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EXHIBIT 10.17
TECHNICAL KNOW HOW LICENCE AGREEMENT
This Agreement made this 14th day of June, One Thousand Nine
Hundred and Ninety Six between JT Storage Corporation, Inc. U.S.A., a
corporation duly created, organised and existing under and by virtue of the laws
of the State of Delaware, U.S.A. having its principal office at 166 Bay Points
Parkway, San Jose, CA 95134 in the United States of America (hereinafter
referred to as "LICENSOR" which term shall unless repugnant to the subject or
context mean and include its, successors and permitted assigns) of the First
Part AND MODULER ELECTRONICS (INDIA) PVT. LTD., a company duly created,
organised and existing under and by virtue of the Companies Act, 1956 and having
its registered office at 406, Dalamal Towers, Nariman Point, Bombay - 400 021,
India and having its Industrial Undertakings in Madras Export Processing Zone
(NEPZ), Madras, India (hereinafter referred to as the "LICENSEE", which term
unless repugnant to the context shall include its successors in interest and
permitted assigns) of the Other Part.
WHEREAS Licensor is in possession and has access to highly innovative Winchester
Disk Drive technology which allows for Ultra high capacity Drives to be
manufactured with simplified designs using fewer parts resulting in lower
manufacturing costs.
WHEREAS the LICENSOR owns and possesses valuable technical information and
know-how relating to the manufacture of the Licensed Products (as defined below)
which the LICENSOR is authorised, competent and willing to disclose and license
to the LICENSEE.
WHEREAS the LICENSEE has been incorporated with the main objects of
manufacturing, producing, distributing, marketing and otherwise dealing in
Winchester Drives.
WHEREAS at the LICENSEE'S request, the LICENSOR has agreed to license to the
LICENSEE certain technical know how and technical information on the terms and
conditions as are hereinafter set out.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL COVENANTS AND
CONDITIONS, HEREINAFTER CONTAINED, THE PARTIES HERETO AGREE AS FOLLOWS:
1. DEFINITIONS
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In this Agreement, the following words and expression unless inconsistent with
the context, shall bear the meanings assigned thereto: precedent has been
fulfilled under Article 25.
"GOVERNMENT" shall mean the Government of the Republic of India.
"IMPROVEMENTS" means future modifications, improvements and upgradation relating
to the LICENSED PRODUCTS and/or TECHNICAL KNOWHOW in so far as such
modifications, improvements and upgradations have been commercially introduced
by LICENSOR in the LICENSED PRODUCTS it being understood that LICENSOR shall be
under no duty or obligation to include any improvements under this License
Agreement. The term IMPROVEMENTS shall not include new product lines or ranges
outside the LICENSED PRODUCTS or inventions and discoveries subject matter of
Patent.
"LICENSED PRODUCTS" shall mean Winchester Disk Drives and Sub-assemblies
thereof.
"PARTY" shall mean and refer to the LICENSOR or the LICENSEE, as the case may
be.
"PARTIES" shall mean and refer to the LICENSOR and the LICENSEE.
"PLANT" shall mean and refer to the manufacturing facilities being established
by the LICENSEE in India for manufacture of the LICENSED PRODUCTS.
"TECHNICAL KNOW-HOW shall mean and include specifications of the LICENSED
PRODUCTS and the parts and components thereof, general definitions and detailed
lists of equipment, operating and quality control requirements, testing,
procedures, rejection/acceptance norms. Technical know-how shall not include
know-how or information for composers/parts level manufacturing in respect of
components and/or parts manufactured by a third party and in relation to which
the LICENSOR does not have the rights to manufacture and/or grant license.
"TERRITORY" shall mean the geographical area under the jurisdiction of the
Government of the Republic of India.
1.2 INTERPRETATION
a. In this AGREEMENT headings are for convenience only and shall not
affect interpretation except to the extent that the context otherwise
requires.
b. Where a word or phrase is defined, other parts of speech and
grammatical forms of that word or phrase shall have corresponding
meanings.
