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EXHIBIT 10.27
TECHNOLOGY TRANSFER AND
LICENSE AGREEMENT
THIS TECHNOLOGY TRANSFER AND LICENSE AGREEMENT (this "Agreement") is made
this 3rd day of February, 1995, by and between WESTERN DIGITAL CORPORATION, a
Delaware corporation, having its principal place of business at 8105 Irvine
Center Drive, Irvine, California 92718 ("WDC"), and JT STORAGE, INC., a Delaware
corporation, having its principal place of business at 1289 Anvilwood Avenue,
Sunnyvale, California 94089 ("JTS"), with reference to the following facts:
WHEREAS, JTS has designed and developed new hard disk drive products in a
new form factor generally referred to as a 3-inch disk drive form factor, at
least one of which is currently ready for production and for which JTS currently
has a customer;
WHEREAS, WDC desires to acquire from JTS the information and rights
necessary to enable WDC to manufacture such new JTS disk drive products, as well
as certain related rights, all as set forth herein; and
WHEREAS, JTS is willing to transfer such information and rights to WDC in
consideration of the payment and other obligations of WDC hereunder.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "3-Inch Disk Drive" means every magnetic-media storage system that
includes control and interfacing circuitry, and a head-disk assembly that
includes at least one magnetic rigid disk the diameter of which is less than
three and one-half inches (3.50") and greater than two and three quarters inches
(2.75").
1.2 "Accessories" means any products that are not 3-Inch Disk Drives but
are sold in conjunction with or for uses incidental to a 3-Inch Disk Drive that
is a Licensed Product, such as carrying cases, docking modules, interface cards
and installation software and other items incidental to installation in a
computer or other value added subsystem; provided, however,
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Accessories shall not include any system incorporating a 3-Inch Disk Drive.
1.3 "Additional Developments" of a party hereto means any
improvements in, modifications on, or variations of any Licensed Nordic
Product; provided, however, that any such improvements, modifications and
variations that do not result in a change to any of the following
specifications of the affected Licensed Nordic Product shall be excluded from
the scope of the term Additional Developments: capacity per disk, data transfer
rate, mechanical form factor, and interface specifications.
1.4 "Captured Patents" of a party hereto means all Patents, issued
or issuing, on applications entitled to an effective filing date prior to
December 31, 1999, under which Patents or the applications therefor such party
or any of its Subsidiaries now has, or hereafter obtains, the right to grant
licenses of or within the scope granted herein. The Captured Patents of JTS
include, but are not limited to, the Patents and Patent applications listed on
Exhibit B attached hereto.
1.5 "Change in Control" means any circumstance in which (a) any
person, entity or group (as group is used in Section 13(d)(3) of the Exchange
Act of 1934, as amended) (other than pursuant to a venture capital financing)
acquires direct or indirect beneficial ownership (as defined in Rule 13d-3
under the Exchange Act of 1934, as amended) in the aggregate of securities of
JTS representing more than thirty percent (30%) of the total combined voting
power of JTS's then issued and outstanding voting securities; (b) the sale of
all or substantially all of the assets of JTS occurs to any person or entity
that is not a wholly-owned-subsidiary of JTS; (c) a part is liquidated; or (d)
an entity identified in Section 11.3 of this Agreement holds or otherwise
controls, directly or indirectly, a majority of the seats on the Board of
Directors of JTS as a result of an election contest.
1.6 "The Customer Sponsor" means the company identified in a letter
from JTS to WDC dated of even date herewith.
1.7 "Designated Product" means the first double disk Licensed
Nordic Product and its single disk version that results from the Technology
Transfer Program.
1.8 "Effective Date" means the effective date of this Agreement as
set forth in Section 10.1 below.
1.9 "Future Generation Licensed Nordic Products" means all Licensed
Nordic Products other than the Designated Product.
1.10 "JTS Chip" means the proprietary single-chip controller
identified by JTS as 541J included in the Designated Product, and any
derivative of such controller.
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1.11 "Licensed Nordic Products" mean every 3-Inch Disk Drive that
includes a JTS Chip or any derivative of a JTS Chip, including, without
limitation, the Designated Product.
1.12 "Licensed Products" mean (a) every 3-Inch Disk Drive and all
components thereof and (b) all Accessories.
1.13 "Other Licensed Technology" of a party hereto means all
technical information and intellectual property (other than Captured Patents
and trademarks and trade names), now owned or possessed by such party (or any
of its Subsidiaries) or hereafter conceived, developed or acquired by such party
(or any of its Subsidiaries), embodied or used, or intended to be embodied or
used, in the making or operation of any Licensed Nordic Product, including,
without limitation, copyrights, trade secrets, inventions, source codes, object
codes, flow charts, processes, techniques, specifications, drawings, parts
layouts, parts lists, technical information pertaining to manufacturing, parts,
circuitry, tooling and testing requirements, know-how, manuals and other
technical data and support documentation, whether or not patentable or
copyrightable.
1.14 "Patents" mean any and all patents of all countries of the
world, including utility patents, design patents, reissue patents, utility
models, inventors certificates and registrations, and any and all applications
therefor, including divisional, continuation, and reissue applications.
