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EXHIBIT 10.5
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY A DOUBLE ASTERISK
(**). THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE
COMMISSION.]
Apple/PCC Manu. Lic. Agt. II
Final, #C24-96-00127
CERTIFIED COMPUTER
MANUFACTURING AGREEMENT
#C24-96-00127
This Certified Computer Manufacturing Agreement (this "Agreement") is effective
as of July 17, 1996 (the "Effective Date"), by and between APPLE COMPUTER INC.,
a California corporation having its principal place of business at ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. ("Apple") and POWER COMPUTING
CORPORATION, a Delaware corporation having its principal place of business at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and its
Subsidiaries ("PCC").
RECITALS
o Apple and PCC have entered into the Mac OS License Agreement
permitting PCC to incorporate the Mac OS into Certified Computers.
Apple has certain intellectual property rights that PCC requires in
order to legally manufacture Approved Boards and Certified Computers.
PCC also requires the right :o purchase certain Proprietary Components
from MASs. The parties desire Apple to license those rights to PCC
under the terms of this Agreement.
AGREEMENT
1. DEFINITIONS
1.1 "Apple lntellectual Property" means all patent applications, patents,
and know how throughout the world (including utility models, but
excluding design patents and registrations, software and/or any
semiconductor design information): (i) infringement of which cannot be
avoided in complying with the Certification Requirements, and (ii) in
connection with which Apple now has or hereafter obtains during the
term of this Agreement the right to grant licenses to PCC without
being obligated to pay royalties or other consideration to third
parties.
1.2 "Approved Boards" means primary printed circuit boards (i.e.,
"motherboards") manufactured by or for PCC for Certified Computers for
which the design has been approved in writing by Apple.
1.3 "Certification Requirements" means requirements documented by Apple
for Certified Computers to successfully run the Mac OS and Mac OS
applications, and otherwise qualify for use of the Mac OS trademark.
These requirements may be modified by Apple from time to time.
1.4 "Certified Computers" means hardware products manufactured by or for
PCC, in the form they will be used by End Users, which satisfy the
Certification Requirements.
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1.5 Confidential Information" means (i) for Apple, the terms and
conditions of this Agreement including without limitation the license
fees and royalty rates charged to PCC, and trade secrets or
proprietary information related to any of the foregoing; (ii) for each
party, any information relating to that party's product plans,
designs, costs, names, finances, marketing plans, business
opportunities, personnel, research, development or know-how designated
as confidential in writing or, if disclosed orally, identified in
writing and designated as confidential within thirty (30) days of
disclosure; provided, however that "Confidential Information" shall
not include information that: (a) is or becomes generally known or
available by publication, commercial use or otherwise through no fault
of the receiving party; (b) is known and has been reduced to tangible
form by the receiving party at the time of disclosure and is not
subject to restriction; (c) is independently developed by the
receiving party without use of the disclosing party's Confidential
Information; (d) is lawfully obtained without restriction from a third
party who has the right to make such disclosure; or (e) is released
for publication by the disclosing party in writing.
1.6 "End User" means a third party using a Certified Computer for its
ordinary and customary business or personal purposes, and not for
redistribution.
1.7 "Mac OS License Agreement" means the Mac OS License Agreement entered
into between PCC and Apple, effective ___________.
1.8 "Mac OS Licensee" means a party that has signed a Mac OS License
Agreement with Apple.
1.9 "MAS" means a Mac OS Authorized Supplier designated by Apple.
1.10 "Proprietary Components" means components in which Apple has some
proprietary rights to be used for incorporation in Certified
Computers.
1.11 "Royalty Payments" means the payments PCC is required to make to Apple
pursuant to Section 4.1 and as described in Exhibit A.
1.12 "Subsidiary" means a corporation more than 50% of whose outstanding
shares or securities (representing the right to vote for the election
of directors or other managing authority) are owned or controlled,
directly or indirectly, by PCC, and which agrees in writing to be
bound by the terms of this Agreement. A corporation which ceases to be
a Subsidiary will lose its rights under this Agreement, but will
continue to be bound by the obligations that survive termination
specified in Section 5.2
2. LICENSE
2.1 Apple hereby grants to PCC, under Apple's Intellectual Property, a
non-exclusive, non-transferable, royalty-bearing, worldwide license to
design, develop, make, have made
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(for resale by PCC), use, and import Certified Computers and Approved
Boards and to lease, sell and otherwise transfer Approved Boards to
Mac OS Licensees and to lease, sell or otherwise transfer Certified
Computers to third parties.
2.2 Apple reserves all its intellectual property rights, including but not
limited to patent rights, trademarks, copyrights, industrial designs,
or rights in the Mac OS software or any Proprietary Components, not
expressly licensed to PCC under this Agreement. PCC has no right to
sublicense the rights granted under this Agreement.
3. MASs
3.1 Apple will authorize MASs to sell certain Proprietary Components to
PCC. The terms and conditions of the purchase and sale of the
Proprietary Components shall be determined by agreement between the
MASs and PCC. Apple is not a party to the purchase and sale
transactions for the Proprietary Components between the MASs and PCC
and Apple has no responsibility for such transactions, including but
not limited to, the quality, condition or delivery of the components
or any payment obligation of PCC. Apple is making no representation
to PCC that MASs are willing to sell Proprietary Components to PCC,
that MASs have sufficient capacity to supply PCC's needs or that MASs
will have Proprietary Components available in the time frame required
for PCC's current manufacturing schedule.
