EXHIBIT 10.99
Date of Agreement: March 27, 2006
PMC Sierra Corporation
Mission Tower One
0000 Xxxxxxx Xxxxxx, #000
Xxxxx Xxxxx, XX 00000
Re: Development Agreement ("Agreement")
The purpose of this Agreement is to set forth certain binding agreements
with respect to a development project wherein Peerless Systems Corporation
("Peerless") will assist PMC-Sierra Corporation ("PMC-Sierra") in developing
"Bluestone", a certain Application Specific Standard Product ("ASSP") device
(the "Development"). Terms used in this Agreement which are capitalized are
defined where first used or as set forth in Annex A this Agreement.
1. The Development.
1.1. PMC-Sierra hereby retains Peerless for the Development, and
Peerless hereby accepts retention for the Development, in
accordance with the terms and conditions of this Agreement.
1.2. PMC-Sierra and Peerless will agree to the product specifications,
statements of work, deliverables, schedules, acceptance criteria
and other details of the Development in one or more addendums to
this Agreement (each a "Project Addendum").
1.3. PMC-Sierra and Peerless will enter into one or more license
agreements for software and hardware to be used in the Development
and/or to be included in or with the ASSP upon commercial sale of
the ASSP.
2. Engineering Services for the Development
2.1. Peerless has applied (beginning in January 2006) and will continue
to apply technical personnel to the Development, with the make-up
of personnel being a mix of Hardware and Software Architects, ASIC
Engineers, Software/Firmware Engineers, Hardware Engineers, and a
Peerless Project Manager, as dictated by the needs of the
Development at a particular time.
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
2.2. Overall coordination of the Development shall be performed by a
PMC-Sierra program manager. This program manager will be
responsible for determining and providing staffing requirements
for the Development to Peerless, and Peerless will use its best
efforts to meet the staffing requirements. Peerless shall not be
required to provide more than *** personnel at any time without
Peerless' further consent. The PMC-Sierra program manager will
provide a rolling six-week staffing forecast to allow Peerless
time to plan for project staffing increases and reductions. If, at
any time, in the judgment of the PMC-Sierra program manager that a
Peerless employee or contractor is not performing to expected
levels, the program manager will have the right to elevate the
employee performance issue to a Peerless Vice President with the
expectation of immediate corrective action to address the issue.
3. Consideration for the Development
3.1. PMC-Sierra will pay Peerless *** per hour for each hour of time
expended by Peerless personnel in connection with the Development,
up to a maximum charge of 40 hours per week per employee or
contractor.
3.2. Peerless will invoice PMC-Sierra on a monthly basis. Invoices must
be paid not later than thirty (30) days after the date of the
invoice. Peerless may suspend work if payments are not made when
due.
3.3. All payments made by PMC-Sierra to Peerless for work performed on
the Development, shall be non-refundable upon payment except as
expressly provided herein.
4. Licensing and Royalty Rates
4.1. No licenses are granted by Peerless to PMC-Sierra or by PMC-Sierra
to Peerless in this Agreement. All licenses must be negotiated as
addendums to this agreement.
4.2. The parties shall negotiate one or more separate license
agreements whereby Peerless will grant PMC-Sierra a license to
use, modify and reproduce Peerless Hardware Intellectual Property
specified in Annex B and to combine the specified Peerless
Hardware Intellectual Property with PMC-Sierra materials as
necessary or appropriate to complete the Development and to
manufacture, support and maintain the Bluestone ASSP product. The
license agreements shall provide that the Bluestone ASSP product
shall not be transferred, sold, offered for sale, or distributed
without the inclusion and appropriate licensing of the Peerless
PDS product. PMC-Sierra will pay Peerless a Recurring License Fee
(royalty) on each Bluestone ASSP product sold that contains a
Peerless proprietary hardware product and is inclusive of Peerless
PDS ( the total of which shall be referred to as the "Bundled
Product"). PMC-Sierra and Peerless will collaborate to create a
single Bundled Product pricing schedule. PMC-Sierra will be
responsible for selling the Bundled Product in the market. The
purchase order, shipment and revenue flow will be through
PMC-Sierra with PDS royalties paid back to Peerless on a monthly
basis. *** The Recurring License
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
Fee of the Bundled Product shall be determined by Peerless in
consultation with PMC-Sierra ***. There will be no license fees
charged to PMC-Sierra for the use of Peerless Hardware
Intellectual Property in the development, support, and maintenance
of the Bluestone ASSP product.
