Exhibit 10.4
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.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "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 under certain patent rights more fully described below; and
WHEREAS, Microsoft desires to acquire a license under such patent
rights, 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. "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.
E. "LICENSED PRODUCT" means all hardware, software, and services,
excluding Adult Products, Medical Products, and Foundry
Products.
F. "MEDICAL PRODUCT" means any [****]. General purpose hardware
or software whose primary function is not the delivery of one
of the foregoing is not a Medical Product.
G. [****].
H. [****].
PROVIDED UNDER RULE 408
I. "PATENT" means any patent, patent application, provisional
application, continuation, continuation-in-part, divisional,
reissue, renewal, reexamination, utility model, design patent,
and foreign counterparts thereof.
J. "PERIPHERAL DEVICE" means [****]. For example, [****] is a
"Peripheral Device" as each of those devices [****].
Similarly, a [****] is also a "Peripheral Device," as each of
those [****]. For purposes of this Agreement, the Parties
expressly agree that:
(I) [****] shall not be deemed a "Peripheral Device" for
purposes of this definition and this Agreement, even
if it includes or comprises [****];
(II) a [****] is not a "Peripheral Device," even if it
includes or comprises [****]; and
(III) any [****] with any of the devices identified in (i)
or (ii) above is a Peripheral Device (for example, a
[****] is a "Peripheral Device").
K. "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 Party
hereto, 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 Party hereto, but such corporation, company
or other entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.
L. "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.
M. All terms not defined herein shall have the meaning set forth
in the Settlement Agreement and Mutual Release executed by
Microsoft and Immersion simultaneously with the execution of
this Agreement (the "SETTLEMENT").
2. LICENSE RIGHTS.
A. LICENSE TO LICENSED PATENTS. Subject to the terms of this
Agreement, Immersion, on behalf of itself and its
Subsidiaries, hereby grants to Microsoft and its Subsidiaries
a worldwide, perpetual, paid-up, irrevocable, non-terminable,
royalty-free and non-exclusive license under the Licensed
Patents to make, have made, use, lease, distribute, have
distributed, publish, have published, import, offer for sale,
provide as a service, sell, or otherwise dispose of Licensed
Products.
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PROVIDED UNDER RULE 408
B. SUBLICENSING RIGHTS. Immersion, on behalf of itself and its
Subsidiaries, hereby irrevocably and non-terminably grants to
Microsoft and its Subsidiaries the worldwide, royalty-free
(subject to the terms of Section 2(e)), paid-up right to
sublicense the Licensed Patents (excluding Patents not
directed to Touch Technology) to third parties [****]. The
right to sublicense shall exclude the following fields of use:
(I) Medical Products, Adult Products or Foundry Products;
(II) hardware, (a) to the extent that [****];
(III) software and services, to the extent that [****]; and
(IV) [****].
In the event that at [****].
C. COMBINATIONS. Immersion, on behalf of itself and its
Subsidiaries, hereby covenants not to xxx any third party,
under any Licensed Patent claim, for making, using, selling,
importing, offering for sale, providing as a service, leasing,
distributing or otherwise disposing of a Licensed Product
created or distributed by or for Microsoft or a Microsoft
Subsidiary in combination with one or more other items
licensed by, or sold or manufactured by or for, such third
party, but only to the extent that:
(I) the sale of the Licensed Product by Microsoft (or one
of its Subsidiaries) would, absent this Agreement,
constitute direct or contributory infringement of
such Licensed Patent claim; and
(II) such Licensed Patent claim would not be directly or
contributorily infringed by such other item(s)
separate and apart from the combination with such
Licensed Product. For the purposes of this Section,
the determination of infringement above shall assume
the existence of any necessary knowledge or intent
required to constitute contributory infringement.
D. PRODUCT/SERVICE RELATED MATERIALS. Immersion, on behalf of
itself and its Subsidiaries, hereby represents, warrants and
covenants not to xxx Microsoft or any Microsoft Subsidiary for
contributory infringement or induced infringement of the
Licensed Patents arising out of the publication or
distribution of product and/or service-related: (1)
documentation for a Microsoft or Microsoft Subsidiary Licensed
Product (e.g., reference designs, specifications, etc.), and
(2) marketing, training and/or support relating to a Microsoft
or Microsoft Subsidiary Licensed Product. The foregoing
sentence shall not be construed to provide customers of
Microsoft or Microsoft Subsidiaries with any implied licenses
or sublicenses.
E. CONDITIONAL PATENTS. Immersion on behalf of itself and its
Subsidiaries, agrees that [****].
F. TRANSFER OF PATENTS. Immersion agrees that any transfer or
assignment of the Licensed Patents shall be subject to the
licenses granted to Microsoft and Microsoft's Subsidiaries
under this Agreement. [****]
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PROVIDED UNDER RULE 408
G. OWNERSHIP. Except as expressly licensed to Microsoft in this
Agreement, Immersion retains all right, title and interest in
and to the Licensed Patents. Immersion reserves all rights not
expressly granted in this Agreement.
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, nineteen million nine hundred thousand dollars (USD
$19,900,000), in consideration of the rights and covenants set forth
herein.
