EXHIBIT 10.2
SEAGATE
CROSS LICENSE AND
KNOW-HOW TRANSFER AGREEMENT
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
TABLE OF CONTENTS
RECITALS.................................................................1
ARTICLE 1. DEFINITIONS...................................................1
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ARTICLE 2. DESIGN CROSS LICENSE..........................................1
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2.1 Design Cross License......................................1
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2.2 Term......................................................1
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2.3 Scope.....................................................2
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ARTICLE 3. TECHNOLOGY LICENSE AND TRANSFER...............................2
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3.1 Technology License and Transfer...........................2
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3.2 Term......................................................2
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ARTICLE 4. TRANSFER SCHEDULE.............................................3
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4.1 Transfer to Seagate.......................................3
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4.2 Schedule and Form.........................................3
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ARTICLE 5. TRAINING AND TECHNICAL ASSISTANCE.............................3
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5.1 Training..................................................3
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5.2 Technical Assistance......................................4
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ARTICLE 6. CAPITAL EQUIPMENT.............................................5
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ARTICLE 7. MATERIALS.....................................................5
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ARTICLE 8. CONSIDERATION.................................................5
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8.1 Prepaid Royalty...........................................5
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8.2 Ongoing Royalties.........................................5
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8.3 Maximum Royalties.........................................5
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8.4 Royalty Recovery..........................................6
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8.5 Royalty Restrictions......................................6
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ARTICLE 9. TRANSPORTATION AND ASSOCIATED DOCUMENTS.......................6
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ARTICLE 10. PAYMENT TERMS................................................6
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10.1 Prepaid Royalty Payment Schedule..........................6
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10.2 Prepaid Royalty Payment Conditions........................7
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10.3 Ongoing Royalties.........................................7
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ARTICLE 11. TAXES........................................................8
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ARTICLE 12. EXPORT RESTRICTIONS..........................................8
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ARTICLE 13. PROPRIETARY INFORMATION NON-DISCLOSURE.......................8
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13.1 General...................................................8
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13.2 Exceptions................................................8
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ARTICLE 14. INTELLECTUAL PROPERTY INDEMNIFICATION........................9
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14.1 Headway Defense and Indemnification.......................9
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14.2 Seagate Defense and Indemnification.......................9
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14.3 Warranty.................................................. 10
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ARTICLE 15. TERMINATION.................................................. 10
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15.1 Termination of Agreement.................................. 10
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15.2 Survival of Rights and Obligations........................ 10
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15.3 Procedure................................................. 10
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ARTICLE 16. FORCE MAJEURE................................................ 10
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ARTICLE 17. GENERAL...................................................... 11
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17.1 Entire Agreement.......................................... 11
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17.2 Amendments................................................ 11
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17.3 Severability.............................................. 11
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17.4 Descriptive Headings...................................... 11
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17.5 Interpretation............................................ 11
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17.6 Third Party Beneficiary................................... 11
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17.7 Independent Contractor.................................... 11
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17.8 Media Release; Advertising................................ 11
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17.9 Assignment................................................ 12
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17.10 Expenses.................................................. 12
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17.11 Notice.................................................... 12
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17.12 Governing Law............................................. 12
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17.13 Counterparts.............................................. 13
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SEAGATE CROSS LICENSE AND KNOW-HOW TRANSFER AGREEMENT
This Seagate Cross License and Know-How Transfer Agreement is made as of
May 19, 1995, by and among Seagate Technology, Inc. of Scotts Valley,
California, U.S.A., a Delaware corporation, including all divisions and
majority-owned affiliated entities (hereinafter jointly and severally referred
to as "Seagate") and Headway Technologies, Inc., a California corporation, on
behalf of itself, (hereinafter referred to as "Headway").
RECITALS
A. Both Seagate and Headway have conducted extensive research, design and
development efforts related to magneto resistive heads used to read, write
or erase information on or from computer disk drive data storage devices.
B. Both Seagate and Headway, subject to the terms hereof, are willing to cross
license certain of their respective technology rights for the purpose of
development and determining the compatibility between Seagate and Headway
of the potential manufacture and distribution of MR Heads utilizing Headway
Dual Stripe MR Technology.
C. In addition, Headway desires to license and transfer Headway Dual Stripe MR
Technology to enable Seagate to make, use and sell DSMR Heads or other
products utilizing Headway Dual Stripe MR Technology.
D. Concurrently with entering into this Agreement, Seagate and Headway will
enter into that certain Patent Cross License Agreement in the form attached
as Exhibit 1.
NOW, THEREFORE, in consideration of the recitals and of the mutual
covenants and agreements set forth herein, Seagate and Headway hereby agree as
follows:
ARTICLE 1. DEFINITIONS
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Unless the context clearly indicates otherwise, all capitalized terms used in
this Agreement shall have the meanings given them in Exhibit 2 attached hereto
and made a part hereof.
