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EXHIBIT 10.14
SEMICONDUCTOR DEVICE
COMPONENT PURCHASE AGREEMENT
This Semiconductor Device Component Purchase Agreement (the "Agreement")
is entered into by and between Immersion Corporation, a California corporation,
having its principal place of business at 0000 Xxxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxx (hereinafter "Immersion") and Kawasaki LSI U.S.A. Inc., a California
corporation, having its principal place of business at 0000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx 00000 (hereinafter "KLSI"). The effective date
of this Agreement will be the date last signed below ("Effective Date").
RECITALS
WHEREAS, Immersion and KLSI have entered into an Agreement for ASIC
Design and Development, effective as of October 16, 1997 (the "ASIC
Design Agreement") under which the parties have designed and developed
an integrated circuit device which provides an optimized version of the
force-feedback functions delivered by the Immersion proprietary force
feedback firmware; and
WHEREAS, KLSI has agreed to manufacture and sell such integrated circuit
devices to Immersion, on an exclusive basis, for resale by Immersion
under the licenses and terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and agreements set
forth below and the other consideration cited herein, the parties agree
as follows:
1. DEFINITIONS.
In this Agreement, the following words and expressions shall have the following
meanings:
1.1. "AFFILIATE" means any corporation or business entity which is
controlled by, controls, or is under common control of an
Immersion customer. For this purpose, the meaning of the word
"control" shall include, without limitation, direct or indirect
ownership of more than fifty percent (50%) of the voting shares
of interest of such corporation or business entity.
1.2. "COMPONENT" means the "AXIS Chip" which is an integrated circuit
device designed to provide an optimized version of the
force-feedback functions delivered by the Immersion proprietary
force feedback firmware. The AXIS Chip was designed and developed
under the terms of the ASIC Design Agreement by KLSI and
Immersion and is further described in the Specification, but does
not include any firmware or hexcode to be loaded or loaded into
such devices. The Components will be produced in a .5 CBA format,
a .35 CBA format and a .35 standard cell format.
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1.3. "DEFECT" means (i) with respect to the Components, defects in
such Components which cause such Components not to operate in
conformance with the Specification and/or a defect in the
materials and/or workmanship of the Component and/or (ii) with
respect to the Documentation, defects in the Documentation which
render the Documentation inaccurate, erroneous or otherwise
unreliable.
1.4. "DELIVERABLES" shall mean the PLSSOP, the testable Prototype
Units, the First Articles and Documentation, as defined and
developed under the terms of the ASIC Design Agreement.
1.5. "DOCUMENTATION" means the Specification, the VHDL File for the
AXIS Chip and other documentation that accompanied the
Deliverables provided by KLSI to Immersion as required under the
ASIC Design Agreement.
1.6. "FIRST ARTICLES" shall mean a limited number of units of the
Components, in a given format (.5 CBA, .35 CBA or .35 standard
cell) as mutually agreed upon by the parties, which are
manufactured as a test run for review and acceptance by Immersion
prior to full production of the Component for sale to Immersion
under the terms of this Agreement.
1.7. "POST LAYOUT SIMULATION SIGN OFF PACKAGE" or "PLSSOP" shall mean
the computer generated simulation of the Prototype Unit that is a
model of the Prototype Unit and that is used to review the
features and functionality which will be present in the Prototype
Unit, as defined and developed under the terms of the ASIC Design
Agreement.
1.8. "PROTOTYPE UNITS" shall mean initial working testable units of
the Components that conform to the PLSSOP and the Specifications,
as defined and developed under the terms of the ASIC Design
Agreement.
1.9. "SECOND SOURCE" means an alternative silicon provider licensed by
KLSI to produce a specific format (.35 CBA or .35 standard cell)
of the Component for KLSI, as a "back-up" resource for KLSI's
manufacturing obligations or licensed by Immersion to produce the
Component for Immersion.
1.10. "SPECIFICATION" means the Component specification in Exhibit A
("Specification") for each of the .0 XXX, .00 XXX and .35
standard cell formats.
2. PURCHASE OF COMPONENTS.
2.1. PURCHASE OF COMPONENTS BY IMMERSION.
2.1.1. COMPONENTS. The parties will agree upon a limited number
of units of the Components to be manufactured as First
Articles and which will serve as a test run for review
and acceptance by Immersion prior to full production of
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each of the formats (.5 CBA, .35 CBA or .35 standard cell) of the
Components under the terms of this Agreement. KLSI will not make
any changes to the design, materials, manufacturing (including
source and location) or processes without Immersion's prior
written consent. KLSI agrees to manufacture and sell to Immersion
and Immersion agrees to purchase from KLSI (by means of purchase
orders issued by Immersion to KLSI) the production units of the
Components, under the terms of this Agreement, for use by
Immersion and resale by Immersion to Immersion's customers and to
the Affiliates. KLSI will be the exclusive manufacturer of such
Components except as provided herein and the Components will be
sold exclusively to Immersion. Immersion makes no representation
or guarantee as to the quantity of Components that Immersion may
purchase under this Agreement. KLSI represents that KLSI has the
manufacturing capacity to fulfill, on a timely basis, all
Immersion orders for the Components and agrees to make good faith
efforts to increase capacity in order to fulfill Immersion's
requirements. Upon request by Immersion, KLSI will disclose
information to Immersion as necessary to demonstrate KLSI's
production readiness and ability to achieve steady cost effective
production.
2.1.2. HEXCODE. Prior to shipment of the Components to Immersion or an
Immersion customer or Affiliate, hexcode or firmware code will
need to be incorporated into each Component. KLSI and Immersion
agree that Immersion (in the case of Components to be shipped to
Immersion) or Immersion's customers or the Affiliates (in the
case of Components to be shipped to such customers or Affiliates)
will supply the required hexcode or firmware code directly to
KLSI for incorporation into the applicable Component. KLSI will
cause such firmware or hexcode and a vendor identification number
(which is supplied by Immersion or Immersion's customer or the
Affiliates, as applicable, directly to KLSI) to be loaded into
specified Components prior to delivery of such Components to
Immersion, Immersion's customers or the Affiliates, as
applicable. Subsequently, for each new release of firmware or
hexcode which is requested by Immersion or Immersion's customer
or the Affiliates to be implemented in Components to be purchased
(by Immersion for Immersion's use or for resale to Immersion's
customer or the Affiliates, as applicable) Immersion or
Immersion's customer or the Affiliates, as applicable, will
provide such firmware or hexcode to KLSI. Immersion will impose
an obligation on each Immersion customer and Affiliate, by means
of the contract between Immersion and such customer or Affiliate,
under which each such customer or Affiliate will be required to
provide the firmware or hexcode to KLSI in compliance with KLSI's
required lead time for Component orders involving new masks so as
to allow sufficient time for the new mask to be created and
implemented in such Components. Immersion and KLSI agree that the
lead time for orders
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involving new masks will be [****] longer than the usual [****]
lead time described in Section 4 ("Lead Times and Minimum Order
Quantities") for the particular format (.5 CBA, .35 CBA or .35
standard cell). KLSI will provide ceramic prototypes within two
(2) to three (3) weeks of a ROM spin.