4. ADDITIONAL RIGHTS, OBLIGATIONS/RESTRICTIONS.
A. NO OBLIGATIONS. Notwithstanding any other provision of this
Agreement, Microsoft will have no obligation to market, sell
or otherwise distribute Licensed Products.
B. MEMBERSHIP IN MICROSOFT TOOL AND MIDDLEWARE PROGRAMS.
Immersion will have the right to apply for and participate in
all publicly available Microsoft tool and middleware programs
in accordance with their standard terms, conditions, and fees.
C. NO RESTRICTIONS. Nothing in this Agreement will be construed
as restricting Microsoft's ability to acquire, license,
develop, manufacture or distribute for itself, or have others
acquire, license, develop, manufacture or distribute on its
behalf, similar technology performing the same or similar
functions as the technology subject to the Licensed Patents,
or to market and distribute such similar technology in
addition to, or in lieu of, the technology subject to the
Licensed Patents.
D. MAINTENANCE OF PATENTS. In the event Immersion plans to forego
payment of any maintenance fees or not take any other steps
required to maintain Immersion's rights under any of the
Licensed Patents, Immersion shall assign, without additional
compensation, all right, title, and interest in and to the
applicable Licensed Patents to Microsoft. If any of the
Licensed Patents lapses (other than by expiration), then
Immersion will promptly use its best efforts to revive the
patent. It shall not be a breach of this Agreement, and the
above provisions of this Section 4(d) shall not apply, if a
Licensed Patent lapses because of an inadvertent failure to
pay any maintenance fees or inadvertent failure to take any
other steps required to maintain Immersion's rights under any
of the Licensed Patents.
5. CONFIDENTIALITY. The terms and conditions, but not the existence, of
this Agreement shall be treated as confidential information by the
Parties, and neither Party shall disclose the terms or conditions of
this Agreement to any third party (other than its Subsidiaries licensed
pursuant to this Agreement) without the prior written permission of the
other Party. Each Party, however, shall have (a) the right to represent
to third parties that such Party is licensed for the products and
patents as provided by this Agreement, and (b) 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
4
PROVIDED UNDER RULE 408
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, each Party may disclose the terms and conditions
of this 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.
6. 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 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 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) [****];
(V) [****];
(VI) as of the Effective Date, there are no actual or
threatened lawsuits or claims relating to the
Licensed Patents other than (i) the Lawsuit (as
defined in the Settlement), (ii) contract, business
or licensing discussions with existing or potential
licensees and customers, and (iii) 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
(VII) 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 Agreement and assume the
obligations hereunder.
C. DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 6(a) AND
6(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 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 Agreement
is or will be free from infringement by patents, copyrights,
trade secrets, trademarks, or other
5
PROVIDED UNDER RULE 408
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, or (b) as a warranty that
Immersion will be successful in securing the grant of any
patent or any reissue or extensions thereof. 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.
7. TERM; TERMINATION.
A. TERM. Unless terminated by Microsoft pursuant to Section 7(b),
the term of this 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 Agreement
may not be terminated by Immersion, even in the event of
Microsoft's breach of this Agreement. Notwithstanding the
foregoing, Microsoft may terminate this 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 Agreement, (i) such termination shall not
terminate or otherwise affect any sublicenses granted by
Microsoft under this Agreement prior to such termination, and
(ii) Sections 5, 6, 7(b), 8, and 9 shall survive. Termination
of this Agreement by Microsoft shall not in any way affect or
relieve Microsoft's obligations to make payment pursuant to
Section 2(e).
8. LIMITATION OF LIABILITIES.
NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR SPECIAL DAMAGES RELATING TO THIS AGREEMENT, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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PROVIDED UNDER RULE 408
9. GENERAL.
A. NOTICES. All notices and requests in connection with this
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 Property Attention: Vice President, 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: Law & Corporate Affairs
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 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. GOVERNING LAW. This 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 Agreement or
to interpret any provision of this Agreement, the prevailing
Party shall be entitled to recover its reasonable attorneys'
fees, costs and other expenses.
D. ASSIGNMENT. This 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
Agreement or any or all of its rights under the 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 uses the licenses granted herein,
provided that (i) such purchaser of a Microsoft business may
use the assigned rights solely as necessary to operate such
purchased Microsoft business, (ii) the assignee's license
rights under Section 2(a) shall exclude the fields of use
specified in Sections 2(b)(ii) and (iii), and (iii) in any
case Microsoft
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PROVIDED UNDER RULE 408
may not assign any of its rights under this Agreement to
[****]. This 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 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 Agreement, or portion
thereof, to be unenforceable, that provision of the Agreement
will be enforced to the maximum extent permissible so as to
effect the intention of the Parties, and the remainder of this
Agreement will continue in full force and effect. Failure by
either Party to enforce any provision of this Agreement will
not be deemed a waiver of future enforcement of that or any
other provision. This 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 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
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 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 Agreement. Delivery of an
executed counterpart of this Agreement by facsimile
transmission shall be effective as delivery of an originally
executed counterpart of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
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SIGNATURE PAGE TO THE
LICENSE AGREEMENT
-------------------------------------------
IN WITNESS WHEREOF, the Parties have entered into this 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:
