Exhibit 10.5
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
EXHIBIT, WHICH PORTIONS HAVE BEEN OMITTED AND REPLACED WITH [****] AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
SUBLICENSE AGREEMENT
THIS SUBLICENSE AGREEMENT ("SUBLICENSE AGREEMENT") is entered into and is
effective on this 25th day of July, 2003 (the "EFFECTIVE DATE") by and between
MICROSOFT CORPORATION, a Washington corporation with principal offices in
Redmond, Washington ("MICROSOFT") and IMMERSION CORPORATION, a Delaware
corporation with principal offices in San Jose, California ("IMMERSION"), each a
"PARTY" and collectively, the "PARTIES."
RECITALS
WHEREAS, Immersion has the right to grant a license to Microsoft and its
Subsidiaries to enable Microsoft and its Subsidiaries to grant the below
described sublicenses to third parties, under certain patent rights more fully
described below; and
WHEREAS, Microsoft desires to acquire a sublicensing right under such
patent rights and Immersion desires to grant such a sublicensing right, all on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Parties agree as follows:
AGREEMENT
1. DEFINITIONS.
A. "ADULT PRODUCT" means: [****].
B. "CONDITIONAL PATENTS" means [****].
C. "FOUNDRY PRODUCT" means [****].
D. "GAME PLATFORM" means: [****].
E. "GAME PLATFORM VENDOR" means an entity which distributes a Game
Platform under its own name.
F. "LICENSED PATENTS" means all Patents under which Immersion or any of
its present or future Subsidiaries owns or has as of the Effective
Date (or as of the acquisition date in the case of future
Subsidiaries), or thereafter obtains, the ability or right to grant
licenses, releases or freedom from suit, with the exception of
Conditional Patents.
G. "MEDICAL PRODUCT" means [****]. General purpose hardware or software
whose primary function is not the delivery of one of the foregoing
is not a Medical Product.
PROVIDED UNDER RULE 408
H. "PATENT" means any patent, patent application, provisional
application, continuation, continuation-in-part, divisional,
reissue, renewal, reexamination, utility model, design patent, and
foreign counterparts thereof.
I. "ROYALTY-BEARING [****] PRODUCTS" means:
(I) [****] except to the extent that such devices constitute Adult
Products, Medical Products, or Foundry Products; and
(II) [****], except to the extent that such devices constitute
Adult Products, Medical Products, or Foundry Products.
A handheld device having a primary purpose of playing games shall be
deemed to fall within the "Game Platform" definition and is not a
Royalty-Bearing [****] Product.
J. [****]
K. [****]
L. "SUBLICENSEE" means any entity to which Microsoft may grant a
sublicense in accordance with this Sublicense Agreement.
M. "SUBSIDIARY" means a corporation, company or other entity: (i) fifty
percent (50%) or more of whose outstanding shares or securities
(representing the right to vote for the election of directors or
other managing authority) are, now or hereafter, owned or
controlled, directly or indirectly, by a given entity, but such
corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists; or (ii)
which does not have outstanding shares or securities, as may be the
case in a partnership, joint venture or unincorporated association,
but fifty percent (50%) or more of whose ownership interest
representing the right to make the decisions for such corporation,
company or other entity is, now or hereafter, owned or controlled,
directly or indirectly, by a given entity, but such corporation,
company or other entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.
N. "TOUCH TECHNOLOGY" means technology related to calculating,
processing, amplifying, communicating, transmitting, controlling,
applying, producing, using, or enhancing touch sensations or
information related to the sense of touch (e.g., resistance,
texture, force). Examples include force feedback, vibration, and
tactile response applications.
2. SUBLICENSING RIGHTS AND PAYMENTS.
A. SUBLICENSE RIGHTS FOR GAME PLATFORM VENDORS.
(I) Grant of Rights. Immersion on behalf of itself and its
Subsidiaries, hereby grants to Microsoft and its Subsidiaries
the worldwide, irrevocable, non-terminable right, subject to
and during the period set forth in Section 2(j), to sublicense
Game Platform Vendors and their Subsidiaries under the
Licensed Patents (excluding Patents not directed to Touch
Technology) to:
(1) make, have made, use, lease, distribute, have
distributed, publish, have published, import, provide as
a service, offer to sell, sell or
2
PROVIDED UNDER RULE 408
otherwise dispose of such Game Platform Vendor's and its
Subsidiaries' Game Platforms; and
(2) further sublicense third party software developers to
use such Game Platform Vendor's and its Subsidiaries'
Game Platform software development tools to develop
games solely for such Game Platforms.
