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                                                                 EXHIBIT 10.51

                     AMENDED AND RESTATED LICENSE AGREEMENT

         This Amended and Restated License Agreement ("Agreement") is entered
into as of this 29th day of September, 1996 (the "Effective Date") by and among
Read-Rite Corporation, a Delaware corporation ("Read-Rite"), Read-Rite SMI
Kabushiki Kaisha, a Japan corporation ("Licensee"), and Read-Rite SMI (Thailand)
Co., Ltd., a Thailand corporation ("RRST").

                              W I T N E S S E T H:

         A. Licensee was established in July 1991 as a joint venture between
Read-Rite and Sumitomo Metal Industries, Ltd., a Japan corporation ("Sumitomo"),
to manufacture certain magnetic recording heads in Japan, and to distribute such
heads within Japan and to certain Japanese customers outside North America.

         B. As part of the organization of Licensee, Read-Rite granted Licensee
certain rights under Read-Rite technical information and industrial property
rights to develop, manufacture, use and sell certain magnetic recording heads,
and Licensee agreed to license back Licensee improvements to such technical
information and industrial property rights pursuant to the terms of the License
Agreement dated July 18, 1991 (the "Original License Agreement") between
Read-Rite and Licensee.

         C. Also as part of such formation, Read-Rite and Licensee agreed to
grant the other certain rights to distribute the other party's products pursuant
to the Distribution Agreements dated July 18, 1991 ("Distribution Agreements")
between Read-Rite and Licensee.

         D. The Original License Agreement was amended by a First Addendum to
the License Agreement and Distribution Agreements dated as of December 14, 1993
between Read-Rite and Licensee, the purpose of which was to (i) expand the scope
of the licenses granted under the Original License Agreement to include
technical information and industrial property rights relating to the
development, manufacture, use and sale of anisotropic thin film magnetoresistive
recording heads based on technology licensed by Read-Rite from Kyushu Matsushita
Electric Corporation, Ltd. ("KME"), on then-existing Read-Rite technology and
certain additional technical information and industrial property rights
subsequently developed by the parties; and (ii) to expand the Distribution
Agreements to include the right to distribute heads manufactured using such
technologies.

         E. The Original License Agreement was further amended by an Agreement
and Second Addendum to License Agreement and Distribution Agreements dated as of
November 1, 1995 between Read-Rite and Licensee, the purpose of which was to (i)
permit Licensee to extend a sublicense to RRST to manufacture and sell products
for Licensee, and, where mutually deemed necessary and desirable by Read-Rite
and Licensee, to manufacture products for Read-Rite, (ii) to obtain for the
benefit of Read-Rite a license back from RRST of RRST improvements to any
Read-Rite technical information or industrial property rights, and (iii) to
provide for certain distribution rights between Read-Rite and RRST.

         F. Read-Rite and Licensee now desire to enter into this Agreement in
order to further expand the scope of the license rights granted to Licensee.

         G. In consideration of such expansion of Licensee's rights and
licenses, Read-Rite and Licensee, together with Read-Rite International, a
Cayman Islands corporation and a subsidiary of Read-Rite ("RRI"), are
concurrently herewith entering into a Research and Development Cost Sharing
Agreement




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("Cost Sharing Agreement") providing for the ongoing sharing by Read-Rite,
Licensee and RRI of certain research and development costs as provided therein,
and the inclusion herein of intellectual properties arising out of such shared
research and development costs. A copy of the Cost Sharing Agreement is attached
hereto as Appendix D.

         H. Read-Rite further wishes to permit Licensee to expand its sublicense
to RRST to incorporate the rights and licenses expanded hereunder.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereby agree as follows:

ARTICLE 1 - DEFINITIONS

         For the purpose of this Agreement, the following terms shall have the
following meanings:

         1.1 "Products" shall mean Magnetic Recording Heads or components
thereof, including, without limitation, processed wafers or HGAs, developed or
manufactured in Japan by Licensee (or a permitted sublicensee), or in Thailand
by RRST, which incorporate, are derived from or are made using, in whole or in
part, Read-Rite Technical Information or Read-Rite Industrial Property Rights.

         1.2 "Magnetic Recording Heads" shall mean (a) inductive read and
inductive write thin film recording heads for use in Winchester rigid disk
drives ("Inductive R/W Heads"), (b) magnetoresistive read, inductive write thin
film recording heads for use in Winchester rigid disk drives ("MR Heads"), (c)
spin valve recording heads for use in Winchester rigid disk drives ("Spin Valve
Heads"), and (d) giant magnetoresistive recording heads for use in Winchester
rigid disk drives ("GMR Heads").

         1.3 "Integration" shall mean the integration and incorporation of a
Product (or higher levels of assembly incorporating a Product) into a completed
rigid magnetic disk Winchester disk drive, which drive is in final form for
commercial sale as a data storage device and for which all stages of manufacture
and assembly have been completed, including without limitation encasing and
final burn-in.

         1.4 "Japanese Customer" shall mean a manufacturer of disk drives whose
principal executive offices are located in Japan, or a Controlling Interest in
which is ultimately owned by a Business Entity whose principal executive offices
are located in Japan, such ownership being either direct or through other
entities, with each entity in the chain of ownership owning a Controlling
Interest in the next lower entity. However, any manufacturer of disk drives
whose principal executive offices are located in the United States as of the
Effective Date ("U.S. Drive Manufacturer"), and any disk drive manufacturer
whose principal executive offices are outside Japan and in which a Controlling
Interest is ultimately owned, directly or indirectly, by a U.S. Drive
Manufacturer, including in each case their successors in interest, shall not be
included as Japanese Customers during the Term of this Agreement, even if a
change in ownership, merger, sale of assets or other reorganization of such U.S.
Drive Manufacturer would otherwise bring them within the definition set forth
above.

As used in this Section 1.4, "Controlling Interest" shall mean both the right to
elect more than fifty percent (50%) of the board of directors (or similar
managing authority) and to receive more than fifty percent (50%) of any
dividends or other distribution of profits to equity owners. A "Business Entity"
shall mean a corporation, partnership or other business entity.




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         1.5 "Licensee Exclusive Market" shall have the meaning defined in
Section 2.1 below.

         1.6 "North America" shall mean the United States, including its
possessions and territories, Canada and Mexico.

         1.7 "Read-Rite Technical Information" shall mean the existing technical
knowledge, software, know-how, process technology and other information, which
is owned by or licensed to Read-Rite as of the date of this Agreement, to the
extent Read-Rite has the right to make such available to Licensee without
payment of consideration to any third party, and which is reasonably necessary
for the development, manufacture, sale, or use of Magnetic Recording Heads. In
addition, Read-Rite Technical Information shall include the technical knowledge,
software, know-how, process technology and other information (i) hereafter
constituting Developed Technology generated by Read-Rite under the Cost Sharing
Agreement or hereafter licensed to Read-Rite during the Term of this Agreement,
in the latter case to the extent Read-Rite has the right to make such available
to Licensee consideration to any third party, and (ii) which is reasonably
necessary for the development, manufacture, sale, or use of Magnetic Recording
Heads.

         1.8 "Read-Rite Industrial Property Rights" shall mean existing patents,
utility models, copyrights and other intellectual property rights and
applications therefor in any country of the world, which are owned by or
licensed to Read-Rite as of the date of this Agreement, to the extent Read-Rite
is authorized to grant licenses without the payment of additional consideration
to third parties, and which are reasonably necessary for the development,
manufacture, sale, or use of Magnetic Recording Heads. In addition, Read-Rite
Industrial Property Rights shall include patents, utility models, copyrights and
other intellectual property rights and applications therefor in any country of
the world (i) hereafter constituting Developed Technology generated by Read-Rite
under the Cost Sharing Agreement or hereafter licensed to Read-Rite during the
Term of this Agreement, in the latter case to the extent Read-Rite has the right
to make such available to Licensee without payment of consideration to any third
party, and (ii) which are reasonably necessary for the development, manufacture,
sale, or use of Magnetic Recording Heads. Read-Rite Industrial Property Rights
shall include industrial property rights obtained by Licensee or RRST on
Read-Rite's behalf under Section 7.3(a) below.

         1.9 "Licensee Improvements" shall mean any invention, discovery or
development, whether or not patentable or copyrightable, which is made or
acquired by Licensee during the term of the Original License Agreement or during
the Term of this Agreement and that modifies, improves upon, extends or enhances
the Read-Rite Technical Information or Industrial Property Rights or that
otherwise relates to the manufacture, sale or use of Magnetic Recording Heads.

         1.10 "Licensee Technical Information" shall mean the existing technical
knowledge, software, know-how, process technology and other information which is
owned by or licensed to Licensee as of the date of this Agreement, to the extent
Licensee has the right to make such available to Read-Rite without payment of
consideration to any third party, and which is reasonably necessary for the
development, manufacture, sale, or use of Licensee Improvements or products
incorporating Licensee Improvements. In addition, Licensee Technical Information
shall mean the technical knowledge, software, know-how, process technology and
other information (i) hereafter constituting Developed Technology generated by
Licensee under the Cost Sharing Agreement or hereafter licensed to Licensee
during the Term of this Agreement, in the latter case to the extent Licensee has
the right to make such available to Read-Rite without payment of




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consideration to any third party, and (ii) which is reasonably necessary for the
development, manufacture, sale, or use of Licensee Improvements or products in
corporating Licensee Improvements.

