Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Form S-4 Registration Statement 253 1.33M
2: EX-2.1 Amended & Restated Agreement & Plan of Reorg 50 253K
3: EX-2.2 Form of Agree. of Merger of Jts Corp.& Atari Corp. 8 31K
4: EX-3.1 Restated Certificate of Incorp - Jt Storage 21 72K
5: EX-3.2 Form of Restated Cert. of Incorp - Jts Corp. 4 24K
6: EX-3.3 By-Laws of Jt Storage, Inc. 14 48K
7: EX-3.4 Form of By-Laws of Jts Corporation (Post Merger) 28 135K
8: EX-4.1 Form of Common Stock Certificate Jts Corporation 2 20K
9: EX-4.2 Jt Storage Registration Rights Agreement 18 79K
10: EX-4.3 Atari & Security Pac.Natl Bank Indenture 4/29/87 94 263K
11: EX-4.4 Federated Grp/Security Pacific Natl Bank Indenture 102 366K
12: EX-4.5 Federated Group/Security Pacific 1st Sup Indenture 8 31K
13: EX-4.6 Warrant to Purchase Common Stock/Venture Lending 15 63K
14: EX-4.7 Warrant to Purchase Stock/Silicon Valley Bank 9 45K
15: EX-4.8 Warrant to Purchse Common Stock/Lunenburg S.A. 7 33K
16: EX-5.1 Opinion of Cooley Godward Et. Al. 1 17K
17: EX-8.1 Form of Cooley Godward Tax Opinion 3 23K
18: EX-8.2 Form of Wilson Sonsini Et. Al Tax Opinion 3 22K
19: EX-9.1 Atari Corp. Amended & Restated Voting Agreement 5 32K
20: EX-9.2 Jt Storage Amended & Restated Voting Agreement 5 32K
21: EX-10.1 Jt Storage 1995 Sop Amended & Restated 3/19/96 33 106K
30: EX-10.10 Restricted Stk Pur Agree/Kenneth D. Wing 1/2/96 22 77K
31: EX-10.11 Restricted Stk Pur Agree/W. Virginia Walker 1/5/96 22 78K
32: EX-10.12 Restricted Stk Pur Agree/David B. Pearce 1/2/96 21 70K
33: EX-10.13 Convertible Promissory Note 5 24K
34: EX-10.14 Promissory Note/Certain Principal Stkhldrs 1/19/96 6 25K
35: EX-10.15 Subord Secured Convertible Prom Note/Atari 2/13/96 35 136K
36: EX-10.16 Stock Purchase Agreement/Lunenburg 4/4/96 29 138K
37: EX-10.17 Draft/Technical Know How License Agreement 12 45K
38: EX-10.18 Lease Jts & Cilker Revocable Trust 6/15/95 41 161K
39: EX-10.19 Loan Agree Modular Elec (I) & Indusrial Credit 37 94K
22: EX-10.2 Jt Storage 1996 Non-Employee Directors Sop 3/19/96 14 52K
40: EX-10.20 Loan Agree Modular & Industrial Credit 10/11/94 44 113K
41: EX-10.21 Loan Agree Modular Electronic/Credit Invest India 19 48K
42: EX-10.22 Agreed Order Comprising Controversies 2/4/94 27 90K
43: EX-10.23 Master Agreement/Teac & Jt Storage, Inc. 32 95K
44: EX-10.24 License Agree Teac & Jt Storage 2/24/94 28 110K
45: EX-10.25 Development Agree Compaq & Jt Storage 6/16/94 32 120K
46: EX-10.26 Purchase Agree/Jts & Compaq 6/16/94 11 48K
47: EX-10.27 Technology Transfer Agree Western Digital 2/3/95 42 89K
48: EX-10.28 Agree Jt Storage & Pont Peripherals 1/31/95 24 100K
23: EX-10.3 Putnam Streamlined Standard 401(K) & Profit Shar 109 365K
24: EX-10.4 Indemnity Agreement 7 33K
25: EX-10.5 Employment Agreement 4 27K
26: EX-10.6 Jt Storage Consulting Agreement/Roger W. Johnson 5 29K
27: EX-10.7 Restricted Stk Pur Agree/David T. Mitchell 1/2/96 22 76K
28: EX-10.8 Restricted Stk Pur Agree/David T. Mitchell 3/6/96 21 79K
29: EX-10.9 Restricted Stk Pur Agree/Sirjang Lal Tandon 3/6/96 21 79K
49: EX-21.1 List of Subsidiaries 1 13K
50: EX-23.1 Consent of Arthur Andersen LLP 1 14K
51: EX-23.2 Consent of Deloitte & Touche LLP 1 14K
52: EX-27.1 Financial Data Schedule 1 16K
53: EX-99.1 Form of Jts Proxy 2 16K
54: EX-99.2 Form of Atari Proxy 2 16K
EXHIBIT 10.24
LICENSE AGREEMENT
LICENSE AGREEMENT (the "Agreement") made as of the 4th day of February,
1994, by and among JT STORAGE, INC., a Delaware corporation having its
principal place of business at 2125 Madera Road, Simi Valley, California 93065
(the "Corporation") and TEAC CORPORATION, a corporation organized and existing
under the laws of Japan, having its principal place of business at 3-7-3
Naka-cho, Musashino, Tokyo, Japan ("TEAC").
PRELIMINARY RECITALS
A. Pursuant to an Agreed Order Compromising Controversies (the
"Order"), entered as of the date hereof by the Bankruptcy Court presiding over
the Bankruptcy Case No. 93-54027 MM of Kalok Corporation, a California
corporation ("Kalok"), pending in the Northern District of California, and
certain related documents referenced in and approved by the Order (the "Related
Documents"), TEAC has acquired certain of the technology and other intellectual
property and certain other assets of Kalok, subject only to the terms and
conditions of the Order and the Related Documents.
B. Pursuant to that certain Master Agreement (the "Master
Agreement") of even date by and among TEAC and the Corporation, such parties
have agreed to exploit through the Corporation certain technology for the
purpose of designing, manufacturing, marketing and selling magnetic rotating
hard disk drive storage devices ("HDDs") and related accessories.
C. TEAC has certain technology that the Corporation desires to
utilize and further develop and TEAC desires to have the Corporation make such
developments and to utilize such developments in its own business, all on the
terms and conditions set forth herein.
D. TEAC and the Corporation each desire to License certain future
additional developments of each company to the other, as hereinafter set forth.
E. The Master Agreement, the representations and covenants of each
party thereunder being substantial consideration for this Agreement, provides,
among other things, that Tandon contribute to the Corporation certain funds,
and that TEAC contribute to the Corporation certain assets. In addition, TEAC
is to provide this license of the technology and other intellectual property of
Kalok acquired by TEAC pursuant to the Order.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and undertakings hereinafter set forth, the parties hereto hereby
agree as follows:
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AGREEMENTS
1. Certain Definitions.
"Accessories" means any products that are not HDDs but are sold
in conjunction with or for uses incidental to an HDD, which is a Licensed
Product, such as carrying cases, docking modules, interface cards and
installation software and other items incidental to installation in a computer
or other value added subsystem; provided, Accessories shall not include any
system incorporating an HDD.
"Additional Developments" as applied to any Person means any
improvements in, modifications on, derivative works of, variations of, new
designs of, discoveries related to, or developments utilizing any of the
Licensed Technology or any other additional development (including
preproduction tooling and drawings and product design and processes and
Accessories), whether separately developed, licensed or otherwise obtained by
or on behalf of such Person or jointly developed, licensed or otherwise
obtained by or on behalf of such Person during the term of this Agreement now
existing or hereafter developed, including patents and patent applications and
licenses therefor (obtained under Section 3.11D or otherwise) in each case,
solely in connection with the development, manufacture or sale of HDD's;
provided that if Additional Developments are obtained by a party hereto from
an unaffiliated third party then the obligations of the party hereto to license
such Additional Development to the other parties hereto shall be conditioned
upon obtaining the consent of such Unaffiliated third party to such license,
which consent the party hereto shall undertake its best efforts to obtain.
