Document:

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                                                                    EXHIBIT 10.4

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

                                LICENSE AGREEMENT

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

                                    RECITALS

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

         WHEREAS, Microsoft desires to acquire a license under such patent
rights, on the terms and conditions set forth in this Agreement.

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

                                    AGREEMENT

         1.       DEFINITIONS.

                  (a)      "ADULT PRODUCT" means: [****] content, access to
which may be lawfully provided solely to users who certify that they are at
least 18 years of age; and (ii) media (e.g. videos, CDs and DVDs) containing the
content described in (i), but only to the extent that the rights to create the
content and/or media described in (i) and (ii) above have been licensed prior to
the Effective Date under the Licensed Patents to another party on an exclusive
basis.

                  (b)      "CONDITIONAL PATENTS" means Patents for which the
grant of licenses, releases, or freedom from suit to Microsoft or Microsoft
Subsidiaries results in an obligation to pay, or the payment of, additional
royalties by Immersion or its Subsidiaries to third parties (except for payments
among Immersion and its Subsidiaries, and payments made to third parties for
inventions made by said third parties while employed by or under an obligation
to assign inventions to Immersion or any of its Subsidiaries).

                  (c)      "FOUNDRY PRODUCT" means a product which is designed
by or for a third party without substantial input from Microsoft, and
manufactured, reproduced, sold, leased, licensed or otherwise transferred from
Microsoft to that third party (or to customers of, or as directed by, that third
party) on essentially an exclusive basis.

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

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                             PROVIDED UNDER RULE 408

                  (e)      "LICENSED PRODUCT" means all hardware, software, and
services, excluding Adult Products, Medical Products, and Foundry Products.

                  (f)      "MEDICAL PRODUCT" means any hardware product,
software product, or combination of hardware and software that uses Touch
Technology for the medical treatment of patients, the training of medical
personnel for medical procedures, or the simulation of any medical procedure.
General purpose hardware or software whose primary function is not the delivery
of one of the foregoing is not a Medical Product.

                  (g)      "MICROSOFT AND MICROSOFT SUBSIDIARY OPERATING SYSTEM"
means an Operating System that is sold, licensed, sublicensed, or otherwise
distributed by Microsoft or Microsoft's Subsidiaries to third parties.

                  (h)      "OPERATING SYSTEM" means software, including
firmware, that [****] Examples include [****]

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

                  (j)      "PERIPHERAL DEVICE" means a hardware peripheral
device which communicates with but is physically separate from a primary
computer (such primary computer being, for example, a personal computer or a
game console), or is physically separate from the primary computing processor
when used in a device other than a primary computer (such primary computing
processor being, for example, a processor contained in a smart refrigerator).
For example, a standalone gamepad, touchpad, joystick, wheel, or haptic control
knob that communicates (by wired or wireless means) with a personal computer is
a "Peripheral Device" as each of those devices is physically separated from the
"primary computer" with which it communicates. Similarly, a joystick built into
a control panel on an aircraft carrier or a touchpad built into the door of a
refrigerator is also a "Peripheral Device," as each of those user input controls
is separate from the primary computer or primary computing processor with which
such user input control communicates. For purposes of this Agreement, the
Parties expressly agree that:

                           (i)      an arcade-style gaming device shall not be
deemed a "Peripheral Device" for purposes of this definition and this Agreement,
even if it includes or comprises a touch sensation mechanism, for example, a
vibrating seat, vibro-gamepad, touchpad, slider, touchscreen, joystick, wheel,
or haptic control knob;

                           (ii)     a [****] other than a portable keyboard not
distributed in connection with the device with which it interacts), laptop
computer, Tablet PC or Smart Display device (including any associated styluses
or pens, solely when bundled with and used in conjunction with such Tablet PC or
Smart Display device or replacement components for the foregoing which may be
sold separately), or "Game Boy" -type handheld gaming device) is not a
"Peripheral Device," even if it includes or comprises a vibrating seat,
vibro-gamepad, touchpad, slider, touchscreen, joystick, wheel, or haptic control
knob; and

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                             PROVIDED UNDER RULE 408

                           (iii)    any physically separate hardware device
(other than styluses, pens, or similar-type devices bundled with and used in
conjunction with Tablet PCs or Smart Display-type devices, or replacement
components for the foregoing which may be sold separately) which communicates
with any of the devices identified in (i) or (ii) above is a Peripheral Device
(for example, a gamepad that communicates (by wired or wireless means) with a
laptop is a "Peripheral Device").

