Document:

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                                                                    EXHIBIT 10.1

SERIES A REDEEMABLE
CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT

BY AND BETWEEN:

IMMERSION CORPORATION

AND

MICROSOFT CORPORATION

DATED AS OF JULY 25, 2003

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                                TABLE OF CONTENTS

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                                                                                                              PAGE NO.
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1.    AUTHORIZATION AND SALE OF SHARES......................................................................      1
      1.1      Authorization................................................................................      1
      1.2      Sale of Shares...............................................................................      1
      1.3      Use of Proceeds..............................................................................      1

2.    THE CLOSING...........................................................................................      1

3.    REPRESENTATIONS OF THE COMPANY........................................................................      2

      3.1      Organization and Standing....................................................................      2
      3.2      Subsidiaries.................................................................................      2
      3.3      Capitalization...............................................................................      3
      3.4      Issuance of Shares...........................................................................      3
      3.5      Authority for Agreement; No Violation........................................................      4
      3.6      Governmental Consents........................................................................      4
      3.7      Litigation; Proceedings......................................................................      4
      3.8      Brokers or Finders...........................................................................      4
      3.9      Nasdaq National Market.......................................................................      5
      3.10     Taxes........................................................................................      5
      3.11     Property and Assets..........................................................................      5
      3.12     Intellectual Property........................................................................      5
      3.13     Material Agreements..........................................................................      6
      3.14     Compliance...................................................................................      6
      3.15     Sarbanes-Oxley Compliance....................................................................      6
      3.16     Disclosures..................................................................................      7
      3.17     Financial Statements.........................................................................      7
      3.18     SEC Documents................................................................................      7
      3.19     No Manipulation of Stock.....................................................................      8
      3.20     Related Party Transactions...................................................................      8
      3.21     Employees....................................................................................      8
      3.22     Investment Company...........................................................................      8
      3.23     Insurance....................................................................................      8
      3.24     Environmental Matters........................................................................      8
      3.25     Accuracy of Information Furnished............................................................      9
      3.26     No Material Adverse Effect...................................................................      9
      3.27     Absence of Certain Developments..............................................................      9
      3.28     Contributions................................................................................      9

4.    REPRESENTATIONS OF THE PURCHASER......................................................................     10

      4.1      Investment...................................................................................     10
      4.2      Authority....................................................................................     10
      4.3      Experience...................................................................................     10
      4.4      Accredited Investor..........................................................................     10
      4.5      Brokers......................................................................................     10
      4.6      Restricted Securities........................................................................     10

5.    CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER........................................................     10

      5.1      Accuracy of Representations and Warranties...................................................     10
      5.2      Performance..................................................................................     11
      5.3      Approvals....................................................................................     11
      5.4      Registration Rights Agreement................................................................     11
      5.5      Stockholders' Agreement......................................................................     11
      5.6      Debenture Agreement..........................................................................     11
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Immersion Corporation
Series A Preferred Stock Purchase Agreement

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<TABLE>
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      5.7      Settlement...................................................................................     11
      5.8      License Agreement............................................................................     11
      5.9      Game Console Agreement.......................................................................     11
      5.10     Certificates and Documents...................................................................     11
      5.11     Compliance Certificate.......................................................................     12
      5.12     Opinion of Counsel...........................................................................     12
      5.13     Adoption and Filing of Certificate of Incorporation..........................................     12
      5.14     No Material Adverse Effect...................................................................     12
      5.15     No Constraints...............................................................................     12
      5.16     Other Matters................................................................................     12

6.    CONDITIONS TO THE OBLIGATIONS OF THE COMPANY..........................................................     12

      6.1      Accuracy of Representations and Warranties...................................................     12
      6.2      Purchase Consideration.......................................................................     13
      6.3      Ancillary Agreements.........................................................................     13

7.    COVENANTS OF THE COMPANY..............................................................................     13

      7.1      Reduction of Lawsuit Claims..................................................................     13
      7.2      Listing and Maintenance Requirements Compliance..............................................     13
      7.3      Hedging Activities...........................................................................     13

8.    SUCCESSORS AND ASSIGNS................................................................................     13

9.    CONFIDENTIALITY.......................................................................................     13

10.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................................     14

11.    NOTICES..............................................................................................     14

12.    EXPENSES.............................................................................................     15

13.    BROKERS..............................................................................................     15

14.    ENTIRE AGREEMENT.....................................................................................     15

15.    AMENDMENTS AND WAIVERS...............................................................................     16

16.    COUNTERPARTS; SIGNATURES.............................................................................     16

17.    HEADINGS.............................................................................................     16

18.    SEVERABILITY.........................................................................................     16

19.    GOVERNING LAW........................................................................................     16

20.    CUSTODIANS...........................................................................................     17
</TABLE>

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       ii
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                   SERIES A PREFERRED STOCK PURCHASE AGREEMENT

         This SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
(this "AGREEMENT") dated as July 25, 2003 (the "EFFECTIVE DATE") is entered into
by and between Immersion Corporation, a Delaware corporation having its
corporate headquarters at 801 Fox Lane, San Jose, California 95131 (the
"COMPANY") and Microsoft Corporation, a Washington corporation having its
corporate headquarters at One Microsoft Way, Redmond, Washington 98052-6399 (the
"PURCHASER"). Capitalized terms have the meanings ascribed to such terms in
Appendix A.

         In consideration of the premises and mutual covenants contained herein
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

         1.       AUTHORIZATION AND SALE OF SHARES.

                  1.1      Authorization. The Company has duly authorized the
sale and issuance of up to 2,185,792 shares (the "SHARES") of its Series A
Redeemable Convertible Preferred Stock, $0.001 par value per share (the "SERIES
A PREFERRED STOCK") and the issuance of shares of common stock, $0.001 par value
per share (the "COMMON STOCK"), to be issued upon conversion of the Shares (the
"SERIES A CONVERSION SHARES"), each having the rights, restrictions, privileges
and preferences set forth in the Company's Certificate of Designation of the
Powers, Preferences, and Rights of Series A Redeemable Convertible Preferred
Stock in the form attached hereto as Exhibit A (the "CERTIFICATE OF
DESIGNATION").

                  1.2      Sale of Shares. Subject to the terms and conditions
of this Agreement, at the Closing (as defined in Section 2), the Company will
(i) sell and issue to the Purchaser, and the Purchaser will purchase from the
Company, the number of shares of Series A Preferred Stock determined by dividing
six million dollars ($6,000,000) (the "PURCHASE PRICE") by the Per Share Price.
The Per Share Price shall be $2.745.

                  1.3      Use of Proceeds. The Company will use the proceeds
from the sale of the Shares for general working capital purposes.

         2.       THE CLOSING. The closing (the "CLOSING") of the sale and
purchase of the Shares under this Agreement shall take place at the offices of
Preston Gates & Ellis LLP, 925 Fourth Avenue, Suite 2900, Seattle, Washington at
2:00 p.m. on July 25, 2003, or at such other time, date and place as are
mutually agreeable to the Company and the Purchaser. At the Closing, the Company
will deliver to the Purchaser a certificate for the Shares being purchased by
such Purchaser, registered in the name of the Purchaser, against payment to the
Company of the Purchase Price therefor, by wire transfer, certified or cashier's
check, or other method acceptable to the Company. If at the Closing any of the
conditions specified in Section 5 hereof shall not have been fulfilled, the
Purchaser shall, at its election, be relieved of all of its obligations under
this Agreement without thereby waiving any other rights it may have by reason

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of such failure or such non-fulfillment. The date of the Closing is hereinafter
referred to as the "CLOSING DATE."

         3.       REPRESENTATIONS OF THE COMPANY. Except as otherwise described
in the Filed SEC Documents (as defined in Section 3.18 below) (including the
documents incorporated by reference therein) and the Company's press releases
since March 31, 2003 that are available on the Company's web site located at
http://www.immersion.com, in each case on the date hereof, the Company hereby
represents and warrants to, and covenants with, the Purchaser as follows:

                  3.1      Organization and Standing. The Company and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
corporate power and authority to conduct its business as presently conducted and
as proposed to be conducted by it. The Company has all corporate power and
authority to enter into and perform this Agreement, the Registration Rights
Agreement between the Company and the Purchaser (the "REGISTRATION RIGHTS
AGREEMENT"), the Stockholders' Agreement between the Company and the Purchaser
(the "STOCKHOLDERS' AGREEMENT"), and the Senior Redeemable Convertible Debenture
Purchase Agreement (the "DEBENTURE AGREEMENT" and, together with the
Registration Rights Agreement and the Stockholders' Agreement, collectively
referred to as the "ANCILLARY AGREEMENTS") and to carry out the transactions
contemplated by this Agreement. Each of the Company and the Subsidiaries (as
defined in Section 3.2 below) is duly qualified to conduct business as a foreign
corporation and is in good standing in every other jurisdiction, if any, in
which the failure to so qualify would have a Material Adverse Effect. Complete
and correct copies of the Company's certificate of incorporation and bylaws and
the certificate of incorporation and bylaws of its Subsidiaries, as in effect on
the date hereof, have been filed by the Company with the Securities and Exchange
Commission (the "COMMISSION") or otherwise made available (including via EDGAR)
to the Purchaser. As used herein, "MATERIAL ADVERSE EFFECT" means any change,
effect, event, occurrence, development or developments which, individually or in
the aggregate, (i) has had or would reasonably be expected to have a material
adverse effect on the business, assets, liabilities (contingent or other),
affairs, operations or financial condition of the Company or any of its
Subsidiaries, or (ii) would reasonably be expected to prevent or materially
impede, interfere, hinder or delay the performance by the Company of its
obligations hereunder.

                  3.2      Subsidiaries. Schedule 3.2 lists the Company's
subsidiaries (the "SUBSIDIARIES") and the jurisdictions in which each is
incorporated. Except as set forth in Schedule 3.2, all of the issued and
outstanding shares of capital stock of, or other equity interests in, each of
the Subsidiaries have been validly issued and are fully paid and nonassessable
and are owned by the Company free and clear of all pledges, liens, charges,
encumbrances or security interests of any kind ("LIENS"), and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other equity interests. Except for the capital stock of, or voting
securities or equity interests in, its Subsidiaries, for short-term investments,
or as set forth in Schedule 3.2, the Company does not own any shares of stock or
any other equity or long-term debt securities of any corporation or have any
equity interest in any firm, partnership, limited liability company, joint
venture, association or other entity.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

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                  3.3      Capitalization.

                           (i)      The authorized capital stock of the Company
(immediately prior to the Closing) consists of 105,000,000 shares of stock
consisting of 100,000,000 shares of Common Stock, $0.001 par value per share,
and 5,000,000 shares of Preferred Stock, $0.001 par value per share.

                           (ii)     As of July 24, 2003, 20,197,984 shares of
Common Stock and no shares of Preferred Stock were outstanding. The Company has
not issued any capital stock since July 24, 2003 other than pursuant to employee
benefit plans disclosed in the Filed SEC Documents.

                           (iii)    Immediately after the Closing, there will
be: 2,185,792 shares of Series A Preferred Stock duly authorized, validly issued
and outstanding and such shares shall be fully-paid and nonassessable.
Immediately after the Closing, there will be a sufficient number of shares of
Common Stock reserved, and duly authorized, for issuance upon exercise of the
Series A Preferred Stock.

                           (iv)     Except as may be provided in this Agreement,
the Ancillary Agreements or as set forth in Schedule 3.3: (a) no subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of capital stock of the Company is authorized
or outstanding; (b) there is no commitment of the Company to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock any evidences
of indebtedness or assets of the Company; and (c) other than as set forth in the
Certificate of Designation, the Company has no obligation (contingent or
otherwise) to repurchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. The outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and
were not issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. There are no voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a
party.

                           (v)      Except as provided in this Agreement or the
Ancillary Agreements, no person or entity is entitled to: (a) any preemptive or
similar right with respect to the issuance of any capital stock of the Company;
(b) any rights with respect to the registration of any capital stock of the
Company under the Securities Act of 1933, as amended (the "SECURITIES ACT"); or
(c) any first offer rights, first refusal rights or, pursuant to an agreement to
which the Company is a party or, to the best of the Company's knowledge,
pursuant to an agreement to which any of the Company's stockholders is a party,
other similar rights to subscribe for or purchase any capital stock of the
Company or any right to restrict the transfer of such securities.

