EXHIBIT 10.11
SUPPLIER ESCROW AGREEMENT
This Agreement, made and entered into this 21 day of April, 1997, by and
between MMC Networks, Inc., a corporation organized and existing under the laws
of the State of California with its principal office at 1134 E. Arques Avenue,
Sunnyvale, CA 94086 ("MMC"), Hitachi Computer Products (America), Inc., a
corporation organized and existing under the laws of the State of Delaware with
an office at 3101 Tasman Drive, Santa Clara, CA 95054 ("HICAM") and SourceFile,
a with an address at 1350 W. Grand Avenue, Oakland CA (the
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"Escrow Agent").
WHEREAS, HICAM and MMC have entered into an agreement pursuant to which HICAM
agreed to purchase (under the terms and conditions of a Purchase Order, a sample
of which is attached hereto as Exhibit A) on a continuing basis from MMC the
PS1000 chip set ("Chip Set") for use in HICAM products; and
WHEREAS, pursuant to the Agreement, MMC has certain continuing supply, warranty,
support and maintenance obligations; and
WHEREAS, MMC and HICAM have agreed to place copies of the documentation required
for the manufacture and testing of the Chip Set, a copy of a Purchase Order and
letters of authorization to suppliers of the Chip Set in escrow to be released
to HICAM upon any discontinuation of certain obligations of supply, warranty,
support and maintenance of the Chip Set undertaken by MMC;
NOW THEREFORE, in consideration of the mutual promises and undertakings
hereafter set forth, the parties hereto do hereby covenant and agree as follows:
ARTICLE 1. ESCROW DOCUMENTS.
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1.1 The Letters of Authorization authorizing the existing vendors and suppliers
of the Chip Set to accept purchase orders from HICAM and to ship production
units of the Chip Set directly to HICAM, and any documents, drawings, design
specifications, bills of materials and other information necessary to
manufacture the Chip Set without undue experimentation on the part of vendors
and suppliers of the Chip Set, HICAM or its agents and suppliers, shall be
placed in escrow, including any exhibits, addenda, amendments and modifications
thereto, whether presently existing or created hereafter. The documents existing
as of the date of execution of this Agreement are listed in Exhibit B hereto.
1.2 A fully executed original License Agreement (the "License Agreement") by and
between MMC and HICAM, a copy of which is attached as Exhibit "C" shall be
placed in escrow and will be delivered to HICAM concurrent with the delivery of
the Escrow Documents pursuant to Article 5 below.
ARTICLE 2. PURPOSE OF AGREEMENT; DEPOSIT OF DOCUMENTATION.
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2.1 Deposit. The deposit of the Documentation and the license thereof pursuant
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to Article 3.1 is intended to provide assurance to HICAM OF access and right of
use of such Documentation in the event that MMC discontinues its supply of the
Chip Sets to HICAM. In connection therewith, the Escrow Agent agrees to accept
from MMC and MMC agrees to deposit with Escrow Agent, within ten (10) calendar
days of the date of this Agreement, a copy of the Documentation. MMC will
furnish to Escrow Agent a list describing all items deposited. MMC shall also
furnish to HICAM a copy of such list so that HICAM can insure that all required
items are included. The Documentation to be initially deposited with Escrow
Agent is described in Exhibit B hereto, and such descriptions will be
supplemented and updated by MMC with each subsequent deposit. For each deposit,
Escrow Agent will issue receipts to MMC, and will send to HICAM copies of such
receipts.
2.2 Update and Maintenance. During the term of this Agreement MMC shall keep the
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Documentation in escrow fully current by depositing the documentation and
related materials for each and every correction, modification or new release of
the Documentation.
2.3 Verification and Testing. HICAM may appoint an independent consultant to
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inspect, test and review the Documentation (under obligations of
confidentiality) at the time of the initial deposit and at the time of each
subsequent deposit in escrow in order to verify that it corresponds to the
Exhibit hereto, and the Escrow Agent shall permit such inspections and testing
of the same promptly upon request.
ARTICLE 3. LICENSE.
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3.1 In the event that the Documentation shall be delivered out of escrow to
HICAM pursuant to the terms of this Agreement, HICAM shall be licensed by MMC,
and MMC does so hereby license HICAM, subject to the terms and conditions of the
License Agreement attached hereto as Exhibit C, to use, modify, maintain and
update the Documentation in all such respects as may be necessary for HICAM to
manufacture, use, copy, distribute and sell the Chip Set as part of HICAM's
packet switch system products. HICAM may sublicense its rights in the Chip Set
to purchasers of HICAM's products so that they may exploit the same.
ARTICLE 4. TITLE TO DOCUMENTATION.
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4.1 Title to the Documentation shall remain in MMC, but title of the copy
thereof to be deposited in escrow hereunder shall pass to and vest in the Escrow
Agent and, in the event the Documentation shall he delivered to HICAM pursuant
hereto, pass to and vest in HICAM.