3.2 PCC will use the Proprietary Components solely for incorporation into
or servicing of Certified Computers or Approved Boards and not for
other purposes, including resale to others.
3.3 APPLE MAKES NO WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE,
INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO CERTIFIED COMPUTERS OR PROPRIETARY
COMPONENTS DELIVERED TO PCC.
4. ROYALTIES
4.1 Royalty Payments and Statements.
(a) PCC will pay to Apple Royalty Payments for each unit of a
Certified Computer or Approved Board distributed by PCC in
accordance with the royalty rates set forth on Exhibit A;
provided however, that only one such Royalty Payment shall be
payable to Apple for each unit of a Certified Computer
containing only one Approved Board, and PCC shall have no
obligation to pay to Apple such Royalty Payment for any such
Certified Computer for which PCC or a third party has
previously paid Apple a royalty under a Certified Computer
Manufacturing Agreement with Apple.
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(b) Within thirty (30) days of the end of each quarter, PCC will
pay the Royalty Payments due for that quarter to Apple
accompanied by a statement certified correct by an officer of
PCC, indicating the number and type of Approved Boards and
Certified Computers sold hy PCC during the quarter and the
amount of royalty due.
(c) PCC shall keep and maintain all appropriate books and records
necessary for verification that the applicable license and
purchase fees and royalties have been paid. During the term
of this Agreement and for three years thereafter, Apple
shall be entitled, not more than once annually and on
thirty (30) days notice, to retain independent certified
public accountants to review PCC's books and records for
the purpose of verifying the accuracy of the statements
provided and amounts paid pursuant to this Section 4. Any
underpayment or overpayment determined as a result of the
review will be reflected in the following quarter's
statement and Royalty Payments. If such review verifies
an underpayment error of greater than five percent (5%),
PCC shall pay the cost of such review. PCC shall pay all
amounts when due, and any amounts not paid when due shall
accrue interest at the annual rate of twelve percent (12%)
or the highest rate allowed by law, if lower, from the date
when the payment should have been paid and ending when
paid.
4.2 Taxes. PCC is responsible for payment of any taxes on payments made
under this Agreement except taxes based on Apple's income for which
Apple shall be responsible.
4.3 Form of Payment. All royalty statements and payments will be made in
U.S. dollars and sent to:
Apple Computer, Inc.
Royalty Accounting
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ 198-GL
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5. TERM AND TERMINATION
5.1 Term. This Agreement will continue in effect until four (4) years from
the Effective Date, unless (i) the Agreement is terminated earlier
pursuant to Section 5.2 or (ii) the Mac OS License Agreement is
terminated, in which case this Agreement will terminate at the same
time as the Mac OS License Agreement.
5.2 Termination for Cause By Either Party. Either party will have the right
to terminate this Agreement immediately upon written notice at any time
if:
(a) The other party is in material breach of any warranty, term,
condition or covenant of this Agreement other than those
contained in Section 5 of the Mac OS License
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Agreement and fails to cure that breach within thirty (30)
days after receiving written notice of that breach and of the
first party's intention to terminate;
(b) The other party is in material breach of any warranty, term,
condition or covenant of Section 5 of the Mac OS License
Agreement; or
(c) The other party: (i) becomes insolvent; (ii) admits in writing
its insolvency or inability to pay its debts or perform its
obligations as they mature; or (iii) makes an assignment for
the benefit of creditors.
5.3 Effect of Termination. Upon any termination of this Agreement, the
license granted under Section 2 will automatically terminate and each
party will be released from all obligations and liabilities to the
other occurring or arising after the date of such termination, except
that the provisions of Sections 1, 2.2, 3.2, 3.3, 4, 5.3, and 6 and
any liability arising from any breach of this Agreement will survive
termination of this Agreement. Termination of this Agreement will not
affect the rights of PCC's End User customers to continue to use
Certified Computers. Subject to the payment of royalties and in
accordance with the terms and conditions of this Agreement, in the
event of termination other than for PCC's breach of this Agreement,
PCC may sell reasonable quantities of Certified Computers and Approved
Boards, which are in inventory at the time of termination, for up to
six (6) months after termination. Any obligation to pay incurred prior
to termination will survive termination. Neither party will be liable
to the other for damages of any sort solely as a result of terminating
this Agreement in accordance with its terms. Termination of this
Agreement will be without prejudice to any other right or remedy of
either party.
6. INCORPORATION OF MAC OS LICENSE AGREEMENT PROVISIONS
The following provisions of the Mac OS License Agreement are hereby
incorporated into this Agreement: Sections 1 (to the extent that the terms
defined in such section are not already defined in Section 1 of this
Agreement), 5, 11, and 12.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
APPLE: PCC:
APPLE COMPUTER, INC. POWER COMPUTING CORPORATING
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇ BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------ ----------------------------------
PRINT NAME: ▇▇▇▇▇ ▇▇▇▇▇ PRINT NAME: ▇▇▇▇▇ ▇▇▇▇▇
----------------------- ----------------------------
TITLE: VP, Licensing TITLE: President & CEO
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Final, #C24-96-00127
EXHIBIT A
ROYALTIES
BOARD DESIGN ROYALTY*
** $ **
-------------
* PCC will pay Apple a royalty in this amount for each unit of a Certified
Computer or Approved Board distributed by PCC, provided that no such royalty
will be payable to Apple for any Certified Computer containing only one
Approved Board for which PCC or a third party has previously paid Apple a
royalty under a Certified Computer Manufacturing Agreement with Apple.
CONFIDENTIAL 022696 Page 6
