Document:

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                                                                     EXHIBIT 4.2

REGISTRATION RIGHTS

AGREEMENT

BY AND BETWEEN:

IMMERSION CORPORATION

AND

MICROSOFT CORPORATION

DATED AS OF JULY 25, 2003

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                          REGISTRATION RIGHTS AGREEMENT

                  This REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as
of July 25, 2003 is entered into by and between Microsoft Corporation, a
Washington corporation (the "PURCHASER") and Immersion Corporation, a Delaware
corporation (the "COMPANY").

                  WHEREAS, simultaneously with the execution and delivery of
this Agreement, the parties shall enter into a Series A Convertible Preferred
Stock Purchase Agreement, dated as of the date hereof, (the "PURCHASE
AGREEMENT") pursuant to which the Purchaser has committed to purchase $6,000,000
of the Company's Series A Convertible Preferred Stock (terms not defined herein
shall have the meanings ascribed to them in the Purchase Agreement);

                  WHEREAS, simultaneously with the execution and delivery of
this Agreement, the parties shall enter into a Senior Redeemable Convertible
Debenture Purchase Agreement, dated as of the date hereof, (the "DEBENTURE
AGREEMENT") pursuant to which the Purchaser has committed to purchase debentures
of the Company of up to $9,000,000, which debentures are convertible into the
Company's Common Stock; and

                  WHEREAS, the execution and delivery of this Agreement and
granting to the Purchaser of the registration rights set forth herein with
respect to the Registrable Securities is a component part of the transaction
contemplated under the Purchase Agreement.

                  NOW, THEREFORE, the parties hereto mutually agree as follows:

         1.       REGISTRABLE SECURITIES. As used herein the term "REGISTRABLE
SECURITIES" means shares of Company common stock owned by the Purchaser and (a)
received upon conversion of securities purchased by the Purchaser pursuant to
the Purchase Agreement, (b) received upon conversion of Company debentures
pursuant to the Debenture Agreement, (c) shares received as dividends,
distributions, or otherwise in connection with rights that the Purchaser may
have under the Purchase Agreement, the Debenture Agreement, or the Company's
Certificate of Incorporation, or (d) otherwise acquired by the Purchaser in
connection with the transactions contemplated by the Purchase Agreement or the
Debenture Agreement (including without limitation in connection with any
settlement of the Lawsuit) or any Ancillary Documents to the Purchase Agreement
thereto (as defined in the Purchase Agreement) that (i) have not been sold under
the Registration Statement, (ii) have not been sold under circumstances under
which all of the applicable conditions of Rule 144 (or any similar provision
then in force) under the Securities Act ("RULE 144") are met, (iii) have not
been otherwise transferred to persons who may trade such Registrable Securities
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such Registrable Securities
not bearing a restrictive legend, or (iv) may not be sold without any time,
volume or manner limitations pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act. In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be deemed to

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be made in the definition of "Registrable Security" as is appropriate in order
to prevent any dilution or enlargement of the rights granted pursuant to this
Agreement.

         2.       RESTRICTIONS ON TRANSFER. The Purchaser acknowledges and
understands that in the absence of an effective Registration Statement
authorizing the resale of the Registrable Securities as provided herein, the
Registrable Securities are "restricted securities" as defined in Rule 144. The
Purchaser understands that no disposition or transfer of the Registrable
Securities may be made by Purchaser in the absence of (i) an opinion of counsel
to the Purchaser, in form and substance reasonably satisfactory to the Company,
that such transfer may be made without registration under the Securities Act or
(ii) such registration.

                  With a view to making available to the Purchaser the benefits
of Rule 144, the Company agrees to:

                  (a)      comply with the provisions of paragraph (c)(1) of
         Rule 144; and

                  (b)      to file with the U.S. Securities and Exchange
         Commission (the "COMMISSION") in a timely manner all reports and other
         documents required to be filed by the Company pursuant to Section 13 or
         15(d) under the Securities Exchange Act of 1934, as amended, and the
         rules and regulations promulgated thereunder; and, if at any time it is
         not required to file such reports but in the past had been required to
         or did file such reports, it will, upon the request of the Purchaser,
         make available other information as required by, and so long as
         necessary to permit sales of, its Registrable Securities pursuant to
         Rule 144.