"Affiliate" as applied to any Person means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For purposes of this definition and Section 5.3 below, the
term "control" (including, with correlative meanings, the terms controlling,
controlled by and under common control with), as applied to any Person, means
the possession, directly or indirectly, of the power to vote 50% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 50% or
more of the ownership interest, beneficial or otherwise) of such Person or
otherwise to direct or cause the direction of the management and policies of
that Person, whether through the ownership of Voting Stock or other ownership
interest, by contract or otherwise. All executive officers, 50% or greater
shareholders and directors of any Person shall be deemed to be Affiliates of
such Person for purposes of this Agreement. "Unaffiliated" shall refer to a
person or entity which is not an Affiliate.
"Future Generation Products" means any HDD product, other than
the Point5 Series or the Nordic II Series, that utilizes the Licensed
Technology or Additional Developments, and was developed or in development
prior to January 31, 1999.
"Licensed Products" means the Point5 Series, the Nordic II
Series and the Future Generation Products.
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"Licensed Technology" all technical information and intellectual
property of Kalok acquired by TEAC pursuant to the Order and the Related
Documents, including without limitation, patents, patent applications and
copyrights (and all extensions, continuations, continuations in part, divisions,
reexaminations and reissues thereof), trade secrets, inventions, source codes,
object codes, flow charts, processes, techniques, specifications, drawings,
parts layouts, parts lists, all technical information and other intellectual
property pertaining to Parts, circuitries, tooling and testing requirements,
know-how, manuals and other technical data and support documentation, whether or
not patentable or copyrightable and whether or not actually patented or
copyrighted.
"Licensed Trademarks" means all trademarks, trade names, trademark
registrations, and applications for registration of trademarks for the names
"Point5", "Kalok", "Nordic II Series" and variations thereof (including all
renewals and extensions thereof) and any other trademark rights or goodwill
associated therewith.
"Corporation Manufacturing Territory" means world-wide, except for the
following: Japan, Poland, the Czech Republic, Slovakia, Hungary, Romania, the
countries that constituted the former Yugoslavia and the countries that
constituted the former Soviet Union, and any new nation created by the merger
or separation of any of the above countries and all territories in the region
controlled by any of the above countries.
"Nordic II Series" means any HDD with a width of between 3.25 and 3.75
inches and a height of less than .40 (four-tenths) inches, and all Licensed
Technology pertaining principally thereto.
"Person" means a natural person, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"Point5 Series" means the Kalok Point5 Series products consisting of
models P-3125, P-3250, P-3360 and P-3540, each having those specifications
attached hereto as Exhibit A, and each Accessory obtained by TEAC from Kalok
pursuant to the Order that is fully-developed and in commercial sale as of the
date hereof.
"Corporation Sales Territory" means world-wide, except for the
following: Japan, Poland, the Czech Republic, Slovakia, Hungary, Romania and
the countries that constituted the former Yugoslavia, and any new nation
created by the merger or separation of any of the above countries and all
territories in the region controlled by any of the above countries.
"Subsidiary" means any corporation, association or other business
entity of which securities or other ownership interests representing more than
fifty percent (50%) of the ordinary voting power are, at the time as of which
any determination is being made, owned or controlled by the Corporation or one
or more Subsidiaries of the Corporation or by the Corporation and one or more
Subsidiaries of the Corporation.
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"Tandon" means Mr. Jugi Tandon.
"TEAC Manufacturing Territory" means world-wide, except for the
following: India, North and South Korea, Poland, the Czech Republic, Slovakia,
Hungary, Romania, the countries that constituted the former Yugoslavia and the
countries that constituted the former Soviet Union, and any new nation created
by the merger or separation of any of the above countries and all territories
in the region controlled by any of the above countries.
"TEAC Sales Territory" means world-wide, except for the
following: India, Poland, the Czech Republic, Slovakia, Hungary, Romania and
the countries that constituted the former Yugoslavia, and any new nation
created by the merger or separation of any of the above countries and all
territories in the region controlled by any of the above countries.
"Voting Stock" of any Person means securities of any class or
classes of such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors of such Person.
2. Transfer of Licensed Technology.
2.1 Delivery by TEAC.
A. Licensed Technology and Additional Developments. As of the date
of this Agreement, TEAC will deliver to the Corporation copies or originals of
all of the Licensed Technology in its possession. From time to time during the
term of this Agreement in a reasonably prompt manner as, TEAC shall, at its
sole expense, deliver to the Corporation in written form, and such other useful
format and media as may be reasonably required for the manufacture and support
of the Licensed Products, all Licensed Technology and Additional Developments
that come into the possession of TEAC or any of its Affiliates not previously
so delivered.
B. Disclosure of Additional Developments. Without limiting the
foregoing, with respect to Additional Developments, TEAC shall at the time this
Agreement is executed and delivered and from time to time thereafter, but in no
event less frequently than quarterly, disclose to the Corporation and confer
with it as to all Additional Developments under consideration or in development
by or on behalf of TEAC or any of its Affiliates.
2.2 Delivery by the Corporation.
A. Additional Developments. From time to time during the term of
this Agreement in a reasonably prompt manner as, the Corporation shall, at its
sole expense, deliver to TEAC in written form, and such other useful format and
media as may be reasonably required for the manufacture and support of the
Licensed Products, all Additional Developments that come into the possession of
the Corporation or any of its Affiliates.
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B. Disclosure of Additional Developments. Without limiting the
foregoing, with respect to Additional Developments, the Corporation shall at
the time this Agreement is executed and delivered and from time to time
thereafter, but in no event less frequently than quarterly, disclose to TEAC
and confer with it as to all Additional Developments under consideration or in
development by or on behalf of the Corporation or any of its Affiliates.
2.3 Restricted Ancillary Technology. On February __, 1994, TEAC and the
Corporation entered into an escrow agreement (the "Escrow Agreement") with
___________________ (the "Escrow Agent"). In accordance with the terms of the
Escrow Agreement, TEAC deposited with the Escrow Agent all of the source codes
and object codes related to the Licensed Technology (the "Restricted Ancillary
Technology"). In addition, under the Escrow Agreement TEAC and the Corporation
agreed to deposit with the Escrow Agent from time to time all source codes and
object codes in their possession or in the possession of one of their
Affiliates related to Additional Developments.
2.4 Confidentiality.
A. TEAC and the Corporation each agree to undertake all reasonable
efforts to treat, and to cause each of its Affiliates, licensees and
sublicensees to treat, as confidential all proprietary information with respect
to the Licensed Technology and Additional Developments. Each of the parties
hereto acknowledge that another party hereto may find it necessary to disclose
general descriptions of proprietary information during the conduct of its
business to banks and other financial institutions contemplating the provision
of project financing to such party. In addition, each of the parties hereto
acknowledge that another party hereto may find it necessary to disclose
proprietary information in connection with the proper grant of sublicenses to
parties other than a party hereto. Under such circumstances, TEAC or the
Corporation, as the case may be, may make such information available to third
parties to the limited extent necessary for such third party to fulfill its
supply or other permitted purposes, provided that such party shall first obtain
from the recipients, a fully-executed confidentiality agreement which is at
least as restrictive as the confidentiality agreement contained herein;
provided, however, that the foregoing shall not restrict the Corporation's or
TEAC's right to provide technical information (other than the Restricted
Ancillary Technology) and test data that is reasonably requested by customers
in the ordinary course of business.
B. With respect to information not subject to Section 2.4.A above,
each of TEAC and the Corporation agree to undertake all reasonable efforts to
treat, and to cause each of its Affiliates to treat, as confidential all other
proprietary information of any party hereto obtained through its relationship
with another party hereto established hereunder or otherwise, and will not
disclose any such information to a third party or, subject to the provisions of
Section 3.7 below, otherwise use such information for its own purposes.
C. Neither TEAC nor the Corporation shall be bound by the provisions
of this Section 2.4 with respect to information which (a) was previously known
to the recipient at the time of disclosure; (b) is in the public domain at the
time of disclosure; (c) becomes a part of the public domain after the time of
disclosure, other than through disclosure by the
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recipient or some other third party who is under an agreement of
confidentiality with respect to the subject information or obtained the
information from the recipient; (d) is required to be disclosed by law or (e)
is disclosed by a third party not bound by any agreement of confidentiality
with respect to such information which third party did not obtain the
information from the recipient.
D. Each of TEAC and the Corporation shall take such action as
another party hereto may reasonably request from time to time to safeguard the
confidentiality of any information subject to the terms of this Section 2.4.
E. To the extent that United States Export Control Regulations, or
similar laws of any jurisdiction, are applicable, neither of TEAC nor the
Corporation shall, without having first fully complied with such regulations,
(i) knowingly transfer, directly or indirectly, any unpublished technical data
obtained or to be obtained from the other party hereto to a destination outside
the United States, or such other relevant jurisdiction, or (ii) knowingly ship,
directly or indirectly, any product produced using such unpublished technical
data to any destination outside the United States, or such other relevant
jurisdiction.
F. The obligations of TEAC and the Corporation under this Section
2.4 shall survive the expiration or earlier termination of all or any part of
this Agreement.
2.5 Support of Licensed Technology. From time to time under this
Agreement, each of the parties hereto shall provide the other parties hereto
with any support materials that they shall have on hand and which shall be
reasonably requested for the manufacture, of the Licensed Products as provided
for herein, including, without limitation, any manuals, reports, specifications
or drawings required by customers to use the Licensed Products in the
manufacture of their products. Each of the Corporation and TEAC shall also
allow the other access to each of their engineering staffs and will allow each
others engineers to visit each of their manufacturing, or research facilities,
for the purpose of providing or receiving support of the technology licensed by
each of them hereunder.
3. Licensing Matters.
3.1 Grant of License by TEAC. Subject to the terms of this
Agreement, TEAC hereby grants to the Corporation:
A. Exclusive Rights to Manufacture. The sole and exclusive right
and license to make the Licensed Products within India, North and South Korea
and the entire Asian Continent, subject only to TEAC's right to manufacture the
Licensed Products within the entire Asian Continent (as set forth in the
dictionary definition attached as Exhibit B hereto, but excluding the countries
that constitute the former Soviet Union), and to use the Licensed Technology and
any Additional Developments made by TEAC and/or its Affiliates in connection
therewith.
B. Nonexclusive Rights to Manufacture. The nonexclusive right and
license to manufacture the Licensed Products within the Corporation
Manufacturing Territory, and to
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use the Licensed Technology and any Additional Developments made by TEAC and/or
its Affiliates in connection therewith.
C. Exclusive Rights to Sell. The sole and exclusive right and
license to sell the Licensed Products within India, and to use the
Licensed Trademarks, the Licensed Technology and any Additional Developments
made by TEAC and/or its Affiliates in connection therewith.
D. Nonexclusive Rights to Sell. The nonexclusive right and license
to sell the Licensed Products within the Corporation Sales Territory and, to use
the Licensed Trademarks, the Licensed Technology and any Additional Developments
made by TEAC and/or its Affiliates in connection therewith.
E. Nonexclusive Rights to Use. The nonexclusive right to use the
Licensed Technology and Additional Developments made by TEAC and/or any of its
Affiliates within the Corporation Manufacturing Territory for the purpose of
making Additional Developments.
3.2 Grant of License to TEAC. Subject to the terms of this
Agreement the Corporation hereby grants to TEAC:
A. Exclusive Right to Manufacture. The sole and exclusive right
and license to use Additional Developments made by the Corporation and/or its
Affiliates for the purpose of manufacturing Licensed Products within Japan and
the entire Asian Continent (as set forth in the dictionary definition attached
as Exhibit B hereto, but excluding the countries that constitute the former
Soviet Union), subject only to the Corporation's right to manufacture the
Licensed Products within the entire Asian Continent (excluding the countries
that constitute the former Soviet Union).
B. Nonexclusive Rights to Manufacture. The nonexclusive right and
license to use Additional Developments made by the Corporation and/or its
Affiliates for the purpose of Licensed Products within the TEAC Manufacturing
Territory.
C. Exclusive Rights to Sell. The sole and exclusive right and
license to use Additional Developments made by the Corporation and/or its
Affiliates for the purpose of selling the Licensed Products within Japan.
D. Nonexclusive Rights to Sell. The nonexclusive right and
license to use Additional Developments made by the Corporation and/or its
Affiliates for the purpose of selling the Licensed Products within the TEAC
Sales Territory.
E. Nonexclusive Rights to Use. The nonexclusive right to use
Additional Developments made by the Corporation and/or any of its Affiliates
within the TEAC Manufacturing Territory for the purpose of making Additional
Developments.
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3.3 Sublicensing. The licenses granted in Sections 3.1 and 3.2 above
shall not include the right to sublicense to a third party, except (i) that
either party may sublicense such licenses in connection with the manufacturing
of Parts and Accessories for use in the manufacture or assembly of finished
goods by the primary licensee or the person described in Section 3.3(ii)
hereunder, (ii) that either party may sublicense their rights to manufacture or
assemble to a third party making products to such party's specifications and
for sale by such primary licensee and under the tradenames or trademarks of the
primary licensee hereunder, and (iii) the parties may sublicense selling rights
in their respective exclusive selling territories.
Further, the parties shall from time to time consider in good faith the
granting of additional sublicenses to other manufacturers for the purpose of
providing multiple sourcing requested by substantial customers of both of the
parties hereto.
3.4 The Corporation's Royalty Obligations to TEAC.
A. The Point5 Series and the Nordic II Series. All of the licenses
granted by TEAC to the Corporation in Section 3.1 above shall be [*]
with respect to the Point5 Series, the Nordic II Series and all Accessories
(with respect to Accessories, only those in existence on the date hereof).
B. Other Licensed Products. Subject to Section 3.4D below, the
Corporation shall pay TEAC royalties on all Future Generation Products as
follows:
(i) all such licenses are now [*] with respect to all
Future Generation Products sold within the [*] period, immediately
following the first commercial sale by the Corporation of each such Future
Generation Product (excepting Future Generation Products with a different form
factor than either the Point5 Series or the Nordic II Series (or Accessories
therefor) ("Other Form Factor Drives and Accessories") which shall be [*]
for only [*] after the first commercial sale by the Corporation of each such
Future Generation Product);
(ii) after such [*] period or such [*] period, as
applicable, if the Future Generation Product was developed by TEAC, then the
royalty shall be [*] of the sales price of such Future Generation
Product;
(iii) after such [*] period or such [*] period, as
applicable, if the Future Generation Product was developed by TEAC, but TEAC
has not developed in a commercially timely manner production tooling or
processes utilized in the development or production of such Future Generation
Product, then the royalty shall be [*] of the sales price of such Future
Generation Product; and
(iv) after such [*] period or such [*] period, as
applicable, if the Future Generation Product is a Joint Development, then the
royalty shall be [*] for each such Future Generation Product sold by the
Corporation.
* 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.
8
3.5 TEAC's Royalty Obligations to the Corporation.
A. The Nordic II Series. All of the licenses granted by the
Corporation in Section 3.2 above shall be [*] with respect Additional
Developments on the Nordic II Series.
