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Exhibit 10.11
SOURCEPRO
SOFTWARE SOURCE CODE ESCROW AGREEMENT
SOURCEFILE NUMBER: 7541
This Software Source Code Escrow Agreement, dated as of July 30, 1997, by
and among SourceFile, a California limited liability partnership, located at
0000 Xxxx Xxxxx Xxx, Xxxxxxx, XX, 00000 ("SourceFile"), MMC Networks, Inc. a
California corporation, with offices located at 0000 X. Xxxxxx Xxx., Xxxxxxxxx,
XX 00000-0000, ("Depositor"), and ArrowPoint Communications a Delaware
corporation with offices at 000 Xxxxxxxxx Xxxx, Xxxxxxxx XX 00000,
("Beneficiary").
RECITALS:
WHEREAS, Depositor and Beneficiary from time to time conduct business
pursuant to which Depositor supplies quantities of its ATM 2400 chip set as
listed in exhibit A (the "Chip Set") to Beneficiary:
WHEREAS, Depositor desires to ensure the availability to Beneficiary of
certain proprietary materials relating to the Chip Set (collectively the "Source
Material") in the event certain conditions set forth in Section 3 of this
Agreement should occur.
AGREEMENT:
1. DELIVERY OF SOURCE MATERIAL TO SOURCEFILE. Depositor shall deliver to
SourceFile a parcel (the "Parcel"), sealed by Depositor, which Depositor
represents and warrants contains the Source Material and any necessary
proprietary information. SourceFile undertakes to perform only such duties as
are expressly set forth herein. The Source Material shall be held by SourceFile.
As of the date of this Agreement, Depositor shall complete a detailed
description of the Source Material which is attached to this Agreement as
EXHIBIT "A". The Depositor will keep the Parcel updated with supplemental or
replacement materials ("Parcel Changes") to the extent of any supplements or
modifications to the use of the Source Materials in Depositor's business. A
"Supplemental Deposit" will include any materials added to the Parcel.
"Replacement Materials" will include any materials intended to replace the
existing all or part of the parcel. Within ten (10) days of acceptance by
SourceFile of such Supplemental or Replacement Deposit, SourceFile Shall notify
Depositor and Beneficiary and identifying the nature of the supplemental or
replacement materials as the case may be. In addition, the parties acknowledge
delivery of, and SourceFile acknowledges receipt of, a fully executed original
license agreement (the "License Agreement") by and between Depositor and
Beneficiary, a copy of which is attached as EXHIBIT "B", which SourceFile also
shall maintain in escrow and only deliver to Beneficiary concurrent with
delivery to Beneficiary of the Source Materials pursuant to Section 3 Below.
Depositor agrees that is shall not at any time revoke the License Agreement or
any rights, permissions or other authorizations issued or granted in the Source
Materials, or attempt or assist others in any action to do so.
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2. ACKNOWLEDGEMENT OF RECEIPT BY SOURCEFILE. SourceFile shall promptly
acknowledge Depositor and to Beneficiary the receipt of the Parcel and any
supplements to the Source Material which are added to the Parcel. Depositor
shall provide to SourceFile the latest version of the Software at least every
six months as supplements to the Source Material without removing the Source
Material. Depositor shall send to SourceFile a duplicate of the Source Material
within three (3) days after receiving written notice from SourceFile that the
Source Material has been destroyed or damaged. All supplements shall be subject
to the terms and provisions of this Agreement. SourceFile will notify
Beneficiary and Depositor of each update to the Source Material. Such
notification will be sent via certified mail, return receipt required.
