-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M/2XTIylVdVSdeyJfzsC5ILTo9BKKsv+qdQ7neTxcAK4v9B86QwRyJqS/XVjLG0z wV2MBuJdssZYrYlk+bCZEw== /in/edgar/work/20000915/0001095811-00-003418/0001095811-00-003418.txt : 20000923 0001095811-00-003418.hdr.sgml : 20000923 ACCESSION NUMBER: 0001095811-00-003418 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000831 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMMERSION CORP CENTRAL INDEX KEY: 0001058811 STANDARD INDUSTRIAL CLASSIFICATION: [3577 ] IRS NUMBER: 943180138 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27969 FILM NUMBER: 723768 BUSINESS ADDRESS: STREET 1: 2158 PARAGON DR CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084671900 MAIL ADDRESS: STREET 1: 2158 PARAGON DR CITY: SAN JOSE STATE: CA ZIP: 95131 8-K 1 f65624ke8-k.txt FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported) August 31, 2000 ----------------- IMMERSION CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter)
Delaware 000-27969 94-3180138 - --------------------------------- ---------------------------- ------------------------- (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.)
801 Fox Lane, San Jose, California 95131 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (408) 467-1900 -------------------- Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 31, 2000, Immersion Corporation ("Immersion") acquired Virtual Technologies, Inc. ("Virtual Technologies"), through the merger (the "Merger") of Immersion's wholly owned subsidiary, VT Acquisitions, Inc. ("Merger Sub"), with and into Virtual Technologies, which survived the Merger, in accordance with the Agreement and Plan of Merger, dated as of July 28, 2000 (the "Merger Agreement"), among Immersion, Merger Sub, Virtual Technologies and James F. Kramer, as the representative of Virtual Technologies' shareholders (the "Shareholder Representative"). By virtue of the Merger, Immersion acquired all of the issued and outstanding stock of Virtual Technologies, and Virtual Technologies' shareholders immediately prior to the Merger received the right to receive 0.06415616 of a share of Immersion common stock, plus $0.193 in cash (without interest), for each share of Virtual Technologies common stock held immediately prior to the Merger, less the shares of Immersion common stock being escrowed (as described below), plus cash paid in lieu of fractional shares. In total, Immersion will issue up to approximately 320,000 shares of Immersion common stock and pay approximately $1 million in cash to these shareholders. Immersion has also assumed all vested and unvested options to purchase Virtual Technologies' common stock outstanding at the Merger and, as a result, may also issue up to an additional 22,000 shares of Immersion common stock on exercise of the assumed options. Under the Merger Agreement, Immersion is being indemnified in the event of losses, as the term is defined in the Merger Agreement, in accordance with the terms and conditions of the Merger Agreement. In addition, James F. Kramer and Marc Tremblay, two of the principal shareholders of Virtual Technologies immediately prior to the Merger, agreed to indemnify Immersion in the event of such losses, including losses greater than the shares being held in escrow, under an Indemnification and Joinder Agreement, dated as of July 28, 2000 (the "Indemnification and Joinder Agreement"), with Immersion. Immersion and the Shareholder Representative also entered into an Escrow Agreement, dated as of August 31, 2000, with U.S. Trust Company, National Association, as escrow agent, to establish an escrow to facilitate the ability of Immersion to recover amounts to which it is entitled as a result of the Merger Agreement and the Indemnification and Joinder Agreement. The initial escrow fund consists of approximately 60,000 shares of Immersion common stock that the prior shareholders of Virtual Technologies would have otherwise received in the Merger. Subject to the satisfaction of any claims asserted by Immersion, (1) up to 30,000 of the remaining escrowed shares will be distributed to the Shareholder Representative, on behalf of the shareholders, on the first anniversary of the date of the Merger (less any shares allocated to pending claims), and 2 3 (2) the remainder of the escrowed shares will be distributed to the Shareholder Representative, on behalf of the shareholders, on the second anniversary of the date of the Merger (less any shares allocated to pending claims). The shares of Immersion common stock being issued in the Merger are being issued under an exemption to the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). Accordingly, such shares are "restricted securities," as defined in Rule 144 of the Securities Act, and are not freely transferable. Immersion has granted the shareholders of Virtual Technologies immediately prior to the Merger who entered into a Registration Rights Agreement, dated as of August 31, 2000, with Immersion the right to request one shelf registration on Form S-3, at such time as Immersion is eligible to use Form S-3, and piggy-back registration rights in the event that Immersion files a registration statement under the Securities Act in connection with the proposed offer and sale for cash of shares of common stock by it or by its shareholders under certain circumstances. Separate and apart from the Merger, on the date of the Merger, Immersion also granted options to purchase up to approximately 500,000 shares of Immersion common stock to certain of Virtual Technologies' employees and directors. Of the options granted, (1) up to approximately 300,000 become exercisable over a four year period of continuous employment with Virtual Technologies, and (2) up to approximately 200,000 become exercisable in four annual installments, based on continuous employment with Virtual Technologies, with exercisability accelerating if certain Virtual Technologies revenue targets are met. Copies of the Merger Agreement, the Indemnification and Joinder Agreement, the Escrow Agreement, the Registration Rights Agreement and the Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan are attached to this Report as Exhibits. The foregoing descriptions of the Merger Agreement, the Indemnification and Joinder Agreement, the Escrow Agreement, the Registration Rights Agreement and the Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan are qualified in their entirety by reference to the full text of those agreements and such plan. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Immersion has determined that it is not required to provide financial statements under Item 7(a) of Form 8-K for its acquisition of Virtual Technologies. 3 4 (b) PRO FORMA FINANCIAL INFORMATION. Immersion has determined that it is not required under Item 7(b) of Form 8-K to provide pro forma financial information on the Virtual Technologies acquisition. (c) EXHIBITS.
EXHIBIT NO. DESCRIPTION ----------- ----------- 2.1 Agreement and Plan of Merger dated as of July 28, 2000, among Immersion Corporation, VT Acquisition, Inc., Virtual Technologies, Inc., and James F. Kramer (Incorporated herein by reference to Exhibit 10.27 to Immersion's Registration Statement on S-4 (Registration No. 333-45254) (the "S-4 Registration Statement")) 2.2 Indemnification and Joinder Agreement dated as of July 28, 2000, among Immersion Corporation, James F. Kramer and Marc Tremblay 2.3 Escrow Agreement dated as of August 31, 2000, among Immersion Corporation, James F. Kramer and U.S. Trust Company, National Association 2.4 Registration Rights Agreement dated as of August 31, 2000, among Immersion Corporation and the shareholders party thereto 10.1 Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan (Incorporated herein by reference to Exhibit 10.29 to the S-4 Registration Statement)
4 5 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. Date: September 15, 2000 Immersion Corporation By /s/ Victor Viegas ---------------------------------- Victor Viegas Chief Financial Officer and Vice President, Finance 5 6 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 2.1 Agreement and Plan of Merger dated as of July 28, 2000, among Immersion Corporation, VT Acquisition, Inc., Virtual Technologies, Inc., and James F. Kramer (Incorporated herein by reference to Exhibit 10.27 to the S-4 Registration Statement) 2.2 Indemnification and Joinder Agreement dated as of July 28, 2000, among Immersion Corporation, James F. Kramer and Marc Tremblay 2.3 Escrow Agreement dated as of August 31, 2000, among Immersion Corporation, James F. Kramer and U.S. Trust Company, National Association 2.4 Registration Rights Agreement dated as of August 31, 2000, among Immersion Corporation and the shareholders party thereto 10.1 Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan (Incorporated herein by reference to Exhibit 10.29 to the S-4 Registration Statement)
