EXHIBIT 10.53
LICENSE AGREEMENT ("Agreement") with an
Effective Date of January 1, 1997 between
INTERNATIONAL BUSINESS MACHINES
CORPORATION, a New York corporation ("IBM"), and
READ-RITE CORPORATION, a Delaware corporation
("READ-RITE").
Each of the parties (as "Grantee") desires to acquire a
nonexclusive license under patents of the other party (as
"Grantor"). In consideration of the premises and mutual
covenants herein contained, IBM and READ-RITE agree as
follows:
Section 1. Definitions
1.1 "Information Handling System" shall mean any
instrumentally or aggregate of instrumentalities primarily
designed to compute, classify, process, transmit, receive,
retrieve, originate, switch, store, display, manifest, measure,
detect, record, reproduce, handle or utilize any form of
information, intelligence or data for business, scientific,
control or other purposes.
1.2 "IHS Product" shall mean an Information Handling
System or any instrumentality or aggregate of
instrumentalities (including, without limitation, any
component, subassembly, computer program or supply)
designed for incorporation in an Information Handling
System; provided, however, that a Manufacturing Apparatus
(as defined hereinafter) shall not be considered to be an IHS
Product.
1.3 "IBM Licensed Patents" and "READ-RITE Licensed
Patents" shall mean all patents, including utility models and
typeface design patents and registrations (but not including
any other design patents or registrations) of Grantor:
(a) issued or issuing on patent applications entitled to
an effective filing date prior to January 1, 2001 ("Futures
Date");
(b) which, but for this Agreement, would be
infringed by Grantee's making, using, importing, offering for
sale, or leasing, selling or otherwise transferring a Grantee's
Licensed Product in the country in which such patent exists;
and
(c) under which patents or the applications therefor
Grantor or any of its Subsidiaries now has, or hereafter
obtains, the right to grant licenses to Grantee of or within the
scope granted herein without such grant or the exercise of
rights thereunder resulting in the payment of royalties or other
consideration by Grantor or its Subsidiaries to third parties
(except for payments between Grantor and its Subsidiaries,
and payments to third parties for inventions made by said third
parties while employed by Grantor or any of its Subsidiaries).
Licensed Patents shall include said patent
applications, continuations in part of said patent applications,
and any patents reissuing on any of the aforesaid patents.
1.4 "Licensed Patents" shall mean either IBM Licensed
Patents or READ-RITE Licensed patents as the context
indicates.
1.5 "Licensed Products" shall mean either IBM Licensed
Products or READ-RITE Licensed Products as the context
indicates.
1.6 "Magnetic Medium" shall mean a rigid planar or
flexible element having a magnetic material coated or plated
on or otherwise deposited on, or incorporated in, one or both
surfaces of said element and primarily designed for
magnetically storing digital information recorded thereon.
1.7 "Magnetic Transducer Apparatus" shall mean an IHS
Product comprising any instrumentality or aggregate of
instrumentalities (including, without limitation, head
assemblies, head assembly suspension apparatus, base plates,
slider mechanisms, head arms and any signal processing
circuitry carried thereby or disposed thereon, motion actuators
and supporting carriages) primarily designed for reading,
writing or erasing information on, in or from a Magnetic
Medium by transducing certain of the magnetic characteristics
of such medium to electrical signals, or vice versa, which
characteristics and signals are indicative of such information.
Magnetic Transducer Apparatus shall include apparatus
designed for magneto optical recording, but shall not include
apparatus designed for optical recording.
1.8 "IBM Licensed Products" shall mean IHS Products.
1.9 "READ-RITE Licensed Products" shall mean
Magnetic Transducer Apparatus.
1.10 "Manufacturing Apparatus" shall mean any
instrumentality or aggregate of instrumentalities primarily
designed for use in the fabrication (including testing) of an
IHS Product licensed herein.
1.11 "Subsidiary" of a party hereto or of a third party shall
mean a corporation, company or other entity:
(a) more than fifty percent (50%) 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 a party hereto or such third party, but such corporation,
company or other entity shall be deemed to be a Subsidiary
only so long as such ownership or control exists; or
(b) which does not have outstanding shares or
securities, as may be the case in a partnership, joint venture or
unincorporated association, but more than fifty percent (50%)
of whose ownership interest representing the right to make the
decisions for such corporation, company or other entity is now
or hereafter, owned or controlled, directly or indirectly, by a
party hereto or such third party, but such corporation,
company or other entity shall be deemed to be a Subsidiary
only so long as such ownership or control exists; and
(c) notwithstanding (a) and (b) above, READ-RITE
SMI Corporation, a Japanese corporation ("READ-RITE
SMI"), shall be deemed a Subsidiary of READ-RITE, but only
so long as READ-RITE owns or controls, directly or
indirectly, not less than twenty percent (20%) of the
outstanding shares or securities (representing the right to vote
for the election of directors or other managing authority) of
such corporation.
