Master Technology License Agreement

EXHIBIT 10.5 Confidential


MASTER TECHNOLOGY LICENSE AGREEMENT


This Master Technology License Agreement is entered into and is effective as of the 23rd day of September, 1994 by and among M-R Assets Corporation, a California corporation ("MAC"), Hewlett-Packard Company, a California corporation ("HP"), Komag, Incorporated, a Delaware corporation ("Komag"), and Asahi Glass America, Inc., a Delaware corporation ("AGA").


RECITALS


WHEREAS, MAC desires to develop and produce the Product utilizing the HP MR Technology, the Dastek MR Technology, the Joint MR Technology and the Komag MR Technology; and


WHEREAS, HP desires to license to MAC the HP MR Technology and to obtain from MAC a license to the MAC MR Technology and certain Product price and production commitments and from each of Komag and AGA a license to the Dastek MR Technology and a license to the Joint MR Technology and from Komag a license to the Komag MR Technology; and


WHEREAS, Komag desires to license to MAC the Dastek MR Technology, the Joint MR Technology and the Komag MR Technology and to obtain from MAC a license to the MAC MR Technology and from HP a license to the HP MR Technology; and


WHEREAS, AGA desires to license to MAC the Dastek MR Technology and the Joint MR Technology and to obtain from MAC a license to the MAC MR Technology, from HP a license to the HP MR Technology and from Komag a license to the Komag MR Technology; and


WHEREAS, each of MAC, HP, Komag and AGA desires to cooperate with the other parties hereto for the purpose of creating a manufacturing capability for the Product and making the Product successful and widely accepted in the industry; and


WHEREAS, MAC has contributed and is contributing significant development resources to bring the Product to readiness for mass production; and


WHEREAS, HP has contributed and is contributing significant development resources to MAC to bring the Product to readiness for mass production; and


[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


WHEREAS, Komag and AGA have contributed and are contributing significant resources to bring the Product to readiness for mass production;


NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows:


1. CERTAIN DEFINITIONS


The following terms not defined elsewhere herein shall have following meanings:


"AKCL" shall mean Asahi Komag Co., Ltd., a Japanese corporation.


"Confidential Information" shall mean confidential or proprietary information of any party hereto which is disclosed to any other party hereto by reason of the parties' relationship hereunder or pursuant hereto, including without limitation (a) Intellectual Property, (b) information about or related to the specification, design, manufacture, test and implementation of the Product, and (c) the business plans, vendors and customers of the respective parties.


"Dastek" shall mean Dastek, Inc., a California corporation.


"Dastek" MR Technology" shall mean Intellectual Property related to the Product developed or acquired and, with respect to patents, conceived or first reduced to practice or acquired and formerly owned by Dastek, in which each of Komag and AGA owns an undivided right.


"Discloser" shall mean any party hereto which discloses Confidential Information under this Agreement.


"HP MR Technology" shall mean Intellectual Property related to dual-stripe magnetoresistive heads, including without limitation air-bearings, head gimble attachments and wire bonding processes, developed or acquired and, with respect to patents, conceived or first reduced to practice or acquired by HP on or before the termination of the Restriction Period.


"Intellectual Property" shall mean any and all (a) documentation; (b) computer programs in source code or object code form; (c) works of authorship (whether copyrightable or not); (d) inventions (whether patentable or not), know-how, technology, trade secrets, mask works, designs, processes and technical data; (e) patents, design patents, utility models,


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industrial designs, copyrights, mask work registrations and applications therefor, foreign counterparts thereof and similar rights and assets in any country.


"Inventing Parties" shall have the meaning set forth in Section 15.5 below.


"Joint Authors" shall have the meaning set forth in Section 15.5 below.


"Joint Inventions" shall have the meaning set forth in Section 15.5 below.


"Joint MR Technology" shall mean Intellectual Property related to the Product developed or acquired and, with respect to patents, conceived or first reduced to practice or acquired jointly by Dastek and Komag as of the date of this Agreement.


"Joint Works" shall have the meaning set forth in Section 15.5 below.


"Komag MR Technology" shall mean Intellectual Property related exclusively to the Product developed or acquired and, with respect to patents, filed or acquired by Komag prior to the closing date.


"MAC MR Technology" shall mean Intellectual Property related to the Product developed or acquired and, with respect to patents, filed or acquired by MAC prior to the closing date.


"MAC Technical Information" shall mean all information, data, engineering drawings and other design specifications and documentation for those aspects of any dual-stripe magnetoresistive Product and its manufacturing process which are developed or acquired by MAC, including without limitation any such information, data, drawings and other design specifications and documentation developed or acquired by Robin.