1.15 "Subsidiary" of a party hereto means any corporation, company
or other entity (a) in which such party holds at least fifty-one percent (51%)
ownership or (b) with respect to such party's manufacturing entities that are
located in foreign jurisdictions that require that the foreign entity own
a controlling interest, that is controlled for all intents and purposes by such
party and in which such party holds at least forty-nine percent (49%)
ownership, but only for so long as the foregoing conditions are met.
1.16 "Technology Transfer Program" means the program described in
Exhibit A, pursuant to which JTS will deliver to WDC information, rights,
documentation and other items relating to the Designated Product.
ARTICLE 2
LICENSES
2.1 Grant of Non-Exclusive Patent License by JTS. In consideration
of WDC entering into this Agreement, JTS hereby grants WDC the perpetual
non-exclusive worldwide right and license under the JTS Captured Patents to
make, have made, use, import and sell Licensed Products, and to make, have
made and use machines, tools, apparatus and equipment required in such
manufacture, and to dispose of such machines, tools, apparatus
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and equipment by sale or otherwise when no longer required in such manufacture;
provided, however, that such sale or disposal of such machines, tools,
apparatus and equipment shall carry no express or implied rights to make, use
or sell any Licensed Product.
2.2 Grant of Non-Exclusive Licensed Technology License by JTS. In
consideration of WDC entering into this Agreement, JTS hereby grants WDC the
perpetual non-exclusive worldwide right and license under JTS Other Licensed
Technology to make, have made, use, import and sell the Licensed Nordic
Products, and to make, have made and use machines, tools, apparatus and
equipment required in such manufacture, and to dispose of such machines, tools,
apparatus and equipment by sale or otherwise when no longer required in such
manufacture; provided, however, that such sale or disposal of such machines,
tools, apparatus and equipment shall carry no express or implied rights to
make, use or sell any Licensed Nordic Product.
2.3 Grant of Non-Exclusive Patent License by WDC. Subject to the
terms and conditions of this Agreement, WDC hereby grants JTS the perpetual
non-exclusive worldwide right and license under WDC Captured Patents to make,
have made, use, import and sell Licensed Products, and to make, have made and
use machines, tools, apparatus and equipment required in such manufacture, and
to dispose of such machines, tools, apparatus and equipment by sale or
otherwise when no longer required in such manufacture; provided, however, that
such sale or disposal of such machines, tools, apparatus and equipment shall
carry no express or implied rights to make, use or sell any Licensed Product.
2.4 Grant of Non-Exclusive License by WDC. Subject to the terms and
conditions of this Agreement, WDC grants JTS the perpetual non-exclusive
worldwide right and license under WDC Other Licensed Technology to make, have
made, use, import and sell Licensed Nordic Products, and to make, have made and
use machines, tools, apparatus and equipment required in such manufacture, and
to dispose of such machines, tools, apparatus and equipment by sale or
otherwise when no longer required in such manufacture; provided, however, that
such sale or disposal of such machines, tools, apparatus and equipment shall
carry no express or implied rights to make, use or sell any Licensed Nordic
Product.
2.5 Sublicensing. Except as separately agreed between WDC and the
Customer Sponsor, the licenses granted in this Article 2 shall not include the
right to sublicense to a third party; provided, however, that the licenses
granted in this Article 2 shall inure to the benefit of any subsidiary of a
party hereto during such period of time that such entity remains a Subsidiary
of such party.
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2.6 Additional Disclosure and Transfer Obligations.
(a) In addition to the information, documents, rights and other
tangible and intangible items required to be transferred and delivered to WDC
by JTS in accordance with the Technology Transfer Program, until the earlier of
(i) six (6) months after WDC commences volume production of a Licensed Nordic
Product or (ii) March 31, 1996, JTS shall, at JTS's sole expense, deliver,
transfer and disclose to WDC all other information, documents, rights and other
tangible and intangible items that constitute JTS Other Licensed Technology,
within a reasonable time before JTS (or any of its Subsidiaries) begins to sell
any Licensed Nordic Product containing such JTS Other Licensed Technology.
Thereafter, [*] JTS shall disclose to WDC all JTS Additional Developments
within a reasonable time before JTS (or any of its Subsidiaries) begins to
sell any Licensed Nordic Product containing such JTS Additional Developments,
and shall, at JTS's sole expense, deliver to WDC such appropriate documentation
in JTS's possession with respect thereto as may be reasonably requested by WDC
to enable WDC to incorporate such JTS Additional Developments into WDC's
manufacturing processes for 3-Inch Disk Drives.
(b) Until [*] WDC shall disclose to JTS all WDC Additional
Developments within a reasonable time before WDC (or any of its Subsidiaries)
begins to sell any Licensed Nordic Product containing such WDC Additional
Developments, and shall, at WDC's sole expense, deliver to JTS such appropriate
documentation in WDC's possession with respect thereto as may be reasonably
requested by JTS to enable JTS to incorporate such WDC Additional Developments
into JTS's manufacturing processes for 3-Inch Disk Drives.