4.3. In furtherance of Section 4.2, Peerless will make the following
Peerless proprietary products available to PMC-Sierra for internal
use in the Development and to manufacture, sell, support and
maintain the Bluestone Product under a separate license agreement
to be negotiated by the parties:
- Build environments
- Software tools
- PeerlessPage imaging environment
- PeerlessPrint7 (PCL-XL emulation) language
interpreter
- Peerless' implementation of ***
- Peerless connectivity solutions for networking
- PeerlessPage Drawing Services
4.4. In furtherance of Section 4.2, PMC-Sierra will make PMC-Sierra
proprietary products available to Peerless for internal use only
in the Development under a separate agreement to be determined by
the parties. These proprietary products will be specified as
necessary during the Development. Peerless will have no right to
sublicense PMC-Sierra Intellectual Property or proprietary
products.
4.5. The parties shall also negotiate a royalty bearing agreement for
PMC-Sierra to distribute to its customers the Peerless software
designated in Section 9.
4.6. Peerless shall not charge PMC-Sierra any fee or royalty for using
the Peerless Intellectual Property referred to in Section 4.3 for
the development, support and maintenance of the Bluestone ASSP
product.
4.7. PMC-Sierra will have no right to modify or create Derivative Works
from Peerless Intellectual Property elements other than those
elements identified in Annex B. Modifications may be made to Annex
B by mutual consent of both parties.
4.8. In the event that PMC-Sierra utilizes Peerless Hardware
Intellectual Property in future products then the parties agree
that such future products will be marketed and sold by PMC-Sierra
using the Bundled Product business model specified in section 4.2.
Otherwise, the parties mutually agree to negotiate a royalty fee
for the use of the Hardware Intellectual Property in those future
products.
4.9. During the Term, PMC Sierra shall not directly or indirectly
develop or commercialize a product with competing functionality to
the functionality as Peerless Intellectual Property.
5. Ownership and Restrictions of Intellectual Property Rights
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
5.1. Nothing in this Agreement transfers ownership of any pre-existing
Intellectual Property from one party to the other.
5.1.1. The intent of this clause is to preserve original ownership
rights to a body of Intellectual Property in the event that
modifications or improvements are made to such Intellectual
Property. It is also the intent of this clause to allow
PMC-Sierra the rights to create new products using Peerless
native Intellectual Property in such a way as to keep the
Peerless native Intellectual Property intact. With respect
to any Intellectual Property to which rights to make
improvements, modifications, or revisions have been
granted, any improvements, modifications, or revisions of
any pre-existing Intellectual Property, or any other form
in which such pre-existing may be recast, transformed, or
adapted, (each a "Derivative Work") shall be the sole
property of the owner of the pre-existing Intellectual
Property. If the party making the Derivative Work can by
law or otherwise retain any rights to such Derivative Work,
such party agrees to assign (and upon creation thereof
hereby automatically assigns), without further
consideration, all worldwide right, title and interest,
including without limitation all Intellectual Property
rights of any kind, in and to such Derivative Works to the
party that owns the underlying or pre-existing Intellectual
Property. However, should either party develop Intellectual
Property which can be reduced in practice to operate
without the use of the other party's existing Intellectual
Property, the developer of the new Intellectual Property
shall be the sole owner of such new Intellectual Property.
5.1.2. Notwithstanding Section 5.1.1, in the event that PMC-Sierra
creates additions or modifications resulting in a
Derivative Work based upon Peerless pre-existing
Intellectual Property, Peerless shall grant to PMC-Sierra
an exclusive license, with no right to sublicense, to the
Derivative Work in conjunction with any license grant to
the pre-existing Intellectual Property. Peerless shall be
prohibited from using any Derivative Work or distributing
any Derivative Work to any other party for the purposes of
developing any new products or devices without the express
written permission of PMC-Sierra. Additionally, PMC-Sierra
will have the right to use any Derivative Work in
subsequent or future devices under the terms of the license
agreements to be negotiated as addendums to this agreement.
The grant of such a license shall in no way change the
ownership of the modification, or the preexisting
Intellectual Property underlying the modification, or any
Derivative Works thereof made prior to the grant of the
specific exclusive license.
