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incentive for CV to do business with Sun. The warrants served as
an incentive to CV to purchase workstations manufactured by Sun,
rather than to manufacture the workstations itself, during the
initial phase of the transaction between CV and Sun. For
workstations manufactured by Sun, the purchase agreement provided
a higher price to be paid by CV to Sun than the royalties that CV
was obligated to pay Sun for workstations manufactured by CV.
Consequently, the volume purchase levels at which the warrants
became exercisable would be reached more quickly were CV to
purchase workstations manufactured by Sun than would be the case
if CV were to manufacture them itself and pay royalties to Sun.
The dollar volume of business at which the warrants became
exercisable was within the expected dollar volume of business to
be transacted between CV and Sun. Although CV did not commit to
buying the volume specified in the investment agreement for
exercisability of the warrants, its projections furnished to Sun
indicated that CV believed it would be able to effect purchases
at those volume levels.
The joint development agreement contained provisions
implementing the objectives of CV and Sun with respect to the
development of future products. As noted above, Sun possessed
valuable technology and know-how with respect to the operation of
UNIX, an open computer operating system compatible with hardware
and software developed by companies besides CV and with which CV
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