6 EX-2.2 2 f65624kex2-2.txt EXHIBIT 2.2 1 EXHIBIT 2.2 INDEMNIFICATION AND JOINDER AGREEMENT THIS INDEMNIFICATION AND JOINDER AGREEMENT (this "Agreement") is made and entered into as of July 28, 2000, by and among Immersion Corporation, a Delaware corporation ("Parent"), and James F. Kramer ("Kramer") and Marc Tremblay ("Tremblay"), each a shareholder of Virtual Technologies, Inc., a California corporation (the "Company") (Kramer and Tremblay sometimes being individually referred to as a "Principal Shareholder" and collectively referred to as the "Principal Shareholders" in this Agreement), with reference to the following facts: A. Parent, Parent's wholly owned subsidiary, VT Acquisition, Inc. ("Merger Sub"), the Company, and Kramer, as the representative of the Company's shareholders (the "Shareholder Representative"), are entering into an Agreement and Plan of Merger (the "Merger Agreement") (in the form attached as ANNEX A to this Agreement), pursuant to which, among other things, Merger Sub will be merged (the "Merger") with and into the Company, which will be the surviving corporation in the Merger, and the Company's shareholders will be entitled to receive shares of common stock of Parent ("Parent Common Stock"), all in accordance with the terms, and subject to the conditions, of the Merger Agreement. B. On this date the Principal Shareholders together own, and as of the Effective Time (as defined in the Merger Agreement) the Principal Shareholders will together own, more than 80% of the outstanding capital stock of the Company. C. As a material inducement to Parent and Merger Sub to enter into and consummate the Merger Agreement, the Principal Shareholders wish to enter into this Agreement and agree to all the terms and provisions hereof. ACCORDINGLY, in consideration of the foregoing, and intending to be legally bound hereby, each of the parties hereby agrees as follows: ARTICLE I INDEMNIFICATION, ESCROW AND ADDITIONAL AGREEMENTS 1.1 APPROVAL; JOINDER. By signing this Agreement, each Principal Shareholder, on behalf of the Principal Shareholder and his spouse, heirs, affiliates, legal representatives, successors and assigns, hereby (i) approves and accepts all of the terms and conditions of the Merger Agreement and the Escrow Agreement (as defined in Section 1.3) and agrees to be bound thereby as if the Principal Shareholder were a party thereto; and (ii) agrees to promptly comply with all of the terms of this Agreement (including the payment of any and all amounts of cash that may become due and payable to any Parent Indemnitee by the Principal Shareholder under the terms of this Agreement), the 2 Merger Agreement (including the indemnification provisions of Article VIII of the Merger Agreement and the payment of the Unanticipated Fees and Expenses (as defined in the Merger Agreement)) and the Escrow Agreement. 1.2 INDEMNIFICATION. (a) Each Principal Shareholder, on behalf of the Principal Shareholder and his spouse, heirs, affiliates, legal representatives, successors and assigns, hereby jointly and severally agrees to indemnify Parent Indemnitees (as defined in the Merger Agreement), and hold them harmless against and in respect of any and all Losses (as defined in the Merger Agreement) to the extent, subject to and in accordance with all of the terms and provisions of Article VIII of the Merger Agreement (which terms and provisions are incorporated by reference in this Agreement as if fully set forth in this Agreement). (b) Each Principal Shareholder, on behalf of the Principal Shareholder and his spouse, heirs, affiliates, legal representatives, successors and assigns, hereby severally and not jointly also agrees to indemnify Parent Indemnitees, and hold them harmless against and in respect of any and all claims, losses, damages (including incidental and consequential damages), expenses (including court costs, the costs of any investigation, expert witnesses and preparation, and attorneys' fees), obligations and liabilities, whether or not involving third party claims, which, directly or indirectly, arise or result from or are incident or related to (i) the inaccuracy of any representation or breach of any warranty of the Principal Shareholder under this Agreement or any other agreements to be entered into by a Principal Shareholder in connection with this Agreement or the Merger Agreement; or (ii) any default or failure of the Principal Shareholder's commitments or obligations under this Agreement or such other agreements; or (iii) any act or omission of the Principal Shareholder which otherwise constitutes a breach of this Agreement or such other agreements; or (iv) any and all Taxes (as defined in the Merger Agreement) that may be imposed on any Parent Indemnitee pursuant to a determination that the Principal Shareholder, at any time on or after the Effective Time, recognized any income in connection with the Merger, any transaction related to the Merger or any provision of the Merger Agreement, this Agreement or any other document referenced in the Merger Agreement. The indemnification obligations contained in this Section 1.2(b) will be determined without regard to the limitations contained in Sections 8.1 and 8.4 of the Merger Agreement. 1.3 THE ESCROW AGREEMENT. It is a condition to the obligations of the parties to the Merger Agreement to consummate the Merger that Parent and the Shareholder Representative enter into an Escrow Agreement (in the form attached as EXHIBIT A to the Merger Agreement) (the "Escrow Agreement") with U.S. Trust Company, N.A., as Escrow Agent ("Escrow Agent"). Under the Escrow Agreement, Escrow Agent will hold in escrow 60,000 shares of the Parent Common Stock to be issued in the Merger (the 2 3 "Escrowed Shares"), all in accordance with the terms and conditions of the Escrow Agreement. At the Effective Time, the Company's shareholders will be deemed to have received and deposited with Escrow Agent the Escrowed Shares, without any act of the Company's shareholders. 1.4 CERTAIN ADDITIONAL AGREEMENTS OF KRAMER. (a) PAYMENT OBLIGATION. In the event of any Termination (as defined below) of Kramer's employment on or before the second anniversary of the date of the Effective Time, Kramer agrees to pay to the Company, as liquidated damages for such breach and not as a penalty, a cash amount equal to $250,000. Kramer will pay such amount to the Company within ten days following such Termination. Kramer and Parent agree that, because there can be no exact measure of the damage that would occur to the Company as a result of the Termination, the payment provided pursuant to this Section 1.4 is an attempt to reasonably estimate such damages and will be deemed to constitute liquidated damages and not a penalty. Kramer hereby also acknowledges and agrees that his employment with the Company, Parent or any of their affiliates will at all times be an "at will" employment. (b) CERTAIN DEFINITIONS. For purposes of this Section 1.4: (i) "Termination" means (A) Kramer voluntarily ceases to be employed by the Company, Parent or any of their affiliates, for any reason other than Good Reason (as defined below), his death or Disability (as defined below), or (B) the Company, Parent or any of their affiliates terminates Kramer's employment for Cause (as defined below). (ii) "Good Reason" means (A) Kramer's annual base salary is reduced to an amount less than $130,000; (B) Kramer does not receive an annual performance review, at which his compensation is discussed, within 13 months of the date of the Effective Time; or (C) Kramer is asked to relocate for more than 90 days to an office that is more than 30 miles away from the Company's current office. (iii) "Disability" means a determination by Parent's Board of Directors, in its good faith reasonable discretion, that Kramer has become so physically or mentally disabled as to be incapable of substantially performing his duties to the Company, Parent or any of their affiliates for a period of at least 90 consecutive days. (iv) "Cause" means (A) Kramer refuses in bad faith to perform the duties required of him with the intent of provoking his firing; (B) Kramer commits acts of material dishonesty, fraud or misrepresentation perpetrated against the Company, Parent or any of their affiliates, or giving rise to liability of the Company, Parent or any of their affiliates for the acts of Kramer; (C) Kramer willfully breaches his obligations to 3 4 treat trade secrets and confidential data confidentially or not to compete with the Company, Parent or any of their affiliates during the term of his employment; (D) Kramer is convicted of a crime involving the Company, Parent or any of their