Exhibit 10.3

AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of March 9, 2011, is made by and between
Immersion Corporation, a Delaware corporation (“Immersion” or the “Company”),
and the entities and natural persons listed on the signature pages hereto
(collectively, the “Dialectic Group”) (each of the Company and the Dialectic
Group, a “Party” to this Agreement, and collectively, the “Parties”).

WHEREAS, the Dialectic Group may be deemed to beneficially own shares of common
stock of Immersion (the “Common Stock”) totaling, in the aggregate, 1,467,861
shares, or approximately 5.2% of the Common Stock issued and outstanding on the
date hereof.

WHEREAS, the Dialectic Group has provided notice to the Company of its intention
to nominate two persons to the board of directors of the Company at Immersion’s
2011 annual meeting of stockholders (the “Annual Meeting”) and to communicate
with stockholders of the Company in connection with the election of directors of
the Company at the Annual Meeting.

WHEREAS, Immersion and the Dialectic Group have agreed that it is in their
mutual interests to enter into this Agreement to set forth, among other things,
the parties’ mutual understanding relating to the Annual Meeting.

NOW, THEREFORE, in consideration of the premises and the representations,
warranties, and agreements contained herein, and other good and valuable
consideration, the Parties mutually agree as follows:

1.        Representations and Warranties of the Dialectic Group.    The
Dialectic Group represents and warrants to Immersion that (a) this Agreement has
been duly authorized, executed and delivered by each member of the Dialectic
Group, and is a valid and binding obligation of each member of the Dialectic
Group, enforceable against each member of the Dialectic Group in accordance with
its terms, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws generally affecting the rights of creditors and subject to general
equity principles; and (b) the execution of this Agreement, the consummation of
any of the transactions contemplated hereby, and the fulfillment of the terms
hereof, in each case in accordance with the terms hereof, will not conflict
with, or result in a breach or violation of, any law, any order of any court or
other agency of government, applicable to any member of the Dialectic Group or
to which any member of the Dialectic Group is a party, or the organizational
documents of any member of the Dialectic Group.

2.        Representations and Warranties of Immersion.    Immersion hereby
represents and warrants to the Dialectic Group that (a) this Agreement has been
duly authorized, executed and delivered by Immersion, and is a valid and binding
obligation of Immersion, enforceable against Immersion in accordance with its
terms, except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
generally affecting the rights of creditors and subject to general equity
principles; and (b) the execution of this Agreement, the consummation of any of
the transactions contemplated

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hereby, and the fulfillment of the terms hereof, in each case in accordance with
the terms hereof, will not conflict with, or result in a breach or violation of,
any law, any order of any court or other agency of government, Immersion’s
Certificate of Incorporation or Bylaws, or any agreement to which Immersion is a
party or is bound, nor trigger any “change of control” provision in any
agreement to which Immersion is a party.

3.        Annual Meeting.

(a)        Immersion agrees to take all actions necessary and appropriate to
nominate for election at the Annual Meeting as Class III directors of the
Immersion Board of Directors (the “Board”) Mr. Carl Schlachte and Mr. John
Fichthorn (together, the “2011 Nominees”) and to recommend, and reflect such
recommendation in the Company’s definitive proxy statement in connection with
the Annual Meeting (the “2011 Proxy Statement”), that the shareholders of the
Company vote to elect the 2011 Nominees as Class III directors of the Board at
the Annual Meeting.

(b)        The Dialectic Group hereby irrevocably withdraws its letter dated
December 30, 2010 nominating two candidates for election to the Board at the
Annual Meeting.

(c)        At the Annual Meeting, the Dialectic Group agrees to vote, and cause
their respective officers, directors, employees, agents, Affiliates and
Associates, to vote, all of the shares of Common Stock beneficially owned by
them or over which it has or shares voting power in favor of the election of the
2011 Nominees.

(d)        The Company agrees that during the Standstill Period (as defined
below), it shall not, and shall cause the Board not to, take any action to
increase the number of members on the Board to more than seven (7) directors.

(e)        The Company agrees that it shall hold the Annual Meeting no later
than June 30, 2011.

