Apple 2003 Annual Report Download - page 107

(ii) modify the Products so they are non-infringing and in compliance with this Agreement; (iii) replace the Products with non-infringing ones
that comply with the Agreement; or (iv) at Apple’s request, accept the return of infringing Products and refund any amount paid. [**] If an
Item provided to IBM hereunder becomes or is likely to become the subject of a claim covered by Section 11.3, below, IBM will provide Apple
written notice advising Apple of such claim, and, [**] IBM may stop further shipment of Products incorporating that Item or portion thereof
without liability for failure to deliver a Product under this Agreement unless Apple has demonstrated to IBM’s reasonable satisfaction that the
Item does not infringe or has modified the Item so it is non-infringing, replaced the Item with a non-infringing Item, or obtained the rights and
licenses necessary to permit IBM to continue to make, use and sell Products incorporating the Item consistent with this Agreement. If a court of
law of competent jurisdiction determines that any Item, Product, or portion thereof infringes an intellectual property right of any third party:
(i) either party may, in its sole discretion, terminate its obligations hereunder with respect to such Item and/or Product effective immediately
upon written notice; and (ii) any payments [**] will be indemnified or reimbursed by Apple pursuant to Section 11.3, below.
11.2 At Apple’s request, IBM will defend any claim that a Product sold to an Authorized Purchaser or Designee or a Service provided by
IBM or any of its Related Companies hereunder infringes a patent, copyright, or mask work right of a third party in any country in which IBM
sells or provides similar products or services and IBM will indemnify and hold Apple and its Authorized Purchasers harmless from any
damages assessed against them as a result of a final judgment of a court of competent jurisdiction, any settlement agreed upon by IBM in
writing, and any costs or fees reasonably incurred by them (including but not limited to fees of attorneys and other professionals) that are
attributable to such claim; PROVIDED THAT Apple: (i) promptly notifies IBM, in writing, of the charge of infringement; (ii) allows IBM to
control and cooperates with IBM at IBM’s expense in the defense and any related settlement action; and (iii) upon the written request of IBM
(a) allows IBM to modify or replace the Product in the Authorized Purchaser’s inventory at IBM’s expense, provided that modified or replaced
product meets the applicable specifications for the Product being so modified or replaced (and returns any such Products being so modified or
replaced to IBM), or (b) if option (a) is not reasonably available, returns the Product for a credit equal to the purchase price of such Product.
Such indemnification does not apply to the extent that the claim of infringement arises from (i) modifications to any Product or Service by
Apple unless directed in writing by IBM, (ii) the combination, operation or use of a Product or Service with a product, data or apparatus not
sold by IBM to Apple, unless the Product has no substantial non-infringing use or unless directed in writing by IBM, (iii) modifications made
by IBM to Product sold to Authorized Purchasers and / or Designees and in compliance with Apple’s written specification(s), except for
modifications made by IBM to standard Products; (iv) any Item that is incorporated into a particular Product or Service with Apple’
s agreement
as evidenced by Apple’s execution of the related RTM (as that term is defined in the ASIC Development Agreement, Agreement No. 000798)
,
or (v) infringement by a non-IBM product alone, as opposed to its combination with Products IBM provides to Apple as a system (collectively
referred to as “Apple-Indemnified Action”).
[**] =
information redacted pursuant to a confidential treatment request. Such omitted information has been filed separately with the Securities
and Exchange Commission.