2.2. SECOND SOURCE.
2.2.1. SECOND SOURCE SILICON PROVIDER OBLIGATION. KLSI will enter into
contractual relationships with certain silicon providers under
which each such silicon provider will stand ready to act as a
"back-up" Second Source for KLSI ("the Second Source Silicon
Provider Agreement") for the Components. Two different Component
designs will require a Second Source: (i) Components without an
analog to digital converter; and (ii) Components with an analog
to digital converter.
2.2.1.1. COMPONENTS WITHOUT AN ANALOG TO DIGITAL CONVERTER. Under
the terms of the Purchase Order No. 11305 dated June 30,
1998 (executed July 2, 1998), KLSI is obligated to
migrate the .35 CBA Component to a .35 standard cell
Component without the analog to digital converter.
Therefore, KLSI will enter into a Second Source Silicon
Provider Agreement to produce a .35 standard cell
Component as a back-up for both: (i) the .35 standard
cell Component without the analog to digital converter;
and (ii) the .35 CBA Component for those Component
orders which do not require the .35 CBA Component with
an analog to digital converter. KLSI further agrees that
the Second Source for the .35 standard cell without the
analog to digital converter will be capable of producing
such Components within thirty (30) days after the
completion of the migration from the .35 CBA to the .35
standard cell without an analog to digital converter.
For purposes of the previous sentence, the migration
shall be deemed complete upon Immersion's acceptance of
the .35 standard cell prototypes.
2.2.1.2. COMPONENTS WITH AN ANALOG TO DIGITAL CONVERTER. If
Immersion's orders for the .35 CBA with the analog to
digital converter reach [****]units per month, or [****]
is designing a [****] force feedback gaming product that
uses a Component requiring an analog to digital
converter (each a "Migration Trigger Event"), then,
within [****] of receiving notification of a Migration
Trigger Event from Immersion, KLSI shall begin the
migration of the .35 CBA Component with an analog to
digital converter to a .35 standard cell Component with
an analog to digital converter. KLSI shall
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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complete the migration within [****] from the
date of such notification. KLSI shall bear all
costs and expenses of the migration, but the
parties acknowledge that KLSI may recover the
actual, documented costs of the migration by
[****] of the .35 standard cell Components [****]
or until the date [****] following the first sale
of the .35 standard cell Component with an analog
to digital converter to Immersion, whichever is
earlier. KLSI will enter into a Second Source
Silicon Provider Agreement to produce a .35
standard cell Component with an analog to digital
converter within [****] after it begins the
migration of the .35 CBA Component to the .35
standard cell Component with an analog to digital
converter. KLSI further agrees that the Second
Source for the .35 standard cell Components with
the analog to digital converter will be capable
of producing such Components within [****] after
the completion of the migration from the .35 CBA
to the .35 standard cell with an analog to
digital converter. For purposes of the previous
sentence, the migration shall be deemed complete
upon Immersion's acceptance of the .35 standard
cell prototypes.
2.2.1.3. SECOND SOURCE PROCEDURES. In any case where the
Die Bank System die are used as a resource by
such .35 standard cell Second Source to source
.35 CBA format Components, in KLSI's discretion,
the die used will be credited to Immersion's Die
Bank System account and replenished by KLSI at no
charge to Immersion. KLSI will provide an entire
manufacturing package of all of the Deliverables,
specifications, technology and other materials
which will be needed by each such Second Source
Silicon provider in order to manufacture the
applicable Components. Although it is the intent
of the parties that KLSI will manufacture the
Components as the primary silicon provider, it is
understood and agreed that KLSI may subcontract
the manufacture of Components to such Second
Sources, on a periodic basis, as necessary for
KLSI to be in compliance with its obligations
hereunder. KLSI will determine, in the case of
each Component order, whether such Components
will be manufactured by KLSI or by the applicable
Second Source silicon provider. KLSI will be in
the role of "governing seller" and therefore,
Immersion will purchase all Components from KLSI
(including the Components which are manufactured
by the Second Source silicon providers), except
that under a specified set of circumstances
described in Section 2.2.5 ("Trigger Events")
Immersion may, in its discretion, purchase
Components directly from KLSI's Second Source
silicon providers. Prior to
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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execution of each Second Source Silicon Provider
Agreement, KLSI will identify each Second Source
silicon provider to Immersion.
2.2.2. TECHNOLOGY LICENSE TO THE SECOND SOURCE. Immersion
hereby grants KLSI a limited license, to sublicense each
Second Source silicon provider to utilize the Immersion
Preexisting Technology and Immersion Requested Revisions
(as defined in the ASIC Design Agreement) solely to
manufacture the Components under the terms of the
applicable Second Source Silicon Provider Agreement. In
addition, KLSI will license the Non-Immersion Technology
(as defined in the ASIC Design Agreement) to each Second
Source silicon provider so as to permit manufacture of
the Components by the applicable Second Source silicon
provider.
2.2.3. TERMS TO BE IMPOSED ON THE SECOND SOURCE SILICON
PROVIDER. KLSI will subcontract with each Second Source
silicon provider, under the terms of the Second Source
Silicon Provider Agreement, to obtain the applicable
Components from such Second Source silicon provider and
Immersion will be a third party beneficiary of each
subcontract between KLSI and KLSI's designated Second
Source silicon providers. KLSI, under the terms of each
Second Source Silicon Provider Agreement, will require
each such Second Source silicon provider to comply with
the lead times, cancellation and rescheduling terms and
minimum order quantities that are included in this
Agreement and the Quality Requirements included in any
Ancillary Agreements between KLSI and Immersion's
customers or Affiliates. KLSI will impose an obligation
on each Second Source silicon provider to sign an
Ancillary Agreement (which is identical to the KLSI
Ancillary Agreement) directly with Immersion's customers
or the Affiliates in any case where KLSI has entered
into such an agreement.
2.2.4. ESCROW ACCOUNT. KLSI recognizes that certain breaches of
KLSI's obligations under the terms of this Agreement
and/or the Ancillary Agreements may require prompt
implementation of business solutions to remedy such
breaches, including but not limited to, solutions which
allow Immersion and Immersion's customers or the
Affiliates (through purchases from Immersion) to obtain
the Components from an alternative source. KLSI agrees
to deposit all of the Deliverables (excluding First
Articles) specifications, technology and other materials
which would be needed by a Second Source silicon
provider to manufacture the Components (the "Second
Source Device Deposit") into an escrow account held by
an escrow agent, mutually agreed upon by the parties.
The Second Source Device Deposit can be accessed by
Immersion for delivery to a Second Source silicon
provider, of Immersion's choice, upon the occurrence of
certain events ("Trigger Events"). The occurrence of the
Trigger Events will be identified by Immersion by
written notice to the
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escrow agent in accordance with the terms of Section
2.2.6 ("Trigger Event Process"). Such escrow agreement
(the "Second Source Device Deposit Escrow Agreement")
will be between KLSI, Immersion and the escrow agent and
will be attached hereto as Exhibit D ("Second Source
Device Deposit Escrow Agreement"). KLSI will be
required, under the terms of the Second Source Device
Deposit Escrow Agreement to promptly deposit any future
updates or revisions to the Second Source Device Deposit
with the escrow agent.