         3.       REGISTRATION RIGHTS WITH RESPECT TO THE SHARES.

                  (a)      The Company agrees that it will prepare and file with
         the Securities and Exchange Commission ("COMMISSION"), within 45 days
         after the date hereof, a registration statement (on Form S-3 or other
         appropriate form of registration statement) under the Securities Act
         (the "REGISTRATION STATEMENT"), at the sole expense of the Company
         (except as provided in Section 3(d) hereof), so as to permit a public
         offering and resale of the Registrable Securities under the Securities
         Act by Purchaser. The Registration Statement shall permit the Purchaser
         to offer and sell, on a delayed or continuous basis pursuant to Rule
         415 under the Securities Act, any or all of the Registrable Securities.
         In the event that the Registration Statement is reviewed by the Staff
         of the Commission, then prior to the effectiveness of the Registration
         Statement, the Company shall respond in writing to any comment letter
         issued by the Commission relating to the Registration Statement within
         15 business days after receipt of such comment letter.

                  (b)      The Company shall cause the Registration Statement to
         become effective within 180 days of the date of filing the Registration
         Statement. The Company will notify Purchaser of the effectiveness of
         the Registration Statement within one trading day of such event.

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                  (c)      The Company will maintain the Registration Statement
         or post-effective amendment filed under this Section 3 hereof effective
         under the Securities Act until the earliest of (i) the date that all
         the Registrable Securities have been sold otherwise disposed of
         pursuant to the Registration Statement, (ii) the date that all of the
         Registrable Securities have been otherwise transferred to persons who
         may trade such shares without restriction under the Securities Act, and
         the Company has delivered a new certificate or other evidence of
         ownership for such Registrable Securities not bearing a restrictive
         legend, (iii) the date that all of the Registrable Securities may be
         sold without any time, volume or manner limitations pursuant to Rule
         144(k) or any similar provision then in effect under the Securities Act
         in the opinion of counsel to the Company, which counsel shall be
         reasonably acceptable to the Purchaser (the "EFFECTIVENESS PERIOD").

                  (d)      All fees, disbursements and out-of-pocket expenses
         and costs incurred by the Company in connection with the preparation
         and filing of the Registration Statement under subparagraph 3(a) and in
         complying with applicable securities and Blue Sky laws (including,
         without limitation, all attorneys' fees of the Company) shall be borne
         by the Company. The Purchaser shall bear the cost of underwriting
         and/or brokerage discounts, fees and commissions, if any, applicable to
         the Registrable Securities being registered and the fees and expenses
         of its counsel.

                  (e)      The Purchaser and its counsel shall have a reasonable
         period, not to exceed 10 business days, to review the proposed
         Registration Statement or any amendment thereto, prior to filing with
         the Commission, and the Company shall provide the Purchaser with copies
         of any comment letters received from the Commission with respect
         thereto within 2 business days of receipt thereof.

                  (f)      The Company shall make reasonably available for
         inspection by Purchaser, any underwriter participating in any
         disposition pursuant to the Registration Statement, and any attorney,
         accountant or other agent retained by the Purchaser or any such
         underwriter all relevant financial and other records, pertinent
         corporate documents and properties of the Company and its subsidiaries,
         and cause the Company's officers, directors and employees to supply all
         information reasonably requested by the Purchaser or any such
         underwriter, attorney, accountant or agent in connection with the
         Registration Statement, in each case, as is customary for similar due
         diligence examinations; provided, however, that all records,
         information and documents that are designated in writing by the
         Company, in good faith, as confidential, proprietary or containing any
         material non-public information shall be kept confidential by the
         Purchaser and any such underwriter, attorney, accountant or agent,
         unless such disclosure is made pursuant to judicial process in a court
         proceeding (after first giving the Company an opportunity promptly to
         seek a protective order or otherwise limit the scope of the information
         sought to be disclosed) or is required by law, or such records,
         information or documents become available to the public generally or
         through a third party not in violation of an accompanying obligation of
         confidentiality. If the foregoing inspection and information gathering
         would otherwise disrupt the Company's conduct of its business, such
         inspection and information gathering shall, to the maximum extent
         possible, be coordinated on behalf of parties entitled thereto

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         by one firm of counsel designed by and on behalf of the majority in
         interest of Purchaser and other parties.

                  (g)      The Company shall qualify any of the Registrable
         Securities for sale in such states as the Purchaser reasonably
         designates and shall furnish indemnification in the manner provided in
         Section 6 hereof. However, the Company shall not be required to qualify
         in any state which will require an escrow or other restriction relating
         to the Company and/or the sellers, or which will require the Company to
         qualify to do business in such state or require the Company to file
         therein any general consent to service of process.