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

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

                  (m)      All terms not defined herein shall have the meaning
set forth in the Settlement Agreement and Mutual Release executed by Microsoft
and Immersion simultaneously with the execution of this Agreement (the
"SETTLEMENT").

         2.       LICENSE RIGHTS.

                  (a)      LICENSE TO LICENSED PATENTS. Subject to the terms of
this Agreement, Immersion, on behalf of itself and its Subsidiaries, hereby
grants to Microsoft and its Subsidiaries a worldwide, perpetual, paid-up,
irrevocable, non-terminable, royalty-free and non-exclusive license under the
Licensed Patents to make, have made, use, lease, distribute, have distributed,
publish, have published, import, offer for sale, provide as a service, sell, or
otherwise dispose of Licensed Products.

                  (b)      SUBLICENSING RIGHTS. Immersion, on behalf of itself
and its Subsidiaries, hereby irrevocably and non-terminably grants to Microsoft
and its Subsidiaries the worldwide, royalty-free (subject to the terms of
Section 2(e)), paid-up right to sublicense the Licensed Patents (excluding
Patents not directed to Touch Technology) to third parties (excluding Sony
Corporation, Sony Computer Entertainment, Inc., Sony Computer Entertainment of
America, Inc., any of their Subsidiaries or successors (collectively, "Excluded
Sublicensees"), and any other entity solely to the extent that such other entity
provides services to or makes products designed specifically for use in
conjunction with the products of the Excluded Sublicensees). The right to
sublicense shall exclude the following fields of use:

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                             PROVIDED UNDER RULE 408

                           (i)      Medical Products, Adult Products or Foundry
Products;

                           (ii)     hardware, (a) to the extent that such
hardware does not use and is not controlled by a Microsoft or Microsoft
Subsidiary Operating System, or, (b) if such hardware can use or be controlled
by multiple Operating Systems (including a Microsoft or Microsoft Subsidiary
Operating System), to the extent that such hardware uses and is controlled by an
Operating System other than a Microsoft or Microsoft Subsidiary Operating
System;

                           (iii)    software and services, to the extent that
they do not use or run on a Microsoft or Microsoft Subsidiary Operating System;
and

                           (iv)     Peripheral Devices.

         In the event that at any given date Microsoft enters into an agreement
with a third party which grants such third party a sublicense under the Licensed
Patents, as permitted under this Section 2(b), such third party shall not by
virtue of such sublicense from Microsoft be excused from such third party's
obligations to pay Immersion pursuant to any agreement entered into by Immersion
and such third party prior to such date.

                  (c)      COMBINATIONS. Immersion, on behalf of itself and its
Subsidiaries, hereby covenants not to sue any third party, under any Licensed
Patent claim, for making, using, selling, importing, offering for sale,
providing as a service, leasing, distributing or otherwise disposing of a
Licensed Product created or distributed by or for Microsoft or a Microsoft
Subsidiary in combination with one or more other items licensed by, or sold or
manufactured by or for, such third party, but only to the extent that:

                           (i)      the sale of the Licensed Product by
Microsoft (or one of its Subsidiaries) would, absent this Agreement, constitute
direct or contributory infringement of such Licensed Patent claim; and

                           (ii)     such Licensed Patent claim would not be
directly or contributorily infringed by such other item(s) separate and apart
from the combination with such Licensed Product. For the purposes of this
Section, the determination of infringement above shall assume the existence of
any necessary knowledge or intent required to constitute contributory
infringement.