ARTICLE 2. DESIGN CROSS LICENSE
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2.1 Design Cross License. Subject to the terms hereof: (a) Headway hereby
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grants Seagate a limited non-exclusive, worldwide, fully paid-up right
and license to use its MR Head Design for the purpose of further
development, enhancement, modification and improvement in connection
with making, using or selling MR Heads without right to sublicense,
except as provided in Section 3.3; (b) Seagate hereby grants to
Headway a limited non-exclusive, worldwide, fully paid-up right and
license to use Seagate Design Technology for the purposes of
determining and establishing commonality of dimensions between
Headway's MR Head Design and Seagate's Design Technology to enable
Headway to provide wafers, head gimbal assemblies and/or sliders to
Seagate in connection with Seagate's making, using or selling DSMR
Heads and permitting Headway to make, have made, use and/or sell
products utilizing or embodying Seagate's Design Technology, provided
that Headway may not sublicense Seagate's Design Technology except to
Asahi Komag Co., Ltd. ("AKCL"), provided that AKCL and Seagate have by
then executed a patent cross license agreement, or for the purpose of
having a third party make product for Headway's use or sale.; (c)
Seagate agrees to grant to Headway a worldwide fully paid-up license
to improvements Seagate may make to Headway's MR Head Design, provided
that Seagate will identify those improvements that Headway may not
transfer to third parties, including AKCL, without Seagate's prior
written approval; and (d) Headway agrees to grant Seagate a worldwide,
fully paid-up license to improvements Headway may make to Seagate
Design Technology.
2.2 Term. Unless terminated earlier pursuant to Article 15 hereunder, the
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term of the design cross license granted by Section 2.1 shall continue
for five (5) years and may be renewed for an additional period upon
the mutual agreement of the parties. Notwithstanding the foregoing,
the cross license granted by Section 2.1 shall continue to apply to
those products or components produced and thereafter sold embodying or
utilizing the technology so licensed during the life of this Agreement
for as long as such products are in use or are being supported by
Seagate, Headway or their respective successors.
2.3 Scope. The design cross license granted by Section 2.1 shall permit:
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(a) Seagate to make, use and/or sell products utilizing or embodying
Headway's MR Head Design as integrated parts of storage devices used
internally by Seagate or Headway, sold to third parties or end users,
sold separately as component parts of third party storage devices, and
as sold as spare parts incidental to previous sales to support
reasonable needs of Seagate, Headway or their respective customers;
and (b) Headway to make, have made, use and/or sell products utilizing
or embodying Seagate's Design Technology; provided that Headway may
not sublicense Seagate's Design Technology except to AKCL , provided
that AKCL and Seagate have by then executed a patent cross license
agreement, or for the purpose of having a third party make product for
Headway's use or sale.
ARTICLE 3. TECHNOLOGY LICENSE AND TRANSFER
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3.1 Technology License and Transfer.
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(a) Pursuant and subject to the terms and conditions hereof, Headway
hereby grants to Seagate a non-exclusive world-wide, transferable
(pursuant to Section 17.9), royalty-bearing right and license
under Headway Dual Stripe MR Technology to make, use, import,
sell and otherwise dispose of products embodying or utilizing
Headway Dual Stripe MR Technology whether or not DSMR Products.
Headway further agrees:
(i) That it has the all rights necessary to transfer and
license the Headway Dual Stripe MR Technology, and that it
will transfer to Seagate all Headway Dual Stripe MR
Technology that is necessary for Seagate to make, have
made (pursuant to Section 3.3), use, import, sell and
otherwise dispose of DSMR Heads and/or DSMR Products;
(ii) That the Headway Dual Stripe MR Technology and other
information that will be supplied to Seagate by Headway
under this Agreement will be equivalent to what Headway
uses for the development, fabrication and/or manufacture
of DSMR Heads and DSMR Products; and
(iii) This license applies to all Headway Dual Stripe MR
Technology as specified in Schedule 1.
(iv) That Headway will negotiate in good faith to license
Seagate the foregoing rights with respect to future
generations of Headway MR Head technology having
capabilities beyond those presently projected for Headway
Dual Stripe MR Technology.
(b) Seagate agrees to grant to Headway a worldwide fully paid-up
license to improvements Seagate may make to Headway's MR Head
process without the right to sublicense, except to AKCL, provided
that Seagate will identify those improvements that Headway may
not transfer to AKCL, without Seagate's prior written approval;
(c) Seagate agrees to grant Headway and AKCL Seagate's proprietary
suspension designs, subject to the prior negotiation of license
fees or other consideration.
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3.2 Term. Unless terminated earlier pursuant to Article 15 hereunder, the
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term of the technology license granted by Section 3.1 shall continue
indefinitely. Notwithstanding any termination, the license granted by
Section 3.1 shall continue to apply to those products or components
produced and thereafter sold embodying or utilizing the technology so
licensed during the life of this Agreement for as long as such
products are in use or are being supported by Seagate or its
successor.
3.3 Sublicense. In the event of the loss or substantial reduction in
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Seagate's internal capacity to fabricate thin film wafers resulting
from a sudden occurrence over which Seagate did not have reasonable
control and the expectation that such loss or reduction in capacity
shall continue for such a period of time that Seagate reasonably
believes renders it necessary to arrange for an outside source of such
capacity, Headway hereby agrees to grant Seagate the worldwide right
to sublicense the Headway Dual Stripe MR Technology for the limited
purpose of supplying Seagate and Headway with their respective needs
until such time as Seagate's internal capacity can reasonably be
restored; provided that Headway will have the first right to supply
such required capacity at mutually acceptable terms.
ARTICLE 4. TRANSFER SCHEDULE
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4.1 Transfer to Seagate. Within thirty (30) days of the execution of this
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Agreement, Headway will commence the transfer of the Headway Dual
Stripe MR Technology.
4.2 Schedule and Form. Within thirty (30) days following the execution of
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this Agreement under Section 4.1, Seagate and Headway will jointly
develop and complete a schedule, Schedule 1, which will identify the
Headway Dual Stripe MR Technology by category required to be
transferred by Headway to Seagate to enable Seagate to fabricate
wafers, machine sliders and assemble head gimbal assemblies and all
other activities necessary to completely manufacture DSMR Heads and
DSMR Products. Schedule 1 will also specify the methods to be used for
the transfer of the Headway Dual Stripe MR Technology, will specify
the schedule for complete transfer and will outline the expected
schedule for Training and Technical Assistance.