                  (h)      The Company at its expense will supply the Purchaser
         with copies of the Registration Statement and the final prospectus
         included therein (the "PROSPECTUS") and other related documents in such
         quantities as may be reasonably requested by the Purchaser.

                  (i)      The Company shall not be required by this Section 3
         to include the Purchaser's Registrable Securities in any Registration
         Statement which is to be filed if, in the opinion of counsel for both
         the Purchaser and the Company (or, should they not agree, in the
         opinion of another counsel experienced in securities law matters
         acceptable to counsel for the Purchaser and the Company) the proposed
         offering or other transfer as to which such registration is requested
         is exempt from applicable federal and state securities laws and would
         result in all purchasers or transferees obtaining securities which are
         not "restricted securities", as defined in Rule 144 under the
         Securities Act.

                  (j)      If at any time or from time to time after the
         effective date of the Registration Statement, the Company notifies the
         Purchaser in writing of the existence and nature of a Potential
         Material Event (as defined in Section 3(k) below), the Purchaser shall
         not offer or sell any Registrable Securities or engage in any other
         transaction involving or relating to Registrable Securities, from the
         time of the giving of notice with respect to a Potential Material Event
         until the Purchaser receives written notice from the Company that such
         Potential Material Event either has been disclosed to the public or no
         longer constitutes a Potential Material Event; provided that (i) there
         shall not be more than one Suspension Period in any six month period,
         and (ii) there shall not be more than an aggregate of 90 days for which
         a Suspension Period is in effect in any 6-month period, provided that
         they are not successive 90 day periods during a 12-month period (the
         "SUSPENSION PERIOD")If a Potential Material Event shall occur prior to
         the date the Registration Statement is filed, then the Company's
         obligation to file the Registration Statement shall be delayed without
         penalty for not more than thirty (30) calendar days. SUBJECT TO ANY
         FEDERAL OR STATE SECURITIES LAWS, REGULATIONS OR RULES, THE COMPANY
         MUST GIVE PURCHASER NOTICE IN WRITING OF THE EXISTENCE OF A POTENTIAL
         MATERIAL EVENT PROMPTLY UPON KNOWLEDGE THAT SUCH AN EVENT EXISTS AND,
         WHERE POSSIBLE, AT LEAST TWO (2) DAYS PRIOR TO THE FIRST DAY OF A
         SUSPENSION PERIOD, IF LAWFUL TO DO SO.

                  (k)      "POTENTIAL MATERIAL EVENT" means the occurrence of an
         event which would cause the Registration Statement or any document
         incorporated therein to contain

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         an untrue statement of material fact or omit to state a material fact,
         and the Company determines in good faith that disclosure of such event
         would be detrimental to the business and affairs of the Company.

                  (l)      In the event that the Company does not (i) file the
         Registration Statement within 45 days of the date hereof, (ii) deliver
         its response letter to the Commission within 15 business days after
         receipt thereof, (iii) obtain the effectiveness of the Registration
         Statement within 180 days after the Registration Statement is filed by
         the Company, (iv) maintain the effectiveness of the Registration
         statement at all times during the Effectiveness Period or (v) restrict
         the occurrence and duration of Suspension Periods to not more than one
         in any six month period and for not more than an aggregate of 90 days
         in any 6- month period, provided that they are not successive 90 day
         periods during a 12-month period, then the Company shall pay to
         Purchaser three-quarters of one percent (0.75%) of the Purchaser's
         aggregate purchase price for the Series A Redeemable Convertible
         Preferred Stock per month, calculated on a pro rata basis and payable
         in cash, for the period commencing on the required filing date,
         response date, effective date, date upon which the Registration
         Statement ceases to be effective, or date on which there occurs a
         violation with respect to a Suspension Period, as applicable, and
         ending on the date the Registration Statement is filed, the response
         letter is delivered to the Commission, the Registration Statement is
         declared effective, or the Suspension Period terminates, as applicable
         (with respect to a cash election by the Company, the "CASH PAYMENT");
         provided, however, that in the case of clauses (i), (ii) and (iii)
         above, if the Purchaser failed to cooperate with the Company in
         preparing or obtaining the effectiveness of the Registration Statement
         or in aiding the Company in preparing its response letter to the
         Commission, and such lack of cooperation or aid was a contributing
         factor to the Company's failure to meet the deadlines described in such
         clauses, then the Company shall not be required to pay the Purchaser
         any fee under this Section 3(l). Any payment required to be made by
         Company pursuant to this Section 3(l), shall be due and payable no
         later than sixty (60) days from the date on which the Registration
         Statement is declared effective, or the Suspension Period terminates,
         as applicable.

