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[Exhibit 10.3]




This Technology License Agreement (the “Agreement”) dated as of _____________________, 1999 (the “Effective Date”), is entered into by and between Quantum Corporation (“Quantum”), a Delaware corporation, and Advanced MicroSensors, Inc. (“AMS”), a Delaware corporation.




Whereas, MKE-Quantum Components, LLC, was a Delaware limited liability corporation (“MKQC”) with Matsushita Kotobuki Peripherals Corporation, a Delaware corporation (“MKPC”) and Quantum, as its sole members; and


Whereas, MKQC was either the owner or licensee of certain intellectual property which it acquired pursuant to an Intellectual Property Agreement dated May 16, 1997, among MKQC, Quantum and Matsushita-Kotobuki Electronics Industries, Ltd. (“MKE”), attached hereto as Exhibit A (the “Intellectual Property Agreement”); and


Whereas, effective as of March 31, 1999 (the “Final Dissolution Date”), MKQC pursuant to the Second Amended and Restated Plan of Liquidation of MKE-Quantum Components LLC (hereafter, the “Plan of Liquidation,” attached hereto as Exhibit B) was dissolved as a limited liability corporation and its assets distributed to various entities with the approval of MKPC and Quantum as its sole members; and


Whereas, pursuant to said Plan of Liquidation, among other things, MKPC and Quantum, as sole members have agreed to certain distribution of MKQC intellectual property; and, in order to effectuate such distribution, MKE (which is also the sole shareholder of MKPC), MKPC, MKQC and Quantum have entered into an Amendment and Assignment Agreement to the Intellectual Property Agreement, dated February 9, 1999 (the “Amendment,” Exhibit C hereto); and


Whereas, in order to facilitate the sale of certain manufacturing apparatus and other assets of MKQC (the “Assets”), MKE, MKPC, MKQC and Quantum have entered into Amendment Number One to Amendment and Assignment Agreement to the Intellectual Property Agreement (“Amendment Number One,” Exhibit D hereto), pursuant to which MKE, MKPC, Quantum and MKQC granted to Quantum the right to sublicense to a purchaser of the Assets the relevant patents and other intellectual property relating to such Assets to the extent necessary to effect the sale of such Assets; and






Whereas, pursuant to several other agreements between or among the parties hereto, AMS has agreed to purchase the Assets, provided, among other things, that Quantum sublicenses to AMS the intellectual property rights formerly owned by or licensed to MKQC, some or all of which may have been distributed to MKE, MKPC, and Quantum; and


Whereas, Quantum, MKE and MKPC desires that AMS purchase such Assets, and therefore wish to grant sublicenses to such intellectual property rights so as to enable AMS to utilize the Assets.


Now, Therefore, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as follows:






For purposes of the Agreement, the terms defined in this article shall have the respective meanings set forth below:


1.1             “Affiliate” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with, such Person.  A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, at least fifty percent (50%) of the voting stock or other ownership interest of the other Person.


1.2             “Hard Disk Drive” or “HDD” shall mean an electromechanical data storage device primarily designed to store data on and retrieve data from one or more rotating, rigid, electromagnetic storage disks by means of one or more HDD Sliders.  (“HDD Slider” is defined in Section 1.10 of the Intellectual Property Agreement.  “Slider” is defined in Section 1.25 of the Intellectual Property Agreement.)  Hard Disk Drive or HDD shall not mean or include any storage device which stores data on flexible media, elongated tape, or any storage device that stores or retrieves data using optical principles which does not fit the HDD description.


1.3           “Person” shall mean an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.


1.4             “Technology” shall mean (a) the Distributed Patents as defined in Section 1.3 of the Amendment and (b) the Distributed Intellectual Property as defined in Section 1.2 of the Amendment.  Without limiting the foregoing, the Technology shall include modeling software developed by MKQC (Carma, Marauder); and the mask set and know-how of MKQC’s MO (magneto-optical) head development effort with FireFly Technologies, Inc.  Notwithstanding the foregoing, Technology shall not include Quantum’s proprietary information disclosed to MKQC specifically related to tape head technology as further described in Exhibit E.  Such proprietary information of Quantum shall be governed under separate agreement between the AMS and Quantum.






1.5             “Third Party” shall mean any Person other than Quantum, Quantum’s Affiliates and AMS.


1.6             “Wafer” shall mean a block of aluminum oxide-titanium carbide or other alloy onto which a plurality of elements have been deposited using thin-film processes such as lithography and sputtering.