         1.11 "Licensee Industrial Property Rights" shall mean all existing
patents, utility models, copyrights and other intellectual property rights and
applications therefor in any country of the world, which are owned by or
licensed to Licensee as of the date hereof, to the extent Licensee is authorized
to grant licenses without the payment of additional consideration to third
parties, and which are reasonably necessary for the development, manufacture,
sale, or use of Licensee Improvements or products incorporating Licensee
Improvements. In addition, Licensee Industrial Property Rights shall mean all
patents, utility models, copyrights and other intellectual property rights and
applications therefor in any country of the world (i) hereafter constituting
Developed Technology generated by Licensee under the Cost Sharing Agreement or
hereafter licensed to Licensee during the Term of this Agreement, in the latter
case to the extent Licensee has the right to make such available to Read-Rite
without payment of consideration to any third party, and (ii) which are
reasonably necessary for the development, manufacture, sale, or use of Licensee
Improvements or products incorporating Licensee Improvements. Licensee
Industrial Property Rights shall include industrial property rights obtained by
Read-Rite on Licensee's behalf under Section 7.3(b) below.

         1.12 "RRST Improvements" shall mean any invention, discovery or
development, whether or not patentable or copyrightable, which is made or
acquired by RRST during the term of the Original License Agreement or during the
Term of this Agreement and that modifies, improves upon, extends or enhances the
Read-Rite Technical Information or Industrial Property Rights or that otherwise
relates to the manufacture, sale or use of Magnetic Recording Heads.

         1.13 "RRST Technical Information" shall mean the technical knowledge,
software, know-how, process technology and other information which is owned by
or licensed to RRST during the Term of this Agreement, to the extent RRST has
the right to make such available to Read-Rite without payment of consideration
to any third party, and which is reasonably necessary for the development,
manufacture, sale, or use of RRST Improvements or products incorporating RRST
Improvements. RRST Technical Information shall not, however, include any
Specific Developed Technology of Licensee.

         1.14 "RRST Industrial Property Rights" shall mean all patents, utility
models, copyrights and other intellectual property rights and applications
therefor in any country of the world, which are owned by or licensed to RRST
during the Term of this Agreement, to the extent RRST is authorized to grant
licenses without the payment of additional consideration to third parties, and
which are reasonably necessary for the development, manufacture, sale, or use of
RRST Improvements or products incorporating RRST Improvements. RRST Industrial
Property Rights shall include industrial property rights obtained by Read-Rite
on RRST's behalf under Section 7.3(b) below. RRST Industrial Property Rights
shall not, however, include any Specific Developed Technology of Licensee.

         1.15 "Net Sales" shall, except for the purpose of Section 6.2(a) below,
mean the invoiced price of Royalty Bearing Products sold by Licensee, its
Subsidiaries and permitted sublicensees to customers, other than Read-Rite or
its Subsidiaries, less the following deductions, to the extent included in the
invoiced price: (a) sales taxes, customs duties and similar governmental
charges; (b) packing expenses and storage charges; (c) freight charges including
insurance premiums; (d) invoiced price of returned Royalty Bearing Products and
uncollectible accounts; and (e) sales discounts and commissions to third
parties. In addition, the total Net Sales for a particular calendar quarter
shall be reduced for amounts paid to Read-Rite for technical assistance or
manufacturing services provided to Licensee with respect to Royalty Bearing




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Products (including, but not limited to, amounts paid to Read-Rite for the
purchase of components, machining, assembly and test).

         1.16 "Subsidiary" shall mean a corporation or other entity fifty
percent (50%) or more of whose outstanding shares or securities representing the
right to vote for the election of directors or similar managing authority are
owned or controlled, directly or indirectly by Licensee or Read-Rite, but only
during such period as such ownership or control exists.

         1.17 "Confidentiality Agreement" shall mean that certain
Confidentiality Agreement dated July 18, 1991 among Read-Rite, Licensee and
Sumitomo.

         1.18 "Joint Venture Agreement" shall mean that certain Joint Venture
Agreement dated June 14, 1991 between Read-Rite and Sumitomo, as amended by the
First Addendum to the Joint Venture Agreement dated December 14, 1993, pursuant
to which the Original License Agreement was executed by Read-Rite and Licensee.

         1.19 "Term of this Agreement" shall mean the period from the Effective
Date until this Agreement terminates under Section 10.1 or 10.2 below.

         1.20 "Royalty Bearing Products" shall mean, except for the purposes of
Section 6.2(a) below, the models of Products which Licensee or RRST is producing
as of the date hereof and which are listed on Appendix C attached hereto and
incorporated herein by reference.

         1.21 "Sublicense Agreement" shall mean that certain Sublicense
Agreement dated as of January 1, 1996 between Licensee and RRST, as amended.

         1.22 "Specific Development Technology" shall have the meaning assigned
thereto in the Cost Sharing Agreement.

ARTICLE 2 - GRANT OF LICENSES

         2.1  Grant.

                  (a) Grant to Licensee. Read-Rite hereby grants to Licensee an
exclusive (subject to rights previously granted by Read-Rite, as set forth in
Appendix A hereto), nontransferable (except as provided in Section 13.3 below)
right and license under Read-Rite Technical Information and Read-Rite Industrial
Property Rights to (i) manufacture, use and sell Products (or higher levels of
assembly incorporating Products) within Japan for Integration in Japan (subject
to the last sentence of this Section 2.1(a)), and (ii) to sell Products (or
higher levels of assembly incorporating Products) to Japanese Customers in any
country of the world, other than North America, for Integration by such Japanese
Customers outside North America ((i) and (ii) together, the "Licensee Exclusive
Market"). Notwithstanding the foregoing, Licensee shall not sell or otherwise
provide Products (or higher levels of assembly incorporating Products) to any
third party who Licensee knows or has reason to believe is reselling or
distributing Products (or higher levels of assembly incorporating Products),
directly or indirectly, for any purpose not expressly authorized in this Section
2.1(a).

                  (b) RRST Sublicense. Solely for the purposes of permitting
Licensee to confirm and expand the rights granted by Licensee to RRST under the
Sublicense Agreement, Read-Rite hereby grants




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to Licensee all, and only such, additional rights as Licensee requires in order
to grant to RRST the nonexclusive, nontransferable (except as provided in
Section 13.3 below) right and license under the Read-Rite Technical Information
and Read-Rite Industrial Property Rights to (i) manufacture Products (or higher
levels of assembly incorporating Products) within Thailand for sale pursuant to
Sections 2.1 (b)(ii) and (iii) below, (ii) to sell Products (or higher levels of
assembly incorporating Products) within Japan for Integration in Japan (subject
to the last sentence of this Section 2.1(b)), and (iii) to sell Products (or
higher levels of assembly incorporating Products) to, either directly or
indirectly through Licensee, Japanese Customers in any country of the world,
other than North America, for Integration by such Japanese Customers outside
North America (subject to the last sentence of this Section 2.1(b)). RRST shall
not have the right to sell or otherwise provide Products (or higher levels of
assembly incorporating Products) to any third party other than Read-Rite,
Licensee or a Subsidiary of Read-Rite or Licensee who RRST knows or has reason
to believe is reselling or distributing Products (or higher levels of assembly
incorporating Products), directly or indirectly, for any purpose not expressly
authorized in this Section 2.1(b). Read-Rite hereby confirms its approval of
RRST as a sublicensee to Licensee and of the extension by Licensee to RRST of
certain additional rights consistent with those granted Licensee hereunder, for
so long as RRST remains a Subsidiary of Licensee and subject in all cases to the
provisions of Section 10 below.

         2.2 Sublicenses. Except as explicitly provided for in Section 2.1(b)
above or unless Licensee obtains the prior written consent of Read-Rite,
Licensee may not sublicense the rights granted in Section 2.1, or subcontract
third parties to make, use or sell Products for Licensee to the extent that such
subcontract involves the use of the rights granted in Section 2.1. Read-Rite may
withhold such consent in its absolute discretion. Notwithstanding the foregoing:

                  (a) Acquisition by Competitor or Transfer of Read-Rite.
Licensee shall have the right, upon six (6) months notice to Read-Rite, to have
Products made for sale to Licensee inside or outside of Japan in the event that
(i) Read-Rite is acquired by a competitor of Sumitomo, as such an acquisition is
described in Section 5.1(e) of the Joint Venture Agreement, or (ii) neither
Read-Rite nor any transferee of Read-Rite pursuant to Section 5.1 of the Joint
Venture Agreement is a shareholder of Licensee.

                  (b) Third Party Offer. In addition, if Licensee receives a
bona fide offer from one or more third party subcontractors inside or outside of
Japan to provide all slider fabrication, assembly and test for Licensee, and
Read-Rite does not agree to meet such offer as provided below, Licensee shall
have the right to subcontract such slider fabrication assembly and test solely
for sale to Licensee, subject to the following:

                           (i) To exercise such right, Licensee shall provide to
Read-Rite a written offer submitted by the proposed subcontractor, and Read-Rite
shall have sixty (60) days after receiving such offer to agree in writing to
supply the subject subcontracting to Licensee on substantially the same price
and principal terms as those specified in the offer. If Read-Rite does not so
agree within the sixty (60) day period, Licensee shall have the right to
subcontract, with the third party identified in the offer, on terms that are not
more favorable to the subcontractor than those reflected in such offer. Licensee
shall provide Read-Rite with one-hundred eighty (180) days written notice before
it commences purchases from such subcontractor, and such notice (if any) shall
be given to Read-Rite within sixty (60) days after the end of the sixty (60) day
period described above.

                           (ii) Prior to providing any Read-Rite Technical
Information to the subcontractor, Licensee shall obtain from such subcontractor
restrictive and protective provisions that Read-Rite obtains from its
subcontractors under a written agreement to be approved by Read-Rite (which
approval shall not be withheld unreasonably). Such provisions shall include
prohibitions against the third party




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manufacturing similar products for itself or others; confidentiality provisions;
the right to terminate immediately upon a breach by the subcontractor;
Licensee's retention of ownership of wafers provided to the subcontractor; and a
right for Read-Rite to enforce the agreement as a third party beneficiary.
Licensee may disclose to a subcontractor permitted hereunder Read-Rite Technical
Information comprising Read-Rite's slider fabrication, assembly and test
processes, but not any Read-Rite Technical Information pertaining to fabrication
of wafers.

