Document:

[Exhibit 10.2]

EQUIPMENT LEASE AGREEMENT

This Equipment Lease Agreement ("Agreement") is made as of this 13th of January 2010 ("Effective Date") by and between MEMSIC, Inc. of One Tech Drive, Suite 325, Andover, Massachusetts 01810 ("Lessor"), and Advanced Micro Sensors, Inc., Shrewsbury, Massachusetts, USA ("Lessee").

WHEREAS, the parties have entered into a Supply Agreement effective January 13, 2010 under which the Lessee is providing certain services to Lessor for the development and production of an AMR sensor;

WHEREAS, the parties entered into an Equipment Purchase Agreement on November 19, 2007 and now wish to extend the lease term of that agreement;

WHEREAS, a Nordiko 8550 Sputtering System ("Equipment") purchased by the Lessor from the Lessee and located at the AMS facility in Shrewsbury, Massachusetts is being used in the services under the aforesaid Supply Agreement;

NOW THEREFORE, in consideration of the foregoing premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereby agree as follows:

1.           THE EQUIPMENT

1.1.           The Lessor purchased from the Lessee the Nordiko 8550 Sputtering System (Serial Number 7324) on November 19, 2007. This System includes a sputter chamber, control cabinet, two pumps and power supplies.

1.2.           The Equipment is currently located at AMS facility and is used by the Lessee for the development and production of the Lessor's AMR sensor.

2.           LEASE OF THE EQUIPMENT

2.1.           Lease.  The Lessor hereby extends the lease of the Equipment to the Lessee for a one (1) year period beginning from the Effective Date ("Initial Term") for purposes of the Lessee providing certain services to (i) the Lessor with respect to the development and production of certain products for the Lessor and (ii) third parties. The Lessee agrees to use the Equipment in accordance with all, and not in violation of any, applicable laws and solely for the purposes specified in this Section 2. I. The Lessee acknowledges and agrees that the services provided by the Lessee to the Lessor for which the Equipment is to be used are personal and the Lessee may not assign or otherwise transfer any right hereunder to any other person or entity. This lease of the Equipment is subject to the provisions in Section 2.4. Notwithstanding the Lessee's right to use the Equipment in accordance with the provisions in Section 2 of this Agreement, the Equipment shall at all times be owned by the Lessor. The Lessee shall have no interest in the Equipment other than the right to use the Equipment pursuant to the terms and conditions of this Agreement. The Lessee shall pay the Lessor rent for this lease of the Equipment in the amount of five thousand dollars ($5,000), payable on the date hereof and on the first day of any Extended Term (as that term is defined in Section 2.4 hereof) in addition to the Lessee's obligations under Sections 2.2 and 2.3 below. The Lessor shall refund a pro-rated portion of such rent paid with respect to the Initial Term or any year of an Extended Term if such Initial Term or Extended Term is terminated before the first anniversary of its commencement.

  

 

  

2.2.           Repair. Maintenance and Insurance.  While the lease of the Equipment as set forth in this Section 2 is in effect, the Lessee shall, regardless of whether the Lessee actually uses the Equipment during any period, be responsible for and bear the expense of all necessary routine repairs, routine maintenance, operation, and replacements required to be made to maintain the Equipment in good condition. The Lessee shall keep the Equipment fully insured against all risks of loss or physical damage to the Equipment for the full insurable value thereof and such other insurance thereon in amounts and against such risks as the Lessee may reasonably request, as provided in Section 3.3 below.

2.3.           Risk of Loss: Compliance.  While this lease of the Equipment pursuant to this Section 2 is in effect, all risk of loss, damage to or destruction (whether total or partial and even when such loss, damage, or destruction is a result of fortuitous causes or force majeure) of the Equipment shall at all times be on the Lessee. While this lease of the Equipment as set forth in this Section 2 is in effect, the Lessee shall (i) comply with and conform to all laws, ordinances, and regulations relating to the use or maintenance of the Equipment, and (ii) shall keep the Equipment free from any and all liens and encumbrances (other than this lease), and shall do or permit no act or thing whereby the Lessor's title or rights may be encumbered or impaired. All the Equipment shall remain personal property, and title thereto shall remain in the Lessor exclusively.

2.4.           Extension of Right to Use Equipment.  Subject to the provisions of Section 3.2, unless otherwise prematurely terminated in accordance with the provisions of this Agreement, at the end of the Initial Term, for so long as the Supply Agreement remains in effect this Agreement will automatically be extended for further, successive one (I) year terms (each an "Extension Term"). The Initial Term and/or any Extension Term will end automatically on termination of the Supply Agreement. .

2.5.           Right of Removal.  Subject to the provisions of Section 3.2 of this Agreement, after the expiration of the Initial Term and any Extended Term (as applicable), the Lessor shall have the right, in its sole and absolute discretion and for any reason, and at the Lessor's sale expense, to remove the Equipment from the premises where they are located upon the Lessor providing the Lessee with a written notice informing the Lessee of the Lessor's intention to remove the Equipment (which notice may also be an email to an address previously provided by the Lessee to the Lessor) (the "Notice of Removal").

  

 

  

 

2.6.           Right to File Financing Statement.  The Lessee hereby irrevocably authorizes the Lessor at any time and from time to time to file in any Uniform Commercial Code jurisdiction any initial financing statement(s) and amendments thereto in such form and substance as the Lessor shall reasonably require. It is the intent of the parties that this Agreement and the transactions contemplated hereby constitute a sale of the Equipment and a lease back to the Lessee of such Equipment as provided herein, and that any filing of a financing statement under the Uniform Commercial Code or otherwise shall not be construed as evidence that any security interest was intended to be created, but only to give public notice of the Lessor's ownership of the Equipment. If this Agreement or any of the transactions contemplated hereby is otherwise deemed at any time to be one intended as security or to not be a sale and the right to use described above, the Lessee hereby grants to the Lessor a security interest in the Equipment and all attachments and accessions thereto, improvements thereon and all products and proceeds thereof (whether now owned or hereafter acquired, and wherever located) to secure the obligations of the Lessee to the Lessor, including those set forth herein.

3.           COVENANTS

The Lessee agrees that:

3.1.           Lessor Access.  The Equipment shall at all times be kept and maintained only at the address for the Lessee listed in the first paragraph of this Agreement. The Lessor shall be entitled to access the premises where the Equipment is located during normal business hours and upon reasonable prior notice for inspection of same, and/or at any time for removal of same pursuant and subject to the terms of this Agreement.

3.2.           Solvency and Financial Distress.  The Lessee shall at all times remain Solvent.  As soon as the Lessee becomes aware (or should reasonably have been aware) of the existence of any development or other information which could reasonably be expected to result in Lessee not to be Solvent, or if the representations of the Lessee in Section 4.3 or Section 4.4 are not true and correct, the Lessee shall immediately provide the Lessor with telephonic, telecopy or e-mail notice specifying the nature of such development or information, including the anticipated effect thereof, which notice shall be promptly confirmed in writing within five (5) calendar days. Whether or not such notice has been provided, in the event that the Lessor believes, in its reasonable discretion, that the Lessee is or could reasonably be expected to not be Solvent, or that the representations of the Lessee in Section 4.3 or Section 4.4 are, or may reasonably be expected to not be true and correct, then the Lessor may enter into the premises where the Equipment are located, take possession of the Equipment, and remove the Equipment from such locations, all without further cost or expense to the Lessor.

3.3.           Insurance.  Lessee agrees to cause Lessor to be named as a "loss payee" under Lessee's property-casualty insurance policy or policies covering the Equipment and as an "additional insured" under Lessee's general liability policy or policies, and to provide Lessor with evidence of such coverage from time to time in form and substance reasonably satisfactory to Lessor. Breach of this covenant by Lessee shall give Lessor the same rights as it would have under Section 3.2 if the representations of the Lessee in Section 4.3 or Section 4.4 are not true and correct.

  

 

  

 

3.4.           Other Termination of Lease.  The Lessor may terminate the lease created under Section 2.1 hereof at any time after the occurrence of any of the following:

(A)           The Lessee fails to pay rent on the dates and in the amounts specified in Section 2.1 hereof, but the Lessor shall not be entitled to terminate the lease unless it has first given the Lessee written notice of its intent to terminate the lease for such failure to pay rent and the Lessee has not paid such rent within three (3) business days after Lessee's receipt of such notice; or

(B)           The Lessee breaches any other provision of this Agreement and fails to remedy the breach within fourteen (14) days after written notice from Lessor.

In addition, this Agreement will terminate automatically upon any termination or expiration of the Supply Agreement between the parties dated January 13, 2010 ("Supply Agreement") or of the Purchase and Lease Agreement between the parties dated January 6, 2009 (the "Purchase and Lease Agreement"). The parties also agree that, in the event of the termination or expiration of the Supply Agreement, the lease to Lessee under the Purchase and Lease Agreement shall terminate automatically, and the parties hereby agree that the Purchase and Lease Agreement is deemed amended to this effect.