B. Other Licensed Products. TEAC shall pay the Corporation
royalties on all Future Generation Products as follows:
(i) all such licenses shall be [*] with respect to all
Future Generation Products sold within the [*] period, immediately
following the first commercial sale by TEAC of such Future Generation Product
(except for Other Form Factor Drives and Accessories, which shall be [*]
for [*] period following the first commercial sale of each such Future
Generation Product);
(ii) after such [*] period or such [*] period, as
applicable, if the Future Generation Product was developed solely by the
Corporation, then the royalty shall be [*] of the sales price of such Future
Generation Product;
(iii) after such [*] period or such [*] period, as
applicable, if the Future Generation Product was developed by the Corporation,
but the Corporation has not developed in a commercially timely manner
production tooling or processes utilized in the development or production of
such Future Generation Product, then the royalty shall be [*] of the sales
price of such Future Generation Product; and
(iv) after such [*] period or such [*] period, as
applicable, if the Future Generation Product is a Joint Development, then the
royalty shall be [*] for each such Future Generation Product sold by the
Corporation.
3.6 Calculation of Royalties. Each of TEAC and the Corporation shall
be responsible for only one royalty on each Future Generation Product sold or
otherwise provided to customers irrespective of the number of patents, patent
claims, copyrights, trademarks, trade names or other types of Licensed
Technology and Additional Developments that may pertain to such Future
Generation Product. In addition, royalties paid on Future Generation Products
not accepted by the customer and returned to the seller thereof will be
deducted from future royalties; provided, that if such returned Future
Generation Products are resold, then royalties will be paid thereon.
Notwithstanding anything in this Agreement to the contrary, royalties will not
be payable on Future Generation Products manufactured by TEAC and sold by it to
the Corporation or manufactured by the Corporation and sold by it to TEAC.
Future Generation Products internally used by TEAC or the Corporation and/or
their respective Affiliates for their own purpose shall be excluded from royalty
payment obligations hereunder. The "sales price" of a Future Generation Product
shall be FOB seller, net of discounts and allowances, and, with respect to sales
to Affiliates, shall be deemed to equal the lowest "sales price" that would have
been paid by an independent third party on an arms-length basis for such a
Future Generation Product. All royalties payable in full, regardless of
applicable withholding taxes.
* 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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3.7 Payment of Royalties. Royalties shall be based on sales made
in any given calendar quarter as reflected in TEAC's or the Corporation's
invoices to its customers, as the case may be, in such calendar quarter. All
royalty payments for each calendar quarter shall be made within thirty (30)
days subsequent to the end of such quarter, and shall be subject to any
applicable withholding tax requirements. Each of TEAC and the Corporation
agrees to maintain accurate and complete records showing all Future Generation
Products sold by it and to keep such records for a period of three years after
the date of sale. Such records will include all information necessary to verify
the total amount and computation of royalties due, and will be open to
inspection by TEAC or the Corporation, as the case may be, or their respective
representatives during reasonable business hours, at their sole expense.
3.8 Proprietary Rights. Subject to the provisions of this
Agreement and any other written agreement between the parties hereto entered
into after the date hereof:
A. TEAC's Rights to the Licensed Technology. Subject to the other
express terms of this Agreement, including Section 3.8.D below, TEAC shall
retain all title and other rights (including copyrights, patent rights, trade
secret rights and other proprietary rights) to the Licensed Technology and the
Licensed Trademarks.
B. Rights to TEAC Additional Developments. Subject to Section
3.8.D below, TEAC shall retain all title and other rights (including
copyrights, patent rights, trade secret rights and other proprietary rights) to:
(i) the information, design and technology of property
(including the Licensed Products and Additional Developments) and all
manufacturing processes with respect thereto developed by TEAC independently
from the Corporation, and all modifications, improvements and derivative works
of the foregoing made by TEAC; and
(ii) all service marks, trademarks, tradenames, and any
other designations with respect to TEAC products.
C. Rights to the Corporation's Additional Developments. Subject
to Section 3.8.D below, the Corporation shall retain all title and other rights
(including copyrights, patent rights, trade secret rights and other proprietary
rights) to:
(i) the information, design and technology of property
(including the Licensed Products and Additional Developments) and all
manufacturing processes with respect thereto developed by the Corporation
independently from TEAC, and all modifications, improvements and derivative
works of the foregoing made by each of the Corporation; and
(ii) all service marks, trademarks, tradenames, and any
other designations with respect to the Corporation's products.
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D. Joint Developments. From time to time during the term of this
Agreement the parties may agree in writing to develop products through a joint
project between each other using the technology owned and/or engineers employed
by each of them (a "Joint Development") to develop Future Generation Products.
Any technology or other intellectual property developed under a Joint
Development shall be owned jointly by the parties, and the parties mutually
shall agree in writing upon the method(s) for commercial exploitation of such
technology. Royalties on Joint Developments shall be as set forth in Sections
3.4(iv) or 3.5(iv), as the case may be. In addition, any patents or copyrights
resulting from any such Joint Development shall be applied for and owned
jointly by the parties. The individual expenses incurred by either party in
connection with any Joint Development (e.g. engineering, development,
prototypes, testing, travel, lodging, allowances and other expenses incurred in
connection with the project) shall be borne by the party incurring the expense.
Notwithstanding anything to the contrary contained herein, neither party shall
transfer or license any of its rights in or to any technology or other
intellectual property developed under a Joint Development without the written
consent of the other party, except pursuant to sublicenses permitted under
Section 3.3.
E. Markings. All Licensed Products shall bear such markings with
respect to patents (or patents pending) and/or trademarks, as shall be
reasonably requested by the licensing party to comply with applicable law or
otherwise required to protect its proprietary rights.
3.9 Defense of Infringement Claims.
A. Notification. If and as soon as any party hereto becomes aware
of any claim of infringement by any third party against any party hereto
concerning or affecting any rights or properties licensed under this Agreement
within the scope of the licenses granted in Sections 3.1 and 3.2 above, it
shall inform the other in writing of all the details thereof.
B. Control of and Co-operation in Defense. If any claim or action
described in Section 3.9.A above results in the filing by a third party of a
formal complaint, answer or other request for judicial or administrative relief
or action (a "Suit"), then each party hereto shall assist the other parties
hereto in diligently defending such suit. The control of the defense of a Suit
relating to the Licensed Technology shall rest, at TEAC's option, with TEAC and
all costs incurred in such a Suit by either party shall be borne by the party
incurring such cost. The defense of all other Suits shall be controlled by the
party licensing the subject technology, which party shall defend such suit on
its own behalf and on behalf of the licensee and, except as set forth in
Section 3.9.C below, shall bear the costs of such defense.
C. Representation in Defense. Each party hereto shall have the
right, in any Suit defended by another party hereto, to be represented at its
own expense by counsel of its own selection to the extent of having full access
to all information and the opportunity to be heard.
11
3.10 Prosecution of Infringement Claims.
A. Notification. If any party hereto becomes aware of an
infringement or potential infringement of any of the Licensed Technology,
Additional Developments or Licensed Trademarks by third parties then each shall
inform the other in writing of all details available (an "Infringement
Notice").
B. Right to Prosecute. Upon receipt of an Infringement Notice or
otherwise learning of an infringement or potential infringement of the Licensed
Technology, Additional Developments or Licensed Trademarks, the party that owns
the technology or other intellectual property rights that are the subject of
such infringement shall promptly either (a) obtain a discontinuance of said
infringement; or (b) bring suit against the third party. Before any party
hereto commences any such infringement action, it shall give careful
consideration to the views of the other parties hereto and to any potential
effects of the litigation on such other parties or itself. The costs and
expenses of such suit and all recoveries therefrom shall be the responsibility
of, and for the party bringing the suit.
C. Participation in Prosecution. Whenever any suit for infringement
is contemplated or brought against any third party by a party hereto as
provided in Section 3.10.B above, such party hereto shall immediately notify
the other parties hereto of any intention of any such suit, and shall provide
such other parties with copies of all pleadings, formal papers, and related
documents and materials prior to filing of such suit. At any time, such other
party may notify the prosecuting party that it elects to participate in such
suit. Regardless of a party's participation in the prosecution of such
infringement, the prosecuting party shall not settle such suit in any manner
which would impair any of the rights hereunder of any other party hereto
without such party's prior written consent.
D. Representation in Prosecution. Any party hereto shall have the
right, in any suit brought by another party hereto pursuant to Section 3.10.B
above, to be represented at its own expense by counsel of its own selection to
the extent of having full access to all information and the opportunity to be
heard.