(II) Delivery of Copy of Game Platform Sublicense. Microsoft's
grant of such a sublicense to a Game Platform Vendor is
referred to herein as a "GAME PLATFORM SUBLICENSE." Except as
set forth in the last sentence of Section 2(c), Microsoft
shall provide Immersion with a copy of the fully executed Game
Platform Sublicense within ten (10) days after the Game
Platform Sublicense is executed by Microsoft and the
applicable Game Platform Vendor.
B. COMPENSATION FOR GAME PLATFORM VENDORS [****]. As Immersion's entire
compensation with respect to each individual sublicense granted
under Section 2(a) above to a particular Game Platform Vendor
[****], (a) Microsoft shall pay Immersion [****] within ten (10)
days of Microsoft's granting any such Game Platform Sublicense, and
(b) thereafter Microsoft shall pay Immersion [****] of the cash
amounts (if any, and including royalty payments and upfront, annual
or other license fees) received by Microsoft from such Game Platform
Vendor for the Game Platform Sublicense in excess of [****]
("ADDITIONAL SUBLICENSING REVENUE") within thirty (30) days of
Microsoft's receipt of any such Additional Sublicensing Revenue.
C. COMPENSATION FOR [****] GAME PLATFORM SUBLICENSE. In the event
Microsoft grants [****] a Game Platform Sublicense on the terms set
forth in Section 2(a) above, the following terms shall apply in
place of the terms of Section 2(b). Within ten (10) days after
Microsoft grants [****] the Game Platform Sublicense, Microsoft
shall pay Immersion:
(I) [****] if the Game Platform Sublicense is entered into prior
to the date that is thirty (30) days prior to the then most
recently [****];
(II) [****] if the Game Platform Sublicense is entered into within
the thirty (30) day period immediately prior to the then most
recently [****];
(III) [****] if the Game Platform Sublicense is entered into during
the time period the [****] is underway, but prior to the
delivery of [****] to Immersion (if any) [****]; or
(IV) the greater of [****] or the amount that is [****] of any
[****] that has been [****] if the Game Platform Sublicense is
entered into after the delivery of the [****] referenced in
(3) above. Microsoft shall be entitled to deduct [****] of the
cash amount received by Microsoft [****] for the Game Platform
Sublicense from the amounts payable under this clause (4);
provided that the amount payable by Microsoft under this
clause (4) will in no event be less than [****].
3
PROVIDED UNDER RULE 408
In any of the cases described under clauses (1) - (4) above, the
Parties shall each be entitled to [****] of the cash amounts (if
any, and including royalty payments and upfront, annual or other
license fees) received by Microsoft [****] for the Game Platform
Sublicense in excess of the applicable amount specified in such
clauses (1) - (4) (after implementation of the calculation specified
in clause (4)). Any license grant [****] under the Game Platform
Sublicense shall not become effective until [****] renders all
compensation required under the Game Platform Sublicense to be paid
by [****] as of the effective date of such Game Platform Sublicense.
At the time of making payment to Immersion for the [****] Game
Platform Sublicense, Microsoft shall also provide Immersion with a
fully executed copy of the [****] Game Platform Sublicense.
D. MICROSOFT'S RIGHT TO SUBLICENSE [****] FOR ADDITIONAL
[****]PRODUCTS. Immersion on behalf of itself and its Subsidiaries,
hereby grants to Microsoft and its Subsidiaries the worldwide,
irrevocable, non-terminable right, subject to and during the period
set forth in Section 2(j), to sublicense [****] under the Licensed
Patents (excluding Patents not directed to Touch Technology) to
make, have made, use, offer to sell and sell or otherwise distribute
Royalty-Bearing [****] Products, subject to the royalty obligations
set forth in Exhibit A. In the event Microsoft and [****] execute an
agreement for such a sublicense, Immersion shall pay Microsoft
[****] within ten (10) days after the execution thereof. Within ten
(10) days after execution of any sublicense under this Section 2(d),
Microsoft shall provide a fully executed copy thereof to Immersion.