                  (d)      PRODUCT/SERVICE RELATED MATERIALS. Immersion, on
behalf of itself and its Subsidiaries, hereby represents, warrants and covenants
not to sue Microsoft or any Microsoft Subsidiary for contributory infringement
or induced infringement of the Licensed Patents arising out of the publication
or distribution of product and/or service-related: (1) documentation for a
Microsoft or Microsoft Subsidiary Licensed Product (e.g., reference designs,
specifications, etc.), and (2) marketing, training and/or support relating to a
Microsoft or Microsoft Subsidiary Licensed Product. The foregoing sentence shall
not be construed to provide customers of Microsoft or Microsoft Subsidiaries
with any implied licenses or sublicenses.

                  (e)      CONDITIONAL PATENTS. Immersion on behalf of itself
and its Subsidiaries, agrees that upon written request, it will grant to
Microsoft and Microsoft Subsidiaries to the broadest extent and under the most
favorable terms and conditions (including the most favorable

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                             PROVIDED UNDER RULE 408

royalty terms) which Immersion then has the ability or right to do, a license,
release and covenant with respect to any Conditional Patents under the terms,
conditions, licenses and covenants granted herein. Such license, release and
covenant shall be granted under a separate agreement upon payment to Immersion
of the additional royalty or other consideration which Immersion or any of its
Subsidiaries is obligated to pay to a third party because of the grant of such
license, release or covenant thereunder. In the event that Immersion's
obligation to pay a particular licensor is based on a percentage of Immersion's
sublicensing revenues from such Conditional Patents, Microsoft and Immersion
agree to negotiate a reasonable payment based on the fair market value of the
sublicense of such Conditional Patents. If Immersion sublicenses such
Conditional Patents to other parties, the fair market value shall be no more
than the best terms that Immersion grants or has granted to other sub-licensees
for the same or similar sublicense.

                  (f)      TRANSFER OF PATENTS. Immersion agrees that any
transfer or assignment of the Licensed Patents shall be subject to the licenses
granted to Microsoft and Microsoft's Subsidiaries under this Agreement. In the
event that Immersion assigns rights to an invention that is documented and ready
for patenting but for which an application has not yet been filed, in any way
for the purpose of avoiding the resulting patent application being captured as a
"Licensed Patent" under this Agreement (for example, to a licensing entity such
as Refac or ThinkFire), Immersion agrees that such transfer shall be subject to
this Agreement and that any resulting Patent(s) on the transferred invention
shall be included as Licensed Patent(s). The foregoing shall not apply to (1)
bona fide transactions that do not include as a purpose of such transactions an
intent to avoid capturing any invention as a "Licensed Patent" under this
Agreement an invention that is documented and ready for patenting but for which
an application has not yet been filed; and (2) the following types of
transactions:

                           (i)      A development agreement where the total
compensation rendered to Immersion is less than [****] Immersion's costs of
performing such development;

                           (ii)     A development or asset sale agreement where
the sole compensation rendered to Immersion is [****]

                           (iii)    A development or asset sale agreement where
the sole compensation rendered to Immersion [****]

                           (iv)     Any standard development agreement or
agreement for sale of technology to an entity that intends to use the developed
or transferred technology in the entity's products.

         Microsoft shall use good faith efforts to respond to any requests by
Immersion to determine if a given agreement falls within the terms of (i)
through (iv) above.

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

         3.       PAYMENT. Within five (5) days after the Effective Date,
Microsoft shall pay Immersion by cashier's check, wire transfer or other
immediately available funds, nineteen

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                             PROVIDED UNDER RULE 408

million nine hundred thousand dollars (USD $19,900,000), in consideration of the
rights and covenants set forth herein.

         4.       ADDITIONAL RIGHTS, OBLIGATIONS/RESTRICTIONS.

                  (a)      NO OBLIGATIONS. Notwithstanding any other provision
of this Agreement, Microsoft will have no obligation to market, sell or
otherwise distribute Licensed Products.