affiliates or any of their customers, where the act or omission occurred after the date of the execution of this Agreement; or (E) Kramer is conviction for a felony or for fraud, embezzlement or any other act of moral turpitude. ARTICLE II APPOINTMENT OF THE SHAREHOLDER REPRESENTATIVE 2.1 APPOINTMENT OF THE SHAREHOLDER REPRESENTATIVE. (a) By signing this Agreement, each Principal Shareholder hereby designates and appoints James F. Kramer as the agent and representative (the "Shareholder Representative") of all of the Company's shareholders, for purposes of this Agreement, the Merger Agreement and the Escrow Agreement, and through whom all actions on behalf of the Company's shareholders relating to this Agreement, the Merger Agreement and the Escrow Agreement (including those actions as are required, authorized or contemplated by Article I with respect to indemnification and escrow) will be made or directed, and hereby acknowledges that the Shareholder Representative will be the only person authorized to take any action so required on behalf of the Company's shareholders. The Company's shareholders will be bound by any and all actions taken on their behalf by the Shareholder Representative. (b) By signing this Agreement, James F. Kramer hereby also accepts and acknowledges his appointment as the "Shareholder Representative" and agrees to perform the duties required of the Shareholder Representative under this Agreement, the Merger Agreement and the Escrow Agreement. 2.2 REPLACEMENT OF SHAREHOLDER REPRESENTATIVE. The appointment of the Shareholder Representative is irrevocable by the Company's shareholders, except that a successor to the Shareholder Representative may be appointed by a written instrument signed by a majority in percentage interest of the Company's shareholders as of immediately prior to the Effective Time. Upon such appointment of any such successor, such successor will immediately give written notice of his or her appointment to Parent and the Escrow Agent (along with a certified copy of the written instrument showing such successor's appointment) and thereafter (i) such successor will be deemed to be the Shareholder Representative for purposes of this Agreement, the Merger Agreement and the Escrow Agreement, and (ii) all of the terms, provisions and obligations of this Agreement, the Merger Agreement and the Escrow Agreement will automatically (without any action on the part of such successor or further notice to any party) be binding upon and inure to the benefit of such successor. The choice of a successor Shareholder Representa- 4 5 tive appointed in any manner permitted above is final and binding upon all of the Company's shareholders. 2.3 COMMUNICATIONS; NOTICES. Parent and the Escrow Agent are entitled to rely upon any communication or writings given or executed by the Shareholder Representative as binding all of the Company's shareholders and their successors, assigns, heirs, legal representatives, affiliates and spouses and will not be bound or put on notice by any communications from any Company shareholder or other person (other than the Shareholder Representative acting as such). All notices to be sent to the Company's shareholders or the Principal Shareholders pursuant to this Agreement, the Merger Agreement or the Escrow Agreement will be addressed to the Shareholder Representative. Any notice so sent will be deemed notice to all of the Company's shareholders or the Principal Shareholders, as the case may be. The Shareholders hereby consent and agree that the Shareholder Representative is authorized to accept notice on behalf of the Company's shareholders and the Principal Shareholders pursuant hereto. 2.4 AGENT FOR SERVICE OF PROCESS. Each Principal Shareholder hereby irrevocably appoints the Shareholder Representative as the lawful agent of such Principal Shareholder and his successors, assigns, heirs, legal representatives, affiliates and spouse to receive and forward on their behalf service of all necessary processes in any action, suit, or proceeding arising under or in any way relating to this Agreement, the Merger Agreement, the Escrow Agreement or any related document, any of the transactions contemplated hereby or thereby or any of the subject matter hereof and that may be brought against any Principal Shareholder or his successors, assigns, heirs, legal representatives, affiliates or spouse in any court. Such service of process or notice received by the Shareholder Representative will have the same force and effect as if served upon the Principal Shareholders or their respective successors, assigns, heirs, legal representative, affiliates or spouses. 2.5 POWER OF ATTORNEY. Each Principal Shareholder hereby appoints and constitutes the Shareholder Representative the true and lawful attorney-in-fact of such Principal Shareholder and his successors, assigns, heirs, legal representatives, affiliates or spouse, with full power in such Principal Shareholder's (or successors', assigns', heirs', legal representatives', affiliates' or spouse's) name and on the Principal Shareholder's (or the successors', assigns', heirs', legal representatives', affiliates' or spouse's) behalf to act according to the terms of this Agreement, the Merger Agreement and the Escrow Agreement in the absolute discretion of the Shareholder Representative, and in general to do all things and to perform all acts, including executing and delivering the Escrow Agreement and all other agreements, certificates, receipts, instructions and other instruments contemplated by or deemed advisable in connection with this Agreement, the Merger Agreement or the Escrow Agreement. This power of attorney and all authority hereby conferred is granted subject to the interest of the other Principal Shareholder hereunder and in consideration of the mutual covenants and agreements made herein, and 5 6 is irrevocable and will not be terminated by any act of any Principal Shareholder or by operation of law, whether by death or any other event. 2.6 LIMITATION ON THE SHAREHOLDER REPRESENTATIVE'S LIABILITY. The Shareholder Representative will not be liable to the Principal Shareholders for any action taken, suffered or omitted by the Shareholder Representative in good faith and reasonably believed by the Shareholder Representative to be authorized or within the discretion of the rights or powers conferred upon the Shareholder Representative by this Agreement, the Merger Agreement or the Escrow Agreement, except to the extent of the Shareholder Representative's own gross negligence, recklessness or willful misconduct. The Shareholder Representative may consult with competent and responsible legal counsel selected by him, and he will not be liable for any action taken or omitted by him in good faith in accordance with the advice of such counsel. 2.7 COSTS AND EXPENSES OF THE SHAREHOLDER REPRESENTATIVE. The Principal Shareholders will bear all expenses incurred by the Shareholder Representative in connection with his duties hereunder and will indemnify him against and save him harmless from any and all claims, liabilities, costs, payments and expenses, including fees of counsel (who may be selected by the Shareholder Representative), for anything done by him in the performance of this Agreement, the Merger Agreement or the Escrow Agreement, except as a result of his own gross negligence, recklessness or willful misconduct. ARTICLE III MISCELLANEOUS 3.1 TAX CONSEQUENCES TO THE PRINCIPAL SHAREHOLDERS, ETC. Each Principal Shareholder hereby acknowledges and agrees that Parent, Merger Sub and the Company have not given the Principal Shareholder any tax advice in connection with the Merger or otherwise, and have no responsibility for any tax consequences to the Principal Shareholder arising from or related to the Merger or otherwise. Each Principal Shareholder further acknowledges and agrees that he has had an opportunity to consult with his personal tax advisors as to the actual tax consequences to him arising from or related to the Merger or otherwise. 3.2 SURVIVAL. The representations, warranties, covenants and agreements of the parties contained in or made pursuant to this Agreement will survive the consummation of the transactions contemplated by this Agreement and will in no way be affected by any investigation of the subject matter thereof made by or on behalf of the parties. 