Exhibit 10.45
SETTLEMENT AGREEMENT
          This Settlement Agreement (the “Agreement”) is made and entered into
effective as of August 25, 2008 (“the Effective Date”) by and between Microsoft
Corporation, a Washington corporation, with its principal offices in Redmond,
Washington (“Microsoft”), and Immersion Corporation, a Delaware Corporation with
its principal offices in San Jose, California (“Immersion”). Microsoft and
Immersion are referred to in this Agreement individually as a “Party” and
collectively as the “Parties.”
          WHEREAS, the Parties previously entered into an agreement entitled
“Sublicense Agreement” effective as of July 25, 2003 (“Sublicense Agreement”).
          WHEREAS, the Parties previously entered into an agreement entitled
“Confidentiality Agreement” on May 11, 2007.
          WHEREAS, disputes have arisen between the Parties relating to the
Sublicense Agreement and the Confidentiality Agreement, resulting in the claims
and counterclaims asserted in the lawsuit entitled Microsoft Corporation v.
Immersion Corp., Case No. C07-0936RSM (the “Action”).
          WHEREAS, the Parties hereto desire to settle the Action and the
disputes between them on the terms and conditions set forth in this Agreement.
          NOW THEREFORE, in consideration of the terms and conditions set forth
in this Agreement, the Parties agree as follows:

1.   Payment. On or before October 1, 2008, Immersion shall cause to be
transmitted to Microsoft a one time payment by wire transfer in the amount of
Twenty Million Seven Hundred Fifty Thousand Dollars and no cents ($20,750,000).
Such wire transfer shall be made pursuant to wire instructions Microsoft
provides in writing to Immersion.   2.   Dismissal of The Action. Not later than
five days after Immersion’s payment pursuant to Section 2 above, Microsoft and
Immersion shall direct their counsel of record in the Action to sign a
Stipulation and Order For Dismissal With Prejudice (“Stipulation”) in the form
attached hereto as Exhibit A. Immersion and Microsoft shall cause the signed
Stipulation to be filed with the United States District Court for the Western
District of Washington as soon as practicable. The Parties agree to take all
actions reasonably necessary to effect the above-described Stipulation and
obtain the dismissal of the Action, including all claims and counterclaims
therein, with prejudice.   3.   Termination of Sublicense Agreement. The
Sublicense Agreement between the Parties dated July 25, 2003, is terminated and
is of no further force and effect. For the avoidance of doubt, all of
Immersion’s obligations under the Sublicense Agreement are deemed satisfied,
discharged and terminated in full.

 

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4.   Certified Partner Program – Gold Level. Microsoft agrees to admit Immersion
into Microsoft’s Gold Certified Partner Program, at no cost for a period of five
years, provided that Immersion meets all of the other requirements for inclusion
in that program, including any necessary training, certification, competency
participation and partner points. The above-described five year period shall
begin to run from the date on which Immersion has reached the Gold Certified
Partner Level, or eighteen (18) months from the Effective Date, whichever is
earlier, although in the latter case Immersion shall not be admitted at the Gold
Certified Partner Level until it qualifies. Services or resources available to
Gold Certified Partners for additional fees will be available to Immersion under
the normal terms and conditions applicable to the Program, including any
additional fee (but with the exception of any annual membership or program fees,
which such fees are expressly waived). Microsoft further agrees to enter into a
Microsoft Services OEM Foundation Service Agreement with Immersion (the “Service
Agreement”), under which Microsoft agrees to provide Immersion, at no cost to
Immersion, with up to 100 hours of support during a 12- month period commencing
from the execution of the Service Agreement.   5.   Mutual Releases. As of the
Effective Date, Microsoft and Immersion each hereby mutually release and forever
discharge the other Party (and the other Party’s current and former officers,
directors, employees, and attorneys), from any and all claims, causes of action,
demands, liabilities, damages, costs, attorney’s fees, or losses of any kind or
nature (hereafter “Claims”), whether known or unknown, which were asserted or
could have been asserted in the Action, or which relate to the Sublicense
Agreement, or which Microsoft or Immersion now has, or may hereafter acquire, by
reason of any matter, cause or thing whatsoever accruing, occurring or arising
at any time prior to the Effective Date. Nothing herein shall be deemed to
release either Party from an action to enforce the terms of this Settlement
Agreement or any other agreement that remains in effect between the Parties. For
the avoidance of doubt, Microsoft hereby agrees that the Releases provided
herein now and forever discharge Immersion from any and all obligations under
the Sublicense Agreement, and that pursuant to Section 4 above such Sublicense
Agreement has no further force or effect.   6.   Waiver of Statutory or Other
Rights Regarding Unknown Claims. The Parties agree and acknowledge that they may
have sustained damages, losses, fees, costs or expenses that are presently
unknown and unsuspected, and that such damages, losses, fees, costs or expenses
as either of them may have sustained might give rise to additional damages,
losses, fees, costs, or expenses in the future. The Parties further acknowledge
that they have been advised of and are familiar with the provisions of
Section 1542 of the California Civil Code, and like or similar provisions of
other States’ laws, which provide:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