                  (b)      MEMBERSHIP IN MICROSOFT TOOL AND MIDDLEWARE PROGRAMS.
Immersion will have the right to apply for and participate in all publicly
available Microsoft tool and middleware programs in accordance with their
standard terms, conditions, and fees.

                  (c)      NO RESTRICTIONS. Nothing in this Agreement will be
construed as restricting Microsoft's ability to acquire, license, develop,
manufacture or distribute for itself, or have others acquire, license, develop,
manufacture or distribute on its behalf, similar technology performing the same
or similar functions as the technology subject to the Licensed Patents, or to
market and distribute such similar technology in addition to, or in lieu of, the
technology subject to the Licensed Patents.

                  (d)      MAINTENANCE OF PATENTS. In the event Immersion plans
to forego payment of any maintenance fees or not take any other steps required
to maintain Immersion's rights under any of the Licensed Patents, Immersion
shall assign, without additional compensation, all right, title, and interest in
and to the applicable Licensed Patents to Microsoft. If any of the Licensed
Patents lapses (other than by expiration), then Immersion will promptly use its
best efforts to revive the patent. It shall not be a breach of this Agreement,
and the above provisions of this Section 4(d) shall not apply, if a Licensed
Patent lapses because of an inadvertent failure to pay any maintenance fees or
inadvertent failure to take any other steps required to maintain Immersion's
rights under any of the Licensed Patents.

         5.       CONFIDENTIALITY. The terms and conditions, but not the
existence, of this Agreement shall be treated as confidential information by the
Parties, and neither Party shall disclose the terms or conditions of this
Agreement to any third party (other than its Subsidiaries licensed pursuant to
this Agreement) without the prior written permission of the other Party. Each
Party, however, shall have (a) the right to represent to third parties that such
Party is licensed for the products and patents as provided by this Agreement,
and (b) the right to make disclosures to the extent required by an order of
court, regulation of another governmental body, or otherwise by law or by a
stock exchange, provided that the Party shall promptly provide written notice to
the non-disclosing Party of the intended disclosure and of the court order or
regulation prior to such disclosure and that the Party shall take all reasonable
steps to minimize such disclosure by, for example, obtaining a protective order
and/or appropriate confidentiality provisions requiring that such information to
be disclosed be used only for the purpose for which such law, order, regulation
or requirement was issued. Additionally, each Party may disclose the terms and
conditions of this Agreement to the extent reasonably necessary, under a
suitable confidentiality agreement, to its accountants, attorneys, financial
advisors and in connection with due diligence activities relating to the sale of
the stock or a portion of the business of a Party or its Subsidiaries.

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         6.       WARRANTIES.

                  (a)      IMMERSION. Immersion represents, warrants, and
covenants that:

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

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

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

                           (iv)     [****];

                           (v)      as of the Effective Date, the issued
Licensed Patents owned by Immersion are subsisting and have not lapsed or
otherwise become abandoned;

                           (vi)     as of the Effective Date, there are no
actual or threatened lawsuits or claims relating to the Licensed Patents other
than (i) the Lawsuit (as defined in the Settlement), (ii) contract, business or
licensing discussions with existing or potential licensees and customers, and
(iii) as set forth in Schedule 3.12 to the Series A Redeemable Convertible
Preferred Stock Purchase Agreement executed by the Parties on even date
herewith; and

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

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

                  (c)      DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS
6(a) AND 6(b) ABOVE, THE PATENTS ARE PROVIDED "AS IS" AND WITHOUT WARRANTY OF
ANY KIND. EACH PARTY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.

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

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                             PROVIDED UNDER RULE 408

sublicensees. All warranties in connection with such products shall be made by
the manufacturer or seller of such products.

         7.       TERM; TERMINATION.

                  (a)      TERM. Unless terminated by Microsoft pursuant to
Section 7(b), the term of this Agreement shall be from the Effective Date until
the expiration of the last to expire of the Licensed Patents.

