This Settlement Agreement (the “Agreement”) is made and entered into effective as of August 25, 2008
(“the Effective Date”) by and between Microsoft Corporation, a Washington corporation, with its principal
offices in Redmond, Washington (“Microsoft”), and Immersion Corporation, a Delaware Corporation with its
principal offices in San Jose, California (“Immersion”). Microsoft and Immersion are referred to in this Agreement
individually as a “Party” and collectively as the “Parties.”
WHEREAS, the Parties previously entered into an agreement entitled “Sublicense Agreement” effective as
of July 25, 2003 (“Sublicense Agreement”).
WHEREAS, the Parties previously entered into an agreement entitled “Confidentiality Agreement” on
May 11, 2007.
WHEREAS, disputes have arisen between the Parties relating to the Sublicense Agreement and the
Confidentiality Agreement, resulting in the claims and counterclaims asserted in the lawsuit entitled Microsoft
Corporation v. Immersion Corp., Case No. C07-0936RSM (the “Action”).
WHEREAS, the Parties hereto desire to settle the Action and the disputes between them on the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the terms and conditions set forth in this Agreement, the Parties
agree as follows:
1. Payment . On or before October 1, 2008, Immersion shall cause to be transmitted to Microsoft a one time
payment by wire transfer in the amount of Twenty Million Seven Hundred Fifty Thousand Dollars and no cents
($20,750,000). Such wire transfer shall be made pursuant to wire instructions Microsoft provides in writing to
2. Dismissal of The Action . Not later than five days after Immersion’s payment pursuant to Section 2 above,
Microsoft and Immersion shall direct their counsel of record in the Action to sign a Stipulation and Order For
Dismissal With Prejudice (“Stipulation”) in the form attached hereto as