Intercompany Intellectual Property License Agreement - Immersion Corp. and MicroScribe LLC
INTERCOMPANY INTELLECTUAL PROPERTY LICENSE AGREEMENT
IMMERSION CORPORATION AND MICROSCRIBE, LLC
This Intercompany Intellectual Property License Agreement (the
"Agreement") is by and between Immersion Corporation, a California corporation,
with an office at 2158 Paragon Drive, San Jose, California (hereinafter
"Immersion") and MicroScribe, LLC, a California limited liability company, with
offices in San Jose, California (hereinafter "Licensor"), is entered into
effective as of July 1, 1997 (the "Effective Date").
RECITALS
A. Licensor is the owner of certain intellectual property rights
related to 3D digitizing.
B. The parties desire that Licensor grant a license to Immersion for
the MicroScribe Technology under the MicroScribe Intellectual Property Rights to
enable Immersion to manufacture, market and sell 3D digitizing technology
products, on the 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.
AGREEMENT
1. DEFINITIONS
In this Agreement the following words and expressions shall have the
following meanings:
1.1 AFFILIATES means any corporation or business entity which is
controlled by, controls, or is under common control of a party. 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 MICROSCRIBE INTELLECTUAL PROPERTY RIGHTS means the patents,
copyrights, trademarks, trade secrets, know-how, mask work rights and all other
intellectual property rights related to the MicroScribe Technology, including
without limitation the issued patents and patent applications described in
Exhibit A ("MicroScribe Intellectual Property"), and any continuations,
continuations in-part, divisional applications, revisions and/or re-examinations
based on the foregoing.
1.3 MICROSCRIBE TECHNOLOGY means certain three dimensional ("3D")
digitizing technology, including but not limited to, a mechanical digitizing arm
used to input three dimensional data into a computer, and related digitizing
software applications (including InScribe and Vertisketch for Lightwave) and
digitizing software drivers, in object code and source code form, which
technology is currently used commercially in a product line sold under the
MicroScribe trademark as such product is further described in Exhibit B
("MicroScribe Technology").
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1.4 NET RECEIPTS means the gross receipts received by Immersion upon
any sales of Royalty Bearing Products to unaffiliated third parties, less any
actual returns and/or credits. Net Receipts shall not include freight, insurance
and taxes. No other costs incurred in the manufacture, sale, distribution, or
exploitation of Royalty Bearing Products shall be deducted from gross receipts
in the calculation of Net Receipts. If Royalty Bearing Products are bundled with
other items sold by Immersion and are not invoiced separately, royalties will be
paid based on Immersion's then-current average sales price for each such Royalty
Bearing Product when sold as a separate item (averaged for the applicable
Quarter in which the Net Receipts are received by Immersion for the country in
which the sale was made) in like quantities in arms length transactions to
unrelated third parties.
1.5 ROYALTY BEARING PRODUCT means a 3D digitizing technology product
which either incorporates or utilizes the MicroScribe Technology and/or would
otherwise infringe the MicroScribe Design Patent D 377,932 without a license.
2. DELIVERY AND GRANT OF LICENSES
2.1 DELIVERY. Licensor will deliver the MicroScribe Technology within
five (5) days of the Effective Date of this Agreement.
2.2 GRANT OF LICENSE. Subject to the terms of this Agreement, Licensor
grants to Immersion a worldwide, nonexclusive license under any MicroScribe
Intellectual Property Rights owned or licensable by Licensor, to use, reproduce,
modify, and create derivative works based upon the MicroScribe Technology in
order to develop, use, make, and have made 3D digitizing technology products,
and to sell, offer to sell, lease, license, import, demonstrate, perform,
display, market and distribute such 3D digitizing technology products, with the
further right to sublicense such rights through multiple tiers of sublicenses.
2.3 TRADEMARK LICENSE. Licensor hereby grants to Immersion a
nonexclusive, worldwide license, to use in connection with marketing Royalty
Bearing Products, the trademark(s) used by Licensor ("Marks") to identify the
MicroScribe Technology and Immersion agrees to use such Marks on and in
connection with the Royalty Bearing Products. Immersion acknowledges that all
use of the Marks will inure to the benefit of Licensor. At Licensor's reasonable
request, Immersion shall provide Licensor with samples of Immersion's use of
Licensor's trademarks. Immersion agrees to abide by Licensor's reasonable
written trademark policies as issued and provided to Immersion from time to
time. In any case where the Marks are not used in compliance with Licensor's
trademark policies and such use has been approved in writing by Licensor, upon
receipt of written notice from Licensor, Immersion will promptly correct the
non-compliance and submit samples of compliant use to Licensor for approval.