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

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

         9.       GENERAL.

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

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

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

                  (b)      INDEPENDENT CONTRACTORS. The Parties are independent
contractors, and nothing in this Agreement will be construed as creating an
employer-employee relationship, a

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                             PROVIDED UNDER RULE 408

partnership, or a joint venture between the Parties. Neither Party will have the
power to bind the other Party or incur obligations on the other Party's behalf
without the other Party's prior written consent.

                  (c)      GOVERNING LAW. This Agreement shall be construed and
controlled by the laws of the State of Washington, and each Party consents to
exclusive jurisdiction and venue in the federal courts sitting in King County,
Washington, unless no federal subject matter jurisdiction exists, in which case
each Party consents to exclusive jurisdiction and venue in the Superior Court of
King County, Washington. Each Party waives all defenses of lack of personal
jurisdiction and forum non-conveniens. Process may be served on either Party in
the manner authorized by applicable law or court rule. In any action to enforce
any right or remedy under this 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.

                  (d)      ASSIGNMENT. This Agreement will be binding upon and
inure to the benefit of each Party's respective successors and lawful assigns.
Microsoft will have the right to assign this Agreement or any or all of its
rights under the Agreement, in whole or in part (in any case together with all
restrictive terms continuing with such assignment) to any purchaser of any
Microsoft business that uses the licenses granted herein, provided that (i) such
purchaser of a Microsoft business may use the assigned rights solely as
necessary to operate such purchased Microsoft business, (ii) the assignee's
license rights under Section 2(a) shall exclude the fields of use specified in
Sections 2(b)(ii) and (iii), and (iii) in any case Microsoft may not assign any
of its rights under this Agreement to Sony Corporation, Sony Computer
Entertainment, Inc., Sony Computer Entertainment of America, Inc., Nintendo,
Inc., or any of their Subsidiaries or successors. This Agreement may be assigned
by Immersion to any acquiror of all or substantially all of the business or
assets of Immersion, or in connection with a merger. Microsoft and Immersion
will each have the right to merge or consolidate without the prior approval of
the other Party. Except as permitted above, assignment of this Agreement,
whether by contract, operation of law, or otherwise, will be void.

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

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

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                             PROVIDED UNDER RULE 408

Agreement. Delivery of an executed counterpart of this Agreement by facsimile
transmission shall be effective as delivery of an originally executed
counterpart of this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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                              SIGNATURE PAGE TO THE
                                LICENSE AGREEMENT

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

                                      IMMERSION CORPORATION

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

                                      MICROSOFT CORPORATION

                                      By: ______________________________________
                                          Name:
                                          Title:

                                      By: ______________________________________
                                          Name:
                                          Title:

                                      By: ______________________________________
                                          Name:
                                          Title:

                                      By: ______________________________________
                                          Name:
                                          Title:

                                       11<PAGE>
                                                                EXHIBIT 10.5

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

                              SUBLICENSE AGREEMENT

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

                                    RECITALS

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

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

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

                                    AGREEMENT

1.       DEFINITIONS.

         a.       "ADULT PRODUCT" means: (i) [****] content, access to which may
                  be lawfully provided solely to users who certify that they are
                  at least 18 years of age; and (ii) media (e.g. videos, CDs and
                  DVDs) containing the content described in (i), but only to the
                  extent that the rights to create the content and/or media
                  described in (i) and (ii) above have been licensed by
                  Immersion prior to the Effective Date under the Licensed
                  Patents to another party on an exclusive basis.

         b.       "CONDITIONAL PATENTS" means Patents for which the grant of
                  licenses, releases, or freedom from suit to Microsoft or
                  Microsoft Subsidiaries for sublicensing or passing through to
                  a Sublicensee, on the terms and conditions set forth herein,
                  results in an obligation to pay, or the payment of, additional
                  royalties by Immersion or its Subsidiaries to third parties
                  (except for payments among Immersion and its Subsidiaries, and
                  payments made to third parties for inventions made by said
                  third parties while employed by or under an obligation to
                  assign inventions to Immersion or any of its Subsidiaries).