1.7             Certain Additional Definitions.   As used in this Agreement, “herein” and “hereof” shall refer to this Agreement as a whole, and “including” shall mean “including but not limited to” and “including, without limitation.”




Rights And Licenses Granted By Quantum;

Deliverables; Technical Assistance


2.1             Technology License Grant to AMS.   Subject to the meeting the conditions set forth in Section 2.3 and subject to the exceptions set forth in Section 2.4, Q uantum hereby grants to AMS a perpetual, non-exclusive, fully-paid, royalty-free, worldwide license to develop, make, have made, use, sell, market and otherwise dispose of or exploit products and processes that incorporate or utilize the Technology.


2.2             Written and Recorded Information.   Upon execution of the Agreement and to the extent not previously disclosed and made available to AMS, Quantum shall use reasonable efforts to disclose and make available to AMS all documentation and information in its possession pertaining to the Technology, including notebooks, process documents, recipes, formulations, computer files, computer software, and any other written documentation in any media, including, without limitation, written, printed, electronic and optical.   AMS shall retain such documentation and information and, at Quantum’s request, shall make available to Quantum’s copies of any portions thereof.  Upon termination of this Agreement, except as provided in the following sentence, all such documentation and information must be promptly returned to Quantum, in any case, no later than 30 days after such termination.  Subject to Section 6.6, below, AMS may retain such documentation and information after termination only if the termination was due to Quantum’s material breach of this Agreement and not due to any material breach by AMS.


2.3             Condition Precedent.   As a condition precedent to the license granted by Quantum in Section 2.1, above, AMS shall have executed all instruments and documents necessary to effect the purchase of the Assets from MKQC.






2.4             License Exclusion.   AMS shall not use the Technology or any element thereof to develop, make, have made, sell, market and otherwise dispose of recording heads for use in Hard Disk Drives.   AMS shall not use the Technology or any element thereof to develop, make, have made, sell, market and otherwise dispose of Wafers (a) for use in SDLT products (other than for Quantum or for Quantum’s designated licensees) or (b) for use in tape products which are competitive with Quantum’s SDLT products.  Without limiting the generality of the foregoing, Quantum’s Competitors include, without limitation, participants in the Linear Tape Open Consortium (Hewlett Packard, IBM and Seagate), Sony, Fujitsu, Maxtor and Western Digital.  AMS further agrees it will not design, apply or manufacture for, or distribute to, any third party any Wafers or products derived from Wafers for use in the manufacture of any tape storage product utilizing multi-channel merged heads with more than three (3) channels for a period of two years commencing from the Effective Date.  Unless otherwise provided outside of this Agreement, Technology shall not include any rights to the Cross License dated as of January 1, 1991 as between International Business Machines Corporation and Matsushita Electric Industrial Co., Ltd.  Additionally, no rights are granted under this Agreement with respect to optical disk drives in connection with U.S. patent 5,115,363.


2.5             Subcontracting.   AMS may subcontract its licensed rights to the Technology under this Agreement only with the prior written consent of Quantum.  Any purported subcontract without such consent shall be void.  Due to the highly confidential nature of the Technology and the irreparable harm that could result from the disclosure or sharing of the Technology with third parties, Quantum shall have the absolute right to withhold, delay or condition such consent.


2.6             Reservation of Rights not Granted.   Rights not expressly granted or licensed by either party are reserved by the party.






3.1             Confidential Information.   Each party shall exercise reasonable care to maintain in confidence all information of the other party disclosed by the other party and identified as, or acknowledged to be, confidential (the “Confidential Information”), and shall not disclose or grant the use of the Confidential Information except on a need-to-know basis to its directors, officers, employees, permitted sublicensees, and permitted assignees, if any, to the extent such disclosure is reasonably necessary in connection with such party’s activities as expressly authorized by the Agreement and only to the extent that such directors, officers, employees, permitted sublicensees and permitted assignees, if any, have executed nondisclosure agreements at least as restrictive as the nondisclosure terms contained herein.  Without limiting the generality of the foregoing, AMS shall not disclose the Technology except to Persons who agree in writing to maintain it as Confidential Information and in no event to Persons who intend to use it in violation of the license exclusions set forth in Section 2.4.


3.2             Permitted Disclosures.   The nonuse and nondisclosure obligations contained in this article shall not apply to the extent th

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