3.3 NOTICES. Any notices, consents, waivers or other communications required or permitted under this Agreement will be given in writing and will be deemed to have been duly given when delivered personally, or if delivered in another manner, the earlier of when it is actually received by the party to whom it is directed, or when the following 6 7 period expires (whether or not it is actually received): (i) if transmitted by telecopier, 24 hours following transmission to the party's telecopier number set forth below, with the party's name and address clearly shown on the first page and confirmation of transmission produced by the transmitting party's equipment, (ii) if deposited in the mail, postage prepaid, and addressed to the party to receive it as set forth below, 72 hours following such deposit, or (iii) if accepted by Federal Express, or similar delivery service in general usage, for delivery to the address of the party to receive it as set forth below, 24 hours following the delivery time promised by the delivery service; provided that, if any such transmission, mailing or express delivery is made on a day immediately preceding a Saturday, Sunday or national holiday, then the subject transmission, mailing or express delivery, as the case may be, will be deemed to be made at the beginning of the next succeeding day that is not a Saturday, Sunday or national holiday: If to the Principal Shareholders, the Shareholder Representative or Kramer: Confidential James F. Kramer, Shareholder Representative c/o Virtual Technologies, Inc. 2175 Park Boulevard Palo Alto, California 94306 Telecopier no.: (650) 321-4912 With a copy to: Lloyd A. Schmidt, Esq. Hopkins & Carley 70 South First Street San Jose, California 95113 Telecopier no.: (408) 998-4790 If to Parent or Parent Indemnitees: Immersion Corporation 801 Fox Lane San Jose, California 95131 Attention: Louis Rosenberg, Chief Executive Officer Telecopier no.: (408) 467-1901 With a copy to: Sarah A. O'Dowd, Esq. Heller Ehrman White & McAuliffe LLP 525 University Avenue Palo Alto, California 94301 Telecopier no.: (650) 324-0638 7 8 or to such other address or telecopier number as the party to whom notice is to be given has furnished to the other party in the manner provided above, provided that notice of such change has actually been received by the party to whom it is directed. 3.4 AMENDMENT. This Agreement may not be amended, modified, supplemented, cancelled or discharged except in a writing signed by Parent and a majority in percentage interest of the Principal Shareholders as of immediately prior to the Effective Time. 3.5 HEADINGS. The Article, Section and subsection headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. 3.6 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, Parent and the Shareholder Representative will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. 3.7 GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the internal laws of the State of California applicable to contracts executed and fully performed within the State of California, without regard to any principles of conflicts or choice of laws. 3.8 INTERPRETATION; RULES OF CONSTRUCTION. This Agreement has been negotiated and is to be interpreted according to its fair meaning and not strictly for or against any party. The parties waive any rule of law or judicial precedent that provides that contractual ambiguities are to be construed against the party who drafted the contractual provision in question. All references in this Agreement to "parties" refer to the parties to this Agreement unless expressly indicated otherwise. References in this Agreement to Sections or subsections are to Sections and subsections of this Agreement unless expressly indicated otherwise. At each place in this Agreement where the context so requires, the masculine, feminine or neuter gender includes the others and the singular or plural number includes the other. "Including" means "including without limitation" and "or" is used in the inclusive sense of "and/or." 3.9 ENTIRE AGREEMENT. This Agreement, and the Merger Agreement and the Escrow Agreement, which are hereby incorporated into this Agreement by this reference 8 9 and are made a part hereof, together with all other agreements and documents executed and delivered concurrently herewith or therewith, constitute the entire understanding and agreement between the parties with regard to the subject matter hereof, and supersede all prior agreements, understandings, negotiations, representations and discussions, whether written or oral, pertaining to that subject matter, which will continue in full force and effect. 3.10 WAIVER. Either Parent or the Shareholder Representative (on his behalf and behalf of the Principal Shareholders) may extend the time for the performance of any of the obligations or other acts of the other party or waive compliance with any of the agreements of the other party. No waiver of any breach or default hereunder will be considered valid unless in writing and signed by the party (either Parent or the Shareholder Representative) giving such waiver, and no such waiver will be deemed a waiver of any subsequent breach or default of the same or similar nature. 3.11 PARTIES IN INTEREST. Except for the Parent Indemnitees, who are third party beneficiaries of this Agreement, nothing in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the parties any rights or remedies under or by reason of this Agreement. 3.12 SUCCESSORS AND ASSIGNS. This Agreement inures to the benefit of and is binding upon the successors and assigns of the parties. Notwithstanding the foregoing, except as set forth in Section 2.2, neither this Agreement nor any rights or obligations hereunder may be assigned, pledged, hypothecated or otherwise transferred by the Shareholder Representative or the Principal Shareholders without the prior written consent of Parent, which consent may be withheld in the sole discretion of Parent. 3.13 ENFORCEMENT. Each Principal Shareholder acknowledges that, in view of the uniqueness of the subject matter of this Agreement, Parent may not have an adequate remedy at law for money damages if this Agreement is not performed in accordance with its terms. Accordingly, each Principal Shareholder agrees that, in addition to any other right or remedy to which Parent may be entitled, at law or in equity, it will be entitled to enforce this Agreement by a decree of specific performance against the Principal Shareholder and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of this Agreement, without posting any bond or other undertaking. 3.14 ATTORNEYS' FEES. The prevailing party will be entitled to recover all costs and expenses, including reasonable attorneys' fees, expert witness fees, court costs and all other costs and expenses incurred in any action or proceeding arising out of this Agreement or as to any matters related to but not covered by this Agreement. "Prevailing party" for purposes of this Section 3.14 includes a party who agrees to dismiss an action or proceeding upon the other's payment of the sums allegedly due or for performance of 9 10 the covenants, undertakings or agreements allegedly breached, or who obtains substantially the relief it sought. 3.15 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by telecopier transmission will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original for all purposes. Signatures of the parties transmitted by telecopier will be deemed to be their original signatures for any purpose whatsoever. 3.16 CONSENT TO JURISDICTION. Each of the parties hereto (i) consents to submit himself, herself or itself to the personal jurisdiction of the United States District Court for the Northern District of California or the courts of the State of California located in the County of Santa Clara with respect to any and all disputes arising out of (A) this Agreement, the Merger Agreement or the Escrow Agreement, including the validity construction and interpretation hereof and thereof and the rights and remedies of the parties hereunder and thereunder; (B) any of the transactions contemplated by this Agreement, the Merger Agreement and the Escrow Agreement; and (C) any matters related to but not covered hereby or thereby, in each case to the extent such court would have subject matter jurisdiction with respect to such dispute; (ii) agrees that he, she or it will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any such court; and (iii) agrees that nothing herein will affect the right to effect service of process in any manner permitted by law. 3.17 SPOUSAL CONSENTS. Each Principal Shareholder who is married is delivering to Parent, concurrently with the Principal Shareholder's execution and delivery of this Agreement, a duly executed and delivered Spousal Consent in the form attached as ANNEX C to this Agreement. 3.18 NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in this Agreement or otherwise will confer upon the Principal Shareholders any right to continued employment by the Company, Parent or any of their affiliates, nor shall it interfere in any way with the right of the Company, Parent or such affiliate to terminate or change the terms of the Principal Shareholder's employment arrangement, or to change the compensation of the Principal Shareholders, at any time for any reason whatsoever, with or without cause. 