         c.       "FOUNDRY PRODUCT" means a product which is designed by or for
                  a third party without substantial input from the Sublicensee,
                  and manufactured, reproduced, sold, leased, licensed or
                  otherwise transferred from the Sublicensee to that third

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                             PROVIDED UNDER RULE 408

                  party (or to customers of, or as directed by, that third
                  party) on essentially an exclusive basis

         d.       "GAME PLATFORM" means: (i) a proprietary consumer computing
                  platform manufactured for the purpose of running game software
                  licensed and written for that platform; (ii) any peripheral
                  device (such as a game pad, joystick or wheel) intended to be
                  used with the computing platform referenced in (i) above, so
                  as to receive input from or transmit output to the user; (iii)
                  game software licensed and written for the computing platform
                  referenced in (i) above; (iv) software development tools used
                  to produce the game software described in (iii) above; and (v)
                  network services to support online gaming activity, including,
                  for example, player match making, data warehousing and voice
                  and chat communications. Sony's PlayStation and Nintendo's
                  GameCube and GameBoy platforms are examples of a Game
                  Platform.

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

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

         g.       "MEDICAL PRODUCT" means any hardware product, software
                  product, or combination of hardware and software that uses
                  Touch Technology for the medical treatment of patients, the
                  training of medical personnel for medical procedures, or the
                  simulation of any medical procedure. General purpose hardware
                  or software whose primary function is not the delivery of one
                  of the foregoing is not a Medical Product.

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

         i.       "ROYALTY-BEARING SONY PRODUCTS" means:

                  (i)      handheld mobile entertainment or productivity devices
                           (e.g. a downloadable media player device or a PDA),
                           and portable keyboards, styluses or pens (and
                           replacement components) distributed in connection
                           with such handheld mobile entertainment or
                           productivity devices, except to the extent that such
                           devices constitute Adult Products, Medical Products,
                           or Foundry Products; and

                  (ii)     handheld mobile communications devices (e.g., a cell
                           phone) distributed under a Sony or Sony Subsidiary
                           brand, except to the extent that such devices
                           constitute Adult Products, Medical Products, or
                           Foundry Products.

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

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                             PROVIDED UNDER RULE 408

         j.       "SONY" means Sony Corporation, Sony Computer Entertainment,
                  Inc., Sony Computer Entertainment of America, Inc., and any
                  and all of their Subsidiaries.

         k.       "SONY LAWSUIT" means the action in the United States District
                  Court for the Northern District of California entitled
                  Immersion Corporation v. Sony Computer Entertainment of
                  America, Inc., Sony Computer Entertainment Inc., and Microsoft
                  Corporation, Northern District of California Case No.
                  C02-00710 CW (WDB), as such action pertains to Sony.

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

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

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

2.       SUBLICENSING RIGHTS AND PAYMENTS.

         a.       SUBLICENSE RIGHTS FOR GAME PLATFORM VENDORS.

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

                           (1)      make, have made, use, lease, distribute,
                                    have distributed, publish, have published,
                                    import, provide as a service, offer to sell,
                                    sell or otherwise dispose of such Game
                                    Platform Vendor's and its Subsidiaries' Game
                                    Platforms; and

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

                                       3

<PAGE>

                             PROVIDED UNDER RULE 408

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

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

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

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

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

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

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

                  In any of the cases described under clauses (1) - (4) above,
                  the Parties shall each be entitled to [****] of the cash
                  amounts (if any, and including royalty payments and upfront,
                  annual or other license fees) received by Microsoft [****] for
                  the Game Platform Sublicense in excess of the applicable
                  amount specified in such clauses (1) - (4) (after
                  implementation of the calculation specified in clause (4)).
                  Any license grant [****] under the Game Platform Sublicense
                  shall not become

                                       4

<PAGE>

                             PROVIDED UNDER RULE 408

                  effective until [****] renders all compensation required under
                  the Game Platform Sublicense to be paid [****] as of the
                  effective date of such Game Platform Sublicense. At the time
                  of making payment to Immersion for [****] Game Platform
                  Sublicense, Microsoft shall also provide Immersion with a
                  fully executed copy of the [****] Game Platform Sublicense.