                  3.4      Issuance of Shares. The issuance, sale and delivery
of the Shares in accordance with this Agreement, and the issuance and delivery
of the shares of Common Stock issuable upon conversion of the Shares, have been,
or will be on or prior to the Closing, duly

Immersion Corporation
Series A Preferred Stock Purchase Agreement

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<PAGE>

authorized and, as the case may be, reserved for issuance by all necessary
corporate action on the part of the Company, its officers, directors and
stockholders, and the Shares when so issued sold and delivered against payment
therefor in accordance with the provisions of this Agreement, and the shares of
Common Stock issuable upon conversion of the Shares when issued upon such
conversion, will be duly authorized and validly issued, fully paid and
non-assessable, free and clear of any liens, encumbrances or security interests.

                  3.5      Authority for Agreement; No Violation. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, its officers,
directors and stockholders. This Agreement and each of the Ancillary Agreements
have been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable in accordance with their
respective terms. The execution of and performance of the transactions
contemplated by this Agreement and the Ancillary Agreements and compliance with
their provisions by the Company will not violate any provision of law and will
not conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, its Certificate of Designation or
Bylaws (each as amended to date and presently in effect), or any material bond,
indenture, note or other evidence of indebtedness, any material lease, agreement
or other instrument to which the Company is a party or by which it or any of its
Subsidiaries is a party or by which their respective properties are bound, or
any decree, judgment, order, statute, rule or regulation applicable to the
Company or its Subsidiaries.

                  3.6      Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, the offer,
issue, sale and delivery of the Shares, and the issue and delivery of the Series
A Conversion Shares or the other transactions to be consummated at the Closing,
as the case may be, as contemplated by this Agreement.

                  3.7      Litigation; Proceedings. Except as set forth in
Schedule 3.7, as of the date hereof, there is no action, suit, claim, proceeding
or investigation pending against or affecting the Company at law or in equity,
or by any arbitrator, or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or, to the Company's knowledge there is no action, suit, claim,
proceeding or investigation threatened against or affecting the Company at law
or in equity, or by any arbitrator, or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, and the Company is not subject to any order, writ,
injunction or decree entered into any lawsuit or proceeding.

                  3.8      Brokers or Finders. The Company has not dealt with
any broker or finder in connection with the transactions contemplated by this
Agreement or the Ancillary Agreements, and the Company has not incurred, and
shall not incur, directly or indirectly, any liability for any brokerage or
finders' fees or agents commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       4

<PAGE>

                  3.9      Nasdaq National Market. The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on the
Nasdaq National Market System ("NASDAQ"). The Company has taken no action
designed to delist, or which, to the Company's knowledge, is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from Nasdaq. The Company shall comply with all
requirements of the National Association of Securities Dealers, Inc. with
respect to the issuance of the Series A Preferred Stock and the listing of the
Common Stock on Nasdaq.

                  3.10     Taxes. The Company and its Subsidiaries have filed or
obtained presently effective extensions with respect to all federal, state,
county, local and foreign tax returns that are required to be filed by it, such
returns are true and correct and all taxes shown thereon to be due have been
timely paid with exceptions not material to the Company. Federal income tax
returns of the Company have not been audited by the Internal Revenue Service,
and no controversy with respect to taxes of any type is pending or, to the
knowledge of the Company, threatened. The Company is taxed as a C corporation as
defined in Section 1361(a)(2) of the Internal Revenue Code of 1986, as amended
(the "CODE"). The provision for taxes of the Company as shown in the Financial
Statements is adequate for taxes due or accrued as of the date thereof. The
Company has not made any other elections pursuant to the Code (other than
elections that relate solely to methods of accounting, depreciation or
amortization) that would have a Material Adverse Effect on the Company. The
Company has never had any tax deficiency proposed or assessed against it and has
not executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge. Except as set forth on Schedule
3.10, none of the Company's federal income tax returns and none of its state
income or franchise tax or sales or use tax returns have ever been audited by
governmental authorities. Except as set forth on Schedule 3.10, since the date
of the Financial Statements, the Company has not incurred any taxes, assessments
or governmental charges other than in the ordinary course of business and the
Company has made adequate provisions on its books of account for all taxes,
assessments and governmental charges with respect to its business, properties
and operations for such period. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes (including, but
not limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories.

                  3.11     Property and Assets. The Company has good and
marketable title in fee simple to all of the real property that it owns and good
and marketable title to all of its personal property and assets, and none of
such properties or assets is subject to any mortgage, pledge, lien, security
interest, lease, charge, encumbrance or defect. Any real or personal property
held under lease by the Company or its Subsidiaries is held by them under valid,
existing and enforceable leases.

                  3.12     Intellectual Property. Set forth on Schedule 3.12 is
a true and complete list of all issued patents and registered trademarks
presently owned or held by the Company. Except as set forth on Schedule 3.12, to
the Company's knowledge, the Company and each of its Subsidiaries has, or has
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and know-how
(including trade secrets or other unpatented and/or unpatentable proprietary or
confidential information, systems

Immersion Corporation
Series A Preferred Stock Purchase Agreement

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<PAGE>

or procedures) (collectively, the "INTELLECTUAL PROPERTY RIGHTS") that are
necessary for use in connection with its business as presently conducted or
proposed to be conducted as described in the SEC Documents. Except as disclosed
on Schedule 3.12, to the Company's knowledge, there is no existing infringement
or misappropriation by another person or entity of any of the Intellectual
Property Rights that are necessary for use in connection with the Company's
business as presently conducted. Except as set forth on Schedule 3.12, neither
the Company nor its Subsidiaries are infringing or misappropriating any
Intellectual Property Rights (other than unpublished patent applications) of any
other person or entity, nor, to the Company's knowledge, are the Company or its
Subsidiaries infringing the rights of any other person or entity granted under
any unpublished patent application. Except as set forth on Schedule 3.12, there
are no claims of infringement of any Intellectual Property Rights made or
threatened by a third party against or involving the Company.

                  3.13     Material Agreements. Except as filed with or listed
in the exhibit index to the Filed SEC Documents or as otherwise made available
to the Purchaser, neither Company nor any of its Subsidiaries is a party to any
material contract, as such contracts are defined in Item 601(b)(10) of
Regulation S-K under the Securities Act (each such contract, a "COMPANY
CONTRACT"). To the Company's knowledge, each Company Contract is valid, binding
and in full force and effect and is enforceable by the Company or any of its
Subsidiaries in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles. As of the date hereof, no party to any such
Company Contract has notified the Company or any of its Subsidiaries that it
intends to terminate such Company Contract. The Company or its Subsidiaries, as
the case may be, has performed in all respects all obligations required to be
performed by it to date under the Company Contracts and is not (with or without
the lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder and, to the knowledge of Company, no other party to any of
the Company Contracts, as of the date hereof, is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any respect
thereunder, except to the extent that such breach or default would not have a
Material Adverse Effect.

                  3.14     Compliance. The Company has, in all material
respects, complied with all laws, regulations and orders applicable to its
present and proposed business and has all material permits and licenses required
thereby. There is no term or provision of any material mortgage, indenture,
contract, agreement or instrument to which the Company is a party or by which it
is bound, or of any provision of any state or federal judgment, decree, order,
statute, rule or regulation applicable to or binding upon the Company, that
materially adversely affects or, to the best of the Company's knowledge so far
as the Company may now foresee, in the future is reasonably likely to materially
adversely affect, the business, prospects, condition, affairs or operations of
the Company or any of its properties or assets. To the Company's knowledge, no
employee of the Company is in violation of any contract or covenant (either with
the Company or with another entity) relating to employment, patent, other
proprietary information disclosure, non-competition, or non-solicitation.

                  3.15     Sarbanes-Oxley Compliance. The Company is currently
and at all times prior to the date hereof has been in compliance in all material
respects with the Sarbanes-Oxley Act of 2002 and any and all rules or
regulations promulgated thereunder.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       6
<PAGE>

                  3.16     Disclosures. Neither this Agreement nor any exhibit
hereto, nor any report, certificate or instrument furnished to the Purchaser in
connection with the transactions contemplated by this Agreement, when read
together, contains or will contain any material misstatement of fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading. The Company knows of no information or fact
that has or would have a material adverse effect on the business, prospects or
condition (financial or otherwise) of the Company that has not been disclosed to
the Purchaser in writing.

                  3.17     Financial Statements. The Company has made available
(including via EDGAR) to the Purchaser its audited consolidated statements of
income, stockholders' equity and cash flows for the fiscal year ended December
31, 2002, its audited consolidated balance sheet as of December 31, 2002, its
unaudited consolidated statements of income, stockholders' equity and cash flows
for the period from January 1, 2003 through March 31, 2003 and its unaudited
consolidated balance sheet as of March 31, 2003. All such financial statements
are hereinafter referred to collectively as the "FINANCIAL STATEMENTS." The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved,
and fairly present the financial position of the Company and its Subsidiaries
and the results of their respective operations as of the date and for the
periods indicated thereon, except that the unaudited financial statements may
not be in accordance with generally accepted accounting principles because of
the absence of footnotes normally contained therein and are subject to normal
year-end audit adjustments which, individually, and in the aggregate, will not
be material. The Company and its Subsidiaries have implemented and maintain a
system of internal accounting controls meeting the requirements of applicable
law, including without limitation the requirements of Section 13(b)(2) of the
Exchange Act. Since March 31, 2003, there has been no Material Adverse Effect.

                  3.18     SEC Documents. The Company has made available
(including via EDGAR) to the Purchaser, a true and complete copy of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002, the Company's Quarterly Report on Form 10-Q for the three months ended
March 31, 2003, the Company's Definitive Proxy Statement for the Annual Meeting
held on June 3, 2003 and the Company's Current Reports on Form 8-K filed after
December 31, 2002 and before the date hereof (all such materials being called,
collectively, the "FILED SEC DOCUMENTS"). The Company will, promptly upon the
filing thereof, also make available to each Purchaser all statements, reports
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K) and definitive proxy statements filed by the Company with
the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials required to be furnished to each Purchaser
pursuant to this sentence being called, collectively, the "SEC DOCUMENTS"). The
Company has filed in a timely manner all documents that the Company was required
to file under the Exchange Act during the 12 months preceding the date of this
Agreement. As of their respective filing dates, the Filed SEC Documents
complied, and the SEC Documents will comply, in all material respects with the
requirements of the Exchange Act, and none of the Filed SEC Documents, as of
their respective filing dates, contained, and none of the SEC Documents will
contain, any untrue statement of a material fact or omitted or omit, as the case
may be, to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       7
<PAGE>

under which they were or are, as the case may be, made, not misleading, except
to the extent corrected by a subsequent Filed SEC Document.

                  3.19     No Manipulation of Stock. The Company has not taken
and will not, in violation of applicable law, take, any action designed to or
that might reasonably be expected to cause or result in unlawful manipulation of
the price of the Common Stock.

                  3.20     Related Party Transactions. Except as set forth in
Schedule 3.20, none of the officers or directors of the Company or its
Subsidiaries and, to the knowledge of the Company, none of their respective
employees is presently a party to any transaction with the Company or its
Subsidiaries, including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.

                  3.21     Employees. Except as set forth in Schedule 3.21, each
employee of the Company who has access to the Company's confidential or
proprietary information has executed a proprietary information agreement, in
substantially the form delivered to the Purchaser. To the best of the Company's
knowledge, no officer or key employee is in violation of any prior employee
contract or proprietary information or noncompetition agreement. No employees of
the Company are represented by any labor union or covered by any collective
bargaining agreement. There is no pending or, to the best of the Company's
knowledge, threatened labor dispute involving the Company and any group of its
employees. To the best of its knowledge, the Company has complied in all
material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.

                  3.22     Investment Company. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.

                  3.23     Insurance. The Company maintains insurance against
such losses and risks and in such amounts as the Company believes in good faith
is adequate, prudent and customary for the businesses in which the Company and
its Subsidiaries are engaged.

                  3.24     Environmental Matters. Each of the Company its
Subsidiaries has obtained all permits, licenses and other authorizations that
are required under federal, state and local laws in the U.S. and outside the
U.S. relating to pollution or protection of the environment, including laws
related to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic material or wastes into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("ENVIRONMENTAL LAWS"), except for any failures to obtain the permits, licenses
or authorizations that would not, individually or in the aggregate, have or
result in a Material Adverse Effect. The Company and each of its Subsidiaries is
in compliance with all terms and conditions of the required permits, licenses
and authorizations and is also in full compliance with all other limitations,
restrictions, conditions and requirements contained in the

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       8

<PAGE>

Environmental Laws or contained in any plan, order, judgment, decree or notice,
except for any non-compliance which could not, individually or in the aggregate,
have or result in a Material Adverse Effect. The Company is not aware of, nor
has the Company received notice of, any events, conditions, circumstances,
actions or plans which may interfere with or prevent continued compliance or
which would give rise to any liability under any Environmental Laws, except for
any liability which could not, individually or in the aggregate, have or result
in a Material Adverse Effect.