3.19 HOLIDAYS. If any date on which action is to be taken under this Agreement occurs, or if any period during which action is to be taken under this Agreement ends, on a Saturday, Sunday or national holiday, the date or period will be extended to the next succeeding day which is not a Saturday, Sunday or national holiday. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 10 11 IN WITNESS WHEREOF, the parties have caused this Indemnification and Joinder Agreement to be duly executed as of the date first above written. IMMERSION CORPORATION By /s/ Louis Rosenberg -------------------------------------- Its: President ------------------------------- /s/ James F. Kramer ----------------------------------------- James F. Kramer, individually and as the Shareholder Representative /s/ Marc Tremblay ----------------------------------------- Marc Tremblay 11 EX-2.3 3 f65624kex2-3.txt EXHIBIT 2.3 1 EXHIBIT 2.3 ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of August 31, 2000, by and among Immersion Corporation, a Delaware corporation ("Parent"), James F. Kramer, as the Shareholder Representative (the "Shareholder Representative"), and U.S. Trust Company, National Association, as Escrow Agent ("Escrow Agent"), with reference to the following facts: A. Parent, Parent's wholly owned subsidiary, VT Acquisition, Inc. ("Merger Sub"), Virtual Technologies, Inc., a California corporation (the "Company") and the Shareholder Representative are parties to an Agreement and Plan of Merger dated as of July 28, 2000 (the "Merger Agreement"), pursuant to which, among other things, Merger Sub will be merged (the "Merger") with and into the Company, which will be the surviving corporation in the Merger (the "Surviving Corporation"), and the Company's shareholders (the "Shareholders") will be entitled to receive shares of Parent's common stock, $0.001 par value per share ("Parent Common Stock"), all in accordance with the terms, and subject to the conditions, of the Merger Agreement. B. Under the Merger Agreement, Parent is be indemnified for Losses (as defined in the Merger Agreement), in accordance with the terms and conditions of the Merger Agreement. C. James F. Kramer and Marc Tremblay, the two principal shareholders of the Company (the "Principal Shareholders"), and Parent are parties to an Indemnification and Joinder Agreement dated as of July 28, 2000 (the "Indemnification and Joinder Agreement"), pursuant to which, among other things, the Principal Shareholders have also agreed to indemnify Parent for Losses and have accepted the terms and conditions of the Merger Agreement and this Agreement. D. The parties are entering into this Agreement to establish an escrow to facilitate the ability of Parent to recover amounts to which it would be entitled as a result of the Merger Agreement and the Indemnification and Joinder Agreement. ACCORDINGLY, in consideration of the foregoing, and intending to be legally bound hereby, each of the parties hereby agrees as follows: 1. ESTABLISHMENT OF ESCROW FUND. Escrow Agent is hereby appointed depository and agent for Parent and the Shareholder Representative, on behalf of the Shareholders, with respect to an aggregate of 60,000 shares of Parent Common Stock, to be deposited with Escrow Agent plus any stock dividends, stock distribution, stock splits, 2 recapitalizations and the like made in respect thereof (collectively, the "Escrowed Shares"). Parent will deliver to Escrow Agent a certificate or certificates representing the Escrowed Shares, and Escrow Agent will acknowledge receipt of such certificate(s) by executing the Receipt for Escrowed Shares attached as ANNEX A to this Agreement (as increased by any stock dividends, stock distributions, stock splits, recapitalizations and the like with respect to the Escrowed Shares and as reduced by any disbursements made under Sections 3, 4 and 6, this fund is referred to as the "Escrow Fund"). Any shares of Parent's common stock, or other securities which, by their terms, are or may be exercisable, convertible or exchangeable for or into Parent's Common Stock that are issued or distributed by Parent ("New Shares") in respect of the Escrowed Shares will be added to the Escrow Fund; provided, however, that any New Shares issued in respect of any Escrowed Shares, that prior to the time of such issuance have been released from the Escrow Fund in accordance with the terms of this Agreement, will not be added to the Escrow Fund, but will instead be distributed by Parent to the record holders entitled thereto. Escrow Agent hereby accepts such appointment and agrees to hold the Escrow Fund pursuant to the terms and conditions of this Agreement. 2. NOTICE OF CLAIMS. Pursuant to the Merger Agreement and the Indemnification and Joinder Agreement, Parent is entitled to make claims for indemnification to be paid from the Escrow Fund for Losses incurred, or anticipated to be incurred, by Parent or Parent Indemnitees (as defined in the Merger Agreement). If Parent asserts any claim for indemnification against the Escrow Fund, it will deliver to Escrow Agent and the Shareholder Representative a written notice thereof (a "Notice of Claim") setting forth (i) a demand for payment of a specified amount from the Escrow Fund and the basis of calculation of such amount or, if such amount cannot be specified, the basis upon which the amount would be determined and the amount of the Escrow Fund that should be held as security for such claim pending determination of the actual amount of the claim (a "Security Reserve"), and (ii) a description of the asserted claim and the basis thereof. 3. PAYMENT OF CLAIMS. (a) If the Shareholder Representative gives notice to Parent and Escrow Agent disputing any claim (a "Counter Notice") in its entirety within 30 days following receipt by Escrow Agent of the Notice of Claim regarding such claim, then such claim will be resolved as provided in Section 3(c). (b) If the Shareholder Representative gives notice to Parent and Escrow Agent accepting all or any part of any claim within 30 days following receipt by Escrow Agent of the Notice of Claim regarding such claim, then (i) the dollar amount of Losses specified by Parent in its Notice of Claim, that are agreed to by the Shareholder Representative in such written notice to Parent and Escrow Agent, will be deemed established for purposes of this Escrow Agreement, the Merger Agreement and the Indemnification and 3 Joinder Agreement, and the Escrow Agent will pay Parent the amount so agreed to from the Escrow Fund, and (ii) any disputed portion of such claim will be resolved as provided in Section 3(c). If no Counter Notice is received by Escrow Agent within 30 days following receipt by the Escrow Agent of the Notice of Claim regarding such claim, then the dollar amount of Losses specified by Parent in its Notice of Claim will be deemed established for purposes of this Escrow Agreement, the Merger Agreement and the Indemnification and Joinder Agreement and, at the end of such 30-day period, Escrow Agent will pay to Parent the amount claimed in the Notice of Claim from the Escrow Fund. In order to so pay Parent, Escrow Agent will return to Parent that number of shares of Parent Common Stock equal in Value (as defined below) to the amount claimed in the Notice of Claim. For purposes of this Agreement, (i) the "Value" of a share of Parent Common Stock will be equal to the average of the closing sale prices of a share of Parent Common Stock on the Nasdaq Stock Market for the five trading days immediately preceding the Effective Time (as defined below) and (ii) the "Effective Time" will be the effective time of the Merger (i.e., the time of the filing of an applicable agreement of merger with the California Secretary of State). Escrow Agent will not inquire or be required to inquire into or consider whether a claim complies with the requirements of, or inquire into or consider any of the other terms and conditions of, the Merger Agreement, the Indemnification and Joinder Agreement or any other agreement entered into in connection therewith. (c) If the Shareholder Representative gives a Counter Notice with respect to a claim within the time specified in Section 3(a), Escrow Agent will make payment with respect thereto only in accordance with (i) joint written instructions of Parent and the Shareholder Representative, or (ii) a final non-appealable order of a court of competent jurisdiction. Any court order will be accompanied by a legal opinion by counsel for the presenting party reasonably satisfactory to Escrow Agent to the effect that the order is final and non-appealable. Escrow Agent will act on such court order and legal opinion without further question. (d) If Parent delivers a Notice of Claim pursuant to Section 2 for a Security Reserve, Escrow Agent will hold the Security Reserve until Parent gives Escrow Agent and the Shareholder Representative notice of the actual amount of the claim underlying the Security Reserve, at which time the claim will be resolved as contemplated by Sections 3(b) and 3(c); provided, that before such notice and resolution, the Security Reserve may be extinguished or reduced, if at all, only in accordance with joint written instructions of Parent and the Shareholder Representative. 