E. PAYMENTS TO MICROSOFT IN THE EVENT IMMERSION [****] PRIOR TO
MICROSOFT GRANTING [****] A GAME PLATFORM SUBLICENSE. In the event
Immersion elects in its discretion to [****] prior to Microsoft's
granting [****] the Game Platform Sublicense (and regardless of
whether such [****] occurs during or after the twenty-four (24)
month period following the Effective Date), then Immersion shall pay
Microsoft an amount determined as follows:
(I) If Immersion [****] for an amount of [****] up to and
including [****], then Immersion shall pay Microsoft the sum
of [****].
(II) If Immersion [****] for an amount in excess of [****] up to
and including [****], then Immersion shall pay Microsoft the
sum of [****] plus an additional amount equal to [****] of the
amount of the settlement in excess of [****] up to and
including [****].
(III) If Immersion [****] for an amount in excess of [****], then
Immersion shall pay Microsoft the sum specified in the
preceding clause (3) plus an additional amount equal to [****]
of the amount of the settlement in excess of [****].
The [****] amounts specified in clauses (i) - (iii) above shall
include all amounts, including all royalty payments and upfront,
annual or other license fees (regardless of when received), received
by Immersion on account of any license, [****], or similar
consideration granted by Immersion to [****] in respect of the
Licensed Patents, including for fields of use outside of the area of
Game Platforms, and(a) in connection with the [****], including any
agreement, license,
4
PROVIDED UNDER RULE 408
sublicense, option, investment, or other transaction associated with
[****], and (b) with respect to any other agreement, license,
sublicense, option, investment, or other transaction entered into
during the time period that is the lesser of (1) the period set
forth in Section 2(j), or (2) eighteen (18) months after [****]. Any
amounts due under this Section 2(e) shall be paid to Microsoft
within ten (10) days of Immersion's [****]. Immersion further agrees
to promptly provide Microsoft with sufficient documentation of
[****] to enable Microsoft to determine and confirm the payment owed
to Microsoft in the event of such [****].
F. [****]. Within five (5) days after Microsoft grants [****] a Game
Platform Sublicense and pays Immersion the amount due under Section
2(c), Immersion, for no additional consideration or payment
whatsoever (whether from Microsoft or [****]) will: (i) [****]; and
(ii) [****] licensees, distributors, and customers, direct and
indirect, [****]. The Immersion obligations set forth in the
foregoing sentence shall be contingent on [****] (for no additional
consideration or payment whatsoever from Immersion) [****].
G. SUBLICENSING REVENUE FROM [****] JOINT VENTURE. If, during the
period set forth in Section 2(j), Immersion grants a third party the
right to grant licenses for the equivalent of Royalty-Bearing [****]
Products to [****], Microsoft shall be entitled to receive [****] f
all amounts received on account of the grant of such rights,
including all royalty payments and upfront, annual or other license
fees (regardless of when received). All such amounts shall be paid
to Microsoft no than thirty (30) days after receipt by Immersion. In
the event that [****], the aforementioned percentage shall be
increased to [****].
H. CONDITIONAL PATENTS. Immersion on behalf of itself and its
Subsidiaries, agrees that [****].
I. OWNERSHIP. Except as expressly licensed to Microsoft in this
Sublicense Agreement, Immersion retains all right, title and
interest in and to the Licensed Patents. Immersion reserves all
rights not expressly granted in this Sublicense Agreement.
J. LIMITATION. Microsoft's right to grant sublicenses to [****] or
other third parties pursuant to this Section 2 shall only be
effective during the [****] month period following the Effective
Date; provided, however, that any such sublicense granted by
Microsoft pursuant to this Section 2 during such [****] month period
shall be effective for the life of the Licensed Patents or for such
lesser duration as Microsoft and the applicable sublicensee may
agree, in their sole discretion.
5
PROVIDED UNDER RULE 408
3. PAYMENT. Within five (5) days after the Effective Date, Microsoft shall
pay Immersion by cashier's check, wire transfer or other immediately
available funds, one hundred thousand dollars (USD $100,000), in
consideration of the rights and covenants set forth herein. The payment
referenced in this Section 3 is in addition to any payments that Microsoft
may be obligated to make to Immersion under Sections 2(b), 2(c) or 2(h) of
this Sublicense Agreement.
