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EXHIBIT 10.49
INDEMNITY AGREEMENT
This Indemnity Agreement ("the Agreement") between Hyundai Electronics
Industries Co., Ltd. ("HEI") and Maxtor Corporation, a Delaware corporation and
its Subsidiaries (collectively the "Company") is made this 25th day of June,
1998.
WHEREAS, Maxtor Corporation is a majority-owned subsidiary of Hyundai
Electronics America ("HEA");
WHEREAS, HEA currently owns 100% of Maxtor Corporation's Series A
Preferred Stock;
WHEREAS, Maxtor Corporation is contemplating a firm commitment,
underwritten public offering of its Common Stock (the "Public Offering")
pursuant to which HEA's Series A Preferred Stock would be converted into Common
Stock and Maxtor Corporation would no longer be a Subsidiary of HEA;
WHEREAS, HEI is licensed under certain patent rights owned by
International Business Machines Corporation ("IBM") by an agreement (the "IBM
Agreement") effective January 1, 1996 as amended and Maxtor Corporation has
acquired a sublicense under the patent rights granted to HEI pursuant to a
sublicense agreement effective January 1, 1996 (the "Sublicense Agreement") and
desires to keep the sublicense;
WHEREAS, Company as a Subsidiary of HEI may have enjoyed the benefit of
cross license agreements between HEI and various third parties and Company now
desires to be protected from certain claims of infringement of such third
parties when Company is no longer a subsidiary of HEI.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
1.1. "Subsidiary" of a party means a corporation or other business
entity, 50% or more of whose outstanding shares or securities,
representing the right to vote for the election of directors or other
managing authority, are now or hereafter, owned or controlled, directly
or indirectly, by that party. Each such corporation or other entity
shall be deemed to be a Subsidiary only so long as such ownership or
control exists and provided that each such corporation or entity
undertakes all obligations contained herein.
INDEMNITY AGREEMENT
June 25, 1998
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2. INDEMNITIES
2.1 Indemnity for IBM Agreement
2.1.1 Notwithstanding anything to the contrary in the Sublicense
Agreement: HEI agrees, at its sole expense, to defend, indemnify
and hold harmless Company for and against any and all claims,
demands, damages, losses, and expenses of any nature (including
attorneys' fees and other litigation expenses) which arise out
of, are based on or relate to HEI's actions or omissions which
constitute a breach of the IBM Agreement (and excluding any
actions or omissions that are expressly permitted or required by
the IBM Agreement), including, but not limited to a breach of its
payment obligations to IBM, which result in a loss, damage or
expense to Company. In the event of notice of termination of the
IBM Agreement, HEI agrees to notify Company of such notice upon
receipt by HEI. After receipt of such notice, Company shall have
the option but not the obligation of curing any alleged breach by
HEI on HEI's behalf and recovering any additional amounts
actually paid to IBM, plus actual interest costs and/or exchange
rate losses, from HEI. In the event of termination by IBM of the
IBM Agreement pursuant to the provisions thereof, HEI shall not
be obligated to negotiate, reinstate or otherwise obtain any
license from IBM which grants licenses for Rotating Memory
Products, as defined in the IBM Agreement.
2.1.2 Notwithstanding anything to the contrary in the Sublicense
Agreement Company agrees, at its sole expense, to defend,
indemnify and hold harmless HEI for and against any and all
claims, demands, damages, losses, and expenses of any nature
(including attorneys' fees and other litigation expenses) which
arise out of, are based on or relate to Company's actions or
omissions which constitute a breach of either the IBM Agreement
or the Sublicense Agreement, including, but not limited to a
breach of its payment obligations to IBM, which result in a loss,
damage or expense to HEI. Company's total liability under this
Section is the total amount of money due to be paid by Company to
IBM under the Sublicense Agreement, plus actual interest costs
and/or exchange rate losses incurred by HEI. In the event of a
breach by Company of any of its payment obligations to IBM, if
Company pays to HEI the amount of money then due to IBM under the
IBM Agreement plus actual interest costs and/or exchange rate
losses, then HEI agrees to reinstate the sublicense rights
originally granted to Company in the Sublicense Agreement if such
rights have been terminated by HEI pursuant to Section 5 of the
Sublicense Agreement for failure to make any payments required in
the Sublicense Agreement.
INDEMNITY AGREEMENT
June 25, 1998
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2.2 Third Party Rights Indemnity
2.2.1 During the period from the date that Company ceases to be a
Subsidiary of HEA and for three years thereafter, in the event
that
(a) a third party sues or brings any arbitration, claims
proceedings or other action which arises out of, is
based on, or relates to an allegation that Company has
violated or infringed the patent rights of the third
party relating to Rotating Memory Products, as defined
in the IBM Agreement, and
(b) HEI had a license, contract or right with such third
party at any time Company was a Subsidiary of HEI such
that if Company had been a Subsidiary of HEI, the acts
by Company claimed to violate or infringe such third
party patent rights would have been licensed under such
third party patent rights,
HEI agrees, at its sole expense, to indemnify, defend, and hold
harmless Company against any such arbitration, claims,
proceedings, actions or demands which arises out of, is based on,
or relates to an allegation that Company has violated or
infringed the patent rights of such third party, but only to the
extent that the acts by Company claimed to violate or infringe
such third party patent rights would have been licensed under
such third party patent rights if Company had been a Subsidiary
of HEI at the time(s) such acts occurred.