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Notwithstanding its ownership of a copy the Documentation in such event, HICAM
shall remain subject to the terms of the license granted pursuant to Article
3.1 hereof with respect to the use thereof.
ARTICLE 5. RELEASE OF DOCUMENTATION TO HICAM.
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5.1 Release. The Documentation to be deposited in escrow pursuant to this
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Agreement shall be released to HICAM only in accordance with the terms of this
Agreement.
5.2 Notice of Default; Cure Period. If MMC discontinues its obligation to supply
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HICAM with the Chip Sets or is in breach of any of its obligations under the
terms and conditions set forth in a Purchase Order, HICAM shall so notify MMC in
writing, specifying in reasonable detail. A copy of such notice will be served
simultaneously upon the Escrow Agent. For a period of ten days after service of
such notice, MMC shall have the right to resume its supply of the Chip Sets or
cure the identified breaches, whichever the case may be. In the event that, at
the conclusion of such cure period, MMC does not resume supply of the Chip Sets
to HICAM, or HICAM shall conclude in good faith that the identified breaches
have not been cured, HICAM may so notify both MMC and the Escrow Agent, and such
notice shall include a demand that the Escrow Agent release the Documentation to
HICAM pursuant to the terms hereof.
5.3 Dispute by MMC. In the case where MMC disagrees that it has discontinued its
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obligation to supply HICAM with the Chip Sets or that its obligations have been
breached, MMC shall, within five (5) days after receipt of HICAM's notice and
demand for release, notify both the Escrow Agent and HICAM that it objects to
release of the Documentation. Failure of MMC to furnish timely notice objecting
to release of Documentation shall conclusively establish its consent to the
immediate release of the Documentation to HICAM under the terms of this
Agreement, and the Escrow Agent shall release such Documentation to HICAM.
5.4 Injunctive Relief. MMC and HICAM acknowledge and agree that HICAM will
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suffer irreparable harm to its business and operations in the event that release
of the Documentation to HICAM is wrongfully delayed by MMC, and that HICAM may
petition for injunctive relief to prevent MMC from seeking to delay such a
release.
5.5 Payment to MMC. HICAM shall pay to MMC, in the event that the Documents are
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released to HICAM and HICAM manufactures and sells the Chip Sets, the amount of
MMC's price to HICAM for the purchase of the Chip Set above the cost of
manufacture of the Chip Set by HICAM, as set forth in detail in the License
Agreement attached hereto as Exhibit C.
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF MMC.
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6.1 Ownership. MMC warrants and represents to HICAM that it is the owner of and
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holder of all rights in the Documentation and that MMC has the right to grant to
HICAM the license rights pursuant to Article 3.1 hereof and to deposit the
Documentation with the Escrow Agent pursuant to the terms hereof.
6.2 Current Version. MMC warrants and represents to HICAM that the Documentation
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to be deposited with the Escrow Agent is the most current version of such
Documentation and conforms to the descriptions set forth in Exhibit B hereto.
ARTICLE 7. BREACH BY MMC.
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7.1 MMC shall be deemed to be in breach of its obligations and under this
Agreement should any of the following events occur:
(1) MMC discontinues its obligation to supply HICAM with the Chip Sets;
(2) MMC advertises for the sale of all or substantially all of its assets
or negotiates or signs an agreement providing for the sale of all or
substantially all of its assets, and such sale threatens, in HICAM's
discretion, to disrupt MMC's obligation to supply HICAM with the Chip
Set;
(3) MMC admits in writing its inability to pay its debts generally as
they become due;
(4) MMC makes a general assignment for the benefit of creditors;
(5) MMC voluntarily institutes proceedings to be adjudicated as bankrupt;
(6) MMC consents to the filing of a petition of bankruptcy against it;
(7) a petition of bankruptcy is filed against MMC and remains unstayed or
is not dismissed within ten (10) days after such filing;
(8) MMC is adjudicated by a court of competent jurisdiction as being
bankrupt or insolvent;
(9) MMC seeks reorganization under any bankruptcy act or law of debtor's
moratorium or consents to the filing of a petition seeking such a
reorganization; or
(10) MMC has a decree entered against it by a court of competent
jurisdiction appointing a receiver, liquidator, trustee or assignee
in bankruptcy or insolvency covering all or substantially all MMC's
property or providing for the liquidation of MMC's property or
business affairs.
Upon occurrence of any of the above events, HICAM may thereupon so notify Escrow
Agent in writing and provide evidence of the same. In such event, Escrow Agent
shall promptly release and deliver the Documentation to HICAM pursuant to the
terms hereof.
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ARTICLE 8. LIMITATION ON OBLIGATION OF ESCROW AGENT.