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    Notwithstanding such provision, this Agreement shall constitute a full
release in accordance with its terms. Each of the Parties knowingly and
voluntarily waives the provisions of § 1542, as well as any other statute, law,
or rule of similar effect, and acknowledges and agrees that this waiver is an
essential and material term of this Agreement, and without such waiver, the
Agreement would not have been accepted. Each Party hereby represents that it has
been advised by his or its legal counsel, and that it understands and
acknowledges the significance and consequence of this release and of this
specific waiver of § 1542 and other such laws.   7.   No Other Asserted Claims.
Microsoft and Immersion each represent and warrant that other than the Action,
as of the Effective Date of this Agreement, neither Microsoft nor Immersion has
filed or asserted in any state or federal court, administrative agency, or other
tribunal any claim against the other.   8.   Other or Additional Facts. Each of
the Parties expressly and knowingly acknowledges that it may hereafter discover
facts different from and/or in addition to those which it now knows and/or
believes to be true with respect to its respective Claims released under this
Agreement, and which, if known to it at the time it executed this Agreement, may
have materially affected its decision to execute this Agreement. Each of the
Parties acknowledges and agrees that by reason of this Agreement and the
releases contained herein, it is voluntarily, knowingly, and after receiving the
advice of counsel assuming any risk of such unknown facts and such unknown and
unsuspected claims and that this Agreement shall be and shall remain in full
force and effect in all respects.   9.   Other Agreements. All agreements
currently in effect between the Parties other than the Sublicensing Agreement
including without limitation, the License Agreement between the Parties dated
July 25, 2003, and the Confidentiality Agreement between the Parties dated
May 11, 2007, remain in full force and effect. The Parties will continue to
abide by the Protective Order issued by the Court in this case, including the
provisions regarding return or destruction of documents.   10.   Parties to Bear
Own Fees and Costs. Each Party shall bear all of its fees, expenses, and costs
incurred in connection with the Action and with this Settlement Agreement.   11.
  Authority to Enter into Agreement. Each individual signing this Agreement
warrants and represents that he or she has full authority to execute the same on
behalf of the Party on whose behalf he or she signs. Each Party hereto agrees to
execute all documents and instruments necessary to implement this Agreement.  
12.   Governing law: This Agreement, including all matters of construction,
validity and performance, shall be governed by, and construed and enforced in
accordance with, the law of the State of Washington as applicable to contracts
entered into and to be performed wholly within the State of Washington between
citizens of Washington, and without reference to any rules governing conflicts
of law.

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13.   Integration: This Agreement sets forth the entire agreement between the
Parties relating to the subject matter of this Agreement and supersedes all
prior and contemporaneous written and oral understandings and agreements.   14.
  Representations and Warranties:

