Semiconductor Device Component Purchase Agreement [Amendment No. 1] - Immersion Corp. and Kawasaki LSI USA Inc.
AMENDMENT NO. 1
TO
SEMICONDUCTOR DEVICE PURCHASE AGREEMENT
This Amendment (the "Amendment") No. 1 to the Semiconductor Device
Component Purchase Agreement dated August 17, 1998, by and between Immersion
Corporation, a California corporation, having its principal place of business at
2158 Paragon Drive, San Jose, California (hereinafter "Immersion") and Kawasaki
LSI U.S.A. Inc., a California Corporation, having its principal place of
business at 2570 North First Street, Suite 301, San Jose, California 95131
(hereinafter "KLSI"), modifies and amends the Semiconductor Device Component
Purchase Agreement (the "Agreement") in certain respects as follows:
1. The parties desire to amend the Agreement to permit KLSI to sell the
"Components" directly to certain designated customers, and therefore Paragraph
2.1.3, entitled "KLSI Sales to Direct Customers" as described below is hereby
added to the Agreement.
2. Paragraph 2.1.3.1, entitled "In General": The following Paragraph
2.1.3.1 is hereby added to the Agreement:
The parties agree that Paragraph 2.1.1 ("Components") of the
Agreement requires that the Components will be sold exclusively to
Immersion. Notwithstanding the foregoing, Immersion may from time to
time desire that KLSI sell certain designated Components ("Specific
Components") directly to certain designated customers ("Direct
Customers"). In such case, Immersion will issue a Direct Customer
Authorization Form substantially in the form attached hereto as
Schedule 1 ("Direct Customer Authorization Form") to KLSI. Upon
execution by Immersion and KLSI of each Direct Custom Authorization
Form, KLSI may negotiate directly with such Direct Customer to enter
into a component purchase agreement under terms mutually agreed upon by
KLSI and the Direct Customer. Subject to the limitations described in
Section 2.1.3.4 ("Limitations") and Section 2.1.3.7 ("Second Source
Limitation"), KLSI and each Direct Customer will be free to address
lead times, pricing, hexcode deliveries, quality requirements and other
relevant terms as mutually agreed upon by KLSI and such Direct
Customer.
3. Paragraph 2.1.3.2, entitled "Direct Customer Royalty": The following
Paragraph 2.1.3.2 is hereby added to the Agreement:
KLSI agrees to compensate Immersion by means of a royalty
which will be due and owing for each unit of the Specific Components
sold to a Direct Customer. The specific royalty due for sales of
Specific Components to each Direct Customer will be described in the
applicable Direct Customer Authorization Form. KLSI agrees to pay the
royalties due to Immersion for each shipment of Specific Components to
a Direct Customer within sixty (60) days of acceptance of the Specific
Components by the Direct Customer.
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4. Paragraph 2.1.3.3, entitled "Mitigation Trigger Events": The
following Paragraph 2.1.3.3 is hereby added to the Agreement:
Orders from Direct Customers shall be counted toward
Immersion's orders for purposes of reaching the 100,000 units per
month.
5. Paragraph 2.1.3.4, entitled "Die Bank and Base Wafer": The following
Paragraph 2.1.3.4 is hereby added to the Agreement:
Immersion's Die Bank System and Base Wafer Maintenance Program
will not be used for Direct Customers.
6. Paragraph 2.1.3.5, entitled "Second Source Limitation": The
following Paragraph 2.1.3.5 is hereby added to the Agreement:
KLSI may use its Second Source to produce Specific Components
for resale by KLSI to Direct Customers but KLSI may not grant Direct
Customers the right to buy directly from the KLSI Second Source.