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8.1 Escrow Agent shall not be required to inquire into the truth of any
statements or representations contained in any notices, certificates or other
documents required or otherwise provided hereunder, and it shall be entitled to
assume that the signatures on such documents are genuine, that the person
signing on behalf of any party thereto are duly authorized to execute the same,
and that all actions necessary to render any such documents binding on the party
purporting to be executing the same have been duly undertaken. Without limiting
the foregoing, Escrow Agent may in its discretion require from MMC or HICAM
additional documents that it deems to be necessary or desirable to aid it in the
course of performing its obligations hereunder.
ARTICLE 9. RELEASE AND INDEMNIFICATION OF ESCROW AGENT.
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9.1 MMC and HICAM, severally, hereby do release Escrow Agent from any and all
liability for losses and damages that may be incurred on account of any action
taken by Escrow Agent in good faith pursuant to this Agreement (excluding acts
of negligence by Escrow Agent), and (the parties do hereby severally indemnify
Escrow Agent and undertake to hold harmless Escrow Agent from and against any
and all claims, demands or actions arising out of or resulting from such
performance by Escrow Agent under this Agreement.
ARTICLE 10. ESCROW AGENT FEES.
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10.01 HICAM hereby acknowledges and agrees that it shall pay the escrow fees
related to this Agreement as set forth in Exhibit D attached hereto and made a
part hereof. Escrow Agent shall invoice HICAM directly for all such fees. Escrow
Agent shall notify HICAM at least ninety (90) days prior to any renewal of this
Agreement of any increase in Escrow Agent's fees, which increase will not be in
an amount greater than 10% of the fees in effect prior to any such renewal.
ARTICLE 11. CONFIDENTIALITY AND USE OF THE DOCUMENTATION.
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11.1 Confidentiality. The Documentation released to HICAM pursuant to this
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Agreement shall be used by HICAM solely for the purposes permitted by this
Agreement. HICAM shall treat and preserve the Documentation as a trade secret of
MMC in accordance with the same practices employed by HICAM to safeguard its own
trade secrets against unauthorized use and disclosure. MMC hereby acknowledges
that HICAM may disclose the Documentation to its authorized agents, affiliates
(including Hitachi, Ltd. and its affiliates) and suppliers of the Chip Set as
needed by HICAM in order to manufacture, distribute and sell the Chip Sets.
Nothing in this Agreement is intended to limit the disclosure of technical or
other information as needed for HICAM's customers to effectively deploy properly
licensed Chip Sets.
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11.2 Survival of Obligations. The obligations of this Article 11 shall survive
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the termination of this Agreement for any reason and shall continue for as long
as the Documentation continues to embody trade secrets of MMC, but in any event
no longer than five(5) years from the date of its disclosure to HICAM.
ARTICLE 12. TERM OF AGREEMENT.
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12.1 The term of this Agreement shall commence on the effective date hereof and
shall continue until the Documentation shall be transferred to HICAM pursuant to
the terms hereof, or, if such transfer shall not have so occurred, the Agreement
shall terminate and the Documentation shall be returned to MMC upon termination
of MMC's supply and support obligations to HICAM.
ARTICLE 13. MISCELLANEOUS.
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13.1 Independent Contractors. The parties hereto are and shall be independent
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contractors under this Agreement, and nothing herein shall be construed to
create a partnership, joint venture or agency relationship between the parties
hereto. No party shall have the authority to enter into agreements of any kind
on behalf of the other parties in any manner.
13.2 Authority. The parties hereto represent and warrant that they have full
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power and authority to undertake the obligations set forth in this Agreement and
that they have not entered into any other agreements nor will they enter into
any other agreements that would render them incapable of satisfactorily
performing their respective obligations hereunder.
13.3 No Agency; No Assignment; No Amendment. HICAM and MMC each represents that
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it is acting on its own behalf and is not acting as an agent for or on behalf of
any third party and agrees that it may not assign its rights or obligations
under this Agreement, or amend this Agreement, without the prior written consent
of the other party hereto, which consent shall not be unreasonably withheld or
delayed.
13.4 Waiver. No party shall, by mere lapse of time, be deemed to have waived any
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breach by the other party or parties of any provisions of this Agreement. The
waiver of any party of a particular breach of this Agreement by any other party
shall not be construed as or constitute a continuing waiver of such breach or of
other breaches of the same or other provisions of this Agreement unless in
writing by the waiving party.
13.5 Notices. All notices and other communications required or permitted to be
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given under this Agreement shall be in writing and shall be considered effective
when sent by facsimile, courier, or when deposited in the U.S. Mail, postage
prepaid, and addressed to the respective party at the address noted above,
unless by such notice a different address shall have been designated.
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13.6 Governing Law. The construction and interpretation of this Agreement shall
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be governed by the law of the State of California, with the exception of its
provisions regarding conflicts of law.
13.7 Force Majeure. No party shall be in default if failure to perform any
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obligation hereunder is caused solely by supervening conditions beyond such
party's control, including acts of God, civil commotion or governmental demands
or requirements.
13.8 Partial Invalidity. if any part, term or provision of this Agreement shall
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be held illegal, unenforceable or in conflict with any law, the validity of the
remaining portions or provisions hereof shall not be affected thereby.