3. TERMS AND CONDITIONS OF THE SOURCE MATERIAL ESCROW. The Source
Material shall be held by SourceFile (in the FileSafe underground vault,
specifically designed for magnetic media storage), upon the following terms and
conditions:
(i) In the event that (1) SourceFile is notified by Beneficiary that
Depositor, pursuant to a sale, merger, reorganization, license or other
transaction, either has or will imminently assign, transfer or delegate its
business or the ability to make or sell the chip set to a third party that
is a direct competitor of Beneficiary, that Beneficiary has given Depositor
written notice of such event, or received written notice of such event from
Depositor (hereinafter, a "Release Condition"), and (2) Beneficiary has
paid to SourceFile all fees and charges then due and owing, SourceFile
shall follow the following procedures set forth in Section 3, parts (ii),
(iii), (iv) and (v);
(ii) SourceFile shall with in five days notify Depositor of the
occurrence of the Release Condition and shall provide to Depositor the
License Agreement and a copy of Beneficiary's notice to SourceFile;
(iii) If SourceFile does not receive Contrary Instructions, as defined
below, from Depositor within thirty (30) days following SourceFile's
delivery of a copy of such notice to Depositor, SourceFile shall deliver
the Source Material to Beneficiary within (30) days of the date of
Beneficiary's original notice to Depositor. "Contrary Instructions" for the
purposes of this Section 3 shall mean the filing of written notice with
SourceFile by Depositor, with a copy to Beneficiary demanding delivery,
stating that the Release Condition has not occurred or has been cured;
(iv) If SourceFile receives Contrary Instructions from Depositor
within thirty (30) days of the giving of such notice to Depositor,
SourceFile shall not deliver the Source Material to Beneficiary, but shall
continue to store the Source Material until: (1) otherwise directed by the
Depositor and Beneficiary jointly; (2) SourceFile has received a copy of an
order of a court of competent jurisdiction directing SourceFile as to the
disposition of the Source Material; or (3) SourceFile has deposited the
Parcel with a court of competent
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jurisdiction or a Trustee or receiver selected by such court pursuant to
Section 3, subpart (v) below;
(v) Upon receipt of Contrary Instructions from Depositor, SourceFile
shall have the absolute right, at SourceFile's election to file an action
in interpleader requiring the Depositor and Beneficiary to answer and
litigate their several claims and rights among themselves. SourceFile is
hereby authorized to comply with the applicable interpleader statutes of
the State of California or the Federal Courts of San Francisco in this
regard.
4. TERM OF AGREEMENT. This Agreement shall have an initial term of three
(3) years. The term shall be automatically renewed on a yearly basis thereafter,
unless Beneficiary, Depositor or SourceFile notifies the other parties in
writing at least forty-five (45) days prior to the end of the then current term
of its intention to terminate this Agreement.
5. COMPENSATION OF SOURCEFILE. Beneficiary agrees to pay SourceFile
reasonable compensation for the services to be rendered hereunder in accordance
with SourceFile's then current schedule of fees, and will pay or reimburse
SourceFile upon request for all reasonable expenses, disbursements and advances,
including software duplication charges and reasonable attorneys' fees, incurred
or made by it in connection with carrying out its duties hereunder. SourceFile's
schedule of fees for the initial term of this Agreement is attached to this
Agreement as EXHIBIT "B".
6. LIMITATION OF LIABILITY OF SOURCEFILE. SourceFile may rely on and
shall suffer no liability as a result of acting or refraining from acting upon
any written notice, instruction or request furnished to SourceFile hereunder
which is reasonably believed by SourceFile to be genuine and to have been signed
or presented by a person reasonably believed by SourceFile to be authorized to
act on behalf of the parties hereto. SourceFile shall not be liable for any
action taken by it in good faith and believed by it to be authorized or within
the rights or powers conferred upon it by this Agreement. SourceFile may consult
with counsel of its own choice, and shall have full and complete authorization
and protection for any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel.
7. INDEMNIFICATION OF SOURCEFILE. Depositor and Beneficiary jointly agree
to indemnify and defend SourceFile and to hold it harmless from and against, any
loss, liability or expense incurred by SourceFile, arising out of or in
connection with this Agreement, carrying out its duties hereunder, and any other
claim of liability with respect to the Source Material. In the event suit is
brought by any party to this Agreement, or any other party, as against any other
party, including SourceFile, claiming any right they may have as against each
other or against SourceFile, then in that event the parties hereto, agree to pay
to SourceFile any attorney's fees and cost incurred by SourceFile in connection
therewith.
8. RECORD KEEPING INSPECTION OF SOFTWARE. SourceFile shall maintain
complete
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written records of all materials deposited by Depositor pursuant to this
Agreement. During the term of this Agreement, Depositor shall be entitled at
reasonable times during normal business hours and upon reasonable notice to
SourceFile to inspect the records of SourceFile maintained pursuant to this
Agreement and to inspect the facilities of SourceFile and the physical condition
of the Source Material.
9. TECHNICAL VERIFICATION. Beneficiary reserves the option to request
SourceFile to verify the Source Material for completeness and accuracy.