3.5.           Intellectual Property Escrow.  Pursuant to the Equipment Purchase Agreement between the parties dated November 19, 2007, Lessee delivered to Lessor's intellectual property counsel the Lessee's intellectual property related to the Equipment as it relates to the AMR sensor products manufactured for the Lessor. Such intellectual property will be delivered to the Lessor upon its notification of such legal counsel (with a copy to the Lessee) that the lease created under Section 2.1 hereof has.expired or terminated.

4.            REPRESENTATIONS OF THE LESSEE; INDEMNIFICATION

The Lessee represents and warrants to the Lessor as follows:

4.1.            Organization.  The Lessee is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has all requisite power and authority (corporate and other) to own its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby. The Lessee is duly qualified to do business and in good standing in all jurisdictions in which its ownership of property being sold herewith or the character of its business requires such qualification.

  

 

  

4.2.           Authorization.  The execution and delivery of this Agreement by the Lessee, and the agreements provided for herein, and the consummation by the Lessee of all transactions contemplated hereby, have been duly authorized by all requisite corporate and, if necessary, shareholder action. This Agreement and all such other agreements and obligations entered into and undertaken in connection with the transactions contemplated hereby to which the Lessee is a party constitute the valid and legally binding obligations of the Lessee, enforceable against the Lessee in accordance with their respective terms. The execution, delivery and performance by the Lessee of this Agreement and the agreements provided for herein, and the consummation by the Lessor of the transactions contemplated hereby and thereby, will not, with or without the giving of notice or the passage of time or both, (a) violate the provisions of any law, rule or regulation applicable to the Lessee; (b) violate the provisions of the Certificate of Incorporation or Bylaws of the Lessee; (c) violate any judgment, decree, order or award of any court, governmental body or arbitrator; or (d) conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the Equipment pursuant to, any indenture, mortgage, deed of trust or other instrument or agreement to which the Lessee is a party or by which the Lessee or any of its properties is or may be bound. No consents or approvals of third parties (other than any that have been obtained or which will be provided pursuant to this Agreement) are required in connection with the consummation by the Lessee of the transactions contemplated by this Agreement and the transactions contemplated hereby.

4.3.            Solvency.  After giving effect to the transactions contemplated by this Agreement, and at all times after the date hereof, the Lessee is and will be Solvent. For purposes of this Lease Agreement, "Solvent" means (a) the fair value of the property of the Lessee is greater than the total amount of liabilities, including contingent liabilities, of the Lessee; (b) the present fair salable value of the assets of the Lessee is not less than the amount that will be required to pay the probable liability of the Lessee on its debts as they become absolute and matured; ( c) the Lessee does not intend to, and does not believe that it will, incur debts or liabilities beyond the Lessee's ability to pay as such debts and liabilities mature; and (d) the Lessee is not engaged in a business or transaction, and has no plans to engage in a business or transaction, for which the Lessee's property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed, without duplication, as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

4.4.           Bankruptcy.  No petition or action for relief has been filed by or against the Lessee under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, or seeking the appointment of a custodian, receiver, tmstee (or other similar official) of the Lessee or all or any substantial portion of the Lessee's assets, or making any assignment for the benefit of creditors.

 

  

 

  

4.5.           Indemnification.  The Lessee hereby indemnifies and holds harmless the Lessor against all claims, damages, losses, liabilities, costs and expenses (including, without limitation, settlement costs and any legal, accounting or other expenses for investigating or defending any actions or threatened actions) reasonably incurred by the Lessor in connection with (i) any breach by the Lessee of any representation or warranty in this Agreement; (ii) any breach of any covenant, agreement or obligation of the Lessee contained in this Agreement or any other agreement, instrument or document contemplated by this Agreement; (iii) any misrepresentation contained in any statement, certificate or schedule furnished by the Lessee pursuant to this Agreement or in connection with the transactions contemplated by this Agreement; (iv) any claims against, or liabilities or obligations of, the Lessee or against the Equipment not specifically assumed by the Lessor pursuant this Agreement; and (v) any violation by the Lessee of, or any failure by the Lessee to comply with, any law, ruling, order, decree, regulation or zoning, environmental or permit requirement applicable to the Lessee or the Equipment.

The Lessor shall have the right to set-off any and all amounts due by the Lessee as a result of the indemnification provided under this Section 4.5 against any amounts otherwise due by Lessor to Lessee under any agreement between the parties.

4.6.           Survival orRepresentations. All representations and warranties made by the Lessee herein or in any instrument or document furnished in connection herewith shall survive the date hereof and any investigation at any time made by or on behalf of the parties hereto.

5.           GENERAL

5.1.           This Agreement shall not affect the terms of the aforesaid Supply Agreement.

5.2.           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Lessee may not assign its obligations hereunder without the prior written consent of the Lessor, which shall not be unreasonably withheld. Any assignment in contravention of this provision shall be void. No assignment shall release the Lessee from any obligation or liability under this Agreement.

5.3.           Entire Agreement. This Agreement, all Schedules and Exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written and all contemporaneous oral negotiations, commitments and understandings between such parties. This Agreement may be modified or amended only by a written instrument executed by the Lessor and the Lessee.

5.4.           Governing Law; Jurisdiction and Waiver of Jury Trial.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. Lessor and Lessee agree that any suit relating to this Agreement or the transactions contemplated thereby may be brought in the Courts of the Commonwealth of Massachusetts or any federal court sitting therein, and consent to the nonexclusive jurisdiction of such courts and service of process in any such suit being made upon the Lessor or Lessee, as the case may be, at the address provided above. Lessor and Lessee each hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum. Lessor and Lessee each hereby waives its right to a trial by jury with respect to any action or claim arising out of any dispute in connection with this Agreement or any transaction contemplated hereby.

  

 

  

 

5.5.           Limitation on Liability.  In no event shall either party be liable or responsible for any special, indirect, incidental or consequential damages (including but not lintited to damages for loss of profits, loss of revenues or claims by any customer of Lessee) arising out of or in connection with this Agreement or any performance or failure of performance by such party, even if such party has been advised of the possibility of such damages or losses.

5.6.           Currency.  All monetary amounts set forth in this Agreement are United States dollars.

5.7.           Notices.  Unless otherwise provided in this Agreement, any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by overnight courier or registered or certified mail, postage prepaid, addressed to the party at the address set forth below or to such other address of which the parties may have given notice:

To the Lessee:

Advanced MicroSensors, Inc.

Attn: Tina Krasnecky

333 South Street

Shrewsbury, MA 01545

Facsimile: 508-770-5807

Email: tkrasnecky@advancedmicrosensors.com

To the Lessor:

MEMSIC, Inc.

One Technology Drive, Suite 325

Andover, MA 01810

Unless otherwise specified herein, such notices or other communications shall be deemed received (a) on the date delivered, if delivered personally; (b) one (I) business day after being sent via overnight courier; or (c) three (3) business days after being sent, if sent by registered or certified mail.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed under seal by their duly authorized representatives as of the date first set forth above.

	
MEMSIC, Inc.

	  	  	
Advanced Micro Systems, Inc.

	  	  	  	  	  
	
By: 

	
/s/

	  	
By:

	
/s/

	  	  	  	  	  
	
Name:

	
Patricia Niu

	  	
Name: 

	
Timothy Stucchi

	  	  	  	  	  
	
Title:

	
CFO

	  	
Title:

	
CEO

  

 

  

[Exhibit 10.2 continued]

 

PURCHASE AND LEASE AGREEMENT

 

This Purchase and Lease Agreement (this “Agreement”) made as of the  6th day of January, 2009 between MEMSIC, Inc., a Delaware corporation with an office at One Technology Drive, Suite 325, Andover, MA  01810 (the “Buyer/Lessor”), and Advanced MicroSensors, Inc., a Delaware corporation with its principal office at 333 South Street, Shrewsbury, MA 01545 (the “Seller/Lessee”).