         4.       COOPERATION WITH COMPANY. The Purchaser will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding the Purchaser and proposed manner of sale of
the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing its obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. The
Purchaser shall consent to be named as an underwriter in the Registration
Statement. The Purchaser acknowledges that in accordance with current Commission
policy, the Purchaser will be named as the underwriter of the Registrable
Securities in the Registration Statement.

         5.       REGISTRATION PROCEDURES. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable

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Securities under the Securities Act, the Company shall (except as otherwise
provided in this Agreement), as expeditiously as possible, subject to the
Purchaser's assistance and cooperation as reasonably required:

                           (a) (i) prepare and file with the Commission such\
         amendments and supplements to the Registration Statement and the
         Prospectus as may be necessary to keep such registration statement
         effective and to comply with the provisions of the Securities Act with
         respect to the sale or other disposition of all securities covered by
         such registration statement whenever the Purchaser of such Registrable
         Securities shall desire to sell or otherwise dispose of the same
         (including prospectus supplements with respect to the sales of
         securities from time to time in connection with a registration
         statement pursuant to Rule 415 promulgated under the Securities Act)
         and (ii) take all lawful action such that each of (A) the Registration
         Statement and any amendment thereto does not, when it becomes
         effective, contain an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary to
         make the statements therein, in light of the circumstances under which
         they were made, not misleading and (B) the Prospectus, and any
         amendment or supplement thereto, does not at any time during the
         Effectiveness Period include an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in light of the circumstances
         under which they were made, not misleading;

                           (b) (i) prior to the filing with the Commission of
         any Registration Statement (including any amendments thereto) and the
         distribution or delivery of the Prospectus (including any supplements
         thereto), provide draft copies thereof to the Purchaser and reflect in
         such documents all such comments as the Purchaser (and its counsel)
         reasonably may propose and (ii) furnish to the Purchaser such numbers
         of copies of the Prospectus including a preliminary prospectus or any
         amendment or supplement to the Prospectus, as applicable, in conformity
         with the requirements of the Securities Act, and such other documents,
         as the Purchaser may reasonably request in order to facilitate the
         public sale or other disposition of the Registrable Securities;

                           (c) comply with applicable blue sky laws with respect
         to the Registrable Securities (subject to the limitations set forth in
         Section 3(g) above), and do any and all other acts and things which may
         be reasonably necessary or advisable to enable the Purchaser to
         consummate the public sale or other disposition in such jurisdiction of
         the Registrable Securities, except that the Company shall not for any
         such purpose be required to qualify to do business as a foreign
         corporation in any jurisdiction wherein it is not so qualified or to
         file therein any general consent to service of process;

                           (d) list such Registrable Securities on the principal
         market or trading system and any other exchange on which the Common
         Stock of the Company is then listed, if the listing of such Registrable
         Securities is then permitted under the rules of such exchange or
         market;

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                           (e) notify the Purchaser at any time when the
         Prospectus is required to be delivered under the Securities Act, of the
         happening of any event of which it has knowledge as a result of which
         the Prospectus, as then in effect, includes an untrue statement of a
         material fact or omits to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading in
         the light of the circumstances then existing, and the Company shall
         prepare and file a curative amendment or curative supplement under
         Section 5(a) as quickly as reasonably possible and the period beginning
         on the date of notice until the curative amendment is effective or a
         curative supplement is filed shall be deemed a Suspension Period and
         the Company shall compensate the Purchaser as set forth in Section 3(j)
         herein;

                           (f) as promptly as practicable after becoming aware
         of such event, notify the Purchaser (or, in the event of an
         underwritten offering, the managing underwriters) of the issuance by
         the Commission or any state authority of any stop order or other
         suspension of the effectiveness of the Registration Statement at the
         earliest possible time and take all lawful action to effect the
         withdrawal, rescission or removal of such stop order or other
         suspension;

                           (g) take all such other lawful actions reasonably
         necessary to expedite and facilitate the disposition by the Purchaser
         of its Registrable Securities in accordance with the intended methods
         therefor provided in the Prospectus which are customary for issuers to
         perform under the circumstances;

                           (h) in the event of an underwritten offering,
         promptly include or incorporate in a prospectus supplement or
         post-effective amendment to the Registration Statement such information
         as the managing underwriters reasonably agree should be included
         therein and to which the Company does not reasonably object and make
         all required filings of such prospectus supplement or post-effective
         amendment as soon as practicable after it is notified of the matters to
         be included or incorporated in such prospectus supplement or
         post-effective amendment; and

                           (i) maintain a transfer agent for its Common Stock.