E. Assumption of Prosecution. If at any time hereafter a party (the
"Delivering Party") shall deliver an Infringement Notice to another party (the
"Other Party") who fails or is unable to bring suit against such infringing
third party or obtain a discontinuance of such infringing operations as
provided in Section 3.10.B above within six (6) months of delivery of the
Infringement Notice, then the Delivering Party may, at its election, bring suit
in its own name against such infringer or, if required by the law of the forum,
in the name of the Other Party or joining such Other Party as a party
plaintiff. Should the Delivering Party bring suit in its own name, the
Delivering Party is hereby irrevocably granted the power to execute such legal
papers necessary and take such other action required for the prosecution of
such suit pursuant to the power of attorney granted by each party hereto to the
other party hereto and executed and delivered contemporaneously herewith. The
Other Party further agrees to execute such legal papers necessary and take such
other action as may be reasonably required for the prosecution of such suit as
may be requested by the
12
Delivering Party. Such other party shall also have all rights described in
Sections 3.10.C and 3.10.D above.
3.11 Prosecution of Applications.
A. Licensed Technology and Licensed Trademarks. As between the
parties hereto, TEAC agrees to take responsibility, including financial
responsibility, for the preparation, filing and prosecution of any and all
United States and foreign patent, trademark and copyright applications covering
the Licensed Technology or the Licensed Trademarks and shall furnish to the
Corporation copies of all communications and correspondence between TEAC and
any patent, trademark or copyright office in which such a patent copyright
application has been filed.
B. Additional Developments. As between the parties hereto, each
party agrees to take responsibility, including financial responsibility, for
the preparation, filing and prosecution of any and all United States and
foreign patent, trademark and copyright applications covering the Additional
Developments made by such party or its Affiliates and shall furnish to the
Corporation copies of all communications and correspondence between any party
and any patent, trademark or copyright office in which such a patent copyright
application has been filed.
C. Failure to Prosecute Claim. If any party hereto decides to
abandon or not to initiate any United States or foreign patent, trademark or
copyright application covering the Licensed Technology, the Licensed Trademarks
or Additional Developments in the countries listed on Exhibit C before
exhausting all permissible applications or petitions for rehearing or review,
or appeals by a superior tribunal, then such party shall inform the other party
of such decision no less than thirty (30) days prior to the expiration of the
time permitted for such applications for petitions for rehearing or review, or
appeals.
D. Power to Prosecute. If (a) a party hereto decides to abandon
any United States or foreign patent, trademark or copyright application
covering the Licensed Technology, the Licensed Trademarks or the Additional
Developments as described in Sections 3.11.A or Section 3.11.B above or
otherwise fails or is unable to prosecute such patent, trademark or copyright
application or acts as described in Section 3.11.A or Section 3.11.B above or
(b) if such party fails to prepare, file or prosecute any patent, trademark or
copyright application in any jurisdiction, then the other party shall have the
right, at its own option and expense, to initiate or continue the prosecution,
including the right to file applications or continuation, continuation-in-part,
and/or divisional applications, of such applications, which such party has
decided to abandon or has otherwise failed or been unable to prosecute. Each
party hereto is hereby irrevocably granted the power to prosecute such patent,
trademark or copyright applications and to prepare and file such legal papers
necessary and take such other action required for the prosecution of such
applications pursuant to the patent power of attorney granted to by each party
hereto and executed and delivered to each other as of the date hereof. Each
party hereto further agrees to give the other party its full cooperation and
assistance in preparing, filing and prosecuting such applications.
13
4. LIMITATION OF LIABILITY. NOTWITHSTANDING ANY OTHER TERM OF
THIS AGREEMENT, NEITHER PARTY HEREUNDER NOR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AFFILIATES, OR AGENTS SHALL BE LIABLE TO THE OTHER
PARTY HEREUNDER OR TO ANY THIRD PARTY FOR ANY LOSS OF USE, LOSS OF
GOODWILL, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES (INCLUDING LOST REVENUES OR PROFITS) OR SIMILAR
DAMAGES, WHETHER BASED ON TORT (INCLUDING WITHOUT LIMITATION,
NEGLIGENCE OR STRICT LIABILITY), CONTRACT, OR OTHER LEGAL OR EQUITABLE
GROUNDS, EVEN IF SUCH PARTY HAS BEEN ADVISED OR HAD REASON TO KNOW OF
THE POSSIBILITY OF SUCH DAMAGES.
5. TERM AND TERMINATION.
5.1 LICENSE PERPETUAL. Except as otherwise provided in Section 5.2
below, the term of this Agreement and the licenses hereunder shall be perpetual.
5.2 TERMINATION OF RIGHTS. If any party hereto shall commit a
material breach of any of the terms of the Order, any of the Related Documents
to which all parties hereto are also parties thereto or this Agreement, and
such breach (to the extent it can be cured) continues for seventy-five (75)
days after receipt of written notice specifying such breach in reasonable
detail, then any non-breaching party shall have the right to terminate all of
the breaching party's rights hereunder by delivery of written notice of such
termination. Notwithstanding the foregoing, (i) any such termination shall have
no effect on the breaching party's duties and obligations hereunder, which
shall continue past such termination in full force and effect, (ii) if any
party initiates arbitration under Section 24 within thirty (30) days of its
notice of the breach hereunder, this license shall not terminate to such person
unless the arbitrator determines that such breach did in fact occur and was
material (regardless of any cure after such seventy-five (75) day period) and
(iii) an inadvertent breach or one caused by a third party outside the control
or not an Affiliate of a party hereto shall not be a material breach unless (a)
it is remediable by money damages and the party hereto fails to do so after
court order or arbitration hereunder, or (b) such breach may be cured by the
party hereto and it fails to do so within the time provided therefor herein.
5.3 BANKRUPTCY, ETC. A party's rights (but not its obligations)
under this Agreement shall terminate automatically if (a) any party attempts to
assign this Agreement, except under circumstances permitted hereunder, or
hereto suspends business, or files a voluntary petition pursuant to or
purporting to be pursuant to any reorganization or insolvency law of any
jurisdiction, or an involuntary petition pursuant to or purporting to be
pursuant to any reorganization or insolvency law of any jurisdiction is filed
and is not dismissed within sixty (60) days, or any party makes an assignment
for the benefit of creditors, or applies for or consents to the appointment of
a receiver or trustee of a substantial part of its property or a receiver or
trustee of a substantial part of its property is otherwise appointed and is not
removed within sixty (60) days or (b) "control" of such party shall be obtained
by an entity or person engaged (or whose affiliate is engaged), in the
14
manufacture by itself or its affiliates of hard disk drives (excluding
affiliates of the parties hereto on the date hereof) other than following a
public offering under the Securities Act of 1933 of not less than 30% of the
Corporation's common stock (an "IPO").
6. Force Majeure and Damage Exclusions. Notwithstanding any other
provision of this Agreement:
A. Force Majeure. Either party shall be excused from any failure or
delay in performance resulting directly or indirectly from inability to obtain
parts or other necessary materials from usual sources of supply, transit
failure or delay, labor disputes, governmental orders or restrictions, fire,
flood or other acts of nature, accident, war, civil disturbance, or any other
causes beyond such party's reasonable control. A party affected by a force
majeure shall resume performance promptly upon cessation of same.
B. Damage Exclusions. Neither party shall be liable to the other party
for any incidental, indirect, consequential or special damages in connection
with any matters relating directly or indirectly to this Agreement, or
otherwise relating to the business relationship of the parties, even if such
party has been advised of the possibility of such damages by the other party
and even if such damages have been asserted against a party hereto by a third
party.