2.1 AUTHORISATION
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a. LICENSOR hereby grants to the LICENSEE for the term of this Agreement
and subject to the limitations and restrictions herein contained:
(i) to the exclusive, non-transferable, non-assignable right to
manufacture, assemble and sell the LICENSED PRODUCTS in the
TERRITORY by utilising the TECHNICAL KNOW-HOW;
(ii) the non-exclusive, non-transferable, non-assignable right to
sell the LICENSED PRODUCTS in such other countries and the
LICENSOR may agree upon from time to time.
b. The LICENSOR shall disclose TECHNICAL KNOWHOW as is currently in use by
or in possession of or within the access of by the LICENSOR. Such
TECHNICAL KNOWHOW shall be complete and shall be sufficient to enable
the LICENSEE to assemble and manufacture and the LICENSED PRODUCTS. THE
TECHNICAL KNOWHOW shall be disclosed in such manner as is mutually
agreed by the parties to enable the LICENSEE to undertake the
manufacture of the Licensed product.
c. Nothing contained in this AGREEMENT shall be construed to require the
LICENSOR to disclose to the LICENSEE any TECHNICAL KNOW-HOW:
(i) to which the LICENSOR does not have a free and unrestricted
right to transfer to the LICENSEE; or
(ii) which the LICENSOR has derived under an obligation to observe
secrecy; or
(iii) the disclosure of which would result in a violation of the
laws of the U.S.A. and/or India.
2.2 By means of this AGREEMENT and the right and the license granted
hereunder, the LICENSEE, acknowledges that the LICENSOR is the owner of
the TECHNICAL KNOW-HOW and the LICENSEE shall under no circumstances
use the same to manufacture the LICENSED PRODUCTS outside the TERRITORY
or induce or assist any one else to do so either inside or outside the
TERRITORY. The LICENSEE also undertakes not to challenge, directly or
indirectly, LICENSOR'S ownership of its patents (if any).
2.3 Notwithstanding any provision contained in this AGREEMENT, should any
TECHNICAL KNOW-HOW be disclosed or supplied by the LICENSOR, at its
sole discretion and judgment, to the representatives of the LICENSEE
prior to the EFFECTIVE DATE, the LICENSEE shall immediately become
subject to, and obliged to comply with, the provisions of Article 11
hereof as if this AGREEMENT has become effective for the limited
purpose of this Article.
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2.4 LICENSOR may disclose and/or provide to LICENSEE, all such IMPROVEMENTS
as have been commercially introduced by the LICENSOR in the LICENSED
PRODUCTS.
2.5 LICENSEE agrees to make full disclosure promptly to LICENSOR of all
modifications, improvements and upgradations relating to the LICENSED
PRODUCTS, which LICENSEE may make to the LICENSED PRODUCTS or the
TECHNICAL KNOW-HOW during the term of this AGREEMENT. The ownership of
all such modifications, improvements and upgradations shall vest in the
LICENSEE. However, the LICENSOR and its affiliates shall have the
royalty free and unlimited duration license to use such modifications,
improvements and upgradations throughout the world either for
manufacturing or having manufactured any products.
3. UNDERTAKINGS BY PARTIES
3.1 UNDERTAKING BY LICENSEE
Neither this AGREEMENT nor the disclosure of confidential information
will be deemed by implication or otherwise to vest in the LICENSEE any
rights in any patents, trade secrets, trade marks, trade names,
know-how, or other property owned by or licensed to LICENSOR, other
than those rights that are expressly set forth in this AGREEMENT or any
other Agreements between the PARTIES.
3.2 UNDERTAKING BY LICENSOR
The LICENSOR undertakes that they are the owner and possesses the
Know-how under this agreement and they are entitled to grant exclusive
license for the production of the licensed products and further
undertakes to hold LICENSEE harmless and indemnify and keep indemnified
by LICENSOR against any claim, action, demand or expenses that the
LICENSEE may have to face or bear as a result of such representation on
the part of LICENSOR.
4. TRAINING OR LICENSEE PERSONNEL
4.1 During the term of this AGREEMENT the LICENSOR shall receive the
personnel of the LICENSEE for the purposes of educating the LICENSEE
and imparting training to the personnel of the licensee in the use of
the TECHNICAL KNOW-HOW, the number of personnel, the duration of
their training and other terms and conditions shall be mutually agreed
upon between the LICENSOR and the LICENSEE. The LICENSEE shall be
responsible for and shall pay all costs and expenses (including
traveling costs and living allowances and expenses of its personnel)
involved in undertaking such training at a Plant or facility of the
LICENSOR.
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4.2 The personnel of the LICENSEE shall during their training observe all
the Rules and Regulations of the LICENSOR which are applicable to the
LICENSOR'S own employees.
5. MAKING AVAILABLE LICENSOR'S PERSONNEL
The LICENSOR shall make available to the LICENSEE at the LICENSEE's
PLANT the services of its technical personnel for such duration and on
such terms as may be mutually agreed between the PARTIES. Such
personnel will provide technical services including supervision of the
installation and commissioning of the PLANT, training of the LICENSEE'S
personnel in the use of the TECHNICAL KNOW-HOW and operation of the
PLANT. The LICENSEE shall bear business class air fare to and from
India and local traveling and living expenses in India of LICENSOR's
personnel.