Section 2. Grants of rights
2.1 Each party, as Grantor, on behalf of itself and its
Subsidiaries grants to the other, as Grantee, a worldwide,
nonexclusive license under Grantor's Licensed Patents:
(a) to make, use (including the right to use any
apparatus and practice any method in making), import, offer
for sale, and lease, sell and/or otherwise transfer Grantee's
Licensed Products;
(b) to have Grantee's Licensed Products made by
another manufacturer for the use and/or lease, sale or other
transfer by Grantee only when the conditions set forth in
Section 2.2 are met; and
(c) to make, have made, use and have used
Manufacturing Apparatus and to practice and have practiced
any method involved in the manufacture or use thereof;
provided, however, that the rights granted in this Section 2.1
(c) shall not serve to enlarge the scope of the rights granted in
Section 2.1(b).
The license granted by each party hereunder is worldwide.
[Section deleted - confidential treatment requested]
2.2 The license to have products made granted in Section
2.1(b) to Grantee:
(a) shall only apply when the specifications for such
Grantee's Licensed Products were created by Grantee (either
solely or jointly with one or more third parties);
(b) shall only be under claims of Grantor's Licensed
Patents, the infringement of which would be necessitated by
compliance with such specifications; and
(c) shall not apply to any products in the form
manufactured or marketed by said other manufacturer prior to
Grantee furnishing of said specifications.
Unless Grantee informs Grantor to the contrary,
Grantee shall be deemed to have authorized said other
manufacturer to make Grantee's Licensed Products under the
license granted to Grantee in this section when the conditions
specified in this Section 2.2 are fulfilled. In response to a
written request identifying a product and a manufacturer,
Grantee shall in a timely manner inform Grantor of the
quantity of such product, if any, manufactured by such
manufacturer pursuant to the license granted in Section 2.1(b).
2.3 No license or immunity is granted under this
Agreement by either party, either directly or by implication,
estoppel or otherwise to any third parties acquiring items from
either party for the combination of such acquired items with
other items (including items acquired from either party hereto)
or for the use of such combination even if such items have no
substantial use other than as part of such a combination.
2.4 IBM on behalf of itself and its Subsidiaries covenants
not to xxx XXXX-RITE for its purchase, use, import, offer for
sale, sale and lease of READ-RITE Licensed Products made
by another manufacturer that are covered by the claims of
IBM Licensed Patents; provided, however, that the covenant
in this Section 2.4 shall not apply to or serve to enlarge the
scope of READ-RITE's license to have products made
granted in Sections 2.1(b) and 2.1(c). Further, the covenant in
this Section 2.4 shall not impair or limit any of IBM's rights to
institute any action or suit against any manufacturer from
whom READ-RITE purchases READ-RITE Licensed
Products.
2.5 READ-RITE on behalf of itself and its Subsidiaries
covenants not to xxx IBM for its purchase, use, import, offer
for sale, sale and lease of IBM Licensed Products made by
another manufacturer that are covered by the claims of IBM
Licensed Patents; provided, however, that the covenant in this
Section 2.5 shall not apply to or serve to enlarge the scope of
IBM's license to have products made granted in Sections
2.1(b) and 2.1(c). Further, the covenant in this Section 2.5
shall not impair or limit any of READ-RITE's rights to
institute any action or suit against any manufacturer from
whom IBM purchases IBM Licensed Products.
2.6 Subject to Section 2.7, the licenses granted herein
shall include the right of each party to grant sublicenses to its
Subsidiaries, which sublicenses may include the right of the
sublicensed Subsidiaries to sublicense other Subsidiaries of
said party. No sublicense shall be broader in any respect at
any time during the life of this Agreement than the license
held at that time by the party that granted the sublicense.
2.7 Subject to Section 2.10, a sublicense granted to a
Subsidiary shall terminated on the earlier of:
(a) the date such Subsidiary ceases to be a
Subsidiary; and
(b) the date of termination or expiration of the
license of the party that granted the sublicense.
If a Subsidiary ceases to be a Subsidiary and holds
any patents under which a party hereto is licensed, such
license shall continue for the term defined herein.
2.8 In the event that neither a party nor any of its
Subsidiaries has the right to grant a license under any
particular Licensed Patent of the scope set forth in Section 2,
then the license granted herein under said Licensed patent
shall be of the broadest scope which said party or any of its
Subsidiaries has the right to grant within the scope set forth
above.