ARTICLE 3
TECHNOLOGY TRANSFER PROGRAM
3.1 Transfer of Know-How Required to Manufacture the Licensed Nordic
Products. JTS shall deliver to WDC the information, documents, rights and other
tangible and intangible items that are necessary to enable WDC to manufacture
the Designated Product in accordance with the Technology Transfer Program. Any
material deviation from the Technology Transfer Program shall require the
mutual agreement of JTS and WDC. JTS shall be solely responsible for the
conduct of all phases of the Technology Transfer Program; provided, however,
JTS agrees to consult in good faith with WDC regarding all significant aspects
of the Technology Transfer Program. JTS shall focus the appropriate resources
to the successful and timely completion of the Program Schedule included in
Exhibit A attached hereto. Without WDC's prior written consent, which shall not
be
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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unreasonably withheld, JTS shall not undertake any development or similar
projects for any third party prior to the earlier of (a) the date on which WDC
commences volume production of a Licensed Nordic Product or (b) January 1,
1996; provided, however, that JTS may continue to discharge its development and
other obligations under the Customer Sponsor Agreement, and nothing contained
herein shall limit or restrict JTS in respect of its performance of the
Customer Sponsor Agreement.
3.2 Access to Vendors. Without limiting the requirements set forth in
the Technology Transfer Program, JTS shall provide WDC with appropriate
documentation [*] . Upon reasonable notice and during normal business hours,
JTS shall further allow WDC reasonable access to JTS's engineering staff and
shall allow WDC's engineers to visit JTS's manufacturing and research facilities
for the purpose of receiving reasonable support of the Licensed Nordic Products
and all rights granted WDC under this Agreement.
3.3 Disclosures Not Required. Notwithstanding any other provision in
this Agreement, JTS shall not be required to disclose to WDC any of the
following information with respect to any JTS Chip: varilogic designs, circuit
designs and logic designs.
ARTICLE 4
PAYMENTS TO JTS
4.1 Technology Transfer Program Payments. In consideration of the
rights granted to WDC under this Agreement, WDC shall pay to JTS [*] in
accordance with and subject to the conditions set forth in the Payment Schedule
included in Exhibit A attached hereto. Whenever the Technology Transfer Program
designates a particular achievement or requirement of JTS as a condition to any
payment, such condition shall be satisfied only after WDC has verified to its
reasonable satisfaction that such achievement or requirement has been
accomplished.
4.2 Transfer of Tangible Items. The parties acknowledge and agree
that the tangible items to be transferred to WDC incidental to the transfer of
technology pursuant to this
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Agreement have an aggregate value of less than [*] .
4.3 Royalties. For so long as JTS is obligated to pay a royalty to the
Customer Sponsor under the Customer Sponsor Agreement, WDC shall pay a royalty
to JTS, on a quarterly basis, at a rate equivalent to that set forth in the
Customer Sponsor Agreement, not to exceed [*] per covered product, on all
sales by WDC to any third party other than the Customer Sponsor of Licensed
Nordic Products; provided, however, that at such time as a third party
competitor begins volume shipment of any 3-Inch Disk Drive, WDC's royalty
obligations to JTS shall be reduced to a level to be negotiated in good faith
among WDC, JTS and the Customer Sponsor. Nothing in this Agreement shall reduce
or otherwise affect JTS's obligations to the Customer Sponsor to pay royalties
to the Customer Sponsor on sales by WDC of Licensed Nordic Products.
4.4 Payments and Reports. WDC shall submit royalty payments due pursuant
to Section 4.2 above on a quarterly basis no later than [*] following the
last business day of all calendar quarters, together with a quarterly report,
certified by an officer of WDC, specifying the quantity of the royalty-bearing
Licensed Nordic Product sold during the previous quarter and the royalty due for
such royalty-bearing Licensed Nordic Product. JTS shall certify to WDC from time
to time the prevailing royalty rates in effect under the Customer Sponsor
Agreement.
4.5 Reports Confidential. The information contained in the reports
delivered by WDC pursuant to Section 4.3 above shall be retained in confidence
and access to such information shall be restricted to the finance and legal
groups of JTS. The obligations to provide royalty reports shall only apply to
the royalty-bearing Licensed Nordic Products.
ARTICLE 5
JTS REPRESENTATIONS,
WARRANTIES AND COVENANTS
JTS hereby represents, warrants and covenants as follows:
5.1 Corporate Power. JTS has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement has been duly and
validly authorized by JTS, and upon the Effective Date, this Agreement will
constitute a valid and binding agreement of JTS.
5.2 No Other Licenses. Except to the extent identified on Exhibit C
attached hereto, JTS has not granted to any third party any rights or interests
to the JTS Captured
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
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Patents, the Licensed Nordic Products or JTS Other Licensed Technology. Until
[*] neither JTS nor any of its Subsidiaries shall grant to any third party
any license under the JTS Captured Patents, JTS Other Licensed Technology or any
JTS Chip to sell 3-Inch Disk Drives made for or by such third party; provided,
however, that JTS and its Subsidiaries shall be entitled to (a) allow other
companies to manufacture 3-Inch Disk Drives to be sold by JTS or its
Subsidiaries; (b) grant manufacturing and sales licenses with respect to 3-Inch
Disk Drives to customers of JTS in connection with sales agreements between JTS
and its customers, but only to the extent such licenses are contingent upon the
inability or failure of JTS to supply such 3-Inch Disk Drives to its customers;
(c) include 3-Inch Disk Drives in the field of use in any patent license
included in a cross-license agreement that is reasonably required to resolve
third party patent infringement claims; and (d) on or after [*] transfer any
of its rights in any JTS Chip (by license or otherwise) to any third party. For
the term of this Agreement, neither JTS nor any of its Subsidiaries shall take
or fail to take any action that may restrict JTS's legal right to grant to WDC
the rights and licenses contemplated under this Agreement.