                           (iii) Any offer from a subcontractor must be for a
term covering at least twenty-four (24) months.

                           (iv) Notwithstanding the foregoing, Licensee shall
not be entitled to subcontract manufacturing, assembly or test services under
this Section 2.2(b) to a third party that has performed, or has entered into an
agreement under which it could reasonably be expected to perform, such services
for Read-Rite over a two (2) year period and for the equivalent of an average of
at least 300,000 Magnetic Recording Heads per month during twelve (12) months of
such period. A subcontractor that is permitted under this Section 2.2 may not
further subcontract the manufacturing of Products or components.

         2.3 License to Read-Rite. Licensee hereby grants to Read-Rite a
perpetual, nonexclusive, nontransferable (except as provided in Section 13.3
below), royalty-free right and license, including the right to grant and
authorize sublicenses, under the Licensee Technical Information and Licensee
Industrial Property Rights, to manufacture, use and sell Magnetic Recording
Heads or other products throughout the world. Notwithstanding the foregoing,
Read-Rite shall not sell, or sublicense a third party to sell, Magnetic
Recording Heads (or higher levels of assembly incorporating Magnetic Recording
Heads) incorporating, made using or derived from Licensee Technical Information
or Licensee Industrial Property Rights for Integration in Japan or to a Japanese
Customer outside North America during the period that the license granted to
Licensee under Section 2.1 remains exclusive, except pursuant to a separate
distribution agreement with Licensee. Nor shall Read-Rite sell or otherwise
provide during such period, directly or indirectly, such Magnetic Recording
Heads (or higher levels of assembly incorporating Magnetic Recording Heads) to
any third party who Read-Rite knows or has reason to believe is reselling or
distributing such Magnetic Recording Heads (or higher levels of assembly
incorporating Magnetic Recording Heads) within Licensee's Exclusive Market.

         2.4 RRST License to Read-Rite. RRST hereby grants to Read-Rite a
perpetual, nonexclusive, nontransferable (except as provided in Section 13.3
below), royalty-free right and license, including the right to grant and
authorize sublicenses, under the RRST Technical Information and RRST Industrial
Property Rights, to manufacture, use and sell Magnetic Recording Heads or other
products throughout the world. Notwithstanding the foregoing, Read-Rite shall
not sell, or sublicense a third party to sell, Magnetic Recording Heads (or
higher levels of assembly incorporating Magnetic Recording Heads) incorporating,
made using or derived from RRST Technical Information or RRST Industrial
Property Rights for Integration in Japan or to a Japanese Customer outside North
America during the period that the license granted to Licensee under Section 2.1
remains exclusive, except pursuant to a separate distribution agreement with
Licensee. Nor shall Read-Rite sell or otherwise provide during such period,
directly or indirectly, such Magnetic Recording Heads (or higher levels of
assembly incorporating Magnetic Recording Heads) to any third party who
Read-Rite knows or has reason to believe is reselling or distributing such
Magnetic Recording Heads (or higher levels of assembly incorporating Magnetic
Recording Heads) within Licensee's Exclusive Market.




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         2.5 Nonsolicitation by Read-Rite. During the period that the license
granted to Licensee under Section 2.1 remains exclusive, Read-Rite shall not
directly or indirectly (i) solicit sales of Magnetic Recording Heads (or higher
levels of assembly incorporating Magnetic Recording Heads) for Integration in
Japan; or (ii) solicit outside North America sales of Magnetic Recording Heads
(or higher levels of assembly incorporating Magnetic Recording Heads) to
Japanese Customers. Read-Rite shall refer to Licensee any unsolicited inquiries
for such sales that Read-Rite may receive during such period.

         2.6 Sales Outside Territory. It is understood that Japanese Customers
who request to purchase Products (or higher levels of assembly incorporating
Products) for Integration in North America could purchase such Products (or
higher level of assembly incorporating Products) from Read-Rite, in Read-Rite's
capacity as Licensee's distributor under a separate distribution agreement
mutually agreed upon between Read-Rite and Licensee.

         2.7 Disk Drive Sales. It is understood and agreed that the limitations
in Section 2.1 above shall not be deemed to restrict customers of Licensee from
selling throughout the world disk drives into which Products have been
Integrated in accordance with Section 2.1. Similarly, the exclusivity granted to
Licensee under Section 2.1 or 2.5 shall not be deemed to limit Read-Rite, its
customers or licensees from selling within Licensee's Exclusive Market disk
drives into which Magnetic Recording Heads have been Integrated outside
Licensee's Exclusive Market.

         2.8  Acquired Technology.

                  (a) Good Faith Efforts. Read-Rite, Licensee and RRST
acknowledge the advantage of having Licensee and Read-Rite offer similar
Magnetic Recording Heads for sale in their respective territories. To that end,
each party (the "Licensing Party") agrees to use good faith efforts to obtain
the right to include in the Licensing Party's Technical Information and
Industrial Property Rights licensed hereunder, technology that the Licensing
Party acquires from or develops together with third parties that is materially
necessary to make, use and sell Magnetic Recording Heads that the Licensing
Party develops and makes generally available to customers. The parties also
recognize, however, that this may not be accomplished, particularly in the event
that Licensee, RRST or Read-Rite develops particular products with customers and
the customer contributes materially to the technology developed.

                  (b) Third Party Payment Obligations. If any technical
information or industrial property rights that Read-Rite, Licensee or RRST
acquires would be within the licenses granted under this Article 2 but for the
fact that such a license would require additional payments to a third party,
such technical information or industrial property rights shall be included
within the Read-Rite Technical Information, Read-Rite Industrial Property
Rights, Licensee Technical Information, Licensee Industrial Property Rights,
RRST Technical Information or RRST Industrial Property Rights, as the case may
be, only if the party to whom such would be licensed under this Agreement agrees
in a separate written agreement to be bound by those payment obligations.

                  (c) KME Licensed Technology. Licensee understands,
acknowledges and agrees that (i) included within the Read-Rite Technical
Information and Read-Rite Industrial Property Rights are certain technical
information and industrial property rights licensed by KME to Read-Rite ("KME
Licensed Technology") under that certain License Agreement between Read-Rite and
KME dated September 14, 1993 ("KME License Agreement"), a copy of which is
attached hereto as Appendix B, (ii) the inclusion of such KME licensed
technology represents a sublicense by Read-Rite to Licensee of such technology
as explicitly permitted under Section 2.1 of the KME License Agreement, and such




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sublicense is subject to the terms, restrictions, obligations and limitations
(including, without limitation, the disclaimer of warranties set forth in
Section 7.4 and the possible termination under Section 8.3 of the KME License
Agreement), to which Licensee hereby agrees to be bound, and (iii) such KME
licensed technology is included in the licenses granted hereunder only to the
extent Read-Rite is entitled to sublicense such technology under the terms of
the KME License Agreement.

         2.9 Reservation. Notwithstanding Section 2.1, above, Licensee and RRST
acknowledge that Read-Rite has previously granted the rights and licenses
identified in Appendix A hereto, and that such licenses limit the exclusivity
granted to Licensee and RRST under Section 2.1, as applicable. Nothing contained
in this Agreement shall be construed as conferring by implication, estoppel or
otherwise upon either party hereunder any license or other right except the
licenses and rights expressly granted hereunder.

ARTICLE 3 - FURNISHING OF TECHNICAL INFORMATION

         3.1 Initial Disclosure. Licensee and Read-Rite acknowledge that
Read-Rite has disclosed to Licensee all presently existing Read-Rite Technical
Information regarding Inductive R/W Heads and MR Heads. Promptly following the
execution of this Agreement, Read-Rite and Licensee will cooperate to establish
a schedule for the initial disclosures to Licensee of Read-Rite Technical
Information pertaining to Spin Valve Heads and GMR Heads.

         3.2 Subsequent Disclosures. During the term of this Agreement,
Read-Rite and Licensee shall keep each other well informed of any progress and
development with respect to Read-Rite Technical Information and Licensee
Technical Information developed or acquired by the respective parties after the
Effective Date. Upon request by either party, the other party shall furnish to
such party such later developed or acquired Technical Information, and shall
provide technical assistance with respect thereto, in the same manner as set
forth in this Article 3 and Article 4 below; provided that such exchange of
Read-Rite Technical Information and Licensee Technical Information is subject to
the prior receipt of any required Japanese or U.S. export licenses.

         3.3 Standards. The Read-Rite Technical Information and Licensee
Technical Information referenced under Sections 3.1 and 3.2 above shall be
presented in an appropriate format based upon mutually agreed technical
standards, and shall be prepared in English. Such Technical Information shall be
delivered by air mail or courier to Licensee or Read-Rite, as applicable, at its
address set forth in Section 13.7 below.

         3.4 Samples. If a party requires samples and/or prototypes of Magnetic
Recording Heads embodying the other party's Technical Information, such other
party shall supply these to the requesting party at the time, by the method and
on the terms and conditions mutually agreed to by the parties. Unless otherwise
agreed to by Read-Rite and Licensee, the costs of such samples and/or prototypes
shall be borne by the requesting party and paid to the delivering party within
forty-five (45) days after the requesting party's receipt of such samples and/or
prototypes or the invoice therefor, whichever is later.

