Immersion Corp · S-3 · On 9/8/03 · EX-10.5

Filed On 9/8/03 4:36pm ET   ·   SEC File 333-108607   ·   Accession Number 891618-3-4696

Registration Statement for Securities Offered Pursuant to a Transaction   ·   Form S-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-3         Registration Statement for Securities Offered       HTML    203K 
                          Pursuant to a Transaction                              
 2: EX-10.3     Material Contract                                      7     29K 
 3: EX-10.4     Material Contract                                      9     35K 
 4: EX-10.5     Material Contract                                     12     42K 
 5: EX-10.6     Material Contract                                      7     27K 
 6: EX-23.2     Consent of Experts or Counsel                          1      5K 

EX-10.5   ·   Material Contract
Exhibit Table of Contents

EX-10.5
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                                                                    Exhibit 10.5

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS        
EXHIBIT, WHICH PORTIONS HAVE BEEN OMITTED AND REPLACED WITH [****] AND FILED    
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.                         

SUBLICENSE AGREEMENT

     THIS SUBLICENSE AGREEMENT ("SUBLICENSE AGREEMENT") is entered into and is
effective on this 25th day of July, 2003 (the "EFFECTIVE DATE") by and between  
MICROSOFT CORPORATION, a Washington corporation with principal offices in       
Redmond, Washington ("MICROSOFT") and IMMERSION CORPORATION, a Delaware         
corporation with principal offices in San Jose, California ("IMMERSION"), each a
"PARTY" and collectively, the "PARTIES."                                        

RECITALS

    WHEREAS, Immersion has the right to grant a license to Microsoft and its
Subsidiaries to enable Microsoft and its Subsidiaries to grant the below        
described sublicenses to third parties, under certain patent rights more fully  
described below; and                                                            

 WHEREAS, Microsoft desires to acquire a sublicensing right under such
patent rights and Immersion desires to grant such a sublicensing right, all on  
the terms and conditions set forth in this Agreement.                           

 NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Parties agree as follows:                                 

 AGREEMENT

1.    DEFINITIONS.                                                              

A.    "ADULT PRODUCT" means: [****].                                

B.    "CONDITIONAL PATENTS" means [****].                           

C.    "FOUNDRY PRODUCT" means [****].                               

D.    "GAME PLATFORM" means: [****].                                

 E.    "GAME PLATFORM VENDOR" means an entity which distributes a Game
Platform under its own name.                            

      F.    "LICENSED PATENTS" means all Patents under which Immersion or any of
          its present or future Subsidiaries owns or has as of the Effective
 Date (or as of the acquisition date in the case of future
           Subsidiaries), or thereafter obtains, the ability or right to grant
      licenses, releases or freedom from suit, with the exception of
Conditional Patents.                                    

      G.    "MEDICAL PRODUCT" means [****]. General purpose hardware or software
          whose primary function is not the delivery of one of the foregoing
is not a Medical Product.                               

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 PROVIDED UNDER RULE 408

H.    "PATENT" means any patent, patent application, provisional    
    application, continuation, continuation-in-part, divisional,
          reissue, renewal, reexamination, utility model, design patent, and
foreign counterparts thereof.                           

I.    "ROYALTY-BEARING [****] PRODUCTS" means:                      

            (I)   [****] except to the extent that such devices constitute Adult
        Products, Medical Products, or Foundry Products; and

       (II)  [****], except to the extent that such devices constitute
          Adult Products, Medical Products, or Foundry Products.

            A handheld device having a primary purpose of playing games shall be
         deemed to fall within the "Game Platform" definition and is not a
Royalty-Bearing [****] Product.                         

J.    [****]                                                        

K.    [****]                                                        

L.    "SUBLICENSEE" means any entity to which Microsoft may grant a 
sublicense in accordance with this Sublicense Agreement.