2.9 If, after the Effective Date, a party or any of its
Subsidiaries ("Acquiring Party") acquires assets, either by
acquiring an entity which owns the assets or by acquiring the
assets from such an entity, and said entity is, as of the date of
acquisition, licensed by the other party ("Licensor") under one
or more Licensed Patents through an existing agreement
pursuant to which royalties or other payments are made by
said entity to said Licensor, then the license and other rights
granted herein to the Acquiring Party with respect to said
Licensed Patents shall apply to products manufactured
through the use of said assets; provided, however, such
royalties or other payments shall continue to be made by
Acquiring Party to the Licensor with respect to products
manufactured through the use of said assets notwithstanding
that the Acquiring Party may have been licensed for the same
Licensed Products before the acquisition.
2.10 In the event one party hereto transfers a product line
either as part of or separate from a disposition of a Subsidiary
to any third party, and said third party, with the written
approval of said one party, requests in writing, within sixty
(60) days following the effective date of the transfer
("Transfer Date"), a license agreement with the other party
hereto upon terms and conditions as hereinafter provided, the
other party hereto agrees that it will enter into such license
agreement forthwith; provided, however, such transfer shall
include all of the following:
(a) patents or other intellectual property relating to
the line of marketable products; and
(b) tangible assets equivalent in value to the lesser of
fifty million U.S. dollars ($50,000,000) or twenty percent
(20%) of the total assets of the party of which it was formerly
a Subsidiary.
Any such agreement with such third party shall grant a
royalty-free license under the same terms and conditions as
the license granted to said one party herein under the other
party's Licensed Patents for the field (as defined between the
transferring party and such third party) of such product line,
except in the following respects:
(c) such field shall be within the field then licensed
to the transferring party;
(d) such field shall not be defined more broadly than
appropriate to cover the particular product line being
transferred and shall be in form and substance acceptable to
such other party;
(e) the license granted shall be limited in the twelve
(12) months immediately following such Transfer Date to a
volume of licensed products having an aggregate selling price
equal to no more than the aggregate selling prices of such
products by said one party in the twelve (12) months
preceding such Transfer Date plus twenty-five percent (25%);
the license granted to such third party shall be limited, in each
of the second through fifth twelve-month periods following
such Transfer Date, to a volume of licensed products having
an aggregate selling price equal to no more than the limit for
the immediately preceding twelve-month period plus twenty-
five percent (25%);
(f) the transferring party shall relinquish its rights
under this Agreement for such field for four (4) years
following such Transfer Date wherein the relinquishing of its
rights by such transferring party pursuant to this Section
2.10(g) shall be automatically effected as an amendment
hereto as of such Transfer Date, which amendment shall
automatically terminate four (4) years after the Transfer Date,
but licenses to such transferring party to use, lease, sell or
otherwise transfer apparatus that was manufactured by or for it
prior to the time of such relinquishing shall continue with
respect to such apparatus;
(g) such third party shall grant to such other party a
royalty-free license (under the same terms as the license
granted to such other party herein) under all Third Party
Patents for all products licensed herein to such other party on
the Effective Date of this Agreement; provided, however, if
such third party chooses not to grant such a license, then the
Futures Date for the license between the other party and such
third party shall be the Transfer Date. "Third Party Patents"
shall mean all patents throughout the world under which, at
any time commencing with the date of the product line
transfer, the third party or any of its Subsidiaries has the right
to grant such licenses; and
(h) this Section 2.10, Section 3, and Section 4 shall
be omitted;
(i) the name of such third party shall be substituted
for the name of the transferring party;
(j) in the event that such third party is or becomes
organized under the laws of a country different from that of
the transferring party, such license agreement shall contain
such additional terms and conditions (other than royalty
provisions) as may exist in patent license agreements between
the other party and other corporations organized under the
laws of the same country.
Section 3. Releases and Indemnification
3.1 Each party (as "Releasor") on behalf of itself and its
Subsidiaries which are Subsidiaries as of the Effective Date,
irrevocably releases the other party, its Subsidiaries which are
Subsidiaries on the Effective Date and its and their respective
customers from any and all claims of infringement of
Releasor's Licensed Patents which claims are based on acts
prior to the Effective Date, which, had they been performed
after the Effective Date would have been licensed under this
Agreement.