         3.5 Indemnification. Neither party shall be responsible for loss or
damage to the property of, or injury to, or the death of the other party's
personnel arising out of or in connection with the dispatch of such other
party's personnel to its premises, and the party who has dispatched its
employees to the other party's premises (the "Indemnifying Party") shall
indemnify and hold harmless the other party (the "Indemnified Party") from and
against any liabilities and expenses resulting from a claim for such loss,
damage, injury or death; provided the Indemnified Party notifies the
Indemnifying Party immediately of any




                                                                               9
<PAGE>   10
such actual or threatened action, gives the Indemnifying Party sole control of
the defense and settlement of such action, and provides the Indemnifying Party
with reasonable assistance, on the Indemnifying Party's request and at the
Indemnifying Party's expense, in defending or settling such action.

ARTICLE 4 - TECHNICAL AND OTHER ASSISTANCE

         4.1 Technical Assistance. Upon written request by Licensee, and upon
Read-Rite's mutual agreement, Read-Rite shall dispatch its engineers to the
factory or office of Licensee to give technical assistance to Licensee for the
development and manufacture of the Products. The number of Read-Rite's engineers
to be dispatched and the duration of their stay shall be determined each time by
the mutual consultation of the parties. Licensee shall pay reasonable travel and
living expenses for each engineer, as separately agreed to by the parties.

         4.2 Additional Training. Upon a reasonable request by Licensee and upon
Read-Rite's mutual agreement, Read-Rite shall accept trainees of Licensee at
Read-Rite's facilities for the purpose of studying the Read-Rite Technical
Information. The number of Licensee's trainees to be dispatched, the duration of
their stay and any necessary training fees shall be determined each time by the
mutual consultation of the parties. Licensee shall bear all the expenses
necessary for dispatching such trainees.

         4.3 Training and Assistance by Licensee and RRST. Upon a reasonable
request by Read-Rite, and Licensee's mutual agreement, Licensee shall provide
Read-Rite with technical assistance and training with regard to the Licensee
Improvements in the same manner and on corresponding terms as Read-Rite is to
provide such assistance and training under Sections 4.1 and 4.2 above.
Similarly, upon a reasonable request by Read-Rite, and RRST's mutual agreement,
RRST shall provide Read-Rite with technical assistance and training with regard
to RRST Improvements in the same manner and on corresponding terms as Read-Rite
is to provide such assistance and training under Sections 4.1 and 4.2 above. All
training and assistance of RRST in Read-Rite Technical Information shall be
performed by Licensee.

         4.4 Inspection. In addition to the foregoing, the parties agree, at
reasonable intervals, upon reasonable written notice from a party and at
mutually agreed times, to provide the requesting party (at no charge to the
requesting party) tours of manufacturing facilities of the requested party or
parties, reasonable opportunity to hold discussions with technical personnel
concerning the manufacturing process and efforts underway to develop
improvements, and the opportunity to conduct reasonable inspections of process
documentation and process equipment relating to the Magnetic Recording Heads and
the parties' respective Technical Information, as applicable.

ARTICLE 5 - COMMERCIALIZATION

         5.1 Licensee Efforts. In consideration for the exclusive rights granted
to Licensee hereunder, Licensee shall use its best efforts to promote and meet
the market demand for Products in the Licensee Exclusive Market.




                                                                              10
<PAGE>   11
         5.2 Standardization. To facilitate the development of standardized
products by Read-Rite and Licensee, each party agrees to keep the other party
informed of its product development plans and activities. Toward this end, the
parties will cooperate and review, at mutually agreed intervals, details of
their respective activities in this regard.

ARTICLE 6 - ROYALTIES; COST SHARING

         6.1 Calculation of Royalty. In consideration for the License to
Read-Rite Technical Information granted hereunder, Licensee shall pay to
Read-Rite royalties calculated at the rate of (i) one percent (1%) of the Net
Sales of all Royalty Bearing Products sold or otherwise distributed by Licensee,
its Subsidiaries and any permitted sublicensees during the first year following
execution of this Agreement, and (ii) one half of one percent (.5%) of such Net
Sales of Royalty Bearing Products sold or otherwise distributed by Licensee, its
Subsidiaries and any permitted sublicensees during the second year following
execution of this Agreement; no royalties shall be due on Royalty Bearing
Products sold thereafter. Royalty Bearing Products shall be deemed sold when
Licensee, its Subsidiary or sublicensee has received payment from the customer
for such Royalty Bearing Products; provided, however, that any Royalty Bearing
Products purchased by Read-Rite or any of its Subsidiaries from Licensee, its
Subsidiaries, or permitted sublicensees shall not be subject to any such royalty
payment. No royalty shall be payable on sales by Licensee to its Subsidiaries or
permitted sublicensees for resale; royalties shall only be due in the event such
Subsidiaries or permitted sublicensees resell such Royalty Bearing Products to a
third party (other than Read-Rite's Subsidiary), whether separately as
components or combined with other components.

         6.2  KME Royalty Obligation.

                  (a) Licensee agrees to pay a royalty equal to two and one-half
percent (2.5%) of Net Sales (as defined in the KME License Agreement) derived by
Licensee from the sale or other disposition of Royalty Bearing Products (as
defined in the KME License Agreement) prior to (i) September 28, 1997 or (ii)
such other earlier date as the aggregate payment by Read-Rite and all its
sublicensees equal the Aggregate Royalty Cap (as defined in the KME License
Agreement) to the extent required by the KME License Agreement. Such royalties
shall be paid by Licensee to Read-Rite for subsequent payment to KME or, if
permitted under Japanese law and agreed to by KME, directly by Licensee to KME.

                  (b) If Licensee pays a royalty directly to KME, Licensee shall
provide Read-Rite with a copy of the royalty reports and proof of payment
submitted to KME pursuant to Section 5.3 of the KME License Agreement
simultaneously with providing such reports and payment to KME. Additionally,
Read-Rite's right to audit Licensee's books and records under Section 6.5 hereof
shall be deemed to include, to the extent required under Section 5.5 of the KME
License Agreement, the obligation to keep records pertaining to, and permit
Read-Rite's inspection to ensure compliance with, such royalty obligations to
KME.

                  (c) Read-Rite shall, whenever requested by Licensee, advise
Licensee promptly (in any event within five (5) days after Read-Rite's receipt
of such request) in writing of the aggregate amount of royalties paid by
Read-Rite and its sublicensees (including Licensee) to KME under the KME License
Agreement as of the most recent practicable date. In addition, Read-Rite will
coordinate closely with Licensee to ensure that, as the aggregate payments by
Read-Rite and all its sublicensees approach the Aggregate Royalty Cap, the
remaining royalties due KME are properly allocated in a way equitable to the
interest of Licensee and do not exceed the Aggregate Royalty Cap.




                                                                              11
<PAGE>   12
         6.3 IBM Royalties and Fees. Read-Rite has previously executed a
cross-license agreement dated as of June 26, 1986 (the "IBM Agreement") with
International Business Machines Corporation ("IBM") pursuant to which Read-Rite,
in addition to the cross license provisions therein, paid license fees to IBM in
the amount of US$1,125,000. Read-Rite has extended, to the extent permitted
under the IBM Agreement and subject to exclusivity provisions herein, the
benefits of the IBM Agreement to Licensee. Read-Rite has initiated discussions
with IBM to renew said IBM Agreement to cover industrial property rights
generated by the parties since the cut-off date of the original IBM Agreement,
and anticipates that such renewal will require Read-Rite to pay additional fees
or royalties to IBM. Licensee acknowledges that any extension by Read-Rite of
the benefits of any renewal of the IBM Agreement or of any additional agreements
with IBM will require Licensee to pay a portion of the fees or royalties payable
to IBM thereunder, and that Read-Rite shall only be obligated to include such
rights hereunder upon payment by Licensee to Read-Rite (or IBM, as appropriate)
the portion of such fees or royalties mutually agreed to by Licensee and
Read-Rite.

         6.4 Reports and Payment. Within forty-five (45) days after the end of
each calendar quarter, Licensee shall submit to Read-Rite a report setting forth
by type of Royalty Bearing Product, the volume of Royalty Bearing Products sold
or otherwise distributed during such quarter, the total Net Sales arising
therefrom and the calculation of royalties due Read-Rite thereon. Payments shall
be made at the same time as reports are due and shall be remitted to Read-Rite's
bank account, in accordance with written instructions provided by Read-Rite from
time to time.

         6.5 Currency of Payment. All royalty payments to be made by Licensee to
Read-Rite shall be made in U.S. dollars. Royalties shall be first determined in
the currency of the country in which the corresponding Net Sales are earned and
then converted directly to its equivalent in U.S. dollars. The buying rates of
exchange for the currencies involved into U.S. dollars as published in The Wall
Street Journal (U.S. West Coast Edition) at the close of business on the last
business day of the quarterly period in which the royalties were earned shall be
used to determine any such conversion.

         6.6 Records and Audit. Licensee shall make and maintain for a period of
three (3) years after the last payment under this Agreement is due complete and
accurate records of Licensee's development, manufacturing, distribution and
other activities in sufficient detail for determination of the royalties payable
hereunder. Licensee shall permit an independent certified public accountant
selected by Read-Rite and reasonably acceptable to Licensee, at Read-Rite's
expense, to inspect and take copies of the said records during regular business
hours of Licensee from time to time during the Term of this Agreement. In the
event that such certified public accountant finds a discrepancy Licensee shall
promptly make up any deficits in the amount of royalties payable, and in the
event there is a discrepancy of more than five percent (5%) between the said
records and the amount of royalties paid by Licensee to Read-Rite, Licensee
shall bear the costs of any such inspection.