(a) The transfer of Headway Dual Stripe MR Technology identified in
Schedule 1 shall be completed within sixty (60) days after
establishing the schedule of such transfer.
(b) One (1) copy of Headway Dual Stripe MR Technology identified in
Schedule 1 will be supplied to Seagate. It shall be in clear,
legible and reproducible form.
(c) In addition, Seagate may request during the first six (6) months
following the request under Section 4.1 in writing, any other
Information not specified in Schedule 1, which is agreed to be
relevant by Headway and Seagate to the Headway Dual Stripe MR
Technology and Headway shall transfer such Information no later
than thirty (30) days after such request.
(d) The Headway Dual Stripe MR Technology supplied by Headway
pursuant to this Agreement shall be in accordance with Headway's
then standards of measurement and format.
(e) All Headway Dual Stripe MR Technology that is required to be
supplied by Headway pursuant to this Agreement shall be that
which, when requested by Seagate is in the possession of and
under the control of Headway and must be transferred by Headway
even if such transfer requires the payment of fees or royalties
to third parties by Headway.
ARTICLE 5. TRAINING AND TECHNICAL ASSISTANCE
---------------------------------
Headway will make available Training and Technical Assistance as may be
reasonably necessary to enable Seagate to manufacture DSMR Heads.
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5.1 Training. Training will be provided at Headway's designated facility
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as follows:
(a) Headway undertakes to permit Seagate's qualified employees, at
Seagate's request, necessary access to Headway's facility, at
dates and times to be mutually agreed upon, to receive
instructions, information, Training and any other type of
explanation appropriate to the manufacture of DSMR Head and DSMR
Products.
Such permission includes access to all Headway Dual Stripe MR
Technology only. Headway will provide copies of Headway Dual
Stripe MR Technology upon request of Seagate's employees.
Seagate's employees may take notes and upon prior written notice
may take photographs concerning the manufacturing process,
provided said access by Seagate's employees would not be
disruptive to Headway's manufacture or assembly of DSMR Head and
DSMR Products or to the production facility. All such photographs
and notes shall be deemed to be and treated as Information.
(b) To request Training, Seagate shall send a written request to
Headway, specifying the number of instruction man weeks requested
including the number of Seagate's employees, training area and a
schedule of not less than one (1) week before the request is
effective taking into account equipment availability and the
like. Headway shall commence providing such Training within ten
(10) days from the effective date of such request. The scope and
schedule of such Training will be as defined in Schedule 1.
(c) All data and Information supplied by Headway during Training
shall consist of Information in use by Headway for purposes of
training Headway's own employees in connection with the
fabrication and manufacture of DSMR Head and DSMR Products.
(d) Seagate employees, while receiving Training from Headway, shall
be subject to all internal rules and regulations of Headway as
may be necessary to prevent interference with the normal
operation and administration of Headway's facility. Seagate shall
assign one person with the responsibility of overseeing Seagate's
employees according to Headway's directions.
(e) Seagate shall, at its expense, be responsible for all business
travel expenses incurred by its employees while they are at
Headway's site receiving Training.
5.2 Technical Assistance. Technical Assistance shall be provided at
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Seagate's manufacturing facility as follows:
(a) Headway's employees, while rendering Technical Assistance to
Seagate, shall be subject to all internal rules and regulations
of Seagate as may be necessary to prevent interfere with the
normal operation and administration of Seagate's facilities, and
Headway's employees shall be accompanied by a Seagate
representative at all times. It is understood that such rules and
regulations will not prevent or hinder the performance by Headway
of its obligations under this Agreement.
(b) Seagate will, at no cost to Headway, provide Headway's employees
rendering Technical Assistance with office accommodations equal
or similar to those made available to Seagate's employees
performing similar activities. Such accommodation will include
adequate office space, furniture, communications, facilities,
secretarial and clerical assistance and such other items as may
be required to enable Headway's employees to perform their
services.
(c) To request Technical Assistance, Seagate shall send a written
request to Headway specifying the number of man weeks requested,
by technical area, and a schedule of not less than one (1) week
before such request is effective, taking into account equipment
availability and the like. The scope and schedule of such
Technical Assistance shall be as defined in Schedule 1. In no
event shall Technical Assistance be provided in increments of
less than one (1) man weeks. Headway shall commence rendering
such Technical Assistance within ten (10) days from the effective
date of such request. Seagate may cancel in advance any scheduled
period of Technical Assistance by providing Headway with written
notice five (5) days in advance of the commencement of such
Technical Assistance.
(d) Headway's employees rendering Technical Assistance will, in
general, observe Seagate's normal work schedule for the location
to which they are assigned, but in no case shall such employees
be required to work in excess of eight (8) hours per day, or in
excess of forty (40) hours per work week.
(e) Headway shall, at its expense, be responsible for all business
travel expenses incurred by its employees while they are at
Seagate's site and rendering Technical Assistance.
ARTICLE 6. CAPITAL EQUIPMENT
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A schedule of all necessary capital equipment to enable Seagate to
produce/process DSMR wafers will be provided by Headway, which will require
that Information concerning Equipment will be delivered to Seagate within
fifteen (15) days of the execution of this Agreement. The initial schedule of
equipment, tooling and test equipment shall be included in Exhibit 4 to this
Agreement for the DSMR wafer process functions. For those items produced by or
for Headway, either a copy of any necessary information required to produce the
item will be provided, or authorization to use Headway's vendor will be given.