2.2.5. TRIGGER EVENTS. The parties agree that in the following
situations described in (i), (ii) and (iii) below,
Immersion will be entitled to take certain steps to
mitigate KLSI's breach: (i) If KLSI is not in compliance
with the Quality Requirements directly imposed by
Immersion's customers or the Affiliates on KLSI under
the terms of the Ancillary Agreements, (ii) if KLSI is
in material breach of its delivery obligations to
Immersion for orders placed by Immersion for Immersion's
use or orders placed by Immersion for resale to
Immersion's customers or the Affiliates (and Immersion
therefore may be in breach of its obligations to its
customers or the Affiliates under the terms of the
agreements between Immersion and Immersion's customers
or the Affiliates, or (iii) if the Components delivered
to Immersion for Immersion's use or for sale to
Immersion's customers or the Affiliates by Immersion
exceed the warranty defect frequency levels permitted
under the terms of Section 5.3 ("Warranty Defect
Frequency Levels"). If any of the events described in
(i), (ii) or (iii) above occur and are not cured within
the thirty (30) day notice period described in Section
2.2.6 ("Trigger Event Process"), such event will be
deemed to be a "Trigger Event" under the Second Source
Device Deposit Escrow Agreement.
2.2.6. TRIGGER EVENT PROCESS. On the basis of Immersion
customer or Affiliate input, or in the case where the
Components purchased by Immersion are exhibiting
warranty defect frequency levels in excess of those
permitted under the terms of Section 5.3 ("Warranty
Defect Frequency Levels"), Immersion may, in Immersion's
discretion, send a written notice to KLSI, the
applicable Second Source silicon provider and the escrow
agent for the Second Source Device Deposit escrow
account, advising KLSI that if the noncompliance with
the Quality Requirements, material breach of the
delivery obligations to Immersion or excessive warranty
defect frequency levels, as applicable, are not cured
within [****] from receipt of Immersion's notice, that
the noncompliance with the Quality Requirements,
material breach of the delivery obligations to Immersion
or excessive warranty defect levels, as applicable, will
be deemed to be a "Trigger Event" under the Second
Source Device Deposit Escrow Agreement. The Second
Source Device Deposit will be released by the escrow
agent to Immersion for delivery to a Second Source
silicon
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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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provider of Immersion's choice upon the occurrence of a
Trigger Event. Notwithstanding the foregoing, Immersion
will still have the right, but not the obligation, to
purchase the Components from KLSI after occurrence of
the Trigger Event and although the rescheduling rules
described in Exhibit B ("Cancellation and Rescheduling
Polices and Fees") will still be in effect, Immersion
may cancel orders without obligation to pay cancellation
fees or base wafer maintenance invoices after the
Trigger Event (and KLSI will credit any base wafer
maintenance fees or die bank fees already paid, which
are not applied to base wafers actually used, to
Immersion's account within [****] of the Trigger Event).
2.2.7. IMMERSION'S SECOND SOURCE. Immersion may choose, in
Immersion's sole discretion, to designate any of KLSI's
Second Source silicon providers as Immersion's Second
Source silicon providers after occurrence of the Trigger
Event. Immersion will notify KLSI as to the Second
Source silicon providers selected by Immersion. KLSI
hereby grants Immersion a limited license to sublicense
the Second Source silicon providers selected by
Immersion to utilize the Non-Immersion Technology after
a Trigger Event so as to permit manufacture of the
Components by such Second Source silicon providers.
2.3. PURCHASE OF COMPONENTS BY IMMERSION'S CUSTOMER'S AFFILIATES. KLSI
acknowledges that Immersion's customers may be permitted, under
the terms of the agreement between Immersion and each of
Immersion's customers, to submit purchase orders for the
Components from the customer's Affiliates (on behalf of one or
more of such Affiliates) and KLSI further acknowledges that
Immersion may agree to process such orders as though the order
was an Immersion customer Component purchase order (i.e., receive
orders directly from the Affiliate, drop ship directly to the
Affiliate, invoice the Affiliate and handle returns and warranty
returns directly with the Affiliate). Immersion will require
Immersion's customer by contract, to impose on each Affiliate, by
means of a written agreement, prior to the placement of the first
Component order to Immersion by any Affiliate, all obligations
imposed on Immersion's customer under the terms of this Agreement
and the applicable Ancillary Agreement, if any. KLSI agrees to
enter into Ancillary Agreements with such Affiliates and in
response to Immersion's purchase orders, to ship Components
directly to such Affiliates under the same terms imposed upon
KLSI by this Agreement with respect to the Immersion customers.
2.4. SPECIFICATION ESCROW. KLSI acknowledges that in addition to the
Second Source Device Deposit escrow account which is for the
benefit of Immersion, Immersion's customers (or the Affiliates)
may request Immersion to escrow the Specification for the
Components for the benefit of Immersion's customers (or the
Affiliates). KLSI shall promptly provide to Immersion any future
updates or revisions to the Specification for deposit by
Immersion with the escrow agent.
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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3. ORDERING PROCEDURE.
3.1. FORECASTING. Immersion will require, by contract, that
Immersion's customers and/or Affiliates provide Immersion with a
written nonbinding [****] rolling forecast, updated by the first
day of each month, which describes the quantity of each
Component, by format (.5 CBA, .35 CBA or .35 standard cell), by
part number, proposed to be purchased by each Immersion customer
and Affiliates, by month. Immersion will provide a copy of such
forecasts directly to KLSI, accompanied by a written nonbinding
[****] rolling forecast for Immersion's own usage of Components,
by the fifteenth of each month. Immersion may, in its discretion,
integrate such forecast information into a single forecast. Such
forecasts will be invalid unless placed by Immersion's designated
purchasing agent.
3.2. PURCHASE ORDERS.
3.2.1. PURCHASE ORDER PROCESS. Immersion will issue purchase
orders to KLSI, specifying the end customer, the
shipping address, the Components by part number and
designating the hexcode or firmware to be loaded into
the Components. Such purchase orders may be submitted by
written, faxed or electronic means. KLSI will accept
Immersion's purchase orders and acknowledge such orders
in writing, to Immersion, within [****] of receipt. Such
purchase orders will be invalid unless placed by
Immersion's designated purchasing agent. The terms and
conditions of this Agreement shall apply to all orders
submitted by Immersion to KLSI and supersede any
different or additional terms on Immersion's or KLSI's
purchase orders, order acknowledgments or invoices, as
applicable.
3.2.2. SHIPMENT AND DELIVERY. KLSI will ship all components to
Immersion, Immersion's customers and the Affiliates, FOB
Narita, Japan. KLSI will provide Immersion with KLSI's
standard packaging specifications for Immersion's prior
approval. All Components will be shipped in accordance
with such standard packaging specifications unless
otherwise agreed to by KLSI and Immersion in writing, in
advance. KLSI will provide Immersion with all documents
that Immersion, Immersion's customers or the Affiliates
need to receive possession of the Components and to
ship, import and export the Components. KLSI shall use
best efforts to make deliveries to Immersion,
Immersion's customers and the Affiliates of orders so
accepted, promptly and within [****] of (before or
after) scheduled delivery dates. For purposes of this
Agreement, a "scheduled delivery date" is the date the
shipment leaves KLSI's dock FOB Narita, Japan.