13.9 Complete Agreement. The parties hereto acknowledge that each has read this
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Agreement, understands it and agrees to be bound by its terms. The parties
further agree that this Agreement, incorporating all Exhibits hereto, is the
complete and exclusive statement of their agreement and supersedes all prior
proposals, understandings, representations, conditions, warranties, covenants
and all other communications between the parties relating hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized representatives as set forth below:
MMC Networks Hitachi Computer Products (America), Inc.
By: /s/ Amos Wilnai by: /s/ Takeaki Matsuoka
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Title: Chairman Title: Senior Vice President
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& General Manager
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Date: 4/11/97 Date: April 16, 1997
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Escrow Agent
By: /s/ [SIGNATURE]
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Title: President
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Date: 4-21-97
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EXHIBIT A
HITACHI COMPUTER PRODUCTS (AMERICA), INC.
TERMS AND CONDITIONS
1) FORMATION OF CONTRACT
The Purchase Order ("Order") is Buyer's offer to purchase the goods and/or
services (herein after referred to as "goods") described from the Seller and
does not constitute an acceptance by Buyer, of any offer to sell, quotation of
proposal by the Seller. This Order shall become a binding contract under the
conditions set forth herein only when the Seller acknowledges in writing the
acceptance of the Order. Buyer's placement of this Order is expressly
conditioned upon acceptance by Seller of all of the terms contained herein and
on the face of this Order and any supplements, specifications of documents
incorporated herein by reference.
Any additional or different terms or conditions which may appear in any
communication from Seller are hereby expressly objected to and shall not be
affective or binding unless specifically agreed to in writing by Buyer's
Purchasing Department.
Seller expressly acknowledges that Buyer is purchasing the goods covered by
this Order for internal use.
2) PRICE AND PAYMENT
All prices shall be firm and fixed unless otherwise agreed in writing.
However, if Seller reduces its published or standard prices for goods or
services covered by the contract before Seller completes his performance
thereunder, such reduced prices shall apply to any goods or services undelivered
at the time.
Payment terms shall be net 30 days unless otherwise specified. Seller agrees
not to deliver goods on sight draft basis.
Except as otherwise provided herein, Seller shall pay all taxes that may
arise of its sale of the goods and services to the Buyer. Buyer agrees to
provide Seller with a Tax Exemption Certificate if required.
3) WORK BY SELLER ON BUYER PREMISES
In the event Seller, its officers, employees and agents or any of them enter
premises owned, leased, occupied or under the control or Buyer in the
performance of or in connection with this order, Seller agrees to indemnify and
hold harmless Buyer, its officers, agents and employees from any loss, costs,
damages, or bodily injury (including death) or whatsoever kind or nature arising
out of or incidental to the performance of delivery of installation of this
order occasioned in whole or in part by the actions or omissions of Seller, its
employees, officers and agents or any of them. Seller shall maintain public
liability, property damage and automobile liability insurance in reasonable
amounts covering the obligations set forth and upon request will provide Buyer
with a Certificate of Insurance indicating the amount of such insurance.
4) PACKING
Seller shall include shipping marks, as specified by Buyer on all packing.
Unless otherwise specified, Seller shall pack the goods in such a manner as to
be safe from damage or deterioration while in transit or storage under
foreseeable circumstances.
No charges of any kind, including charges for boxing or cartage, will be
allowed unless specifically agreed to by Buyer in writing.
5) DELIVERY
Unless otherwise stated on this Order, all goods are to be shipped freight
prepaid, F.O.B. Seller's factory. Buyer will advise the Seller of the
destination, and has the option to specify routing and method of shipment.
Time is of the essence, and this Order may be terminated if delivery is not
made or services not performed by the date specified on the Order. No change in
the scheduled date or performance will be permitted without Buyer's written
consent. No acceptance of goods or services after the scheduled delivery date
shall be deemed a waiver of future compliance with the terms hereof. If the
materials cannot be delivered within the time specified in the Order. Seller
must notify Buyer immediately in writing of the earliest possible delivery date.
6) INSPECTION
Seller shall thoroughly inspect all and every part of the goods and shall
conduct running and performance tests before shipment and send Buyer a record of
such tests. Buyer and/or its designee shall have the right and opportunity to
witness such inspection and/or test. Seller shall furnish without additional
charge, all reasonable facilities and assistance for the safety and convenience
of Buyer and/or as designee in the performance of such inspection and/or test.
Witnessing or failure to witness such inspection and/or tests by Buyer and/or
its designee shall in no way impact Buyer's or its designee's rights in the
case of nonconforming or defective goods.
All goods furnished under this Order by Seller to Buyer or its designee may,
at its option, (1) reject the goods and return it to Seller at Seller's risk and
expense or (2) arrange for repair or make the goods otherwise acceptable at
Seller's expense in accordance with Seller's timely instructions, or in
accordance with Buyer's or the designee's best judgement (at Seller's risk and
expense). If Seller does not provide such instructions or make such repairs
within a reasonable time, or (3) accept the goods at a reasonably reduced price.