5.3 No Consents Required. As of the Effective Date, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereunder will require JTS or any of its Subsidiaries
to obtain any permits, authorizations or consents under current law from any
governmental body or from any other person, firm or corporation under any
existing agreement to which JTS or any of its Subsidiaries may be a party. The
execution, delivery and consummation of this Agreement will not result in the
breach of or give rise to cause for termination of any agreement to which JTS
or any of its Subsidiaries may be a party or, to JTS's knowledge, that
otherwise relates to the Captured Patents, Licensed Products or any JTS Other
Licensed Technology.
5.4 No Additional Obligations. Neither the execution, delivery and
performance of this Agreement by WDC nor the use of the licenses and other
rights granted WDC hereunder impose or will impose on WDC any royalty
obligation or other payment obligation of any kind pursuant to (a) any
agreement or understanding to which JTS is a party or (b) to the best of JTS's
knowledge, otherwise, except as expressly contemplated herein and in the
License Agreement of even date herewith between WDC and TEAC CORPORATION.
5.5 Current Technology. All material technical information and other
items deliverable pursuant to the Technology Transfer Program represent what
JTS believes in good faith to be the most current and best technology available
to JTS relating to 3-Inch Disk Drives.
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
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ARTICLE 6
WDC REPRESENTATIONS AND WARRANTIES
WDC hereby represents, warrants and covenants as follows:
6.1 Corporate Power. WDC has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance of this Agreement has been duly and
validly authorized by WDC, and upon the Effective Date, this Agreement will
constitute a valid and binding agreement of WDC.
6.2 No Consents Required. As of the Effective Date, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereunder will require WDC to obtain any permits,
authorizations or consents from any governmental body or from any other
person, firm or corporation, and such execution, delivery and consummation will
not result in the breach of or give rise to any termination of any agreement or
contract to which WDC may be a party.
6.3 Future Generation Licensed Nordic Products. WDC shall offer to
sell all Future Generation Licensed Nordic Products to the Customer Sponsor
before offering such products to any third party. Provided the Customer Sponsor
commits in a reasonably timely manner to purchase such Future Generation
Licensed Nordic Products from WDC or JTS, WDC shall refrain from selling such
products to any customer other than JTS or the Customer Sponsor for a period of
[*] commencing on [*] .
ARTICLE 7
IMMUNITY FROM SUIT
7.1 Immunity Granted by JTS. JTS, on behalf of itself and its
Subsidiaries, hereby grants to all third-party transferees of the Licensed
Products manufactured, leased, sold or otherwise transferred by WDC or its
Subsidiaries, an immunity from suit under JTS Captured Patents (a) for the
manufacture, use and sale of the Licensed Products; and (b) for the formation,
sale and use of any higher-level assembly that includes any Licensed Product,
whether or not such higher-level assembly includes other apparatus not
furnished by WDC or any of its Subsidiaries; provided, however, that such
immunity shall not extend to any apparatus that forms a part of such
higher-level assembly that is not furnished by WDC or its Subsidiaries. JTS, on
behalf of itself and its Subsidiaries, hereby grants to all third-party
transferees of the Licensed Nordic Products manufactured, leased, sold or
otherwise transferred by WDC or its Subsidiaries, an immunity from suit under
JTS Other Licensed Technology (a) for the manufacture, use and sale of the
Licensed
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
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Nordic Products; and (b) for the formation, sale and use of any higher-level
assembly that includes any Licensed Nordic Product, whether or not such
higher-level assembly includes other apparatus not furnished by WDC or any of
its Subsidiaries; provided, however, that such immunity shall not extend to any
apparatus that forms a part of such higher-level assembly that is not
furnished by WDC or its Subsidiaries.
7.2 Immunity Granted by WDC. WDC, on behalf of itself and its
Subsidiaries, hereby grants to all third-party transferees of the Licensed
Products manufactured, leased, sold or otherwise transferred by JTS or its
Subsidiaries, an immunity from suit under WDC Captured Patents (a) for the
manufacture, use and sale of Licensed Products; and (b) for the formation, sale
and use of any higher-level assembly that includes any Licensed Product,
whether or not such higher-level assembly includes other apparatus not
furnished by JTS or any of its Subsidiaries; provided, however, that such
immunity shall not extend to any apparatus that forms a part of such
higher-level assembly that is not furnished by JTS or its Subsidiaries. WDC, on
behalf of itself and its Subsidiaries, hereby grants to all third-party
transferees of the Licensed Nordic Products manufactured, leased, sold or
otherwise transferred by JTS or its Subsidiaries, an immunity from suit under
WDC Other Licensed Technology (a) for the manufacture, use and sale of the
Licensed Nordic Products; and (b) for the formation, sale and use of any
higher-level assembly that includes any Licensed Nordic Product, whether or not
such higher-level assembly includes other apparatus not furnished by JTS or any
of its Subsidiaries; provided, however, that such immunity shall not extend to
any apparatus that forms a part of such higher-level assembly that is not
furnished by JTS or its Subsidiaries.