SourceFile may elect to perform the verification at its site or at Depositor's
site. Depositor agrees to cooperate with SourceFile in the verification process
by providing its facilities and computer systems and by permitting SourceFile
and at least one employee of Beneficiary to be present during the verification
of Source Material.
10. RESTRICTION ON ACCESS TO SOFTWARE. Except as required to carry out its
duties hereunder, SourceFile shall not permit any SourceFile employee,
Beneficiary or any other person access to the Source Material unless consented
to in writing by Depositor. SourceFile shall use its best efforts to avoid
unauthorized access to the Source Material by its employees or any other person.
11. BANKRUPTCY. Depositor and Beneficiary acknowledge that this Agreement
is an "agreement supplementary to" the License Agreement as provided in Section
365 (n) of Xxxxx 00, Xxxxxx Xxxxxx Code (the "Bankruptcy Code"). Depositor
acknowledges that if Depositor, as a debtor in possession or a trustee in
Bankruptcy in a case under the Bankruptcy Code, rejects the License Agreement or
this Agreement, Beneficiary may elect to retain its rights under the License
Agreement and this Agreement as provided in Section 365 (n) of the Bankruptcy
Code. Upon written request of Beneficiary to Depositor or the Bankruptcy
Trustee, Depositor or such Bankruptcy Trustee shall not interfere with the
rights of Beneficiary as provided in the License Agreement and this Agreement,
including the right to obtain the Source Material from SourceFile.
12. NOTICES. Any notice or other communication required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date service is served personally, one day after the date of sending by
overnight courier, or five (5) days after the date of mailing if sent registered
mail, postage prepaid, return receipt required, and addressed as follows or to
such other address or telefax number as either party may, from time to time,
designate in a written notice given in like manner:
TO BENEFICIARY: Xx. Xxxxx Xx, President
ArrowPoint Communications
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Telephone: 0.000.000.0000
Facsimile: 0.000.000.0000
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TO DEPOSITOR: Xx. Xxxx Xxxxxx, President
MMC Networks, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: 0.000.000.0000
Facsimile: 0.000.000.0000
TO SOURCEFILE: SourceFile
0000 Xxxx Xxxxx Xxx
Xxxxxxx, Xxxxxxxxxx 000000
Attn: Director
Telephone: 0.000.000.0000
Facsimile: 0.000.000.0000
13. MISCELLANEOUS PROVISIONS.
(a) WAIVER. Any term of this Agreement may be waived by the party
entitled to the benefits thereof, provided that any such waiver must be in
writing and signed by the party against whom the enforcement of the waiver is
sought. No waiver of any condition, or of the breach of any provision of this
Agreement, in any one or more instances, shall be deemed to be a further or
continuing waiver of such condition or breach. Delay or failure to exercise any
right or remedy shall not be deemed the waiver of that right or remedy.
(b) MODIFICATION OR AMENDMENT. Any modification or amendment of any
provision of this Agreement must be in writing, signed by the parties hereto and
dated subsequent to the date hereof.
(c) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
(d) HEADINGS; SEVERABILITY. The headings appearing at the beginning
of the sections contained in this Agreement have been inserted for
identification and reference purposes only and shall not be used to determine
the construction or interpretation of this Agreement. If any provision of this
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(e) FURTHER ASSURANCES. The parties agree to perform all acts and
execute all supplementary instruments or documents which may be reasonably
necessary to carry out the
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provisions of this Agreement.
(f) ENTIRE AGREEMENT. This Agreement, including the attachments
hereto, contains the entire understanding among the parties and supersedes all
previous communications, representations and contracts, oral or written, among
the parties, with respect to the subject matter thereof. It is agreed and
understood that this document and agreement shall be the whole and only
agreement among the parties hereto with regard to these escrow instructions and
the obligations of SourceFile herein in connection with this Agreement, and
shall supersede and cancel any prior instructions. SourceFile is specifically
directed to follow these instructions only and SourceFile shall have no
responsibility to follow the terms of any prior agreements or understandings.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DEPOSITOR
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
--------------------------------
Title: Chairman
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BENEFICIARY
By: /s/ Xxxxx Xx
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Name: Xxxxx Xx
--------------------------------
Title: CEO
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SOURCEFILE
CALIFORNIA LIMITED LIABILITY PARTNERSHIP
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
--------------------------------
Title: Admin. Mgr.