4.        Standstill.    Each member of the Dialectic Group agrees that, from
the date of this Agreement until the one-year anniversary of the date of the
Annual Meeting (the “Standstill Period”), neither it nor any of its Affiliates
or Associates under its control or direction will, and it will cause each of its
Affiliates and Associates under its control not to, directly or indirectly, in
any manner:

(i)                engage in any solicitation of proxies or consents or become a
“participant” in a “solicitation” (as such terms are defined in Regulation 14A
under the Securities Exchange Act of 1934, as amended or the rules or
regulations thereunder (the “Exchange Act”)) of proxies or consents (including,
without limitation, any solicitation of consents to call a special meeting of
stockholders, action by written consent of stockholders and any solicitation or
nomination pursuant to Rule 14a-11 under the Exchange Act), in each case, with
respect to securities of the Company;

(ii)                seek to advise, encourage, support or influence any person
with respect to the voting or disposition of any securities of the Company at
annual or special meeting of stockholders, except in accordance with
Section 4(a)(vii);

 

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(iii)                form, join or in any way participate in any “group” (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to the Common
Stock (other than a “group” that includes all or some lesser number of the
persons identified herein as part of the Dialectic Group);

(iv)                deposit any Common Stock in any voting trust or subject any
Common Stock to any arrangement or agreement with respect to the voting of any
Common Stock, other than any such voting trust, arrangement or agreement solely
among the Dialectic Group;

(v)                control, influence or seek to control or influence the Board,
other than through non public communications with the officers and directors of
the Company;

(vi)                seek or encourage any person to submit nominations in
furtherance of a “contested solicitation” for the election or removal of
directors with respect to the Company or any solicitation or nomination pursuant
to Rule 14a-11 under the Exchange Act;

(vii)                (1) make any proposal for consideration by stockholders at
any annual or special meeting of stockholders or (2) make any offer or proposal
(with or without conditions) with respect to a merger, acquisition, disposition
or other business combination involving the Dialectic Group and the Company;

(viii)                seek, alone or in concert with others, representation on
the Board; or

(ix)                make any request to amend, waive or terminate any provision
of this Agreement, other than through non public communications with the
officers and directors of the Company that do not trigger any disclosure
obligation on the part of the Company or any member of the Dialectic Group;

provided, however, that nothing herein will limit the ability of (1) any member
of the Dialectic Group, or its respective Affiliates and Associates, except as
otherwise provided in Section 3, to vote its shares of Common Stock on any
matter submitted to a vote of the stockholders of the Company in such manner as
it may determine in its sole discretion; (2) the Dialectic Group to announce its
opposition to any Board-approved and publicly-announced proposals, including,
but not limited to, a merger, acquisition, disposition of all or substantially
all of the assets of the Company or other business combination or divestiture
involving the Company; (3) the Dialectic Group to file a Schedule 13D/A with the
Securities and Exchange Commission disclosing the execution of this Agreement
and terminating their status as a group; or (4) any member of the Dialectic
Group, or its respective Affiliates and Associates from taking any action as in
the opinion of counsel is reasonably required to comply with applicable law
(including any Federal or State securities laws, rules or regulations or the
rules and regulations of any stock exchange or stock market).

As used in this Agreement, the terms “Affiliate” and “Associate” shall have the
respective meanings set forth in Rule 12b-2 promulgated by the SEC under the
Exchange Act.

 

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5.        Public Announcement.    Immersion and the Dialectic Group shall
promptly disclose the existence of this Agreement after its execution pursuant
to a joint press release that is mutually acceptable to the parties, including a
description of the material terms of this Agreement. Subject to applicable law,
none of the Parties shall disclose the existence of this Agreement until the
joint press release is issued. During the Standstill Period, the Parties agree
that each Party shall refrain from any disparagement, defamation, libel or
slander with respect to any other Party and from publicly criticizing any other
Party or a Party’s respective Affiliates and Associates. Nothing in this
Agreement shall prohibit or be construed to prohibit any member of the Dialectic
Group or any of its Affiliates and Associates from commenting or presenting its
views on any issue or matter that has been publicly disclosed by the Company and
making any filings with the Securities and Exchange which in the opinion of
counsel any of the foregoing parties is reasonably required to make in
connection therewith.

6.        Remedies.

(a)        Each of the Parties acknowledges and agrees that a breach or
threatened breach by any Party may give rise to irreparable injury inadequately
compensable in damages, and accordingly each Party shall be entitled to seek
injunctive relief to prevent a breach of the provisions hereof and to enforce
specifically the terms and provisions hereof in any state or federal court
having jurisdiction, in addition to any other remedy to which such aggrieved
Party may be entitled to at law or in equity, and without posting a bond or
other security.

(b)        In the event a Party institutes any legal action to enforce such
Party’s rights under, or recover damages for breach of this Agreement, the
prevailing party or parties in such action shall be entitled to recover from the
other party or parties all costs and expenses, including but not limited to
reasonable attorneys’ fees, court costs, witness fees, disbursements and any
other expenses of litigation or negotiation incurred by such prevailing party or
parties.