3.2.3. LATE DELIVERIES. KLSI will promptly notify Immersion of
any possible delays and Immersion may elect in writing
to cancel any orders which
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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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KLSI (i) advises will not be delivered as scheduled (and
will be more than [****] late) or (ii) which are not
delivered as scheduled (and are more than [****] late)
and (iii) in either case, the cause of the late delivery
was attributable solely to KLSI, KLSI's Second Source
and/or other KLSI suppliers. Such cancellations by
Immersion will not be subject to the cancellation rules
and fees described in Exhibit B ("Cancellation and
Rescheduling Policies and Fees"). If Immersion does not
cancel a late order (meaning the shipment will be
received more than [****] after the scheduled delivery
date), KLSI will pay the premium transportation charges
necessary to meet Immersion's delivery obligations, or
to mitigate the delay. Allowing Immersion to cancel late
orders and payment of premium shipping are remedies
intended to mitigate KLSI's breach of its delivery
obligations and Immersion's acceptance of any such
remedies in no way waives Immersion's right to all other
available remedies. Orders which will not be delivered
or are not delivered in accordance with the scheduled
delivery date and which are canceled by Immersion will
nevertheless be counted as purchased for purposes of
quantity discounts, if any. Immersion shall not be
liable to Immersion's customers or the Affiliates for
any damages to Immersion's customers or the Affiliates
or to any other person for KLSI's failure to fill any
orders, or for any delay in delivery or error in filling
any orders for any reason whatsoever. KLSI agrees to
indemnify, defend and hold Immersion harmless from any
claim by any Immersion customer or Affiliate which is
based on KLSI's failure to fill any orders or for any
delay in delivery or error in filling any orders for any
reason whatsoever.
3.2.4. EARLY DELIVERIES. KLSI will not ship Components to
Immersion, Immersion's customers or the Affiliates more
than [****] prior to the scheduled delivery date without
Immersion's prior written consent. Immersion,
Immersion's customers and the Affiliates will be
entitled to return any Components delivered more than
[****] days in advance of the scheduled delivery date at
KLSI's risk and expense and Immersion's account will be
credited.
3.3. ACCEPTANCE OF COMPONENT ORDERS BY IMMERSION AND IMMERSION'S
CUSTOMERS AND AFFILIATES.
3.3.1. ACCEPTANCE PROCESS. Immersion agrees that the Components
purchased by Immersion from KLSI for Immersion's own use
will be deemed accepted within [****] of receipt from
KLSI, unless Immersion, by means of written notice,
notifies KLSI of a Defect, which has been verified by a
means mutually agreed upon between KLSI and Immersion,
which means may include, but will not be limited to,
Defect Test Suites as described below, within such
period. Immersion will require, under the terms of the
contract with each Immersion customer and
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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each Affiliate, that the Components will be deemed
accepted by Immersion's customer or the Affiliate within
a specified number of days from receipt unless
Immersion's customer or the Affiliate, by means of
written notice, notifies Immersion of a Defect, which
has been verified by a means mutually agreed upon
between Immersion and such customer, and which may
include, but will not be limited to, Defect Test Suites
as described below, within such period.
3.3.2. DEFECT TEST SUITES. Immersion and KLSI may develop and
mutually agree upon a Defect Test Suite which will test
the Components, excluding the hexcode or firmware code
supplied by Immersion or the Immersion customer, using
specified test vectors to identify Defects. The Defect
Test Suites may be supplied to each Immersion customer
and Affiliate by Immersion for use as the basis for
acceptance or rejection of the Components (excluding the
hexcode or firmware code portion).
3.3.3. FIRST LEVEL INTERFACE. Immersion agrees to perform the
role of the first level interface with the Immersion
customers and the Affiliates and to verify whether there
is a Defect. Once Immersion has notified KLSI as to
Immersion's conclusion that the existence of a Defect
has been verified, by whatever means mutually agreed
upon between Immersion and the Immersion customer, KLSI
will work directly with the Immersion customers and the
Affiliates in compliance with the sample reject/failure
mode criteria and RMA procedure which have been agreed
upon between KLSI and such Immersion customer or
Affiliate under the terms of the Ancillary Agreement.
The Immersion customers and Affiliates will be permitted
to return the Components to KLSI for replacement within
[****] of KLSI's return approval notification. In such
case KLSI will ship the replacement Components to
Immersion's customer or the Affiliate on a priority
basis.
3.3.4. HEXCODE DEFECTS. KLSI and each Immersion customer or
Affiliate will mutually agree upon, in writing, under
the terms of the Ancillary Agreement, an appropriate
test suite for use by the Immersion customer or
Affiliate as the basis for acceptance or rejection of
the hexcode or firmware code portion of the Components.
3.3.5. IMMERSION AS A CUSTOMER. Once Immersion has notified
KLSI that Immersion has verified the existence of a
Defect in Components purchased by Immersion for
Immersion's use, KLSI and Immersion will coordinate
return of the defective Component units under the terms
of the reject/failure mode criteria and RMA procedure
described in Exhibit E ("KLSI RMA Procedures").
Immersion will be permitted to return the Components to
KLSI for replacement within [****] of KLSI's return
approval notification. KLSI will ship the replacement
Components
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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to Immersion on a priority basis. In addition, KLSI and
Immersion will mutually agree upon, in writing, an
appropriate test suite for use by Immersion as the basis
for acceptance or rejection of the hexcode or firmware
code portion of the Components ordered by Immersion for
Immersion's use.
3.4. CHANGE ORDERS. Cancellation and rescheduling of Immersion's
Component orders will be governed by the cancellation and
rescheduling policies and fees described in Exhibit B
("Cancellation and Rescheduling Policies and Fees"). All
cancellation and/or rescheduling requests will be submitted to
Immersion by Immersion's customers and will be incorporated by
Immersion into a cancellation and/or rescheduling request
which will be submitted by Immersion to KLSI.
3.5. ANCILLARY AGREEMENT. Immersion agrees and acknowledges that
Immersion's customers will be permitted to negotiate with KLSI
to directly impose quality requirements on KLSI under the
terms of a separate, executed agreement (the "Ancillary
Agreement") and to mutually agree upon RMA procedures and
hexcode or firmware code loading and spin charges.
4. LEAD TIMES AND MINIMUM ORDER QUANTITIES. The parties agree that the lead
time for orders placed by Immersion to KLSI for the .5 CBA and .35 CBA
format Components will be [****] from receipt of the Immersion purchase
order by KLSI, subject to implementation of a Base Wafer Maintenance
Purchase Order System as described in Section 7.4 ("Base Wafer
Maintenance Purchase Order System"). The parties agree that the lead
time for orders placed by Immersion to KLSI for the .35 standard cell
will be [****] from receipt of the Immersion purchase order by KLSI,
subject to implementation of a Die Bank System as described in Section
7.5 ("Die Bank System"). Some exceptions may be taken to the [****] lead
time in the case of factory/subcontractor holiday periods, however, KLSI
shall notify Immersion of any shutdown impact and will define the
additional lead time necessary for ordering purposes on a case by case
basis at the time the order first appears in the forecast (within [****]
of receipt of the forecast from Immersion). The minimum order quantity
requirement is [****] Component units per Immersion purchase order,
however Components aggregated on a single purchase order may be
designated to be shipped to multiple Immersion customer and Affiliate
locations.