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EXHIBIT "A-_____"
DESCRIPTION OF SOURCE MATERIAL
SOURCEFILE ACCOUNT #:________
The Depositor agrees to deposit the Source Material for the benefit of the
Beneficiary of this escrow arrangement. Below is the acknowledgment that the
deposit arrived at SourceFile in good order. It is completed by the Depositor
and visually inspected by SourceFile. A copy of this form will be shared with
the Beneficiary. (As multiple deposits are made please make copies of this form
and number them appropriately. For example, the initial deposit will be Exhibit
"A-1", the next "A-2" and so on.).
1. LETTER OF AUTHORIZATION FOR EACH SUPPLIER OF THE FOLLOWING MMC CHIPS:
- MBUF2 (A2401) - Memory Access Buffer 2
- PIF2 (A2402) - Port Interface 2
- MSCI (A2403) - Modular Switch Controller 1
- MSC2 (A2404) - Modular Switch Controller 2
- CMI (A2405) - Controller Memory Interface
- XQC (A2406) - Xstrewn Queuing Controller
- XS (ATMS2205) - Xstrearn Scheduler
- EPIF (A2301) - Ethernet Port Interface
- PCIPIF - PCI Port Interface
- GEPIF - Gigabit Ethernet Port Interface
- Xcheck - Xcheck controller
PLEASE CHECK ONE OF THE FOLLOWING:
INITIAL DEPOSIT_____ SUPPLEMENTAL_____ REPLACEMENT_____*
*IF REPLACEMENT THEN: DESTROY DEPOSIT_____ OR RETURN DEPOSIT_____
--------------------------------------------------------------------------------
Completed by: Visually verified by:
DEPOSITOR SOURCEFILE
By: __________________________ By: ____________________________
Name: ________________________ Name: __________________________
Title: _______________________ Title: Client Services
Date: ________________________ Date: __________________________
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EXHIBIT B
LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement") is entered into and effective as of the
date this fully executed original copy is delivered to Arrowpoint
Communications, a Delaware corporation ("Arrowpoint"), by and between Arrowpoint
and MMC Networks, Inc., a California corporation ("MMC"), on the basis of the
following facts:
RECITALS
WHEREAS, MMC designs, manufactures, has manufactured, markets and sells a chip
set currently known as the ATSM2400 chip set (the "Chip Set").
WHEREAS, MMC and Arrowpoint from time to time conduct business pursuant to which
MMC supplies quantities of the Chip Set to Arrowpoint.
WHEREAS, MMC desires to (i) ensure the availability to Arrowpoint of certain
proprietary materials relating to the Chip Set (collectively the "Source
Material") in the event certain, conditions set forth in Section 3 of the Escrow
Agreement (a "Release Event") should occur, and (ii) grant to Arrowpoint and
Arrowpoint desires to acquire from MMC a license to make, use and sell the Chip
Sets for the consideration and upon the terms and subject to the condition set
forth in this Agreement.
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:
Grant of License. MMC hereby grants to Arrowpoint 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 Arrowpoint's switch
system product and only pursuant to the terms stated in section 3(i) of the
Escrow Agreement.
Consideration. In consideration of the License granted hereunder Arrowpoint
shall pay to MMC a royalty (the "Royalties") for each Chip Set manufactured and
sold by Arrowpoint, as part of Arrowpoint's switch system product, equal to the
Production Margin. For the purposes of this Agreement, the "Production Margin"
for each Chip Set shall be determined by subtracting the cost that Arrowpoint
pays to the ASIC supplier for such Chip Set from the average, pre-tax, FOB point
of manufacture price at which Arrowpoint purchased Chip Sets from MMC during the
three month period immediately preceding notice of a Release Event.
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Payment Terms for Royalties. The Royalties attributable to the sale of a Chip
Set, as part of Arrowpoint's switch system product, shall be payable on the last
day of the month following the month in which the Chip Set is actually received
by Arrowpoint.
Royalties Mistakenly Paid on Returned Products. If Arrowpoint pays to MMC a
Royalty on the sales of a product which includes the Chip Set that is
subsequently returned to Arrowpoint, the amount of the Royalty so paid shall be
deemed a credit against future royalties payable by Arrowpoint. If no future
Royalties are payable, the remaining balance of such credits shall be refunded
to Arrowpoint within thirty (30) days after the expiration or termination of
Arrowpoint's obligation to pay Royalties or the expiration or termination of
this Agreement.