6. KNOW HOW FEES
6.1 In consideration for the grant of the license and this rights
hereunder, the LICENSEE shall pay to the LICENSOR a lump sum know-how
fees of US $2 million (US Dollar Two million) net of taxes to be
remitted in three installments as under:
1. 1/3rd after the agreement is filed with the Reserve Bank of
India /Authorised Foreign Exchange Dealer.
2. 1/3rd on delivery of technical documents;
3. and final 1/3rd on commencement of commercial production on
four years after the agreement is filed with Reserve Bank of
India / Authorised Foreign Exchange Dealer, whichever is
earlier.
6.2 Notice of Production
The LICENSEE shall notify the LICENSOR. LICENSEE's commencement of
COMMERCIAL PRODUCTION of LICENSED PRODUCTS within seven (7) days of
such commencement.
6.3 TAX
The lump sum know-how fees payable to the LICENSOR shall be net of all
Indian Taxes. Any such Taxes payable or deductible in respect thereof
shall be exclusively to the account of LICENSEE who shall pay and bear
the same. The LICENSEE shall provide to the LICENSOR along with each
remittance a Certificate showing the Tax which the LICENSEE has paid to
the relevant Tax Authorities.
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6.4 REMITTANCE
The lump sum know-how fees which are due shall, after conversion into
United States Dollars at the market rate on the date of remittance be
remitted to the LICENSOR, so as to arrive at LICENSOR'S Bank Account in
the United States of America within thirty (30) days of its becoming
due or such extended period as may be agreed by the LICENSOR.
7. QUALITY STANDARDS
7.1 The LICENSEE shall be responsible for manufacturing the LICENSED
PRODUCTS in accordance with the TECHNICAL KNOW-HOW and all applicable
standards of material and workmanship and processing conditions.
8. RIGHT OF INSPECTION & QUALITY CONTROL
8.1 The LICENSEE shall allow the LICENSOR or its authorised representatives
at all reasonable times to enter the works, warehouses, offices or
factories of the LICENSEE to inspect the PLANT, the raw material, parts
and components lying thereat and the manufacturing, testing and quality
control and other methods and processes currently in use for
manufacturing the LICENSED PRODUCTS and to carry out quality checks on
the LICENSES PRODUCTS.
8.2 The LICENSOR shall be entitled to cause the LICENSEE to withhold
manufacture and/or dispatch of the LICENSED PRODUCTS until the LICENSOR
is satisfied that the PLANT, the raw materials, parts and components
the manufacturing methods and the LICENSED PRODUCTS meet the
specifications, standards and quality stipulated by the LICENSOR under
this AGREEMENT.
9. LIMITATION OF LIABILITY
The LICENSOR shall not have any liabilities for claims of third parties
or any consequential losses, direct or indirect, suffered by the
LICENSEE or third parties with respect to the LICENSED PRODUCTS
manufactured by the LICENSEE. Further, the LICENSEE agrees to wave
and hold harmless the LICENSOR and each of its subsidiaries and
affiliates from any claims by anyone arising out of the manufacture or
sale of the LICENSED PRODUCTS by the LICENSEE.
10. LABELS & MARKINGS
10.1 The LICENSED PRODUCTS shall, if so desired by the LICENSOR, be marked
with a designation and/or labels (layout to be provided by the
LICENSOR) indicating that they are made under license of the LICENSOR.
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10.2 Upon termination and/or expiry of this AGREEMENT, the LICENSEE
shall forthwith cease using any name, marking or other terms of
designation indicating that the LICENSED PRODUCTS are made according to
the license provided for herein unless otherwise agreed to by and
between the PARTIES hereto in writing.
11. SECRECY
11.1 The LICENSEE shall maintain the secrecy of the TECHNICAL KNOW-HOW
furnished hereunder and shall take such necessary stops as may be
required for this purpose. The steps to be taken by the LICENSEE shall
include not making disclosure thereof to its employees,
sub-contractors, associate companies and any other party, except and to
the extent necessary for the performance of their duties. The
employees and sub-contractor shall be bound to threat all such
TECHNICAL KNOW-HOW as confidential and the LICENSEE shall get the
employee and sub-contractor to sign an undertaking to this effect.
11.2 The LICENSEE shall not use or permit the use of any TECHNICAL KNOW-HOW
in any manner inconsistent with the intention and spirit of this
AGREEMENT. The LICENSEE acknowledges that the TECHNICAL KNOW-HOW is
confidential and is delivered to the LICENSEE for the sole purpose of
enabling the LICENSEE to manufacture, market and sell the LICENSED
PRODUCTS.