5. WARRANTY.
5.1. WARRANTY BY KLSI TO IMMERSION. KLSI acknowledges that although
Immersion may purchase Components for Immersion's use, for the
most part Immersion is purchasing the Components for resale to
Immersion's customers and that Immersion will be making a
warranty to each of Immersion's customers that for a period of
[****] from delivery of each quantity of the Components to
Immersion's customer, the Components, excluding the hexcode or
firmware code, will conform to the Specification and will be
free from defects in materials and
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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workmanship. KLSI warrants to Immersion that for a period of
[****] from delivery of each quantity of the Components to
Immersion or directly to Immersion's customers or the
Affiliates, the Components, excluding the hexcode or firmware
code, will conform to the Specification and will be free from
defects in materials and workmanship.
5.2. WARRANTY PROCEDURES.
5.2.1. WARRANTY PROCESS. KLSI further agrees that in any instance where
Immersion's customer or an Affiliate has asserted a claim under
the warranty provided by Immersion to the customer or the
Affiliate (during the [****] warranty period) that a Component,
excluding the hexcode or firmware code, does not conform to the
Specification and/or is not free from defects in material and
workmanship, Immersion will identify the nature of the claim
through direct communication with the customer or the Affiliate
and will conduct Defect verification tests using the means,
including but not limited to Defect Test Suites, that has been
mutually agreed upon between Immersion and KLSI in accordance
with Section 3.3.2 ("Defect Test Suites"). Immersion will obtain
an appropriate sample of Component units, prior to notifying
KLSI of the customer or the Affiliate warranty claim. For
Components purchased by Immersion for Immersion's use, Immersion
will conduct verification tests using the means, including but
not limited to Defect Test Suites that has been mutually agreed
upon between Immersion and KLSI in accordance with the terms of
Section 3.3.2 ("Defect Test Suites") on an appropriate sample of
Components following the same procedures.
5.2.2. KLSI RESPONSIBILITIES. If Immersion determines, on the basis of
the verification criteria that the sample Component units are
defective, KLSI agrees that KLSI will accept receipt of
Immersion's test data and sample Component units and will treat
such delivery of test data and sample Component units from
Immersion as a warranty claim by Immersion under the warranty
provided by KLSI to Immersion under the terms of this Agreement.
If Immersion presents KLSI with a warranty claim which involves
Components which have been shipped to an Immersion customer or
Affiliate, KLSI will contact the customer or Affiliate under
KLSI's Return Authorization Program within [****] of receipt of
Immersion's test data and sample Component units and will accept
defective Component units back directly from Immersion's
customers or the Affiliates. KLSI will provide replacement
Component units directly to Immersion's customers or the
Affiliates on a one to one basis for each defective Component
returned by Immersion's customer or an Affiliate to KLSI, as
described above, within [****] of receipt of Immersion's test
data and sample Component units. If Immersion presents KLSI with
a warranty claim for Components which have been shipped to
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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Immersion, KLSI will contact Immersion within [****] of receipt
of Immersion's test data and sample Component units and will
accept defective Component units back from Immersion. KLSI will
provide replacement Component units directly to Immersion on a
one to one basis for each defective Component returned by
Immersion, as described above, within [****] of receipt of
Immersion's test data and sample Component units. KLSI agrees to
be responsible for all insurance and shipping costs incurred by
Immersion and by Immersion's customers and the Affiliates in
returning defective Component units to KLSI. Immersion may, in
its sole discretion, instruct KLSI to accept return of the
defective Component units from Immersion, Immersion's customers
or the Affiliates, as applicable, and to credit Immersion's
account for the purchase price of such units, instead of
providing replacement units to Immersion, Immersion's customers
or the Affiliates, as applicable.
5.2.3. PURPOSE OF THE WARRANTY. Although this warranty extends only to
Immersion and not to Immersion's customers, KLSI agrees and
acknowledges that the purpose of this warranty is to cause KLSI
to provide warranty replacement units to Immersion's customer or
an Affiliate in each instance where Immersion's customer or an
Affiliate asserts a warranty claim to Immersion under the [****]
warranty provided by Immersion to Immersion's customers and the
Affiliates. KLSI further acknowledges and agrees that it is
Immersion's intent to avoid a situation where Immersion is
responsible under Immersion's warranty to Immersion's customer
or an Affiliate for defective Components and Immersion is
without recourse from KLSI to obtain replacement Component units
under the warranty provided by KLSI to Immersion.
5.3. WARRANTY DEFECT FREQUENCY LEVELS.
5.3.1. PROCESS IMPROVEMENT. Immersion and KLSI agree that the
Components manufactured by KLSI should be free from Defects and
that the Components should be manufactured under a stable
manufacturing process that is capable of producing high-quality
reliable components in volume. The acceptance procedure as
described in Section 3.3 ("Acceptance of Component Orders by
Immersion and Immersion's Customers and Affiliates) and the
warranty procedures described in Section 5.1 ("Warranty by KLSI
to Immersion") and 5.2 ("Warranty Procedures") are intended to
identify Defects and to allow Immersion, the Immersion customers
and the Affiliates to return Defective Components to KLSI.
Notwithstanding the acceptance and warranty procedures, KLSI and
Immersion recognize that if the frequency level of Defects in
the Components exceeds certain parameters, the acceptance and
warranty procedures will become expensive and time consuming. As
a result, the
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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parties agree that KLSI will conduct a quality and reliability
improvement program on an ongoing basis and use the Defect data
obtained through the acceptance and warranty procedures to
document, analyze and implement a program to constantly reduce
the Defect frequency levels of the Components towards a zero
Defect standard.
5.3.2. RECORD KEEPING AND DOCUMENTATION. KLSI will maintain records of
corrective actions indicating the frequency of Defects during
fabrication of the Components, the proposed corrective process
change, evaluation of effectiveness of the corrective process
and the effective date of implementation of corrective measures.
KLSI will make such records available to Immersion upon request.
KLSI will provide documentation with each shipment of Components
which indicates that the Components shipped have been tested and
inspected by KLSI and have a defect rate no greater than [****]
dpm.
5.3.3. CORRECTIVE ACTION. KLSI will implement and maintain a corrective
action system, including failure analysis, for addressing and
correcting Defects reported under the acceptance and warranty
procedures. The parties agree that any time the Defect rate in
Components purchased by Immersion on a rolling basis or in any
shipment or consecutive series of shipments exceeds [****] dpm
and such Defects are traceable to a single failure mode,
Immersion will be entitled to notify KLSI that the Defect levels
are unacceptable and KLSI will respond by preparing and
proposing a Corrective Action Plan within [****] of KLSI's
confirmation of unacceptable Defects levels. KLSI will confirm
the unacceptable Defect levels within [****]of receipt of
Immersion's notice. The Corrective Action Plan will address
implementation and procedure milestones and timeframes for
remedying the unacceptable Defect levels.