7. Paragraph 2.2.3 entitled "Terms to be Imposed on the Second Source
Silicon Provider": The following language shall be added to the end of the
existing paragraph 2.2.3:
The parties agree that under certain circumstances where KLSI
has entered into an agreement with a Direct Customer in accordance with
the terms of Section 2.1.3.1 ("In General"), KLSI may be required, by
the Direct Customer, to agree that in the case of a material breach by
KLSI of Quality Requirements or delivery obligations, KLSI will permit
the Direct Customer, as a limited remedy, to enter into a direct
purchase arrangement with KLSI's Second Source for the Specific
Components. Immersion hereby grants KLSI the right to enter into such
an arrangement to permit Direct Customers to purchase the Specific
Components under the circumstances described above, so long as KLSI
imposes an obligation for the Second Source silicon provider to
compensate Immersion by means of the specific royalty applicable to the
Specific Components as described in the applicable Direct Customer
Authorization Form within sixty (60) days of delivery of the Specific
Components by the Second Source to the Direct Customer. KLSI also
agrees to insure that the obligation to pay Immersion on a timely basis
is an obligation enforceable by Immersion as a third party beneficiary
of the Second Source Silicon Provider Agreement. In consideration for
granting KLSI the Direct Customer rights described above, KLSI agrees
not to design, develop and/or manufacture any integrated circuit
devices for "force feedback" applications for any third party during
the time period for which KLSI is exercising Direct Customer rights.
For purposes of this Agreement the term "force feedback" shall mean
simulation of feel or tactile sensations using at least one actuator
controlled by one or more microprocessors such that modulation of said
actuator creates feel or tactile sensations.
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8. Schedule 1 ("Direct Customer Authorization Form") attached hereto is
hereby added to the Agreement as Exhibit F thereto.
9. In the event of inconsistencies between the Agreement and this
Amendment, the terms and conditions of this Amendment shall be controlling.
Unless specifically modified or changed by the terms of this Amendment, all
terms of the Agreement shall remain in effect and shall apply fully as described
and set forth in the Agreement. Capitalized terms used and not defined herein
are used with the meanings set forth in the Agreement.
IMMERSION: KLSI:
IMMERSION CORPORATION: KAWASAKI LSI U.S.A., INC.:
By: /s/ Louis Rosenberg By: /s/ Hakuo Watanabe
---------------------------- ----------------------------
Print Name: Louis Rosenberg Print Name: Hakuo Watanabe
-------------------- --------------------
Title: President Title: Chief Financial Officer
------------------------- -------------------------
Date: April 26, 1999 Date: April 27, 1999
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Schedule 1
Direct Customer Authorization Form
This Direct Customer Authorization Form No. 1 contains the special
terms and conditions applicable to the Direct Customer described below and will
be incorporated by reference into the Semiconductor Device Component Purchase
Agreement (the "Agreement") between Immersion and KLSI effective as of 6/4/99
for a term of twenty-four months. This Direct Customer Authorization Form shall
be effective on the date last executed below. All terms used in this Direct
Customer Authorization Form shall retain the same meaning as defined in the
Agreement and such definitions are incorporated herein by reference.
1. Name of Proposed Direct Customer: Logitech, Inc.
2. Royalty to be paid to Immersion: For Annual Quantities of Less
Than 500,000 Units [****] for
each production unit with a
tested analog-to-digital
converter
[****] for each
pre-production unit with a
tested analog-to-digital
converter
For Annual Quantities of
Greater Than 500,000 Units
[****] for each production
unit with a tested
analog-to-digital converter
[****] for each
pre-production unit with a
tested analog-to-digital
converter
3. Name of Specific Component (and AXIS II only in the .35 CBA
format number, if applicable) part # TPF-001
IN WITNESS HEREOF, the parties hereto have duly caused this Direct
Customer Authorization Form to be signed by their duly authorized
representatives.
IMMERSION: KLSI:
IMMERSION CORPORATION: KAWASAKI LSI U.S.A., INC.:
By: /s/ Louis Rosenberg By: /s/ H. Watanabe
---------------------------- ----------------------------
Print Name: Louis Rosenberg Print Name: Hakuo Watanabe
-------------------- ----------------------
Title: President Title: Chief Financial Officer
------------------------- -------------------------
Date: May 27, 1999 Date: June 4, 1999
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* 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.