      M.    "SUBSIDIARY" means a corporation, company or other entity: (i) fifty
       percent (50%) or more of whose outstanding shares or securities
        (representing the right to vote for the election of directors or
 other managing authority) are, now or hereafter, owned or
       controlled, directly or indirectly, by a given entity, but such
    corporation, company or other entity shall be deemed to be a
            Subsidiary only so long as such ownership or control exists; or (ii)
           which does not have outstanding shares or securities, as may be the
           case in a partnership, joint venture or unincorporated association,
   but fifty percent (50%) or more of whose ownership interest
          representing the right to make the decisions for such corporation,
          company or other entity is, now or hereafter, owned or controlled,
        directly or indirectly, by a given entity, but such corporation,
          company or other entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.               

N.    "TOUCH TECHNOLOGY" means technology related to calculating,   
         processing, amplifying, communicating, transmitting, controlling,
    applying, producing, using, or enhancing touch sensations or
    information related to the sense of touch (e.g., resistance,
        texture, force). Examples include force feedback, vibration, and
tactile response applications.                          

2.    SUBLICENSING RIGHTS AND PAYMENTS.                                         

A.    SUBLICENSE RIGHTS FOR GAME PLATFORM VENDORS.                  

    (I)   Grant of Rights. Immersion on behalf of itself and its
                 Subsidiaries, hereby grants to Microsoft and its Subsidiaries
                the worldwide, irrevocable, non-terminable right, subject to
                  and during the period set forth in Section 2(j), to sublicense
          Game Platform Vendors and their Subsidiaries under the
             Licensed Patents (excluding Patents not directed to Touch
Technology) to:                             

       (1)   make, have made, use, lease, distribute, have
                        distributed, publish, have published, import, provide as
 a service, offer to sell, sell or

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                        otherwise dispose of such Game Platform Vendor's and its
 Subsidiaries' Game Platforms; and

               (2)   further sublicense third party software developers to
                     use such Game Platform Vendor's and its Subsidiaries'
                   Game Platform software development tools to develop
     games solely for such Game Platforms.

       (II)  Delivery of Copy of Game Platform Sublicense. Microsoft's
           grant of such a sublicense to a Game Platform Vendor is
                 referred to herein as a "GAME PLATFORM SUBLICENSE." Except as
             set forth in the last sentence of Section 2(c), Microsoft
                  shall provide Immersion with a copy of the fully executed Game
           Platform Sublicense within ten (10) days after the Game
        Platform Sublicense is executed by Microsoft and the
applicable Game Platform Vendor.            

      B.    COMPENSATION FOR GAME PLATFORM VENDORS [****]. As Immersion's entire
       compensation with respect to each individual sublicense granted
     under Section 2(a) above to a particular Game Platform Vendor
        [****], (a) Microsoft shall pay Immersion [****] within ten (10)
           days of Microsoft's granting any such Game Platform Sublicense, and
       (b) thereafter Microsoft shall pay Immersion [****] of the cash
           amounts (if any, and including royalty payments and upfront, annual
            or other license fees) received by Microsoft from such Game Platform
   Vendor for the Game Platform Sublicense in excess of [****]
      ("ADDITIONAL SUBLICENSING REVENUE") within thirty (30) days of
        Microsoft's receipt of any such Additional Sublicensing Revenue.

C.    COMPENSATION FOR [****] GAME PLATFORM SUBLICENSE. In the event
           Microsoft grants [****] a Game Platform Sublicense on the terms set
       forth in Section 2(a) above, the following terms shall apply in
      place of the terms of Section 2(b). Within ten (10) days after
       Microsoft grants [****] the Game Platform Sublicense, Microsoft
shall pay Immersion:                                    

          (I)   [****] if the Game Platform Sublicense is entered into prior
               to the date that is thirty (30) days prior to the then most
recently [****];                            

           (II)  [****] if the Game Platform Sublicense is entered into within
                 the thirty (30) day period immediately prior to the then most
recently [****];                            

           (III) [****] if the Game Platform Sublicense is entered into during
            the time period the [****] is underway, but prior to the
       delivery of [****] to Immersion (if any) [****]; or

       (IV)  the greater of [****] or the amount that is [****] of any
                  [****] that has been [****] if the Game Platform Sublicense is
               entered into after the delivery of the [****] referenced in
                  (3) above. Microsoft shall be entitled to deduct [****] of the
                  cash amount received by Microsoft [****] for the Game Platform
              Sublicense from the amounts payable under this clause (4);
            provided that the amount payable by Microsoft under this
    clause (4) will in no event be less than [****].