         6.7 Withholding. If any Japanese or Thailand withholding taxes are
imposed on royalty payments to Read-Rite by Licensee or RRST and are required to
be withheld by Licensee or RRST, then Licensee or RRST, as the case may be, may
withhold such amounts, but promptly shall furnish Read-Rite with appropriate
documentation of the amounts so withheld as soon as practicable. The parties
shall cooperate to make any necessary filings to utilize the lowest withholding
rate available under any treaty between the United States and Japan or Thailand,
as the case may be. Notwithstanding the foregoing, with respect to any royalties
or license fees payable by Licensee or RRST to Read-Rite to reimburse Read-Rite
for its royalty or license fee obligations to a third party licensor (e.g. KME
under the KME License Agreement as provided in Section 6.2 above, or IBM as
described in Section 6.3 above) which Licensee or RRST, as the case may be, has
not paid or cannot pay directly to such third party licensor, then Licensee or
RRST, as the




                                                                              12
<PAGE>   13
case may be, shall gross the payments to Read-Rite up such that Read-Rite
actually receives, net of withholdings, the full amount of the royalties and/or
license fees payable by Licensee or RRST hereunder, allowing Read-Rite to make
such payments to the third party licensor in full without having to contribute
its own funds to replace the amounts withheld due to local taxation
requirements. Read-Rite shall fully cooperate with Licensee and RRST in
minimizing any such withholding taxes and other deductions which Licensee or
RRST, as the case may be, is required to withhold or otherwise deduct under the
laws of Japan or Thailand, and (i) if the aggregate amount withheld or deducted
by Licensee and RRST in a given fiscal year of Read-Rite is Fifty Thousand
United States Dollars (U.S. $50,000) or more and (ii) Read-Rite obtains tax
reductions for such year as a result of such withholding or deduction by
Licensee or RRST, then Read-Rite shall refund to either Licensee or RRST, as
applicable, the amount of the tax reductions Read-Rite actually obtains.

         6.8 Calculation of Royalty. Read-Rite acknowledges the royalty
referenced in Section 6.1 shall not be payable on wafers sold by Licensee to
RRST, but shall be payable by Licensee or RRST on sales of finished sliders,
head gimbal assemblies or other higher levels of assembly by Licensee or RRST
(other than sales by RRST to Licensee for resale, in which case said royalty
shall be due solely on Licensee's subsequent resales) which constitute Royalty
Bearing Products hereunder.

         6.9 Cost Sharing Agreement. As stated above, in consideration of the
significant expansion by Read-Rite of the scope of the license rights granted to
Licensee hereunder, Read-Rite, Licensee and RRI are concurrently herewith
entering into the Cost Sharing Agreement, a copy of which is attached hereto as
Appendix D. The intent of such Cost Sharing Agreement is that Read-Rite, RRI and
Licensee shall share the costs of research and development activities which the
parties thereto mutually agree to include within the Research Program (as
defined therein), and that the technology resulting from such projects will be
subject to the licenses contemplated by this Agreement. Accordingly, any
Developed Technology (as defined therein) generated by Read-Rite and/or RRI as
part of the Research Program thereunder shall be considered "Read-Rite Technical
Information" or "Read-Rite Industrial Property Rights" as appropriate and as
defined herein. Similarly, any Developed Technology generated by Licensee as
part of the Research Program thereunder shall be considered "Licensee Technical
Information" or "Licensee Industrial Property Rights" as appropriate and as
defined herein. Notwithstanding any other provision herein to the contrary,
Specific Development Technology (as defined in the Cost Sharing Agreement) of
Read-Rite and/or RRI thereunder shall not constitute Read-Rite Technical
Information or Read-Rite Industrial Property Rights under this Agreement, nor
shall Specific Development Technology of Licensee thereunder constitute Licensee
Technical Information or Licensee Industrial Property Rights under this
Agreement. As a result of the foregoing, neither Read-Rite nor Licensee shall
have any rights whatsoever with respect to any Specific Development Technology
of the other.

ARTICLE 7 - PROPRIETARY RIGHTS AND IMPROVEMENTS

         7.1 Read-Rite Technology. Licensee acknowledges that, except for the
license granted to Licensee under Sections 2.1 and 8.1, Licensee acquires no
right, title, or interest in the Read-Rite Technical Information or Read-Rite
Industrial Property Rights, or in any of Read-Rite's patents, copyrights or
other intellectual property rights, trademarks, trade names, inventions,
know-how, and trade secrets made, developed or acquired by Read-Rite during the
Term of this Agreement. RRST acknowledges that, except for the sublicense
granted to RRST by Licensee under the Sublicense Agreement, RRST acquires no
right, title, or interest in Read-Rite Technical Information or Read-Rite
Industrial Property Rights, or in any of Read-Rite's patents, copyrights or
other intellectual property rights, trademarks, trade names, inventions,
know-how, and trade secrets made, developed or acquired by Read-Rite during the
Term of this Agreement.




                                                                              13
<PAGE>   14
         7.2 Licensee and RRST Technology. Read-Rite acknowledges that, except
as provided under Sections 2.3, 2.4 and 8.2, Read-Rite acquires no right, title
or interest in the Licensee or RRST Technical Information or Licensee or RRST
Industrial Property Rights or in any of Licensee's or RRST's patent, copyrights
or other intellectual property rights, trademarks, trade names, inventions,
know-how or trade secrets made, developed or acquired by Licensee or RRST during
the Term of this Agreement.

         7.3 Patent Filing. Read-Rite and Licensee Industrial Property Rights
shall be dealt with as follows:

                  (a) Read-Rite Industrial Property Rights. Read-Rite shall be
responsible, at its option, for filing and prosecuting applications for
Read-Rite Industrial Property Rights, and maintaining Read-Rite Industrial
Property Rights issuing thereon. Read-Rite shall keep Licensee and RRST informed
of material developments with respect to such applications. If Read-Rite does
not file an application for Industrial Property Rights in Japan or Thailand
corresponding to an application filed by or for Read-Rite outside Japan or
Thailand, or determines not to prosecute such application in Japan or Thailand,
or to maintain the patent or other Read-Rite Industrial Property Right issuing
thereon in Japan on Thailand, or defend against an interference or reexamination
proceeding with respect thereto, in each such case Licensee and RRST shall have
the right to do so in Japan and Thailand, respectively, at their respective
expenses. All such Industrial Property Rights shall be owned by Read-Rite in
Read-Rite's name, subject to the license granted to Licensee and RRST under 2.1
above.

                  (b) Licensee Industrial Property Rights. Licensee shall be
responsible, at its option, for filing and prosecuting applications for Licensee
Industrial Property Rights, and maintaining Licensee Industrial Property Rights
issuing thereon. Licensee shall keep Read-Rite informed of material developments
with respect to such applications. If Licensee does not file an application for
Licensee Industrial Property Rights outside Japan, or RRST does not file such
application for Licensee Industrial Property Rights outside Thailand
corresponding to an application filed by or for such parties in Japan or
Thailand, respectively, or determines not to prosecute such application or to
maintain the patent or other Licensee Industrial Property Rights issuing thereon
outside Japan or Thailand, as the case may be, or defend against an interference
or reexamination proceeding with respect thereto, in each such case Read-Rite
shall have the right to do so at its own expense. All such Industrial Property
Rights shall be owned by Licensee or RRST, as applicable, in the name of
Licensee or RRST as the case may be, subject to the licenses granted to
Read-Rite under 2.3 and 2.4 above, respectively.

ARTICLE 8 - TRADEMARK RIGHTS

         8.1 Licensee Products. Subject to the obligations of this Article 8,
Licensee shall have the right, at its option, to use in connection with the
distribution, promotion, use, and sale of Products in accordance with Section
2.1 above, the trade names, trademarks, model designations and/or logos
("Marks") that Read-Rite uses for its Magnetic Recording Heads and has the right
to authorize Licensee to use without the payment of compensation to third
parties. Licensee also shall have the right to use its own Marks in connection
with the Products in lieu of or in addition to Read-Rite's Marks. Licensee may
sublicense the rights granted in this Section 8.1 to RRST, provided that
Licensee ensures that RRST's usage of the Marks complies with the requirements
of Section 8.4 below, that RRST grants to Read-Rite rights to use RRST's Marks
consistent with those granted by Licensee to Read-Rite under Section 8.2 below,
and that RRST consents to the provisions of Section 8.3 below.




                                                                              14
<PAGE>   15
         8.2 Read Rite Products. Subject to the obligations of this Article 8,
Read-Rite shall have the right, at its option, to use in connection with the
distribution, promotion, use, and sale of Magnetic Recording Heads the Marks
that Licensee uses for its Products and has the right to authorize Read-Rite to
use without the payment of compensation to third parties. Such right shall
include the right to authorize others to so use Licensee's Marks in connection
with Magnetic Recording Heads manufactured under authority from Read-Rite.
However, Read-Rite shall not use or sublicense Licensee's Marks in Japan during
the Term of this Agreement. Read-Rite shall also have the right to use its own
Marks in connection with its Magnetic Recording Heads, in lieu of or in addition
to Licensee's Marks.

         8.3 Registration. At the request of Licensee or Read-Rite, the other
party shall use commercially reasonable efforts, at the requesting party's
expense, to register such other party's Marks in countries throughout the world
where the requesting party reasonably expects to sell Products (in the case of
Licensee) or Magnetic Recording Heads (in the case of Read-Rite).

         8.4 Quality Control. Each of Read-Rite and Licensee (the "Authorized
Party") agrees that, as a condition to its use of the other party's Marks
hereunder, the performance and quality of the product which the Authorized Party
distributes under any of the other party's Marks shall be substantially the same
in quality and performance as those distributed by the other party under such
Marks. Accordingly, the Authorized Party shall provide samples of such products
to the other party for evaluation reasonably in advance of the first commercial
shipment of such product under the other party's Marks (or the first shipment of
a modified version of a previously shipped product), and shall not use such
Marks with that product until receiving written approval from the other party.
The other party shall not unreasonably withhold such consent.