The release contained herein shall not apply to any
person other than the persons named in this Section 3 and
shall not apply to the manufacture of any items by any person
other than the other party or its Subsidiaries. The release
granted by READ-RITE to IBM is effective as of the Effective
Date. [Section deleted - confidential treatment requested]
3.2 READ-RITE shall indemnify and hold IBM and
IBM's Subsidiaries harmless from and against any and all
claims, actions, suits, proceedings and litigations brought by
READ-RITE SMI relating to infringement of any READ-
RITE SMI patents by IBM, and any losses, deficiencies,
damages, liabilities, costs and expenses including without
limitation, reasonable attorneys' fees and all related costs and
expenses, to be paid or otherwise incurred in connection with
the defense of any such claim, action, suite, proceeding or
litigation.
Section 4. [Section deleted - confidential treatment requested]
Section 5. Term of Agreement; Acquisition of a Party
5.1 The term of the licenses granted under this
Agreement shall be from the Effective Date until the
expiration of the last to expire of the License Patents, unless
earlier terminated under the provisions of this Agreement.
5.2 If one party (the "Acquired Party") is acquired by a
third party (the "Acquiror"), becoming a Subsidiary of the
Acquiror:
(a) the Acquired Party shall promptly give
notice of such acquisition to the other party (the "non-
Acquired Party");
(b) the license granted to the Acquired Party herein,
and all sublicenses (if any) granted to the Acquired Party's
Subsidiaries, shall continue in accordance with the terms of
this Agreement, [section deleted - confidential treatment
requested] provided, however:
(i) such license shall be limited in the twelve
(12) months immediately following such acquisition to a
volume of the Acquired Party's Licensed Products having an
aggregate selling price equal to no more than the aggregate
selling prices of such Products by said Acquired Party in the
twelve (12) months preceding such transfer plus twenty-five
percent (25%), and in each of the next twelve-month periods
for the remaining term of this Agreement, such license shall
be limited to a volume of the Acquired Party's Licensed
Products having an aggregate selling price equal to no more
than the limit for the immediately preceding twelve-month
period plus twenty-five percent (25%); and
(ii) such license shall continue only if the
Acquiror grants to the non-Acquired party a royalty-free
license (under the same terms as the license granted to the
non-Acquired party herein) under all Acquiror Patents for the
Licensed Products licensed herein to the Acquired Party;
provided, however, if the Acquiror chooses not to grant such a
license, then this license shall continue but the Futures Date in
Section 1.3 (a) for both parties shall be automatically changed
to the date of such acquisition. "Acquiror Patents" shall mean
all patents throughout the world under which, at any time
commencing with the date of the acquisition, the Acquiror or
any of its Subsidiaries has the right to grant such licenses; and
(c) except for the Futures Date which may be
changed to the date of acquisition pursuant to Section
5.2(b)(ii), the rights granted to the non-Acquired Party from
the Acquired Party under this Agreement shall not be affected.
5.3 If one party (the "Acquired Party") is acquired by a
third party such that it is no longer a separate legal entity, then
the Acquired Party shall require as a condition precedent to
the acquisition that the entity that survives after, or results
from, [section deleted - confidential treatment requested]
Section 6. Other License Rights
6.1 It is recognized that the parties hereto or their
respective Subsidiaries may now have, or hereafter obtain, the
right to grant licenses under one or more patents of any
country, including utility models and including type font
design patents and registrations (but not including any other
design patents or registrations), issuing on patent applications
entitled to an effective filing date prior to the Futures Date and
under the patent applications therefore, but that such grant or
the exercise of rights thereunder shall result in payment of
royalties or other consideration by Grantor or its Subsidiaries
to third parties. Each party (as Grantor) agrees that, upon
written request, it shall grant to the other party the extent and
subject to the terms and conditions under which it then has the
right to do so, a license of the broadest scope which Grantor
has the right to grant at any time but of no greater scope than
the scope of the licenses granted herein with respect to any
such patent or patent application. Such license shall be
granted under a separate agreement, upon payment of the
same royalty or other consideration as that which Grantor or
any of its Subsidiaries is obligated to pay to a third party
because of the grant of such license or the exercise of rights
thereunder.
6.2 Upon written request by a party, the other party shall
inform the requesting party of those patents or patent
applications coming within the scope of Section 6.1 at the
time of such request.
Section 7. [Section deleted - confidential treatment requested]
7.1 [Section deleted - confidential treatment requested]
7.2 Notices and other communications shall be sent by
facsimile or by registered or certified mail to the following
addresses and shall be effective upon mailing or transmission:
For IBM: For READ-RITE:
Director of Licensing Read-Rite Corporation
IBM Corporation Attn: General Counsel
000 Xxxxxxxx Xxxxxx 345 Los Coches Street
Thornwood, New York 10594 Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000)000-0000
Section 8. Miscellaneous
8.1 Neither party shall assign or grant any right under
any of its Licensed Patents unless such assignment or grant is
made subject to the terms of this Agreement.