4. CONFIDENTIALITY. The terms, conditions, and existence of this
Sublicense Agreement shall be treated as confidential information by
the Parties, and neither Party shall disclose the existence, terms or
conditions of this Sublicense Agreement to any third party (other than,
in the case of Microsoft, to [****] and to any other Game Platform
Vendor entering into a Game Platform Sublicense) without the prior
written permission of the other Party. Each Party, however, shall have
the right to make disclosures to the extent required by an order of
court, regulation of another governmental body, or otherwise by law or
by a stock exchange, provided that the Party shall promptly provide
written notice to the non-disclosing Party of the intended disclosure
and of the court order or regulation prior to such disclosure and that
the Party shall take all reasonable steps to minimize such disclosure
by, for example, obtaining a protective order and/or appropriate
confidentiality provisions requiring that such information to be
disclosed be used only for the purpose for which such law, order,
regulation or requirement was issued. Additionally, (i) each Party may
disclose the terms and conditions of this Sublicense Agreement to the
extent reasonably necessary, under a suitable confidentiality
agreement, to its accountants, attorneys, financial advisors and in
connection with due diligence activities relating to the sale of the
stock or a portion of the business of a Party or its Subsidiaries, and
(ii) Immersion shall be permitted to disclose to [****] and any other
Game Platform Vendor entering into a Game Platform Sublicense the
permitted scope of Microsoft's sublicense rights under this Sublicense
Agreement, provided that Immersion gives Microsoft notice of such
proposed disclosure and Microsoft does not respond within thirty (30)
days after such notice.
5. WARRANTIES.
A. IMMERSION. Immersion represents, warrants, and covenants that:
(I) it has the full power and has taken the necessary and
appropriate steps to enter into this Sublicense Agreement and
assume the obligations hereunder;
(II) it has the right to license the Licensed Patents, and it has
the full power and has taken the necessary and appropriate
steps to enter into this Sublicense Agreement and assume the
obligations hereunder, and to grant the license rights and
covenants set forth herein;
(III) it has not previously and will not grant any rights in the
Licensed Patents to any third party that are inconsistent with
the rights granted to Microsoft herein;
(IV) it has not previously and will not grant during the period set
forth in Section 2(j) to any third party the right to grant
[****] the sublicense rights granted in Sections 2(a) herein;
6
PROVIDED UNDER RULE 408
(V) it has not assigned or otherwise transferred or subrogated any
interest [****], and, except in connection with an assignment
by Immersion permitted by Section 8(d), will not assign or
otherwise transfer or subrogate any interest [****];
(VI) [****];
(VII) [****];
(VIII) as of the Effective Date, there are no actual or threatened
lawsuits or claims relating to the Licensed Patents other than
the action in the United States District Court for the
Northern District of California entitled Immersion Corporation
v. Sony Computer Entertainment of America, Inc., Sony Computer
Entertainment Inc., and Microsoft Corporation, Northern
District of California Case No. C02-00710 CW (WDB), contract,
business or licensing discussions with existing or potential
licensees and customers, and as set forth in Schedule 3.12 to
the Series A Redeemable Convertible Preferred Stock Purchase
Agreement executed by the Parties on even date herewith; and
(IX) as of the Effective Date, Immersion believes, in good faith,
that the issued Licensed Patents owned by Immersion are valid
and enforceable.
B. BY MICROSOFT. Microsoft represents, warrants, and covenants that it
has the full power and has taken the necessary and appropriate steps
to enter into this Sublicense Agreement and assume the obligations
hereunder.
C. DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 5(a) AND 5(b)
ABOVE, THE PATENTS ARE PROVIDED "AS IS" AND WITHOUT WARRANTY OF ANY
KIND. EACH PARTY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NON-INFRINGEMENT.