Preliminary Statement

 

The Buyer/Lessor desires to purchase, and the Seller/Lessee desires to sell, all of the Purchased Assets for the consideration set forth below, subject to the terms and conditions of this Agreement and upon consummation of the transactions contemplated by this Agreement.  Moreover, the Buyer/Lessor hereby agrees to grant to the Seller/Lessee a lease for the Fixed Assets subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:

 

1.           Sale and Delivery of the Purchased Assets.

 

1.1      Delivery of the Purchased Assets.

 

(a)      Subject to and upon the terms and conditions of this Agreement, the Seller/Lessee hereby sells, transfers, conveys, assigns and delivers to the Buyer/Lessor, and the Buyer/Lessor purchases from the Seller/Lessee, all of Seller/Lessee’s rights, title and interests in and to the following (collectively, the “Purchased Assets”):

 

(i)           all personal property listed on Exhibit A hereto (collectively, the “Fixed Assets”);

 

(ii)          all rights of the Seller/Lessee under and to express or implied warranties relating to or covering any Fixed Asset;

 

(iii)         all rights of the Seller/Lessee under any maintenance contracts or agreements relating to the Fixed Assets; and

 

(iv)         all permits, licenses, registrations, certificates, orders, approvals, variances, and similar rights issued or obtained from any governmental entity (including any court, tribunal, administrative agency or commission or other governmental or regulatory authority or agency), necessary for the use or operation of any Fixed Asset.

 

(v)          all operation manuals, repair records, maintenance records relating to the Fixed Assets.

  

 

  

 

1.2      Further Assurances.  At any time and from time to time after the date hereof and subject to the terms and conditions of this Agreement, at the Buyer/Lessor’s request and without further consideration, the Seller/Lessee promptly shall execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take such other action, as the Buyer/Lessor may reasonably request to more effectively transfer, convey and assign to the Buyer/Lessor, and to confirm the Buyer/Lessor’s title to, all of the Purchased Assets, to put the Buyer/Lessor in actual possession and operating control thereof, to assist the Buyer/Lessor in exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement, in each case subject to the terms and conditions of this Agreement.

 

1.3      Purchase Price.  The aggregate purchase price for the Purchased Assets is $300,000, which shall be delivered by the Buyer/Lessor to the Seller/Lessee on the date hereof by wire transfer to an account designated by the Seller/Lessee.

 

1.4      No Assumption of Liabilities. The Buyer/Lessor does not assume any liabilities or obligations of the Seller/Lessee, and the Seller/Lessee shall remain solely liable (as between the Buyer/Lessor and the Seller/Lessee) for any and all such liabilities and obligations.

 

1.5      Condition; Disclaimer of Warranties.  The Buyer/Lessor acknowledges that the Fixed Assets consist of used equipment and related personal property and agrees that it is purchasing each of the Fixed Assets in “as is, where is” condition.  Except as expressly set forth in Section 2 hereof, the Buyer/Lessor makes no representations or warranties with respect to the Purchased Assets and, without limiting the foregoing, expressly disclaims all warranties (express, implied or otherwise) with respect to the Purchased Assets, including but not limited to any implied warranties of merchantability or fitness for a particular purpose.

 

2.           Representations of the Seller/Lessee.

 

The Seller/Lessee represents and warrants to the Buyer/Lessor as follows:

 

2.1      Organization.  The Seller/Lessee is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has all requisite power and authority (corporate and other) to own its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby.  The Seller/Lessee is duly qualified to do business and in good standing in all jurisdictions in which its ownership of property being sold herewith or the character of its business requires such qualification.

 

  

 

  

2.2      Authorization.  The execution and delivery of this Agreement by the Seller/Lessee, and the agreements provided for herein, and the consummation by the Seller/Lessee of all transactions contemplated hereby, have been duly authorized by all requisite corporate and, if necessary, shareholder action.  This Agreement and all such other agreements and obligations entered into and undertaken in connection with the transactions contemplated hereby to which the Seller/Lessee is a party constitute the valid and legally binding obligations of the Seller/Lessee, enforceable against the Seller/Lessee in accordance with their respective terms.  The execution, delivery and performance by the Seller/Lessee of this Agreement and the agreements provided for herein, and the consummation by the Buyer/Lessor of the transactions contemplated hereby and thereby, will not, with or without the giving of notice or the passage of time or both, (a) violate the provisions of any law, rule or regulation applicable to the Seller/Lessee; (b) violate the provisions of the Certificate of Incorporation or Bylaws of the Seller/Lessee; (c) violate any judgment, decree, order or award of any court, governmental body or arbitrator; or (d) conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the Purchased Assets pursuant to, any indenture, mortgage, deed of trust or other instrument or agreement to which the Seller/Lessee is a party or by which the Seller/Lessee or any of its properties is or may be bound.  No consents or approvals of third parties (other than any that have been obtained or which will be provided pursuant to this Agreement) are required in connection with the consummation by the Seller/Lessee of the transactions contemplated by this Agreement and the transactions contemplated hereby.

 

2.3      Ownership of the Purchased Assets.  There are no claims, liabilities, liens, mortgages, security interests, restrictions, prior assignments, pledges, charges, encumbrances and equities of any kind and nature whatsoever affecting or against the Purchased Assets (collectively, the “Encumbrances”).  The Seller/Lessee is the true and lawful owner of the Purchased Assets, and has the right to sell and transfer to the Buyer/Lessor good, clear, record and marketable title to the Purchased Assets, free and clear of all Encumbrances of any kind and nature whatsoever.  The execution and delivery by the Seller/Lessee of this Agreement vests good and marketable title to the Purchased Assets in the Buyer/Lessor, free and clear of all Encumbrances.

 

2.4      Broker or Finder Fees.  The Seller/Lessee represents and warrants that it has not engaged any broker or finder or incurred any liability for brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement, and agrees to indemnify and hold harmless the Buyer/Lessor against any claims or liabilities asserted against it by any person acting or claiming to act as a broker or finder on behalf of the other party.

 

2.5      Fixed Assets.  All of the Fixed Assets are in good operating condition and repair, normal wear and tear excepted and with reasonable allowance for the age of the Fixed Assets, are currently used by the Seller/Lessee in the ordinary course of business and in the production of products of the Seller/Lessee and normal maintenance has been consistently performed with respect to such Fixed Assets.

 

2.6      Tax Matters.  The Seller/Lessee has timely filed or will timely file (allowing for any applicable extension periods) all federal, state and local tax returns which are required to be filed by it and has paid or will pay all taxes, interest, penalties, assessments and deficiencies which have become due or which have been claimed to be due prior to the date hereof relating to the Purchased Assets.  The Seller/Lessee is current in the payment of all income, franchise, real estate, sales, use and withholding taxes and other employee benefits, taxes or imposts.

 

2.7      Compliance with Laws.  The Seller/Lessee is not in violation of any law, regulation or ordinance relating to the Purchased Assets.

 

  

 

  

 

2.8      Regulatory Approvals.  All consents, approvals, authorizations and other requirements prescribed by any law, rule or regulation and all consents and approvals of third parties which must be obtained or satisfied by the Seller/Lessee and which are necessary for the execution and delivery by the Seller/Lessee of this Agreement and the documents to be executed and delivered by the Seller/Lessee in connection herewith, and the consummation of the transactions contemplated hereby, have been obtained and satisfied.

 

2.9      Solvency.  After giving effect to the transactions contemplated by this Agreement, and at all times after the date hereof, the Seller/Lessee is and will be Solvent.  For purposes of this Purchase Agreement, “Solvent” means (a) the fair value of the property of the Seller/Lessee is greater than the total amount of liabilities, including contingent liabilities, of the Seller/Lessee; (b) the present fair salable value of the assets of the Seller/Lessee is not less than the amount that will be required to pay the probable liability of the Seller/Lessee on its debts as they become absolute and matured; (c) the Seller/Lessee does not intend to, and does not believe that it will, incur debts or liabilities beyond the Seller/Lessee’s ability to pay as such debts and liabilities mature; and (d) the Seller/Lessee is not engaged in a business or transaction, and has no plans to engage in a business or transaction, for which the Seller/Lessee’s property would constitute an unreasonably small capital.  The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed, without duplication, as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability.

 

2.10     Bankruptcy.  No petition or action for relief has been filed by or against the Seller/Lessee under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, or seeking the appointment of a custodian, receiver, trustee (or other similar official) of the Seller/Lessee or all or any substantial portion of the Seller/Lessee’s assets, or making any assignment for the benefit of creditors.

 

2.11     Purchase Price.  The aggregate purchase price paid pursuant to Section 1.3 of this Agreement represents reasonably equivalent value for the Purchased Assets.