5.3.4. SUSPENSION BY IMMERSION. Immersion will be permitted to delay
and/or postpone manufacturing and deliveries of Components which
have been ordered as well as future orders (a "Suspension") by
written notice to KLSI, pending correction of the excessive
Defect levels under the Corrective Action Plan. The Suspension
status invoked by Immersion's written notice will temporarily
relieve KLSI of its obligation to ship Components, will relieve
Immersion customers and the Affiliates of any obligation to
receive shipment of Components, and will not be treated as a
cancellation or rescheduling by Immersion under the terms of
this Agreement. KLSI will develop a remedy for the Defects under
the Corrective Action Plan at KLSI's sole expense and will
demonstrate to Immersion the effectiveness of such remedy. If
Immersion, in its discretion, approves the remedy, Immersion
will cancel the Suspension and KLSI will (i) incorporate such
remedy into all subsequent
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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Components manufactured, (ii) replace all Component units in
Immersion, Immersion's customers' and/or the Affiliates'
inventory, and (iii) reimburse Immersion, the Immersion
customers and/or the Affiliates for any expenses and/or costs
associated with implementation of such remedy. If KLSI is unable
to propose and implement a remedy as described above, Immersion
will be entitled to treat such failure as a Trigger Event under
Section 2.2 ("Second Source") upon [****] written notice and
receive a refund for all defective Components in Immersion,
Immersion's customers' and the Affiliates' inventories.
5.4. DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES CONTAINED HEREIN, KLSI
MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6. INDEMNIFICATION.
6.1. INDEMNIFICATION BY KLSI.
6.1.1. SCOPE OF KLSI'S INDEMNITY. Subject to prompt notification by
Immersion, cooperation by Immersion and control of all litigation
and/or settlement by KLSI, KLSI shall indemnify, defend and hold
Immersion, Immersion's customers and the Affiliates harmless from
and against any and all damages, costs and expenses ("Costs")
suffered or incurred by Immersion, Immersion's customers and the
Affiliates as a result of any third party claim that the
Components, as delivered by KLSI (whether manufactured by KLSI or
KLSI's Second Source silicon provider) to Immersion, Immersion's
customers or the Affiliates, but excluding any firmware or
hexcode loaded onto any Components and further excluding the
Immersion Preexisting Technology and Immersion Requested
Revisions (as defined in the ASIC Design Agreement), infringe any
patent, copyright or misappropriates any trade secret of any
third party.
6.1.2. MITIGATION BY KLSI. In the case of any third party claim
involving the Components which is covered by the indemnity
described in Section 6.1.1 ("Scope of KLSI's Indemnity"), KLSI
may, in its sole discretion (i) provide Immersion with a modified
version of the Components which comply with the functionality and
features of the Specification so that the Components become
noninfringing (as a replacement for Components in Immersion,
Immersion's customer's and the Affiliates inventory and for
future sales), (ii) provide Immersion other components which are
functionally equivalent (as a replacement for Components in
Immersion, Immersion's customer's and the Affiliates inventory
and for future sales), (iii) procure for Immersion a license to
continue to use and sell the Components, or, (iv) in the
alternative, if none of the foregoing
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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alternatives are commercially reasonable, accept return of the
infringing Components in Immersion's, Immersion's customer's
and/or the Affiliate's inventory and refund to Immersion the
purchase price paid for such inventory. Each party agrees to
notify the other promptly of any matters in respect to which the
foregoing indemnity in Section 6.1.1 ("Scope of KLSI's
Indemnity") may apply. If notified in writing of any action or
claim for which KLSI is to provide indemnity, KLSI shall defend
those actions or claims at KLSI's expense and pay the Costs
awarded against Immersion, Immersion's customers and/or
Affiliates in any such action, or pay any settlement of such
action or claim entered into by KLSI.
6.1.3. EXCEPTIONS TO KLSI'S INDEMNITY OBLIGATION. The foregoing
indemnity by KLSI will not apply to any infringement claim to the
extent it arises from (i) any modification of any Component by
parties other than KLSI or KLSI subcontractors under contract
with KLSI, or (ii) an infringement which would not occur in the
Component but which does occur when the Component is incorporated
into the devices.
6.2. INDEMNIFICATION BY IMMERSION.
6.2.1. SCOPE OF IMMERSION'S INDEMNITY. Subject to prompt notification by
KLSI, cooperation by KLSI and control of all litigation and/or
settlement by Immersion, Immersion shall indemnify, defend and
hold KLSI harmless from and against any and all damages, costs
and expenses ("Costs") suffered or incurred by KLSI as a result
of any third party claim that the Immersion Preexisting
Technology and Immersion Requested Revisions (as defined in the
ASIC Design Agreement) as incorporated into the Components as
manufactured under the terms of this Agreement, but excluding any
firmware or hexcode loaded onto any Components, infringe any
patent, copyright or misappropriate any trade secret of any third
party.
6.2.2. MITIGATION BY IMMERSION. In the case of any third party claim
involving the Components which is covered by the indemnity
described in Section 6.2.1 ("Scope of Immersion's Indemnity"),
Immersion may, in its sole discretion, (i) provide KLSI with a
modification to the Immersion Preexisting Technology and/or
Immersion Requested Revisions for use in the Components, or (ii)
procure for Immersion a license to continue to use the Immersion
Preexisting Technology and/or Immersion Requested Revisions in
the Components. Each party agrees to notify the other promptly of
any matters in respect to which the foregoing indemnity in
Section 6.2.1 ("Scope of Immersion's Indemnity") may apply. If
notified in writing of any action or claim for which Immersion is
to provide indemnity, Immersion shall defend those actions or
claims at Immersion's expense and pay the Costs awarded against
KLSI in any such action, or pay any settlement of such action or
claim entered into by Immersion.
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6.2.3. EXCEPTIONS TO IMMERSION'S INDEMNITY OBLIGATION. The
foregoing indemnity by Immersion will not apply to any
infringement claim to the extent it arises from (i) any
modification of the Immersion Preexisting Technology
and/or Immersion Requested Revisions by parties other
than Immersion or Immersion subcontractors under
contract with Immersion, or (ii) an infringement which
would not occur in the Immersion Preexisting Technology
and/or Immersion Requested Revisions but which does
occur when the Immersion Preexisting Technology and/or
Immersion Requested Revisions are incorporated into the
Components.
7. FINANCIAL TERMS.
7.1. PRICE. The pricing for the Components will be in U.S. dollars and
shall be as set forth in Exhibit C ("Pricing"). KLSI has advised
Immersion that there is a [****] CBA ROM spin charge per each new
(or new revision of) hexcode or firmware implemented in the
Components. Such charge will be paid by Immersion within [****]
of KLSI's invoice in the case of Components ordered by Immersion
for Immersion's use. Such charge will be invoiced by KLSI
directly to the Immersion customers or the Affiliates, as
applicable, in the case of Components ordered by Immersion for
shipment to Immersion's customers or the Affiliates, since the
hexcode or firmware will be provided to KLSI directly by the
Immersion customers or the Affiliates, as applicable. KLSI will
not reserve or retain a security interest in the Components. In
any case where the respin is due to KLSI's failure to perform,
such respin will be expedited at no charge.
7.2. PAYMENT. KLSI will invoice Immersion for all Components shipped
to Immersion, the Immersion customers or the Affiliates, as
applicable and will invoice the Immersion customers and
Affiliates for any ROM spin charges. The invoice from KLSI to
Immersion for each shipment of Components will be due and payable
to KLSI within [****] after acceptance of the Components by
Immersion, Immersion's customer or the Affiliates as described in
Section 3.2.2 ("Deemed Acceptance by Immersion"). KLSI shall not
require a letter of credit or prepayment as precondition to
manufacturing Components for sale to Immersion or delivering
Components to Immersion, Immersion's customers or the Affiliates.
