Exhibit 10.20
AMENDED AND
RESTATED
PATENT LICENSING
AGREEMENT
This AMENDED AND RESTATED PATENT
LICENSING AGREEMENT (hereinafter referred to as the
“Agreement”) is made and entered into March 28, 2005
(the “Effective Date”) by and between NeoMagic
Corporation, a corporation duly organized and existing under the
laws of the State of Delaware and having its principal office at
3250 Jay Street, Santa Clara, California, 95054 (hereinafter
referred to as “NEOMAGIC”) and The Consortium for
Technology Licensing, Ltd., a corporation duly organized under the
laws of the State of New York and having its principal office at
Six Swan Place, Nissequogue, New York 11780-1335 (hereinafter
referred to as “CONSORTIUM”). This Agreement amends and
restates in its entirety the April 1, 2002 Patent Licensing
Agreement and all amendments thereto between NEOMAGIC and
CONSORTIUM.
WITNESSETH
WHEREAS, NEOMAGIC is the owner of
certain Patent Rights (as later defined herein) relating to the
patents and patent applications listed in Appendix A hereto and has
the right to grant licenses in respect of said Patent
Rights;
WHEREAS, NEOMAGIC desires to appoint
CONSORTIUM as its exclusive licensing agent, subject to certain
conditions as later specified herein, to derive licensing revenue
from third parties that wish to exercise the Patent Rights in
connection with the manufacture, use or sale of products that are
not made by or for NEOMAGIC and do not incorporate NEOMAGIC
products;
WHEREAS, CONSORTIUM has represented
to NEOMAGIC, to induce NEOMAGIC to enter into this Agreement, that
CONSORTIUM possesses expertise in the licensing of intellectual
property similar to the Patent Rights and that it shall commit
itself to a thorough, vigorous and diligent program, the objective
of which will be to assist NEOMAGIC in deriving licensing revenue
from some or all of the Patent Rights; and
WHEREAS, CONSORTIUM desires to
obtain the right to derive licensing revenue on NEOMAGIC’s
behalf from the Patent Rights upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants contained herein, the parties
hereto agree as follows:
1. DEFINITIONS .
For the purposes of this Agreement,
the following words and phrases shall have the following
meanings:
1.1 “Confidential
Information” as used in this Agreement shall mean any trade
secrets or other secret or confidential information of NEOMAGIC,
and any ideas and expressions contained in any deliverables
provided by NEOMAGIC to CONSORTIUM. Confidential Information does
not include any portions of any such deliverables which are made
publicly available by NEOMAGIC or which are generally known outside
NEOMAGIC. Confidential
Information also includes any other confidential
information belonging to or relating to the business of NEOMAGIC or
its affiliated companies including, without limitation, information
relating to NEOMAGIC’s customers, intellectual property,
employees, programs, costs, products, apparatus, equipment,
financing, plans or technology which NEOMAGIC does not make
generally available to the public.
1.2 “Licensed Product”
shall mean any product or part thereof which:
(a) the manufacture, use or sale of
which is covered in whole or in part by any claim in the NEOMAGIC
Patents in the country in which any such product or part thereof is
made, used or sold; or
(b) is manufactured by using a
process or is employed to practice a process which is covered in
whole or in part by any claim in the NEOMAGIC Patents in the
country in which any Licensed Process is used or in which such
product or part thereof is used or sold.
Notwithstanding the foregoing, “Licensed
Product” does not include any NeoMagic Product.
1.3 “Licensed Process”
shall mean any process which is covered in whole or in part by any
claim contained in the NEOMAGIC Patents.
1.4 “Licensee” means a
licensee of the Patent Rights that has executed a Licensee
Agreement either directly with NEOMAGIC or with any of its
Subsidiaries in accordance with this Agreement.
1.5 “Licensee Agreement”
means the written agreement each Licensee shall execute either
directly with NEOMAGIC or with any of its Subsidiaries in order to
obtain the right to manufacture, use or sell products incorporating
or embodying all or part of the Patent Rights; provided that if any
Licensee Agreement is renegotiated by NEOMAGIC or by any of its
Subsidiaries, it shall continue to be deemed a Licensee Agreement.
Notwithstanding the foregoing, “Licensee Agreement”
does not include any agreement relating to the design, development,
manufacture, distribution or sale of a NeoMagic Product.