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

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

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

                  (ii)     If Immersion [****] for an amount in excess of [****]
                           up to and including [****], then Immersion shall pay
                           Microsoft the sum of [****] plus an additional amount
                           equal to 25% of the amount of the settlement in
                           excess of [****] up to and including [****].

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

                  The [****] amounts specified in clauses (i) - (iii) above
                  shall include all amounts, including all royalty payments and
                  upfront, annual or other license fees (regardless of when
                  received), received by Immersion on account of any license,
                  [****], or similar consideration granted by Immersion to
                  [****] in respect of the Licensed Patents, including for
                  fields of use outside of the area of Game Platforms, and (a)
                  in connection with the [****], including any agreement,
                  license, sublicense, option, investment, or other transaction
                  associated with [****], and (b) with respect to any other
                  agreement, license, sublicense, option, investment, or other
                  transaction entered into during the time period that is the
                  lesser of (1) the period set forth in Section 2(j), or (2)
                  eighteen (18) months after [****]. Any amounts due under this
                  Section 2(e) shall be paid to Microsoft within ten (10) days
                  of Immersion's [****]. Immersion further agrees to

                                       5

<PAGE>

                             PROVIDED UNDER RULE 408

                  promptly provide Microsoft with sufficient documentation of
                  [****] to enable Microsoft to determine and confirm the
                  payment owed to Microsoft in the event of such a [****].

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

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

         h.       CONDITIONAL PATENTS. Immersion on behalf of itself and its
                  Subsidiaries, agrees that upon written request, it will grant
                  to Microsoft and Microsoft Subsidiaries to the broadest extent
                  and under the most favorable terms and conditions (including
                  the most favorable royalty terms) which Immersion then has the
                  ability or right to do, a license, release and covenant with
                  respect to any Conditional Patents under the terms,
                  conditions, licenses and covenants granted herein, (i.e. of
                  such scope as to permit the sublicense of such Conditional
                  Patents on the terms set forth herein). Such license, release
                  and covenant shall be granted under a separate agreement upon
                  payment to Immersion of the additional royalty or other
                  consideration which Immersion or any of its Subsidiaries is
                  obligated to pay to a third party because of the grant of such
                  license, release or covenant thereunder. In the event that
                  Immersion's obligation to pay a particular licensor is based
                  on a percentage of Immersion's sublicensing revenues from such
                  Conditional Patents, Microsoft and Immersion agree to
                  negotiate a reasonable payment based on the fair market value
                  of the sublicense of such Conditional Patents. If Immersion
                  sublicenses such Conditional Patents to other parties, the
                  fair market value shall be no more than the best terms that
                  Immersion grants or has granted to other sub-licensees for the
                  same or similar sublicense.

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

                                       6

<PAGE>

                             PROVIDED UNDER RULE 408

         j.       LIMITATION. Microsoft's right to grant sublicenses to [****]
                  or other third parties pursuant to this Section 2 shall only
                  be effective during the twenty-four (24) month period
                  following the Effective Date; provided, however, that any such
                  sublicense granted by Microsoft pursuant to this Section 2
                  during such twenty-four (24) month period shall be effective
                  for the life of the Licensed Patents or for such lesser
                  duration as Microsoft and the applicable sublicensee may
                  agree, in their sole discretion.