Freight costs for rejected goods shall include all freight charges from the
point of which the goods are rejected. If rejection occurs outside of the U.S.,
Buyer will bear any taxes and/or duties incurred in the transportation of the
goods to the Seller.
Seller shall provide Buyer with appropriate material certifications,
including but to limited to material, physical and/or chemical analysis
certifications.
7) WARRANTIES
A. Seller warrants to the Buyer and its designee that the goods supplied
and work of services performed under this Order conform to the specifications
herein.
B. Seller further warrants to the Buyer and its designee that all goods
under this Order will be free from defects in material and workmanship and
will conform to applicable specifications, drawings, samples and descriptions.
Buyer's or the designee's written approval of the designs furnished by Seller
shall not relieve Seller of its obligations under this warranty.
C. Unless otherwise specified, Seller's warranty shall extend for a period
of twelve (12) months after the goods are accepted by Buyer's designee. Buyer
and its designee shall have the benefit of any other warranties which may be
applicable.
D. In the event Buyer or its designee discovers a breach of any kind of the
warranties specified herein with respect to any goods or part thereof within the
warranty period, Buyer or its designee may at its option, (1) return such goods
to Seller's at Sellers' risk and expense; or (2) arrange for repair or make the
goods otherwise conform to the warranties at Seller's risk and expense in
accordance with the Seller's timely instructions, or in accordance with Buyer's
or its designee's best judgement (at Seller's risk and expense) if Seller does
not provide such instructions or make such repairs within a reasonable time.
E. In addition to the other remedies provided herein, Seller shall be
liable for all damages both to Buyer and/or its designee, incurred as a result
of any defect or breach of warranty in any item covered by this Order.
F. the warranties of the Seller shall survive the termination of this
contract.
8) ASSIGNMENT
Seller shall not assign this contract, or the right to payment due
hereunder, without Buyer's prior written consent.
9) LIENS, CLAIMS AND ENCUMBRANCES
Seller warrants and represents that all the goods will, when delivered
hereunder, be free and clear of all liens, claims or encumbrances of every kind.
10) DEFAULT AND TERMINATION
Buyer may cancel the whole or any part of this Order or exercise any other
remedy provided buyers of goods by law or in equity including any remedy under
the Uniform Commercial Code, in any of the following circumstance:
1. If Seller fails to make delivery of the goods or to perform the services
within the time specified herein or any extension thereof;
2. If, in Buyer's good faith judgement, the Seller fails to perform any of
the other provisions of this Order or fails to make progress as to endanger
performance of this Order in accordance with its terms and does not cure such
failure within a period of ten days, or such longer period as Buyer may
authorize in writing, after receipt of notice from Buyer specifying such
failure:
3. Seller is in breach of any of the terms or conditions of the Order;
4. Seller becomes insolvent, makes a general assignment for the benefit of
creditors, or is subject of proceeding under any law relating to bankruptcy,
insolvency or relief of debtors, however designated.
The failure of the Buyer to insist upon strict performance of any of the
terms of this Order of to exercise any rights hereunder shall not be construed
as a waiver of the rights of the Buyer or designee.
11) INFRINGEMENTS
Seller warrants the Buyer's and/or its designee's purchase, installation,
and/or use of the goods covered hereby will not result in any claim of
infringement, or actual infringement, of any patent, trademark, copyright, or
other intellectual property right. Seller agrees to defend any action brought
against the Buyer and/or its designee arising out of such infringement and
Seller shall indemnify and hold buyer and/or its designee harmless from and
against all claims, losses, expenses, damages, causes of action and liabilities
of every kind and nature, including without limitation, reasonable attorney's
fees (without waiver of Seller's obligation to indemnify Buyers and/or its
designee hereunder), arising from or out of any breach of the foregoing
warranty. The rights granted hereunder shall survive termination of this
contract.
12) FORCE MAJEURE
Neither party shall be responsible for any delay or failure in performance
of any part of this Order to the extent that such delay or failure is caused by
events beyond its control and without its negligence ("force majeure
conditions"). If any force majeure condition occurs, the party delayed or unable
to perform shall give immediate notice to the other party, and the party
affected by the others delay or inability to perform may elect to: (1) suspend
this Order for the duration of the force majeure condition, buy elsewhere, goods
to be bought under this Order, and deduct from any commitment the quantity
bought for which commitments have been made elsewhere, and resume performance of
this Order once the force majeure condition ceases with an option in the
affected party to extend the period of this Order up to the length of time the
forced majeure condition endured; or (2) terminated this Order or the part of it
relating to goods not already shipped if the force majeure condition continues
for more than thirty (30) days.
13) CHANGES
Buyer shall have the right to make changes in this Order. If such changes
affect shipment of delivery or the amount to be paid by Buyer, Seller shall
immediately notify Buyer in writing. Upon such notification, the parties shall
enter into negotiation for and adjustment.