1.6 “NEOMAGIC Patents”
shall mean all the patents and/or patent applications, in all
countries of the world, currently owned by NEOMAGIC and/or its
Subsidiaries, as listed in Appendix A, and all patents and/or
patent applications, in all countries of the world, which shall in
the future issue to, or be applied for, by NEOMAGIC and/or its
Subsidiaries, which shall be incorporated into Appendix A from time
to time, by amendment.
1.7 “NeoMagic Product”
means any hardware or software product manufactured by or for
NEOMAGIC or any third party product that incorporates a hardware or
software product manufactured by or for NEOMAGIC.
1.8 “Net Revenues” shall
mean the total amount actually paid, during the term of this Patent
Licensing Agreement and for five (5) years thereafter, by any third
party, by way of
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Confidential
treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
Omitted portions have been filed separately with the
Commission.
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license fees, royalties or any other types of
payments, to NEOMAGIC and/or its Subsidiaries for the right to use
the Patent Rights pursuant to a Licensee Agreement, less the
following amounts related to such third party payments incurred
pursuant to this Agreement: (i) outside engineering time and
expenses incurred by NEOMAGIC and/or its Subsidiaries; (ii) outside
legal expenses incurred by NEOMAGIC and/or its Subsidiaries; (iii)
out-of-pocket disbursements incurred by NEOMAGIC and/or its
Subsidiaries; and (iv) all amounts paid to CONSORTIUM as
reimbursement of expenses under Section 4.4 hereof. Notwithstanding
the above, the outside legal expenses referred to in this Section
1.8 shall not include NEOMAGIC’s and/or its
Subsidiaries’ normal patent-related costs such as, but not
limited to, prosecution and patent maintenance. NEOMAGIC shall
provide CONSORTIUM with adequate documentary evidence of the items
described in (i) – (iii) directly above. Any expenses
deducted from Net Revenues under this Section 1.8(i) – (iv)
shall be deducted pro-rata from all payments to be received under a
Licensee Agreement, and not from just the first payment(s) under
such Licensee Agreement.
1.9 “Patent Rights”
means the rights to make, have made, use, lease, sell and import
products incorporating and/or using the NEOMAGIC
Patents.
1.10 [***]
1.11 “Records” shall
mean any documents, tapes, records or other materials in printed or
machine-readable form containing any Confidential
Information.
1.12 “Subsidiary” shall
mean any corporation, company or other entity of which a party
hereto, now or hereafter, owns or controls, directly or indirectly,
more than fifty percent (50%) of the Voting Rights. As used herein,
the term “Voting Rights” means (i) the outstanding
shares or stock entitled to vote for the election of directors of a
corporation, company or other entity in question or (ii), in case
such entity does not have outstanding shares or securities, the
ownership interest representing the right to manage such entity.
Any corporation, company or other entity which would at any time be
a Subsidiary of NEOMAGIC or CONSORTIUM, as the case may be, by
reason of the foregoing, shall be considered as a Subsidiary for
the purposes of this Agreement only so long as the ownership or
control, directly or indirectly, by NEOMAGIC or CONSORTIUM, as the
case may be, meets the conditions hereinabove set forth.
“Subsidiaries” of NEOMAGIC or CONSORTIUM shall mean,
respectively, all corporations, companies or other entities that
qualify as a Subsidiary under the foregoing.
2. APPOINTMENT .
2.1 Subject to the terms and
conditions of this Agreement, NEOMAGIC hereby appoints CONSORTIUM
as its exclusive agent to negotiate Licensee Agreements with
Licensees on behalf of NEOMAGIC.
2.2 (a) Except for the rights
expressly granted to CONSORTIUM hereunder, NEOMAGIC reserves all
rights in and to the NEOMAGIC Patents, including without limitation
the right:
(i) to use the Patent Rights in all
past, current and future NEOMAGIC designs and
components;
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Confidential
treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
Omitted portions have been filed separately with the
Commission.
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(ii) to license the Patent Rights to
any third party for purposes of the third party designing,
developing, manufacturing, distributing or selling any NeoMagic
product; and
(iii) to license or sell any of the
NEOMAGIC Patents.