                  3.25     Accuracy of Information Furnished. The information
furnished to the Purchaser or its representatives or advisors by the Company or
its representatives or advisors furnished prior to the date of this Agreement,
does not contain any untrue statement of a material fact and does not omit to
state any material fact required to be stated therein or necessary to make any
statement therein, in light of the circumstances under which such statement is
made, not misleading.

                  3.26     No Material Adverse Effect. Since March 31, 2003,
except as disclosed in the SEC Documents filed subsequent to that date, if any,
the business, properties, assets, condition (financial or otherwise), prospects
or operating results of the Company and its Subsidiaries have not suffered any
Material Adverse Effect.

                  3.27     Absence of Certain Developments. Except as described
in or contemplated by this Agreement or the filed SEC Documents, since March 31,
2003, through the closing Date, the Company and its Subsidiaries have not (a)
issued any stock, options (other than to employees and directors consistent with
past practices) bonds or other corporate securities; (b) borrowed any amount or
incurred or become subject to any direct or indirect liabilities (absolute,
accrued or contingent), other than current liabilities incurred in the ordinary
course of business and liabilities under contracts entered into in the ordinary
course of business; (c) discharged or satisfied any lien or adverse claim or
paid any obligation or liability (absolute, accrued or contingent), other than
current liabilities shown on the consolidated balance sheet and current
liabilities incurred in the ordinary course of business; (d) made any material
change in the nature or operations of the business of the Company and its
Subsidiaries; (e) sustained any material loss or interference with its business
or properties not covered by insurance; (f) paid or declared any dividends or
other distributions with respect to the capital stock (other than customary
dividends paid to all holders of Common Stock); (g) defaulted in the payment of
principal and interest on any outstanding debt obligations or (h) entered into
any agreement or commitment to do any of the foregoing.

                  3.28     Contributions. Neither the Company, its employees
nor, to the Company's knowledge, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials, or employees or to foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company or made by any person acting on its
behalf and of which the Company is aware in violation of law or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       9

<PAGE>

         4.       REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and
warrants to the Company as follows:

                  4.1      Investment. The Purchaser is acquiring the Shares and
the shares of Common Stock into which the Shares may be converted for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and, except as contemplated by this Agreement and the
Ancillary Agreement, the Purchaser has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.

                  4.2      Authority. The Purchaser has full power and authority
to enter into and to perform this Agreement in accordance with its terms.

                  4.3      Experience. The Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement and has had
the opportunity to make detailed inquiry concerning the Company, its business
and its personnel; and the Purchaser has adequate net worth and means of
providing for its current needs and contingencies to sustain a complete loss of
its investment in the Company; the Purchaser's overall commitment to investments
which are not readily marketable is not disproportionate to its net worth and
the Purchaser's investment in the Shares will not cause such overall commitment
to become excessive.

                  4.4      Accredited Investor. The Purchaser is an Accredited
Investor within the definition set forth in Rule 501(a) promulgated by the
Securities and Exchange Commission under the Securities Act.

                  4.5      Brokers. The Purchaser has not retained or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.

                  4.6      Restricted Securities. The Purchaser understands
that, although the Company is undertaking to file a registration statement
covering the resale of the Shares and the shares of common stock into which the
Shares are convertible, the registration statement will not be effective for an
indeterminate time following the Closing, the Shares to be purchased hereunder
and the shares of Common Stock into which the Shares are convertible are
"restricted securities" under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder, such
securities may not be resold except in limited circumstances. The Purchaser is
familiar with Rule 144 under the Securities Act, as amended from time to time,
and understands the resale limitations imposed thereby and by the Securities
Act.

         5.       CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligation
of the Purchaser to purchase the Shares at the Closing, is subject to the
fulfillment, or the waiver by the Purchaser, of the following conditions on or
before the Closing:

                  5.1      Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be true and correct as
of the date hereof and shall be true

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       10

<PAGE>

and correct on and as of the Closing Date with the same effect as though such
representation and warranty had been made on and as of that date. The Company
hereby agrees that for purposes of this Agreement, the representations and
warranties of the Company shall be deemed to have been restated on and as of the
Closing Date.

                  5.2      Performance. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by the Company prior to or at the Closing.

                  5.3      Approvals. The Company shall have obtained any and
all authorizations, approvals, consents, permits, and waivers and shall have
made all filings necessary or appropriate for the consummation of the
transactions contemplated hereby and under the Ancillary Agreements.

                  5.4      Registration Rights Agreement. The Registration
Rights Agreement attached hereto as Exhibit B shall have been executed and
delivered by the Company and the Purchaser.

                  5.5      Stockholders' Agreement. The Stockholders' Agreement
attached hereto as Exhibit C shall have been executed and delivered by the
Company, by the Purchaser and by each of the parties identified therein.

                  5.6      Debenture Agreement. The Debenture Agreement attached
hereto as Exhibit D shall have been executed and delivered by the Company and
the Purchaser.

                  5.7      Settlement. The Settlement Agreement and Mutual
Release attached hereto as Exhibit E shall have been executed and delivered by
the Company and the Purchaser.

                  5.8      License Agreement. The License Agreement attached
hereto as Exhibit F shall have been executed and delivered by the Company and
the Purchaser.

                  5.9      Game Console Agreement. The Game Console Sublicense
Agreement attached hereto as Exhibit G shall have been executed and delivered by
the Company and the Purchaser.

                  5.10     Certificates and Documents. The Company shall have
delivered to the Purchaser:

                           (i)      The Certificate of Designation of the
Company, as amended and in effect prior to the Closing, certified by the
Secretary of State of the State of Delaware;

                           (ii)     A certificate, as of the most recent
practicable date, as to the corporate good standing of the Company issued by the
Secretary of State of the State of Delaware confirming such good standing on or
immediately prior to the Closing;

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       11

<PAGE>

                           (iii)    Bylaws of the Company, certified by its
Secretary or Assistant Secretary as of the Closing Date; and

                           (iv)     Resolutions of the Directors of the Company,
authorizing and approving all matters in connection with this Agreement and the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of the Company as of the Closing Date.

                  5.11     Compliance Certificate. The Company shall have
delivered to the Purchaser a certificate, executed by the President of the
Company, dated the Closing Date, certifying to the fulfillment of the conditions
specified in subsections 5.1, 5.2, 5.3, 5.14 and 5.15 of this Agreement.

                  5.12     Opinion of Counsel. Gray Cary Ware & Freidenrich LLP
shall have delivered its opinion, addressed to the Purchaser, in the form
attached hereto as Exhibit H.

                  5.13     Adoption and Filing of Certificate of Designation.
The Company shall have taken all requisite corporate action to adopt and file
the Certificate of Designation with the Secretary of the State of Delaware.

                  5.14     No Material Adverse Effect. The Company shall not
have suffered any Material Adverse Effect prior to the Closing Date.

                  5.15     No Constraints. No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit,
alter, prevent or delay the Closing, shall have been instituted before any
court, arbitrator or governmental body, agency or official and shall be pending.
The purchase of and payment for the Series A Preferred Stock by the Purchaser
shall not be prohibited by any law or governmental order or regulation. All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registrations, declarations and filings with, any governmental or
administrative agency with respect to any of the transactions contemplated
hereby shall have been duly obtained or made and shall be in full force and
effect.

                  5.16     Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser, and the Purchaser shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.

         6.       CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company under subsection 1.2 of this Agreement are subject to
fulfillment, on or before the Closing, of each of the following conditions:

                  6.1      Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in Section 4 shall be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of that date. The
Purchaser hereby agrees that for purposes of this Agreement the representations
and warranties of the Purchaser shall be deemed to have been restated on and as
of the Closing Date.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       12

<PAGE>

                  6.2      Purchase Consideration. The Purchaser shall have
delivered the aggregate purchase consideration as set forth in Section 2.

                  6.3      Ancillary Agreements. The Registration Rights
Agreement, Stockholders' Agreement and Debenture Agreement by shall have been
executed and delivered by each of the parties identified therein.

         7.       COVENANTS OF THE COMPANY.

                  7.1      Reduction Of Lawsuit Claims. In the event that a
court of competent jurisdiction in the case of 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) (the "LAWSUIT") issues a ruling or order which eliminates any claims
asserted in the Lawsuit by the Company or narrows the scope of the Lawsuit and
the Company desires to withdraw or dismiss the Lawsuit, the Purchaser shall have
the right to either (i) direct the assignment of the Lawsuit to any third party
and if any such third party purchases such Lawsuit from the Company, the
Purchaser shall receive any and all proceeds from such sale; or (ii) assign the
Lawsuit and all right, title and interest therein to either the Purchaser or its
designee for no cash or other consideration.

                  7.2      Listing And Maintenance Requirements Compliance. So
long as the Company shall continue the listing and trading of its Common Stock
on Nasdaq, the Company will use its commercially reasonable efforts to comply in
all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of such exchange or quotation system.

                  7.3.     Hedging Activities. Notwithstanding the anything to
the contrary herein, the Purchaser shall have the right at any time to enter
into hedging or remarketing activities with respect to the Series A Preferred
Stock or the shares of Common Stock into which such the Series A Preferred Stock
is convertible.

         8.       SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon, and inure to the benefit of, the respective successors,
assigns, heirs, executors and administrators of the parties hereto.

         9.       CONFIDENTIALITY. In addition to, but not in substitution for,
any pre-existing confidentiality agreement between the Company and the
Purchaser, the Purchaser agrees that it will keep confidential and will not
disclose or divulge any confidential, proprietary or secret information that the
Purchaser may obtain from the Company pursuant to reports and other materials
submitted by the Company to such Purchaser pursuant to this Agreement, or
pursuant to visitation or inspection rights granted hereunder, unless such
information is known, or until such information becomes known, to the public
other than as a result of a disclosure by the Purchaser; provided, however, that
the Purchaser may disclose such information to its attorneys, accountants,
consultants and other professionals to the extent necessary to obtain their
services in connection with its investment in the Company.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       13

<PAGE>

         10.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby until the third anniversary of the Closing.

         11.      NOTICES. All notices, demands, requests, consents or other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been received when sent personally to the recipient:
(i) one (1) business day after it has been dispatched (with charges prepaid) to
the recipient by a reputable overnight courier service; or (ii) three (3)
business days after deposit in the mail when mailed (with postage prepaid) by
first class certified or registered mail, return receipt requested. Such
notices, demands, requests, consents or other communications shall be addressed:

If to the Company, to:

                  Victor Viegas, President,
                  Chief Executive Officer and Chief Financial Officer
                  Immersion Corporation
                  801 Fox Lane
                  San Jose, CA 95131
                  Facsimile: (408) 467-1901

or at such other address or addresses as may later have been furnished in
writing by the Company to the Purchaser, with a copy to:

                  James Koshland
                  Gray Cary Ware & Freidenrich LLP
                  2000 University Avenue
                  East Palo Alto, CA 94303
                  Facsimile: (650) 833-2001
                  Email: jkoshland@graycary.com

If to the Purchaser, to:

                  Microsoft Corporation
                  One Microsoft Way
                  Redmond, WA 98052
                  Fax: (425) 936-7329
                  Attn: Law and Corporate Affairs

and               Microsoft Corporation
                  One Microsoft Way
                  Redmond, WA 98052
                  Fax: (425) 936-7329
                  Attn: Corporate Development and Business Strategies, c/o Marc
                        Brown

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       14

<PAGE>

                  and with respect to all corporate actions and income
                  notifications to:

                  The Northern Trust Company
                  Attn: Ms. Robyn Spillane
                  801 Canal Street
                  C1-S
                  Chicago, IL 60607
                  Reference: Microsoft Corporation, account #26-06819

                  All Shares should be delivered via Federal Express to:

                  The Northern Trust Company New York
                  40 Broad Street
                  8th Floor
                  New York, N.Y. 10004
                  Reference: Microsoft Corporation, account #26-06819

or at such other address or addresses as may later have been furnished in
writing by Microsoft to the Company, with a copy to:

                  Preston Gates & Ellis LLP
                  425 Fourth Avenue, Suite 2900
                  Seattle, WA 98104-1158
                  Attn.: Richard B. Dodd
                  Facsimile: (206) 623-7022
                  E-mail: rdodd@prestongates.com

Any party may give any notice, demand, request, consent or other communication
required or permitted under this Agreement using any other means (including,
without limitation, personal delivery, messenger service, facsimile, first class
mail or electronic mail), but no such notice, request, consent or other
communication shall be deemed to have been duly given unless and until it is
actually received by the party for whom it is intended within the specified
period. Any party may change the address to which notices, requests, consents or
other communications hereunder are to be delivered by giving the other parties
notice in the manner set forth in this Section 10.