ARTICLE 7. MATERIALS
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Seagate will be provided with a list of all materials critical to the
manufacture of the DSMR Heads and DSMR Products and the name and address of each
supplier on Exhibit 5 hereto, and Information with respect thereto will be
delivered to Seagate with the process documentation identified in Schedule 1.
ARTICLE 8. CONSIDERATION
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In consideration for the license and transfer of Headway Dual Stripe MR
Technology and rendering of Technical Assistance and Training under this
Agreement, Seagate will pay Headway as follows:
8.1 Prepaid Royalty. Seagate agrees to pay Headway with a prepaid royalty
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payment of up to [*] Dollars ($[*]) conditioned upon Headway's meeting
the performance criteria identified in Section 10.1. This payment
shall be considered a prepaid royalty, subject to recovery by Seagate
as a credit against future royal payments as provided in Section 8.4
below.
8.2 Ongoing Royalties. Seagate agrees to pay ongoing royalties for
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products actually sold by Seagate utilizing or embodying Headway Dual
Stripe MR Technology as follows:
(a) For each DSMR Head shipped from Seagate head manufacturing or its
sublicensees in accordance with Section 3.3 to Seagate drive
manufacturing for incorporation into a Seagate disk drive,
Seagate will pay a royalty of [*] ($[*]) per Head for the first
[*] ([*]) DSMR Heads and [*] ($[*]) per DSMR Head shipped
thereafter.
(b) For each DSMR Head actually sold by Seagate to third party
original equipment manufacturers (including the Hewlett-Packard
Company) and not incorporated into a Seagate disk drive, Seagate
will pay a royalty of [*] ($[*]) per DSMR Head sold for the first
[*]=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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like. The scope and schedule of such Technical Assistance shall
be as defined in Schedule 1. In no event shall Technical
Assistance be provided in increments of less than one (1) man
weeks. Headway shall commence rendering such Technical Assistance
within ten (10) days from the effective date of such request.
Seagate may cancel in advance any scheduled period of Technical
Assistance by providing Headway with written notice five (5) days
in advance of the commencement of such Technical Assistance.
(d) Headway's employees rendering Technical Assistance will, in
general, observe Seagate's normal work schedule for the location
to which they are assigned, but in no case shall such employees
be required to work in excess of eight (8) hours per day, or in
excess of forty (40) hours per work week.
(e) Headway shall, at its expense, be responsible for all business
travel expenses incurred by its employees while they are at
Seagate's site and rendering Technical Assistance.
ARTICLE 6. CAPITAL EQUIPMENT
-----------------
A schedule of all necessary capital equipment to enable Seagate to
produce/process DSMR wafers will be provided by Headway, which will require that
Information concerning Equipment will be delivered to Seagate within fifteen
(15) days of the execution of this Agreement. The initial schedule of
equipment, tooling and test equipment shall be included in Exhibit 4 to this
Agreement for the DSMR wafer process functions. For those items produced by or
for Headway, either a copy of any necessary information required to produce the
item will be provided, or authorization to use Headway's vendor will be given.
ARTICLE 7. MATERIALS
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Seagate will be provided with a list of all materials critical to the
manufacture of the DSMR Heads and DSMR Products and the name and address of each
supplier on Exhibit 5 hereto, and Information with respect thereto will be
delivered to Seagate with the process documentation identified in Schedule 1.
ARTICLE 8. CONSIDERATION
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In consideration for the license and transfer of Headway Dual Stripe MR
Technology and rendering of Technical Assistance and Training under this
Agreement, Seagate will pay Headway as follows:
8.1 Prepaid Royalty. Seagate agrees to pay Headway with a prepaid royalty
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payment of up to [*] Dollars ([*]) conditioned upon Headway's meeting
the performance criteria identified in Section 10.1. This payment
shall be considered a prepaid royalty, subject to recovery by Seagate
as a credit against future royalty payments as provided in Section 8.4
below.
8.2 Ongoing Royalties. Seagate agrees to pay ongoing royalties for
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products actually sold by Seagate utilizing or embodying Headway Dual
Stripe MR Technology as follows:
(a) For each DSMR Head shipped from Seagate head manufacturing or its
sublicensees in accordance with Section 3.3 to Seagate drive
manufacturing for incorporation into a Seagate disk drive,
Seagate will pay a royalty of [*] ([*]) per Head for the first
[*] ([*]) DSMR Heads and Fifteen Cents ([*]) per DSMR Head
shipped thereafter.
(b) For each DSMR Head actually sold by Seagate to third party
original equipment manufacturers (including the Hewlett-Packard
Company) and not incorporated into a Seagate disk drive, Seagate
will pay a royalty of [*] ([*]) per DSMR Head sold for the first
[*]=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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[*] ([*]) DSMR Heads and [*] ($[*]) per DSMR Head sold
thereafter.
8.3 Maximum Royalties. Notwithstanding anything else herein, Seagate will
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not be obligated to pay more than the following amounts for the sale
of DSMR Heads of the type identified which amounts will not be reduced
by royalty recovery provisions provided by Section 8.4 below:
(a) [*] Dollars ($[*]) for Generation 1 DSMR Heads having the
capacity of up to 900 megabits per square inch;
(b) [*] Dollars ($[*]) for Generation 2 DSMR Heads having the
capacity of between 900 and 1,500 megabits per square inch; and
(c) [*] Dollars ($[*]) for Generation 3 DSMR Heads having a capacity
of between 1,500 to 2,000 megabits per square inch.