All representations by the Authorized Party of Marks licensed to it hereunder,
with respect to design, size, color, location and other details, shall be exact
copies of those used by the other party, and, at the other party's request, the
Authorized Party shall provide copies of its use of such Marks for verification
that they comply with those used by the other party.

ARTICLE 9 - REPRESENTATIONS, WARRANTIES AND INDEMNITIES

         9.1  Representations and Warranties.

                  (a) By Read-Rite. Read-Rite warrants that, as of the date
hereof, (i) the Read-Rite Technical Information being furnished to Licensee
hereunder is the same as that Read-Rite uses to manufacture its own magnetic
recording heads in its own factories, (ii) Read-Rite has the right to grant the
licenses granted hereunder and to permit and authorize Licensee to sublicense
the same to RRST as contemplated hereby, without breaching or conflicting with
any agreement of Read-Rite with third parties, and (iii) except as disclosed on
Appendix E hereto, Read-Rite has received no claims that the Read-Rite Technical
Information infringes on the industrial property rights of any third party. In
addition, Read-Rite warrants that, as of the date hereof, the Read-Rite
Technical Information and the Read-Rite Industrial Property Rights include
(together with Licensee Technical Information, Licensee Industrial Property
Rights, RRST Technical Information and RRST Industrial Property Rights licensed
hereunder) all of technical information and intellectual property rights owned
by or licensed to Read-Rite that are materially necessary to manufacture and
sell magnetic recording heads that Read-Rite presently manufactures and makes
generally available to customers; provided, however, the parties acknowledge
that Read-Rite makes no warranty with respect to Read-Rite's right to sublicense
the rights granted to Read-Rite pursuant to the IBM Agreement; and provided
further that, while it is Read-Rite's belief that its rights under the IBM




                                                                              15
<PAGE>   16
Agreement extend to the design, manufacture and sale of all types of Magnetic
Recording Heads, the parties hereto acknowledge that Read-Rite does not
represent or warrant that Read-Rite's rights under the IBM Agreement so extend
to any Magnetic Recording Heads other than Inductive R/W Heads.

                  (b) By Licensee. Licensee warrants that, as of the date
hereof, (i) the Licensee Technical Information being furnished to Read-Rite
hereunder is the same as that Licensee uses (together with Read-Rite Technical
Information and Read-Rite Industrial Property Rights licensed to Licensee
hereunder, and with any RRST Technical Information and RRST Industrial Property
Rights licensed to Licensee under the Sublicense Agreement) to manufacture its
own magnetic recording heads in its own factories, (ii) Licensee has the right
to grant the licenses granted hereunder without breaching or conflicting with
any agreement of Licensee with third parties, and (iii) Licensee has received no
claims that the Licensee Technical Information infringes on the industrial
property rights of any third party. In addition, Licensee warrants that, as of
the date hereof, the Licensee Technical Information and the Licensee Industrial
Property Rights include (together with Read-Rite Technical Information,
Read-Rite Industrial Property Rights, RRST Technical Information and RRST
Industrial Property Rights licensed hereunder or under the Sublicense Agreement)
all of technical information and intellectual property rights owned by or
licensed to Licensee that are materially necessary to manufacture and sell
magnetic recording heads that Licensee presently manufactures and makes
generally available to customers.

                  (c) By RRST. RRST warrants that, as of the date hereof, (i)
the RRST Technical Information being furnished to Read-Rite hereunder is the
same as that RRST uses (together with Read-Rite Technical Information and
Read-Rite Industrial Property Rights licensed to Licensee hereunder, and with
any Licensee Technical Information and Licensee Industrial Property Rights
licensed to RRST under the Sublicense Agreement) to manufacture its own magnetic
recording heads in its own factories, (ii) RRST has the right to grant the
licenses granted hereunder without breaching or conflicting with any agreement
of RRST with third parties, and (iii) RRST has received no claims that the RRST
Technical Information infringes on the industrial property rights of any third
party. In addition, RRST warrants that, as of the date hereof, the RRST
Technical Information and the RRST Industrial Property Rights include (together
with Read-Rite Technical Information, Read-Rite Industrial Property Rights,
Licensee Technical Information and Licensee Industrial Property Rights licensed
hereunder or sublicensed under the Sublicense Agreement) all of technical
information and intellectual property rights owned by or licensed to RRST that
are materially necessary to manufacture and sell magnetic recording heads that
RRST presently manufactures and makes generally available to customers.

         9.2  Indemnity.

                  (a) By Read-Rite. Read-Rite shall indemnify Licensee against
any and all expenses and/or liabilities paid to third parties incurred by
Licensee as a result of any legal action arising out of a breach of the
warranties set forth in Section 9.1(a) above; provided Licensee notifies
Read-Rite immediately of any such actual or threatened action, gives Read-Rite
sole control of the defense and settlement of such action, and provides
Read-Rite with reasonable assistance, on Read-Rite's request and at Read-Rite's
expense, in defending or settling such action. Read-Rite agrees to duly exercise
its rights and discharge its duties and obligations under the KME License
Agreement. Further, Read-Rite agrees to indemnify and hold Licensee harmless
against any loss, liability, cost or expense (including reasonable attorneys'
fees) which Licensee might incur arising out of any breach by Read-Rite of the
terms and conditions of the KME License Agreement. For any claim arising out of
a claim that Read-Rite breached any obligation under such Agreement, Licensee
shall provide Read-Rite with prompt notice of such claim and permit Read-Rite to
participate in the defense thereof. It is acknowledged and agreed that
Licensee's




                                                                              16
<PAGE>   17
expenses and liabilities indemnified by Read-Rite under the foregoing provisions
shall include, but not be limited to, the expenses and liabilities which
Licensee incurs to indemnify RRST as a result of a breach by Read-Rite of its
warranties set forth in Section 9.1(a) above.

                  (b) By Licensee. Licensee shall indemnify Read-Rite against
any and all expenses and/or liabilities paid to third parties incurred by
Read-Rite as a result of any legal action arising out of a breach of the
warranties set forth in Section 9.1(b) above; provided Read-Rite notifies
Licensee immediately of any such actual or threatened action, gives Licensee
sole control of the defense and settlement of such action, and provides Licensee
with reasonable assistance, on Licensee's request and at Licensee's expense, in
defending or settling such action. Licensee agrees to duly exercise its rights
and discharge its duties and obligations under its sublicense under the KME
License Agreement. Licensee agrees to indemnify and hold Read-Rite harmless
against any loss, liability, cost or expense (including reasonable attorney's
fees) which Read-Rite might incur arising out of any breach by Licensee of the
terms and conditions of the KME License Agreement. For any claim arising out of
a claim that Licensee breached any obligation under such Agreement, Read-Rite
shall provide Licensee with prompt notice of such claim and permit Licensee to
participate in the defense thereof.

                  (c) By RRST. RRST shall indemnify Read-Rite against any and
all expenses and/or liabilities paid to third parties incurred by Read-Rite as a
result of any legal action arising out of a breach of the warranties set forth
in Section 9.1(c) above; provided Read-Rite notifies RRST immediately of any
such actual or threatened action, gives RRST sole control of the defense and
settlement of such action, and provides RRST with reasonable assistance, on
RRST's request and at RRST's expense, in defending or settling such action. RRST
agrees to duly exercise its rights and discharge its duties and obligations
under its sublicense under the KME License Agreement. RRST agrees to indemnify
and hold Read-Rite harmless against any loss, liability, cost or expense
(including reasonable attorney's fees) which Read-Rite might incur arising out
of any breach by RRST of the terms and conditions of the KME License Agreement.
For any claim arising out of a claim that RRST breached any obligation under
such Agreement, Read-Rite shall provide RRST with prompt notice of such claim
and permit RRST to participate in the defense thereof.

         9.3 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 9,
LICENSEE, RRST AND READ-RITE INDUSTRIAL PROPERTY RIGHTS, TECHNICAL INFORMATION
AND MARKS ARE PROVIDED "AS IS" WITHOUT WARRANTY OR CONDITION OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OR CONDITIONS AS
TO CONTENT OR USEFULNESS AND ANY IMPLIED WARRANTIES OR CONDITIONS OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN PARTICULAR, BUT WITHOUT
LIMITATION, NO PARTY WARRANTS THAT THE OTHERS WILL BE ABLE TO MANUFACTURE
PRODUCTS TO THE SAME STANDARD OR WITH THE SAME YIELDS AS THE LICENSING PARTY BY
UTILIZING SUCH TECHNICAL INFORMATION AND INDUSTRIAL PROPERTY RIGHTS.




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<PAGE>   18
NO PARTY MAKES ANY WARRANTY, WHETHER EXPRESS OR IMPLIED, THAT THE PRACTICE OF
SUCH PARTY'S TECHNICAL INFORMATION OR INDUSTRIAL PROPERTY RIGHTS DOES NOT
INFRINGE ON THE INTELLECTUAL OR INDUSTRIAL PROPERTY RIGHTS OF ANY THIRD PARTY
AND EACH PARTY HEREBY AGREES THAT THE PRACTICE OF ANY SUCH SUBJECT MATTER SHALL
BE ENTIRELY AT ITS OWN RISK.

ARTICLE 10 - TERM AND TERMINATION

         10.1 Term. This Agreement shall be through June 14, 2041, unless
earlier terminated by mutual agreement of Read-Rite, Licensee and RRST or as
otherwise provided in this Article 10.

         10.2 Termination of the Joint Venture Agreement. Upon termination of
the Joint Venture Agreement pursuant to Section 14.2 thereof, the following
shall occur:

                  (a) If the Joint Venture Agreement is terminated by agreement
between Read-Rite and Sumitomo pursuant to Section 14.2(a) thereof, Read-Rite
and Licensee will negotiate at such time whether this Agreement will continue in
effect after such termination and, if so, terms on which it would continue.