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 PROVIDED UNDER RULE 408

        In any of the cases described under clauses (1) - (4) above, the
        Parties shall each be entitled to [****] of the cash amounts (if
        any, and including royalty payments and upfront, annual or other
        license fees) received by Microsoft [****] for the Game Platform
       Sublicense in excess of the applicable amount specified in such
            clauses (1) - (4) (after implementation of the calculation specified
        in clause (4)). Any license grant [****] under the Game Platform
      Sublicense shall not become effective until [****] renders all
           compensation required under the Game Platform Sublicense to be paid
            by [****] as of the effective date of such Game Platform Sublicense.
      At the time of making payment to Immersion for the [****] Game
          Platform Sublicense, Microsoft shall also provide Immersion with a
   fully executed copy of the [****] Game Platform Sublicense.

D.    MICROSOFT'S RIGHT TO SUBLICENSE [****] FOR ADDITIONAL         
           [****]PRODUCTS. Immersion on behalf of itself and its Subsidiaries,
      hereby grants to Microsoft and its Subsidiaries the worldwide,
           irrevocable, non-terminable right, subject to and during the period
          set forth in Section 2(j), to sublicense [****] under the Licensed
       Patents (excluding Patents not directed to Touch Technology) to
            make, have made, use, offer to sell and sell or otherwise distribute
           Royalty-Bearing [****] Products, subject to the royalty obligations
            set forth in Exhibit A. In the event Microsoft and [****] execute an
      agreement for such a sublicense, Immersion shall pay Microsoft
           [****] within ten (10) days after the execution thereof. Within ten
            (10) days after execution of any sublicense under this Section 2(d),
           Microsoft shall provide a fully executed copy thereof to Immersion.

E.    PAYMENTS TO MICROSOFT IN THE EVENT IMMERSION [****] PRIOR TO  
          MICROSOFT GRANTING [****] A GAME PLATFORM SUBLICENSE. In the event
         Immersion elects in its discretion to [****] prior to Microsoft's
       granting [****] the Game Platform Sublicense (and regardless of
       whether such [****] occurs during or after the twenty-four (24)
            month period following the Effective Date), then Immersion shall pay
Microsoft an amount determined as follows:              

   (I)   If Immersion [****] for an amount of [****] up to and
                including [****], then Immersion shall pay Microsoft the sum
of [****].                                  

         (II)  If Immersion [****] for an amount in excess of [****] up to
                and including [****], then Immersion shall pay Microsoft the
                  sum of [****] plus an additional amount equal to [****] of the
          amount of the settlement in excess of [****] up to and
including [****].                           

         (III) If Immersion [****] for an amount in excess of [****], then
          Immersion shall pay Microsoft the sum specified in the
                  preceding clause (3) plus an additional amount equal to [****]
        of the amount of the settlement in excess of [****].

       The [****] amounts specified in clauses (i) - (iii) above shall
        include all amounts, including all royalty payments and upfront,
            annual or other license fees (regardless of when received), received
  by Immersion on account of any license, [****], or similar
      consideration granted by Immersion to [****] in respect of the
            Licensed Patents, including for fields of use outside of the area of
           Game Platforms, and(a) in connection with the [****], including any
agreement, license,                                     

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            sublicense, option, investment, or other transaction associated with
     [****], and (b) with respect to any other agreement, license,
         sublicense, option, investment, or other transaction entered into
       during the time period that is the lesser of (1) the period set
            forth in Section 2(j), or (2) eighteen (18) months after [****]. Any
      amounts due under this Section 2(e) shall be paid to Microsoft
            within ten (10) days of Immersion's [****]. Immersion further agrees
      to promptly provide Microsoft with sufficient documentation of
            [****] to enable Microsoft to determine and confirm the payment owed
to Microsoft in the event of such [****].               

