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royalty” arrangement under which CV could manufacture
workstations but would be discouraged from being its primary
manufacturer because the “royalty” paid Sun with respect to the
workstations would increase as the number of workstations
manufactured by CV increased.
During June 1983, representatives of CV and Sun met to
discuss the proposals and to develop the framework for their
business relationship. During the negotiations, CV sought to
minimize the price at which it would purchase workstations by
maximizing the discount from Sun’s list price for Sun’s products,
and Sun sought to maximize the selling price of the workstations,
and sought to minimize the discount from its list price. CV
pressed for a higher discount although it was aware that, in the
computer industry, a 45-percent discount was on the high end of
normal purchase discounts given by suppliers to original
equipment manufacturers (OEM’s). Near the conclusion of the June
1983 meeting, CV and Sun discussed giving CV warrants to purchase
Sun stock as means of reducing the cost to CV of the transaction
with Sun.
The Preliminary Agreement
The negotiations culminated in an agreement that was signed
on or about June 17, 1983 (June 17, 1983, agreement), and that
established guidelines for the joint development and manufacture
of workstations by CV and Sun. The June 17, 1983, agreement
provided that the relationship between CV and Sun was to
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