14) EXPORT RESTRICTIONS
Seller agrees to comply, and do all things necessary for Buyer to comply
with all applicable federal, state and local laws and regulations, including
regulations of the United States Departments of Commerce and State relating to
the export of technical data and commodities insofar as they relate to the
transactions contemplated herein. Seller agrees to advise Buyer of any and all
export restrictions and/or requirements concerning the goods covered by this
Order and to obtain the required government documents and approvals prior to
export from the United States of any such technical data or commodity.
15) COMPLIANCE
The Seller shall warrant that the goods called for by this order have been
or will be produced in compliance with Fair Labor Standards Act of 1939 (29 U.S.
Code 210-219) and any amendments thereto, and insofar as applicable to this
Order, the Walsh-Healy Public Contracts Acts (41 U.S. Code 35-45) and any
amendments thereto, as well as with the provision of any other Federal Law
enacted including P.L. 87-851 WORK HOURS ACT OF 1962-Overtime Compensation, and
with any and all rules and regulations issued under each and every such act. The
Seller agrees that this warranty may be considered as the certificate
contemplated by the amendment dated October 26, 1949, to the Fair Labor Standard
Act of 1938. Seller of goods and or services herein listed on this purchase
order, asserts and warrants to the Buyer that the goods and/or services complies
with all applicable standards of the Williams-Steiger Occupational Safety and
Health Act of 1970.
Seller shall comply with all applicable Federal, State or local laws,
rulings, regulations, and orders pertaining thereof in effect on the date of
this Order.
16) APPLICABLE LAW
The validity, interpretation, and performance of this order shall be
governed by the laws of the State of California.
EXHIBIT B(1)
LETTER OF AUTHORIZATION TO MOTOROLA SEMICONDUCTOR
_____________, 1997
Motorola Semiconductor
1300 N. Alma School Road
Chandler, AZ 85224
RE: Authorization to Supply
To whom it may concern:
You are a party to that certain Development and Purchase Agreement with MMC
Networks, Inc. ("MMC") pursuant to which you agree to provide certain [foundry]
supply services to MMC with respect to the supply of the MMC product known as
the PS1000 chip set (the "Chip Set"). Effective upon delivery of this letter to
you and notwithstanding anything to the contrary in any document given to you or
executed by MMC, MMC and its successors and assigns, hereby authorize and grant
to you an irrevocable and non-exclusive right and license to sell quantities of
the Chip Set to Hitachi Computer Products (America), Inc. as Hitachi Computer
Products (America), Inc. may from time to time order.
Very truly yours,
MMC Networks, Inc.
By:_________________________
Its:________________________
EXHIBIT B (2)
LETTER OF AUTHORIZATION TO NEC CORP.
______________, 1997
NEC Corp.
2880 Scott Blvd.
P.O. Box 58062
Santa Clara, CA 95052-8062
RE: Authorization to Supply
To whom it may concern:
You are a party to that certain Development and Purchase Agreement with MMC
Networks, Inc. ("MMC") pursuant to which you agree to provide certain [foundry]
supply services to MMC with respect to the supply of the MMC product known as
the PS1000 chip set (the "Chip Set"). Effective upon delivery of this letter to
you and notwithstanding anything to the contrary in any document given to you or
executed by MMC, MMC and its successors and assigns, hereby authorize and grant
to you an irrevocable and non-exclusive right and license to sell quantities of
the Chip Set to Hitachi Computer Products (America), Inc. as Hitachi Computer
Products (America), Inc. may from time to time order.
Very truly yours,
MMC Networks, Inc.
By:_________________________
Its:________________________
EXHIBIT B(3)
DESCRIPTION OF DEPOSITED MATERIAL
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1. For each of the following products:
. PS1001 . Packet Switch Processor
. PS1002 - Fast Ethernet Interface Unit
. PS1003 - Ethernet Interface Unit
a) Verilog source code
b) EDIF files
c) Test vectors
2. Letter of Authorization to the Chip Vendor(s)
Exhibit C
License Agreement
-----------------
This LICENSE AGREEMENT (the "Agreement") is entered into and effective as
of the date this fully executed original copy is delivered to Hitachi Computer
Products (America), Inc., a Delaware corporation ("HICAM"), having offices at
3101 Tasman Drive, Santa Clara, CA 95054, this Agreement being by and between
HICAM and MMC Networks, Inc., a California corporation ("MMC"), having offices
at 1134 E. Arques Avenue, Sunnyvale, CA 94086, on the basis of the following
facts:
R E C I T A L S
---------------
WHEREAS, MMC designs, manufactures, has manufactured, markets and sells a
chip set currently known as the PS1000 chip set (the "Chip Set").
WHEREAS, MMC and HICAM from time to time conduct business pursuant to which
MMC supplies quantities of the Chip Set to HICAM.