   F.    [****]. Within five (5) days after Microsoft grants [****] a Game
           Platform Sublicense and pays Immersion the amount due under Section
   2(c), Immersion, for no additional consideration or payment
           whatsoever (whether from Microsoft or [****]) will: (i) [****]; and
      (ii) [****] licensees, distributors, and customers, direct and
    indirect, [****]. The Immersion obligations set forth in the
           foregoing sentence shall be contingent on [****] (for no additional
   consideration or payment whatsoever from Immersion) [****].

G.    SUBLICENSING REVENUE FROM [****] JOINT VENTURE. If, during the
            period set forth in Section 2(j), Immersion grants a third party the
            right to grant licenses for the equivalent of Royalty-Bearing [****]
           Products to [****], Microsoft shall be entitled to receive [****] f
    all amounts received on account of the grant of such rights,
           including all royalty payments and upfront, annual or other license
          fees (regardless of when received). All such amounts shall be paid
            to Microsoft no than thirty (30) days after receipt by Immersion. In
     the event that [****], the aforementioned percentage shall be
increased to [****].                                    

H.    CONDITIONAL PATENTS. Immersion on behalf of itself and its    
Subsidiaries, agrees that [****].                       

I.    OWNERSHIP. Except as expressly licensed to Microsoft in this  
    Sublicense Agreement, Immersion retains all right, title and
       interest in and to the Licensed Patents. Immersion reserves all
  rights not expressly granted in this Sublicense Agreement.

 J.    LIMITATION. Microsoft's right to grant sublicenses to [****] or
    other third parties pursuant to this Section 2 shall only be
        effective during the [****] month period following the Effective
    Date; provided, however, that any such sublicense granted by
            Microsoft pursuant to this Section 2 during such [****] month period
           shall be effective for the life of the Licensed Patents or for such
       lesser duration as Microsoft and the applicable sublicensee may
agree, in their sole discretion.                        

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 PROVIDED UNDER RULE 408

3.    PAYMENT. Within five (5) days after the Effective Date, Microsoft shall   
pay Immersion by cashier's check, wire transfer or other immediately
available funds, one hundred thousand dollars (USD $100,000), in    
   consideration of the rights and covenants set forth herein. The payment
      referenced in this Section 3 is in addition to any payments that Microsoft
      may be obligated to make to Immersion under Sections 2(b), 2(c) or 2(h) of
this Sublicense Agreement.                                          

4.    CONFIDENTIALITY.  The terms, conditions, and existence of this            
Sublicense Agreement shall be treated as confidential information by
 the Parties, and neither Party shall disclose the existence, terms or
   conditions of this Sublicense Agreement to any third party (other than,
in the case of Microsoft, to [****] and to any other Game Platform  
Vendor entering into a Game Platform Sublicense) without the prior  
   written permission of the other Party.  Each Party, however, shall have
the right to make disclosures to the extent required by an order of 
  court, regulation of another governmental body, or otherwise by law or
by a stock exchange, provided that the Party shall promptly provide 
 written notice to the non-disclosing Party of the intended disclosure
  and of the court order or regulation prior to such disclosure and that
 the Party shall take all reasonable steps to minimize such disclosure
by, for example, obtaining a protective order and/or appropriate    
confidentiality provisions requiring that such information to be    
disclosed be used only for the purpose for which such law, order,   
   regulation or requirement was issued.  Additionally, (i) each Party may
 disclose the terms and conditions of this Sublicense Agreement to the
extent reasonably necessary, under a suitable confidentiality       
agreement, to its accountants, attorneys, financial advisors and in 
connection with due diligence activities relating to the sale of the
  stock or a portion of the business of a Party or its Subsidiaries, and
 (ii) Immersion shall be permitted to disclose to [****] and any other
Game Platform Vendor entering into a Game Platform Sublicense the   
  permitted scope of Microsoft's sublicense rights under this Sublicense
Agreement, provided that Immersion gives Microsoft notice of such   
 proposed disclosure and Microsoft does not respond within thirty (30)
days after such notice.                                             