7. Warranties and Representations: Release.
A. Of TEAC. TEAC represents and warrants that (i) TEAC is a corporation
validly existing, and in good standing under the laws of Japan and has full
power and authority to carry on its business as it is now being conducted and
to own or lease the properties and assets it now owns or leases, and is duly
qualified to do business, and is in good standing as a foreign corporation in
each state in the United States in which TEAC's activities require such
qualification, (ii) TEAC has all necessary right, power and authority to enter
into this Agreement (iii) neither the execution and delivery of this Agreement
by TEAC nor its performance hereunder will conflict with or result in the
breach of any of the terms or conditions of or constitute a default under the
charter documents of TEAC or of any contract, agreement, commitment, indenture,
mortgage, note, bond, license or other instrument or obligation to which it is
a party or by which it or any of its property or assets may be bound, (iv) this
Agreement has been duly and validly executed by TEAC and constitutes the valid
and binding obligation of TEAC enforceable in accordance with its terms and (v)
except as set forth on Exhibit D attached hereto, no consent, approval or
authorization of, or declaration, filing or registration with, any foreign,
federal, state or local governmental or regulatory authority, or any other
party, is required to be made by TEAC in connection with the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED IN
THIS AGREEMENT ALL OF THE TECHNOLOGY IS PROVIDED TO THE CORPORATION BY TEAC
HEREUNDER "AS IS" AND TEAC EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES,
INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
15
B. Of The Corporation. The Corporation represents and warrants that (i)
the Corporation is a corporation validly existing, and in good standing under
the laws of the State of California and has full power and authority to carry
on its business as it is now being conducted and to own or lease the properties
and assets it now owns or leases, and is duly qualified to do business, and is
in good standing as a foreign corporation in each state in the United States in
which the Corporation's activities require such qualification, (ii) the
Corporation has all necessary right, power and authority to enter into this
Agreement (iii) neither the execution and delivery of this Agreement by the
Corporation nor its performance hereunder will conflict with or result in the
breach of any of the terms or conditions of or constitute a default under the
charter documents of the Corporation or of any contract, agreement, commitment,
indenture, mortgage, note, bond, license or other instrument or obligation to
which it is a party or by which it or any of its property or assets may be
bound, (iv) this Agreement has been duly and validly executed by the
Corporation and constitutes the valid and binding obligation of the Corporation
enforceable in accordance with its terms and (e) except as set forth on Exhibit
E attached hereto, no consent, approval or authorization of, or declaration,
filing or registration with, any foreign, federal, state or local governmental
or regulatory authority, or any other party, is required to be made by the
Corporation in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated hereby. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SPECIFICALLY PROVIDED IN THE AGREEMENT ALL OF
THE ADDITIONAL DEVELOPMENTS IS PROVIDED TO TEAC BY THE CORPORATION HEREUNDER
"AS IS" AND THE CORPORATION EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES,
INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
C. The Corporation, on behalf of itself, Tandon and all of their now or
hereafter existing Affiliates (the "First Releasing Parties") grants to TEAC
and any of its licensees or product purchasers ("TEAC Users") immunity from any
infringement action by the First Releasing Parties with respect to the use by
TEAC or the TEAC Users of the Licensed Technology or Licensed Products and
hereby covenants, on behalf of itself and the other First Releasing Parties,
not to sue TEAC or the TEAC Users with respect thereto.
D. TEAC, on behalf of itself and its now or hereafter existing
Affiliates (the "Second Releasing Parties") grants to TEAC and any of its
licensees or purchasers ("Corporation Users") immunity from any infringement
action by those and Releasing Party with regard to the use by the Corporation
or the Corporation Users of the Licensed Technology or Licensed Products and
hereby covenants on behalf of itself and the other Second Releasing Parties,
not to sue the Corporation or the Corporation Users with respect thereto.
8. Waiver. The waiver by either party of any of its rights or any
breaches of the other party under this Agreement in a particular instance shall
not serve as a waiver of the same or different rights or breaches in subsequent
instances. All remedies, rights, undertakings and obligations hereunder shall
be cumulative, and none shall operate as a limitation of any other.
16
9. Section Headings and Language Interpretations: Business Days. As used
herein, "business day" shall mean each day other than Saturday, Sunday and any
day on which banks are nationally required to be closed in the United States of
America or Japan, or any other business holiday for either party of which it
has advised the other party in writing not less than 45 days in advance. The
descriptive headings in this Agreement are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter genders shall
include all genders, the singular shall include the plural and vice versa and
shall refer solely to the parties signatory thereto unless otherwise
specifically provided. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
10. Notices. All notices, demands, consents, requests, approvals, and other
communications required or permitted hereunder shall be in writing and shall be
deemed effective only upon delivery (whether receipt is accepted or refused) at
the addresses set forth below (or at such other addresses within the United
States of America as shall be given in writing by any party to the others in
accordance with this Section 10. Notices may be delivered by hand, United
States registered or certified mail, return receipt requested, bonded private
courier service or by telecopier (followed immediately in writing by bonded
private courier service).
To the Corporation: JT Storage, Inc.
2125 Madera Road
Simi Valley, California 93065
Attention: Board of Directors
Telecopy Number: (805) 582-3227
with a copy to: Riordan & McKenzie
5743 Corsa Avenue, Suite 116
West Lake Village, California 91362
Attention: Lawrence Weeks
Telecopy Number: (818) 706-2956
To TEAC: TEAC Corporation
3-7-3 Nakacho, Musashino
Tokyo, Japan
Attention: General Manager,
Disk Drive Products Division
Telecopy Number: 0422-52-3771
with copies to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Mark D. Gerstein
Telecopy Number: (312) 902-1061
17
and
TEAC America, Inc.
7733 Montebello Road
Montebello, California 90640
Attention: Executive Vice President
Telecopy Number: (213) 727-7688
11. Assignment. Except as specifically provided herein, no party hereto may
assign any of its rights or delegate any of its obligations hereunder without
the prior written consent of the other parties, which consent shall not be
withheld unreasonably; provided that TEAC may assign its rights and obligations
hereunder to any party purchasing all of the Licensed Technology, without the
consent of the Corporation, other than as prohibited by the Order and provided
further the Corporation's rights hereunder will succeed to a successor by
merger or acquisition to the Corporation following an IPO.
12. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. Governing Law. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the
laws of the State of California, without giving effect to provisions thereof
regarding conflict of laws.
14. Controlling Terms/Entire Agreement/Amendment. This Agreement, those
documents expressly referred to herein and other documents of even date
herewith embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way. No provisions in the purchase orders,
acknowledgements or other business forms of either party which are different
from or in addition to the applicable terms set forth in this Agreement shall be
of any force or effect whatsoever unless it is acknowledged to in writing by the
other party expressly stating that each document supersedes this Agreement as
follows: "Notwithstanding any term of the License Agreement by and between TEAC
Corporation and ___________________ dated February ____, 1994". Any
provision of this Agreement may be amended only with the prior written consent
of all of the parties hereto.
15. Multiple Counterparts. This Agreement may be executed on separate
counterparts transmitted by telecopy, each of which is deemed to be an original
and all of which taken together constitute one and the same agreement.
18
16. Relationship of the Parties. It is not the intent of the parties to create
a partnership or joint venture or to assume partnership liability or
responsibility by entering into this Agreement. Each party hereto shall be
deemed an independent contractor with respect to the other party and neither
party hereto shall have any right or authority to assume or create any
obligations on behalf of the other party hereto or to make any representations
on such other party's behalf. Accordingly, the obligations of the parties with
respect to the matters addressed herein shall be limited to those specifically
set forth in this Agreement or other written agreements between the parties.
17. Public Disclosure. Neither party hereto shall make any public release of
information regarding the terms of this Agreement relating to the royalties due
hereunder unless (i) such party has obtained the written consent of the other
party regarding the form, content and timing of such disclosure or (ii) such
disclosure is required by applicable law; provided that in the event of any
disclosure mandated by law, each party shall consult with the other as to the
content of such disclosure.