3. ROYALTIES
3.1 ROYALTY. Immersion shall pay Licensor a royalty based on a
percentage of the Net Receipts for each Royalty Bearing Product sold by
Immersion to unrelated third parties in arms
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length transactions, in accordance with the royalty schedule attached as Exhibit
C ("Royalty Schedule").
3.2 PAYMENTS AND REPORTS. The royalties to be paid by Immersion to
Licensor hereunder shall be due forty-five (45) days after the close of each
calendar quarter. Royalty reports setting forth the royalty calculation shall be
included with such payments.
3.3 AUDIT RIGHTS OF ROYALTY PAYMENTS. Licensor shall have the right, at
Licensor's expense, to have an independent auditor mutually agreed upon by
Licensor and Immersion audit the Net Receipts and the royalty payments of
Immersion on an annual basis, unless such audit reveals any underpayment of
royalties in an amount greater than seven and one-half percent (7.5%) of actual
royalties due for any Year, in which case Immersion shall promptly remit an
amount equal to the underpayment and shall pay the reasonable costs of such
audit. Such audit shall be preceded by at least thirty (30) business days
advance written notice and shall be performed during normal business hours by
the auditor. The auditor shall have access to only those books and records of
Immersion which are reasonably necessary to determine the relevant royalties due
for Royalty Bearing Products.
4. TERM AND TERMINATION
4.1 TERM. Unless earlier terminated in accordance with the provisions
of this Agreement, this Agreement will remain in force for ten (10) years. The
parties agree that upon a Change of Control of Licensor, this Agreement will
terminate, except that the parties may, by mutual written agreement, waive such
termination or mutually agree on a later termination date. For purposes of this
Agreement, the term "Change of Control of Licensor" shall mean the occurrence of
(i) a transaction pursuant to which any person (or group of persons) other than
Immersion or its affiliates (a "Third Party") acquires more than 50% of the
outstanding units of Licensor, (ii) a merger or other business combination
involving Licensor pursuant to which any Third Party acquires more than 50% of
the outstanding units of Licensor or the entity surviving such merger or
business combination or (iii) any other transaction pursuant to which any Third
Party acquires control of assets of Licensor having a fair market value (as
determined by Immersion in good faith) equal to more than 50% of the fair market
value of all the assets of Licensor immediately prior to such transaction.
4.2 TERMINATION FOR BREACH. This Agreement may be terminated by either
party upon written notice to the breaching party, if the breaching party
materially breaches this Agreement and fails to remedy the breach within thirty
(30) days after being given written notice thereof.
4.3 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement for any reason, Immersion agrees to pay Licensor for royalties due
under this Agreement. Upon any termination of this Agreement, Immersion shall
have one hundred and twenty (120) days to distribute any remaining inventory in
process and/or in existence as of the effective date of the termination, subject
to the obligation for Immersion to pay royalties hereunder for any such
distribution by Immersion.
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5. WARRANTY OF TITLE
Licensor represents and warrants that Licensor either has ownership of,
or sufficient rights in, the MicroScribe Technology and MicroScribe Intellectual
Property to enter into this Agreement and to grant all the rights set forth
herein.
6. INDEMNIFICATION
6.1 INFRINGEMENT. Subject to prompt notification by Immersion,
cooperation by Immersion and control of all litigation and/or settlement by
Licensor, Licensor shall indemnify, defend and hold harmless Immersion from and
against any and all costs and damages suffered or incurred by Immersion as a
result of any third party claim that any MicroScribe Technology as delivered by
Licensor infringes upon any third party intellectual property right. Each party
agrees to notify the other promptly of any matters in respect to which the
foregoing indemnity in this Section 6 ("Indemnification") may apply. If notified
in writing of any action or claim for which Licensor is to provide indemnity,
Licensor shall defend those actions or claims at its expense and pay the costs
and damages awarded against Immersion in any such action, or pay any settlement
of such action or claim entered into by Licensor.
6.2 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 or damages suffered 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 3D digitizing technology.
7. LIMITATION OF LIABILITY
7.1 DISCLAIMER OF CERTAIN TYPES OF DAMAGES. IN NO EVENT WILL LICENSOR
OR IMMERSION 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 APPLY EVEN IF
LICENSOR AND IMMERSION HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
7.2 LIMITATION. EXCEPT WITH RESPECT TO MICROSCRIBE'S OBLIGATIONS OF
INDEMNITY, IN NO CASE WILL EITHER PARTY'S TOTAL CUMULATIVE LIABILITY OR
OBLIGATIONS UNDER THE TERMS OF OR ARISING OUT OF THIS AGREEMENT EXCEED THE
ROYALTIES PAID BY IMMERSION TO MICROSCRIBE.