3.           Lease of the Fixed Assets

 

3.1           Lease.  From and after giving effect to the sale of the Purchased Assets by the Seller/Lessee to the Buyer/Lessor as provided in this Agreement, the Buyer/Lessor hereby leases back to  the Seller/Lessee the Fixed Assets for purposes of the Seller/Lessee providing certain services to (i) the Buyer/Lessor with respect to the development and production of certain products for the Buyer/Lessor and (ii) third parties.  The Seller/Lessee agrees to use the Fixed Assets in accordance with all, and not in violation of any, applicable laws and solely for the purposes specified in this Section 3.1.  The Seller/Lessee acknowledges and agrees that the services provided by the Seller/Lessee to the Buyer/Lessor for which the Fixed Assets are to be used are personal and the Seller/Lessee may not assign or otherwise transfer any right hereunder to any other person or entity.  This lease of the Fixed Assets is subject to the provisions in Section 3.4.  Notwithstanding the Seller/Lessee’s right to use the Fixed Assets in accordance with the provisions in Section 3 of this Agreement, the Fixed Assets shall at all times be owned by Buyer/Lessor.  The Seller/Lessee shall have no interest in the Purchased Assets after the date hereof other than the right to use the Fixed Assets pursuant to the terms and conditions of this Agreement.  The Seller/Lessee shall have no interest in the Purchased Assets after the date hereof other than the right to use the Fixed Assets pursuant to the terms and conditions of this Agreement.  The Seller/Lessee shall pay the Buyer/Lessor rent for this lease of the Fixed Assets in the amount of one thousand dollars ($1,000), payable on the date hereof and on the first day of any Extended Term (as that term is defined in Section 3.4 hereof) in addition to performance of the Seller/Lessee’s obligations under Sections 3.2 and 3.3 below.  The Buyer/Lessor shall refund a pro-rated portion of such rent paid with respect to the Initial Term or any year of an Extended Term if such Initial Term or Extended Term is terminated before the first anniversary of its commencement.

 

  

 

  

 

3.2      Repair, Maintenance and Insurance.  While the lease of the Fixed Assets as set forth in this Section 3 is in effect, the Seller/Lessee shall, regardless of whether the Seller/Lessee actually uses the Fixed Assets during any period, be responsible for and bear the expense of all necessary routine repairs, routine maintenance, operation, and replacements required to be made to maintain the Fixed Assets in good condition, normal wear and tear excepted and with reasonable allowance for the age of the Fixed Assets, it being understood that the Seller/Lessee shall not be responsible for any cost or expense of repairing or replacing any Fixed Asset should such Fixed Asset experience a fundamental failure or cease to operate notwithstanding the Buyer/Lessor’s performance of its routine repair and maintenance obligations as provided above.  Seller/Lessee shall keep the Fixed Assets fully insured against all risks of loss or physical damage to the Fixed Assets for the full insurable value thereof and such other insurance thereon in amounts and against such risks as Seller/Lessee may reasonably request, as provided in Section 5.6 below.

 

3.3      Risk of Loss; Compliance.  While this lease of the Fixed Assets pursuant to this Section 3 is in effect, all risk of loss, damage to or destruction (whether total or partial and even when such loss, damage, or destruction is a result of fortuitous causes or force majeure) of the Fixed Assets shall at all times be on the Seller/Lessee.  While this lease of  the Fixed Assets as set forth in this Section 3 is in effect, the Seller/Lessee shall (i) comply with and conform to all laws, ordinances, and regulations relating to the use or maintenance of the Fixed Assets, and (ii) shall keep the Fixed Assets free from any and all Encumbrances (other than this lease), and shall do or permit no act or thing whereby the Buyer/Lessor’s title or rights may be encumbered or impaired.  All the Fixed Assets shall remain personal property, and title thereto shall remain in the Buyer/Lessor exclusively.

 

  

 

  

3.4      Term of Lease.  The initial term of this lease shall be for the period beginning on the date hereof and ending  January 6, 2010  (the “Initial Term”).  Unless otherwise prematurely terminated in accordance with the provisions of this Agreement, this lease shall terminate and no longer be of any force or effect at the end of the Initial Term unless the Buyer/Lessor provides the Seller/Lessee, at least 90 calendar days prior to the expiration of the Initial Term, with written notice (which may also be an email to an address previously provided by the Seller/Lessee to the Buyer/Lessor) for the extension of such lease, in which case, the lease will be extended for an additional one year period (the “Initial Extension”).  Buyer/Lessor may thereafter similarly provide the Seller/Lessee with additional extension notices at least 90 days prior to the expiration of the then-current term, each of which shall extend the time for an additional one year term (all such extensions, including the Initial Extension, an “Extended Term”).  The Buyer/Lessor is under no obligation to provide the Seller/Lessee with any extension notices, and the determination whether to provide any extension notices is in the sole and absolute discretion of the Buyer/Lessor.  Furthermore, the providing of any extension notice on any one or more occasions does not modify this provision, obligate the Buyer/Lessor to provide any extension notice, or create any expectation on the part of the Seller/Lessee that any further extension notices shall be given.

 

3.5      Right of Removal.

 

(A)           Subject to the provisions of Section 5.3 of this Agreement, after the expiration of the Initial Term and any Extended Term (as applicable), the Buyer/Lessor shall have the right, in its sole and absolute discretion and for any reason, and at the Buyer/Lessor’s sole expense, to remove the Fixed Assets from the premises where they are located upon the Buyer/Lessor providing the Seller/Lessee with a written notice informing the Seller/Lessee of the Buyer/Lessor’s intention to remove the Fixed Assets (which notice may also be an email to an address previously provided by the Seller/Lessee to the Buyer/Lessor) (the “Notice of Removal”).

 

 (B)           The requirement that the Notice of Removal be sent to the Seller/Lessee as specified in this Section 3.5 do not apply in the event the Buyer/Lessor decides, in its reasonable discretion, to remove the Fixed Assets pursuant to the provisions in Section 5.3 of this Agreement.

 

3.6      Right to File Financing Statement.  The Seller/Lessee hereby irrevocably authorizes the Buyer/Lessor at any time and from time to time to file in any Uniform Commercial Code jurisdiction any initial financing statement(s) and amendments thereto in such form and substance as the Buyer/Lessor shall reasonably require.  It is the intent of the parties that this Agreement and the transactions contemplated hereby constitute a sale of the Purchased Assets and a lease back to the Seller/Lessee of such Purchased Assets as provided herein, and that any filing of a financing statement under the Uniform Commercial Code or otherwise shall not be construed as evidence that any security interest was intended to be created, but only to give public notice of the Buyer/Lessor’s ownership of the Purchased Assets.  If this Agreement or any of the transactions contemplated hereby is otherwise deemed at any time to be one intended as security or to not be a sale and the right to use described above, the Seller/Lessee hereby grants to the Buyer/Lessor a security interest in the Purchased Assets and all attachments and accessions thereto, improvements thereon and all products and proceeds thereof (whether now owned or hereafter acquired, and wherever located) to secure the obligations of the Seller/Lessee to the Buyer/Lessor, including those set forth herein.

  

 

  

 

4.           Indemnification

 

4.1      Scope of Indemnification.  Subject to Section 11 below, the Seller/Lessee hereby indemnifies and holds harmless the Buyer/Lessor against all claims, damages, losses, liabilities, costs and expenses (including, without limitation, settlement costs and any legal, accounting or other expenses for investigating or defending any actions or threatened actions) reasonably incurred by the Buyer/Lessor in connection with (i) any breach by the Seller/Lessee of any representation or warranty in this Agreement; (ii) any breach of any covenant, agreement or obligation of the Seller/Lessee contained in this Agreement or any other agreement, instrument or document contemplated by this Agreement; (iii) any misrepresentation contained in any statement, certificate or schedule furnished by the Seller/Lessee pursuant to this Agreement or in connection with the transactions contemplated by this Agreement; (iv) any claims against, or liabilities or obligations of, the Seller/Lessee or against the Purchased Assets not specifically assumed by the Buyer/Lessor pursuant this Agreement; and (v) any violation by the Seller/Lessee of, or any failure by the Seller/Lessee to comply with, any law, ruling, order, decree, regulation or zoning, environmental or permit requirement applicable to the Seller/Lessee or the Purchased Assets.

 

The Buyer/Lessor shall have the right to set-off any and all amounts due by the Seller/Lessee as a result of the indemnification provided under this Section 4.1 against any amounts otherwise due by Buyer/Lessor to Seller/Lessee under any agreement between the parties.

4.2      Survival of Representations.  All representations and warranties made by the Seller/Lessee herein or in any instrument or document furnished in connection herewith shall survive the date hereof and any investigation at any time made by or on behalf of the parties hereto.

 

5.           Post-Closing Covenants.

 

The Seller/Lessee agrees that:

 

5.1      Asset Tags.  From and after the date hereof, the Seller/Lessee shall cause the Fixed Assets to have asset tags affixed in a reasonably visible location at all times which asset tags will be in form and substance acceptable to the Buyer/Lessor and will indicate that such Fixed Assets are the property of the Buyer/Lessor.

 

5.2       Buyer/Lessor Access .  The Fixed Assets shall at all times be kept and maintained only at the address for the Seller/Lessee listed in the first paragraph of this Agreement.  The Buyer/Lessor shall be entitled to access the premises where the Fixed Assets or any other Purchased Assets are located during normal business hours and upon reasonable prior notice for inspection of same,  and/or at any time for removal of same pursuant and subject to the terms of this Agreement.