                  (b) If the Joint Venture Agreement is terminated by Sumitomo
or Read-Rite under Section 14.2(b) thereof by reason of an event described
therein occurring to Licensee (including by reason of a dissolution of Licensee
under Section 14.4(e) of the Joint Venture Agreement) then this Agreement shall
automatically terminate upon the effective date of such termination without
notice.

                  (c) If the Joint Venture Agreement is terminated (i) by
Sumitomo or Read-Rite under Section 14.2(b) thereof by reason of an event
described therein occurring to either Sumitomo or Read-Rite and the other party
elects not to dissolve Licensee in accordance with Section 14.4(e) thereof, (ii)
by Sumitomo or Read-Rite under Section 14.2(d), (iii) by RRC under Section
14(c)(i) thereof, and Sumitomo purchases Read-Rite's shares in Licensee in
accordance with Section 14.4(c) thereof, or (iv) by either Read-Rite or Sumitomo
pursuant to Section 14.2(c)(ii) thereof, then in any such case this Agreement
shall continue according to its terms; provided that (1) the parties'
obligations under Articles 3 and 4 above shall terminate; (2) the rights and
license granted to Licensee under Articles 2, 7.3 and 11 hereof shall not apply
to any Read-Rite Technical Information developed or acquired by Read-Rite after
the date of such termination, or any Read-Rite Industrial Property Rights
covering such later-developed or later-acquired Read-Rite Technical Information
(in which event Licensee's sublicense to RRST shall be similarly restricted);
(3) the license granted to Read-Rite under Section 2.3 above shall not include
any Licensee Technical Information developed or acquired by Licensee after the
date of such termination, or any Licensee Industrial Property Rights covering
such later-developed or later-acquired Licensee Technical Information; (4) the
license granted to Read-Rite under Section 2.4 above shall not include any RRST
Technical Information developed or acquired by RRST after the date of such
termination, or any RRST Industrial Property Rights covering such
later-developed of later-acquired RRST Technical Information; and (5) the
licenses granted to Licensee and Read-Rite under Article 8 shall terminate as to
any product models first sold commercially after the date of such termination of
the Joint Venture Agreement.

         10.3 Effect of Termination. Except as expressly provided in Section
10.2 above, upon the expiration or any earlier termination of this Agreement,
all rights and obligations of the parties shall terminate except that the
provisions of Sections 2.3, 2.4, 6.6, 7.1, 7.2, 10.3 and 10.5 hereof, and
Articles 9, 12 and 13 hereof, shall survive. In addition, the licenses granted
to Licensee under Section 2.1 above shall




                                                                              18
<PAGE>   19
survive the expiration of this Agreement under Section 10.1, but not an earlier
termination under Section 10.2 (except as expressly provided therein); provided
that following such expiration the license granted to Licensee shall become
nonexclusive.

         10.4 No Termination For Breach. The parties acknowledge and agree that
this Agreement shall not be terminated by reason of any breach hereof by any
party, but shall be terminated prior to the end of the term specified in Section
10.1 only by mutual agreement or as provided in Section 10.2.

         10.5 Bankruptcy Protection. Notwithstanding any provision contained
herein to the contrary, in case Read-Rite is under any proceeding under the U.S.
Bankruptcy Code and the trustee in bankruptcy of Read-Rite or Read-Rite as a
debtor in possession rightfully elects to reject this Agreement, Licensee may,
pursuant to 11 U.S.C. Section 365(n)(1) and (2), retain any and all rights
hereunder, to the maximum extent permitted by law, subject to the royalty
payments specified herein.

         10.6 Termination of Rights to KME Licensed Technology. Read-Rite shall
have the right to terminate Licensee's rights to the KME Licensed Technology
included in the licenses granted hereunder if, at any time prior to September
28, 1997, or the date the Aggregate Royalty Cap is paid to KME, whichever is
earlier: (i) Licensee fails to meet its royalty obligations to KME within five
(5) days of Read-Rite's written demand to Licensee that it pay KME; (ii)
Licensee materially breaches any term of the KME License Agreement and fails to
cure said breach within forty-five (45) days of Read-Rite's written notice to
Licensee thereof, or if such breach cannot reasonably be cured within forty-five
(45) days, if Licensee fails to commence within such forty-five (45) day period,
and thereafter to diligently pursue such cure to completion; provided that a
determination as to whether the cure can reasonably be accomplished within
forty-five (45) days, and whether Licensee is diligently pursuing such cure
shall be at the reasonable discretion of Read-Rite, (iii) if an application for
bankruptcy, receivership, liquidation or other similar proceeding against
Licensee is made by Licensee or any other person, such application is not
vacated within sixty (60) days; (iv) all of the assets of Licensee are seized or
attached in conjunction with any action against Licensee by any third party; or
(v) if Licensee is dissolved except as permitted under Section 11.3 of the KME
License Agreement, if Licensee assigns its rights under the Licensee Agreement
except as permitted under Section 11.3 of the KME License Agreement, or if
Licensee attempts to sublicense any of the KME licensed technology to any third
party who is not an Affiliate (as defined in the KME License Agreement) of
Licensee. Thereafter, pursuant to (ii), (iii), (iv) and (v) above, Read-Rite
shall continue to have the right to terminate Licensee's rights to any of the
patents included in the KME licensed technology which are included within the
Read-Rite Industrial Property Rights.

ARTICLE 11 - INFRINGEMENT BY THIRD PARTIES

         11.1 Infringement of Read-Rite Rights. In the event of any third party
infringement of Read-Rite Industrial Property Rights, Read-Rite Technical
Information and/or Read-Rite Marks, with respect to the manufacture or sale of
Magnetic Recording Heads in Japan or Thailand, the party which first becomes
aware thereof shall promptly notify the other parties of such infringement. In
the event that Read-Rite does not take action to abate such infringement within
one hundred twenty (120) days of receiving notice from Licensee or RRST, or (if
earlier) within ninety (90) days prior to the effective date of any statutory
bar to action, and thereafter diligently pursue such action, then Licensee may
at its sole discretion bring suit to restrain such infringement. At Licensee's
or RRST's request, Read-Rite may, if necessary, be joined in such action, and
will cooperate at Licensee's or RRST's expense in the conduct of such action,
including, without limitation, providing Licensee or RRST with authority to
bring such suit in Read-Rite's name and providing such information, data and
assistance as Licensee or RRST reasonably may request. Any




                                                                              19
<PAGE>   20
recovery awarded in such suit with respect to such infringement in Japan or
Thailand shall be applied first to reimburse the party prosecuting such action
for expenses paid to third parties in bringing such action, with the balance, if
any, to be shared equally by Read-Rite and Licensee or RRST.

         11.2 Infringement of Licensee Rights. In the event of any third party
infringement of Licensee Industrial Property Rights, Licensee Technical
Information or Licensee Marks with respect to the manufacture or sale of
Magnetic Recording Heads outside Japan or Thailand, the party which first
becomes aware thereof shall promptly notify the other parties of such
infringement. In the event that Licensee or RRST does not take appropriate
action to abate such infringement, within one hundred twenty (120) days of
receiving notice for Read-Rite, or (if earlier) within ninety (90) days prior to
the effective date of any statutory bar to such action, then Read-Rite may at
its sole discretion bring action to abate such infringement. At Read-Rite's
request, Licensee or RRST may, if necessary, be joined in such action, and will
cooperate at Read-Rite's expense in the conduct of such action, including,
without limitation, providing Read-Rite with authority to bring such action in
Licensee's name and providing such information, data and assistance at
Read-Rite's expense as Read-Rite reasonably may request. Any recovery awarded in
such suit with respect to Licensee's Industrial Property Rights or Licensee
Technical Information shall be applied first to reimburse Read-Rite for expenses
paid to third parties in bringing such suit, with the balance, if any, to be
shared equally by Read-Rite and Licensee or RRST.

ARTICLE 12 - LIMITATION OF LIABILITY; INDEMNITY

           12.1 LIMITATION. IN NO EVENT WILL ANY PARTY BE LIABLE FOR LOST
PROFITS, OR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY, ARISING IN ANY WAY OUT OF THIS AGREEMENT,
OTHER THAN A BREACH OF THE CONFIDENTIALITY AGREEMENT. THIS LIMITATION SHALL
APPLY EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THE PARTIES AGREE THAT THIS SECTION 12.1 REPRESENTS A REASONABLE ALLOCATION OF
RISK.

         12.2  Indemnification.

                  (a) By Licensee. Except to the extent that Read-Rite is
obligated to indemnify Licensee under Section 9.2(a) above or as otherwise
agreed in writing by Read-Rite, Licensee assumes responsibility and shall
indemnify and defend Read-Rite from and against all liability to third parties
and expenses (including reasonable attorney's fees) resulting from claims for
personal injuries or property damage, or any other claim, resulting from or
arising out of the manufacture, sale or use of Products by Licensee; provided
that Read-Rite notifies Licensee immediately of any such actual or threatened
action, gives Licensee sole control of the defense and settlement of such
action, and provides Licensee with reasonable assistance in defending or
settling such action.

                  (b) By RRST. Except to the extent that Read-Rite is obligated
to indemnify RRST under Section 9.2(a) above or as otherwise agreed in writing
by Read-Rite, RRST assumes responsibility and shall indemnify and defend
Read-Rite from and against all liability to third parties and expenses
(including reasonable attorney's fees) resulting from claims for personal
injuries or property damage, or any other claim, resulting from or arising out
of the manufacture, sale or use of Products by RRST; provided that Read-Rite
notifies RRST immediately of any such actual or threatened action, gives RRST
sole control of the defense and settlement of such action, and provides RRST
with reasonable assistance in defending or settling such action.