7.3 NEGATION OF WARRANTIES AND OTHER OBLIGATIONS.
7.3.1 Nothing in this Agreement shall be construed:
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(i) as a warranty or representation that anything made,
used, sold or otherwise disposed of under any license
granted in this Agreement is or will be free from
infringement by patents, copyrights, trade secrets,
trademarks, or other rights of third parties;
(ii) as granting by implication, estoppel or otherwise any
licenses or rights under patents or other intellectual
property rights of Licensor other than expressly
granted herein; or
(iii) (a) to require Licensor to file any patent application
relating to any 3D digitizing technology and (b) a
warranty that Licensor will be successful in securing
the grant of any patent relating to any 3D digitizing
technology or any reissue or extensions thereof.
7.3.2 Except for Licensor's obligations of indemnity set forth
herein, Licensor does not assume any responsibility for the manufacture of the
3D digitizing technology products, or use of any 3D digitizing technology
products manufactured or sold by or for Immersion under the licenses granted
herein. All warranties in connection with such products shall be made by
Immersion as manufacturer or seller of such products and such warranties shall
not directly or by implication obligate Licensor in any way.
8. GENERAL
8.1 ENTIRE AGREEMENT. This Agreement constitutes the complete agreement
of the parties and supersedes any other agreements, written or oral concerning
the subject matter hereof.
8.2 SUCCESSION AND ASSIGNMENT. Neither party may assign this Agreement
without the prior written consent of the other party except that either party
may assign this Agreement 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 8.2 ("Succession and Assignment") shall be
void.
8.3 NOTICES. Notices required under this Agreement shall be addressed
as follows, except as otherwise revised by written notice:
TO IMMERSION: TO MICROSCRIBE:
Louis B. Rosenberg, Ph.D. Tim Lacey
President MicroScribe LLC
Immersion Corporation 2158 Paragon Drive
2158 Paragon Drive San Jose, CA 95131
San Jose, CA 95131
8.4 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.
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8.5 NO AGENCY. Neither party is to be construed as the agent, partner,
or joint venturer or to be acting as the agent, partner or joint venturer of the
other party hereunder in any respect, solely by reason of this Agreement.
8.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which taken together shall constitute one single Agreement
between the parties.
8.7 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.
8.8 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.
8.9 AMENDMENTS IN WRITING. Any amendment to this Agreement shall be in
writing and signed by both parties hereto.
8.10 INTERPRETATION. Since this Agreement was prepared by both parties
hereto, it shall not be construed against any one party as the drafting party.
8.11 SURVIVAL. Sections 3.1 ("Royalties"), 3.2 ("Payments and
Reports"), 4.3 ("Effect of Termination"), 6 ("Indemnification"), 7 ("Limitation
of Liability") and 8 ("General") shall survive any termination or expiration of
this 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.
IMMERSION CORPORATION, MICROSCRIBE, LLC,
a California corporation a California limited liability company
By: /s/ Louis Rosenberg By: /s/ Timothy A. Lacey
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Name: Louis Rosenberg Name: Tim Lacey
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Title: President Title: Manager
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Date: Date:
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EXHIBIT A
MICROSCRIBE INTELLECTUAL PROPERTY
Licensed Patents:
MicroScribe Design Patent D 377,932 (issued Feb. 11, 1997)
Pending Patent Serial Number: 08/512,084
Pending Patent Serial Number: 08/741,190
Pending Patent Serial Number: 08/744,725
Pending Patent Serial Number: 08/739,454
MicroScribe PCT Patent Application IMM1P010.P
Trademarks:
MicroScribe-3D
Personal Digitizer
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EXHIBIT B
MICROSCRIBE TECHNOLOGY
MicroScribe Technology includes the items listed below:
(1) the following Microscribe software and source code:
(a) Microscribe firmware;
(b) Microscribe calibration software;
(c) Inscribe;
(d) Alias Driver;
(e) Vertisketch; and
(f) SDK (software development kit);
(2) the following Microscribe manufacturing documentation:
(a) Microscribe bill of materials;
(b) Microscribe drawings and database;
(c) Microscribe schematics; and
(d) Microscribe layout files and electronics;
(3) Microscribe fabrication tooling;
(4) Microscribe calibration, production fixtures, and test
electronics;
(5) Microscribe reseller contact information;
(6) Microscribe user documentation; and
(7) a copy of the Microscribe calibration files.
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EXHIBIT C
ROYALTY SCHEDULE
Royalties shall be based on the following formula:
A) 5% of the portion of annual Net Receipts up to the Threshold
Amount, as defined below; and
B) 10% of the portion of annual Net Receipts exceeding the
Threshold Amount.
The Threshold Amount for Net Receipts shall be equal to the following:
1) $1,000,000 for calendar year 1997;
2) $2,500,000 for calendar year 1998;
3) $3,125,000 for calendar year 1999;
4) $2,500,000 for calendar year 2000;
5) $1,250,000 for calendar year 2001; and
6) $0 (zero) for all years thereafter.
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