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: (i) [****] content, access to which may
be lawfully provided solely to users who certify that they are
at least 18 years of age; and (ii) media (e.g. videos, CDs and
DVDs) containing the content described in (i), but only to the
extent that the rights to create the content and/or media
described in (i) and (ii) above have been licensed by
Immersion prior to the Effective Date under the Licensed
Patents to another party on an exclusive basis.
b. "CONDITIONAL PATENTS" means Patents for which the grant of
licenses, releases, or freedom from suit to Microsoft or
Microsoft Subsidiaries for sublicensing or passing through to
a Sublicensee, on the terms and conditions set forth herein,
results in an obligation to pay, or the payment of, additional
royalties by Immersion or its Subsidiaries to third parties
(except for payments among Immersion and its Subsidiaries, and
payments made to third parties for inventions made by said
third parties while employed by or under an obligation to
assign inventions to Immersion or any of its Subsidiaries).
c. "FOUNDRY PRODUCT" means a product which is designed by or for
a third party without substantial input from the Sublicensee,
and manufactured, reproduced, sold, leased, licensed or
otherwise transferred from the Sublicensee to that third
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PROVIDED UNDER RULE 408
party (or to customers of, or as directed by, that third
party) on essentially an exclusive basis
d. "GAME PLATFORM" means: (i) a proprietary consumer computing
platform manufactured for the purpose of running game software
licensed and written for that platform; (ii) any peripheral
device (such as a game pad, joystick or wheel) intended to be
used with the computing platform referenced in (i) above, so
as to receive input from or transmit output to the user; (iii)
game software licensed and written for the computing platform
referenced in (i) above; (iv) software development tools used
to produce the game software described in (iii) above; and (v)
network services to support online gaming activity, including,
for example, player match making, data warehousing and voice
and chat communications. Sony's PlayStation and Nintendo's
GameCube and GameBoy platforms are examples of a Game
Platform.
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 any hardware product, software
product, or combination of hardware and software that uses
Touch Technology for the medical treatment of patients, the
training of medical personnel for medical procedures, or the
simulation of any medical procedure. General purpose hardware
or software whose primary function is not the delivery of one
of the foregoing is not a Medical Product.
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 SONY PRODUCTS" means:
(i) handheld mobile entertainment or productivity devices
(e.g. a downloadable media player device or a PDA),
and portable keyboards, styluses or pens (and
replacement components) distributed in connection
with such handheld mobile entertainment or
productivity devices, except to the extent that such
devices constitute Adult Products, Medical Products,
or Foundry Products; and
(ii) handheld mobile communications devices (e.g., a cell
phone) distributed under a Sony or Sony Subsidiary
brand, 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 Sony Product.
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PROVIDED UNDER RULE 408
j. "SONY" means Sony Corporation, Sony Computer Entertainment,
Inc., Sony Computer Entertainment of America, Inc., and any
and all of their Subsidiaries.
k. "SONY LAWSUIT" means 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), as such action pertains to Sony.
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 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.
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PROVIDED UNDER RULE 408
(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 [****] in the [****];
(ii) [****] if the Game Platform Sublicense is entered
into within the thirty (30) day period immediately
prior to the then most recently [****] in the [****];
(iii) [****] if the Game Platform Sublicense is entered
into during the time period the [****] of the [****]
is underway, but prior to the delivery of [****] for
the [****] to be [****] to Immersion (if any) in the
[****]; or
(iv) the greater of [****] or the amount that is [****] of
any [****] that has been [****] in the [****] 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
[****] 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 [****].
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
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PROVIDED UNDER RULE 408
effective until [****] renders all compensation required under
the Game Platform Sublicense to be paid [****] as of the
effective date of such Game Platform Sublicense. At the time
of making payment to Immersion for [****] 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 [****].
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 Sony 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 25% 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, 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
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PROVIDED UNDER RULE 408
promptly provide Microsoft with sufficient documentation of
[****] to enable Microsoft to determine and confirm the
payment owed to Microsoft in the event of such a [****].
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, from any [****] or could have
[****]. The Immersion obligations set forth in the foregoing
sentence shall be contingent on [****] (for no additional
consideration or payment whatsoever from Immersion) [****] or
that could have been [****] or based on or [****].
g. SUBLICENSING REVENUE FROM SONY/ERICSSON 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 Sony Products to Sony - Ericsson Mobile
Communications, Microsoft shall be entitled to receive [****]
of 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 Sony acquires
majority ownership of Sony - Ericsson Mobile Communications,
the aforementioned percentage shall be increased to [****].
h. CONDITIONAL PATENTS. Immersion on behalf of itself and its
Subsidiaries, agrees that upon written request, it will grant
to Microsoft and Microsoft Subsidiaries to the broadest extent
and under the most favorable terms and conditions (including
the most favorable royalty terms) which Immersion then has the
ability or right to do, a license, release and covenant with
respect to any Conditional Patents under the terms,
conditions, licenses and covenants granted herein, (i.e. of
such scope as to permit the sublicense of such Conditional
Patents on the terms set forth herein). Such license, release
and covenant shall be granted under a separate agreement upon
payment to Immersion of the additional royalty or other
consideration which Immersion or any of its Subsidiaries is
obligated to pay to a third party because of the grant of such
license, release or covenant thereunder. In the event that
Immersion's obligation to pay a particular licensor is based
on a percentage of Immersion's sublicensing revenues from such
Conditional Patents, Microsoft and Immersion agree to
negotiate a reasonable payment based on the fair market value
of the sublicense of such Conditional Patents. If Immersion
sublicenses such Conditional Patents to other parties, the
fair market value shall be no more than the best terms that
Immersion grants or has granted to other sub-licensees for the
same or similar sublicense.
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.
6
PROVIDED UNDER RULE 408
j. LIMITATION. Microsoft's right to grant sublicenses to [****]
or other third parties pursuant to this Section 2 shall only
be effective during the twenty-four (24) month period
following the Effective Date; provided, however, that any such
sublicense granted by Microsoft pursuant to this Section 2
during such twenty-four (24) 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.
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;
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PROVIDED UNDER RULE 408
(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;
(v) it has not assigned or otherwise transferred or
subrogated any interest in any of its claims that are
the subject of the Sony Lawsuit, and, except in
connection with an assignment by Immersion permitted
by Section 8(d), will not assign or otherwise
transfer or subrogate any interest (other than in the
proceeds) in any of its claims that are the subject
of the Sony Lawsuit;
(vi) [****];
(vii) as of the Effective Date, the issued Licensed Patents
owned by Immersion are subsisting and have not lapsed
or otherwise become abandoned;
(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
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PROVIDED UNDER RULE 408
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.
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.
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PROVIDED UNDER RULE 408
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, Intellectual Attention: Vice President,
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.
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 Sony
Corporation, Sony Computer Entertainment, Inc., Sony Computer
Entertainment of America, Inc., Nintendo, Inc., or any of
their Subsidiaries or successors. This Sublicense
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PROVIDED UNDER RULE 408
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
effective as delivery of an originally executed counterpart of
this Sublicense Agreement.
[Remainder of page intentionally left blank]
11
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:
CONFIDENTIAL TREATMENT REQUESTED - EDITED COPY
EXHIBIT A
ROYALTIES FOR ROYALTY-BEARING SONY 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 Sony 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. Portable keyboards, styluses or pens bundled with handheld mobile
entertainment or productivity devices shall not bear a separate
royalty; the only royalty payable shall be on the underlying handheld
mobile entertainment or productivity devices with which such portable
keyboards, styluses or pens are intended to be used.