"Product" shall mean a disk drive component, namely any recording head.


"PTO" shall mean the U.S. Patent and Trademark office.


"Recipient" shall mean any party hereto which receives Confidential Information from any other party hereto under this Agreement.


"Restriction Period" shall mean the period beginning on the date hereof and ending on the date two (2) years thereafter.


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"Robin" shall mean Robin, Inc., a Delaware corporation.


"Third Party MR Technology" shall mean Intellectual Property related to dual-stripe magnetoresistive heads, including without limitation air-bearings, head gimble attachments and wire bonding processes, developed or acquired and, with respect to patents, conceived or first reduced to practice or acquired by third parties and licensed on or before the termination of the Restriction Period to HP or at any time to Komag or AGA, as the case may be.


2. HP LICENSE TO MAC


2.1 (i) Grant of License under the HP MR Technology. HP hereby grants
------------------------------------------- to MAC a perpetual, exclusive, royalty-free (subject to Section 2.2(ii) below), worldwide license under the HP MR Technology to develop, manufacture (including the right to have manufactured subject to Section 2.1(ii) below), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the HP MR Technology for the purpose of developing, manufacturing (including the right to have manufactured subject to Section 2.1 (ii) below) , testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Sections 2.1(iii) and 16 below.


(ii) Have Made Restriction. The right of MAC to have Product made
--------------------- contained in Section 2.1(i) above is subject to the restriction that, during the Restriction Period, MAC shall have obtained HP's prior written approval, which shall not be unreasonably withheld.


(iii) Sublicense and Assignment Restrictions. The right of MAC to
-------------------------------------- sublicense or assign the rights contained in Section 2.1(i) is subject to the restriction that, during the Restriction Period, except with respect to any sublicense to be granted by MAC pursuant to Section 16 below, MAC may grant a sublicense of commensurate scope only to AKCL, and no other party, unless prior written approval is obtained from HP, which shall not be unreasonably withheld. Factors which HP may consider in determining whether to grant such approval include without limitation (a) whether the proposed sublicense includes an option for HP to purchase a minimum of [*] percent ([*]%) of the sublicensee's Product production output containing the sublicensed HP MR Technology, and (b) the right of HP to receive the lowest price such sublicensee charges any customer for similar volumes of such Product.


[*]=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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2.2 Sublicense under the Third Party MR Technology.
----------------------------------------------


(i) HP hereby grants to MAC a sublicense under the Third Party MR Technology licensed by the third party to HP, commensurate in scope with such license, to the extent and for as long as permitted by such license, to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of such Third Party MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product.


(ii) To the extent HP has an obligation to pay any royalties or other fees to any third party pursuant to the license to HP under any Third Party MR Technology sublicensed by HP to MAC under Section 2.2(i) above, HP shall so inform MAC and MAC shall pay HP all such applicable royalties and other fees due to such third parties under such sublicense.


3. KOMAG AND AGA LICENSES TO MAC


3.1 Grant of License under the Dastek MR Technology. Each of Komag and AGA
----------------------------------------------- hereby grants to MAC a perpetual, exclusive, royalty-free, worldwide license under the Dastek MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Dastek MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign.


3.2 Grant of License under the Joint MR Technology. Each of Komag and AGA
---------------------------------------------- hereby grants to MAC a perpetual, non-exclusive, royalty-free, worldwide license under the Joint MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Joint MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign.


3.3 (i) Grant of License under the Komag MR Technology. Komag hereby
---------------------------------------------- grants to MAC a perpetual, non-exclusive, royalty-free (subject to Section 3.3(iii) (b) below), worldwide license under the Komag MR Technology to develop, manufacture (including the right to have


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manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Komag MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense or assign subject to Sections 3.3(ii) and 16 below.


(ii) Sublicense and Assignment Restrictions. During the Restriction
-------------------------------------- Period, the right of MAC to sublicense or assign the rights contained in Section 3.3(i) above is limited and subject to, except with respect to sublicenses to be granted by MAC pursuant to Section 16 below (a) Komag's providing, in its sole discretion, prior written approval of any such proposed sublicense or assignment, including approval of the terms and of the parties to any such sublicense, such approval not to be unreasonably withheld, and (b) any such sublicense being of a scope commensurate with the rights granted herein, without further right of sublicense. Notwithstanding the foregoing, MAC may sublicense rights of a scope commensurate with the rights granted herein, without further right of sublicense, to AKCL, without such prior written approval.


