Marketing, Development And Settlement Agreement DTD April 7, 2005

Exhibit 10.1


MARKETING, DEVELOPMENT AND SETTLEMENT AGREEMENT


This Marketing, Development and Settlement Agreement (the " Agreement" ) is made as of April 7, 2005, (the " Effective Date" ) by and between Gateway, Inc., a Delaware corporation with its principal place of business at 7565 Irvine Center Drive, Irvine, CA 92618 (" Gateway" ) and Microsoft Corporation, a Washington corporation with its principal place of business at One Microsoft Way, Redmond, WA 98052 (" Microsoft" ).


RECITALS


WHEREAS, Gateway and Microsoft have had a substantial business relationship for many years;

WHEREAS, the parties believe that additional cooperative marketing and development efforts will be to their mutual benefit;

WHEREAS, the parties also have been engaged in discussions regarding past disputes between them arising from alleged acts of retaliatory price discrimination against Gateway as set forth in United States v. Microsoft , 84 F. Supp. 2d 9 (D.D.C. 1999) as well as other antitrust, unfair competition and related legal claims, and wish to resolve all such matters, and;


WHEREAS, the parties desire that this Agreement help effect the goals stated above.


NOW THEREFORE, in consideration of the mutual promises contained herein, the parties hereby agree as follows:

AGREEMENT


1. Definitions.


1.1 " Effective Date" shall have the meaning given such term in the first paragraph of this Agreement.

1.2 " Gateway Products" shall mean Gateway computers and other Gateway devices that are able to run a licensed version of a Microsoft operating system (including mobile, embedded, client, and server) and which are distributed or marketed under any of Gateway' s trademarks, including eMachines.


1.3 " General Fund" means all of the funds described in Section 2.

1.4 " Longhorn Client" shall mean the next version of Microsoft' s client operating system (i.e., the successor to Windows XP).


1.5 " Longhorn Wave Fund" shall have the meaning set forth in Section 3.3.

1.6 " Office 12" means the next version of Microsoft' s desktop productivity suite (i.e., the successor to Office 2003).


1.7 " Settlement Release" means the general settlement release attached hereto as Exhibit A .

2. Payments.

Subject to the terms and conditions of this Agreement, Microsoft shall pay Gateway the following amounts under this Agreement, according to the following schedule:


Payment Date Payment Amount


Within 10 days after Effective Date $ 10,500,000

June 30, 2005 $ 10,000,000

September 30, 2005 $ 10,000,000

December 31, 2005 $ 10,000,000

March 31, 2006 $ 8,625,000

June 30, 2006 $ 8,625,000

September 30, 2006 $ 8,625,000

December 31, 2006 $ 8,625,000

March 31, 2007 $ 8,625,000

June 30, 2007 $ 8,625,000

September 30, 2007 $ 8,625,000

December 31, 2007 $ 8,625,000

March 31, 2008 $ 8,625,000

June 30, 2008 $ 8,625,000

September 30, 2008 $ 8,625,000

December 31, 2008 $ 8,625,000


Microsoft shall make the payments described in this Section 2 by wire transfer to the following account unless notified by Gateway in writing during the term of this Agreement that such account information has changed:


Gateway, Inc.

c/o Bank of America

1850 Gateway Blvd.

Concord, CA 94520


Account # 12338-35315

ABA # 121000358

Swift: BOFAUS6S


If a payment date set forth above falls on a federal or state holiday or weekend, Microsoft shall cause the wire transfer to occur on the next business day.

3. Marketing and Development Funds and Activities.

3.1 General Restriction . Nothing in this Agreement in any way precludes Gateway from supporting, developing, distributing, promoting, using, selling, or licensing any non-Microsoft software products or any product or service that distributes or promotes any non-Microsoft software; however, the parties understand and agree that the General Fund and Longhorn Wave Fund may only be used to fund Gateway initiatives as more fully described below which are designed to promote Gateway Products.

2

3.2 Funding of Strategic Initiatives .

(a) Subject to the restriction described in Section 3.3, Gateway shall apply the General Fund toward marketing initiatives for Gateway Products during the term of the Agreement in support of the following:

(i) Advertisements

ullet print

ullet television

ullet Internet

ullet direct mail

(ii) Point of sale

ullet displays

ullet marketing collateral

(iii) Broadcast

ullet television

ullet radio

ullet infomercials

(iv) Sales training

(v) Large format/outdoor advertising

(vi) Marketing headcount

(vii) Consulting, manufacturing and operational support for sale of Gateway Products


(b) Gateway also may apply the General Fund toward research, development, and testing of new Gateway Products. Gateway reserves the right to determine in its sole discretion how the General Fund is allocated among the various activities described above in Sections 3.2(a) and (b).


3.3 Funding of Longhorn Wave Launch Marketing Activities . Notwithstanding Sections 3.2(a) and 3.2(b), Gateway shall apply $7,000,000 of the General Fund (the " Longhorn Wave Fund" ) toward the following Microsoft product launch activities:

(a) Longhorn Client and Windows Media Center . Gateway shall spend Six Million Dollars ($6,000,000) of the Longhorn Wave Fund on the following activities designed to generate demand for Gateway Products running Longhorn Client and/or the next version of the Microsoft Windows Media Center Edition: (a) development and distribution/publication of advertisement (print, television, Internet, and direct mail); (b) development and distribution of retail point of sale displays and sales collateral; and (c) other external-customer-focused marketing activities. Such advertisement, point of sale material, and sales collateral shall prominently feature Longhorn Client. Such funds shall be spent during the period beginning two (2) months before and six (6) months after the date that Longhorn Client is commercially available to Gateway for distribution to its customers. If Gateway fails to expend all of the Longhorn Wave Funds within the time period set forth in the preceding sentence, Gateway shall make commercially reasonable efforts to spend such funds as soon as practicable after the commercial availability date of such Microsoft products until such time as the funds have been fully expended.

(b) Office 12 . Gateway shall spend One Million Dollars ($1,000,000) of the Longhorn Wave Fund on the following activities designed to generate demand for Gateway Products running Office 12: (a) development and distribution/publication of advertisement (print, television, Internet, and e-mail) and other pro ...