO ASSIGNMENT. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated by either party without the prior written
consent of the other party, and any attempted assignment or delegation not in
conformity with this Article 19 shall be null and void. This provision shall not
apply to an assignment or delegation by either party resulting from (i) a change
its state or country of incorporation or (ii) a modification of the relevant


corporate structure that does not materially alter ownership or control or that
does not materially alter the rights of the other party according to this

     19.2  SUCCESSOR. Notwithstanding anything in this Agreement to the
contrary, this Agreement with all rights and obligations hereunder shall be
binding upon and inure to the benefit of any successor to which either party
directly or indirectly transfers all or a substantial part of its business and
assets pertaining to the Product, whether by merger, sale of assets, sale of
stock or otherwise. The party making such a transfer shall assign this Agreement
and the rights and obligations hereunder and obtain from the assignee, in a form
satisfactory to counsel for the other party, an acceptance of such assignment
and an assumption of all of the assignor party's obligations under this

20.  NOTICES AND COMMUNICATIONS. For international communications, notice shall
be deemed given upon successful transmission by Telefax or Telex to the
telephone numbers and addresses listed below or, if by mail, upon receipt by the
addressee. Except as otherwise specifically provided herein, notices and other
communications given and received under this Agreement shall be deemed given
fourteen (14) business days after the date when deposited, registered mail
postage prepaid, addressed as follows or as from time to time otherwise directed
in writing by either party:

     To Seller:     AudioCodes, Ltd.
                    4 Hohoresh Road
                    Yehud, Israel, 56470

                    ATTN: Chief Financial Officer_________________

     To Buyer:      Clarent Corporation
                    700 Chesapeake Dr
                    Redwood City, CA 94063
                    ATTN: Contracts Administration


     21.1  SUBSTITUTION OF NEW PRODUCT. Should Seller develop a type of product
which is like any Product, or performs a similar function, or would obsolete any
Product due to new technology, Seller shall give Buyer notice as soon as
practicable and in no event later than six (6) months prior to the initial
shipping date for such new product and furnish to Buyer the specifications and
other pertinent description thereof and, at the request of Buyer, arrange an
engineering evaluation of such product immediately upon a working model of it
becoming available. At its option, Buyer may elect to substitute such new
product for such Product under this Agreement at a price mutually agreeable
between the parties. Such New Product shall thereafter be considered a Product
under the terms and conditions of this Agreement as if initially


included hereunder. For purposes of this Paragraph only "New Product" shall not
include any Product which is scheduled to be introduced within six (6) months of
the date hereof.

     21.2  DISCONTINUATION OF PRODUCTION. In addition to any other notices that
may be required in connection with termination of this Agreement by Seller,
Seller shall provide notice at least one hundred and eighty (180) days prior to
the discontinuation of production of a Product.


     22.1  EXCUSED PERFORMANCE. Neither party shall be liable for damages
because of delays in or failure of performance required under this Agreement
when such delay or failure is due to acts of God, acts of civil or military
authority, fire, flood, strikes, war, epidemics, shortage of power or other
cause beyond such party's reasonable control and without its fault or
negligence, provided that such party (a) uses its best efforts to promptly
notify the other in advance of conditions which will result in any such delay in
or failure of performance, (b) uses its best efforts to avoid or remove such
conditions, and (c) immediately continues performance whenever such conditions
are removed.

     22.2  CURTAILED PRODUCTION. In the event that Seller's overall production
of Products is curtailed for any reason, Seller will ship Buyer a percentage of
its Orders for Products and Parts at least equivalent to that shipped for
similar products to any other customer. Acceptance by Buyer of such percentage
of its Orders shall not operate as a waiver of any rights or remedies which
Buyer shall have as a result of Seller's failure to ship all Products and Parts
under such Orders.

     22.3  INTEGRATION. This Agreement is intended to be the sole and complete
statement of the obligations of the parties with regard to purchasing of
Products by Buyer from Seller. It supersedes any other agreement or
understanding, whether written or oral, that may have been made or entered into
with regard to the subject matter hereof by Seller or Buyer, as well as any
terms stated on any Purchase Order, acknowledgment, acceptance form, or other
printed document used by either party in the course of dealing under this

     22.4  ENTIRE AGREEMENT. This Agreement and Exhibits A, B, C, D annexed
hereto contain the entire Agreement between the parties and may not be altered,
amended or modified, except by formal agreement in writing signed by duly
authorized representatives of both parties. Purchase Orders, Purchase Order
acknowledgments, acceptance forms and other printed documents shall not
constitute an alteration, amendment or modification, even if acknowledged by the
party sought to be bound.