                                                                              20
<PAGE>   21

                  (c)  By Read-Rite.

                           (i) Of Licensee. Except to the extent that Licensee
is obligated to indemnify Read-Rite under Section 9.2(b) above or as otherwise
agreed in writing by Licensee, Read-Rite assumes responsibility and shall
indemnify and defend Licensee from and against all liability to third parties
and expenses (including reasonable attorney's fees) resulting from claims for
personal injuries or property damage, or any other claim, resulting from or
arising out of the manufacture, sale or use of Magnetic Recording Heads or other
products by Read-Rite; provided that Licensee notifies Read-Rite immediately of
any such actual or threatened action, gives Read-Rite sole control of the
defense and settlement of such action, and provides Read-Rite with reasonable
assistance in defending or settling such action.

                           (ii) Of RRST. Except to the extent that RRST is
obligated to indemnify Read-Rite under Section 9.2(c) above or as otherwise
agreed in writing by RRST, Read-Rite assumes responsibility and shall indemnify
and defend RRST from and against all liability to third parties and expenses
(including reasonable attorney's fees) resulting from claims for personal
injuries or property damage, or any other claim, resulting from or arising out
of the manufacture, sale or use of Magnetic Recording Heads or other products by
Read-Rite; provided that RRST notifies Read-Rite immediately of any such actual
or threatened action, gives Read-Rite sole control of the defense and settlement
of such action, and provides Read-Rite with reasonable assistance in defending
or settling such action.

         12.3 No Application to Infringement Claims. The indemnities under
Section 12.2 above shall not apply to claims that Read-Rite Technical
Information, Read-Rite Industrial Property Rights, Licensee Technical
Information, Licensee Industrial Property Rights, RRST Technical Information or
RRST Industrial Property Rights infringe intellectual property rights of a third
party.

ARTICLE 13  - MISCELLANEOUS

         13.1 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California, without reference to
conflict of laws principles.

         13.2 Arbitration. Any dispute or claim between the parties under this
Agreement shall be finally settled by binding arbitration in Paris, France,
under the rules of arbitration of the International Chamber of Commerce by one
arbitrator appointed in accordance with said rules. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Notwithstanding the foregoing, the parties may apply to any court of
competent jurisdiction for injunctive relief without breach of this arbitration
provision.

         13.3 Assignment. No party may assign or delegate this Agreement or any
of its licenses, rights or duties under this Agreement without the prior written
consent of the other parties, except to a person or entity into which it has
merged or which has otherwise succeeded to all or substantially all of its
business and assets to which this Agreement pertains, by merger, reorganization
or otherwise, and which has assumed in writing or by operation of law its
obligations under this Agreement.




                                                                              21
<PAGE>   22
         13.4 Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions hereof in any
other language shall be for accommodation only and shall not be binding upon the
parties hereto. All communications, royalty reports, Read-Rite Technical
Information, Licensee Technical Information, RRST Technical Information and
notices to be made or given pursuant to this Agreement shall be in the English
language.

         13.5 Force Majeure. No Party shall be held in breach of this Agreement
for any performance required of it hereunder to the extent the same is prevented
in whole or in part by reason of strike, fire, flood, acts of God, governmental
acts, failure of suppliers, lack of transportation or any other force majeure
beyond the reasonable control of such party. Provided, however, the party
affected shall give prompt written notice to the other parties of the nature and
date of commencement of the force majeure and expected duration, and the party
so affected shall use reasonable efforts to avoid or remove the force majeure to
the extent it is so able to do.

         13.6 Construction. All parties have been represented by counsel during
the negotiation and drafting of this Agreement. Accordingly, any rule of
construction relating to the author of specific language shall not apply.

         13.7 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand, or by
commercial express courier service, addressed as follows:

To Read-Rite:

Read-Rite Corporation
Los Coches Street
Milpitas, CA 95035
Attention:  Chairman and Chief Executive Officer
cc:  Vice President and General Counsel

with a copy to:

Wilson, Sonsini, Goodrich & Rosati
Palo Alto Square
Palo Alto, California 95306
Attention:  Francis S. Currie, Esq.

To Licensee:

Read-Rite SMI Kabushiki Kaisha
2-15-17 Egawa
Shimamoto-cho, Mishima-gun
Osaka, 618 JAPAN
Attention:  President




                                                                              22
<PAGE>   23
with copies to:

Sumitomo Metal Industries, Ltd.
Ote Center Building
Otemachi 1-Chome
Chiyoda-ku, Tokyo 100, Japan
Attn:  General Manager,  Electronics Components Division

Sumitomo Metal Industries, Ltd.
Ote Center Building
Otemachi 1-Chome
Chiyoda-ku, Tokyo 100, Japan
Attn:  General Manager, Legal Department

To RRST:

Read-Rite SMI (Thailand) Co., Ltd.
139/4 Moo 2 Bangpa-In Industrial Estate
Udomsorayuth Road, Klongjig Bangpa-in
Ayutthaya 13160, Thailand
Attention:  President

Such notices shall be deemed to have been served when delivered or, if delivery
is not accomplished by reason of some fault of the addressee, when tendered.

         13.8 Export Controls.

                  (a) United States. Licensee understands and acknowledges that
Read-Rite is subject to regulation by agencies of the U.S. government, including
the U.S. Department of Commerce, which prohibit export or diversion of certain
products and technology to certain countries. Any and all obligations of
Read-Rite to provide technical information, technical assistance, any media in
which any of the foregoing is contained, training and related technical data
(collectively, "Data") shall be subject in all respects to such United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad by persons subject to the jurisdiction of the
United States, including the Export Administration Act of 1979, as amended, any
successor legislation, and the Export Administration Regulations issued by the
Department of Commerce, or the Bureau of Export Administration. Licensee
warrants that it will comply in all respects with the export and re-export
restrictions set forth in any export license (if necessary) for Data disclosed
to Licensee hereunder; provided that Read-Rite informs Licensee of such
restrictions.

                  (b) Japan. Read-Rite understands and acknowledges that
Licensee is subject to similar regulation on technology transfer under the
Foreign Currency and Foreign Trade Control Act of Japan, as amended from time to
time, and regulations and guidelines with respect thereto. Any and all
obligations of Licensee to provide Licensee Technical Information shall be
subject in all respects to such Japanese laws, regulations and guidelines.
Read-Rite agrees that it will comply in all respects with the export and
re-export restrictions set forth in any export license (if necessary) for Data
disclosed to Read-Rite hereunder, provided that Licensee informs Read-Rite of
any restrictions contained therein.




                                                                              23
<PAGE>   24
                  (c) Thailand. Read-Rite understands and acknowledges that RRST
is or may be subject to similar regulation on technology transfer under the
applicable export laws in Thailand, as they may be amended from time to time,
and regulations and guidelines with respect thereto. Any and all obligations of
RRST to provide RRST Technical Information shall be subject in all respects to
such Thai laws, regulations and guidelines. Read-Rite agrees that it will comply
in all respects with the export and re-export restrictions set forth in any
export license (if necessary) for Data disclosed to Read-Rite hereunder,
provided that RRST informs Read-Rite of any restrictions contained therein.

         13.9 Partial Invalidity. If any paragraph, provision, or clause thereof
in this Agreement shall be found or be held to be invalid or unenforceable in
any jurisdiction in which this Agreement is being performed, the remainder of
this Agreement shall be valid and enforceable and the parties shall use their
respective best efforts to negotiate a substitute, valid and enforceable
provision which most nearly effects the parties' intent in entering into this
Agreement.

         13.10 Counterparts. This Agreement may be executed in three (3) or more
counterparts, all of which, taken together, shall be regarded as one and the
same instrument.

         13.11 Waiver. The failure of any party to enforce at any time the
provisions of this Agreement shall in no way be constituted to be a present or
future waiver of such provisions, nor in any way affect the validity of any
party to enforce each and every such provision thereafter.

         13.12 Entire Agreement. The terms and conditions herein contained, in
those certain Distribution Agreements as amended from time to time, in the Joint
Venture Agreement, in the Confidentiality Agreement or in the related Indemnity
Agreement entered into pursuant to the terms thereof, constitute the entire
agreement between the parties and supersede all previous agreements and
understandings, whether oral or written, between the parties hereto with respect
to the subject matters hereof and thereof and no agreement or understanding
varying or extending the same shall be binding upon any party hereto unless in a
written document signed by the party to be bound thereby. This Agreement
specifically supersedes the Original License Agreement and all amendments
thereto.

         13.13 Further Assurances. At any time or from time to time on and after
the date of this Agreement, each party shall at the request of the other party,
at such requesting party's expense, (i) deliver such records, data or other
documents consistent with the provisions of this Agreement, (ii) execute, and
deliver or cause to be delivered, all such assignments, consents, documents or
further instruments of transfer or license, and (iii) take or cause to be taken
all such other actions, as the requesting party may reasonably deem necessary or
desirable in order for the requesting party to obtain the full benefits of this
Agreement and the transactions contemplated hereby.




                                                                              24
        
<PAGE>   25
         13.14 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized officers or representatives as of the date first above
written.

READ-RITE CORPORATION                        READ-RITE SMI KABUSHIKI KAISHA

By: _________________________                By: ______________________________
Name: _______________________                Name: ____________________________
Title: ______________________                Title: ___________________________

READ-RITE SMI (THAILAND) CO., LTD.

By: _________________________
Name: _______________________
Title: ______________________

APPENDICES:

Appendix A:       Rights Previously Granted by Read-Rite
Appendix B:       KME License Agreement
Appendix C:       Royalty-Bearing Products
Appendix D:       Cost-Sharing Agreement
Appendix E:       Disclosure Schedule



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