5.    WARRANTIES.                                                               

A.    IMMERSION. Immersion represents, warrants, and covenants that:

   (I)   it has the full power and has taken the necessary and
                 appropriate steps to enter into this Sublicense Agreement and
assume the obligations hereunder;           

          (II)  it has the right to license the Licensed Patents, and it has
              the full power and has taken the necessary and appropriate
                steps to enter into this Sublicense Agreement and assume the
              obligations hereunder, and to grant the license rights and
covenants set forth herein;                 

        (III) it has not previously and will not grant any rights in the
                  Licensed Patents to any third party that are inconsistent with
the rights granted to Microsoft herein;     

            (IV)  it has not previously and will not grant during the period set
               forth in Section 2(j) to any third party the right to grant
                 [****] the sublicense rights granted in Sections 2(a) herein;

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            (V)   it has not assigned or otherwise transferred or subrogated any
                 interest [****], and, except in connection with an assignment
              by Immersion permitted by Section 8(d), will not assign or
        otherwise transfer or subrogate any interest [****];

(VI)  [****];                                           

(VII) [****];                                           

          (VIII) as of the Effective Date, there are no actual or threatened
                  lawsuits or claims relating to the Licensed Patents other than
          the action in the United States District Court for the
                  Northern District of California entitled Immersion Corporation
                  v. Sony Computer Entertainment of America, Inc., Sony Computer
           Entertainment Inc., and Microsoft Corporation, Northern
                 District of California Case No. C02-00710 CW (WDB), contract,
                business or licensing discussions with existing or potential
                 licensees and customers, and as set forth in Schedule 3.12 to
                the Series A Redeemable Convertible Preferred Stock Purchase
                Agreement executed by the Parties on even date herewith; and

          (IX)  as of the Effective Date, Immersion believes, in good faith,
                 that the issued Licensed Patents owned by Immersion are valid
and enforceable.                            

     B.    BY MICROSOFT. Microsoft represents, warrants, and covenants that it
            has the full power and has taken the necessary and appropriate steps
          to enter into this Sublicense Agreement and assume the obligations
hereunder.                                              

    C.    DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 5(a) AND 5(b)
           ABOVE, THE PATENTS ARE PROVIDED "AS IS" AND WITHOUT WARRANTY OF ANY
KIND. EACH PARTY DISCLAIMS ALL IMPLIED WARRANTIES OF    
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR   
NON-INFRINGEMENT.                                       

        Nothing in this Sublicense Agreement shall be construed (i) as a
           warranty or representation by Immersion as to the validity or scope
          of any Licensed Patents; (ii) as a warranty or representation that
            anything made, used, sold or otherwise disposed of under any license
         or sublicense granted in or under this Sublicense Agreement is or
    will be free from infringement by patents, copyrights, trade
       secrets, trademarks, or other rights of third parties; (iii) as
      granting by implication, estoppel or otherwise any licenses or
     rights under patents or other intellectual property rights of
            Immersion other than expressly granted herein; or (iv)(a) to require
        Immersion to file any patent application, (b) as a warranty that
           Immersion will be successful in securing the grant of any patent or
         any reissue or extensions thereof, or (c) to require Immersion to
    pay any maintenance fees or take any other steps to maintain
Immersion's patent rights. Immersion does not assume any
 responsibility for the manufacture of any product that is
manufactured or sold by or for Microsoft or Microsoft's 
         Subsidiaries, or their sublicensees. All warranties in connection
         with such products shall be made by the manufacturer or seller of
such products.                                          

6.    TERM; TERMINATION.                                                        

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    A.    TERM. Unless terminated by Microsoft pursuant to Section 6(b), the
          term of this Sublicense Agreement shall be from the Effective Date
           until the expiration of the last to expire of the Licensed Patents.