  (a)   Each of the Parties represents and warrants (i) that no other person or
entity has, or has had, any interest in any Claims released in this Agreement;
(ii) that it has the rights and authority to execute this Agreement; and
(iii) that it has not sold, assigned, transferred, conveyed or otherwise
disposed of any of the Claims released in this Agreement.     (b)   Each of the
Parties hereto acknowledges that no other Party, nor any agent or attorney of
any other Party, has made any promise, representation, or warranty, whatsoever,
express or implied, not contained herein, concerning the subject matter hereof,
to induce it to execute this instrument. Each of the Parties acknowledges that
it has not executed this instrument in reliance on any such promise,
representation, or warranty not contained herein.     (c)   Each of the Parties
hereto has read this Agreement carefully and knows and understands the contents
thereof. Each of the Parties is fully aware of the legal and binding effect of
this Agreement. Each of the Parties has made such an investigation of the facts
pertinent to this Agreement and of all the matters pertaining thereto as it
deemed necessary.     (d)   Each of the Parties hereto acknowledges that it has
been represented by counsel in the preparation, negotiation and execution of
this Agreement, and that it has executed this document with the consent and the
advice of such legal counsel.     (e)   Each of the Parties hereto acknowledges
and agrees that the terms of this Agreement are contractual and not merely
recitals and are the result of negotiations between Parties represented by
sophisticated counsel. All recitals are incorporated by reference into this
Agreement.

15.   Amendment: This Agreement may be amended only by a writing signed by
authorized representatives of both Parties.   16.   Waiver: To be effective, the
waiver of any right of either Party under this Agreement must be in writing. The
failure of either Party to require performance of any obligation under this
Agreement shall not affect such Party’s right at a later time, to enforce the
same.

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17.   Confidentiality: The negotiations leading to this Settlement Agreement,
including proceedings before the mediator and all facts or assertions made
therein, and the provisions of this Settlement Agreement relating to the
Certified Partner Program (paragraph 4 above) are confidential (“confidential
matters”). The Parties agree to maintain confidentiality and not disclose these
confidential matters to any person or entity. The confidential matters shall not
be disclosed to the general public by either Party except as required by law or
in response to a valid subpoena or court order. Notwithstanding the foregoing,
the Parties may disclose the existence and terms of confidential matters to
their accountants, attorneys or as otherwise necessary within their respective
organizations, or as they may otherwise mutually agree. Violations of the
confidentiality requirement of this Section are actionable in a binding
arbitration before James A. Smith, Jr., who shall have the discretion to award
the prevailing party attorney’s fees, arbitrator fees, and costs.   18.  
Successors and Assigns. This Agreement shall bind and inure to the benefit of
the Parties hereto and their respective predecessors, successors, and permitted
assigns. Immersion shall have the right to assign its rights and/or obligations
hereunder to any acquirer of all or substantially all of the business or assets
of Immersion, to the surviving entity of a merger involving Immersion, or in
connection with a change of control of Immersion. Any assignment of rights under
the Certified Partner Program shall be governed by the provisions of that
program. Notwithstanding anything to the contrary in this Settlement Agreement,
in the event of a permitted assignment, in no event will the assignee be deemed
to have released any claims that such assignee may have other than the claims of
the assigning Party which are expressly released by that Party hereunder.   19.
  No Admission of Liability.This Settlement Agreement is a compromise settlement
and does not constitute an admission of liability by any Party. Neither Party is
admitting liability to the other with respect to any matter.   20.   Notices:
Any notice given pursuant to this Settlement Agreement shall be in writing,
addressed as set forth below, and sent by registered or certified mail.

To MICROSOFT:
Microsoft Corporation
One Microsoft Way
Redmond, Washington 98052
Attn: Deputy General Counsel, Litigation
To IMMERSION:
Immersion Corporation
801 Fox Lane
San Jose, California 95131
Attn: Mr. Stephen Ambler, Chief Financial Officer

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21.   Captions: The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.   22.   Counterparts; Signatures: This Agreement may be executed in
one or more counterparts, each of which will be an original, but all or which
shall constitute one and the same document. Facsimile signatures of this
Agreement shall be treated as original signatures.       ACCEPTED AND AGREED to
by the undersigned authorized representatives:

                      MICROSOFT CORPORATION       IMMERSION CORPORATION    
 
                   
By:
  /s/ Steven J. Aeschbacher       By:   /s/ Clent Richardson    
 
                   
 
                   
Name:
  Steven J. Aeschbacher       Name:   Clent Richardson    
 
                   
 
                   
Title:
  Associate General Counsel       Title:   President and CEO    
 
                   

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