 

  

 

  

5.3      Solvency and Financial Distress.  The Seller/Lessee shall at all times remain Solvent.  As soon as Seller/Lessee becomes aware (or should reasonably have been aware) of the existence of any development or other information which could reasonably be expected to result in Seller/Lessee not to be Solvent, or if the representations of the Seller/Lessee in Section 2.9 or Section 2.10 are not true and correct, the Seller/Lessee shall immediately provide the Buyer/Lessor with telephonic, telecopy or e-mail notice specifying the nature of such development or information, including the anticipated effect thereof, which notice shall be promptly confirmed in writing within five (5) calendar days.  Whether or not such notice has been provided, in the event that the Buyer/Lessor believes, in its reasonable discretion, that the Seller/Lessee is or could reasonably be expected to not be Solvent, or that the representations of the Seller/Lessee in Section 2.9 or Section 2.10 are, or may reasonably be expected to not be true and correct, then the Buyer/Lessor may, in addition to any other remedies, without notice and notwithstanding the Seller/Lessee’s purchase rights set forth in Section 3.5 of this Agreement, enter into the premises where the Purchased Assets are located, take possession of the Purchased Assets, and remove the Purchased Assets from such locations, all without further cost or expense to the Buyer/Lessor, whereupon the term of the lease created under Section 3.1 hereof shall terminate.

 

5.4.  Other Termination of Lease.  The Buyer/Lessor may terminate the lease created under Section 3.1 hereof at any time after the occurrence of any of the following:

(A)  The Seller/Lessee fails to pay rent on the dates and in the amounts specified in Section 3.1 hereof, but the Buyer/Lessor shall not be entitled to terminate the lease unless it has first given the Seller/Lessee written notice of its intent to terminate the lease for such failure to pay rent and the Seller/Lessee has not paid such rent within three (3) business days after Seller/Lessee’s receipt of such notice; or

(B)  AMS’s  termination of the Development and Supply Agreement (“D&S Agreement”) between the parties dated May 20, 2006 pursuant to Section 11(a), or termination by the Buyer/Lessor pursuant to Section 11(b), of said agreement; or

(C)  a material breach by the Seller/Lessee of any of its obligations hereunder or its exclusivity obligations under Section 3(b) of the D&S Agreement, if the Buyer/Lessor has given the Seller/Lessee notice of such breach and the Seller/Lessee has not cured such breach within ten (10) days of its receipt of such notice.

 

5.5  Intellectual Property Escrow.  Promptly following execution of this agreement, but in any event within thirty (30) days following the date of this agreement, Seller/Lessee shall deliver to Buyer/Lessor’s intellectual property counsel at the address noted below the Seller/Lessee’s intellectual property related to the Fixed Assets  as it relates to    the AMR sensor products manufactured for the Buyer/Lessor by use thereof as set forth in Exhibit B to this agreement.

 

The Seller/Lessee’s intellectual property shall be delivered to:

 

Stanley M. Schurgin, Esq.

Weingarten, Schurgin, Gagnebin & Lebovici, LLP

Ten Post Office Square

Boston, MA 02109

  

 

  

Telephone:  617-542-2290

The intellectual property will be delivered to the Buyer/Lessor upon its notification of the above legal counsel (with a copy to the Seller/Lessee) that the lease created under Section 3.1 hereof has expired or terminated.

5.6  Insurance.  Buyer/Lessor agrees to cause Seller/Lessee to be named as a “loss payee” under Seller/Lessee’s property-casualty insurance policy or policies covering the Fixed Assets and as an “additional insured” under Seller/Lessee’s general liability policy or policies, and to provide Buyer/Lessor with evidence of such coverage from time to time in form and substance reasonably satisfactory to Buyer/Lessor.  Breach of this covenant by Seller/Lessee shall give Buyer/Lessor the same rights as it would have under Section 5.3 if the representations of the Seller/Lessee in Section 2.9 or Section 2.10 are not true and correct.

 

6.            Transfer and Sales Tax.

 

Notwithstanding any provisions of law imposing the burden of such taxes on the Seller/Lessee or the Buyer/Lessor, as the case may be, the Seller/Lessee shall be responsible for and shall pay (a) all sales, use and transfer taxes, and (b) all governmental charges, if any, upon the sale or transfer of any of the Purchased Assets hereunder.  If the Seller/Lessee shall fail to pay such amounts on a timely basis, the Buyer/Lessor may pay such amounts to the appropriate governmental authority or authorities, and the Seller/Lessee shall promptly reimburse the Buyer/Lessor for any amounts so paid by the Buyer/Lessor.

 

7.            Notices.

 

Unless otherwise provided in this Agreement, any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by e-mail or by overnight courier or registered or certified mail, postage prepaid, addressed to the party at the address set forth below or to such other address of which the parties may have given notice:

 

To the Seller/Lessee:

 

Advanced MicroSensors, Inc.

Attention: Tina Krasnecky, CFO

333 South Street

Shrewsbury, MA 01545

Facsimile:  508-770-5807

E-mail:  tkrasnecky@advancedmicrosensors.com

With a copy to:

 

To the Buyer/Lessor:

 

MEMSIC, Inc.

  

 

  

 

Attention:  Patricia Niu, CFO

One Technology Drive, Suite 325

Andover, MA  01810

Facsimile: 978-738-0196

E-mail:  pniu@memsic.com

With a copy to:

 

Robert L.  Birnbaum Esq.

Foley Hoag LLP

155 Seaport Boulevard

Boston, MA  02210

Facsimile:  617-832-7000

E-mail:  rbirnbaum@foleyhoag.com

 

Unless otherwise specified herein, such notices or other communications shall be deemed received (a) on the date delivered, if delivered personally; (b) one (1) business day after being sent via overnight courier; or (c) three (3) business days after being sent, if sent by registered or certified mail.

 

8.            Successors and Assigns.

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Seller/Lessee may not assign its obligations hereunder without the prior written consent of the Buyer/Lessor, which shall not be unreasonably withheld.  Any assignment in contravention of this provision shall be void.  No assignment shall release the Seller/Lessee from any obligation or liability under this Agreement.

 

9.            Entire Agreement; Amendments; Attachments.

 

This Agreement, all Schedules and Exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written and all contemporaneous oral negotiations, commitments and understandings between such parties.  This Agreement may be modified or amended only by a written instrument executed by the Buyer/Lessor and the Seller/Lessee.

 

10.          Expenses.

 

The Buyer/Lessor and the Seller/Lessee shall each pay their own expenses in connection with this Agreement and the transactions contemplated hereby.

  

 

  

11.           Governing Law; Jurisdiction and Waiver of Jury Trial.

 

This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.  Buyer/Lessor and Seller/Lessee agree that any suit relating to this Agreement or the transactions contemplated thereby may be brought in the Courts of the Commonwealth of Massachusetts or any federal court sitting therein, and consent to the nonexclusive jurisdiction of such courts and service of process in any such suit being made upon the Buyer/Lessor or Seller/Lessee, as the case may be, at the address provided above.  Buyer/Lessor and Seller/Lessee each hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient forum.  Buyer/Lessor and Seller/Lessee each hereby waives its right to a trial by jury with respect to any action or claim arising out of any dispute in connection with this Agreement or any transaction contemplated hereby.

 

12.           Limitation on Liability.

 

In no event shall either party be liable or responsible for any special, indirect, incidental or consequential damages (including but not limited to damages for loss of profits, loss of revenues or claims by any customer of Seller/Lessee) arising out of or in connection with this Agreement or any performance or failure of performance by such party, even if such party has been advised of the possibility of such damages or losses.

 

13.           Miscellaneous.

 

The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document.

 

[Remainder of this page left blank]

  

 

  

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of and on the date first above written.

 

	  	
SELLER/LESSEE:

	  	  
	  	
ADVANCED MICROSENSORS, INC.

	  	  	  
	  	
By: 

	
/s/

	  	
Title: 

	
President and CEO

	  	
BUYER/LESSOR:

	  	  
	  	
MEMSIC, INC.

	 	 
	  	
By:

	
/s/

	  	
Title: 

	
President and CEO

  

 

  

Exhibit A

 

(Fixed Assets List)

	
Machine

	  	
Manufacturer

	  	
Serial No

	  	
Price

	  	  	  	  	  	  	  
	
*

	  	
*

	  	
*

	  	
*

 

*  Omitted – confidential treatment has been sought from the SEC.