     22.5  WAIVER OR DELAY. Any waiver or delay in the exercise by either party
hereto of its right to terminate hereunder or to enforce any provision of this
Agreement for any breach by the other party shall not prejudice such party's
right of termination or enforcement for any further, continuing or other breach
by the other party.


     22.6   SEVERABILITY. In the event that any provision contained in his
Agreement should, for any reason, be held to be invalid or unenforceable in any
respect under the laws of any jurisdiction where enforcement is sought, such
invalidity or unenforceability shall not affect any other provision of this
Agreement and this Agreement shall be construed as if such invalid or
unenforceable provision had not been contained herein.

     22.7   GOVERNING LAW. This Agreement shall be interpreted and construed,
and the legal relations created herein shall be determined, in accordance with
the laws of Israel.

     22.8   HEADINGS. The Article and Paragraph headings within this Agreement
are for convenience only and shall neither be considered a part of, nor affect
the construction or interpretation of, any provision of this Agreement.

     22.9   WARRANTIES. Seller and Buyer represent and warrant to each other
that each has the right and power to enter into this Agreement.

     22.10  RELATIONSHIP OF PARTIES. The relationship of Seller and Buyer as
established under this Agreement shall be and at all times remain one of
independent contractors, and neither party shall at any time or in any way
represent itself as being a dealer, agent or other representative of the other
party or as having authority to assume or create obligations or otherwise act in
any manner on behalf of the other party.

     22.11  PERIODS OF TIME. In computing any period of time under this
Agreement where a specified number of days are required or permitted for notice,
response or other action on the part of either party, Saturdays, Sundays and
holidays shall be included in such period of time.

     22.12  ARBITRATION. Seller and Buyer shall settle by arbitration any
controversy or claim, including any claim of misrepresentation, arising out of
or related to this Agreement. Failure to file a notice of arbitration within two
(2) years after the occurrences supporting the claim constitutes an irrevocable
waiver of that claim. Before the institution of arbitration under this Section,
the party claiming that arbitration is necessary shall first send written notice
of such controversy, claim or breach to the affected party, demanding that the
matter be cured within sixty (60) days. If within sixty (60) days from the
sending of that notice either no response is received or the party sending the
notice deems the response to be insufficient, it may then institute arbitration
in accordance with this Section. The sixty (60) day period provided for in this
Section shall run concurrently with any other cure period provided in this
Agreement. Arbitration shall take place in San Jose, California, according to
the rules of the American Arbitration Association by an arbitrator nominated by
the mutual consent of the parties and if no such consent is reached upon the
elapse of the said 60 day period, by the California branch of the American
Arbitration Association.

     22.13  ESCROW

     Within thirty (30) days after execution of this Agreement, Seller shall
submit an escrow agreement to Buyer in a form reasonably acceptable to Buyer
providing that the design


specifications and architecture for the Products and the software code (to be
further defined in the Escrow agreement) for any and all included software
technology necessary to ensure full operation of such products along with any
other information required to permit Buyer to manufacture the Products (the
"Information") shall be released to Seller in the event that (i); (i) Seller is
a party in a voluntary or involuntary proceeding in liquidation or bankruptcy;
or (ii) ownership or control of Seller or substantially all the assets of Seller
is transferred to a third party who's products are competitive with those of
Buyer. In the event that such Products are manufactured and distributed by
Buyer, a fee equal to the best price for such Products (at arms length basis)
obtained from Seller less Seller's costs of production shall be due to Buyer on
a quarterly basis. The Information deposited in escrow shall be kept current by
Seller by making updates to the Information at least two (2) times per year as
long as such Products are in production (if such updates are required) and
adding the required material related to New Products within thirty (30) days
after first commercial shipment of such New Products by Seller to Buyer.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed in duplicate by their respective authorized representatives.

SELLER:                             BUYER:


By: /s/ Michael Lilo                  By: /s/ Richard Heaps
    ----------------                      -----------------
Title: CFO                            Title: COO
       -------------                         --------------
Date: April 5, 1999                   Date: March 24, 1999
      --------------                         --------------


                                   EXHIBIT A

                            PRODUCT SPECIFICATIONS

                                   EXHIBIT B

                                 PRODUCT PRICE

To be supplied by Seller within thirty (30) days of the execution of this

                                   EXHIBIT C