WHEREAS, MMC desires to (i) ensure the availability to HICAM of certain
proprietary materials relating to the Chip Set (collectively the "Source
Material") in the event certain conditions set forth in Section 7 of the Escrow
Agreement (a "Release Event") should occur, and (ii) grant to HICAM and HICAM
desires to acquire from MMC a license to make, use and sell the Chip Set for the
consideration and upon the terms and subject to the condition set forth in this
Agreement.
LICENSE AGREEMENT
-----------------
IT IS HEREBY AGREED, on the basis of the foregoing facts and in
consideration of the respective covenants set forth in this Agreement, as
follows:
1. Grant of License. MMC hereby grants to HICAM a perpetual, non-
----------------
exclusive, worldwide right and license, without the right to
sublicense, under all of its intellectual property rights to directly
and indirectly make, use, test, sell, market and distribute the Chip
Set, but only as part of an HICAM's packet switch system products and
only pursuant to the terms stated in section 3.1 of the Escrow
Agreement.
2. Consideration. In consideration of the License granted hereunder HICAM
-------------
shall pay to MMC a royalty (the "Royalties") for each Chip Set
manufactured and sold by HICAM as part of HICAM's packet switch system
products, equal to the Production Margin. For the purposes of this
Agreement, the "Production Margin" for each Chip Set shall he
determined by subtracting the
10
cost that HICAM pays to the ASIC supplier for such Chip Set, from the
average, pre-tax, FOB point of manufacture price at which HICAM
purchased Chip Set from MMC during the three month period immediately
preceding notice of a Release Event.
3. Payment Terms for Royalties. The Royalties attributable to the sale of
---------------------------
a Chip Set, as part of HICAM's packet switch system products, shall be
payable on the last day of the month following the month in which the
Chip Set is actually received by HICAM.
4. Royalties Mistakenly Paid on Returned Products. If HICAM pays to MMC a
Royalty on the sales of a product which includes the Chip Set that is
subsequently returned to HICAM, the amount of the Royalty so paid shall
be deemed a credit against future royalties payable by HICAM. If no
future Royalties are payable, the remaining balance of such credits
shall be refunded to HICAM within thirty (30) days after the expiration
or termination of HICAM's obligation to pay Royalties or the expiration
or termination of this Agreement.
5. Warranty and Indemnification. MMC warrants that HICAM's manufacture,
use, sale, reproduction and distribution of the Chip Set shall be free
of rightful claims of any third person of infringement of any
intellectual property rights. MMC agrees to defend, at its expense, the
part of any suit or proceeding brought against HICAM or HICAM's
suppliers based in whole or in part upon any claims which, would
constitute a violation of the foregoing intellectual property rights
indemnification. HICAM agrees to notify MMC in writing of any such
claim, give MMC sole control of the defense and settlement thereof; and
provide all reasonable assistance, at MMC's expense, in connection
therewith. If any Chip Set products are claimed to so infringe, MMC
shall, at its option, (a) procure for HICAM the right to continue using
the Chip Set; (b) modify or replace the Chip Set, without materially
impairing the performance or functions of the product, so there is no
infringement; or (c) compensate HICAM for the purchase price paid by
HICAM for the Chip Set. MMC shall have no liability regarding any claim
arising out of the use of the Chip Set in combination with other goods
if the infringement would not occur but for such combination.
6. Term of License. This Agreement shall commence and be effective on the
---------------
date on which a copy of the Agreement is delivered to MMC by the Escrow
Agent and shall continue in full force and effect thereafter, subject
to termination by (a) HICAM for any reason on thirty (30) days prior
written notice to MMC, and (b) MMC for failure to pay Royalties when
due, unless HICAM pays such Royalties within thirty (30) days of
receipt of notice from MMC. In the event
11
of a Change in control of HICAM, provided that HICAM has not first
obtained MMC's written consent as to a Change in Control, which consent
shall not be unreasonably withheld or delayed, MMC may, upon thirty (30)
days written notice to HICAM, terminate HICAM's right to purchase ASICs
from the ASIC vendor. A Change in Control is defined as a sale of
substantially all of HICAM's assets, a merger involving HICAM whereby
HICAM is not the surviving corporate entity or any other changes of
control of HICAM in which more than 50 percent of the voting power of
HICAM no longer resides in HICAM's shareholders as constituted
immediately prior to such transactions.
7.Confidential Information. HICAM agrees that MMC has a proprietary
------------------------
interest in the Source Materials. All disclosures to HICAM, its agents
and employees shall be held in strict confidence by HICAM, its agents and
employees. HICAM shall disclose the Source Materials only to those of its
agents and employees to whom it is necessary in order properly to carry
out their duties as limited by the terms and conditions hereof. HICAM
shall not use the Source Materials except for the purposes of exercising
its rights and carrying out its duties hereunder.