The license granted by Section 3.1 shall be considered fully paid-up
upon payment of the foregoing amounts with respect to the specific
category of DSMR Heads noted.
8.4 Royalty Recovery. Seagate shall be entitled to retain as an offset
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and credit against ongoing royalties [*] percent ([*]%) of all
royalty payments owed to Headway at the time such payments are due to
the extent necessary and until the entire advance royalty payments
actually made by Seagate of up to [*] ($[*]) has been recovered by
Seagate.
8.5 Royalty Restrictions. No royalty will be payable by Seagate to
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Headway in the event and to the extent Seagate utilizes or embodies
Headway Dual Stripe MR Technology in products that do not constitute
DSMR Products or with respect to DSMR Heads sold or used by Seagate
that are produced from Headway supplied wafers, sliders or head gimbal
assemblies.
ARTICLE 9. TRANSPORTATION AND ASSOCIATED DOCUMENTS
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Headway will make and be responsible for all charges and arrangements for the
transfer of the technology associated with this license. Any tangible property
such as wafers, chips, DSMR Heads, gimbal assemblies and the like will be
transferred under terms specified by separate purchase orders in each occasion.
ARTICLE 10. PAYMENT TERMS
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10.1 Prepaid Royalty Payment Schedule. Seagate agrees to make prepaid
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non-refundable (except as provided by Sections 8.4 and 10.2(a))
royalty payments according and subject to the schedule set forth
below. All dates are approximate, provided, however, that the payments
are specifically conditioned upon Headway's satisfaction of the
milestone or waiver by Seagate.
Date Payment Milestone
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1) 5/95 $[*] Execution of this Agreement
and commencement of events
outlined in Article 4.
2) 7/95 $[*] Headway to complete delivery
to Seagate of all relevant
Headway Dual Stripe MR
Technology identified as
Generation 1 in Schedule 1.
3) 8/95 $[*] Headway to deliver to
Seagate a sufficient
quantity of 1.2 gigabits per
square inch DSMR Heads to
enable
[*]=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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Seagate to test in prototype
drives. DSMR Heads shall meet
mutually defined
specifications and
performance criteria
including agreement on media,
channel type/code, etc.
4) 11/95 $[*] Seagate to conduct prototype
drive evaluation with 1.2
gigabits per square inch DSMR
Heads. Evaluation to be
conducted/measured per the
conditions identified in
milestone number 3) above.
5) 7/96 $[*] Headway to deliver to Seagate
a sufficient quantity of 1.8
gigabits per square inch DSMR
Heads. DSMR Heads shall meet
mutually defined
specifications and
performance criteria
including agreement on media,
channel type/code, etc.
6) 10/96 $[*] Seagate to conduct prototype
drive evaluation with 1.8
gigabits per square inch DSMR
Heads. Evaluation to be
conducted/measured per the
conditions identified in
milestone number 5) above.
10.2 Prepaid Royalty Payment Conditions. The following conditions apply
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to prepaid royalty payments:
(a) If Headway fails to deliver item 2) within three months of the
identified due date as defined in Schedule 1, the payment
identified in item 1) shall be refunded to Seagate within one
week of such failure.
(b) If Headway fails to deliver items 3) or 5) within three (3)
months of the identified due date, Seagate shall have the
option to continue or terminate this Agreement without further
obligation for payment of fixed-fee amounts. Seagate shall have
continued access to Headway Dual Stripe MR Technology delivered
as of that date, and ongoing royalty payment obligations shall
continue.
(c) Seagate's failure to evaluate 1.2 gigabits per square inch and
1.8 gigabits per square inch DSMR Heads within three (3) months
of receipt of such DSMR Heads that meet the mutually agreed
performance and test criteria will not relieve Seagate from the
obligation to make payments called for by items 4) or 6) above.
(d) Both parties agree to use their best efforts to define
performance, test and acceptance criteria that will include but
not be limited to:
-Electrical/magnetic parametrics
-Mechanical/tribological properties
-Environmental issues
-Reliability criteria.
(e) Seagate shall be relieved from any further obligation to make
prepaid royalty payments upon the occurrence of the following:
(i) Headway's failure to continue active business operations;
and
(ii) Transfer of a majority (greater than 50%) interest in
Headway or the sale of assets or a transaction that
constitutes the functional equivalent of the transfer of
the
[*]=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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business engaged in the manufacture of the DSMR Products
to a third party engaged in the development, manufacture
or sale of computer disk drive data storage devices or the
development, manufacture or sale of inductive or magneto
resistive Head components; provided the majority ownership
of Headway by Hewlett-Packard Company and an underwritten
public offering of Headway capital stock is specifically
permitted hereby.
10.3 Ongoing Royalties. Ongoing Royalties shall accrue upon sale or
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internal shipment but shall not be due and payable until thirty (30)
days after the end of the calendar quarter in which the sale or
internal shipment occurs. Within thirty (30) calendar days after the
end of each quarter, including the quarter following the termination
of the Agreement, Seagate shall transmit to Headway a written
report, with supporting documents, indicating the total amount of
remuneration owing Headway for such quarter according to Section
8.2, together with any payment due.
10.4 Audit Rights. Seagate agrees to keep accurate books and records of
------------
all DSMR Heads internally shipped or sold. Headway shall have the
right to have a qualified independent third party such as a
certified public accounting firm inspect and audit such books and
records during Seagate's normal business hours, upon at least five
(5) days prior written notice once per year. If Headway's
independent agent should conduct an audit, and such audit shows that
any of Seagate's statements previously submitted to Headway contain
an error which results in a payment to Headway that was in error by
5% or more of the actual amount due Headway, the expense of the
audit by Headway shall be borne by Seagate; otherwise Headway shall
bear the expense of the audit.