4. RELEASE OF ESCROWED SHARES AND OTHER PAYMENTS BY ESCROW AGENT; TERMINATION. 4 (a) On the first anniversary of the Effective Time, if no claims (including Security Reserves) are then pending, Escrow Agent will release to the Shareholder Representative that number of Escrowed Shares equal to the difference between 30,000 less the number of Escrowed Shares previously paid to Parent pursuant to Sections 3(b) and 3(c). (b) On the second anniversary of the Effective Time, Escrow Agent will release to the Shareholder Representative an amount equal to the then remaining Escrowed Shares, if any, less that number of Escrowed Shares equal to the total of all claims (including Security Reserves) that have not been both (i) resolved as provided in Sections 3(b) and 3(c), and (ii) paid to Parent, based upon the Value of the Parent Common Stock. Thereafter, upon the final resolution of each claim, on a claim-by-claim basis, for which Escrow Agent has received a Notice of Claim on or prior to such date or the extinguishment or reduction of a Security Reserve as provided in Section 3(d), Escrow Agent will distribute to Parent the amount, if any, that it is entitled to receive pursuant to Sections 3(b) or 3(c), and to the Shareholder Representative the balance, less that number of Escrowed Shares equal to the total of all claims (including Security Reserves) that have not been both (i) resolved as provided in Sections 3(b) and 3(c), and (ii) paid to Parent, based upon the Value of the Parent Common Stock. (c) In the event that Parent and the Shareholder Representative agree that the Principal Shareholders have collectively satisfied claims in an amount equal to the maximum liability of the Principal Shareholders under the Indemnification and Joinder Agreement, Parent and the Shareholder Representative will issue joint written instructions to Escrow Agent, who will then immediately release the Escrowed Shares attributable to the Principal Shareholders to the Shareholder Representative on behalf of the Principal Shareholders (and the Shareholder Representative will distribute such shares to the Principal Shareholders entitled thereto). (d) This Agreement will terminate and Escrow Agent will have no further responsibilities hereunder once the Escrow Fund has been distributed by Escrow Agent and its fees and expenses have been paid. (e) Any cash dividends declared and paid by Parent on the Escrowed Shares will be delivered to Escrow Agent as the record holder of the Escrowed Shares. As soon as reasonably practicable after such receipt, Escrow Agent will pay such dividends to the Shareholder Representative on behalf of the Shareholders (and the Shareholder Representative will distribute such dividends to the Shareholders entitled thereto). At anytime, during which Escrowed Shares are being held in escrow, that the stockholders of Parent are entitled to vote on any matter, Escrow Agent will vote such share as instructed in writing by the Shareholder Representative as agent for the Shareholders. 5 (f) If at any time, Escrow Agent must deliver less than all the Escrowed Shares to Parent under this Agreement and Escrow Agent does not have certificates evidencing such number of shares, Parent agrees that upon delivery by Escrow Agent of certificates evidencing a larger number of Escrowed Shares, duly endorsed for transfer, Parent will subtract the appropriate number of shares from the number of shares evidenced by the delivered stock certificates, issue new certificates for the difference and return the new certificates to Escrow Agent. 5. ESCROW AGENT RESPONSIBILITIES. (a) Escrow Agent will hold and safeguard the Escrow Fund during the Escrow Period, will treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement, and not as the property of the Parent, the Surviving Corporation, the Shareholder Representative or any Shareholder, and will hold and dispose of the Escrow Fund only in accordance with the terms of this Agreement. (b) Escrow Agent may act upon any instrument or other writing believed by Escrow Agent in good faith to be genuine and to have been signed (with an original signature or signature by facsimile transmission) and presented by the proper person (including the signature of any person purporting to be an officer or authorized representative of a corporate party) and will not be liable to any party hereto in connection with the performance of Escrow Agent's duties hereunder, except for Escrow Agent's own breach, gross negligence or willful misconduct. Escrow Agent will not incur any liability for following the instructions herein contained or expressly provided for, or written instructions given by the parties hereto in accordance with this Agreement. Escrow Agent's duties will be determined only with reference to this Agreement and applicable laws, and Escrow Agent is not charged with knowledge of, or any duties or responsibilities in connection with, any other document or agreement. If in doubt as to its duties and responsibilities hereunder, Escrow Agent may consult with counsel of its choice and will be protected in any action taken or omitted in connection with the reasonable advice or opinion of such counsel. (c) In the event that Escrow Agent is uncertain as to its duties or rights hereunder or receives instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement, it will be entitled to refrain from taking any action and its sole obligation will be to keep safely all property held in escrow until it is directed otherwise in writing by joint written instructions, or an order and legal opinion as referred to in Section 3(c). (d) Escrow Agent is to act as a depository agent only and is hereby relieved of any liability in connection with any representations, promises or agreements 6 made by the other parties to this Agreement. Escrow Agent is not be responsible for and is not under a duty to examine any other agreement or to determine if parties have performed under any other agreement. (e) Escrow Agent will send to the Shareholder Representative and Parent, statements detailing receipts, disbursements and balances of the Escrow Fund on a calendar quarterly basis. (f) In the event that the Escrow Fund includes any cash, Escrow Agent will invest and reinvest the Escrow Fund as instructed by the Shareholder Representative in short-term U.S. Treasury Bills and Notes or other direct obligations of the United States. Income from any such investment will be held by Escrow Agent and will be reinvested in accordance with this Section 5(f). Escrow Agent will have the right to liquidate any investments held, in order to provide funds necessary to make required payments under this Agreement. Escrow Agent in its capacity as escrow agent hereunder will not have any liability for any loss sustained as a result of any investment made pursuant to the instructions of the Shareholder Representative that comply with this Section 5(f) or as a result of any liquidation of any investment prior to its maturity or for the failure of the Shareholder Representative to give Escrow Agent instructions to invest or reinvest the Escrow Fund or any earnings thereon except to the extent arising from Escrow Agent's breach, gross negligence or willful misconduct. 