(b) Notwithstanding any other
provision of this Agreement, NEOMAGIC shall not be required to make
any payments to CONSORTIUM, by way of Royalty Payments or otherwise
as a result of:
(i) exercising any rights under
2.2(a)(i) or 2.2(a)(ii) above; or
(ii) any payments or other
consideration received by NEOMAGIC or its stockholders as the
result of (1) any general sale of the assets of NEOMAGIC or any of
its divisions, (2) the reorganization of NEOMAGIC, or (3) the
merger, acquisition or spin-off of NEOMAGIC or any of its divisions
into or by a third party or separate entity; or
(iii) any payments or other
consideration received by NEOMAGIC as the result of any business
arrangement or agreement whose primary objective does not relate to
the intellectual property area (although intellectual property may
be a component thereof) and which was negotiated directly between
NEOMAGIC and a third party, without any involvement on the part of
CONSORTIUM; or
(iv) any payments or other
consideration received by NEOMAGIC as the result of any business
arrangement or agreement between NEOMAGIC and a third party which
was effected after NEOMAGIC specifically requested that CONSORTIUM
represent NEOMAGIC in pursuing such business arrangement or
agreement with such third party and CONSORTIUM elected, for any
reason whatsoever, not to represent NEOMAGIC in pursuing such
business arrangement or agreement, resulting in NEOMAGIC’s
either having to negotiate with such third party directly or having
to enlist the assistance of an outside consultant or agent (other
than CONSORTIUM) to negotiate with such third party.
(c) Notwithstanding any other
provision of this Agreement, any third party, or other entity, that
acquires all, or substantially all, of the assets of NEOMAGIC shall
not be required to make any payments to CONSORTIUM, by way of
Royalty Payments or otherwise, under the following circumstances:
(i) the primary business of such third party, or other entity, is
the licensing of intellectual property, (ii) the third party, or
other entity, grants a license under the Patent Rights to another
company or organization not previously licensed under the Patent
Rights and (iii) CONSORTIUM has not contacted or met with such
company or organization on behalf of NEOMAGIC for at least one (1)
year prior to such third party’s acquiring all, or
substantially all, of the assets of NEOMAGIC.
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Confidential
treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
Omitted portions have been filed separately with the
Commission.
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2.3 Notwithstanding any other
provision in this Agreement, CONSORTIUM shall not enter into any
Licensee Agreement with any Licensee.
2.4 CONSORTIUM agrees to forward to
NEOMAGIC an original copy of any and all Licensee Agreements
promptly upon execution by the parties. NEOMAGIC agrees to forward
to CONSORTIUM an original copy of all Licensee Agreements promptly
upon execution by the parties. CONSORTIUM agrees that all
agreements with Licensees will be made solely between the Licensee
and NeoMagic.
2.5 CONSORTIUM shall not license the
NEOMAGIC Patents in conjunction with any other party’s
patents or patent rights without the prior written consent of
NEOMAGIC.
2.6 The rights granted hereunder
shall not be construed to confer any rights upon CONSORTIUM, by
implication, estoppel, or otherwise, as to any technology or
intellectual property other than any rights expressly set forth
herein.
2.7 NEOMAGIC recognizes that, in
order to secure licensing agreements, the inventors of the NEOMAGIC
Patents will need to be available for meetings with potential
Licensees and for a reasonable amount of consultation with
CONSORTIUM, from time to time, as required, without fee.
2.8 CONSORTIUM will endeavor to
negotiate all Licensee Agreements in the English
language.
2.9 The parties agree to meet
regularly, at mutually-convenient times and places, after the
execution of this Agreement to discuss and determine strategies
concerning the licensing of Patent Rights to Licensees.
3. CONSORTIUM OBLIGATIONS
.
3.1 CONSORTIUM shall use its best
efforts to derive Net Revenues from Licensees, through licensing
and/or selling, all or part, of the Patent Rights to Licensees
through a thorough, vigorous and diligent program for exploitation
of the Patent Rights. Without limiting the foregoing, CONSORTIUM
shall:
(a) use reasonable efforts to
promote licenses of the Patent Rights to third parties;
and
(b) conduct its business in a manner
that reflects positively on NEOMAGIC and the Patent
Rights.
3.2 CONSORTIUM acknowledges that the
Confidential Information constitutes valuable, confidential
proprietary information of NEOMAGIC and agrees that both during the
term hereof and thereafter CONSORTIUM shall not, except in the
provision of its services hereunder and for the exclusive advantage
of NEOMAGIC, use or disclose to any third party any
Confidential
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treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
Omitted portions have been filed separately with the
Commission.