Nothing in this Sublicense Agreement shall be construed (i) as a
warranty or representation by Immersion as to the validity or scope
of any Licensed Patents; (ii) as a warranty or representation that
anything made, used, sold or otherwise disposed of under any license
or sublicense granted in or under this Sublicense Agreement is or
will be free from infringement by patents, copyrights, trade
secrets, trademarks, or other rights of third parties; (iii) as
granting by implication, estoppel or otherwise any licenses or
rights under patents or other intellectual property rights of
Immersion other than expressly granted herein; or (iv)(a) to require
Immersion to file any patent application, (b) as a warranty that
Immersion will be successful in securing the grant of any patent or
any reissue or extensions thereof, or (c) to require Immersion to
pay any maintenance fees or take any other steps to maintain
Immersion's patent rights. Immersion does not assume any
responsibility for the manufacture of any product that is
manufactured or sold by or for Microsoft or Microsoft's
Subsidiaries, or their sublicensees. All warranties in connection
with such products shall be made by the manufacturer or seller of
such products.
6. TERM; TERMINATION.
7
PROVIDED UNDER RULE 408
A. TERM. Unless terminated by Microsoft pursuant to Section 6(b), the
term of this Sublicense Agreement shall be from the Effective Date
until the expiration of the last to expire of the Licensed Patents.
B. TERMINATION. The parties expressly agree that this Sublicense
Agreement may not be terminated by Immersion, even in the event of
Microsoft's breach of this Sublicense Agreement. Notwithstanding the
foregoing, Microsoft may terminate this Sublicense Agreement in its
sole discretion and at any time upon thirty (30) days' written
notice in advance to Immersion. In the event Microsoft elects to
terminate this Sublicense Agreement, (i) such termination shall not
terminate or otherwise affect any sublicenses granted by Microsoft
under this Sublicense Agreement prior to such termination, and (ii)
Sections 4, 5, 6(b), 7, 8, and 9 shall survive. Termination of this
Sublicense Agreement by Microsoft shall not in any way affect or
relieve either of the Parties of the payment obligations set forth
in Sections 2(b), 2(c), 2(d) and 2(h) of this Sublicense Agreement.
7. LIMITATION OF LIABILITIES.
NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR SPECIAL DAMAGES RELATING TO THIS SUBLICENSE AGREEMENT, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8. GENERAL.
A. NOTICES. All notices and requests in connection with this Sublicense
Agreement will be given in writing and will be deemed given as of
the day they are received either by messenger, delivery service, or
in the mails of the United States of America, postage prepaid,
certified or registered, return receipt requested, and addressed as
follows:
TO: MICROSOFT TO: IMMERSION
Microsoft Corporation Immersion Corporation
Attention: Vice President, Attention: Vice President,
Intellectual Property Legal Affairs
One Microsoft Way 000 Xxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000 Xxx Xxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Copy to: Vice President, Litigation
Fax: (000) 000-0000
or to such other address as the Party to receive the notice or
request so designates by written notice to the other.
B. INDEPENDENT CONTRACTORS. The Parties are independent contractors,
and nothing in this Sublicense Agreement will be construed as
creating an employer-employee relationship, a partnership, or a
joint venture between the Parties. Neither Party will have the power
to bind the other Party or incur obligations on the other Party's
behalf without the other Party's prior written consent.
8
PROVIDED UNDER RULE 408
C. DISPUTE RESOLUTION. This Sublicense Agreement shall be construed and
controlled by the laws of the State of Washington, and each Party
consents to exclusive jurisdiction and venue in the federal courts
sitting in King County, Washington, unless no federal subject matter
jurisdiction exists, in which case each Party consents to exclusive
jurisdiction and venue in the Superior Court of King County,
Washington. Each Party waives all defenses of lack of personal
jurisdiction and forum non-conveniens. Process may be served on
either Party in the manner authorized by applicable law or court
rule. In any action to enforce any right or remedy under this
Sublicense Agreement or to interpret any provision of this
Sublicense Agreement, the prevailing Party shall be entitled to
recover its reasonable attorneys' fees, costs and other expenses.
D. ASSIGNMENT. This Sublicense Agreement will be binding upon and inure
to the benefit of each Party's respective successors and lawful
assigns. Microsoft will have the right to assign this Sublicense
Agreement or any or all of its rights under this Sublicense
Agreement, in whole or in part (in any case together with all
restrictive terms continuing with such assignment) to any purchaser
of any Microsoft business that grants the sublicenses authorized
herein; provided, that Microsoft may not make any such assignment to
[****]. This Sublicense Agreement may be assigned by Immersion to
any acquiror of all or substantially all of the business or assets
of Immersion, or in connection with a merger. Microsoft and
Immersion will each have the right to merge or consolidate without
the prior approval of the other Party. Except as permitted above,
assignment of this Sublicense Agreement, whether by contract,
operation of law, or otherwise, will be void.