18. Right of Set-off. If in the good faith belief of one of the parties hereto
(the "Injured Party"), it is entitled to indemnification, reimbursement or
payment hereunder, in addition to any other remedies which it may have
available to it, the Injured Party shall have the right to set off the entire
amount thereof against any amounts which the Injured Party shall owe to the
other party from time to time thereafter for any reason, including any
royalties due or which become due hereunder.
19. No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction will be applied against any party hereto.
20. Remedies. Each of the parties confirms that damages at law may be an
inadequate remedy for a breach or threatened breach of this Agreement and
agrees that, in the event of a breach or threatened breach of any provisions
hereof, the respective rights and obligations hereunder shall be enforceable by
specific performance, injunction or other equitable remedy, but nothing herein
contained is intended to, nor shall it limit or affect, any rights at law or by
statute or otherwise of any party aggrieved as against any other party for
breach or threatened breach of any provision hereof, it being the intention by
this section to make clear the agreement of the parties that the respective
rights and obligations of the parties shall be enforceable in equity as well as
at law or otherwise.
21. Preamble; Preliminary Recitals. The Preliminary Recitals set forth in the
Preamble hereto are hereby incorporated and made part of this Agreement.
22. Consent to Jurisdiction and Service of Process. Each of the Corporation and
TEAC hereby consent to the jurisdiction of any state or federal court located
within the County of Los Angeles, State of California and irrevocably agree
that all actions or proceedings arising out of or relating to this Agreement
shall be litigated in such courts. Each of the parties hereto accept for
itself, himself or herself, as the case may be, and in connection with its, his
or her properties, generally and unconditionally, the nonexclusive jurisdiction
of the
19
aforesaid courts and waives any defense of forum non conveniens, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Each of the parties hereto designate and appoint CT
Corporation System and such other persons as may hereinafter be selected by
them who irrevocably agree in writing to so serve as agent to receive on their
behalf service of all process in any such proceedings in any such court, such
service being hereby acknowledged by each such party to be effective and
binding service in every respect. A copy of any such process so served shall be
mailed by registered mail to each such party hereto as provided herein, except
that unless otherwise provided by applicable law, any failure to mail such copy
shall not affect the validity of service of process. If any agent appointed by
a party hereto refuses to accept service, such party hereby agrees that service
upon it, him or her, as the case may be, by mail shall constitute sufficient
notice. Nothing herein shall affect the right of any party hereto to serve
process in any other manner permitted by law.
23. WAIVER OF JURY TRIAL. EACH OF THE CORPORATION AND TEAC HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED HEREBY. EACH OF THE CORPORATION AND TEAC ALSO WAIVE ANY BOND OR
SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF ANY OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE CORPORATION AND TEAC ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF THE
CORPORATION AND TEAC FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS, HIS OR HER, AS THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS, HIS OR HER, AS THE CASE MAY BE, JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
20
24. Arbitration.
(i) If any controversy or claim between the parties hereto arises out
of this Agreement or any document, instrument or agreement executed and
delivered pursuant hereto, such disagreement or dispute may, at the election of
either party prior to the filing by either party an action in a court of proper
jurisdiction pertaining to such claim, be submitted to binding arbitration in
Los Angeles, California, under the Commercial Arbitration Rules of the American
Arbitration Association; provided that any matter provided for in this
Agreement to be mutually agreed to, negotiated or otherwise discussed between
the parties shall be subject to arbitration hereunder only if specifically
provided in this Agreement.
(ii) One arbitrator shall be appointed under the Commercial
Arbitration Rules of the American Arbitration Association, who shall be a
business person with at least five years experience in the disk drive industry;
provided, however, that if any disagreement arises concerning specialized
matters such as intellectual property rights, product design or computer
engineering, market conditions or importing/exporting regulations, then the
arbitrator shall also have an expertise in such matters. As soon as the panel
has been convened, a hearing date shall be set within 45 days thereafter.
Written submittals shall be presented and exchanged by both parties 15 days
before the hearing date, including reports prepared by experts upon whom either
party intends to rely. At such time the parties shall exchange copies of all
documentary evidence upon which they will rely at the arbitration hearing and a
list of the witnesses whom they intend to call to testify at the hearing. Each
party shall also make its respective experts available for deposition by the
other party prior to the hearing date. The arbitrator shall make its award as
promptly as practicable after conclusion of the hearing.
(iii) The arbitrator shall not be bound by the rules of evidence or
civil procedure, but rather may consider such writings and oral presentations
as reasonable businessmen would use in the conduct of their day-to-day affairs,
and may require the parties to submit some or all of their presentations orally
or in written form as the arbitrators may deem appropriate. It is in the
intention of the parties to limit live testimony and cross-examination to the
extent necessary to insure a fair hearing to the parties on the matters
submitted to arbitration, and to provide neither party more than ten business
days to present its position. The parties have included the foregoing
provisions limiting the scope and extent of the arbitration with the intention
of providing for prompt, economic and fair resolution of any dispute submitted
to arbitration.
(iv) The arbitrator shall have the discretion to award the costs of
arbitration, arbitrators' fees and the respective attorneys' fees of each party
between the parties as they see fit. Judgment upon the award entered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall make its award in accordance with applicable law and based on
the evidence presented by the parties, and at the request of either party at
the state of the arbitration shall include in its award findings of fact and
conclusions of law both in law and equity which would be available in a court
having
21
jurisdiction over the parties and over the subject matter of the dispute. Such
powers shall include, but not be limited to, the power to require specific
performance.
(v) The arbitration agreement set forth herein shall not limit a court
from granting a temporary restraining order or preliminary injunction in order
to preserve the status quo of the parties pending arbitration. Further, the
arbitrator shall have power to enter such orders by way of interim award, and
they shall be enforceable in court.
22
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
THE CORPORATION:
JT STORAGE, INC.
By: /s/
-----------------------------
A duly authorized signatory
TEAC:
TEAC CORPORATION
By:
----------------------------
A duly authorized signatory
23
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
THE CORPORATION:
JT STORAGE, INC.
By:
-----------------------------
A duly authorized signatory
TEAC:
TEAC CORPORATION
By: /s/
----------------------------
A duly authorized signatory
24
AMENDMENT AND CONSENT
This Amendment and Consent (the "Amendment") is made and entered into as of
this 3rd day of February, 1995, by and between TEAC Corporation, a corporation
organized and existing under the laws of Japan, having its principal place of
business at 3-7-3 Naka-cho, Musashino, Tokyo, Japan ("TEAC"), and JT Storage,
Inc., a corporation organized and existing under the laws of the State of
Delaware, U.S.A., having its principal place of business at 2125 Madera Road,
Simi Valley, California 93065 (the "Corporation").
WHEREAS, on February 4, 1994 an Agreed Order Compromising Controversies
(the "Order") was entered into in the United States Bankruptcy Court For the
Northern District of California with respect to case No. 93-54027MM pursuant to
which TEAC obtained certain technology and other intellectual property and
certain other assets of Kalok Corporation, and licensed certain of said
technology and intellectual property to the Corporation pursuant to a License
Agreement attached to the Order as Exhibit A (the "License Agreement"); and
WHEREAS, Section F of the Order prohibits the sublicensing or transfer of
the IP Assets to certain parties, including Western Digital Corporation ("WDC").
WHEREAS, TEAC and the Corporation deem that it is in their mutual best
interest to amend the License Agreement, and to consent to certain transactions
related thereto, upon the terms and conditions set forth in this Amendment.
WHEREAS, all capitalized terms not otherwise defined herein shall have the
meaning given such term in the License Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Order and the License Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. AMENDMENT OF LICENSE AGREEMENT. The License Agreement is hereby
amended as follows:
1.1 Section 1, the definition of "Nordic II Series", is amended to delete
the number and words ".40 (four-tenths)" appearing between the words "than" and
"inches" and to insert the number and words ".50 (five tenths)" between the
words "than" and "inches".
1.1A A new Section 2.1C will be added and will read in its entirety as
follows:
"C. Certain WDC Additional Developments. Notwithstanding the foregoing,
TEAC shall not disclose to the Corporation any Additional Developments which may
be delivered by WDC to TEAC after [*] , under the WDC License Agreement
(as defined hereunder)."