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
5.2. Any Intellectual Property developed or created during the course
of the Development, other than Derivative Works, ("New IP") will
be owned in accordance with the as follows:
5.2.1. New IP jointly developed by PMC-Sierra and Peerless will be
jointly and equally owned by PMC-Sierra and Peerless. Each
party will have the right to exploit such jointly owned New
IP without accounting or incurring any other obligations to
the other party. When a filing shall be made to register
such New IP, such as a patent or copyright, the filing
party shall inform the other party in advance and the other
party given the opportunity to share the expenses equally
and with its participation shall retain joint ownership of
the Intellectual Property rights. Otherwise, ownership
rights shall pass to the filing party and the other party
shall receive a perpetual, world wide, royalty free,
non-exclusive license to the New IP. If any infringement of
joint Intellectual Property is brought to the attention of
either party, such party shall notify the other party and
the parties will cooperate in good faith to address the
prosecution of the alleged infringer.
5.2.2. New IP independently developed by either party without
reference to the other party's technical information will
be solely owned by the party who develops or acquires such
Intellectual Property rights.
5.3. Notwithstanding any of the foregoing, any Third Party Product will
remain the property of such third party.
5.4. Peerless has the rights to sell all its existing Intellectual
Property to anyone.
5.4.1. Existing Intellectual Property of Peerless includes,
without limitation, SW, HW RTL code and vectors which
Peerless owns, including the Peerless Intellectual Property
components used inside the QP2040.
5.4.2. Existing Intellectual Property does not include the QP2040
device and tooling, each of which PMC-Sierra owns.
5.5. Peerless has the rights to license or sell its rights to any
PMC-Sierra funded Peerless-developed New IP to anyone after ***
from the Date of this signed Agreement.
5.5.1. Such New IP includes, without limitation, any SW or HW code
or vectors which Peerless develops as a result of
PMC-Sierra design services funding and which Peerless owns.
5.5.2. Such New IP does not include the QP2040 device or tooling,
Bluestone device or tooling or other future PMC device or
tooling, each of which PMC-Sierra owns.
6. Term of the Development
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
6.1. The term of the Development will commence on January 1, 2006 and,
unless terminated earlier as provided in this Section 6, continue
through completion of the Development.
6.2. During the course of this Agreement, if both parties decide to
proceed with a joint chip development effort in addition to the
Bluestone device, the terms of this Agreement can be extended by
mutual consent to cover the subsequent development effort.
6.3. The initial period of the Development, starting on January 2, 2006
and ending by April 15, 2006 or later by mutual consent of both
parties , shall be used by the parties to determine the
feasibility of the Development (the "Feasibility Period"). If
PMC-Sierra determines at any time during the Feasibility Period to
terminate the Development, PMC-Sierra may do so without payment of
any cancellation fees to Peerless. During the three month period
after the end of the Feasibility Period, Peerless will staff to
the agreed upon plan to work on the Development (the "Ramp Up
Period"). If PMC-Sierra elects to terminate the Development during
the Ramp Up Period, PMC-Sierra shall compensate Peerless in the
amount of *** of the amount it would have paid Peerless for three
months following cancellation of the Development. For example, if
Peerless had six engineers applied to the project at the time of
cancellation, PMC-Sierra would reimburse Peerless the cost for
three engineers for the three months after the cancellation date.
If PMC-Sierra cancels the Development after the Ramp Up Period,
PMC-Sierra shall pay Peerless three months of compensation based
upon the number of Peerless personnel then staffed on the
Development (using the previous example, this would be payment for
six engineers for three months.)
6.4. In the event that Peerless elects to cancel this Agreement for its
convenience, PMC-Sierra will have the right, subject to the
separate license agreement(s), to use the Intellectual Property
provided by and developed by Peerless relating to the Development
(any Third Party Products shall continued to be provided to the
extent permitted in the applicable third party agreements).
PMC-Sierra will have no obligation to pay Recurring License Fees
or other applicable royalties on the Peerless hardware proprietary
products or hardware Intellectual Property which ship in the
Bluestone product (Recurring License Fees or other applicable
royalties will continue with respect to any Third Party Products).
PMC-Sierra will also have no obligation to pay Recurring License
Fees for the PDS software as used in the Bundled Product. Any
other Peerless proprietary products or Intellectual Property or
Third Party Products not shipping in PMC-Sierra's Bluestone
product will be returned to Peerless immediately upon
cancellation. Peerless will also be obligated to pay PMC-Sierra a
sum equal to the cancellation fee that would be due to Peerless if
PMC-Sierra had decided to cancel this Agreement for its
convenience at the same point in the Development.