ARTICLE 8
CONFIDENTIALITY
8.1 Confidential Information. JTS and WDC agree to undertake all
reasonable efforts to refrain, and to cause its Subsidiaries to refrain, from
disclosing any confidential proprietary information with respect to the
technology products governed by this Agreement. Each of the parties hereto
acknowledge that another party hereto may find it necessary to disclose
proprietary information in connection with the proper grant of sublicenses to
parties other than a party hereto to the extent permitted hereby. Under such
circumstances, JTS or WDC, as the case may be, may make such information
available to third parties to the limited extent necessary for such third party
to fulfill its supply or other permitted purposes, provided that such party
shall first obtain from the recipients a fully-executed confidentiality
agreement that is at least as restrictive as the confidentiality agreement
contained herein; provided, however, that the foregoing shall not restrict JTS's
or WDC's right to provide technical information and test data that
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is reasonably requested by customers in the ordinary course of business.
8.2 Public Domain. Neither JTS nor WDC shall be bound by the
provisions of Section 8.1 above with respect to information that (a) was
previously known to the recipient at the time of disclosure; (b) is in the
public domain at the time of disclosure; (c) becomes a part of the public
domain after the time of disclosure, other than through disclosure by the
recipient or some other third party that is under an agreement of
confidentiality with respect to the subject information or obtained the
information from the recipient; (d) is required to be disclosed by law; or
(e) is disclosed by a third party not bound by an agreement of confidentiality
with respect to such information that the third party did not obtain from the
recipient.
ARTICLE 9
RECORDKEEPING AND AUDIT RIGHTS
Each party shall keep and maintain full and accurate records relating
to the development, manufacture and sales of the Licensed Products. Each party
agrees to allow a mutually acceptable independent auditor to audit and analyze
appropriate records to ensure compliance with the terms of this Agreement. Any
such audit shall be permitted by the party to be audited within fifteen (15)
days of receipt of a written request by the party requesting such audit, during
normal business hours. The cost of such audit will be borne by the party
requesting the audit unless a material discrepancy is found or records are not
maintained and available in accordance with this Article, in which case the
audited party agrees to pay the requesting party for the costs associated with
the audit.
ARTICLE 10
TERM AND TERMINATION
10.1 Effective Date. This Agreement shall become effective upon
satisfaction of the following conditions, any of which may be waived by WDC in
its sole discretion:
(a) The execution and delivery of a license or similar
agreement, acceptable in form and substance to WDC, from TEAC CORPORATION in
favor of WDC with respect to 3-Inch Disk Drives (the "TEAC Agreement");
(b) The execution and delivery of a license or similar
agreement, acceptable in form and substance to WDC, from PONT PERIPHERALS
(formerly known as DZU CORPORATION) in favor of WDC with respect to 3-Inch
Disk Drives;
(c) The execution and delivery of an amendment to or other
arrangement affecting the Customer Sponsor
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Agreement, acceptable in form and substance to WDC, modifying such
agreement to the extent it may otherwise affect WDC's rights hereunder
and consenting to this Agreement; and
(d) The closing of the JTS equity financing on substantially the
terms and conditions identified in the Letter of Intent for Private
Placement of Equity Securities dated November 3, 1994 or otherwise on
terms and conditions acceptable to WDC.
The parties agree that if the Effective Date does not occur on or
before February 15, 1995, WDC may terminate this Agreement at any time before
the Effective Date occurs.
10.2 Term. Except to the extent provided in Section 10.3 below, the
term of this Agreement and the licenses and immunities from suit granted
hereunder shall be perpetual.
10.3 Early Termination. If any party hereto commits a material breach
of this Agreement, and such breach continues for thirty (30) days after receipt
of a written notice specifying such breach in reasonable detail, the
non-breaching party shall have the right to terminate all of the breaching
party's rights hereunder by delivery of written notice of such termination.
Notwithstanding the foregoing, any such termination shall have no effect on the
breaching party's duties and obligations hereunder, which shall continue in
full force and effect. WDC's rights hereunder shall not be reduced or
diminished in the event of a termination by WDC by reason of a material breach
of JTS. JTS's rights hereunder shall not be reduced or diminished in the event
of a termination by JTS by reason of a material breach by WDC.
ARTICLE 11
MISCELLANEOUS
11.1 Notices. Any notice, consent or approval required under this
Agreement shall be in writing sent by registered or certified mail, postage
prepaid, or by facsimile or cable (confirmed by such registered or certified
mail) and addressed as follows:
If to WDC: Western Digital Corporation
8105 Irvine Center Drive
Irvine, California 92718
Attn: General Counsel
Phone: (714) 932-5000
Facsimile: (714) 932-7820
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If to JTS: JT Storage, Inc.