         6.       INDEMNIFICATION.

                           (a) The Company agrees to indemnify and hold harmless
         the Purchaser and each person, if any, who controls the Purchaser
         within the meaning of the Securities Act ("DISTRIBUTING PURCHASER")
         against any losses, claims, damages or liabilities, joint or several
         (which shall, for all purposes of this Agreement, include, but not be
         limited to, all reasonable costs of defense and investigation and all
         reasonable attorneys' fees), to which the Distributing Purchaser may
         become subject, under the Securities Act or otherwise, insofar as such
         losses, claims, damages or liabilities (or actions in respect thereof)
         arise out of or are based upon any untrue statement or alleged untrue
         statement of any material fact contained in the Registration Statement,
         or any related preliminary prospectus, the Prospectus or amendment or
         supplement thereto, or arise out of or are based upon the omission or
         alleged omission to state therein a material fact required to be stated
         therein

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         or necessary to make the statements therein in light of the
         circumstances when made not misleading; provided, however, that the
         Company will not be liable in any such case to the extent that any such
         loss, claim, damage or liability arises out of or is based upon an
         untrue statement or alleged untrue statement or omission or alleged
         omission made in the Registration Statement, preliminary prospectus,
         the Prospectus or amendment or supplement thereto in reliance upon, and
         in conformity with, written information furnished to the Company by the
         Distributing Purchaser specifically for use in the preparation thereof.
         This Section 6(a) shall not inure to the benefit of any Distributing
         Purchaser with respect to any person asserting such loss, claim, damage
         or liability who purchased the Registrable Securities which are the
         subject thereof if the Distributing Purchaser failed to send or give a
         copy of the Prospectus to such person at or prior to the written
         confirmation to such person of the sale of such Registrable Securities,
         where the Distributing Purchaser was obligated to do so under the
         Securities Act or the rules and regulations promulgated thereunder.
         This indemnity agreement will be in addition to any liability which the
         Company may otherwise have.

                           (b) Each Distributing Purchaser agrees that it will
         indemnify and hold harmless the Company, and each officer, director of
         the Company or person, if any, who controls the Company within the
         meaning of the Securities Act, against any losses, claims, damages or
         liabilities (which shall, for all purposes of this Agreement, include,
         but not be limited to, all reasonable costs of defense and
         investigation and all reasonable attorneys' fees) to which the Company
         or any such officer, director or controlling person may become subject
         under the Securities Act or otherwise, insofar as such losses, claims,
         damages or liabilities (or actions in respect thereof) arise out of or
         are based upon any untrue statement or alleged untrue statement of any
         material fact contained in the Registration Statement, or any related
         preliminary prospectus, the Prospectus or amendment or supplement
         thereto, or arise out of or are based upon the omission or the alleged
         omission to state therein a material fact required to be stated therein
         or necessary to make the statements therein not misleading, but in each
         case only to the extent that such untrue statement or alleged untrue
         statement or omission or alleged omission was made in the Registration
         Statement, preliminary prospectus, the Prospectus or amendment or
         supplement thereto in reliance upon, and in conformity with, written
         information furnished to the Company by such Distributing Purchaser
         specifically for use in the preparation thereof. This indemnity
         agreement will be in addition to any liability which the Distributing
         Purchaser may otherwise have. Notwithstanding anything to the contrary
         herein, the Distributing Purchaser shall not be liable under this
         Section 6(b) for any amount in excess of the net proceeds to such
         Distributing Purchaser as a result of the sale of Registrable
         Securities pursuant to the Registration Statement.