7. Change of Control.
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
If Peerless receives a written term sheet from a party or entity
for the change of control of Peerless by merger or acquisition of
the entire assets or outstanding voting securities of Peerless,
Peerless will within three (3) business days after determining
that such written term sheet is acceptable to Peerless inform
PMC-Sierra of such event in writing. Peerless will have no
obligation to disclose the identity of the party or entity making
the offer to PMC-Sierra. PMC-Sierra acknowledges that such
information will be confidential and material non-public
information.
8. Transferability.
8.1 Each party agrees that in the event a party is acquired ***.
8.2 In the event of breach by Peerless' acquirer under Section 8.1,
PMC-Sierra will continue to have the right, subject to the
separate license agreement(s), to use the Intellectual Property
provided by and developed by Peerless relating to the Development
(any Third Party Products shall continue to be provided to the
extent permitted in the applicable third party agreements).
Further, PMC-Sierra would be allowed to unbundle the Bluestone
device from the PDS software as used in the Bundled Product.
Finally, PMC-Sierra shall return all other Peerless proprietary
products or Intellectual Property or Third Party Products not
shipping in PMC-Sierra's QP2040 and Bluestone product to Peerless.
8.3 In the event of breach by Peerless' acquirer under Section 8.1,
PMC-Sierra will have no obligation to pay Recurring License Fees
or other applicable royalties on the Peerless hardware proprietary
products or hardware Intellectual Property which ship in the
Bluestone product (Recurring License Fees or other applicable
royalties will continue with respect to any Third Party Products).
PMC-Sierra will also have no obligation to pay Recurring License
Fees for the PDS software as used in the Bundled Product.
9. Revenue Sharing
***
10. Prohibition Against Disclosure or Misuse of Confidential Information.
Neither party nor any of its representatives or agents shall (i) disclose
to any third party any confidential or proprietary information about the
business activities or any of the transactions contemplated by this
Agreement, except as required by applicable law or (ii) use any
confidential or proprietary information of the other party obtained in
connection with this Agreement or the Development for any purposes other
than in connection with Development. The parties agree that any breach of
the prohibition against the disclosure of confidential or proprietary
information may cause irreparable injury and that any remedy at law for
the breach may be inadequate. Therefore, the parties agree that in the
event of any breach of this provision, the non-breaching party shall be
entitled to obtain injunctive relief without having to prove that actual
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
damages resulted from the breach. This injunctive relief is in addition
to all other legal and equitable remedies to which a party may be
entitled.
11. Public Disclosures.
The parties shall consult with each other and must agree as to the
timing, content, and form before issuing any press release or other
public disclosure related to this Agreement or any transaction
contemplated by this Agreement. However, this does not prohibit either of
them from making a public disclosure regarding this Agreement and the
transactions contemplated by this Agreement if, in the opinion of its
legal counsel, such a disclosure is required by law, subpoena or court
order. The party making the disclosure pursuant to law, subpoena or court
order shall take reasonable actions to protect the confidentiality of
this information to the greatest extent possible, including without
limitation seeking a protective order or an order of confidentiality.
12. Expenses.
The parties each shall be solely responsible for expenses that it incurs
in connection with the negotiation of this Agreement.
13. No Conflicting Agreement.
Each party hereto represents and warrants that such party is not a party
to any contract, agreement or understanding with any other party which
would prevent such party from entering into this Agreement.
14. Relationship of the Parties.
The parties agree that they are independent contractors and that this
Agreement does not establish or create and shall not be interpreted as
establishing or creating a joint venture, partnership, franchise or other
formal or informal business organization of any kind. No person or entity
other than the parties to this Agreement shall have any rights hereunder.
15. Disclaimer.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, PMC SIERRA AND PEERLESS EACH
DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS OR USE FOR A PARTICULAR PURPOSE,
TITLE AND NON-INFRINGEMENT. THE MATERIALS AND SERVICES PROVIDED BY EACH
PARTY ARE PROVIDED "AS IS."