ARTICLE 11. TAXES
-----
Headway shall be responsible for and shall pay all taxes, duties, assessments
and governmental charges, however designated, associated with the performance by
Headway of its obligations hereunder or the payment of any amounts by Seagate
pursuant to this Agreement, which are now or hereafter imposed under or by any
governmental authority or agency.
ARTICLE 12. EXPORT RESTRICTIONS
-------------------
Seagate and Headway agree that they and their affiliates will not dispose of any
U.S. originated equipment, software, products, services, reports, know-how or
technical data furnished to them pursuant to or as a result of this Agreement
which is subject to destination control under the export control regulations of
the United States now or hereafter in effect, unless prior approval is obtained
from the appropriate agency or department of the United States Government.
ARTICLE 13. PROPRIETARY INFORMATION NON-DISCLOSURE
--------------------------------------
13.1 General. Headway and Seagate agree to keep in confidence and not
-------
disclose to others during the term of and for a period of three (3)
years after the termination of this Agreement all knowledge,
information and data furnished to it by the other party hereto and
claimed by the other party hereto to be proprietary (including
notes, videos, photographs and the like regardless of tangible
medium) provided that such proprietary information is either in
writing or if not in writing, identified in writing and such
information is marked or identified to indicate the claims of
ownership. Headway and Seagate agree that neither shall use or
reproduce for use in any way any proprietary information of the
other except in furtherance of the relationship set forth in this
Agreement. Headway and Seagate agree to protect the proprietary
information with the same standard of care and procedures which each
uses to protect its own proprietary information of similar
importance, but in no case less than reasonable care.
8
13.2 Exceptions. Notwithstanding anything set forth in Section 13.1
----------
hereof, the proprietary information shall not include any
information which:
(a) Was at the time received or which prior to disclosure by the
receiving party becomes, through no act or failure on the part
of the receiving party, generally known or available to the
public;
(b) Is known to the receiving party at the time it received such
information as evidenced by documentation then rightfully in
the possession of the receiving party;
(c) Is furnished to others by a disclosing party hereunder without
restriction on the third party's rights to disclose the
information;
(d) Is rightfully received by the receiving party from the third
party without restriction by that third party on disclosure and
without the knowledge of the receiving party of a breach of an
obligation running directly or indirectly to the other party
hereto;
(e) Is released from restrictions imposed hereunder by written
release given by the owner of the information;
(f) Has been disclosed pursuant to a requirement of an applicable
governmental agency or of applicable law without restrictions
or other protections against public disclosure, or is required
to be disclosed by operation of applicable law; provided,
however, that the receiving party shall have first given
written notice of such required disclosure to the disclosing
party, made a reasonable effort to obtain a protective order
requiring that the proprietary information so disclosed be used
only for the purposes for which disclosure is required, and
taken reasonable steps to allow the disclosing party to seek to
protect the confidentiality of the proprietary information
required to be disclosed; or
(g) Is independently developed by the receiving party without use,
directly or indirectly, of the proprietary information received
from the other party hereto.
ARTICLE 14. INTELLECTUAL PROPERTY INDEMNIFICATION
-------------------------------------
14.1 Headway Defense and Indemnification. Headway shall at its own
-----------------------------------
expense defend any claim or suit instituted against Seagate which is
based upon an allegation that the use of Headway Dual Stripe MR
Technology in connection with the manufacture or sale of DSMR Heads
or DSMR Products by Seagate hereunder constitutes an infringement of
any intellectual or industrial property rights of a third party, and
Headway shall indemnify Seagate against any award or damage and any
reasonable cost incident thereto made against Seagate by final
judgment of court of last resort if it is determined therein that
any such manufacture or sale of DSMR Heads or DSMR Products
constitute an infringement of any such intellectual or industrial
property rights, provided that, five business days after receipt,
Seagate gives Headway notice in writing of any threat, notice or
claim of infringement and permits Headway through Headway's counsel
to defend the same and give Headway all available information,
assistance and authority to enable Headway to assume such defense.
Headway shall have full control of the defense with regard to such
threat, notice, claim or suit including appeals from any judgment
therein and any negotiation for the settlement or compromise thereof
and full authority to enter into a binding settlement agreement or
compromise. If any such DSMR Heads or DSMR Products are held by such
court to constitute infringement or in order to avoid potential
infringement, Seagate and Headway agree that Headway shall at its
option either:
(a) procure for Seagate the fight to continue manufacturing and
selling such DSMR Heads or DSMR Products; or
9
(b) provide the necessary modification in the DSMR Heads or DSMR
Products so they no longer infringe third parties' intellectual
or industrial property rights, and furnish Seagate with the
necessary information and data to enable Seagate to manufacture
such DSMR Heads or DSMR Products.
14.2 Seagate Defense and Indemnification. Seagate represents and warrants
-----------------------------------
that it shall hold harmless Headway from any action claiming
infringement of intellectual or industrial property rights with
respect to the Seagate Design Technology furnished by Seagate to
Headway to the same extent and in the same manner as provided by
Headway under Section 14.1 above.
14.3 Warranty. Seagate and Headway hereby warrant that they have the
--------
requisite authority to grant the licenses to each other pursuant to
this Agreement and that they have not received any written notice of
infringement with respect to any of the technology licensed
hereunder.
ARTICLE 15. TERMINATION
-----------
15.1 Termination of Agreement. Without limiting any rights or remedies
------------------------
available to the parties, this Agreement may be terminated at any
time upon the mutual written agreement of both parties hereto.