         12.      EXPENSES. Each party will bear its own costs and expenses in
connection with the negotiation, execution and consummation of the Agreement and
the Ancillary Agreements and the closing of the transactions contemplated
hereby.

         13.      BROKERS. Each party will bear the cost and expenses incurred
by it in connection with a broker or finder in regard to the transactions
contemplated by this Agreement.

         14.      ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements
embody the entire agreement and understanding between the parties hereto with
respect to the

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       15

<PAGE>

subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.

         15.      AMENDMENTS AND WAIVERS. Except as otherwise expressly set
forth in this Agreement, any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the Purchaser(s) holding a majority of the Shares.
Any amendment or waiver effected in accordance with this Section 14 shall be
binding upon each holder of any Shares (including shares of Common Stock into
which such Shares have been converted), as well as each future holder of all
such securities and the Company. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.

         16.      COUNTERPARTS; SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which when taken together shall constitute one and the same instrument. This
Agreement may be executed by actual, facsimile or electronic signatures, or
combinations thereof.

         17.      HEADINGS. The headings of the sections, subsections, and
paragraphs of this Agreement have been added for convenience only and shall not
be deemed to be a part of this Agreement.

         18.      SEVERABILITY. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a board of
arbitration or a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of those that may
be hereafter declared invalid, illegal, void or unenforceable.

         19.      GOVERNING LAW. This Agreement and the rights and obligations
of the parties hereunder 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 Agreement or to interpret any provision of this Agreement,
the prevailing party shall be entitled to recover its reasonable attorneys'
fees, costs and other expenses.

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       16

<PAGE>

         20.      CUSTODIANS. Notwithstanding anything to the contrary contained
herein, upon receipt of a written request from the Purchaser, the Company will
issue the Shares, the Series A Conversion Shares and any other shares of capital
stock to be issued to the Purchaser pursuant to this Agreement or any of the
Ancillary Agreements in the name of a Custodian. All of the Shares issued to
Microsoft at the Closing shall be issued in the name of Booth and Co. (Tax ID
number 36-6033750), which is the nominee name of the Purchaser's Custodian, The
Northern Trust Company. "CUSTODIAN" shall mean a Person who holds any capital
stock or securities convertible into capital stock as a nominee for the benefit
of the owner for the purpose of receiving notices and handling certification
issues, or any other purpose necessary to manage the portfolio of the owner
pursuant to an arrangement in which the owner retains control of the vote of the
shares in question, the economic benefits and risks of the shares in question
and of any disposition of the shares in question.

                            {SIGNATURE PAGE FOLLOWS}

Immersion Corporation
Series A Preferred Stock Purchase Agreement

                                       17

<PAGE>

                              SIGNATURE PAGE TO THE
                    SERIES A REDEEMABLE CONVERTIBLE PREFERRED
                            STOCK PURCHASE AGREEMENT

         IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first above written.

                                     COMPANY:

                                     IMMERSION CORPORATION

                                     By: /s/ Victor Viegas
                                         ---------------------------------------
                                         VICTOR VIEGAS
                                         President, Chief Executive Officer and
                                         Chief Financial Officer

                                     PURCHASER:

                                     MICROSOFT CORPORATION

                                     By: /s/ William H. Gates
                                         ---------------------------------------
                                         Name:  William H. Gates
                                         Title: Chairman of the Board

                                     By: /s/ Richard Emerson
                                         ---------------------------------------
                                         Name:  Richard Emerson
                                         Title: Sr. VP. Corp. Development

                                     By: /s/ Bryan Lee
                                         ---------------------------------------
                                         Name:  Bryan Lee
                                         Title: Corporate Vice President and
                                         Chief Financial Officer

Immersion Corporation
Series A Preferred Stock Purchase Agreement

<PAGE>

                                   APPENDIX A

                                  DEFINITIONS

         "Agreement" means this Series A Preferred Stock Purchase Agreement.

         "Ancillary Agreements" shall have the meaning set forth in Section 3.1
hereof.

         "Certificate of Designation" shall have the meaning set forth in
Section 1.1 hereof.

         "Closing" shall have the meaning set forth in Section 2 hereof.

         "Closing Date" shall have the meaning set forth in Section 2 hereof.

         "Code" shall have the meaning set forth in Section 3.11 hereof.

         "Commission" shall have the meaning set forth in Section 3.1 hereof.

         "Common Stock" shall have the meaning set forth in Section 1.1 hereof.

         "Company" means Immersion Corporation, a Delaware corporation having
its corporate headquarters at 801 Fox Lane, San Jose, California 95131.

         "Company Contract" shall have the meaning set forth in Section 3.14
hereof.

         "Custodian" shall have the meaning set forth in Section 23 hereof.

         "Debenture Agreement" shall have the meaning set forth in Section 3.1
hereof.

         "Environmental Laws" shall have the meaning set forth in Section 3.28
hereof.

         "Filed SEC Documents" shall have the meaning set forth in Section 3.19
hereof.

         "Financial Statements" shall have the meaning set forth in Section 3.18
hereof.

         "Intellectual Property Rights" shall have the meaning set forth in
Section 3.13 hereof.

         "Lawsuit" shall have the meaning set forth in Section 7 hereof.

         "Liens" shall have the meaning set forth in Section 3.2 hereof.

         "Material Adverse Effect" shall have the meaning set forth in Section
3.1 hereof.

         "Nasdaq" shall have the meaning set forth in Section 1.2 hereof.

         "Publicly Available Software" shall have the meaning set forth in
Section 3.13(iii) hereof.

                                      A - 1

<PAGE>

         "Purchase Price" shall have the meaning set forth in Section 1.2
hereof.

         "Purchaser" means Microsoft Corporation, a Washington corporation
having its corporate headquarters at One Microsoft Way, Redmond, Washington
98052-6399.

         "Registration Rights Agreement" shall have the meaning set forth in
Section 3.1 hereof.

         "SEC Documents" shall have the meaning set forth in Section 3.19
hereof.

         "Securities Act" shall have the meaning set forth in Section 3.3(v)
hereof.

         "Series A Conversion Shares" shall have the meaning set forth in
Section 1.1 hereof.

         "Series A Preferred Stock" shall have the meaning set forth in Section
1.1 hereof.

         "Shares" shall have the meaning set forth in Section 1.1 hereof.

         "Stockholders' Agreement" shall have the meaning set forth in Section
3.1 hereof.

         "Subsidiaries" shall have the meaning set forth in Section 3.2 hereof.

                                      A - 2<PAGE>

                                                                    EXHIBIT 10.2

SENIOR REDEEMABLE

CONVERTIBLE DEBENTURE

PURCHASE AGREEMENT

BY AND BETWEEN:

IMMERSION CORPORATION

AND

MICROSOFT CORPORATION

DATED AS OF JULY 25, 2003

<PAGE>

           SENIOR REDEEMABLE CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                  THIS SENIOR REDEEMABLE CONVERTIBLE DEBENTURE PURCHASE
AGREEMENT, made this 25th day of July, 2003, by and between IMMERSION
CORPORATION, a Delaware corporation with an address at 801 Fox Lane, San Jose,
California 95131 (the "COMPANY"); and MICROSOFT CORPORATION, a Washington
corporation with an address at One Microsoft Way, Redmond, WA 98052-6399,
Washington (the "PURCHASER").

                              W I T N E S S E T H:

                  WHEREAS, the Company proposes, subject to the terms and
conditions stated herein (including the attached schedules), to issue to the
Purchaser a series of senior redeemable convertible debentures in increments of
Five Hundred Thousand Dollars ($500,000) with the aggregate principal amount not
to exceed Nine Million Dollars ($9,000,000), having the terms, including the
interest accruing thereon, set forth in the Debenture.

                  NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties and covenants hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows.

                             SECTION 1. DEFINITIONS

                  Section 1.01 Defined Terms. Unless hereinafter defined or
otherwise defined herein, all capitalized terms used in this Agreement shall
have the meanings, ascribed to such terms in the Debenture:

                  "Affiliate" means, with respect to a specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by or is under common control with such first Person;
where for purposes of the foregoing "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a Person
whether through the ownership of voting securities, contract or otherwise;
provided; however, that: (i) in the case of any Person that is an individual,
"Affiliate" shall include any spouse, parent, grandparent, child, grandchild,
sibling of such Person and any spouse or child of any such parent, grandparent,
child, grandchild, or sibling ("Family Members"); and (ii) in the case of any
Person that is a corporation or other legal entity, including without
limitation, the Company, "Affiliate" shall include any officer, director,
trustee, member, partner, shareholder and Family Members thereof; and provided;
further; however, that "Affiliate" shall include any trust or estate with
respect to which such Person is a trustee, executor or has a beneficial interest
therein.

                  "Agreement" means this Senior Redeemable Convertible Debenture
Purchase Agreement, as amended or supplemented from time to time. References to
Articles, Sections, Exhibits, Schedules and the like refer to the Articles,
Sections, Exhibits, Schedules and the like

<PAGE>

of this Agreement unless otherwise indicated, and the words "herein" and
"hereof" and "hereunder" and words of similar import when used in this Agreement
or the Debenture shall refer to this Agreement or such Debenture as the case may
be and not to any particular provision of this Agreement or the Debenture.

                  "Capital Expenditures" means for any period, the dollar amount
of gross expenditures (including obligations under Capital Leases) made for
fixed assets, real property, plant and equipment, and all renewals, improvements
and replacements thereto (but not repairs thereof) incurred during such period.

                  "Capital Lease" means all leases of personal property which
have been or should be capitalized on the books of the lessee in accordance with
GAAP.

                  "Closing Date" means the date on which all of the conditions
to the Initial Purchase set forth in Section 3.01 and 3.02 have been met by the
Company.

                   "Commission" shall have the meaning set forth in Section 4.01
hereof.

                  "Company" shall have the meaning set forth in the preamble
hereof.

                  "Company Contract" shall have the meaning set forth in Section
4.13 hereof.

                  "Compliance Certificate" means a certificate executed by the
senior executive officer of the Company certifying to the matters set forth in
Section 3.02(h) hereof.

                  "Debenture Remainder" shall have the meaning set forth in
Section 2.01

                  "Determination Date" shall have the meaning set forth in
Section 8.04 hereof.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as such may be amended from time to time.

                  "Filed SEC Documents" shall have the meaning set forth in
Section 4.18 hereof.

                  "Financial Statements" shall have the meaning set forth in
Section 4.17 hereof.

                  "Game Console Sublicense Agreement" means that certain Game
Console Sublicense Agreement between the Company and the Purchaser dated July
25, 2003.

                  "Indebtedness" means at a particular time, without
duplication: (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money; (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security; (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business which are not more than six months past due);
(iv) any commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations with
respect to letters of credit); (v) any indebtedness guaranteed in any manner by
a Person (including, without limitation, guarantees in the form of an agreement
to repurchase or reimburse); (vi) any

                                      -2-

<PAGE>

obligations under Capital Leases with respect to which a Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations a Person assures a creditor against loss; (vii) any
indebtedness secured by a Lien on a Person's assets; and (viii) any unsatisfied
obligation for "withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA.

                  "Indemnifiable Damages" shall have the meaning set forth in
Section 8.01 hereof.

                  "Indemnified Parties" shall have the meaning set forth in
Section 8.01 hereof.

                  "Indemnifying Party" shall have the meaning set forth in
Section 8.02 hereof.

                  "Initial Debenture Period" shall have the meaning set forth in
Section 2.01 hereof.

                  "Initial Purchase" means the purchase by the Purchaser of the
first senior redeemable convertible debenture of the Company in the original
principal amount of up to Three Million Dollars ($3,000,000).

                  "Intellectual Property Rights" shall have the meaning set
forth in Section 4.12 hereof.

                  "Lawsuit" means the 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).

                  "License Agreement" means that certain License Agreement
between the Company and the Purchaser dated July 25, 2003.

                  "Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company or any
Subsidiary, any filing or agreement to file a financing statement as debtor
under the Uniform Commercial Code, as amended from time to time, or any similar
statute other than to reflect ownership by a third party of property leased to
the Company or any Subsidiaries under a lease which is not in the nature of a
conditional sale or title retention agreement, or any subordination arrangement
in favor of another Person (other than any subordination arising in the ordinary
course of business).

                  "Material Adverse Effect" means any change, effect, event,
occurrence, development or developments which, individually or in the aggregate,
(i) has had or would reasonably be expected to have a material adverse effect on
the business, assets, liabilities (contingent or other), affairs, operations or
financial condition of the Company or any of its Subsidiaries, or (ii) would
reasonably be expected to prevent or materially impede, interfere, hinder or
delay the performance by the Company of its obligations hereunder. However, any
adverse change, effect, event, occurrence, state of facts or development to the
extent attributable to the announcement of the execution of the Transaction
Documents shall not be deemed in and of itself to constitute, and shall not be
taken into account in determining whether there has been or will be, a "material
adverse effect".