B.    TERMINATION. The parties expressly agree that this Sublicense 
          Agreement may not be terminated by Immersion, even in the event of
            Microsoft's breach of this Sublicense Agreement. Notwithstanding the
           foregoing, Microsoft may terminate this Sublicense Agreement in its
      sole discretion and at any time upon thirty (30) days' written
        notice in advance to Immersion. In the event Microsoft elects to
           terminate this Sublicense Agreement, (i) such termination shall not
          terminate or otherwise affect any sublicenses granted by Microsoft
           under this Sublicense Agreement prior to such termination, and (ii)
           Sections 4, 5, 6(b), 7, 8, and 9 shall survive. Termination of this
        Sublicense Agreement by Microsoft shall not in any way affect or
          relieve either of the Parties of the payment obligations set forth
           in Sections 2(b), 2(c), 2(d) and 2(h) of this Sublicense Agreement.

7.    LIMITATION OF LIABILITIES.                                                

NEITHER PARTY WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL,       
PUNITIVE OR SPECIAL DAMAGES RELATING TO THIS SUBLICENSE AGREEMENT, EVEN IF SUCH 
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.                      

8.    GENERAL.                                                                  

      A.    NOTICES. All notices and requests in connection with this Sublicense
         Agreement will be given in writing and will be deemed given as of
           the day they are received either by messenger, delivery service, or
      in the mails of the United States of America, postage prepaid,
           certified or registered, return receipt requested, and addressed as
follows:                                                

                                                                [Download Table]

TO: MICROSOFT                            TO: IMMERSION              
                                                                    
Microsoft Corporation                    Immersion Corporation      
Attention:  Vice President,              Attention:  Vice President,
Intellectual Property                    Legal Affairs              
One Microsoft Way                        801 Fox Lane               
Redmond, Washington  98052-6399          San Jose, California 95131 
Phone: (425) 882-8080                    Phone:  (408) 467-1900     
Fax: (425) 936-7329                      Fax:  (408) 467-1901       
Copy to: Vice President, Litigation                                 
Fax:  (425) 936-7409                                                

      or to such other address as the Party to receive the notice or
request so designates by written notice to the other.   

   B.    INDEPENDENT CONTRACTORS. The Parties are independent contractors,
     and nothing in this Sublicense Agreement will be construed as
       creating an employer-employee relationship, a partnership, or a
            joint venture between the Parties. Neither Party will have the power
         to bind the other Party or incur obligations on the other Party's
behalf without the other Party's prior written consent. 

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      C.    DISPUTE RESOLUTION. This Sublicense Agreement shall be construed and
         controlled by the laws of the State of Washington, and each Party
          consents to exclusive jurisdiction and venue in the federal courts
            sitting in King County, Washington, unless no federal subject matter
           jurisdiction exists, in which case each Party consents to exclusive
    jurisdiction and venue in the Superior Court of King County,
      Washington. Each Party waives all defenses of lack of personal
       jurisdiction and forum non-conveniens. Process may be served on
        either Party in the manner authorized by applicable law or court
     rule. In any action to enforce any right or remedy under this
  Sublicense Agreement or to interpret any provision of this
       Sublicense Agreement, the prevailing Party shall be entitled to
         recover its reasonable attorneys' fees, costs and other expenses.

      D.    ASSIGNMENT. This Sublicense Agreement will be binding upon and inure
       to the benefit of each Party's respective successors and lawful
        assigns. Microsoft will have the right to assign this Sublicense
   Agreement or any or all of its rights under this Sublicense
     Agreement, in whole or in part (in any case together with all
           restrictive terms continuing with such assignment) to any purchaser
        of any Microsoft business that grants the sublicenses authorized
            herein; provided, that Microsoft may not make any such assignment to
         [****]. This Sublicense Agreement may be assigned by Immersion to
          any acquiror of all or substantially all of the business or assets
   of Immersion, or in connection with a merger. Microsoft and
          Immersion will each have the right to merge or consolidate without
         the prior approval of the other Party. Except as permitted above,
     assignment of this Sublicense Agreement, whether by contract,
operation of law, or otherwise, will be void.           

   E.    CONSTRUCTION. If for any reason a court of competent jurisdiction
    finds any provision of this Sublicense Agreement, or portion
      thereof, to be unenforceable, that provision of the Sublicense
          Agreement will be enforced to the maximum extent permissible so as
         to effect the intention of the Parties, and the remainder of this
            Sublicense Agreement will continue in full force and effect. Failure
   by either Party to enforce any provision of this Sublicense
           Agreement will not be deemed a waiver of future enforcement of that
  or any other provision. This Sublicense Agreement has been
          negotiated by the Parties and their respective counsel and will be
       interpreted fairly in accordance with its terms and without any
strict construction in favor of or against either Party.