7.3. TAXES AND DUTIES. In addition to any payments due to KLSI under
this Agreement, Immersion shall pay amounts equal to any taxes,
duties, or other amounts, however designated, which are levied or
based upon such payments, or upon this Agreement, provided,
however, that Immersion shall not be liable for taxes based on
KLSI's net income.
7.4. BASE WAFER MAINTENANCE PURCHASE ORDER SYSTEM. KLSI and Immersion
agree that in order for KLSI to maintain the [****] lead time
required under the
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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terms of this Agreement with respect to the .5 CBA and .35 CBA
format Components, as well as the flexibility requested in the
reschedule and cancellation windows described in Exhibit B
("Cancellation and Rescheduling Policies and Fees"), it will be
necessary for KLSI to implement a Base Wafer Maintenance program.
Under the program, KLSI will manufacture a "maintenance quantity"
of Component base wafers which have been manufactured up to the
metalization phase and set aside for use exclusively to produce
Components in fulfillment of Immersion's purchase orders. The
"maintenance quantity" will be determined on a monthly basis by
KLSI and will be calculated using the upcoming month's quantity
of Components as reflected in the Immersion rolling [****]
forecast for .5 CBA and .35 CBA format Components submitted to
KLSI. To facilitate the program, Immersion agrees to issue an
open rolling purchase order for .5 CBA and .35 CBA format
Components. If Immersion cancels or discontinues the Base Wafer
Maintenance program without providing KLSI [****] notice and if
such cancellation or discontinuation is due to no fault of KLSI
for either non-delivery or quality issues, then Immersion will be
responsible for the amount of the Base Wafer Maintenance purchase
order which is equal to one month's average usage (based on the
average purchase order quantity for the previous six months) at
[****] of the applicable current unit price. An invoice will be
sent by KLSI to Immersion within [****] of Immersion's
cancellation or discontinuation of the program and will be due
and payable by Immersion within [****] after receipt. KLSI agrees
that KLSI is obligated to use up the base wafer "maintenance
quantity" prior to any termination of this Agreement and that the
rolling open purchase order will be deemed to be canceled upon
notice of such termination.
7.5. DIE BANK SYSTEM. KLSI and Immersion agree that in order for KLSI
to maintain the [****] lead time required under the terms of this
Agreement with respect to the .35 standard cell format
Components, as well as the flexibility requested in the
reschedule and cancellation windows described in Exhibit B
("Cancellation and Rescheduling Policies and Fees"), it will be
necessary for KLSI to implement a Die Bank System program. Under
the program, KLSI will manufacture a "maintenance quantity" of
Component die which have been manufactured up to the finished die
phase and set aside for use exclusively to produce Components in
fulfillment of Immersion's purchase orders. The "maintenance
quantity" will be determined on a [****] basis by KLSI and will
be calculated using the upcoming month's quantity of Components
as reflected in the Immersion rolling [****] forecast for .35
standard cell format Components submitted to KLSI. To facilitate
the program, Immersion agrees to issue an open rolling purchase
order for .35 standard cell format Components. If Immersion
cancels or discontinues the Die Bank System program without
providing KLSI [****] notice and if such cancellation or
discontinuation is due to no fault of KLSI for either
non-delivery or quality issues, then Immersion will be
responsible for the amount of the Die Bank System
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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purchase order which is equal to one month's average usage (based
on the average purchase order quantity for the previous [****])
at [****] of the applicable current unit price. An invoice will
be sent by KLSI to Immersion within [****] of Immersion's
cancellation or discontinuation of the program and will be due
and payable by Immersion within [****] after receipt. KLSI agrees
that KLSI is obligated to use up the die "maintenance quantity"
prior to any termination of this Agreement and that the rolling
open purchase order will be deemed to be canceled upon notice of
such termination.
8. TERMINATION.
8.1. TERM. The initial term of this Agreement shall be for a period of
[****] commencing on the Effective Date, unless otherwise earlier
terminated by the parties according to the terms of this
Agreement. Thereafter, this Agreement shall automatically renew
for subsequent one-year periods, unless either party terminates
the Agreement by written notice at least [****] prior to the end
of the initial term or any renewal term.
8.2. TERMINATION WITHOUT CAUSE. Immersion may terminate this Agreement
without cause upon [****] prior written notice.
8.3. TERMINATION FOR CAUSE. Either party may terminate this Agreement
by written notice if the other party materially breaches the
terms of this Agreement. Such termination shall become effective
upon [****] written notice of breach, provided the breaching
party fails to cure its breach within the notice period.
8.4. EFFECT OF TERMINATION.
8.4.1. GENERALLY. Upon termination of this Agreement, Immersion's
obligation to pay KLSI for Components delivered to
Immersion, Immersion's customers and/or Affiliates, as
applicable, up through the effective date of termination
shall survive and Immersion will pay for all such
Components in accordance with the terms of this Agreement,
subject to all rights of acceptance and rejection and
warranty returns and credits.
8.4.2. LIMITATION. EXCEPT FOR DIRECT DAMAGES RESULTING FROM A
BREACH OF THE TERMS OF THIS AGREEMENT, NEITHER PARTY SHALL
BE LIABLE TO THE OTHER FOR DAMAGES OF ANY SORT, DIRECT OR
INDIRECT, INCLUDING LOST PROFITS, AS A RESULT OF
TERMINATING THIS AGREEMENT IN ACCORDANCE WITH THE TERMS OF
THE AGREEMENT.
9. PERSONAL INJURY AND PROPERTY DAMAGE CLAIMS. Neither party shall have any
obligation to indemnify, protect, defend and hold the other party
harmless from any Costs suffered
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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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or incurred by the other party to the extent such third party claim or
threatened claim arises from a personal or alleged personal injury or
damage or alleged damage to property arising out of the third party's
use of the Components or the devices containing the Components.
10. CONFIDENTIALITY AND PROPRIETARY NOTICES.
10.1. OBLIGATIONS. During the course of this Agreement, each party may
be a disclosing party (hereinafter called "Discloser") for
transmitting certain proprietary information to the other party
(hereinafter called "Recipient"). Recipient agrees to treat as
confidential all such proprietary information, including all
information, written or oral, relating thereto, including, but
not limited to, know how, concepts, techniques, drawings,
specifications, processes, computer programs, firmware, hexcode,
designs and systems, manufacturing and marketing information,
received from Discloser, and Recipient agrees not to publish such
information or disclose same to others except to those employees,
subcontractors and sublicensees to whom disclosure is necessary
to order to carry out the purpose for which such information is
supplied. Recipient shall inform such employees, subcontractors
and sublicensees of the confidential nature of such information
and of their obligation to keep same confidential. Recipient
further agrees not to use such proprietary information for
Recipient's own benefit or for the benefit of others, other than
in accordance with this Agreement, without Discloser's prior
written consent, and that all tangible materials, including
written material, photographs, discs or other documentation
embodying such proprietary information shall remain the sole
property of Discloser and shall be delivered to Discloser upon
Discloser's request. Upon Discloser's request, the Receiving
party shall return any and all copies of Discloser's confidential
information or, at Discloser's option, the Receiving party shall
destroy such copies and notify Discloser in writing when such
copies have been destroyed.