8.2 Neither party shall assign any of its rights or delegate
any of its obligations under this Agreement. Any attempt to
do so shall be void. However, a party which undergoes
reorganization may assign such rights and delegate such
obligation to its legal successor, provided that after the
reorganization, the successor and its Subsidiaries will have
essentially the same assets as such party and its Subsidiaries
had prior to the reorganization.
8.3 Neither party shall use or refer to this Agreement or
any of its provisions in any promotional activity.
8.4 Each party represents and warrants that it has the full
right and power to grant the licensee and release set forth in
Sections 2 and 3. Each party (as a Grantor) further represents
and warrants that prior to the execution of this Agreement, it
has informed the other party of any patent originating from
inventions made by employees of Grantor or its Subsidiaries,
which patent is now owned by Grantor or its Subsidiaries and
which patent, owing to prior arrangements with third parties,
does not qualify as a Licensed Patent of Grantor under which
licenses are granted in Section 2. Neither party makes any
other representation or warranties, express or implied, nor
shall either party have any liability in respect of any
infringement of patents or other rights of third parties due to
the other party's operation under the license herein granted.
8.5 Nothing contained in this Agreement shall be
construed as conferring any rights by implication, estoppel or
otherwise under any non-patent intellectual property right, or
any patents other than the Licensed Patents. Neither party is
required hereunder to furnish or disclose to the other any
technical or other information (including copies of Licensed
Patents).
8.6 Neither party shall have any obligation hereunder to
institute any action or suit against third parties for
infringement of any of its Licensed Patents or to defend any
action or suit brought by a third party which challenges or
concerns the validity of any of its Licensed Patents. Neither
party shall have any right to institute any action or suit against
third parties for infringement of any of the other party's
Licensed Patents. Neither party, nor any of its Subsidiaries, is
required to file any patent application, or to secure any patent
or patent rights, or to maintain any patent in force.
8.7 Each party shall, upon a request from the other party
sufficiently identifying any patent or patent application,
inform the other party as to the extent to which said patent or
patent application is subject to the licenses and other rights
granted hereunder. If such licenses or other rights under said
patent or patent application are restricted in scope, copies of
all pertinent provisions of any contract or other arrangement
creating such restrictions shall, upon request, be furnished to
the party making such request, unless such disclosure is
prevented by such contract, and in such event, a statement of
the nature of such restriction shall be provided.
8.8 If a third party has the right to grant licenses under a
patent to a party hereto (as a "Licensee") with the consent of
the other party hereto, said other party shall provide said third
party with any consent required to enable said third party to
license said Licensee on whatever terms such third party may
deem appropriate. Each party hereby waives any right it may
have to receive royalties or other consideration for said third
party as a result of said third party's so licensing said Licensee
within the scope of the licenses granted under Section 2 of this
Agreement.
8.9 As of the Effective Date of this Agreement, the
patent license agreement between IBM and READ-RITE
dated as of October 1, 1986 (the "Prior Agreement") is
terminated, and this Agreement supersedes the Prior
Agreement and all other license agreements and amendments
to such agreements between the parties which relate to the
subject matter of this Agreement, however if READ-RITE's
license under this Agreement is terminated, READ-RITE's
license under the Prior Agreement shall be reinstated under
the terms and conditions of the Prior Agreement.
8.10 This Agreement shall not be binding upon the parties
until it has been signed hereinbelow by or on behalf of each
party. NO amendment or modification hereof shall be valid or
binding upon the parties unless made in writing and signed as
aforesaid.
8.11 If any section of this Agreement is found by
competent authority to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of such section in every other respect and the
remainder of this Agreement shall continue in effect so long
as the Agreement still expresses the intent of the parties.
However, if the intent of the parties cannot be preserved, this
Agreement shall be either renegotiated or terminated.
8.12 This Agreement shall be construed, and the legal
relations between the parties hereto shall be determined, in
accordance with the law of the State of New York, USA, as
such law applies to contracts signed and fully performed in
New York.
8.13 The headings of sections are inserted for convenience
of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
//
This Agreement embodies the entire understanding
of the parties with respect to the Licensed Patents, and
replaces any prior oral or written communications and
between them.
Agreed to: Agreed to:
READ-RITE CORPORATION INTERNATIONAL
BUSINESS
MACHINES
By: By:
X. X. Xxxxxxx X.X. Xxxxxx Xx.
Vice President Business Vice President
Development & General
Counsel