  

  

  

  

   

Exhibit B

 

(Intellectual Property)

 

Intellectual Property for AMR sensor includes material (spec and part number) used in production, equipment information, process condition, process flow, recipe, product layer structure, testing procedure and script.[Exhibit 10.3]

 

TECHNOLOGY LICENSE AGREEMENT

 

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

 

Witnesseth:

 

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

 

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

 

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

 

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

 

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

 

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

  

 

  

 

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

 

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

 

ARTICLE 1

 

Definitions

 

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

 

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

 

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

 

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

 

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

 

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

  

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

 

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

 

ARTICLE 2

 

Rights And Licenses Granted By Quantum;

Deliverables; Technical Assistance

 

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

 

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

 

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

 

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

  

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

 

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

 

ARTICLE 3

 

Confidentiality

 

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

 

3.2           Permitted Disclosures.  The nonuse and nondisclosure obligations contained in this article shall not apply to the extent that (a) any receiving party (the “Recipient”) (i) is required to disclose information by law, order or regulation of a governmental agency or a court of competent jurisdiction, or (ii)  is required to disclose information to any governmental agency for purposes of obtaining approval to test or market a product or to apply for a patent on any improvement, provided that the Recipient shall provide written notice thereof to the other party and sufficient opportunity to request confidential treatment thereof, if confidential treatment is available under the circumstances and not otherwise being accorded; or (iii) discloses the Confidential Information to an attorney, consultant or agent bound by non-disclosure obligations at least as protective as the terms herein in connection with the fulfillment, administration or enforcement of the Agreement or (b) the Recipient can demonstrate that (i) the information was public knowledge at the time of such disclosure by the Recipient, or thereafter became public knowledge, other than as a result of acts attributable to the Recipient in violation hereof; (ii) the information was rightfully known by the Recipient (as shown by its written records) prior to the date of disclosure to the Recipient by the other party hereunder; (iii) the information was disclosed to the Recipient on an unrestricted basis from a Third Party not under a duty of confidentiality to the other party; or (iv) the information was independently developed by employees or agents of the Recipient without access to the Confidential Information of the other party.

  

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3.3           Discovery of Unauthorized Use.  Each party shall notify the other promptly upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information.

 

ARTICLE 4

 

Inventions And Patents

 

4.1           Ownership of Inventions.  As between the parties under this Agreement, Quantum or its licensors or successors (as the case may be) shall retain the entire, right, title and interest in the Technology developed prior to the Effective Date.  As between the parties, the ownership of all inventions, discoveries, processes, methods, compositions, formulae, techniques, information and data, whether or not related to the Technology, whether or not patentable, and any patent applications or patents based thereon, developed in the performance of  the parties’ activities under this Agreement (collectively, the “Inventions”) made after the Effective Date shall be owned solely by the party that invented or discovered such Inventions or jointly by the parties in the case of Inventions invented or discovered jointly.

 

4.2           Grantbank License.  AMS shall grant to Quantum a perpetual license to the Inventions created solely by AMS under Section 4.1, above, to develop, make, have made, use, sell, market and otherwise dispose of or exploit products and processes that incorporate or utilize such Inventions.  Such license shall include the right for Quantum to sublicense such rights, provided the sublicense is for the production of Quantum products.  Subject to the provisions herein, Quantum shall pay AMS commercially reasonable royalties for each license of an AMS Invention that it desires to license from AMS. However, if this Agreement should terminate, each such license shall become royalty free.  Quantum shall pay royalties owed to AMS under each such license for a particular Invention (or Inventions) under payment terms as mutually agreed.  AMS may terminate a particular license under this Section 4.2 only due to Quantum’s continued nonpayment of undisputed royalties owed to AMS under such license, provided that AMS has given Quantum at least thirty (30) days written notice to Quantum to cure its payment default and Quantum nonetheless fails to cure such default within such cure period.  Notwithstanding any provisions to the contrary, AMS shall not use any of its issued patents based on or derivative of the Technology to block or enjoin Quantum from practicing any of its or a third party’s independently discovered inventions.

  

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4.3           Patent Rights Generally.  Subject to the provisions of this article, each party shall be responsible for and shall control and pay for the preparation, filing, prosecution, maintenance and enforcement of its own patent applications and patents pertaining to its Inventions.  Each party shall cooperate with the other party and shall execute all lawful papers and instruments and make all rightful oaths and declarations as may be necessary in the preparation, filing, prosecution, maintenance and enforcement of all patent applications and patents as referred to in this Section.  Each party shall execute all lawful papers and instruments and shall take such other actions as the other party may reasonably request in order to record, perfect or protect the rights of the other party hereunder, including, without limitation, executing such patent licenses in recordable form as may be necessary to effect such purpose.

 

4.4           Enforcement.  Each party shall notify the other party of any infringement known to it of any rights in the Technology, and, if requested, shall provide the other party with the available evidence, if any, of such infringement.  Each party shall have the right, but not obligation to determine the appropriate course of action to enforce such rights or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce such rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to such rights, and shall consider, in good faith, the interests of the other party in so doing.

 

ARTICLE 5

 

Representations And Warranties

 

5.1           Mutual Representations.  Each party hereby represents and warrants to the other party as follows:

 

 5.1.1           Corporate Existence and Power.  Such party (a) is a legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, and (b) has the power and authority and the legal right to own and operate its property and assets, and to carry on its business as it is now being conducted.

 

 5.1.2           Authorization and Enforcement of Obligations.  Such party (a) has the power and authority and the legal right to enter into the Agreement and to perform its obligations hereunder and (b) has taken all necessary action on its part to authorize the execution and delivery of the Agreement and the performance of its obligations hereunder.  The Agreement has been duly executed and delivered on behalf of such party, and constitutes a legal, valid, binding obligation, enforceable against such party in accordance with its terms.

 

 5.1.3           No Consents.  All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by such party in connection with the Agreement and the performance hereof have been obtained.

 

 5.1.4           No Conflict.  The execution and delivery of the Agreement and the performance of such party’s obligations hereunder (a) do not conflict with or violate any requirement of applicable laws, and (b) do not conflict with, or constitute a default under, any of its contractual or other obligations of it.

 

5.2           Warranty by Quantum as to the Technology.  Notwithstanding any provisions to the contrary in this Agreement, Quantum’s warranty with respect to the Technology shall be limited to the following:  Quantum has received no written notice of any pending or threatened claims of infringement or misappropriation with respect to the Technology.

  

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5.3           THE WARRANTIES SET FORTH IN THIS ARTICLE 5 ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT.  ALL OTHER WARRANTIES ARE EXPRESSLY DISCLAIMED.  WITHOUT LIMITING THE FOREGOING DISCLAIMER, EXCEPT AS SET FORTH IN THIS AGREEMENT, NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE VALIDITY OR SCOPE OF ANY OF THE TECHNOLOGY.

 

ARTICLE 6

 

Term And Termination

 

6.1           Term.  This Agreement shall commence upon the Effective Date and shall continue unless and until terminated pursuant to this Article 6.

 

6.2           Termination for Cause.  In case Quantum, on the one hand, or AMS, on the other hand, fail to perform under or commits a material breach of any of the several covenants and conditions herein contained, the non-breaching party(ies) shall notify the breaching party(ies) in writing of such failure or default and the breaching party(ies) shall then have the right to remedy such failure or default by complying with the terms of this Agreement, and thereby making the notice null and void and of no effect.  If the breaching party(ies)  has not instituted a remedy or is not in the process of instituting a remedy within thirty (30) days of receipt of such notice, the aggrieved party may terminate this Agreement immediately by a further notice in writing.

 

6.3           Termination Due to Cessation of Business.  This Agreement may be terminated by either party immediately in the event any assignment is made by the other party for the benefit of creditors, or if a receiver, trustee in bankruptcy or similar officer shall be appointed to take charge of any or all of the other party's property, or if the other party ceases to operate as a going concern, or if the other party files a voluntary petition under federal bankruptcy laws or similar state statutes or such a petition is filed against the other party and is not dismissed within ninety (90) days.  Quantum may terminate this Agreement in the event that the assets which are to be used with the Technology are no longer in the possession of AMS and such assets are not replaced by other assets with which the Technology may be used.  Quantum may further terminate this Agreement if AMS defaults on the purchase note of the assets with which such Technology is to be used and fails to cure such default as provided in such purchase note.

  

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6.4           Termination Due to Change of Control of AMS.  Because of the highly sensitive nature of the Technology involved with this Agreement and the significant harm to Quantum’s business if this Technology were to be made available to any third party by whatever means, Quantum may terminate this Agreement if AMS enters into a Change of Control transaction with a third party without the prior written consent of Quantum.  Change of Control with respect to AMS shall mean the occurrence of any of the following events (whether or not pursuant to the U.S. Bankruptcy Code):  (a) any reorganization, consolidation or merger of AMS with or into any other entity in which the holders of such party’s outstanding shares immediately before such reorganization, consolidation or merger do not, immediately after such reorganization, consolidation or merger, retain stock representing a majority of the voting power of the surviving entity or stock representing a majority of the voting power of an entity that wholly owns, directly or indirectly, the surviving entity; (b) the sale, transfer or assignment of securities of AMS representing a majority of the voting power of all of AMS’s outstanding voting securities to an acquiring party or group; (c) the sale, transfer or assignment of securities of AMS representing ten percent (10%) or greater of the voting power of all of AMS’s outstanding voting securities to a Quantum Competitor or (d) the sale of all or substantially all of AMS’s assets.  Notwithstanding the foregoing, any pre-IPO financing of AMS by one or more venture capital firms or similar institutions will not be considered a “Change of Control” of AMS, provided that Quantum Competitors shall not directly or indirectly control securities of AMS representing ten percent (10%) or greater of the voting power of all of AMS’s outstanding voting securities.