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Information acquired by it. CONSORTIUM also
agrees not to use or permit others to use the Confidential
Information, or to make copies of any of the Records, except as may
be authorized by NEOMAGIC. CONSORTIUM acknowledges that all
Records, including all copies thereof, containing any Confidential
Information belong exclusively to NEOMAGIC and the same shall be
delivered up to NEOMAGIC forthwith following the termination or
expiration of this Agreement, or at any time at the request of
NEOMAGIC. CONSORTIUM agrees to comply with all security measures
and to follow all instructions provided by NEOMAGIC in order to
safeguard and protect the Confidential Information. CONSORTIUM will
advise NEOMAGIC of any unauthorized disclosure or use of any of the
Confidential Information of which it becomes aware.
3.3 CONSORTIUM shall be required to
receive NEOMAGIC’s consent prior to approaching any party for
purposes of discussions or negotiations, or for purposes of
pursuing an infringement claim concerning the NEOMAGIC Patents,
which consent NEOMAGIC may withhold in its sole discretion.
NEOMAGIC agrees that for a period of eighteen (18) months following
the grant of such consent, that NEOMAGIC, or any designee or
representative of NEOMAGIC, shall not approach that party for the
purposes of pursuing an infringement claim concerning, or
negotiating a license to use, the NEOMAGIC Patents. In the event
where a consent is not given, NEOMAGIC reserves the right to
approach that party for the purposes of pursuing an infringement
claim concerning, or negotiating a license to use, the NEOMAGIC
Patents.
3.4 CONSORTIUM agrees that, if it is
prevented from pursuing a claim of infringement against a party, or
concluding a Licensee Agreement with a party for reasons of
conflict of interest, that, notwithstanding any other provision in
this Agreement, NEOMAGIC shall immediately be permitted to approach
that party for purposes of pursuing an infringement claim or
concluding a Licensee Agreement.
4. ROYALTIES AND EXPENSES
.
4.1 (a) The first [***] of Net
Revenues derived from Licensee Agreements and/or sales transactions
of one or more NEOMAGIC Patents will accrue entirely to NEOMAGIC.
Thereafter, for all Net Revenues in excess of the first [***],
except as provided in section 2.2(b) above, NEOMAGIC shall pay to
CONSORTIUM royalty payments (the “Royalty Payments”)
calculated as follows:
(i) [***] of Net Revenues derived
from Licensee Agreements;
(ii) [***] of all Net Revenues
associated with sales transactions of one or more NEOMAGIC Patents,
and
(iii) an additional one-time bonus
of [***] if CONSORTIUM exceeds performance targets established by
agreement with NEOMAGIC.
(b) If NEOMAGIC is compensated by a
Licensee in other than financial terms under (i) or (ii) above,
then the parties will negotiate in good faith to determine a
comparable amount of compensation to CONSORTIUM in lieu of the
Royalty Payments.
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treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
Omitted portions have been filed separately with the
Commission.
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(c) If NEOMAGIC licenses or sells
all or part of the Patent Rights to a third party and CONSORTIUM is
not involved, and has not been involved, at any time, in the
introduction of, or the negotiation or transaction with, the third
party, then the “Royalty Payments” that NEOMAGIC shall
pay to CONSORTIUM, as specified above in Section 4.1(a), (i) and
(ii), shall be reduced [***] to [***] in Section 4.1(a)(i) and from
[***] to [***] in Section 4.1(a)(ii), and NEOMAGIC shall pay such
reduced payments to CONSORTIUM.
4.2 The Royalty Payments due
hereunder to CONSORTIUM shall be paid in full without deduction of
taxes or other fees which may be imposed by any government and
shall be paid by NEOMAGIC to CONSORTIUM within a thirty (30) day
period following the end of each calendar quarter in which NEOMAGIC
receives payment of the Net Revenues.
4.3 Royalty Payments shall be paid
to CONSORTIUM in United States dollars. If any currency conversion
shall be required in connection with the payment of royalties
hereunder, such conversion shall be made by using the mid point of
the exchange rate specified by The Wall Street Journal on
the last business day of the calendar quarterly reporting period to
which such Royalty Payments relate.
4.4 CONSORTIUM shall be responsible
for paying all of its out-of-pocket expenses incurred in connection
with its efforts to facilitate the obtaining of Net Revenues, as
per the terms of this Agreement, including, but not limited to,
out-of-pocket expenses, travel expenses, telephone bills, mailing
charges, copying charges and fees incurred for technical patent
analysis. However, CONSORTIUM shall not be responsible, in any way,
for reimbursing NEOMAGIC for any costs, fees or expenses whatsoever
that NEOMAGIC incurs unless NEOMAGIC has obtained specific written
authorization to incur any such costs, fees or expenses from
CONSORTIUM prior to NEOMAGIC inc