(iii) Sublicense under the Third Party MR Technology.
----------------------------------------------


(a) Komag hereby grants to MAC a sublicense under the Third Party MR Technology licensed by the third party to Komag, commensurate in scope with such license, to the extent and for as long as permitted by such license, to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of such Third Party MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product.


(b) To the extent Komag has an obligation to pay any royalties or other fees to any third party pursuant to the license to Komag under any Third Party MR Technology sublicensed by Komag to MAC under Section 3.3(iii)(a) above, Komag shall so inform MAC and MAC shall pay Komag all such applicable royalties and other fees due to such third parties under such sublicense.


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4. MAC LICENSES TO HP, KOMAG AND AGA


Except as provided in Section 5 below with respect to the license of the HP MR Technology, the Dastek MR Technology, the Joint MR Technology and the Komag MR Technology, which shall not be included in the licenses granted pursuant to Sections 4.1-4.3:


4.1 Grant of License under the MAC MR Technology to HP. MAC hereby grants
-------------------------------------------------- to HP a perpetual, non-exclusive, royalty-free, worldwide license under the MAC MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the MAC MR Technology for the purpose of developing, manufacturing (including the right to have manufactured) , testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign.


4.2 Grant of License under the MAC MR Technology to Komag. MAC hereby
----------------------------------------------------- grants to Komag a perpetual, non-exclusive, royalty-free, worldwide license under the MAC MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the MAC MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign.


4.3 Grant of License under the MAC MR Technology to AGA. MAC hereby
--------------------------------------------------- grants to AGA a perpetual, non-exclusive, royalty-free, worldwide license under the MAC MR Technology to develop, manufacture (including the right to have manufactured) , test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the MAC MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign.


5. CROSS-LICENSES AMONG HP, KOMAG AND AGA


5.1 (i) Grant of Cross-License under the HP MR Technology to Komag. HP
---------------------------------------------------------- hereby grants to Komag a perpetual, non-exclusive, royalty-free (subject to Section 5.1(v)(b) below), worldwide license under the HP MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the HP MR Technology for the purpose of developing,


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manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Section 5.1(iii)-(iv) below.


(ii) Grant of Cross-License under the HP MR Technology to AGA. HP
-------------------------------------------------------- hereby grants to AGA a perpetual, non-exclusive, royalty-free (subject to Section 5.1(v)(b) below), worldwide license under the HP MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the HP MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Section 5.1(iii)-(iv) below.


(iii) Sublicense and Assignment Restrictions. Neither Komag nor AGA
-------------------------------------- may sublicense or assign under the HP MR Technology without the prior written consent of HP, which shall not be unreasonably withheld. Notwithstanding the foregoing, in the event that MAC has not already granted a sublicense under the HP MR Technology to AKCL pursuant to Section 2.1(iii) above, each of Komag and AGA may sublicense rights of a scope commensurate with the rights granted in this Section 5.1, without further right of sublicense, to AKCL, without such prior written approval.


(iv) Price and Production Commitments. In further consideration of
-------------------------------- the licenses granted in this Section 5.1, each of Komag and AGA hereby agrees that, if it elects to practice the licensed technology, it shall sell Product to HP with the same price protection and volume commitments as govern MAC's obligation to sell to HP pursuant to Section 9 below. The obligations contained in this Section 5.1(iv) shall be subject to independent audit, during normal business hours upon reasonable notice, by a third party of HP's choosing, and at HP's expense.


(v) Sublicense under the Third Party MR Technology.
----------------------------------------------


(a) HP hereby grants to each of Komag and AGA a sublicense under the Third Party MR Technology licensed by the third party to HP, commensurate in scope with such license, to the extent and for as long as permitted by such license, to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of such Third Party MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing,


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selling, marketing and distributing Product.


(b) To the extent HP has an obligation to pay any royalties or other fees to any third party pursuant to the license to HP under any Third Party MR Technology sublicensed by HP to Komag and AGA under Sections 5.1(i)- (ii) above, HP shall so inform each of Komag and AGA and each of Komag and AGA shall pay HP all such applicable royalties and other fees due to such third parties under such sublicense.


5.2 (i) Grant of Cross-License under the Dastek MR Technology to HP.
----------------------------------------------------------- Each of Komag and AGA hereby grants to HP a perpetual, non-exclusive, royalty- free, worldwide license under the Dastek MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Dastek MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Section 5.2(ii) below.