                           (c) Promptly after receipt by an indemnified party
         under this Section 6 of notice of the commencement of any action, such
         indemnified party will, if a claim in respect thereof is to be made
         against the indemnifying party under this Section 6, notify the
         indemnifying party of the commencement thereof; but the omission so to
         notify the indemnifying party will not relieve the indemnifying party
         from any liability which it may have to any indemnified party except to
         the extent of actual prejudice demonstrated by the indemnifying party.
         In case any such action is brought against any indemnified party, and

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         it notifies the indemnifying party of the commencement thereof, the
         indemnifying party will be entitled to participate in, and, to the
         extent that it may wish, jointly with any other indemnifying party
         similarly notified, assume the defense thereof, subject to the
         provisions herein stated and after notice from the indemnifying party
         to such indemnified party of its election so to assume the defense
         thereof, the indemnifying party will not be liable to such indemnified
         party under this Section 6 for any legal or other expenses subsequently
         incurred by such indemnified party in connection with the defense
         thereof other than reasonable costs of investigation, unless the
         indemnifying party shall not pursue the action to its final conclusion.
         The indemnified party shall have the right to employ separate counsel
         in any such action and to participate in the defense thereof, but the
         fees and expenses of such counsel shall not be at the expense of the
         indemnifying party if the indemnifying party has assumed the defense of
         the action with counsel reasonably satisfactory to the indemnified
         party; provided that if the indemnified party is the Distributing
         Purchaser, the fees and expenses of such counsel shall be at the
         expense of the indemnifying party if (i) the employment of such counsel
         has been specifically authorized in writing by the indemnifying party,
         or (ii) the named parties to any such action (including any impleaded
         parties) include both the Distributing Purchaser and the indemnifying
         party and the Distributing Purchaser shall have been advised by such
         counsel in writing that there may be one or more legal defenses
         available to the indemnifying party different from or in conflict with
         any legal defenses which may be available to the Distributing Purchaser
         (in which case the indemnifying party shall not have the right to
         assume the defense of such action on behalf of the Distributing
         Purchaser, it being understood, however, that the indemnifying party
         shall, in connection with any one such action or separate but
         substantially similar or related actions in the same jurisdiction
         arising out of the same general allegations or circumstances, be liable
         only for the reasonable fees and expenses of one separate firm of
         attorneys for the Distributing Purchaser, which firm shall be
         designated in writing by the Distributing Purchaser and be approved by
         the indemnifying party). No settlement of any action against an
         indemnified party shall be made without the prior written consent of
         the indemnified party, which consent shall not be unreasonably
         withheld.

                  All fees and expenses of the indemnified party (including
reasonable costs of defense and investigation in a manner not inconsistent with
this Section and all reasonable attorneys' fees and expenses) shall be promptly
paid to the indemnified party, as incurred; within 10 business days of written
notice thereof to the indemnifying party; provided, that the indemnifying party
may require such indemnified party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such indemnified
party is not entitled to indemnification hereunder.

         7.       CONTRIBUTION. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the

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part of any indemnified party, then the Company and the applicable Distributing
Purchaser shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the applicable
Distributing Purchaser on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Purchaser agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 7 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

                  Notwithstanding any other provision of this Section 7, in no
event shall any (i) Purchaser be required to undertake liability to any person
under this Section 7 for any amounts in excess of the dollar amount of the net
proceeds to be received by the Purchaser from the sale of the Purchaser's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are or were to be registered under the Securities Act and
(ii) underwriter be required to undertake liability to any person hereunder for
any amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to the Registration
Statement.

         8.       NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be delivered as set forth in the
Purchase Agreement.

         9.       ASSIGNMENT. Neither this Agreement nor any rights of the
Purchaser or the Company hereunder may be assigned by either party to any other
person. Notwithstanding the foregoing, (a) the provisions of this Agreement
shall, upon the prior written consent of the Company not to be unreasonably
withheld, inure to the benefit of, and be enforceable by, any transferee of any
of the Common Stock purchased by the Purchaser pursuant to the Purchase
Agreement other than through open-market sales, and (b) upon the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed in the case of an assignment to an affiliate of the Purchaser, the
Purchaser's interest in this Agreement may be assigned at any time, in whole or
in part, to any other person or entity (including any affiliate of the
Purchaser) who agrees to be bound hereby.

                                       10

<PAGE>

         10.      COUNTERPARTS/FACSIMILE. 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.

         11.      REMEDIES AND 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.

         12.      CONFLICTING AGREEMENTS. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the purchasers of Registrable Securities in this Agreement or
otherwise prevents the Company from complying with all of its obligations
hereunder.