The obligations foregoing obligations of confidentiality shall not apply
to any particular portion of any Confidential Information that: (i) now
or subsequently becomes generally known or available through no act or
omission of the receiving party; (ii) is known to the receiving party at
the time of receipt of same from the furnishing party; (iii) is provided
by the furnishing party to a third party without restriction on
disclosure; (iv) is subsequently rightfully provided to the receiving
party by a third party without restriction on disclosure; or (v) is
independently developed by the receiving party and as can be demonstrated
from the receiving party's business records and documentation, provided
the person or persons developing same have not had access to the
Confidential Information of the furnishing party.
8.Audit Rights. HICAM agrees to make and keep full and accurate books and
------------
records in sufficient detail to enable Royalties payable hereunder to be
determined. On thirty (30) days' prior written notice to HICAM and not
more than two times within a calendar year, MMC's independent firm of
certified public accountants shall have access to the books and records
of HICAM pertaining to net proceeds received by HICAM for its
sublicensing and assigning of its rights and licenses under this
Agreement and shall have the right to make copies therefrom at MMC's
expense. In the event that the audit shows that HICAM under compensated
MMC by greater than 10% of the total amount due to MMC for the period
audited, the costs of the audit shall be paid by HICAM. Such firm of
independent certified public
12
accountants shall have such access at all reasonable times and from time
to time during normal business hours. Prompt adjustment shall be made by
the proper party to compensate for any errors or omissions disclosed by
such audit. The firm of independent certified public accountants shall
execute a confidentiality agreement with HICAM advance of receiving such
access, whereby such firm shall agree to hold confidential all
information learned in the course of any examination of HICAM's books and
records hereunder, except that it may report to MMC the extent of any
error or omission and the general basis therefor. All reports and
payments not disputed as to correctness by MMC within two (2) year after
receipt thereof shall thereafter conclusively be deemed correct for all
purposes.
9.Miscellaneous.
-------------
(a)This Agreement shall be governed by the internal laws of the State of
California as if made and performed within the State.
(b)Any dispute, controversy or claim arising out of or relating to this
Agreement or breach thereof shall be exclusively and finally resolved
by arbitration pursuant to the rules of the American Arbitration
Association, which shall administer the arbitration and act as
appointing authority. The decision of the arbitrators shall be final
and binding upon the parties hereto, and shall be executory. Judgment
based on the decision of the arbitrators may be entered by any court
of competent jurisdiction. Notwithstanding this, judgment upon the
award of the arbitration may be entered in any court where the
arbitration takes place or any court having jurisdiction thereof, and
application may be made to any court for a judicial acceptance of the
award or order of enforcement. Notwithstanding anything contained in
this section to the contrary, each party shall have the right to
institute judicial proceedings against the other party or anyone
acting by, through or under such other party in order to enforce the
instituting party's rights hereunder through reformation of contract,
specific performance, injunction or similar equitable relief.
(c)A waiver of any breach of any provision of this Agreement shall not be
construed as a continuing waiver of other breaches of the same or
other provisions of this Agreement.
(d)Nothing herein contained shall be deemed to create an agency, joint
venture or partnership relationship between the parties hereto.
Neither party shall have any power to bind the other party in any
respect whatsoever.
13
(e)Any amendment or modification of any provision of this Agreement must
be in writing, dated and signed by both parties hereto.
(f)This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original.
(g)If any provision of this Agreement is declared invalid or
unenforceable by a court having competent jurisdiction, it is mutually
agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court. The parties shall
consult and use their best efforts to agree upon a valid and
enforceable provision which shall be a reasonable substitute for such
invalid or unenforceable provision in light of the intent of this
Agreement.
(h)Any headings contained herein are for directory purposes only, do not
constitute a part of this Agreement, and shall not be employed in
interpreting this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
personally or by agents or officers thereunto duly authorized.
"HICAM" Hitachi Computer Products (America), Inc.
TAKEAKI MATSUOKA
--------------------------------
By: /s/ Takeaki Matsuoka
----------------------------
Date: April 16, 1997
--------------------------
"MMC" MMC Networks, Inc.
/s/ Amos Wilnai
--------------------------------
By: Amos Wilnai
----------------------------
Date: 4/11/97
--------------------------
14
EXHIBIT D
SOURCEFILE'S ESCROW SERVICES
1997 FEE SCHEDULE
ESCROW SERVICES
Includes climate controlled storage, certified letters of notification, and
custom agreements.
. Initial set-up $1,000.00*
. Annual Maintenance per Deposit or Product $1,100.00
(Includes 2 deposit updates per year)
. Annual Race per Beneficiary $ 300.00
SourceFile invoices Depositor
. Annual Rate per Beneficiary $ 500.00
SourceFile Invoices Beneficiary directly
ADDITIONAL SERVICES
. Technical Verification starts at $145.00/hour
. SourceLink on-line account status please call for estimate
. Source Material Updates $150.00
. Escrow Release Beneficiary Request $800.00
. Escrow Release Depositor Request $200.00
. Pick-Up and Delivery Service per year $200.00
*Due when agreement is customized or signed.