 

6.5           Immediate Termination Due to Breach of Certain Covenants.  Notwithstanding any provisions to the contrary, Quantum shall have the right to terminate this Agreement, including any or all of the licenses granted, immediately upon AMS’s breach of Sections 2.4 and 3.1 of this Agreement.

 

6.6           Effect of Termination.  Termination of the Agreement shall not relieve the parties of any obligation accruing prior to such termination, and the provisions of Section 2.4 and Articles 3, 4, 5, 6, 7 and 9 shall survive the termination of the Agreement.  Upon termination of the Agreement by AMS under Section 6.2, above, by reason of breach by Quantum and not by reason of any breach by AMS, the licenses granted hereunder (including any limitations and restrictions) shall survive and continue in full force and effect.  AMS’s termination of the Agreement shall have no effect on Quantum’s (or its licensors’) control and ownership of the Technology.

 

ARTICLE 7

 

Indemnification; Limitation On Liability

 

7.1           Indemnification.

 

(a)           By AMS.  AMS shall indemnify, defend and hold harmless Quantum and its directors, officers, employees and agents (the “Quantum Parties”) from all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and costs) that they may suffer as a result of any and all claims, demands, actions or other proceedings made or instituted by any Third Party against any of them and arising out of (a) any recklessness or intentional misconduct by or on behalf of any of the AMS Parties (as defined below) in the performance of the activities contemplated by the Agreement, (b) any claim of product liability or defective product concerning any product made, used or sold by or under authority of AMS pursuant to any license granted under this Agreement, except to the extent those losses, liabilities, damages and expenses arise out of the intentional misconduct, recklessness or negligence of any of the Quantum Parties or the adherence by AMS to Quantum specifications or (c) any claim of property damage or personal injury, including death, to the extent caused by AMS.

  

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(b)           By Quantum.  Quantum shall indemnify, defend and hold harmless AMS and its directors, officers, employees and agents (the “AMS Parties”) from all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and costs) that they may suffer as a result of any and all claims, demands, actions or other proceedings made or instituted by any Third Party against any of them and arising out of any property damage or personal injury, including death, to the extent caused by Quantum.

 

7.2           Indemnification Procedure.  A party (the “Indemnitee”) that intends to claim indemnification under this article shall promptly notify the other party (the “Indemnitor”) of any loss, liability, damage or expense, or any claim, demand, action or other proceeding with respect to which the Indemnitee intends to claim such indemnification.  The Indemnitor’s indemnity obligations under this article shall not apply to amounts paid in any settlement if effected without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed.  The Indemnitor shall not settle or consent to an adverse judgment in any such claim, demand, action or other proceeding that adversely affects the rights or interests of any Indemnitee or imposes additional obligations on such Indemnitee, without the prior express written consent of such Indemnitee, which consent shall not be unreasonably withheld or delayed.  The Indemnitee, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action, claim or liability covered by this indemnification.

 

7.3           Limited Liability.  EXCEPT FOR A BREACH OF ARTICLES 2 AND 3, IN NO EVENT SHALL ANY PARTY HERETO (OR ITS SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS) BE LIABLE TO ANY OTHER PARTY OR ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, RELIANCE OR PUNITIVE DAMAGES, INCLUDING LOSS OF PROFITS OR GOODWILL, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR WITH RESPECT TO ANY CLAIM, DEMAND, ACTION OR OTHER PROCEEDING RELATING TO THIS AGREEMENT HOWEVER CAUSED, AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION SHALL NOT APPLY EITHER TO (I) FINAL DAMAGE AWARDS FOR THIRD PARTY CLAIMS FOR WHICH EITHER PARTY HAS AGREED TO INDEMNIFY THE OTHER UNDER THIS AGREEMENT, OR (II) ANY OTHER DIRECT DAMAGES OF A PARTY ARISING FROM CLAIMS, SUITS OR ACTIONS BY ANY THIRD PARTY FOR WHICH THE OTHER PARTY HAS AGREED TO INDEMNIFY SUCH PARTY UNDER THIS AGREEMENT.  The total liability of any party to the other party under any cause of action arising under or in connection with this Agreement and any theory of damages shall not exceed $2 million.  The limitation contained in the preceding sentence shall not apply to the parties’ indemnification obligations under this Agreement.

 

7.4           AMS’s Remedies for Quantum’s Breach of Warranty.  AMS’s sole and exclusive remedy for any breach by Quantum of its representation and warranty of Section 5.2, above, shall be the termination by AMS of this Agreement to the extent affected by the breach. Notwithstanding the preceding sentence, Quantum shall indemnify, defend and hold harmless AMS and its directors, officers, employees and agents (the “AMS Parties”) from all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and costs) that they may suffer as a result of any and all claims, demands, actions or other proceedings made or instituted by any Third Party against any of them and arising out of the incorporation or use of the Technology in Quantum products.

  

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ARTICLE 8

 

Force Majeure

 

No party shall be held liable or responsible to any other party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement to the extent, and for so long as, such failure or delay is caused by or results from causes beyond the reasonable control of the affected party including but not limited to fires, earthquakes, floods, embargoes, wars, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or other party.

 

ARTICLE 9

 

Miscellaneous

 

9.1           Notices.    All notices and other correspondence under this Agreement shall be in writing and shall be sufficiently given if delivered personally, if sent by facsimile transmission with proof of receipt by the recipient, or sent by DHL, Federal Express or comparable overnight courier with proof of receipt to the following addresses and addressees:

 

	
If to Quantum at:

	  	
Quantum Corporation

	  	
500 McCarthy Boulevard

	  	
Milpitas, CA 95035

	  	
Attention:

	
Andrew Kryder, General Counsel

With a copy (which will not constitute notice) to:

	  	
Cooley Godward, LLP

	  	
Five Palo Alto Square

	  	
3000 El Camino Real

	  	
Palo Alto, CA 94306

	  	
Attention:

	
Robert Jones, Esq.

If to AMS at:

 

	  	
Advanced MicroSensors

	  	
333 South Street

	  	
Shrewsbury, Massachusetts 01545

	  	
Attention:

	
Timothy Stucchi, President

  

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With a copy (which will not constitute notice) to:

	  	
Palmer & Dodge, LLP

	  	
One Beacon Street

	  	
Boston, MA 02108

	  	
Attention:

	
Mark A. Fischer, Esq.

 

9.2           Governing Law.  The validity of this Agreement, the construction and enforcement of its terms, and the interpretation of the rights and duties of the parties shall be governed by the laws of the United States and then the State of California, excluding the choice of law principles of that state, and shall not be governed by the United Nations Convention on Contracts for the International Sale of Goods.  Any and all disputes arising under or in connection with this Agreement shall be adjudicated in the appropriate state or federal courts located in Santa Clara County, California.  Each party hereby irrevocably consents to the personal jurisdiction of such courts for purpose of the adjudication of any such dispute.

 

9.3           Export Laws and Regulations.  Each party hereby acknowledges that the rights and obligations of the Agreement are subject to the laws and regulations of the United States relating to the export of products and technical information.  Without limitation, each party shall comply with all such laws and regulations.

 

9.4           Waivers and Amendments.  No change, modification, extension, termination or waiver of the Agreement, or any of the provisions herein contained, shall be valid unless made in writing and signed by duly authorized representatives of the parties hereto.

 

9.5           Entire Agreement.  The Agreement and the Exhibits attached hereto embody the entire understanding between the parties and supersede any prior understanding and agreements between and among them respecting the subject matter hereof, with the exception of the development agreement which may be executed by the parties and Lafe prior to, on or after the Effective Date.  In the event of conflict, if any, between this Agreement and the aforementioned development agreement, the terms of the development agreement will govern or prevail.  There are no representations, agreements, arrangements or understandings, oral or written, between the parties hereto relating to the subject matter of the Agreement which are not fully expressed herein.

 

9.6           Independent Contractors.  The parties hereto are independent contractors and are not, and shall not represent themselves as, principal and agent, partners or joint venturers.  No party shall attempt to act, or represent itself as having the power, to bind another party or create any obligation on behalf of another party.  Each party shall be solely responsible for the employment, direction and control of its employees and their acts.