Either party may, by written notice, terminate and/or suspend its
performance under this Agreement, hereunder without penalty upon the
occurrence of one or more of the following events of default:
(a) the other party fails to comply with any payment provisions of
this Agreement and such condition is not remedied within
fifteen (15) days after written notice hereof; and
(b) the other party fails to perform any material non-payment
obligation hereunder and such condition is not remedied within
thirty (30) days after written notice thereof;
(c) the other party becomes bankrupt or insolvent, suffers a
receiver to be appointed or makes an assignment for the benefit
of creditors or the dissolution or liquidation of the other
party;
(d) upon sixty (60) days prior written notice to the other party,
if the other party's performance hereunder constitutes a series
of continuing or repetitive material breaches of this Agreement
which although timely cured or remedied as set forth herein,
cause this Agreement to fail of its essential purpose.
(e) the occurrence of an event that constitutes a transfer of a
majority (greater than 50%) of the voting interest in Headway
or the sale of assets or a transaction that constitutes the
functional equivalent of the transfer of the business engaged
in the manufacture of the DSMR Products to a third party
engaged in the development, manufacture or sale of computer
disk drive data storage devices or the development, manufacture
or sale of inductive or magneto resistive Head components;
provided that the majority ownership of Headway by Hewlett-
Packard and an underwritten public offering of Headway capital
stock is specifically permitted hereby.
15.2 Survival of Rights and Obligations. Notwithstanding the above
----------------------------------
Section 15.1, the following rights and obligations of the parties
shall survive the termination:
(a) the obligation of Seagate to pay all accrued amounts payable
including ongoing royalty payments if shipments of DSMR
Products continue (as of the date of termination) and the
corresponding right of audit provided hereunder;
(b) the indemnification rights of a non-defaulting party under
Article 14 above; and
10
(c) Seagate shall continue to have rights to all portions of
Headway Dual Stripe MR Technology for which it has made payment
or otherwise performed.
15.3 Procedure. In case either party mails a termination notice, such
---------
notice shall specify this Article 15 and the Section(s) of this
Agreement under which the default has occurred.
ARTICLE 16. FORCE MAJEURE
-------------
If the performance of this Agreement, or any obligation hereunder is prevented,
restricted or interfered with by reason of any act or condition beyond the
reasonable control of the affected party including but not limited to: fire,
flood, earthquake, explosion or other casualty or accident, strikes or labor
disputes, war or other violence, any law, order, proclamation, regulation,
ordinance, demand or requirement of any governmental agency, or any other act or
condition beyond the reasonable control of the affected party, the party so
affected, upon giving prompt notice to the other party, shall be excused from
such performance to the extent of such prevention, restriction, or interference;
provided, however, that the party so affected shall take all reasonable steps to
avoid or remove such cause of nonperformance, including cooperating with the
other party to enable the other party to undertake performance during the period
of prevention, and shall resume performance hereunder with dispatch whenever
such causes are removed.
If performance is delayed more than ninety (90) days, the other party shall have
the right to terminate this Agreement, without any further liability resulting
therefrom.
ARTICLE 17. GENERAL
-------
17.1 Entire Agreement. This Agreement, together with all documents,
----------------
schedules and exhibits attached hereto or referenced herein,
constitutes the entire agreement between the Parties with respect to
the transaction contemplated hereby and supersedes and is in full
substitution for any and all prior agreements and understandings
between the Parties relating to such transactions.
17.2 Amendments. No modification, termination, extension, renewal or
----------
waiver of any provisions of this Agreement shall be binding upon
either party unless made in writing and signed by an authorized
officer of each of the parties.
17.3 Severability. In case any one or more of the provisions contained in
------------
this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, except in those instances where
removal or elimination of such invalid, illegal or unenforceable
provision or provisions would result in a failure of consideration
under this Agreement, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
17.4 Descriptive Headings. The descriptive headings of the several
--------------------
Articles and Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
17.5 Interpretation. Should any provision of this Agreement require
--------------
judicial interpretation, mediation or arbitration, it is agreed that
the court, mediator or arbitrator interpreting or construing the
same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of
construction that a document is to be construed more strictly
against the party who itself or through its agents prepared the
same, it being agreed that all parties, directly or through their
agents, have participated in the preparation hereof.
11
17.6 Third Party Beneficiary. This Agreement is intended for the benefit
-----------------------
of the parties and their permitted assigns, and no other person
shall be entitled to rely upon this Agreement or be entitled to any
benefits under this Agreement.
17.7 Independent Contractor. Neither party shall, for any purpose, be
----------------------
deemed to be an agent of the other party and the relationship
between the parties shall only be that of independent contractors.
17.8 Media Release; Advertising. Neither party shall issue any press
--------------------------
release or otherwise announce or disclose the facts, circumstances
or existence of this Agreement without consent in advance of the
other party. No advertising by either party shall display any of the
other's trademarks or refer to the other as the manufacturer of the
Products, or any of them, without the prior written approval of the
other. Any commercial advertising of this Agreement (including the
supplies and services hereunder and the pictures and descriptions,
or samples thereof) by any party is prohibited, except as shall have
occurred prior to the Effective Date and except with the other
party's written approval.
17.9 Assignment. This Assignment shall be binding upon and inure to the
----------
benefit of the Parities and their respective successors and
permitted assigns. Neither party hereto shall sell, transfer, lease,
assign, pledge, mortgage, hypothecate or otherwise dispose of any of
the rights, privileges, duties and obligations granted or imposed
upon it under this Agreement.