1.2 Section 3.1A is amended to add the phrase "India, North and South
Korea and" between the words "within" and "the" at the end of the third line of
said section. Section 3.1B
* 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.
is amended to add the phrase "Japan and" between the words "within" and "the" in
the second line of said Section. Section 3.1C is amended to add the phrase
",subject only to TEAC's right to sell Licensed Products in India after January
1, 1995" after the word "India" in the second line of said section. Section
3.1D is amended to add the phrase "and, after January 1, 1995, in Japan" after
the word "Territory" in the second line of said section.
1.3 Section 3.2A is amended to add the phrase "Japan and" between the
words "within" and "the" in the sixth line of said section. Section 3.2C is
amended to add the phrase ",subject only to the Corporation's right to sell
Licensed Products in Japan after January 1, 1995" after the word "Japan" in the
last line of said section. Section 3.2D is amended to add the phrase "and, after
January 1, 1995, in India" after the word "Territory" in the last line of said
section.
1.4 The first paragraph of Section 3.3 of the Agreement is amended to
delete the text ",and (iii) the parties may sublicense selling rights in the
respective exclusive selling territories", and to insert before the text "(ii)",
the word "and" in the fifth line of said paragraph. The second paragraph of
Section 3.3 is amended to add the following phrase at the end of such paragraph:
", but only for sale of products under the trade names or trademarks of the
primary licensee hereunder."
1.5 Section 3.4A is amended to add the phrase "Subject to Sections 3.4C
and 3.4D below, all" in substitution of the first word of said section. Section
3.4B is amended to add the phrase "Subject to Section 3.4D below, the" in
substitution of the first word of said section.
1.6 Section 3.4B(iii) is amended to delete the phrase "pre-" in the
third line of said section.
1.7 A new Section 3.4C will be added and will read in its entirety as
follows:
"C. TEAC Exit of HDD Industry. If TEAC shall cease (i) all sales of
Licensed Products, (ii) all production or subcontracting production of
Licensed Products and (iii) the purchase of Licensed Products from the
Corporation and WDC, then during the [*] period following the
last of such events, the Corporation shall pay TEAC a royalty of [*]
per Nordic II Series HDD sold by the Corporation outside of Japan.
Notwithstanding anything to the contrary contained herein, this royalty
shall cease at such time, if any, as the fair market value of TEAC's
investment in the Corporation shall equal or exceed [*] (subject
to pro rata adjustment to the extent TEAC disposes of such investment)
for a period of twelve consecutive months."
1.8 A new Section 3.4D will be added and will read in its entirety
as follows:
"D" Sales in Japan. Notwithstanding anything to the contrary contained
herein, the Corporation shall pay TEAC a royalty as follows: From the
date of [*] , up until the earlier of an [*]
[*] 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.
-2-
[*] or [*] (the "Initial Term") the Corporation shall pay TEAC the
greater of (i) [*] each three months during the Initial Term (provided
that this clause "(i)" shall only be applicable for periods after
[*] , or (ii) the product of [*] times the number of HDD or each
HDD in an accessory utilizing the Licensed Technology ("Licensed
HDD's") sold by the Corporation in Japan each [*] during the Initial
Term. Subsequent to the Initial Term and up through [*] , the
Corporation shall pay TEAC the greater of (i) [*] each [*] or (ii)
the product of [*] times the number of HDD or Licensed HDD's sold
during each three-month period. In the event that an IPO occurs prior
to [*] the Corporation shall pay TEAC, with respect to the
[*] period during which the IPO occurs, the greater of (i) an
amount equal to [*] in such [*] times [*] , or (ii) the number
of HDD or Licensed HDD's sold during the period of time within such
[*] period prior to the [*] times [*] . All amounts owed by the
Corporation to TEAC under this Section 3.4(D) shall be paid no later
than thirty (30) days after the three-month period in which such
payment is due."
1.8 Section 3.5B(iii) is amended to delete the word "pre-" in the third
line of said section. Section 3.5B(iv) is amended to delete the words "the
Corporation" and substitute therefor the word "TEAC".
1.9 All references to "Future Generation Products" in Sections 3.6 and
3.7 shall be changed to reference "Licensed HDD's".
1.10 Section 3.7 is amended to delete the phrase ", and shall be
subject to any applicable withholding tax requirements" in lines 4 and 5 of
said section.
1.11 Section 11 is amended to clarify the original intent of the
parties to add the following language: "As used in this Agreement, the phrase
'assign' or 'assignments' shall include, without limitation, any pledge,
hypothecation or other encumbering of rights hereunder, and any transfer by
operation of law, involving merger or consolidation.
2. OTHER AGREEMENTS. As additional consideration for the agreements and
covenants of TEAC contained herein, the parties hereby further agree as
follows:
2.1 The Corporation shall provide TEAC with the opportunity to purchase
Licensed HDDs from the Corporation at a price equal to the lower of [*] If
TEAC purchases Licensed HDDs at 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.
-3-
price provided in (i) of the previous sentence, then TEAC's purchases shall be
limited to [*] . Allocations of the indirect costs provided for in
the previous sentence shall be made in a reasonable manner, consistent with
allocations made by the Corporation for other cost/analysis purposes. Delivery
(subject only to the available manufacturing capacity of the Corporation) and
warranty terms for such purchases shall be equal to the most favorable terms
provided to any of the Corporation's other customers for comparable products
without regard to volume purchased by such customers or to be purchased by
TEAC.
2.2 If TEAC or one of its subcontracted manufacturers of Licensed
Products needs to purchase parts from a vendor that also does business with the
Corporation, then the Corporation shall authorize such vendor to calculate the
price of such parts based on the combined purchase volumes of such parts of
TEAC, any such subcontractor and the Corporation. TEAC agrees to bear its pro
rata share of any tooling costs, which proportion shall be agreed to by TEAC
and the Corporation at the time of the purchase.
3. BALANCE OF AGREEMENT. Except as amended by the terms of this Amendment,
each and every other term, condition and covenant of the License Agreement (and
the exhibits and schedules thereto) and all other documents, instruments or
agreements heretofore executed and delivered by the parties shall remain in
full force and effect.
4. LICENSE WITH WDC. The Corporation and TEAC hereby acknowledge that TEAC is
entering into a certain licensing agreement with WDC dated as of February 3,
1995 (the "WDC License Agreement") by which TEAC will license certain
technologies to WDC and WDC will license certain technologies to TEAC and the
Corporation hereby consents to the WDC License Agreement. The Corporation and
TEAC hereby acknowledge that the Corporation is entering into a certain
licensing agreement with WDC, the Technology Transfer and License Agreement
dated as of February ___, 1995 (hereinafter the "Corporation License
Agreement") by which the Corporation will license certain technologies to WDC
and WDC will license certain technologies to the Corporation and TEAC hereby
consents to the Corporation License Agreement.
5. LICENSE WITH COMPAQ. The Corporation and TEAC hereby acknowledge that the
Corporation has entered into a certain licensing agreement with Compaq Computer
Corporation, dated as of June 16, 1994, as amended (the "Development
Agreement"), by which the Corporation has licensed certain technologies to
Compaq and TEAC hereby consents to the Development Agreement.
6. CERTAIN CONDITIONS. The agreements of the parties contained herein are
conditioned upon, and shall become immediately effective only upon the
completion of, the following:
6.1 TEAC shall have received the counter-signature page of Mr. Tandon
to the Stockholders Agreement (as defined in the Master Agreement) and a
revised Exhibit H to the Order, executed by the Corporation.
* 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.
-4-
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-4’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 1/31/99 | | 2 | | | | | None on these Dates |
| Filed on: | | 6/24/96 |
| | 2/3/95 | | 28 |
| | 1/1/95 | | 26 |
| | 6/16/94 | | 28 |
| | 2/4/94 | | 25 |
| List all Filings |
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