Term of License. This Agreement shall commence and be effective on the date on
which a copy of the Agreement is delivered to Arrowpoint by the Escrow Agent and
shall continue in full force and effect thereafter, subject to termination by
(a) Arrowpoint for any reason on thirty (30) days prior written notice to MMC,
and (b) MMC for failure to pay Royalties when due, unless Arrowpoint pays such
Royalties within thirty (30) days of receipt of notice from MMC. In the event of
a Change in Control of Arrowpoint, provided that Arrowpoint has not first
obtained MMC's written consent as to a Change in Control, which consent shall
not be unreasonably withheld, MMC may, upon fifteen (15) days written notice to
Arrowpoint, terminate Arrowpoint's right to purchase ASICs from the ASIC vendor.
It is agreed that MMC may not reasonably withhold such consent unless a Change
of Control involves an acquisition or controlling investment by a company that
represents a clear competitive threat to MMC. A Change in Control is defined as
a sale of substantially all of Arrowpoint's assets, a merger involving
Arrowpoint whereby Arrowpoint is not the surviving corporate entity or any other
changes of control of Arrowpoint in which more than 50 percent of the voting
power of Arrowpoint no longer resides in Arrowpoint's shareholders as
constituted immediately prior to such transactions.
Confidential Information. Arrowpoint agrees that MMC has proprietary interest in
the Source Materials. All disclosures to Arrowpoint, its agents and employees
shall be held in strict confidence by Arrowpoint, its agents and employees.
Arrowpoint 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. Arrowpoint shall not use the Source
Materials except for the purposes of exercising its rights and carrying out its
duties hereunder.
Audit Rights. Arrowpoint agrees to make and keep full and accurate books and
records in sufficient detail to enable Royalties payable hereunder to be
determined. On seven (7) days' prior written notice to Arrowpoint, MMC's
independent firm of certified public accountants shall have access to the books
and records of Arrowpoint pertaining to net proceeds received by Arrowpoint 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 Arrowpoint under compensated MMC by greater than 10%
of the total amount due to MMC for the period audited,
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the costs of the audit shall be paid by Arrowpoint. Such firm of independent
certified public 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 Arrowpoint advance of receiving such access,
whereby such firm shall agree to hold confidential all information learned in
the course of any examination of Arrowpoint'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) years after receipt thereof shall thereafter conclusively
be deemed correct for all purposes.
Miscellaneous.
This Agreement shall be governed by the internal laws of the State of California
as if made and performed within the State.
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 8 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.
Any amendment or modification of any provision of this Agreement must be in
writing, dated and signed by both parties hereto.
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original.
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This Agreement embodies the entire understanding between the parties relating to
the subject matter hereto and there are no prior representations or warranties
between the parties not contained in the Agreement.
Each notice or payment required or permitted to be sent under this Agreement
shall be given or made by registered or recorded delivery letter (return receipt
requested) at the addresses indicated above. Either party may change its address
for purposes of this Agreement by giving the other party written notice of its
new address. Any such notice or payment if given or made by registered or
recorded delivery letter (return receipt requested) shall be deemed to have been
received on the earlier of the date actually received and the date three (3)
days after the same was posted (and in proving such it shall be sufficient to
prove that the envelope containing the same was properly addressed and posted as
aforesaid).
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 party 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.
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.
"Arrowpoint"
ARROWPOINT Communications
By_____________________________
"MMC"
MMC NETWORKS, INC.
By_____________________________
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EXHIBIT "C"
SOURCEFILE COMPENSATION
ESCROW SERVICES
- Initial set-up $1000.00*
- Annual Maintenance $1000.00
(Includes 2 deposit updates)
Includes climate controlled storage, certified letters of notification, and
custom agreements.
ADDITIONAL SERVICES
- Source Material Updates in excess of two per year $150.00
- Escrow release Beneficiary Request $600.00
- Escrow Release Depositor Request $200.00
- Pick-Up and Delivery Service per year $200.00
TECHNICAL REVIEW/VERIFICATION starts at $145.00/hour
SOURCELINK SERVICE Please call for an estimate
*Due when agreement is customized or signed.