16. Limitation of Liability.
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
SPECIAL, PUNITIVE, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, LOSS
OF PROFITS, OR INTERRUPTION OF BUSINESS, WHETHER SUCH ALLEGED DAMAGES ARE
LABELED IN TORT, CONTRACT OR INDEMNITY, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. These limitations shall not
apply to damages associated with violations of the provisions protecting
confidential information or from unauthorized use of the other party's
Intellectual Property rights or to any claims asserted by third parties
which give rise to a right of contractual or equitable indemnification.
17. Interpretation.
This Agreement has been jointly negotiated by the parties and their
respective counsel and will be interpreted fairly in accordance with its
terms and without any strict construction in favor of or against either
party
18. Entire Agreement.
This Agreement and any other written documents signed by both parties
that make specific reference to amending this Agreement constitute the
entire agreement between the parties with respect to the subject matter
of this Agreement, and supersede all prior discussions and agreements
between the parties relating to the subject matter hereof. This Agreement
may be executed in counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.
19. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without giving effect to the conflicts
of law principles thereof.
20. Notices.
All notices shall be in writing, sent in a manner that generates a
reliable written receipt, and is addressed to the attention of the
individual signatories of this Agreement on behalf of the parties. Notice
will be deemed given: (i) upon delivery if personally delivered; (ii)
when written receipt is signed if sent by certified or registered mail,
postage prepaid, (iii) upon receipt of confirmation if sent by facsimile,
or (iv) three business days after provided to a recognized overnight
delivery or courier service, properly addressed in accordance with this
Section. Notices will be sent to the persons and addresses set forth
below, as they may be changed by the parties from time to time by written
notice to the other.
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
All notices to PEERLESS shall be sent to:
Peerless Systems Corporation Tel: (000)000-0000
0000 Xxxxxxxxx Xxxxxx FAX: (000)000-0000
Xx Xxxxxxx, XX 00000 FAX: (000)000-0000
Attention: Xxxx Xxxxxx email:
xxxxxxx@xxxxxxxx.xxx
All notices to PMC-Sierra shall be sent to:
PMC-Sierra Tel:
Mission Towers One FAX:
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000 email:
Attention: Xxxxx Xxxxx
Please sign and date this Agreement and return a copy to us to confirm our
mutual understandings and binding agreement. This Agreement shall not be binding
on either party if not signed and returned by you.
Very truly yours,
/s/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx, President and CEO
Peerless Systems Corporation
AGREED TO AND ACCEPTED:
PMC-Sierra, Inc.:
By: /s/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Chairman & CEO
Date: March 27, 2006
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
ANNEX A
DEFINED TERMS
"ASSP" means Application Specific Standard Product.
"Derivative Work" means any improvements, modifications or revisions of any
pre-existing Intellectual Property, or any other form in which such pre-existing
Intellectual Property may be recast, transformed, or adapted.
"Feasibility Period" has the meaning set forth in Section 6.3.
"Intellectual Property" shall mean (i) all inventions (whether or not patentable
and whether or not reduced to practice), all improvements thereto, and all
patents, patent applications, and patent disclosures, together with all
reissuances, divisions, continuations, continuations-in-part, revisions,
renewals, extensions, and reexaminations thereof, (ii) all registered and
unregistered trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (iii) all
works of authorship, including, but not limited to, all mask work rights and
copyrightable works, all copyrights, all applications, registrations and
renewals in connection therewith, and all moral rights, (iv) all trade secrets
and confidential information (including, but not limited to, research and
development, know-how, processes, methods, techniques, technical data,
architectural and layout designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business, technical and
marketing plans and proposals), (v) all other Intellectual Property and
proprietary rights, and (vi) all copies and tangible embodiments of all of the
foregoing (i) through (v) in any form or medium throughout the world.
"New IP" has the meaning set forth in Section 5.2.
"Peerless" means Peerless Systems Corporation.
"PDS" means Peerless Drawing Services
"PMC-Sierra" means PMC-Sierra Corporation.
"Ramp Up Period" has the meaning set forth in Section 6.3.
"Third Party Products" means any proprietary products or Intellectual Property
owned by third parties (including, but not limited to, Adobe PostScript and
Novell Netware).
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission
. ANNEX B
SPECIFIED HARDWARE INTELLECTUAL PROPERTY
***
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Confidential treatment has been requested for portions of this document. This
copy of the document filed as an Exhibit omits the confidential information
subject to the confidentiality request. Omissions are designated by three
asterisks (***). A complete version of this document has been filed separately
with the Securities and Exchange Commission