                                      -3-

<PAGE>

                  "Notice of Claim" shall have the meaning set forth in Section
8.02 hereof.

                  "Notice of Possible Claim" shall have the meaning set forth in
Section 8.02 hereof.

                  "Obligations" means all obligations, Indebtedness and
liabilities, joint, several, matured, unmatured, contingent, absolute, of
whatever nature, now or hereafter owing by the Company to the Purchaser,
including, but not limited to, all Indebtedness of the Company under this
Agreement and any Debenture (whether for principal, interest, fees, costs,
expenses or other amount).

                  "Ordinary Course Indebtedness" means (i) Indebtedness of the
sort described in clauses (i) and (ii) of the definition of "Indebtedness"
existing on the date of this Agreement and disclosed in Schedule 1.01 and
refinancings, renewals and extensions of any such Indebtedness if the average
life to maturity thereof is greater than or equal to that of the Indebtedness
being refinanced or extended and if the principal amount thereof is not
increased; (ii) Capital Leases in an individual amount not to exceed $500,000
and other Indebtedness secured by a lien described in clause (iii) of the
definition "Permitted Liens," provided that such Indebtedness does not exceed
the cost or fair market value of the assets financed with such Indebtedness and
refinancings and extensions of any such Indebtedness if the average life to
maturity thereof is greater than or equal to that of the Indebtedness being
refinanced or extended (provided, for purposes hereof, Indebtedness shall
qualify under this clause if it is incurred within thirty (30) days of the date
that Company acquired the assets which are to secure such Indebtedness and the
cost of the assets acquired shall include the delivery, installation and tax
expenses incurred in acquiring such assets); (iii) Indebtedness which may be
deemed to exist pursuant to any performance, surety, statutory appeal or similar
obligations; (iv) Indebtedness under interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging Company's
and/or the Subsidiaries' exposure to fluctuations in interest or exchange rates,
loan, credit exchange, security or currency valuations or commodity prices; (v)
deferred taxes; (vi) Indebtedness in respect of overdraft protections and
otherwise in connection with Company's deposit accounts; (vii) leases of office
and storage facilities; (viii) Indebtedness owing from a Subsidiary to Company
or another Subsidiary; (ix) Indebtedness in respect of credit cards issued to
Company, a Subsidiary or employees of either; (x) Indebtedness consisting of
deferred liabilities in respect of payments received by Company for services to
be provided; (xi) Guarantees of any Indebtedness arising out of subparagraphs
(i)-(x) and (xii) hereof; and (xii) Subordinated Debt; provided, that in each
case, such indebtedness is incurred in the ordinary course of business
consistent with the Company's past practice.

                  "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

                  "Permitted Liens" means:

                                      -4-

<PAGE>

                           (i)      tax Liens with respect to Taxes not yet due
and payable or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established in
accordance with GAAP, consistently applied;

                           (ii)     deposits or pledges made in connection with,
or to secure payment of, utilities or similar services, workers' compensation,
unemployment insurance, old age pensions or other social security obligations;

                           (iii)    purchase money security interests in any
property acquired by the Company to the extent permitted by this Agreement;

                           (iv)     interests or title of a lessor under any
lease permitted by this Agreement;

                           (v)      mechanics', materialmen's or contractors'
Liens or encumbrances or any similar Lien or restriction for amounts not yet due
and payable;

                           (vi)     easements, rights-of-way, restrictions and
other similar charges and encumbrances not interfering with the ordinary conduct
of the business of the Company or detracting from the value of the assets of the
Company;

                           (vii)    Liens with respect to Indebtedness permitted
pursuant to Section 6.01; and

                           (viii)   Liens outstanding on the date hereof which
secure Indebtedness and which are described in the schedules to this Agreement.

                  "Person" means an individual, partnership, corporation,
company, limited liability company, association, trust, unincorporated
organization or any other entity or organization, including a government or
agency or political subdivision thereof.

                  "Plan" means any plan under ERISA established, maintained or
to which contributions have been made by the Company or any Subsidiary.

                  "Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.

                  "Purchase" means the Initial Purchase and each Subsequent
Purchase of Debentures.

                   "Purchase Agreement" means that certain Series A Convertible
Preferred Stock Purchase Agreement between the Company and the holder of the
Series A Preferred Stock dated July 25, 2003.

                   "Reportable Event" means any of the events set forth in
Section 4043 of ERISA.

                  "SEC Documents" shall have the meaning set forth in Section
4.18 hereof.

                                      -5-

<PAGE>

                  "Securities Act" shall have the meaning set forth in Section
4.03 hereof.

                  "Subordinated Debt" means any debt incurred by the Company
that is subordinated to the debt owing by the Company to the Purchaser on terms
acceptable to the Purchaser (and identified as being such by the Company and the
Purchaser).

                  "Subsequent Debenture Period" shall have the meaning set forth
in Section 2.01 hereof.

                  "Subsequent Purchase" means each purchase made by the
Purchaser of a senior redeemable convertible debenture of the Company in the
principal amount of up to Two Million Dollars ($2,000,000) on that date when all
of the conditions to such purchase set forth in Section 3.02 hereof have been
satisfied.

                  "Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which: (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof;
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.

                  "Tax" or "Taxes" means and includes any and all taxes, fees,
levies, assessments, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any governmental authority,
including, without limitation: foreign, domestic, central, local, state or other
jurisdictional taxes or other charges on or with respect to income, estimated
income, franchises, business, occupation, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges.

                  "Third Party Claim" shall have the meaning set forth in
Section 8.03 hereof.

                  "Transaction Documents" means the Debenture Purchase
Agreement, the Purchase Agreement, the License Agreement and the Game Console
Sublicense Agreement.

                  Section 1.02 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles as in effect on the date of this Agreement, or,
as in effect

                                      -6-

<PAGE>

on the date when any financial statements are delivered pursuant to this
Agreement ("GAAP").

                  Section 1.03 Issuance of Debentures. The Debentures purchased
by the Purchaser hereunder will be represented by a definitive instrument in the
form attached hereto as Exhibit A. The Company shall issue the Debentures to the
Purchaser, against a wire transfer of immediately available funds by or on
behalf of the Purchaser equal to the principal amount of the Debentures to an
account designated by the Company. The time and date of such delivery and
payment shall be at such time and date as the Purchaser and the Company may
agree upon. Contemporaneous with the Purchaser's wire transfer of an amount
equal the original principal amount of the Debenture, the Company shall issue to
the Purchaser the Debenture.

                         SECTION 2. DEBENTURE PURCHASES

                  Section 2.01 The Debenture Purchases. Subject to the terms and
conditions hereof, the Purchaser agrees to offer to purchase Debentures of the
Company in an aggregate principal amount not to exceed Nine Million Dollars
($9,000,000), subject to the Company's request of the Purchaser to make such
purchases as follows:

                  (a)      The Company may request that Purchaser purchase
Debentures in an aggregate principal amount not to exceed Three Million Dollars
($3,000,000), in minimum increments of Five Hundred Thousand Dollars ($500,000),
at the Closing Date or during the twelve (12) month period following the Closing
Date ("INITIAL DEBENTURE PERIOD").

                  (b)      Following the Initial Debenture Period and upon
thirty (30) days' prior written notice to Purchaser, the Company may request
that Purchaser purchase Debentures in an aggregate principal amount not to
exceed Two Million Dollars ($2,000,000), in minimum increments of Five Hundred
Thousand Dollars ($500,000), in each of the three successive twelve (12) month
periods following the Initial Debenture Period (each such period a "SUBSEQUENT
DEBENTURE PERIOD"), provided, however, that if the Company requests that
Purchaser purchase Debentures in an amount less than $2,000,000 in any
Subsequent Debenture Period, any such remaining amount (the "DEBENTURE
REMAINDER") may be added to the amount the Company may issue in the next
Subsequent Debenture Period, provided further, that if such Debenture Remainder
is not issued in such next Subsequent Debenture Period, such Debenture Remainder
will not carryover to the next Subsequent Debenture Period. For example, if the
Company issues $1,500,000 in Debentures in the first Subsequent Debenture Period
following the Initial Debenture Period, the Company may issue Debentures for up
to $2,500,000 in the second Subsequent Debenture Period, but if not used in the
second Subsequent Debenture Period, the Company may only issue $2,000,000 of
Debentures in the third Subsequent Debenture Period.

                  (c)      The Company shall not request that the Purchaser
purchase, and the Purchaser shall not be required to purchase, a Debenture
unless, in connection with the Purchase of such Debenture and the conversion of
such Debentures into Common Stock of the Company in accordance with such
Debenture, either (i) the Company has received the requisite shareholder
approval pursuant to the Nasdaq Marketplace Rules or (ii) no such approval is
required.

                                      -7-

<PAGE>

                  Section 2.02 Debenture. The Company's obligation to pay the
principal of, and interest on, the Debentures shall be evidenced by each
Debenture. The Purchaser is hereby authorized to maintain a record of the
Debentures. Such records shall constitute rebuttably presumptive evidence of the
accuracy of the information contained therein. Any failure by the Purchaser to
maintain such records or any error therein shall not affect the Company's
obligation to repay the Debentures and interest thereon in accordance herewith.

                  Section 2.03 Use of Proceeds. The Company will use the
proceeds from the sale of the Debentures for reasonable litigation expenses
related to the Lawsuit.

                    SECTION 3. DEBENTURE PURCHASE CONDITIONS

                  Section 3.01 Conditions to Closing of the Initial Purchase.
The Purchaser's obligation to consummate the Initial Purchase with the Company
is subject to the fulfillment of the following conditions:

                  (a)      The Purchaser shall have received each of the
following:

                           (i)      a copy of the charter documents of the
         Company, certified by the Secretary of State of Delaware;

                           (ii)     a copy of good standing certificates issued
         by the Secretary of State of: (x) the state in which the Company is
         incorporated; and (y) the states where the Company is authorized to
         conduct business, dated within five (5) Business Days of the Closing
         Date;

                           (iii)    by-laws of the Company, certified by its
         Secretary or Assistant Secretary as of the Closing Date;

                           (iv)     resolutions of the Board of Directors of the
         Company approving and authorizing, inter alia, the execution, delivery
         and performance by the Company of this Agreement and the Debenture,
         certified by the Secretary or Assistant Secretary of the Company as of
         the Closing Date; and

                           (v)      the names, titles and signatures of the
         officers of the Company and other representatives thereof who are
         authorized to act on its behalf in respect of this Agreement and the
         issuance of the Debentures, including without limitation, the execution
         and delivery thereof and the documents to be delivered thereunder or in
         connection therewith; the Purchaser may conclusively rely on the
         authorities contained in each such certificate unless and until it
         shall have received a further certificate from such Secretary or
         Assistant Secretary amending or otherwise modifying the authorities set
         forth in the prior certificate furnished to the Purchaser; and

                  (b)      The Purchaser shall have received a legal opinion
from the Company's counsel, in form and substance reasonably satisfactory to the
Purchaser.

                  (c)      With respect to the Initial Purchase, once the
Company believes that Purchaser has received all of the items required in
subparagraphs (a) and (b) above and Section

                                      -8-

<PAGE>

3.02 below, it shall provide written notice to Purchaser of the fulfillment of
the conditions to the Initial Purchase and the closing of the Initial Purchase
shall occur within five (5) business days of such written notice unless
Purchaser shall contest such fulfillment of the conditions, in which event the
closing shall occur at such time as Purchaser acknowledges fulfillment of the
conditions.

                  Section 3.02 Conditions to Closing of the each Purchase of
Debentures. The Purchaser's obligation to purchase any Debentures, including
without limitation pursuant to the Initial Purchase, shall be subject to the
fulfillment of the following conditions:

                  (a)      The Company shall have executed and delivered the
Debenture to the Purchaser;

                  (b)      No Default or Event of Default shall have occurred
and be continuing on the date thereof either before or after giving effect to
the consummation of the Purchase;

                  (c)      Subject to updating by the Company of the Schedules
to this Agreement attached hereto on the date of such Purchase (or such other
schedules as may be provided by the Company on such date), the representations
and warranties contained herein and in the Debenture are true and correct in all
material respects on such date, both before and after giving effect to the
consummation of the Purchase;

                  (d)      In connection with such Purchase of such Debenture
and the conversion of such Debentures into Common Stock of the Company in
accordance with such Debenture, either (i) the Company has received the
requisite shareholder approval pursuant to the Nasdaq Marketplace Rules or (ii)
no such approval is required;

                  (e)      The Company shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the date of
consummation of the Purchase;

                  (f)      There has been no Material Adverse Effect;

                  (g)      No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
delay the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending. The purchase of and
payment for the Debentures by the Purchaser shall not be prohibited by any law
or governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency with respect to any
of the transactions contemplated hereby shall have been duly obtained or made
and shall be in full force and effect.