6. INDEMNIFICATION AND FEES. (a) In consideration of Escrow Agent's acceptance of this Agreement, (i) Parent will indemnify and hold Escrow Agent harmless as to any liability incurred by Escrow Agent to Parent (or any of Parent's successors, assigns or affiliates) in carrying out any of the terms of this Agreement, and will reimburse Escrow Agent for all out-of-pocket expenses related solely thereto, including reasonable attorneys' fees and court costs, incurred by reason of its position under this Agreement or actions taken pursuant to this Agreement, (ii) the Shareholder Representative will indemnify and hold Escrow Agent harmless as to any liability incurred by Escrow Agent to any shareholder of the Company (or any of such shareholders' successors, assigns, heirs, legal representatives, affiliates or spouses) by reason of accepting the same or in carrying out any of the terms of this Agreement, and will reimburse Escrow Agent for all out-of-pocket expenses, including reasonable attorneys' fees and court costs, incurred by reason of its position under this Agreement or actions taken pursuant to this Agreement, and (iii) Parent and the Shareholder Representative will jointly and severally indemnify and hold Escrow Agent harmless as to any liability incurred by Escrow Agent to any other person by reason of accepting the same or in carrying out any of the terms of this Agreement (including any liability for taxes or any penalties or interest related thereto related to any cash dividends or other income paid from the Escrow Fund in accordance with this Agreement), and will 7 each reimburse Escrow Agent for all reasonable out-of-pocket expenses, including reasonable attorneys' fees and court costs, incurred by reason of its position under this Agreement or actions taken pursuant to this Agreement; provided, however, in no event will Parent or the Shareholder Representative indemnify or hold Escrow Agent harmless as to any liability incurred, or reimburse it for any out-of-pocket expenses, under this Section 6(a) for the Escrow Agent's breach, gross negligence or willful misconduct. In the event that Parent and the Shareholder Representative are required to pay any amount to Escrow Agent under clause (iii) of the immediately preceding sentence, then (A) Parent and the Shareholder Representative will each pay 50% of any such amount owed to Escrow Agent, and (B) Parent and the Shareholder Representative will each indemnify and hold the other harmless for any amount paid by either of them, to Escrow Agent pursuant to such clause (iii), to the extent such payment exceeds 50% of the total amount owed to Escrow Agent pursuant to such clause (iii). The parties hereto acknowledge that the foregoing indemnities will survive the resignation or removal of Escrow Agent or the termination of this Agreement. The fees and charges set forth below for Escrow Agent's services will be considered compensation for its ordinary services as contemplated by this Agreement. If Escrow Agent renders any service not provided for in this Agreement or there is any assignment of any interest in the subject matter of this escrow or modification of any interest or if any controversy arises in connection with it, Escrow Agent will be reasonably compensated for such extraordinary services, and will be reimbursed for all reasonable costs, attorneys' fees and expenses occasioned thereby, which compensation, costs, fees and expenses will be payable to Escrow Agent by Parent and the Shareholder Representative. (b) Escrow Agent will receive fees and expenses for its services hereunder in accordance with ANNEX B to this Agreement. All such fees and expenses will be paid by Parent. Escrow Agent's initial fees, as shown on such ANNEX B, will be paid by Parent on or prior to the Effective Time. 7. CERTAIN TAX RELATED MATTERS. The parties agree that, for tax reporting purposes, any cash dividends payable by Escrow Agent to the Shareholder Representative under Section 4(e) or any other income earned on the Escrow Fund will be allocated among the Shareholders in proportion to their beneficial interests therein. If any cash dividends or other income is to be paid by Escrow Agent in accordance with this Agreement, such payment will be subject to backup withholding unless the Shareholder Representative provides the Escrow Agent with either (i) a schedule of certified taxpayer identification numbers and addresses for each of the Shareholders or (ii) a certified Internal Revenue Service Form W-8 or W-9 (as applicable) for each of the Shareholders. If required to do so, Escrow Agent will timely file with the Internal Revenue Service any applicable Forms 1099 following the relevant tax year for any payment of cash dividends or other income that it makes in accordance with this Agreement. 8 8. NOTICES. Any notices, consents, waivers or other communications required or permitted under this Agreement will be given in writing and will be deemed to have been duly given when delivered personally, or if delivered in another manner, the earlier of when it is actually received by the party to whom it is directed, or when the following period expires (whether or not it is actually received) (i) if transmitted by telecopier, 24 hours following transmission to the party's telecopier number set forth below, with the party's name and address clearly shown on the first page and confirmation of transmission produced by the transmitting party's equipment; (ii) if deposited in the mail, postage prepaid, and addressed to the party to receive it as set forth below, 72 hours following such deposit,; or (iii) if accepted by Federal Express, or similar delivery service in general usage, for delivery to the address of the party to receive it as set forth below, 24 hours following the delivery time promised by the delivery service; provided that, if any such transmission, mailing or express delivery is made on a day immediately preceding a Saturday, Sunday or national holiday, then the subject transmission, mailing or express delivery, as the case may be, will be deemed to be made at the beginning of the next succeeding day that is not a Saturday, Sunday or national holiday: If to Parent: Immersion Corporation 801 Fox Lane San Jose, California 95131 Attention: Louis Rosenberg, Chief Executive Officer Telecopier no.: (408) 467-1901 With a copy to: Sarah A. O'Dowd, Esq. Heller Ehrman White & McAuliffe LLP 525 University Avenue Palo Alto, California 94301 Telecopier no.: (650) 324-0638 If to the Shareholder Representative: Confidential James F. Kramer, Shareholder Representative c/o Virtual Technologies, Inc. 2175 Park Boulevard Palo Alto, California 94306 Telecopier no.: (650) 321-4912 9 With a copy to: Lloyd A. Schmidt, Esq. Hopkins & Carley 70 South First Street San Jose, California 95113 Telecopier no.: (408) 998-4790 If to Escrow Agent: U.S. Trust Company, National Association 515 South Flower Street, Suite 2700 Los Angeles, California 90071 Attention: Corporate Trust Department Telecopier no.: (213) 488-1370 or to such other address or telecopier number as the party to whom notice is to be given has furnished to the other party in the manner provided above, provided that notice of such change has actually been received by the party to whom it is directed. 9. RESIGNATION. Escrow Agent may resign and be discharged from its duties hereunder at any time by giving not less than 60 days prior written notice of such resignation to Parent and the Shareholder Representative, which notice will specify the date when such resignation will take effect. Upon such notice, Parent and the Shareholder Representative will appoint a successor escrow agent. Escrow Agent will continue to serve until its successor delivers to Parent and the Shareholder Representative a duly executed instrument of acceptance of the terms and conditions of this Agreement and receives the Escrow Fund, at which time Escrow Agent will have no further duties or responsibilities hereunder. 10. MISCELLANEOUS. (a) AMENDMENT. This Agreement may not be amended, modified, supplemented, cancelled or discharged except in a writing signed by Parent, the Shareholder Representative and Escrow Agent. (b) HEADINGS. The Section and subsection headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. (c) SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and 10 effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, Parent, the Shareholder Representative and Escrow Agent will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. (d) GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the internal laws of the State of California applicable to contracts executed and fully performed within the State of California, without regard to any principles of conflicts or choice of laws. (e) INTERPRETATION; RULES OF CONSTRUCTION. This Agreement has been negotiated and is to be interpreted according to its fair meaning and not strictly for or against any party. The parties waive any rule of law or judicial precedent that provides that contractual ambiguities are to be construed against the party who drafted the contractual provision in question. All references in this Agreement to "parties" refer to the parties to this Agreement unless expressly indicated otherwise. References in this Agreement to Sections or subsections are to Sections and subsections of this Agreement unless expressly indicated otherwise. At each place in this Agreement where the context so requires, the masculine, feminine or neuter gender includes the others and the singular or plural number includes the other. "Including" means "including without limitation" and "or" is used in the