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

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

5.       WARRANTIES.

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

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

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

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<PAGE>

                             PROVIDED UNDER RULE 408

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

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

                  (v)      it has not assigned or otherwise transferred or
                           subrogated any interest in any of its claims that are
                           the subject of the Sony Lawsuit, and, except in
                           connection with an assignment by Immersion permitted
                           by Section 8(d), will not assign or otherwise
                           transfer or subrogate any interest (other than in the
                           proceeds) in any of its claims that are the subject
                           of the Sony Lawsuit;

                  (vi)     [****];

                  (vii)    as of the Effective Date, the issued Licensed Patents
                           owned by Immersion are subsisting and have not lapsed
                           or otherwise become abandoned;

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

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

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

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

                  Nothing in this Sublicense Agreement shall be construed (i) as
                  a warranty or representation by Immersion as to the validity
                  or scope of any Licensed Patents; (ii) as a warranty or
                  representation that anything made, used, sold or otherwise
                  disposed of under any license or sublicense granted in or
                  under this Sublicense Agreement is or will be free from
                  infringement by patents, copyrights, trade secrets,
                  trademarks, or other rights of third parties; (iii) as
                  granting by implication, estoppel or otherwise any licenses or
                  rights under patents or other intellectual property rights of
                  Immersion other than expressly granted herein; or (iv)(a) to
                  require Immersion to file any patent application, (b) as a
                  warranty that Immersion

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<PAGE>

                             PROVIDED UNDER RULE 408

                  will be successful in securing the grant of any patent or any
                  reissue or extensions thereof, or (c) to require Immersion to
                  pay any maintenance fees or take any other steps to maintain
                  Immersion's patent rights. Immersion does not assume any
                  responsibility for the manufacture of any product that is
                  manufactured or sold by or for Microsoft or Microsoft's
                  Subsidiaries, or their sublicensees. All warranties in
                  connection with such products shall be made by the
                  manufacturer or seller of such products.

6.       TERM; TERMINATION.

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

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

7.       LIMITATION OF LIABILITIES.

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

                                       9

<PAGE>

                             PROVIDED UNDER RULE 408

8.       GENERAL.

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

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

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

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

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

         d.       ASSIGNMENT. This Sublicense Agreement will be binding upon and
                  inure to the benefit of each Party's respective successors and
                  lawful assigns. Microsoft will have the right to assign this
                  Sublicense Agreement or any or all of its rights under this
                  Sublicense Agreement, in whole or in part (in any case
                  together with all restrictive terms continuing with such
                  assignment) to any purchaser of any Microsoft business that
                  grants the sublicenses authorized herein; provided, that
                  Microsoft may not make any such assignment to Sony
                  Corporation, Sony Computer Entertainment, Inc., Sony Computer
                  Entertainment of America, Inc., Nintendo, Inc., or any of
                  their Subsidiaries or successors. This Sublicense

                                       10

<PAGE>

                             PROVIDED UNDER RULE 408

                  Agreement may be assigned by Immersion to any acquiror of all
                  or substantially all of the business or assets of Immersion,
                  or in connection with a merger. Microsoft and Immersion will
                  each have the right to merge or consolidate without the prior
                  approval of the other Party. Except as permitted above,
                  assignment of this Sublicense Agreement, whether by contract,
                  operation of law, or otherwise, will be void.

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

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

                  [Remainder of page intentionally left blank]

                                       11

<PAGE>

                              SIGNATURE PAGE TO THE
                        GAME CONSOLE SUBLICENSE AGREEMENT

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

                                    IMMERSION CORPORATION

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

                                    MICROSOFT CORPORATION

                                    By: ________________________________________
                                        Name:
                                        Title:

                                    By: ________________________________________
                                        Name:
                                        Title:

                                    By: ________________________________________
                                        Name:
                                        Title:

                                    By: ________________________________________
                                        Name:
                                        Title:

<PAGE>

                CONFIDENTIAL TREATMENT REQUESTED - EDITED COPY

                                    EXHIBIT A

                   ROYALTIES FOR ROYALTY-BEARING SONY PRODUCTS

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

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

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

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

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

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

3.       Portable keyboards, styluses or pens bundled with handheld mobile
         entertainment or productivity devices shall not bear a separate
         royalty; the only royalty payable shall be on the underlying handheld
         mobile entertainment or productivity devices with which such portable
         keyboards, styluses or pens are intended to be used.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]