                  (h)      The Purchaser shall have received a Compliance
Certificate dated the date of such Purchase certifying that the conditions set
forth in Subclauses (b) - (g) have been satisfied; and

                  (i)      The Purchaser shall have received such other
documentation relating to the Purchase, this Agreement and the Debentures and
the transactions contemplated thereby as

                                      -9-

<PAGE>

the Purchaser may have reasonably requested. All corporate and other proceedings
and all other documents (including, without limitation, all documents referred
to herein and not appearing as exhibits hereto) and all legal matters in
connection herewith shall be reasonably satisfactory in form and substance to
the Purchaser.

                  (j)      With respect to each Purchase other than the Initial
Purchase, once the Company believes that Purchaser has received all of the items
required in subparagraphs (a) through (i) above, it shall provide written notice
to Purchaser of the fulfillment of the conditions to the closing of such
Purchase and the closing of such Purchase shall occur within five (5) business
days of such written notice unless Purchaser shall contest such fulfillment of
the conditions, in which event such closing shall occur at such time as
Purchaser acknowledges fulfillment of the conditions.

                  SECTION 4. REPRESENTATIONS AND WARRANTIES

         Except as otherwise described in the Filed SEC Documents (as defined in
Section 4.18 below) (including the documents incorporated by reference therein)
and the Company's press releases since March 31, 2003 that are available on the
Company's web site located at http://www.immersion.com, in each case on the date
hereof, or subsequently disclosed in a Schedule corresponding to the applicable
section hereof delivered to the Purchaser pursuant to Section 3.02 (provided
that no such updating shall be considered to render a representation or warranty
true and correct that was not true and correct when originally made or given),
the Company represents and warrants as of the date of the Initial Purchase and
as of the date of consummation of each Subsequent Purchase as follows:

                  Section 4.01 Organization and Standing. The Company and each
of its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has all
corporate power and authority to conduct its business as presently conducted and
as proposed to be conducted by it. The Company has all corporate power and
authority to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement and the Debentures. Each of the
Company and the Subsidiaries (as defined in Section 4.02 below) is duly
qualified to conduct business as a foreign corporation and is in good standing
in every other jurisdiction, if any, in which the failure to so qualify would
have a Material Adverse Effect. Complete and correct copies of the Company's
certificate of incorporation and by-laws and the certificate of incorporation
and bylaws of its Subsidiaries, as in effect on the date hereof, have been filed
by the Company with the Securities and Exchange Commission (the "COMMISSION") or
otherwise made available (including via EDGAR) to the Purchaser.

                  Section 4.02 Subsidiaries. Schedule 4.02 lists the Company's
subsidiaries (the "SUBSIDIARIES") and the jurisdictions in which each is
incorporated. Except as set forth in Schedule 4.02, all of the issued and
outstanding shares of capital stock of, or other equity interests in, each of
the Subsidiaries have been validly issued and are fully paid and nonassessable
and are owned by the Company free and clear of all Liens, and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other equity

                                      -10-

<PAGE>

interests. Except for the capital stock of, or voting securities or equity
interests in, its Subsidiaries, for short-term investments, or as set forth in
Schedule 4.02, the Company does not own any shares of stock or any other equity
or long-term debt securities of any corporation or have any equity interest in
any firm, partnership, limited liability company, joint venture, association or
other entity.

                  Section 4.03 Capitalization.

                           (i)      The authorized capital stock of the Company
(immediately prior to the Closing) consists of 105,000,000 shares of stock
consisting of 100,000,000 shares of Common Stock, $0.001 par value per share,
and 5,000,000 shares of Preferred Stock, $0.001 par value per share.

                           (ii)     As of July 24, 2003, 20,197,984 shares of
Common Stock and no shares of Preferred Stock were outstanding. The Company has
not issued any capital stock since July 24, 2003 other than pursuant to employee
benefit plans disclosed in the Filed SEC Documents.

                           (iii)    Immediately after the Closing, there will
be: 2,185,792 shares of Series A Preferred Stock duly authorized, validly issued
and outstanding and such shares shall be fully-paid and nonassessable.
Immediately after the Closing, there will be a sufficient number of shares of
Common Stock reserved, and duly authorized, for issuance upon exercise of the
Series A Preferred Stock and a sufficient number of shares of Common Stock
reserved, and duly authorized for issuance to the Purchaser pursuant to and in
accordance with this Agreement and the Debentures.

                           (iv)     Except as may be provided in this Agreement,
the Purchase Agreement or the Ancillary Agreements (as defined in the Purchase
Agreement) or as set forth in Schedule 4.03: (a) no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company is authorized or
outstanding; (b) there is no commitment of the Company to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock any evidences
of indebtedness or assets of the Company; and (c) other than as set forth in the
certificate of incorporation of the Company, as amended, this Agreement or in
the Debentures, the Company has no obligation (contingent or otherwise) to
repurchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof. The outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and were not
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Other than as set forth in the Stockholder Agreement
executed with Purchaser as of the Closing Date, there are no voting agreements
or other similar agreements with respect to the Common Stock to which the
Company is a party.

                           (v)      Except as provided in this Agreement, the
Debentures, the Purchase Agreement or the Ancillary Agreements (as defined in
the Purchase Agreement) , no person or entity is entitled to: (a) any preemptive
or similar right with respect to the issuance of

                                      -11-

<PAGE>

any capital stock of the Company; (b) any rights with respect to the
registration of any capital stock of the Company under the Securities Act of
1933, as amended (the "SECURITIES ACT"); or (c) any first offer rights, first
refusal rights or, pursuant to an agreement to which the Company is a party or,
to the best of the Company's knowledge, pursuant to an agreement to which any of
the Company's stockholders is a party, other similar rights to subscribe for or
purchase any capital stock of the Company or any right to restrict the transfer
of such securities.

                  Section 4.04 Issuance of Debentures. The issuance, sale and
delivery of the Debentures in accordance with this Agreement, and the issuance
and delivery of the shares of Common Stock issuable upon conversion of the
Debentures, have been, or, with respect to the Common Stock, will be on or prior
to the issuance of such Common Stock, duly authorized and, as the case may be,
reserved for issuance by all necessary corporate action on the part of the
Company, its officers, directors and stockholders, and the Debentures when so
issued, sold and delivered against payment therefor in accordance with the
provisions of this Agreement, and the shares of Common Stock issuable upon
conversion of the Debentures when issued upon such conversion, will be duly
authorized and validly issued, fully paid and non-assessable, free and clear of
any liens, encumbrances or security interests.

                  Section 4.05 Authority for Agreement; No Violation The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
its officers, directors and stockholders. This Agreement and the Debentures have
been duly executed and delivered by the Company and constitute valid and binding
obligations of the Company enforceable in accordance with their respective
terms. The execution of and performance of the transactions contemplated by this
Agreement and the Debentures and compliance with their provisions by the Company
will not violate any provision of law and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute a
default under, its certificate of incorporation or by-laws (each as amended to
date and presently in effect), or any material bond, indenture, note or other
evidence of indebtedness, any material lease, agreement or other instrument to
which the Company is a party or by which it or any of its Subsidiaries is a
party or by which their respective properties are bound, or any decree,
judgment, order, statute, rule or regulation applicable to the Company or its
Subsidiaries.

                  Section 4.06 Governmental Consents. No consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any governmental authority is required on the part
of the Company in connection with the execution and delivery of this Agreement,
the offer, issue, sale and delivery of the Debentures as contemplated by this
Agreement.

                  Section 4.07 Litigation; Proceedings. Except as set forth in
Schedule 4.07, there is no action, suit, claim, proceeding or investigation
pending against or affecting the Company at law or in equity, or by any
arbitrator, or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or,
to the Company's knowledge there is no action, suit, claim, proceeding or
investigation threatened against or affecting the Company at law or in equity,
or by any arbitrator, or any federal, state, municipal or other governmental
department, commission, board,

                                      -12-

<PAGE>

bureau, agency or instrumentality, domestic or foreign, and the Company is not
subject to any order, writ, injunction or decree entered into any lawsuit or
proceeding.

                  Section 4.08 Brokers or Finders. The Company has not dealt
with any broker or finder in connection with the transactions contemplated by
this Agreement and the Company has not incurred, and shall not incur, directly
or indirectly, any liability for any brokerage or finders' fees or agents
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.

                  Section 4.09 Nasdaq National Market. The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on the
Nasdaq National Market System ("NASDAQ"). The Company has taken no action
designed to delist, or which, to the Company's knowledge, is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from Nasdaq. The Company shall comply with all
requirements of the National Association of Securities Dealers, Inc. with
respect to the issuance of the Debentures and the listing of the Common Stock on
Nasdaq.

                  Section 4.10 Taxes. The Company and its Subsidiaries have
filed or obtained presently effective extensions with respect to all federal,
state, county, local and foreign tax returns that are required to be filed by
it, such returns are true and correct and all taxes shown thereon to be due have
been timely paid with exceptions not material to the Company. Federal income tax
returns of the Company have not been audited by the Internal Revenue Service,
and no controversy with respect to taxes of any type is pending or, to the
knowledge of the Company, threatened. The Company is taxed as a C corporation as
defined in Section 1361(a)(2) of the Code. The provision for taxes of the
Company as shown in the Financial Statements is adequate for taxes due or
accrued as of the date thereof. The Company has not made any other elections
pursuant to the Code (other than elections that relate solely to methods of
accounting, depreciation or amortization) that would have a Material Adverse
Effect on the Company. The Company has never had any tax deficiency proposed or
assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax or governmental charge.
Except as set forth on Schedule 4.10, none of the Company's federal income tax
returns and none of its state income or franchise tax or sales or use tax
returns have ever been audited by governmental authorities. Except as set forth
on Schedule 4.10, since the date of the Financial Statements, the Company has
not incurred any taxes, assessments or governmental charges other than in the
ordinary course of business and the Company has made adequate provisions on its
books of account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for such period. The Company
has withheld or collected from each payment made to each of its employees, the
amount of all taxes (including, but not limited to, federal income taxes,
Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom, and has paid the same to the
proper tax receiving officers or authorized depositories.

                  Section 4.11 Property and Assets. The Company has good and
marketable title in fee simple to all of the real property that it owns and good
and marketable title to all of its personal property and assets, and none of
such properties or assets is subject to any mortgage, pledge, lien, security
interest, lease, charge, encumbrance or defect. Any real or personal

                                      -13-

<PAGE>

property held under lease by the Company or its Subsidiaries is held by them
under valid, existing and enforceable leases.

                  Section 4.12 Intellectual Property. Set forth on Schedule 4.12
is a true and complete list of all issued patents and registered trademarks
presently owned or held by the Company. Except as set forth on Schedule 4.12, to
the Company's knowledge, the Company and each of its Subsidiaries has, or has
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and know-how
(including trade secrets or other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, the
"INTELLECTUAL PROPERTY RIGHTS") that are necessary for use in connection with
its business as presently conducted or proposed to be conducted as described in
the SEC Documents. Except as disclosed on Schedule 3.12, to the Company's
knowledge, there is no existing infringement or misappropriation by another
person or entity of any of the Intellectual Property Rights that are necessary
for use in connection with the Company's business as presently conducted. Except
as set forth on Schedule 4.12, neither the Company nor its Subsidiaries are
infringing or misappropriating any Intellectual Property Rights (other than
unpublished patent applications) of any other person or entity, nor, to the
Company's knowledge, are the Company or its Subsidiaries infringing the rights
of any other person or entity granted under any unpublished patent application.
Except as set forth on Schedule 4.12, there are no claims of infringement of any
Intellectual Property Rights made or threatened by a third party against or
involving the Company.

                  Section 4.13 Material Agreements. Except as filed with or
listed in the exhibit index to the Filed SEC Documents or as otherwise made
available to the Purchaser, neither Company nor any of its Subsidiaries is a
party to any material contract, as such contracts are defined in Item 601(b)(10)
of Regulation S-K under the Securities Act (each such contract, a "COMPANY
CONTRACT"). To the Company's knowledge, each Company Contract is valid, binding
and in full force and effect and is enforceable by the Company or any of its
Subsidiaries in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles. As of the date hereof, no party to any such
Company Contract has notified the Company or any of its Subsidiaries that it
intends to terminate such Company Contract. The Company or its Subsidiaries, as
the case may be, has performed in all respects all obligations required to be
performed by it to date under the Company Contracts and is not (with or without
the lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the knowledge of Company, no other party to
any of the Company Contracts, as of the date hereof, is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
respect thereunder, except to the extent that such breach or default would not
have a Material Adverse Effect.