         13.      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.

         14.      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.

                            [SIGNATURE PAGE FOLLOWS]

                                       11

<PAGE>

                              SIGNATURE PAGE TO THE
                          REGISTRATION RIGHTS AGREEMENT

                  IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on this 25th day of
July, 2003

                                    IMMERSION CORPORATION

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

                                    MICROSOFT CORPORATION

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

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

                                       12<PAGE>

                                                                     EXHIBIT 4.3

STOCKHOLDER'S AGREEMENT

BY AND BETWEEN:

IMMERSION CORPORATION

AND

MICROSOFT CORPORATION

DATED AS OF JULY 25, 2003

<PAGE>

                             STOCKHOLDER'S AGREEMENT

         This STOCKHOLDER'S AGREEMENT (the "AGREEMENT") is made as of July 25,
2003 (the "EFFECTIVE DATE"), 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 08052 (the "STOCKHOLDER").

                  WHEREAS, Microsoft is acquiring shares of the Company's Series
A Convertible Preferred Stock, $0.001 par value per share (the "SERIES A STOCK")
pursuant to that certain Series A Preferred Stock Purchase Agreement dated as of
July 25, 2003 (the "STOCK PURCHASE AGREEMENT"); and

         WHEREAS, as a condition to and to effect the purchase and sale of the
Series A Stock, the parties believe it is in their mutual best interests to
agree to certain covenants and rights.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and the consummation of the issuance and sale of the Series A
Preferred Stock, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.       STANDSTILL AGREEMENT. As long as the Stockholder holds in
excess of 25% of the shares of Series A Stock originally issued, (a) the
Stockholder agrees that it shall not, without the Company's consent, acting by
itself or with others, acquire any additional equity interest in the Company
except pursuant to the Stock Purchase Agreement, the Senior Redeemable
Convertible Debenture Purchase Agreement dated as of the date hereof, or
pursuant to the terms of the Company's Certificate of Incorporation, other than
ordinary treasury activities by the Stockholder, and (b) the Stockholder shall
not, unless solicited by the Company's Board of Directors, acting by itself or
with others, participate in any proxy solicitation or election contest, make any
proposal for any acquisition of the Company, or propose any matter for
submission to a vote of the Company's stockholders, other than ordinary treasury
activities by the Stockholder.

         2.       VOTING AGREEMENT. For all matters on which the Stockholder is
entitled to vote as a holder of Common Stock or with the holders of Common Stock
on an as-converted basis, the Stockholder will, at its sole discretion, either
not vote or cause duly authorized persons to vote any such shares it holds in
excess of 19.4% of the outstanding shares of the Company on an as-converted
basis ("EXCESS SECURITIES"), such person shall be present at all meetings of the
Company's stockholders at which such Excess Securities shall be entitled to
vote, or shall cause proxies to be present at all such meetings, to enable all
such Excess Securities to be counted for quorum purposes, and shall cause all
such Excess Securities to be voted in favor of any matter submitted by the
Company's Board of Directors for approval of the stockholders of the Company at
such meetings.

<PAGE>

         3.       MISCELLANEOUS.

         3.1      Termination. This Agreement shall terminate when the
Stockholder no longer holds any shares of the capital stock of the Company.

         3.2      Remedies; 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.

         3.3      Specific Performance. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, the Stockholder shall be entitled to specific performance of the
agreements and obligations of the other parties hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction.

         3.4      Alteration or Amendment. 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 Stockholder. Any amendment or waiver effected in
accordance with this Section 4 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.

         3.5      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.

                                     - 2 -

<PAGE>

         3.6      Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be delivered as set forth in the
Stock Purchase Agreement.

         3.7      Complete Agreement. This Agreement, the Series A Convertible
Preferred Stock Purchase Agreement, the Registration Rights Agreement, the
Senior Redeemable Convertible Debenture Purchase Agreement (and corresponding
debenture) between the Company and the Stockholder embody the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.

         3.8      Pronouns. Whenever the content may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.

         3.9      Counterparts; Signatures. This Agreement may be executed in
one or more counterparts, each of which when so executed shall be deemed an
original and 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.

         3.10     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.

                            {Signature Page Follows}

                                     - 3 -

<PAGE>

                              SIGNATURE PAGE TO THE
                             STOCKHOLDER'S 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

                                     STOCKHOLDER:

                                     MICROSOFT CORPORATION

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

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

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