7.        Expenses.    The Company shall reimburse the Dialectic Group for its
reasonable, documented out-of-pocket fees and expenses incurred in connection
with matters related to the Annual Meeting and the negotiation and execution of
this Agreement in the amount of $100,000 in the aggregate. Mr. Fichthorn agrees
not to accept any cash compensation as a member of the Board until the amount of
foregone compensation equals $100,000.

8.        Releases.

(a)        The Dialectic Group hereby agrees for the benefit of Immersion, and
each controlling person, officer, director, shareholder, agent, affiliate,
employee, partner, attorney, heir, assign, executor, administrator, predecessor
and successor, past and present, of Immersion (Immersion and each such person
being an “Immersion Released Person”) as follows:

(i)        The Dialectic Group, for themselves and for their members, officers,
directors, assigns, agents and successors, past and present, hereby agrees and
confirms that, effective from and after the date of this Agreement, they hereby
acknowledge full and complete satisfaction of, and covenant not to sue, and
forever fully release and discharge each Immersion Released Person of, and hold
each Immersion Released Person harmless from, any and all rights, claims,
warranties, demands, debts, obligations, liabilities, costs, attorneys’ fees,

 

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expenses, suits, losses and causes of action of any nature whatsoever, whether
known or unknown, suspected or unsuspected (collectively, “Claims”) and arising
out of or related to the Company’s solicitation of nominees for directors and
related proxy solicitation in connection with the Annual Meeting (collectively,
“Dialectic Claims”) that the Dialectic Group may have against the Immersion
Released Persons, in each case with respect to events occurring prior to the
date of the execution of this Agreement.

(ii)        The Dialectic Group understands and agree that the Dialectic Claims
released by the Dialectic Group above include not only those Claims presently
known but also include all unknown or unanticipated claims, rights, demands,
actions, obligations, liabilities, and causes of action of every kind and
character that would otherwise come within the scope of the Dialectic Claims as
described above. The Dialectic Group understands that they may hereafter
discover facts different from or in addition to what they now believe to be
true, which if known, could have materially affected this release of Dialectic
Claims, but they nevertheless waive any claims or rights based on different or
additional facts.

(b)        The Dialectic Group agrees that, except as counsel to the Dialectic
Group or any of its Affiliates and Associate reasonably determines is required
in order for members of the Dialectic Group to comply with their respective
fiduciary duties to their investors, (i) no member of the Dialectic Group shall,
without the consent of Immersion, instigate, solicit, assist, intervene in, or
otherwise voluntarily participate in any litigation or arbitration in which
Immersion or any of its officers or directors are named as parties; provided
that the foregoing shall not prevent any member of the Dialectic Group from
responding to a validly issued legal process and (ii) the Dialectic Group agrees
to give Immersion at leave five business days notice of the receipt of any legal
process requesting information regarding Immersion or any of its officers or
directors, to the extent that such notice is legally permissible.

(c)        Immersion hereby agrees for the benefit of the Dialectic Group, and
each controlling person, officer, director, stockholder, agent, affiliate,
employee, partner, attorney, heir, assign, executor, administrator, predecessor
and successor, past and present (the Dialectic Group and each such person being
a “Shareholder Released Person”) as follows:

(i)        Immersion, for itself and for its affiliates, officers, directors,
assigns, agents and successors, past and present, hereby agrees and confirms
that, effective from and after the date of this Agreement, it hereby
acknowledges full and complete satisfaction of, and covenants not to sue, and
forever fully releases and discharges each Shareholder Released Person of, and
holds each Shareholder Released Person harmless from, any and all Claims of any
nature whatsoever, whether known or unknown, suspected or unsuspected and
arising out of or related to the Dialectic Group’s notice to the Company of its
intention to nominate two persons to the Company’s Board at the Annual Meeting
(collectively, “Immersion Claims”), that Immersion may have against the
Shareholder Released Persons, in each case with respect to events occurring
prior to the date of the execution of this Agreement.

(ii)        Immersion understands and agrees that the Immersion Claims released
by Immersion above include not only those Claims presently known but also
include all unknown or unanticipated claims, rights, demands, actions,
obligations, liabilities, and causes of action of every kind and character that
would otherwise come within the scope of the Immersion

 

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Claims as described above. Immersion understands that it may hereafter discover
facts different from or in addition to what it now believes to be true, which if
known, could have materially affected this release of Immersion Claims, but it
nevertheless waives any claims or rights based on different or additional facts.