E. CONSTRUCTION. If for any reason a court of competent jurisdiction
finds any provision of this Sublicense Agreement, or portion
thereof, to be unenforceable, that provision of the Sublicense
Agreement will be enforced to the maximum extent permissible so as
to effect the intention of the Parties, and the remainder of this
Sublicense Agreement will continue in full force and effect. Failure
by either Party to enforce any provision of this Sublicense
Agreement will not be deemed a waiver of future enforcement of that
or any other provision. This Sublicense Agreement has been
negotiated by the Parties and their respective counsel and will be
interpreted fairly in accordance with its terms and without any
strict construction in favor of or against either Party.
F. ENTIRE AGREEMENT. This Sublicense Agreement constitutes the entire
agreement between the Parties with respect to the subject matter
hereof and merges all prior and contemporaneous communications
regarding the subject matter hereof. This Sublicense Agreement will
not be modified except by a written agreement dated subsequent to
the Effective Date and signed on behalf of Immersion and Microsoft
by their respective duly authorized representatives. This Sublicense
Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the Sublicense
Agreement. Delivery of an executed counterpart of this Sublicense
Agreement by facsimile transmission shall be
9
PROVIDED UNDER RULE 408
effective as delivery of an originally executed counterpart of this
Sublicense Agreement.
[Remainder of page intentionally left blank]
10
-------------------------------------------
SIGNATURE PAGE TO THE
GAME CONSOLE SUBLICENSE AGREEMENT
-------------------------------------------
IN WITNESS WHEREOF, the Parties have entered into this Sublicense
Agreement as of the Effective Date written above.
IMMERSION CORPORATION
By:
----------------------------------
XXXXXX XXXXXX
President, Chief Executive Officer
and Chief Financial Officer
MICROSOFT CORPORATION
By:
----------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
EXHIBIT A
ROYALTIES FOR ROYALTY-BEARING [****] PRODUCTS
1. In the event Microsoft grants [****] the additional license rights
referenced in Section 2(d), Microsoft shall arrange for [****] to pay
royalties directly to Immersion as described below.
A. The royalty applicable to each unit of a given type of
Royalty-Bearing [****] Product that is licensed, sold, or otherwise
distributed or disposed of by any entity licensed under the
sublicense granted pursuant to Section 2(d) of the Sublicense
Agreement (a "UNIT") shall be the greater of:
(I) [****] per Unit; or
(II) [****] of the wholesale cost of production of such Unit.
B. Alternatively, at [****] option, in the event that Immersion has
entered into an agreement with a party other than [****] (excluding
(i) the License Agreement entered into by Microsoft and Immersion
simultaneously with the execution of this Agreement, (ii) any other
agreement with a third party in connection with the [****]; and
(iii) any agreement under which Immersion receives a license or
[****] from such third party) (a "THIRD PARTY AGREEMENT") in which
Immersion grants such third party rights under the Licensed Patents
of equivalent scope to the rights sublicensed to [****] under
Section 2(d), if, taken as a whole, the terms of such Third Party
Agreement are more favorable than the terms of the agreement entered
into by [****] and Microsoft pursuant to Section 2(d) ("SECTION 2(D)
AGREEMENT"), [****] may elect that all material terms of such Third
Party Agreement shall apply to [****] in place of the Section 2(d)
Agreement. In the event of such an election by [****] and Microsoft
shall terminate the Section 2(d) Agreement, and Immersion and [****]
will enter into an agreement containing all such material terms of
such Third Party Agreement.
2. Except as otherwise agreed by [****] and Immersion, royalties payable for
Units shall be paid within 30 days after the end of the calendar quarter
in which [****] receives revenue for such Unit and to a bank account
designated by Immersion.
3. [****] bundled with [****] shall not bear a separate royalty; the only
royalty payable shall be on the underlying [****] which such [****]
intended to be used.
A-1