    F.    ENTIRE AGREEMENT. This Sublicense Agreement constitutes the entire
        agreement between the Parties with respect to the subject matter
      hereof and merges all prior and contemporaneous communications
           regarding the subject matter hereof. This Sublicense Agreement will
         not be modified except by a written agreement dated subsequent to
          the Effective Date and signed on behalf of Immersion and Microsoft
            by their respective duly authorized representatives. This Sublicense
        Agreement may be executed in any number of counterparts, each of
            which when so executed shall be deemed to be an original, and all of
    which taken together shall constitute one and the Sublicense
         Agreement. Delivery of an executed counterpart of this Sublicense
Agreement by facsimile transmission shall be            

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           effective as delivery of an originally executed counterpart of this
Sublicense Agreement.                                   

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 -------------------------------------------
 SIGNATURE PAGE TO THE
 GAME CONSOLE SUBLICENSE AGREEMENT
 -------------------------------------------

IN WITNESS WHEREOF, the Parties have entered into this Sublicense   
Agreement as of the Effective Date written above.                               

                                                                [Download Table]
                                       
IMMERSION CORPORATION                  

By:                                    
     ----------------------------------
     VICTOR VIEGAS                     
     President, Chief Executive Officer
     and Chief Financial Officer       

MICROSOFT CORPORATION                  

By:                                    
     ----------------------------------
     Name:                             
     Title:                            

By:                                    
     --------------------------------- 
     Name:                             
     Title:                            

By:                                    
     --------------------------------- 
     Name:                             
     Title:                            

 By:                                   
      ---------------------------------
      Name:                            
      Title:                           

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 EXHIBIT A

 ROYALTIES FOR ROYALTY-BEARING [****] PRODUCTS

1.    In the event Microsoft grants [****] the additional license rights        
 referenced in Section 2(d), Microsoft shall arrange for [****] to pay
royalties directly to Immersion as described below.                 

A.    The royalty applicable to each unit of a given type of        
           Royalty-Bearing [****] Product that is licensed, sold, or otherwise
   distributed or disposed of by any entity licensed under the
     sublicense granted pursuant to Section 2(d) of the Sublicense
Agreement (a "UNIT") shall be the greater of:           

(I)   [****] per Unit; or                               

      (II)  [****] of the wholesale cost of production of such Unit.

  B.    Alternatively, at [****] option, in the event that Immersion has
           entered into an agreement with a party other than [****] (excluding
         (i) the License Agreement entered into by Microsoft and Immersion
           simultaneously with the execution of this Agreement, (ii) any other
       agreement with a third party in connection with the [****]; and
       (iii) any agreement under which Immersion receives a license or
          [****] from such third party) (a "THIRD PARTY AGREEMENT") in which
           Immersion grants such third party rights under the Licensed Patents
     of equivalent scope to the rights sublicensed to [****] under
         Section 2(d), if, taken as a whole, the terms of such Third Party
            Agreement are more favorable than the terms of the agreement entered
            into by [****] and Microsoft pursuant to Section 2(d) ("SECTION 2(D)
           AGREEMENT"), [****] may elect that all material terms of such Third
          Party Agreement shall apply to [****] in place of the Section 2(d)
           Agreement. In the event of such an election by [****] and Microsoft
            shall terminate the Section 2(d) Agreement, and Immersion and [****]
          will enter into an agreement containing all such material terms of
such Third Party Agreement.                             

2.    Except as otherwise agreed by [****] and Immersion, royalties payable for 
    Units shall be paid within 30 days after the end of the calendar quarter
in which [****] receives revenue for such Unit and to a bank account
designated by Immersion.                                            

3.    [****] bundled with [****] shall not bear a separate royalty; the only    
royalty payable shall be on the underlying [****] which such [****] 
intended to be used.                                                

A-1