1289 Anvilwood Avenue
Sunnyvale, California 94089
Attn: President
Phone: (408) 747-1315
Facsimile: (408) 747-0849
All notices shall be deemed to be effective on the earlier of actual
receipt or the fifth day after deposit in the U.S. first class mail, postage
prepaid, properly addressed to the party to whom such notice is directed.
Either party may change its address at which notice is to be received by
delivering notice to the other party in accordance with this Section.
11.2 Relationship of the Parties. Notwithstanding any provision
hereof, for all purposes of this Agreement each party shall be and act as an
independent contractor and not as a partner, joint venturer or agent of the
other and shall not bind nor attempt to bind the other to any contract.
11.3 Assignment. Neither party shall have the right or ability to
assign, transfer or sublicense any obligations or benefits under this Agreement
without the written consent of the other party, which consent shall not be
unreasonably withheld. A Change in Control of JTS shall constitute an
assignment for purposes of this Agreement, requiring the consent of WDC as set
forth in this Section, [*] Further, JTS shall not consent to an assignment,
transfer or sublicense of the JTS Captured Patents, the Licensed Nordic
Products and/or JTS Other Licensed Technology by [*]
11.4 Waivers; Amendments. The waiver by either party of any of its
rights or any breaches of the other party under this Agreement in a particular
instance shall not be deemed to be a waiver of the same or different rights or
breaches in subsequent instances. Neither this Agreement nor any Exhibit
attached hereto may be amended or waived except by an instrument in writing
executed by the party against which enforcement is sought.
11.5 Governing Law. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of California, without
regard to the choice of law rules thereof.
11.6 Entire Agreement. This Agreement and the Exhibits attached hereto
constitute the entire agreement of the parties
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
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and supersede all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations between the parties with respect to
the subject matter hereof.
11.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
11.8 Severability. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect.
11.9 Attorneys' Fees. Should any party institute any action or
proceeding, including without limitation binding arbitration, to enforce this
Agreement or any provision hereof, the prevailing party in any such action or
proceeding shall be entitled to receive from the other all reasonable costs and
expenses, including attorneys' fees, incurred by the prevailing party in
connection with such action or proceeding.
11.10 Binding Arbitration. Any controversy or claim arising out of or
related to this Agreement, or any breach thereof (a "Dispute"), shall be
settled by binding arbitration, conducted by a single mutually agreed-upon
arbitrator, with the forum being Orange County, California. The arbitrator of
any Dispute shall be either a lawyer selected by the parties or a retired judge
selected by two lawyers (one of each such lawyer being designated for such
purpose by each party). Promptly after such Dispute arises, the parties shall
confer to select a lawyer who practices in or near Orange County, California to
serve as the arbitrator. If the parties cannot agree upon the selection of a
lawyer as the arbitrator, a retired judge who is a member of JAMS shall be
selected as the arbitrator. Such selection shall by made by the lawyers
designated by the parties. The arbitrator so selected shall make the
determination required on the basis of such procedures as such arbitrator, in
his or her sole judgment, deems appropriate and expeditious, taking into
account the nature of the issues, the amount in dispute and the positions
asserted by the parties. The arbitrator shall not be required to follow any
particular rules or procedure, it being the parties' intention to create a
flexible, practical, and expeditious method of resolving any Dispute hereunder.
Upon the written request of a party, the arbitrator shall issue a written
opinion of his or her findings of fact and conclusions of law. Upon receipt by
the requesting party of such a written opinion, such party shall have the right
within ten (10) days thereof to file with the arbitrator a motion to reconsider.
Thereupon, the arbitrator shall reconsider the issues raised by said motion and
either confirm or change his or her decision. The decision of such arbitrator
shall then be final, conclusive and binding, and shall not be subject to review
or challenge of any kind. The parties
14
15
intend that this agreement to arbitrate be valid, enforceable and irrevocable.