10.2. EXCEPTIONS. The foregoing obligations of confidentiality do not
apply to information which was previously known to Recipient, is
rightfully received from a third party by Recipient, or becomes
publicly known or available without breach of this Agreement by
Recipient.
10.3. PROPRIETARY NOTICES. KLSI will cause the outside package and top
level metal mask work layer of the Components to bear a mask work
and copyright notice for Immersion's benefit.
11. LIMITATION OF LIABILITY.
11.1. CONSEQUENTIAL DAMAGES. IN NO EVENT WILL EITHER PARTY BE LIABLE
FOR LOST PROFITS, OR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT.
THIS LIMITATION WILL
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APPLY EVEN IF THE PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
11.2. LIMITATIONS OF LIABILITY OTHER THAN INDEMNITY OBLIGATIONS. EXCEPT
WITH RESPECT TO EITHER PARTY'S OBLIGATIONS OF INDEMNITY,
INCLUDING, BUT NOT LIMITED TO, COSTS OF DEFENSE AND "COSTS" (AS
DEFINED ABOVE) SET FORTH IN SECTION 6 ("INDEMNIFICATION") IN NO
CASE WILL EITHER PARTY'S TOTAL CUMULATIVE LIABILITY OR
OBLIGATIONS UNDER THE TERMS OF OR ARISING OUT OF THIS AGREEMENT
EXCEED [****]
12. GENERAL PROVISIONS.
12.1. SUCCESSION AND ASSIGNMENT. Neither party may assign this
Agreement unless the other party consents in advance in writing
to the assignment, provided, however, that the Agreement may be
assigned to a corporate successor in interest in the case of a
merger or acquisition or in the case of a sale of assets without
the prior approval of the other party. Any attempt to assign this
Agreement in violation of the provisions of this Section 12.1
("Succession and Assignment") shall be void.
12.2. NOTICES. Notices required under this Agreement shall be addressed
as follows, except as otherwise revised by written notice:
TO IMMERSION: TO KLSI:
Xxxxx X. Xxxxxxxxx, Ph.D. _______________
President _______________
Immersion Corporation Kawasaki LSI USA Inc.
0000 Xxxxxxx Xxxxx 0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 Suite 000
X.X.X. Xxx Xxxx, XX 00000
X.X.X.
12.3. GOVERNING LAW. The validity, interpretation and performance of
this Agreement shall be governed by the substantive laws of the
State of California, without the application of any principle
that leads to the application of the laws of any other
jurisdiction.
12.4. NO AGENCY. Neither party is to be construed as the agent or to be
acting as the agent of the other party hereunder in any respect.
12.5. MULTIPLE COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which taken together shall constitute one
single Agreement between the parties.
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separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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12.6. NO WAIVER. No delay or omission by either party hereto to
exercise any right or power occurring upon any noncompliance or
default by the other party with respect to any of the terms of
this Agreement shall impair any such right or power or be
construed to be a waiver thereof. A waiver by either of the
parties hereto of any of the covenants, conditions, or agreements
to be performed by the other shall not be construed to be a
waiver of any succeeding breach thereof or of any covenant,
condition, or agreement herein contained. Unless stated
otherwise, all remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other
remedies available to either party at law, in equity, or
otherwise.
12.7. SEVERABILITY. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable,
the validity, legality or enforceability of the remaining
provisions of this Agreement shall not in any way be affected or
impaired thereby.
12.8. AMENDMENTS IN WRITING. Any amendment to this Agreement shall be
in writing and signed by both parties hereto.
12.9. INTERPRETATION. Since this Agreement was prepared by both parties
hereto, it shall not be construed against any one party as the
drafting party.
12.10. SURVIVAL. Sections 2.2 ("Second Source"), 5 ("Warranty"), 6
("Indemnification"), 7.4 ("Base Wafer Maintenance Purchase Order
System"), 7.5 ("Die Bank System"), 8 ("Termination"), 9
("Personal Injury and Property Damage Claims"), 10
("Confidentiality and Proprietary Notices"), 11 ("Limitation of
Liability") and 12 ("General Provisions") will survive and
continue after the expiration or termination of this Agreement.
12.11. DISPUTE RESOLUTION. Except in the case of a breach of an
obligation related to a party's intellectual property rights, in
the event either party concludes that it is in its best interest
to file any legal action against the other, the party shall
contact the other party's management and at least two (2) senior
managers from each party shall meet without legal counsel or
interruption for a minimum amount of three (3) eight (8) hour
periods and diligently attempt to resolve all disputed matters.
If the parties are unable to resolve their difference and either
party desires to file a legal action against the other, at least
two (2) senior managers from each party and their respective
counsels shall meet for three (3) eight (8) hour periods and
diligently attempt to resolve all disputed matters. Either party
may request that an independent third party bound to mutually
agreed upon obligations of confidentiality attend such meeting in
order to assist the parties in reaching a reasonable resolution.
All oral and written information exchanged in these meetings
shall be exchanged in an effort to settle all disputed matters.
If either party still desires to file a legal action against the
other after these prescribed meetings, such party may file a
legal action against the other party as allowed by
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applicable law in Santa Xxxxx County state court or in the
federal court. The parties agree that if a party does not attend
all of the prescribed meetings it waives its rights to any
monetary damages in the legal action(s) it files.
12.12. FORCE MAJEURE. Neither party shall be liable for any failure or
delay in its performance under this Agreement due to causes,
including, but not limited to, acts of God, acts of civil or
military authority, fires, epidemics, floods, earthquakes, riots,
wars, sabotage, court orders and governmental actions, which are
beyond its reasonable control ("Force Majeure"); provided that
the delayed party: (i) gives the other party written notice of
such cause promptly; and (ii) uses its best efforts to correct
such failure or delay in its performance. Notwithstanding the
foregoing, KLSI agrees that failure to deliver the Components to
Immersion or Immersion's customers will have a significant effect
on Immersion's ability to comply with Immersion's contractual
obligations to its customers. As such, KLSI agrees that delays in
production of the Components in a single silicon facility, with
respect to a particular format, whether at KLSI or a Second
Source, including but not limited to, process problems,
availability of materials, or other such manufacturing delays,
shall not constitute a Force Majeure. Accordingly, KLSI will take
all reasonable measures to establish, maintain and qualify Second
Source capability so as to insure a continuous supply of the
Components.
12.13. ENTIRE AGREEMENT. This Agreement, with the exception of the ASIC
Design Agreement, constitutes the complete agreement of the
parties, and supersedes any other agreements, written or oral,
concerning the subject matter hereof, with the exception of the
ASIC Design Agreement.
IN WITNESS WHEREOF, the authorized representatives of the parties hereto
have signed this Agreement as of the date and year last set forth below.
KLSI: IMMERSION:
KAWASAKI LSI USA. IMMERSION CORPORATION
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
---------------------------- ------------------------------
Print Name: Xxxxx Xxxxxxxx Print Name: Xxxxx Xxxxxxxxx
----------------------- -----------------------
Title: CFO Title: President
---------------------------- ----------------------------
Date: 8/17/98 Date: Aug. 17, 1998
---------------------------- ----------------------------
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