11.3 The obligations cast upon the LICENSEE by this Article are extremely
valuable to the LICENSOR and therefore adherence to the said
obligations by the LICENSEE is critical to the performance of this
AGREEMENT and forms the very substance of this AGREEMENT and goes to
its very root and intent and any violation thereof would cause
irreparable injury to the LICENSOR which injury cannot be adequately
compensated by monetary reliefs alone and therefore the LICENSOR shall
be entitled to seek injunctive relief from a Court of law in the event
of the failure of the LICENSEE to adhere to the said obligations
notwithstanding the Arbitration Article herein.
11.4 The obligation undertaken in these Articles shall remaining force
indefinitely and shall survive termination or expiration of this
AGREEMENT. Provided always that the provision of this Article 11 shall
not apply to any information which is or enters the public domain due
to no fault of the LICENSEE.
12. NON-COMPETITION
The LICENSEE agrees that, since it is an exclusive licensee, it shall
not, directly or indirectly, except with prior written consent of the
LICENSOR have any business or commercial interest, either as a
shareholder, employees, consultant, partner or otherwise, in any other
company, whether incorporated or not, which is engaged in
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the TERRITORY in the production, sale and distribution or marketing
of any products which are similar to the LICENSED PRODUCTS and/or
competitive with the same. Any violation of the undertaking(s) set
forth in this Article is fundamental to this AGREEMENT and goes to
the root of the AGREEMENT and shall be considered irreparable injury
to the LICENSOR, thereby permitting it to seek remedy by way of
injunction, stay order or other equitable remedies under India law,
notwithstanding the arbitration clause herein.
13. TERM
Unless earlier terminated as provided herein the terms of this
AGREEMENT shall be for a period of seven (7) years from the Effective
Date of this AGREEMENT.
14. TERMINATION
14.1 The LICENSOR shall have a right to terminate this AGREEMENT forthwith
by written notice to the LICENSEE in any of the following events:
a. if this AGREEMENT does not take effect under Article 15 within 180 days
from the date of execution of this AGREEMENT;
b. if any government shall confiscate, expropriate or nationalise all or
part of the LICENSEE'S business or property or convert such business or
property to purposes which affect the design, manufacture, sale or
service of the LICENSED PRODUCTS;
14.2 This AGREEMENT may be terminated:
i) By mutual agreement between the PARTIES; or
ii) By either PARTY by giving written notice in the event of material
breach or default or any of the obligations by the other PARTY and
where such breach or default has not been rectified within thirty (30)
days after written notice from the other PARTY specifying the nature of
the default; or
iii) By either PARTY if any authority of the GOVERNMENT should require
directly or indirectly modification of any term or condition of this
AGREEMENT. The PARTIES hereto will then mutually negotiate to arrive at
a settlement and in case no such settlement can be arrive at within
ninety (90) days of commencement of such negotiations, either PARTY may
terminate this AGREEMENT; or
iv) By either PARTY in case the other PARTY becomes insolvent or is
declared bankrupt or goes into liquidation, voluntary or compulsory,
except for the purpose of amalgamation or reconstruction effective
immediately upon written notice to the other PARTY.
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14.3. CONSEQUENCES OF TERMINATION
a. It is expressly agreed and understood by the PARTIES hereto that in the
event of termination pursuant to the terms of this AGREEMENT the PARTY
electing to terminate this AGREEMENT shall incur no liability by the
other PARTY hereto for damages arising solely from the exercise of the
right to terminate this AGREEMENT.
b. Under no circumstances will either PARTY be released from any liability
or obligation accrued prior to the date of termination and the PARTY in
breach shall in all events remain liable for the consequences of that
breach.
c. In the events of expiration or termination of this AGREEMENT for any
reason whatsoever, the LICENSEE shall continue to be bound by the terms
and conditions contained in Article 11 herein.
d. In the event of LICENSOR terminating the Agreement, the LICENSEE shall
cease to use all and any of the TECHNICAL KNOWHOW and the LICENSEE
shall not thereafter manufacture or sell any products that use or
employ any of the LICENSOR's TECHNICAL KNOWHOW. The LICENSEE shall also
upon such termination promptly deliver to the LICENSOR all information,
processing instructions, correspondence and other data relating to the
manufacture, processing or packaging of the LICENSED PRODUCTS and shall
not thereafter use or disclose any information or data furnished under
this AGREEMENT.
14.4 After the full term expiration of this Agreement in accordance with
Article 13 and provided that the LICENSEE have paid all other sums due
hereunder to the LICENSOR up to the date of such expiration, the
LICENSEE may continue to use, in the territory, on a non-exclusive
basis, the TECHNICAL KNOWHOW then in use by its subject, however, to
the provisions of Article 11 herein.