11.11 Time of the Essence. Time is of the essence of this Agreement.
15
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
"WDC"
WESTERN DIGITAL CORPORATION,
a Delaware corporation
By: /s/ Marc Nussbaum for Kathryn A. Braun
---------------------------------------
Its:
--------------------------------------
"JTS"
JT STORAGE, INC., a Delaware corporation
By:
---------------------------------------
Its:
--------------------------------------
16
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
"WDC"
WESTERN DIGITAL CORPORATION,
a Delaware corporation
By:
---------------------------------------
Its:
--------------------------------------
"JTS"
JT STORAGE, INC., a Delaware corporation
By: /s/ David B. Pearce
---------------------------------------
Its: President
--------------------------------------
16
18
LIST OF EXHIBITS
TO
TECHNOLOGY TRANSFER AND
LICENSE AGREEMENT
PAGE
----
EXHIBIT A TECHNOLOGY TRANSFER PROGRAM A1
SECTION A-1 DESIGNATED PRODUCT TECHNICAL A2
SPECIFICATIONS
SECTION A-2 PROGRAM SCHEDULE (DEVELOPMENT A4
PLAN)
SECTION A-3 PAYMENT SCHEDULE A7
SECTION A-4 DELIVERY SCHEDULE A9
SECTION A-5 JTS DELIVERABLES TO WDC QUALITY AND A10
RELIABILITY DEPARTMENT
SECTION A-6 JTS DELIVERABLES TO WDC NEW PRODUCT A13
INTRODUCTION AND ADVANCED MANUFACTURING
DEPARTMENT
SECTION A-7 JTS DELIVERABLES TO WDC DESIGN A14
ENGINEERING DEPARTMENT
SECTION A-8 JTS DELIVERABLES TO WDC TEST A18
ENGINEERING DEPARTMENT
SECTION A-9 JTS DELIVERABLES TO WDC PURCHASING A20
AND MATERIALS DEPARTMENT
EXHIBIT B NON-EXCLUSIVE LIST OF JTS CAPTURED B1
PATENTS
EXHIBIT C THIRD PARTY LICENSES AND RIGHTS C1
AFFECTING JTS TECHNOLOGY
19
EXHIBIT A
TO
TECHNOLOGY TRANSFER AND
LICENSE AGREEMENT
TECHNOLOGY TRANSFER PROGRAM
---------------------------
This Technology Transfer Program sets forth the information, documents,
rights and other tangible and intangible items that JTS shall deliver to WDC
pursuant to Article 3 of this Agreement; the manner in which JTS shall deliver
such items to WDC; and the payments to which JTS shall be entitled in
consideration of its performance of this Agreement, including, without
limitation, the Technology Transfer Program. Any material deviation from the
Technology Transfer Program shall require the mutual written agreement of JTS
and WDC.
Page A1
20
SECTION A-1: DESIGNATED PRODUCT TECHNICAL SPECIFICATIONS
In a timely manner following the execution of this Agreement, the
parties shall finalize the Technical Specifications for the Designated Product.
Set forth below are preliminary technical specifications for the Designated
Product, which may be modified by mutual agreement of the parties in accordance
with the above provision and the terms of this Agreement.
- -------------------------------------------------------------------------------
[*]
- -------------------------------------------------------------------------------
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
Page A2
21
-J541HP 'HIGH PERFORMANCE' ASIC FEATURES (.95u)
IDE INTERFACE:
[*]
DME INTERFACE:
[*]
SEQUENCER/DISK INTERFACE:
[*]
SERVO INTERFACE:
[*]
PROCESSOR INTERFACE:
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
A3
22
[CHART]
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
A4
23
[CHART]
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
A5
24
[CHART]
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
A6
25
SECTION A-3: PAYMENT SCHEDULE
In consideration of the rights granted to WDC under this Agreement, WDC
shall pay to JTS up to [*] in accordance with and subject to the terms and
conditions of the Technology Transfer Program and the Payment Schedule set
forth below:
Date Payment Condition to Payment
---- ------- --------------------
Execution of this [*] None
Agreement
[*] [*] JTS successfully completes
Engineering Verification Test
("EVT") and reviews EVT with WDC
[*] [*] JTS delivers the Designated Product
to WDC*
If JTS delivers the Designated Product
between [*] and [*] , the payment
shall be [*] , unless the Designated
Product is an [*] Mbyte 3-Inch Disk
Drive, in which case the payment shall be
[*] *
If JTS delivers the Designated Product
after 09/30/95, the payment shall be
$500,000*
* If a change is made to the Technology
Transfer Program at the request of WDC
that causes a delay in JTS's delivery of
the Designated Product, the time deadlines
set forth herein shall be equitably
adjusted accordingly.
[*] [*] [*] following the date on which the
Company accepts from JTS working samples
of both an [*] Mbyte Licensed Nordic
Product and a [*] Mbyte Licensed
Nordic Product
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A7
26
[*] [*] [*] following the date on which the Company commences
volume production of both an [*] Mbyte Licensed Nordic
Product and a [*] Mbyte Licensed Nordic Product
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A8
27
SECTION A-4: DELIVERY SCHEDULE
JTS shall deliver to WDC the following deliverables in accordance with
the Delivery Schedule set forth below:
DELIVERY
DATE DELIVERABLE
-------- -----------
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A9
28
SECTION A-5: JTS DELIVERABLES TO WDC QUALITY AND RELIABILITY
DEPARTMENT
Promptly upon execution of this Agreement, JTS shall deliver to WDC's
Quality and Reliability Department copies or originals of the following
materials in JTS's possession. Thereafter, JTS shall deliver updates of such
materials on at least a [*] basis. All such deliveries shall be at
[*] sole expense. To facilitate this process, JTS and WDC shall review
these deliverables on a [*] basis.
MATERIALS QUALITY -- [*]
[*]
- [*]
-
-
-
-
-
-
-
-
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A10
29
- [*]
-
-
-
-
-
-
-
-
-
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
page a11
30
- - [*]
- -
- -
- -
- -
- -
- -
- -
- -
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
Page A12
31
SECTION A-6: JTS DELIVERABLES TO WDC NEW PRODUCT
INTRODUCTION AND ADVANCED MANUFACTURING
DEPARTMENT
Promptly upon execution of this Agreement, JTS shall deliver to WDC's
New Product Introduction and Advanced Manufacturing Department copies or
originals of the following materials in JTS's possession. Thereafter, JTS shall
deliver updates of such materials on at least a [*] basis. All such
deliveries shall be at [*] sole expense. To facilitate this process, JTS and
WDC shall review those deliverables [*] .