17.10 Expenses.
--------
(a) Except as otherwise set forth herein, the Parties shall each
bear their own legal and accounting fees and all other costs,
expenses and fees incurred by them in connection with this
Agreement and the transactions contemplated hereby.
(b) In the event a dispute between the parties hereunder with
respect to this Agreement must be resolved by litigation, or
Headway must engage an attorney to collect any amounts due and
owing to it hereunder, the prevailing party shall be entitled to
receive reimbursement for all associated costs and expenses
(including, without limitation, reasonable attorney's fees) from
the other party.
17.11 Notice. Unless otherwise specified in this Agreement, all notices
------
and other communications permitted or required by the provisions of
this Agreement shall be in writing and shall be mailed, telecopied,
telegraphed, telexed or delivered to the other party at the address
shown below (or at such other address as either party may designate
in writing to the other party during the term of the Agreement in
accordance with this Section 15.1 1) and shall be effective and
deemed received:
(a) if mailed, when received by the addressee;
(b) if telecopied, when received by the addressee;
(c) if telegraphed, when delivered by the telegraph company to the
addressee;
(d) if telexed, when dispatched and confirmation of message received
by the sender; or
(e) if personally delivered, when delivered to the addressee.
(i) if intended to Headway, to: Xxxxx Xxxxxxxxx
HEADWAY TECHNOLOGIES, INC.
000 X. Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
12
(ii) if intended to Seagate, to: Xxx Xxxxxx
SEAGATE TECHNOLOGY, INC.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
17.12 Governing Law. This Agreement and its performance shall be governed
-------------
by, subject to and construed in accordance with the laws of the
State of California without application of the principles of
conflicts of law.
17.13 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
HEADWAY TECHNOLOGIES, INC.
BY: /s/ Xxxxx Xxxxxxxxx
-----------------------
ITS: President & CEO
-----------------------
SEAGATE TECHNOLOGY, INC.
BY: [SIGNATURE ILLEGIBLE]
---------------------------
ITS: C.C.C. COMPONENTS
---------------------------
13
EXHIBIT 2
DEFINITIONS
"Information" means all know-how, information, all documentation,
------------
inventions (whether or not patentable, but excluding patents thereon and whether
or not reduced to practice), other intellectual property, discoveries,
improvements, manufacturing and production processes, methods, techniques,
approaches, data and other information (including but not limited to schematics,
flow charts, test methods, purchase specifications, engineering specifications,
computer programs, technical data, software and log books).
"MR Head" means that kind or category of devices or components designed and
-------
manufactured for the purpose of recording, reading or erasing information on or
from a computer disk drive storage device utilizing or embodying magneto
resistive principles and/or technology, including a magneto resistive reader
head and an inductive writer head.
"MR Head Design" shall mean the physical characteristics and/or dimensions
--------------
and representations thereof specially relating to the wafer level transducer
design of or embodied in magneto-resistive heads owned or used by Headway as of
the date hereof including: drawings, models, purchase specifications,
engineering specifications, test specifications, geometric details, wafer layout
specifications, dimensions, materials used and documentation thereof any or all
of which may be confidential information not generally known to the public,
whether patentable or not. Improvements, modifications and enhancements to MR
Head Design shall be deemed a part of MR Head Design. MR Head Design shall
exclude all patents or patent applications. Specifically excluded is all
information related to fabrication and processing techniques for wafer
fabrication.
"Headway Dual Stripe MR Technology" means Information developed, owned or
---------------------------------
used by Headway relating to the DSMR Head excluding Information regarding slider
and head gimbal assembly fabrication or processing techniques beyond that which
is included in the DSMR Head wafer process.
"DSMR Head" means the particular form of MR Head employing a magnetic read
---------
transducer employing two or more active magneto-resistive thin film elements
operating in the differential mode to play back information previously recorded
in a magnetic media detailed in the Specifications attached as Exhibit 3.
Exhibit 3 will be completed and attached within thirty (30) days of execution of
this document.
"DSMR Product" means an individual DSMR Head or any assembly consisting of
------------
one or more DSMR Heads or combination thereof
"Specifications" means the specifications for the DSMR Head as set forth on
--------------
Exhibit 3.
"Seagate Design Technology" means the physical dimensions of Seagate's
-------------------------
design of magnetic heads specifically relating to air bearing, slider,
suspension, top bond pad and transducer and lapping guide placement on wafers
excluding all Information related to fabrication and processing techniques for
wafer fabrication, top bond pad, slider machining, air bearing, head gimbal
assembly, or methods of deposition and composition of film or other process
related Information. As of the date of the Agreement, improvements to the
Seagate Design Technology shall be deemed part of the Seagate Design Technology.
"Training" means hands-on, production, assembly, testing and se operations
--------
consistent with those currently conducted in connection with the Headway Dual
Stripe MR Technology, including detailed technical product design reviews,
facility assessment, production process reviews, equipment and tooling support,
material sources, planning, design and configurations of testers and test
equipment, software requirements, maintenance procedures and other related
matters, as requested by Seagate.
"Technical Assistance" means assistance to Seagate in on-site equipment
--------------------
installation, set-up and calibration; technical and trouble shooting, technical
assistance in connection with the transfer and delivery of the Headway Dual
Stripe MR Technology and to Seagate as contemplated under this Agreement; and to
assist Seagate in on-site training and technical assistance in connection with
its operations of the Headway Dual Stripe MR Technology following delivery.
"Equipment" means capital equipment, tooling and the like reasonably
---------
necessary for Seagate to fulfill its obligations hereunder.