15. EFFECTIVE DATE
This AGREEMENT shall take effect from the date when all the following
conditions precedent have been satisfied:
a. Both the PARTIES have obtained all necessary internal and corporate
approvals to execute this AGREEMENT;
b. All such necessary APPROVALS have been obtained and notification
thereof provided to the LICENSOR;
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c. This AGREEMENT has been executed by the PARTIES and filed with the
Reserve Bank of India, and/or authorised dealer in accordance with the
APPROVALS received from the GOVERNMENT.
16. INDEPENDENT PARTIES
Nothing set forth herein shall create a partnership, agency or power of
attorney between the PARTIES and neither PARTY shall be liable for a
debt or liability of the other unless it is specifically provided for
in this Agreement.
17. ENTIRE AGREEMENT
This Agreement supersedes all other agreements previously made between
the PARTIES relating to its subject matter. There are no other
understanding or agreements. Any amendment hereof or modifications
hereto shall be made in writing duly signed by authorised
representatives of the PARTIES.
18. WAIVER
Failure to exercise any rights under this AGREEMENT by either PARTY in
any one or more instances shall not constitute a waiver of such rights
or any other rights in any other instance.
19. ASSIGNMENT
This AGREEMENT may be assigned either fully or in part, by the LICENSOR
in respect of any of its rights and obligations to any other party
without the consent of the LICENSEE. However the LICENSEE cannot assign
this AGREEMENT without the prior written consent of the LICENSOR.
20. GOVERNMENT APPROVAL
The Letters of Approval No. 8/423/94-IA1 dated 21.9.94 and
8/423/94-1A2 dated 20.10.95 issued by the Government of India,
Ministry of Commerce, Office of the Development Commissioner, Madras
Export Processing Zone, in favour of licensee shall be deemed to be a
part of this Agreement. Only those provisions of this Agreement which
are covered by the said letter or which are not at variance with the
provisions of that letter, shall be binding on the Government of India
or the Reserve Bank of India.
21. GOVERNING LAW
21.1 This AGREEMENT and its substantive provisions shall be governed by and
construed in accordance with the laws of India.
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22. DISPUTES AND ARBITRATION
22.1 It is specifically agreed that in case of any disputes, controversy,
claim or breach arising out of or in relation to this AGREEMENT
(including any disputes as to the existence and/or validity hereof; the
parties shall seek to resolve such controversy, claim or breach by
amicable arrangement and compromise, and only if the parties fail to
resolve the same by amicable arrangement and compromise within a period
of sixty (60) days of receipt of written notice of the same by the
other PARTY, either PARTY may resort to arbitration as provided for in
Article 22.2 hereof.
22.2 Except as hereinafter provided, any dispute controversy, claim or
breach arising out of or in relation to this Agreement (including a
dispute as to the existence or validity hereof) shall be finally
settled, without appeal, by arbitration in accordance with the Rules of
the International Chamber of Commerce, then in effect which shall be
deemed to have been incorporated herein, and judgment upon the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
23. NOTICE
Any notice required or permitted to be given hereunder shall be
considered properly if sent by Registered Air Mail or by telefax
(confirmed in writing by the Registered Air Mail) to the respective
address of the PARTIES as below:
If to JT Storage Corporation, Inc.
166, Bay Points Parkway,
San Jose, CA 95234,
U.S.A.
FAX: 408-405-1800
TEL: 408-408-1801
If to Modular Electronics (I) Pvt. Ltd.,
Unit #35 and 36,
Madras Export Processing Zone
Madras -- 600 045.
INDIA
FAX: 236-8054
TEL: 2368254/2368079
or to such other address as a party may have previously notified to the
other PARTY in writing.
24. SEVERABILITY
If one or more of the provisions hereof shall be void, invalid, illegal
or unenforceable in any respect under any applicable law or decision,
the validity, legality and enforceability of the remaining provisions
herein continued shall not be affected or impaired in any way. Each
PARTY hereto shall, in any such event, execute such additional
documents as the other PARTY may reasonably request or require in
order to give valid, legal and enforceable effects to any provision
here of which is determined to be invalid, illegal or unenforceable.
IN WITNESS WHEREOF, the PARTIES have caused this AGREEMENT to be
executed by and through their duly authorised representatives as of the
date written herein.
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LICENSOR LICENSEE
BY [Sig] : BY [Sig] :
NAME : NAME :
TITLE : TITLE :
DATE : DATE :
WITNESS :
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