(d)        The Parties do hereby expressly waive and relinquish all rights and
benefits afforded by California Civil Code Section 1542, and do so understanding
and acknowledging the significance and consequences of such specific waiver of
California Civil Code Section 1542. The Parties acknowledge and understand that
they are being represented in this matter by counsel of their own choice, and
acknowledge that they are familiar with the provisions of California Civil Code
Section 1542, which provides as follows:

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

Thus, notwithstanding these provisions of law, the Parties expressly acknowledge
and agree that this Section 8 is also intended to include in its effect, without
limitation, all such claims which they do not know or suspect to exist at the
time of the execution of this Agreement, and that this Agreement contemplates
the extinguishment of those claims.

(e)        The Parties intend that the foregoing release be broad with respect
to the matter released, provided, however, this release of Dialectic Claims and
Immersion Claims shall not include claims to enforce the terms of this
Agreement; and provided further that nothing in the foregoing release shall be
deemed or construed, now or hereafter, as limiting in any manner any right of
indemnification inuring to the benefit of any director or former director of
Immersion arising under Immersion’s Certification of Incorporation, Bylaws or
otherwise.

9.        Notices.    Any notice or other communication required or permitted to
be given under this Agreement will be sufficient if it is in writing, sent to
the applicable address set forth below (or as otherwise specified by a Party by
notice to the other Parties in accordance with this Section 9) and delivered
personally or sent by recognized overnight courier, postage prepaid, and will be
deemed given (a) when so delivered personally, or (b) if sent by recognized
overnight courier, one day after the date of sending.

If to Immersion:

Immersion Corporation

801 Fox Lane

San Jose, California 95131

Attention: General Counsel

Telephone: (408) 467-1900

Facsimile: (408) 467-1901

with a copy to:

 

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Fenwick & West LLP

555 California Street, 12th Floor

San Francisco, California 94104

Attention: Douglas N. Cogen

Telephone: (415) 875-2300

Facsimile: (415) 281-1350

If to the Dialectic Group:

Dialectic Capital Partners, LP

875 Third Avenue, 15th Floor

New York, New York 10022

Attention: John Fichthorn

Telephone: (212) 230-3220

Facsimile: (212) 980-2635

with a copy to:

Kane Kessler, P.C.

1350 Avenue of the Americas

New York, New York 10019

Attention: Jeffrey Tullman

Telephone: (212) 519-5101

Facsimile: (212) 245-3009

10.        Entire Agreement.    This Agreement constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions of the Parties in connection with the subject matter hereof.

11.        Amendments; Severability; Counterparts; Facsimile.    This Agreement
may not be modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by all of the Parties. In the event
one or more of the provisions of this Agreement should, for any reason, be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. This Agreement may be
executed in any number of counterparts and by the Parties in separate
counterparts, and signature pages may be delivered by facsimile, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

12.        Governing Law; Jurisdiction.    This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware,
without regard to choice of law principles that would compel the application of
the laws of any other jurisdiction. The Parties to this Agreement agree that any
suit, action or proceeding to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement may be brought only in a
federal court located in Delaware or in any Delaware state court, and each of
the Parties irrevocably consents to the jurisdiction of such courts (and of the
appellate courts therefrom) in

 

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any such suit, action or proceeding and irrevocably waives any objection it may
now or hereafter have to the laying of venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.

13.        Successors and Assigns.    This Agreement shall not be assignable by
any of the Parties. This Agreement, however, shall be binding on successors of
the Parties.

14.        Further Action.    Each Party agrees to execute such additional
reasonable documents, and to do and perform such reasonable acts and things
necessary or proper to effectuate or further evidence the terms and provisions
of this Agreement.

[Signatures are on the following page.]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and
year first above written.

 

IMMERSION CORPORATION By:  

/s/ Victor Viegas

  Name: Victor Viegas   Title: Chief Executive Officer THE DIALECTIC GROUP:
DIALECTIC CAPITAL PARTNERS, LP By:   /s/ John Fichthorn   Dialectic Capital, LLC
  Its General Partner DIALECTIC OFFSHORE L2, LTD. By:   /s/ John Fichthorn  
Dialectic Capital, LLC,   Its Investment Manager DIALECTIC ANTITHESIS OFFSHORE,
LTD. By:   /s/ John Fichthorn   Dialectic Capital, LLC   Its Investment Manager
DIALECTIC ANTITHESIS PARTNERS, LP By:   /s/ John Fichthorn   Dialectic Capital,
LLC   Its General Partner DIALECTIC OFFSHORE, LTD. By:   /s/ John Fichthorn  
Dialectic Capital, LLC   Its Investment Manager DIALECTIC CAPITAL, LLC By:  

/s/ John Fichthorn

  John Fichthorn   Managing Member, and Individually By:  

/s/ Luke Fichthorn

  Luke Fichthorn   Managing Member

 

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