                  Section 4.14 Compliance. The Company has, in all material
respects, complied with all laws, regulations and orders applicable to its
present and proposed business and has all material permits and licenses required
thereby. There is no term or provision of any material mortgage, indenture,
contract, agreement or instrument to which the Company is a party or by which it
is bound, or of any provision of any state or federal judgment, decree, order,
statute, rule or regulation applicable to or binding upon the Company, that
materially adversely affects or, to the best of the Company's knowledge so far
as the Company may now foresee, in

                                      -14-

<PAGE>

the future is reasonably likely to materially adversely affect, the business,
prospects, condition, affairs or operations of the Company or any of its
properties or assets. To the Company's knowledge, no employee of the Company is
in violation of any contract or covenant (either with the Company or with
another entity) relating to employment, patent, other proprietary information
disclosure, non-competition, or non-solicitation.

                  Section 4.15 Sarbanes-Oxley Compliance. The Company is
currently and at all times prior to the date hereof has been in compliance in
all material respects with Sarbanes-Oxley Act of 2002 and any and all rules or
regulations promulgated thereunder.

                  Section 4.16 Disclosures. Neither this Agreement nor any
exhibit hereto, nor any report, certificate or instrument furnished to the
Purchaser in connection with the transactions contemplated by this Agreement,
when read together, contains or will contain any material misstatement of fact
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading. The Company knows of no information
or fact that has or would have a material adverse effect on the business,
prospects or condition (financial or otherwise) of the Company that has not been
disclosed to the Purchaser in writing.

                  Section 4.17 Financial Statements. The Company has made
available (including via EDGAR) to the Purchaser its audited consolidated
statements of income, stockholders' equity and cash flows for the fiscal year
ended December 31, 2002, its audited consolidated balance sheet as of December
31, 2002, its unaudited consolidated statements of income, stockholders' equity
and cash flows for the period from January 1, 2003 through March 31, 2003 and
its unaudited consolidated balance sheet as of March 31, 2003. All such
financial statements are hereinafter referred to collectively as the "FINANCIAL
STATEMENTS." The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, and fairly present the financial position of the Company
and its Subsidiaries and the results of their respective operations as of the
date and for the periods indicated thereon, except that the unaudited financial
statements may not be in accordance with generally accepted accounting
principles because of the absence of footnotes normally contained therein and
are subject to normal year-end audit adjustments which, individually, and in the
aggregate, will not be material. The Company and its Subsidiaries have
implemented and maintain a system of internal accounting controls meeting the
requirements of applicable law, including without limitation the requirements of
Section 13(b)(2) of the Exchange Act. Since March 31, 2003, there has been no
Material Adverse Effect.

                  Section 4.18 SEC Documents. The Company has made available
(including via EDGAR) to the Purchaser, a true and complete copy of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002, the Company's Quarterly Report on Form 10-Q for the three months ended
March 31, 2003, the Company's Definitive Proxy Statement for the Annual Meeting
held on June 3, 2003 and the Company's Current Reports on Form 8-K filed after
December 31, 2002 and before the date hereof (all such materials being called,
collectively, the "FILED SEC DOCUMENTS"). The Company will, promptly upon the
filing thereof, also make available to each Purchaser all statements, reports
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K) and definitive proxy statements filed by the Company with
the SEC during the period commencing on the date hereof and ending on the
Closing Date (all such materials required to be furnished to the Purchaser
pursuant to this

                                      -15-

<PAGE>

sentence being called, collectively, the "SEC DOCUMENTS"). The Company has filed
in a timely manner all documents that the Company was required to file under the
Exchange Act during the 12 months preceding the date of this Agreement. As of
their respective filing dates, the Filed SEC Documents complied, and the SEC
Documents will comply, in all material respects with the requirements of the
Exchange Act, and none of the Filed SEC Documents, as of their respective filing
dates, contained, and none of the SEC Documents will contain, any untrue
statement of a material fact or omitted or omit, as the case may be, to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were or
are, as the case may be, made, not misleading, except to the extent corrected by
a subsequent Filed SEC Document.

                  Section 4.19 No Manipulation of Stock. The Company has not
taken and will not, in violation of applicable law, take, any action designed to
or that might reasonably be expected to cause or result in unlawful manipulation
of the price of the Common Stock.

                  Section 4.20 Related Party Transactions. Except as set forth
in Schedule 4.20, none of the officers or directors of the Company or its
Subsidiaries and, to the knowledge of the Company, none of their respective
employees is presently a party to any transaction with the Company or its
Subsidiary, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

                  Section 4.21 Employees. Except as set forth in Schedule 4.21,
each employee of the Company who has access to the Company's confidential or
proprietary information has executed a proprietary information agreement, in
substantially the form delivered to the Purchaser. To the best of the Company's
knowledge, no officer or key employee is in violation of any prior employee
contract or proprietary information or noncompetition agreement. No employees of
the Company are represented by any labor union or covered by any collective
bargaining agreement. There is no pending or, to the best of the Company's
knowledge, threatened labor dispute involving the Company and any group of its
employees. To the best of its knowledge, the Company has complied in all
material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.

                  Section 4.22 Investment Company. The Company is not an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an investment company, within the meaning of the Investment
Company Act of 1940, as amended.

                  Section 4.23 Insurance. The Company maintains insurance
against such losses and risks and in such amounts as the Company believes in
good faith is adequate, prudent and customary for the businesses in which the
Company and its Subsidiaries are engaged.

                  Section 4.24 Environmental Matters. Each of the Company its
Subsidiaries has obtained all permits, licenses and other authorizations that
are required under federal, state and local laws in the U.S. and outside the
U.S. relating to pollution or protection of the environment, including laws
related to emissions, discharges, releases or threatened releases of pollutants,

                                      -16-

<PAGE>

contaminants or hazardous or toxic material or wastes into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("ENVIRONMENTAL LAWS"), except for any failures to obtain the permits, licenses
or authorizations that would not, individually or in the aggregate, have or
result in a Material Adverse Effect. The Company and each of its Subsidiaries is
in compliance with all terms and conditions of the required permits, licenses
and authorizations and is also in full compliance with all other limitations,
restrictions, conditions and requirements contained in the Environmental Laws or
contained in any plan, order, judgment, decree or notice, except for any
non-compliance which could not, individually or in the aggregate, have or result
in a Material Adverse Effect. The Company is not aware of, nor has the Company
received notice of, any events, conditions, circumstances, actions or plans
which may interfere with or prevent continued compliance or which would give
rise to any liability under any Environmental Laws, except for any liability
which could not, individually or in the aggregate, have or result in a Material
Adverse Effect.

                  Section 4.25 Accuracy of Information Furnished. The
information furnished to the Purchaser or its representatives or advisors by the
Company or its representatives or advisors furnished prior to the date of this
Agreement, does not contain any untrue statement of a material fact and does not
omit to state any material fact required to be stated therein or necessary to
make any statement therein, in light of the circumstances under which such
statement is made, not misleading.

                  Section 4.26 No Material Adverse Changes. Since March 31,
2003, except as disclosed in the SEC Documents filed subsequent to that date, if
any, there has not been any Material Adverse Effect.

                  Section 4.27 Absence of Certain Developments. Except as
described in or contemplated by this Agreement or the Filed SEC Documents, since
March 31, 2003, through the closing Date, the Company and its Subsidiaries have
not (a) issued any stock, options (other than to employees and directors
consistent with past practices) bonds or other corporate securities; (b)
borrowed any amount or incurred or become subject to any direct or indirect
liabilities (absolute, accrued or contingent), other than current liabilities
incurred in the ordinary course of business and liabilities under contracts
entered into in the ordinary course of business; (c) discharged or satisfied any
lien or adverse claim or paid any obligation or liability (absolute, accrued or
contingent), other than current liabilities shown on the Balance Sheet and
current liabilities incurred in the ordinary course of business; (d) made any
material change in the nature or operations of the business of the Company and
its Subsidiaries; (e) sustained any material loss or interference with its
business or properties not covered by insurance; (f) paid or declared any
dividends or other distributions with respect to the capital stock (other than
customary dividends paid to all holders of Common Stock); (g) defaulted in the
payment of principal and interest on any outstanding debt obligations or (h)
entered into any agreement or commitment to do any of the foregoing.

                  Section 4.28 Contributions. Neither the Company, its employees
nor, to the Company's knowledge, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment

                                      -17-

<PAGE>

or other unlawful expenses related to foreign or domestic political activity,
(ii) made any unlawful payment to foreign or domestic government officials, or
employees or to foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the
Company or made by any person acting on its behalf and of which the Company is
aware in violation of law or (iv) violated in any material respect any provision
of the Foreign Corrupt Practices Act of 1977, as amended.

                        SECTION 5. AFFIRMATIVE COVENANTS

                  So long as any Obligations remain outstanding to the
Purchaser, unless the Company shall have had prior consultation with the
Purchaser and the Purchaser shall have otherwise agreed in writing, the Company
shall:

                  Section 5.01 Maintenance of Existence. Preserve and maintain,
and cause each Subsidiary to preserve and maintain, its existence and good
standing in the jurisdiction of its organization, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
required.

                  Section 5.02 Maintenance of Records. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with the principles used by the Company for
income tax purposes, except where otherwise stated herein, reflecting all
financial transactions of the Company and such Subsidiary.

                  Section 5.03 Maintenance of Properties. Maintain, keep, and
preserve, and cause each Subsidiary to maintain, keep, and preserve, all of its
properties and assets necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted.

                  Section 5.04 Conduct of Business. Continue, and cause each
Subsidiary to continue, to engage in its principal business.

                  Section 5.05 Maintenance of Insurance. Maintain, and cause
each Subsidiary to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof.

                  Section 5.06 Compliance With Laws. Comply, and cause each
Subsidiary to comply, in all material respects with all material applicable
laws, rules, regulations, and orders, such compliance to include, without
limitation, paying before the same become delinquent all Taxes, assessments, and
governmental charges imposed upon it or upon its property unless an extension
for time to pay has been granted or any such taxes, assessments or governmental
charges are being contested by the Company or such Subsidiary in good faith and
the same is funded by an adequate reserve.

                  Section 5.07 Right of Inspection. At any reasonable time and
from time to time, upon three (3) Business Days prior written notice, during
regular business hours and without disruption of the conduct of their respective
businesses, permit the Purchaser or any agent or

                                      -18-

<PAGE>

representative thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Company or any
Subsidiary, and to discuss its or their affairs, finances, and accounts with any
of its or their respective officers, directors, partners and independent
accountants.

                  Section 5.08 Information. Furnish to the Purchaser:

                  (a)      promptly (but in any event within three (3) Business
Days) after the discovery or receipt of notice of any Default or Event of
Default or any default under any Company Contract or any other material adverse
change, event or circumstance affecting the Company or any Subsidiary
(including, without limitation, the filing of any material litigation against
the Company or any Subsidiary or the existence of any dispute with any Person
which involves a reasonable likelihood of litigation being commenced), an
Officer's Certificate specifying the nature and period of existence thereof and
what actions the Company and its Subsidiaries have taken and propose to take
with respect thereto; provided however, either a non-disclosure agreement shall
be in place with Purchaser or Purchaser shall execute a non-disclosure agreement
as to any confidential information provided to Purchaser pursuant to this
section 5.08 (a);

                  (b)      after a Default or Event of Default has occurred (i)
a copy of each annual report on Form 10-K when filed with the Commission, (ii) a
copy of each quarterly report on Form 10-Q when filed with the Commission, (iii)
a copy of each proxy statement and any current reports on Form 8-K as each
becomes available and (iv) within two days after release, copies of all press
releases issued by the Company or any of its subsidiaries;

                  (c)      after a Default or Event of Default has occurred,
subject to Regulation FD and any state or federal securities laws, the Company
further agrees to provide promptly to Purchaser any information with respect to
the Company, its properties, or its business as the Purchaser may reasonably
request; provided, however, that the Company will not be required to provide the
Purchaser any material nonpublic information.

                  Section 5.09 Reservation of Shares.

                  (a)      Reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Conversion, such number of shares of Common Stock that shall be
issuable, from time to time, upon both the exercise of the Conversion, which
shares when so issued, shall be duly and validly issued, fully paid and
nonassessable, and free from all Taxes, Liens and charges.