(ii) Sublicense and Assignment Restriction. HP may not sublicense or
------------------------------------- assign the Dastek MR Technology without the prior written consent of Komag and AGA, which shall not be unreasonably withheld. Notwithstanding the foregoing, in the event that MAC has not already granted a sublicense under the Dastek MR Technology to AKCL pursuant to Section 3. 1 above, HP may sublicense rights of a scope commensurate with the rights granted in Section 5.2(i), without further right of sublicense, to AKCL, without such prior written approval.


5.3 (i) Grant of Cross-License under the Joint MR Technology to HP.
---------------------------------------------------------- Each of Komag and AGA hereby grants to HP a perpetual, non-exclusive, royalty- free, worldwide license under the Joint MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Joint MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Section 5.3(ii) below.


(ii) Sublicense and Assignment Restrictions. HP may not sublicense
-------------------------------------- or assign under the Joint MR Technology without the prior written consent of Komag and AGA, which shall not be unreasonably withheld. Notwithstanding the foregoing, in the event that MAC has not already granted a sublicense under the Joint MR Technology to AKCL pursuant to Section 3.2 above, HP may sublicense rights of a scope commensurate with the rights granted in section 5.3(i), without further right of


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sublicense, to AKCL, without such prior written approval.


5.4 (i) Grant of Cross-License under the Komag MR Technology to HP.
---------------------------------------------------------- Komag hereby grants to HP a perpetual, non-exclusive, royalty-free (subject to Section 5.4(iv) (b) below) , worldwide license under the Komag MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Komag MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Section 5.4(iii) below.


(ii) Grant of Cross-License under the Komag MR Technology to AGA.
----------------------------------------------------------- Komag hereby grants to AGA a perpetual, non-exclusive, royalty-free (subject to Section 5.4(iv) (b) below) , worldwide license under the Komag MR Technology to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of the Komag MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product, with the right to sublicense and assign subject to Section 5.4(iii) below.


(iii) Sublicense and Assignment Restrictions. Neither HP nor AGA may
-------------------------------------- sublicense or assign under the Komag MR Technology without the prior written consent of Komag, which shall not be unreasonably withheld. Notwithstanding the foregoing, in the event that MAC has not already granted a sublicense under the Joint MR Technology to AKCL pursuant to Section 3.2 above, HP and AGA may sublicense rights of a scope commensurate with the rights granted in Section 5.4(i) and (ii) , respectively, without further right of sublicense, to AKCL, without such prior written approval.


(iv) Sublicense under the Third Party MR Technology.
----------------------------------------------


(a) Komag hereby grants to each of HP and AGA a sublicense under the Third Party MR Technology licensed by the third party to Komag, commensurate in scope with such license, to the extent and for as long as permitted by such license, to develop, manufacture (including the right to have manufactured), test, use, modify, reproduce, sell, market and distribute Product and to modify and create derivative works of such Third Party MR Technology for the purpose of developing, manufacturing (including the right to have manufactured), testing, using, modifying, reproducing, selling, marketing and distributing Product.


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(b) To the extent Komag has an obligation to pay any royalties or other fees to any third party pursuant to the license to Komag under any Third Party MR Technology sublicensed by Komag to HP and AGA under Sections 5.4(i) and (ii), respectively, above, Komag shall so inform each of HP and AGA and each of HP and AGA shall pay Komag all such applicable royalties and other fees due to such third parties under such sublicense.


6. CONTRIBUTIONS OF HP, KOMAG AND AGA


6.1 HP Contribution. Except with respect to the HP MR Technology which
--------------- HP is licensing to MAC pursuant to Section 2.1 (i) above, HP has contributed and will contribute to MAC the information, data, engineering drawings and other design specifications and documentation for the dual-stripe magnetoresistive heads which have been developed or acquired by HP on or before the termination of the Restriction Period.


6.2 Komag and AGA Contribution. Except with respect to the Dastek MR
-------------------------- Technology and Joint MR Technology which Komag and AGA are licensing to MAC pursuant to Section 3.1 and 3.2 above, Komag and AGA have contributed and will contribute to MAC the information, data, engineering drawings and other design specifications and documentation for magnetoresistive heads which have been developed or acquired by Dastek, or Dastek and Komag, as the case may be.


6.3 Komag Contribution. Except with respect to the Komag MR Technology
------------------ which Komag is licensing to MAC pursuant to Section 3.3(i) above, Komag has contributed and will contribute to MAC the information, data, engineering drawings and other design specifications and documentation for magnetoresistive heads which have b ...