 

9.7           Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law.  The parties agree that (i) the provisions of this Agreement shall be severable in the event that any of the provisions hereof are for any reason whatsoever invalid, void or otherwise unenforceable, (ii) such invalid, void or otherwise unenforceable provisions shall be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (iii) the remaining provisions shall remain enforceable to the fullest extent permitted by law.

  

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9.8           Assignment.

 

9.8.1            Quantum may assign or otherwise transfer this Agreement and the licenses granted hereby and the rights acquired by it hereunder in whole or in part in connection with (1) sale or transfer of all or substantially all of Quantum’s business, (2) sale or transfer of that part of Quantum’s business to which this Agreement relates, or (3) sale or transfer to one or more sublicensees.  If possible, Quantum will give AMS thirty (30) days prior written notice of such assignment or transfer.

 

9.8.2           Because of the highly sensitive nature of the Technology involved with this Agreement and the significant harm to Quantum’s business if this Technology were to be made available to any third party by whatever means, AMS may not assign, transfer or subcontract any of its rights under this Agreement (whether voluntarily, involuntarily, by way of merger, by operation of law or otherwise), and AMS may not assign, transfer or subcontract any of its obligations under this Agreement (whether voluntarily, involuntarily, by way of merger, by operation of law, or otherwise), without the consent of Quantum, which consent may be withheld or denied at its sole discretion.  Any attempted or purported assignment, transfer or subcontract by AMS of any of its rights or obligations under this Agreement, other than as expressly permitted in this Agreement, shall be null and void and of no force or effect.    

 

9.9           Captions. The captions herein have been inserted solely for convenience of reference and in no way define or limit the scope or substance of any provision of this Agreement.

 

9.10        Condition Precedent.  Notwithstanding any provisions to the contrary herein, this Agreement will not become effective, if at all, until an equity investment by Quantum Corporation pursuant to such Stock Purchase Agreement and related financing agreements are executed by Quantum Corporation and consummated.   Upon execution of such Stock Purchase Agreement and related financing agreements and upon execution of this Agreement by both parties herein, this Agreement shall become effective and shall have as the Effective Date the date indicated in the first paragraph of this Agreement.

 

In Witness Whereof, the parties have caused this Agreement to be executed and delivered as a document under seal by their duly authorized officers, as of the date first above written.

 

	
Quantum Corporation

	 	
Advanced MicroSensors, Inc.

	 	 	 
	
/s/

	 	
/s/

	
By:

	
Richard L. Clemmer

	 	
By:

	
Timothy Stucchi

	
Title:

	
EVP and CFO

	 	
Title:

	
Chief Executive Officer

	
Date:

	[blank]	
 

	 	  
	  	 	
Date:

	[blank]	
 

  

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Exhibit A

 

[Reserved for the “Intellectual Property Agreement” dated May 16, 1997 among MKQC, Quantum and MKE in its entirety.  For sake of convenience, the following are excerpts relevant to this Agreement:

1.13         “Intellectual Property” shall mean (i) all works in a tangible medium of expression and all U.S. and foreign copyrights (whether or not registered) thereon and applications therefor, existing as of the Effective Date; (ii) all computer software and programming code, including Object Code and Source Code; (iii) all trade secrets, know-how or proprietary information, whether or not reduced to writing, including but not limited to, ideas discoveries and inventions whether or not patentable, manufacturing and production processes and techniques, research and development information, prototypes, designs, concepts, specifications, diagrams, drawings, schematics, blueprints technical data, user manuals, documentation, plans, proposals, financial, marketing and business data, business and marketing plans, customer and supplier lists and information; (iv) mask works (whether or not registered), whether embodied in semiconductor chips, layout drawings, computer plots, masks, magnetic tape or other physical media, and registration or applications therefor; and (v) copies and tangible embodiments of all the foregoing, in whatever form or medium.]

  

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Exhibit B

[Reserved for the “Second Amended and Restated Plan of Liquidation of MKE-Quantum Components LLC.”]

  

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Exhibit C

[Reserved for the “Amendment and Assignment Agreement to the Intellectual Property Agreement” dated February 9, 1999.

For sake of convenience, the following are excerpts relevant to this Agreement:

1.2           “Distributed Intellectual Property” shall mean all Intellectual Property that is owned by MKQC as of the Final Dissolution Date.

 

1.3           “Distributed Patents” shall mean (i) all Assigned Patents under the Original Agreement; (ii) all other patents and patent applications owned by MKQC as of the Final Dissolution Date, whether such patents and patent applications arise from inventions by MKQC personnel or acquisition from third parties; (iii) all patents and patent applications that may arise in the future and claim priority from inventions made by MKQC personnel prior to the Final Dissolution Date; and (iv) all patents, both U.S. and foreign, which issue, directly or indirectly, or through continuation, continuation-in-part, or divisional applications or otherwise, from the foregoing.

 

1.4           “Final Dissolution Date” shall have the meaning given to it in the Plan of Liquidation.

 

1.5           The term “Intellectual Property” is hereby amended to delete the words “existing as of the Effective Date” from the third line of Article 1.13 of the Original Agreement.]

  

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Exhibit D

[Reserved for the “Amendment Number One to Amendment and Assignment Agreement to the Intellectual Property Agreement.”]

  

- 16 -

  

Exhibit E

 

Intellectual Property Not Licensed

The following are expressly not licensed to AMS under this Agreement:

Any know-how and/or Technology specifically related to Super DLT, including without limitation, all of the information disclosed to MKQC by Quantum in connection with the “STRM SPUT” process, which is a Quantum proprietary trade secret.

 

  

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[Exhibit 10.3 continued]

 

AMENDMENT AND SUPPLEMENT AGREEMENT

 

This Amendment and Supplement Agreement (this “Amendment”) is entered into as of June 1, 2003 by and between Advanced MicroSensors, Inc. (“AMS”) and Quantum Corporation (“Quantum”; together with AMS, the “Parties”).

 

Background

 

The Parties entered into a Technology License Agreement, effective as of ________, 1999 (the “Original License Agreement”), pursuant to which, among other things, Quantum granted AMS a perpetual, non-exclusive fully-paid, royalty-free, worldwide license to develop, make, have made, use, sell, market and otherwise dispose of or exploit products and process that incorporate or utilize certain defined Technology.  Sections 1.4 and 2.4 of the Original License Agreement excluded certain uses of the Technology.  The Parties have now agreed that certain of these exclusions, more fully described herein, should no longer apply.

 

Now, therefore, the Parties agree as follows:

 

1.      Revocation of Certain Exclusions.  The third and fourth sentences of Section 1.4 of the Original License Agreement is hereby revoked and deleted.  For avoidance of doubt, the Technology licensed by Quantum to AMS shall, as of the date of this Amendment, be deemed to include the technology described in Exhibit E to the Original License Agreement.  Clause (b) of the second sentence and the third sentence of Section 2.4 of the Original License Agreement are hereby revoked and deleted.  Notwithstanding anything in the Original License Agreement or any other agreement between the Parties, Quantum hereby agrees that AMS may, from and after the date of this Amendment, develop, make, have made, sell, market and otherwise dispose of Wafers that utilize the Technology for use in tape products without limitation.  For avoidance of doubt, this Amendment applies only to Technology in existence as of the Effective Date of the Original License Agreement and does not provide AMS with licenses to any technology developed by Quantum after said Effective Date.  Where applicable, such later-developed Quantum technology shall be governed by one or more separate agreements between the parties.

 

2.      Amended Agreement.  The Original License Agreement as amended and supplemented hereby is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed.  All capitalized terms used herein, unless specifically defined herein, shall have the meaning set forth in the Original License Agreement.

 

3.      Entire Agreement.  This Amendment and the Original License Agreement as amended hereby constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, promises, letters of intent, proposals, representations, understandings and negotiations, whether or not reduced to writing, among and between the parties respecting the subject matter hereof and thereof.

  

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4.      Effective Date.  This Amendment shall become effective as of the date first written above upon the execution hereof by each of the Parties.

 

5.      Governing Law.  The validity of this Amendment, the construction and enforcement of its terms, and the interpretation of the rights and duties of the Parties hereunder shall be governed as set forth in Section 9.2 of the Original License Agreement.

 

6.      Counterparts.  This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have caused this Amendment and Supplement Agreement to be executed by their duly authorized officers as of the date and year first above written.

 

	  	
QUANTUM CORPORATION

	  	  
	  	
By:

	
/s/

	  	  	
Curt Kane

	  	  	
VP Supply Chain Management

  

	  	
By:

	
/s/

	  	  	
Sandy Stewart

	  	  	
Director of Heads Engineering

   

	  	
ADVANCED MICROSENSORS, INC.

	  	  
	  	
By:

	
/s/

	  	  	
Timothy C. Stucchi

	  	  	
CEO and President

 

  

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