Take all such actions as may be necessary to assure that all such shares
issuable upon the exercise of the Conversion may be so issued without violation
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which such shares may be listed.

                  Section 5.10 Listing and Maintenance Requirements Compliance.
So long as the Company shall continue the listing and trading of its Common
Stock on Nasdaq, the Company will use its commercially reasonable efforts to
comply in all respects with the

                                      -19-

<PAGE>

Company's reporting, filing and other obligations under the by-laws or rules of
such exchange or quotation system.

                  Section 5.11 Reduction of Lawsuit Claims. In the event that a
court of competent jurisdiction in the Lawsuit issues a ruling or order which
eliminates any claims asserted in the Lawsuit by the Company or narrows the
scope of the Lawsuit and the Company desires to withdraw or dismiss the Lawsuit,
the Purchaser shall have the right to either (i) direct the assignment of the
Lawsuit to any third party and if any such third party purchases such Lawsuit
from the Company, the Purchaser shall receive any and all proceeds from such
sale; or (ii) assign the Lawsuit and all right, title and interest therein to
either the Purchaser or its designee for no cash or other consideration.

                         SECTION 6. NEGATIVE COVENANTS

                  So long as Purchaser owns at least 25% of the aggregate
principal amount of Debentures issued under this Agreement, without prior
consultation with and the prior written agreement or consent of the Purchaser,
the Company will not, and will not permit any Subsidiary to:

                  Section 6.01 Liens. Create, incur, assume or permit to exist
any security interest, Lien, mortgage, pledge, assignment or other charge or
encumbrance on or with respect to (including a Capital Lease and the retained
security title of a conditional vendor) any of its present or future assets or
properties, except:

                  (a)      Liens in favor of the Purchaser; or

                  (b)      Permitted Liens.

                  Section 6.02 Indebtedness. Create, incur, assume or permit to
exist any Indebtedness, except:

                  (a)      Indebtedness to the Purchaser;

                  (b)      Ordinary Course Indebtedness; and

                  (c)      other Indebtedness in an aggregate principal amount
not to exceed $5,000,000 at any one time outstanding.

                  Section 6.03 Restricted Payments. Declare or pay any dividend
on Common Stock other than dividends payable in shares of Common Stock.

             SECTION 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES

                  The respective representations, warranties and other
statements of the Company and the Purchaser, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of the Purchaser or
any controlling person of the Purchaser, or the Company, or any officer or
director or controlling

                                      -20-

<PAGE>

person of the Company and shall survive until the latest to occur of (i) payment
in full of the Debentures; (ii) early repayment pursuant to Section 4 of the
Debentures, (iii) redemption pursuant to Section 6 of the Debentures; or (iv)
conversion in full pursuant to Section 8 of the Debentures.

                           SECTION 8. INDEMNIFICATION

                  Section 8.01 Indemnification by the Company. Subject to the
terms of this Section 8, the Company shall indemnify, defend, save and hold
harmless the Purchaser, its officers, directors, employees, representatives and
agents, and its successors and assigns (collectively, the "INDEMNIFIED
PARTIES"), from and against any demands, claims (as defined in Section 101 of
the U.S. Bankruptcy Code), actions, losses, damages, deficiencies, liabilities,
assessments, costs and expenses (including, without limitation, reasonable
attorneys' and accountants' fees and expenses incurred in the investigation,
preparation, defense and settlement of any claim, loss, damage or liability),
together with interest and penalties, if any, awarded by court order or
otherwise agreed to (collectively, "INDEMNIFIABLE DAMAGES"), suffered by the
Indemnified Parties that arise out of or result from any of the following
(whether or not a third party initiates the proceeding or claim giving rise to
such Indemnifiable Damages):

                  (a)      any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or the Debenture;

                  (b)      any breach of any representation, warranty, covenant
or agreement made by the Company in a document, certificate or affidavit
delivered by the Company on the Closing Date;

                  (c)      any expenses, charges, fees, or costs associated with
any liability for Taxes imposed as a result of entering into this Agreement, but
such liability for Taxes shall not apply to Taxes imposed as a result of
payments made by the Company to Purchaser pursuant to this Agreement; or

                  (d)      the exercise by the Purchaser of its rights and
remedies (including, without limitation, foreclosure) under any agreements
creating any such Lien (but excluding, as to any Indemnified Party, any such
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements incurred to the extent of the gross
negligence or willful misconduct of such Indemnified Party as finally determined
by a court of competent jurisdiction).

                  Section 8.02 Claims for Indemnification. The representations,
warranties, covenants and agreements in this Agreement shall survive the Closing
Date subject to the limitations set forth herein and shall not be affected by
any investigation made by the parties hereto prior to the date hereof. The
Indemnified Party shall give the party from whom indemnification is sought (the
"INDEMNIFYING PARTY") a written notice ("NOTICE OF CLAIM") within sixty (60)
days of the discovery of any loss, liability, claim or expense in respect of
which the right to indemnification contained in this Section 8 may be claimed;
provided, however, that the failure to give such notice within such sixty (60)
day period shall not result in the waiver or loss of any right to bring such
claim hereunder after such period unless, and only to the extent that, the other
party is actually prejudiced by such failure. In the event a claim is pending or

                                      -21-

<PAGE>

threatened or the Indemnified Party has a reasonable belief as to the validity
of the basis for such claim, the Indemnified Party may give written notice (a
"NOTICE OF POSSIBLE CLAIM") of such claim to the Indemnifying Party, regardless
of whether a loss has arisen from such claim. Any Notice of Claim or Notice of
Possible Claim shall set forth the representations, warranties, covenants and
agreements with respect to which the claim is made, the specific facts giving
rise to an alleged basis for the claim and the amount of liability asserted or
anticipated to be asserted by reason of the claim.

                  Section 8.03 Matters Involving Third Parties.

                  (a)      If any third party shall notify the Indemnified Party
as to any matter in respect of which the right to indemnification contained in
this Section 8 may be claimed (a "THIRD PARTY CLAIM"), the Indemnified Party
shall give the Indemnifying Party notice of such Third Party Claim as provided
in Section 8.02 above; and the Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim, consent to the entry of any
judgment with respect thereto and enter into any settlement with respect
thereto, all with counsel of its choice, so long as the Indemnifying Party
notifies the Indemnified Party in writing, within fifteen (15) days after the
Indemnified Party has given the Indemnifying Party notice of the Third Party
Claim pursuant to Section 8.02, that the Indemnifying Party will indemnify the
Indemnified Party from and against Indemnifiable Damages the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of or
caused by the Third Party Claim.

                  (b)      If the Indemnifying Party undertakes the defense of
any Third Party Claim pursuant to Section 8.03(a) above, the Indemnified Party
may retain separate co-counsel at its sole cost and expense (and such expenses
shall not be Indemnifiable Damages) and participate in the defense of such Third
Party Claim. The Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to any Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably). The Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim that
does not include a full release by the third party of the Indemnified Party from
all Indemnifiable Damages relating to such Third Party Claim, without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).

                  (c)      The parties hereto shall provide, or cause their
appropriate employees or representatives to provide, to the other parties hereto
information or data in connection with the handling of the defense of any Third
Party Claim or litigation (including counterclaims filed by the parties), and
the party receiving such information or data shall reimburse the other party for
all of its reasonable costs and expenses in providing these services, including,
without limitation, (1) all out-of-pocket, travel and similar expenses incurred
by its personnel in rendering these services; and (2) all fees and expenses for
services performed by third parties engaged by or at the request of such other
party.

                  Section 8.04 Settlement of Indemnification Claims After
Closing. If the recipient of a Notice of Claim desires to dispute such claim, it
shall, within thirty (30) days after receipt of the Notice of Claim, give
counternotice, setting forth the basis for disputing such claim, to the Company.
If no such counternotice is given within such thirty (30) day period, or if the
Company acknowledges liability for indemnification, then the amount claimed
shall be

                                      -22-

<PAGE>

promptly satisfied as provided in Section 8.05. If, within thirty (30) days
after the receipt of counternotice by the Company, the Company and Indemnified
Parties shall not have reached agreement as to the claim in question, then the
party disputing the claim shall satisfy any undisputed amount as specified in
Section 8.05 and the disputed amount of the claim of indemnification shall be
submitted to and settled by arbitration in accordance with the then prevailing
commercial arbitration rules of the American Arbitration Association. Such
arbitration shall be held in the Seattle, Washington area before a panel of
three (3) arbitrators, one selected by each of the parties and the third
selected by mutual agreement of the first two, and all of whom shall be
independent and impartial under the rules of the American Arbitration
Association. The decision of the arbitrators shall be final and binding as to
any matter submitted under this Agreement. To the extent the decision of the
arbitrators is that a party shall be indemnified hereunder, the amount shall be
satisfied as provided in Section 8.05. Judgment upon any award rendered by the
arbitrators may be entered in any court of competent jurisdiction. The date of
the arbitrator's decision or the date a claim otherwise becomes payable pursuant
to this Section 8.04 is referred to as the "DETERMINATION DATE."

                  Section 8.05 Manner of Indemnification by the Company. Where
the Company is obligated to indemnify the Indemnified Parties under Section
8.01, such indemnity obligation must be satisfied by paying to that Indemnified
Party in cash an amount equal to the applicable Indemnifiable Damages upon the
request of the Indemnified Party.

                  Section 8.06 Survival. The Company's obligations under this
Section 8 shall survive the termination of this Agreement and the payment of the
Obligations.

                            SECTION 9. MISCELLANEOUS

                  Section 9.01 Payment of Expenses. The Company shall pay, and
hold the Purchaser harmless from and against, any and all present and future
stamp, excise and other similar taxes with respect to the transactions
contemplated hereby and hold the Purchaser harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to the Purchaser) to pay such taxes.

                  Section 9.02 Notices. Except as otherwise expressly provided
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and shall be
deemed to have been duly given or made when delivered by hand, or five (5) days
after being deposited in the United States mail, postage prepaid, or, in the
case of telecopy notice, when sent, or, in the case of a nationally recognized
overnight courier service, one (1) Business Day after delivery to such courier
service, addressed, in the case of each party hereto, at its address specified
opposite its signature below, or to such other address as may be designated by
any party in a written notice to the other parties hereto.

                  Section 9.03 Successors, etc. This Agreement shall be binding
upon and inure to the benefit of the Company and the Purchaser, and their
respective transferees, successors and assigns, except that neither party shall
have the right to assign or transfer any right or interest herein or hereunder
except to an Affiliate of the Purchaser or the Company without the other party's
prior written consent.

                                      -23-

<PAGE>

                  Section 9.04 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Purchaser in exercising any right, power or privilege
hereunder or under the Debentures and no course of dealing between the Company
and the Purchaser of the Debenture shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under the Debentures preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies, which the Purchaser would otherwise have. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Purchaser to any other or further action in any
circumstances without notice or demand.

                  Section 9.05 Governing Law. This Agreement and the rights and
obligations of the parties hereunder 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 Agreement or to interpret any provision of this
Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys' fees, costs and other expenses.

                  Section 9.06 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.

                  Section 9.07 Headings Descriptive. The headings of the several
Sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

                  Section 9.08 Severability. In case any provision in or
obligation under this Agreement or the Debenture shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

                  Section 9.09 Amendments and Waivers. Neither this Agreement,
the Debenture, nor any terms hereof or thereof may be amended, supplemented,
modified or waived except in accordance with the provisions of this Section. The
Purchaser and the Company may, from time to time, enter into written amendments,
supplements, modifications or waivers for the purpose of adding, deleting,
changing or waiving any provisions to this Agreement or the Debenture.

                                      -24-

<PAGE>

                              SIGNATURE PAGE TO THE

           SENIOR REDEEMABLE CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                  IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.

                  ADDRESS FOR NOTICES

                              IMMERSION CORPORATION

                              By: /s/ Victor Viegas
                                  ----------------------------------------------
                                  VICTOR VIEGAS
                                  President, Chief Executive Officer and
                                  Chief Financial Officer

                                        Address:
                                              801 Fox Lane
                                              San Jose, California 95131

                              MICROSOFT CORPORATION

                              By: /s/ William H. Gates
                                  ----------------------------------------------
                                  Name:  William H. Gates
                                  Title: Chairman of the Board

                              By: /s/ Richard Emerson
                                  ----------------------------------------------
                                  Name:  Richard Emerson
                                  Title: Sr. VP. Corp. Development

                              By: /s/ Bryan Lee
                                  ----------------------------------------------
                                  Name:  Bryan Lee
                                  Title: Corporate Vice President and
                                  Chief Financial Officer

                               Address:
                                    One Microsoft Way, Bldg. 8/1132
                                    Redmond, WA 98052-6399

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