- All drive piece part drawings with critical-to-function ("CTF")
parameters identified and process capability ("CpK") figures
list
- All drive sub-assembly drawings and associated parts list
- Head gimbal assembly ("HGA") specification
- Disk specification
- Track map
- ESD requirements and a list of static sensitive components
- At least one (1) complete set of functional mechanical parts
and sub-assemblies, including labels, seals, etc.
- At least one (1) mechanically functional drive that is able to
spin-up
- Tolerance stack up analysis for the drive itself and all
subassemblies
- Head stack assembly ("HSA") shipping comb drawing and three (3)
samples
- Latest revision design drawings for all tools, including disk
install, head load, VCM install and cover install
- Tooling to tolerance study results
- Rights to fabricate/use tools that WDC finds desirable
- Permission to contact HGA vendors for answers to questions
- JTS contact for design questions
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
Page A13
32
SECTION A-7: JTS DELIVERABLES TO WDC DESIGN ENGINEERING
DEPARTMENT
Promptly upon execution of this Agreement, JTS shall deliver to WDC's
Design Engineering Department copies or originals of the following materials in
JTS's possession. Thereafter, JTS shall deliver updates of such materials on at
least a [*] basis. All such deliveries shall be at [*] 's sole expense. To
facilitate this process, JTS and WDC shall review these deliverables on a
[*] basis.
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A14
33
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A15
34
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A16
35
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page A17
36
SECTION A-8: JTS DELIVERABLES TO WDC TEST ENGINEERING DEPARTMENT
Promptly upon execution of this Agreement, JTS shall deliver to WDC's
Test Engineering Department copies or originals of the following materials in
JTS's possession. Thereafter, JTS shall deliver updates of such materials on at
least a [*] basis. All such deliveries shall be at [*] sole expense. To
facilitate this process, JTS and WDC shall review these deliverables on a
[*] basis
[*]
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
Page A18
37
[*]
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
Page A19
38
SECTION A-9 JTS DELIVERABLES TO WDC PURCHASING AND
MATERIALS DEPARTMENT
Promptly upon execution of this Agreement, JTS shall deliver to WDC's
Purchasing and Materials Department copies or originals of the following
materials in JTS's possession. Thereafter, JTS shall deliver updates of such
materials on at least a monthly basis. All such deliveries shall be at JTS's
sole expense. To facilitate this process, JTS and WDC shall review these
deliverables on a monthly basis.
- Complete costed bill of material ("BOM") reflecting the
following information (minimum):
- JTS part numbers
- JTS part descriptors
- All current hard tooled suppliers
- All targeted hard tooled suppliers
- Supplier part numbers
The above-referenced list should include piece parts, purchased
sub-assemblies and all packaging materials.
- Complete book of all parts, including the following information
by part number:
- Prints
- Schematics/specifications
- Documented supplier process flow charts
- Supplier quotes, with cost break points
- Tooling capacities at each supplier (which must support
WW volumes requirements for the first 12 months of
productions)
- Documented cleaning process
- Contact names, addresses and telephone numbers for each
supplier
- Supplier materials and process lead-times
- Copies of any supply agreements and/or contracts in
existence
Page A20
39
- Of primary importance are any custom integrated
circuits and/or other components that may be sole
sourced. Ownership of design prints and/or mask rights
must be identified. Length of support agreements are
critical.
- Authorization for WDC to purchase against JTS
specifications at WDC's prerogative.
Page A21
40
EXHIBIT B
TO
TECHNOLOGY TRANSFER AND
LICENSE AGREEMENT
NON-EXCLUSIVE LIST OF JTS CAPTURED PATENTS
PATENTS ISSUED:
PATENT TITLE INVENTOR ISSUE DATE
- ---------- ---------------------------------------------------------------- --------------- ------------
4,992,899 Low Inertia, Single Component Arm Actuator for Open-Loop Disk S. Kaczeus 02/12/91
Drives G. Kudo
4,949,202 Disk-Track for Locating Zero Track and Generating Timing for T. Kim 08/14/90
Index Signal
5,218,496 Magnetic Disk Drive with Reduced Disk-to-Disk Spacing and S. Kaczeus 06/08/93
Improved Actuator Design
PATENT PENDING APPLICATIONS
DOCKET # TITLE INVENTOR(S) FILE DATE
- ---------- ---------------------------------------------------------------- --------------- ------------
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page B1
41
DOCKET # TITLE INVENTOR(S) FILE DATE
- ---------- ---------------------------------------------------------------- --------------- ------------
[*]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page B2
42
EXHIBIT C
TO
TECHNOLOGY TRANSFER AND
LICENSE AGREEMENT
THIRD PARTY LICENSES AND RIGHTS AFFECTING JTS TECHNOLOGY
TEAC Corporation
Pont Peripherals (Formerly DZU Corporation)
Compaq Computer Corporation
Page C1