HEI's obligations pursuant to this Section 2.2.1 are contingent
upon: (i) Company giving prompt written notice to HEI of any such
claim, action or demand, and (ii) Company reasonably assisting in
the defense, provided however that the failure of Company to give
notice as provided herein shall not relieve HEI of its
obligations pursuant to this Section 2.2.1 except to the extent
such failure resulted in actual detriment to HEI.
In addition, in the event that any such arbitration, claims,
proceedings, actions or demands includes any claim, allegation,
or demand which does not relate to alleged violation or
infringement by Company of patent rights belonging to such third
party, HEI's obligations pursuant to this Section 2.2.1 shall be
limited to indemnification, defense, and/or hold harmless of such
third party's claims, allegations, or demands that arise out of
such third party's claims of patent violation or infringement.
The obligations under this section 2.2.1 shall not apply to any
action, claim, or proceeding by or on behalf of IBM.
2.2.2 Company reserves the right, at its own expense, to
participate in, but not control, the defense of the arbitration,
claim, proceeding, action or demand with
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June 25, 1998
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separate counsel of its own choosing, but not to control the
settlement thereof. If Company chooses to participate in the
defense of the arbitration, claim, proceeding, action or demand,
Company agrees to cooperate reasonably and in good faith with
HEI. No settlement that provides for any loss or adverse
consequence to Company shall be entered without Company's
consent, which consent shall not be unreasonably withheld.
2.2.3 HEI's obligations under Section 2.2.1 are limited to a
cumulative amount of twenty five million dollars
($25,000,000.00), including all expenses incurred by HEI in
investigating, settling, defending, or resolving claims by third
parties pursuant to Section 2.2.1.
3. ASSIGNMENT
This Agreement shall not be transferable or assignable by either party
hereto.
4. MISCELLANEOUS
4.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restriction set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. It
is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants
restrictions without including any of such which may be hereafter
declared invalid, void or unenforceable. In the event that any such
term, provision, covenant or restriction is held to be invalid, void or
unenforceable, the parties hereto shall use their commercially
reasonable efforts to find and employ an alternate means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.
4.2 Further Assurances. Subject to the provisions hereof, the parties
hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be
reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.
Subject to the provisions hereof, each of the parties shall, in
connection with entering into this Agreement, performing its obligations
hereunder and taking any and all actions relating hereto, comply with
all applicable laws, regulations, orders and decrees, obtain all
required consents and approvals and make all required filings with any
governmental agency, other regulatory or administrative agency,
commission or similar authority and promptly provide the parties with
all such information as they may reasonably request in order to be able
to comply with the provisions of this sentence.
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4.3 Parties in Interest. Except as herein otherwise specifically
provided, nothing in this Agreement expressed or implied is intended to
confer any right or benefit upon any person, firm or corporation other
than the parties and their respective successors and permitted assigns.
4.4 Waivers. No failure or delay on the part of the parties in
exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such
right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. No modification or waiver of any
provision of this Agreement nor consent to any departure by the parties
therefrom shall in any event be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
4.5 Change of Law. If, due to any change in applicable law or
regulations or the interpretation thereof by any court of law or other
governing body having jurisdiction subsequent to the effective date of
this Agreement, performance of any provision of this Agreement or any
transaction contemplated thereby shall become impracticable or
impossible, the parties hereto shall use commercially reasonable efforts
to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such provision.
4.6 Headings. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of
this Agreement.
4.7 Counterparts. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be,
an original instrument.
4.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of California, without regard to
its conflict of law provisions.
4.09 Modifications. This Agreement may be modified or amended only
pursuant to an instrument in writing executed by all the parties hereto.
4.10 Entire Agreement. This Agreement and the Sublicense Agreement, as
and to the extent modified by this Agreement, constitute the entire
agreement among the parties relating to the subject matter hereof.
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4.11 Notices. All notices, consents, requests, instructions, approvals
and to her communications provided for herein shall be validly given,
made or served, if in writing and delivered personally, by telegram or
sent by registered mail, postage prepaid to:
HEI: Hyundai Electronics Industries Co., Ltd.
12th Floor Hyundai Jeonja Xxxxxxxx
00 Xxxxxxxxx-xxxx, Xxxxxxx-xx
Xxxxx, Xxxxx
Attention: Senior Manager, Patent Department
Facsimile: 000-00-0000-0000
Company: Maxtor Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000 X.X.X.
Attention: Xx. Xxxxx X. Xxxxxxx
Vice President and General Counsel
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 4.11.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
MAXTOR CORPORATION
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx, Vice President,
General Counsel and Secretary
INDEMNITY AGREEMENT
June 25, 1998
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HYUNDAI ELECTRONICS
INDUSTRIES CO., LTD.
By: /s/ X.X. Xxxxx
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Name: X.X. Xxxxx
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Title: Director
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INDEMNITY AGREEMENT
June 25, 1998
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