inclusive sense of "and/or." (f) WAIVER. Either Parent or the Shareholder Representative (on his behalf and behalf of the shareholders of the Company) may extend the time for the performance of any of the obligations or other acts of the other party or waive compliance with any of the agreements of the other party. No waiver of any breach or default hereunder will be considered valid unless in writing and signed by the party (either Parent or the Shareholder Representative) giving such waiver, and no such waiver will be deemed a waiver of any subsequent breach or default of the same or similar nature. (g) PARTIES IN INTEREST. Nothing in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the parties any rights or remedies under or by reason of this Agreement. (h) SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of and be binding upon the successors and assigns of the parties. Notwithstanding the foregoing, neither this Agreement nor any rights or obligations hereunder may be assigned, pledged, hypothecated or otherwise transferred by the Shareholder Representative or 11 Escrow Agent without the prior written consent of Parent, which consent may be withheld in the sole discretion of Parent. (i) COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by telecopier transmission will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original for all purposes. Signatures of the parties transmitted by telecopier will be deemed to be their original signatures for any purpose whatsoever. (j) CONSENT TO JURISDICTION. Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the United States District Court for the Northern District of California or the courts of the State of California located in the County of Santa Clara with respect to any and all disputes arising out of (A) this Agreement, including the validity construction and interpretation hereof and thereof and the rights and remedies of the parties hereunder and thereunder; (B) any of the transactions contemplated by this Agreement; and (C) any matters related to but not covered hereby or thereby, in each case to the extent such court would have subject matter jurisdiction with respect to such dispute; (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction or venue by motion or other request for leave from any such court; and (iii) agrees that nothing herein will affect the right to effect service of process in any manner permitted by law. (k) HOLIDAYS. If any date on which action is to be taken under this Agreement occurs, or if any period during which action is to be taken under this Agreement ends, on a Saturday, Sunday or national holiday, the date or period will be extended to the next succeeding day which is not a Saturday, Sunday or national holiday. [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 12 IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed as of the date first above written. PARENT: IMMERSION CORPORATION By /s/ Louis Rosenberg -------------------------------------- Its: President ------------------------------- SHAREHOLDER REPRESENTATIVE: /s/ James F. Kramer ----------------------------------------- James F. Kramer ESCROW AGENT: U.S. TRUST COMPANY, NATIONAL ASSOCIATION By /s/ M. Deborah Gibbons -------------------------------------- Its: V.P. ------------------------------- EX-2.4 4 f65624kex2-4.txt EXHIBIT 2.4 1 EXHIBIT 2.4 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of August 31, 2000, by and among Immersion Corporation, a Delaware corporation (the "Company") and the persons listed on Annex A attached hereto who become signatories to this Agreement (the "Shareholders"). WHEREAS, the Company, the Company's wholly owned subsidiary, VT Acquisition, Inc. ("Merger Sub"), and Virtual Technologies, Inc., a California corporation ("VTi") have entered into an Agreement and Plan of Merger, dated as of July 28, 2000 (the "Merger Agreement"), pursuant to which, among other things, Merger Sub is being merged into VTi (the "Merger"), and the Shareholders are entitled to receive shares of common stock of the Company, all in accordance with the terms, and subject to the conditions, of the Merger Agreement. WHEREAS, in order to induce VTi to consummate the Merger Agreement, the Company desires to provide the Shareholders with the rights set forth in this Agreement with respect to all of the shares of Common Stock of the Company to be acquired by the Shareholders by virtue of the Merger other than the shares to be escrowed (the "Escrowed Shares") under the Merger Agreement. NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties hereby agree as follows: 1. Registration Rights. 1.1. Definitions. The following terms have the following respective meanings: (a) "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same are in effect at the time. (b) "Holder" or "Holders" means any person or persons to whom Registrable Securities were originally issued or qualifying transferee(s) under Section 1.10 who hold Registrable Securities. (c) "Initiating Holders" means Holders who in the aggregate hold at least 50% of the outstanding Registrable Securities and who elect to exercise demand registration under Section 1.3. (d) "Register," "registered" and "registration" refers to a registration effected by preparing and filing a registration statement on Form S-1, S-2 or S-3 in 2 compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. (e) "Registrable Securities" means (i) all of the shares (collectively, the "Shares") of the Common Stock of the Company which the Shareholders have a right to receive, as of the Effective Time, by virtue of the Merger other than the Escrowed Shares, in such individual proportions as are listed on Annex A attached hereto; and (ii) any shares of Common Stock issued in respect of the Shares as a result of a stock split, stock dividend or similar distribution with respect to the Shares; provided, however, that such securities (referred to in clauses (i) and (ii) immediately above) will cease to be Registrable Securities when (A) a registration statement with respect to the sale of such securities has become effective under the Securities Act and such securities have been disposed of in accordance with such registration statement, (B) such securities have been sold to the public pursuant to Rule 144 under the Securities Act, (C) such securities have been sold, transferred or otherwise disposed of in violation of this Agreement, or (D) the registration rights granted under this Agreement have terminated whether pursuant to Section 1.12 or otherwise. (f) "SEC" means the Securities and Exchange Commission. (g) "Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same are in effect at the time. 1.2. Company Registration. (a) Participation in Company Registration. Subject to the terms and conditions of this Agreement, if the Company determines to register any of its securities for its own account or the account of a security holder (other than a Holder) exercising demand registration rights (other than a registration relating to employee stock option or purchase plans, or a registration on SEC Form S-4 relating to an SEC Rule 145 transaction, or a registration on any form other than SEC Forms S-1, S-2 or S-3), the Company will: (i) Promptly give to each Holder written notice thereof; and (ii) Include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company, by any Holder or Holders, except as set forth in Section 1.2(b). 2 3 (b) Underwriting. (i) If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company will so advise the Holders as a part of the written notice given pursuant to Section 1.2(a)(i). In such event, the right of any Holder to participate in such registration pursuant to this Section 1.2 is conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting will (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriters selected for such underwriting by the Company. (ii) Notwithstanding any other provision of this Section 1.2 to the contrary, the underwriters may limit the number of outstanding securities of the Company held by shareholders having contractual rights to registration, including without limitation the Registrable Securities (collectively, the "Aggregate Registrable Securities"), to an amount equal to 25% of the Common Stock to be included in such registration and underwriting. The Company will so advise all holders of the Aggregate Registrable Securities which would otherwise be registered and underwritten pursuant hereto, and the number of shares of the Aggregate Registrable Securities that may be included in the registration and underwriting will be allocated among holders requesting registration as follows: (A) holders of common stock exercising demand registration rights will have priority over Holders of Registrable Securities, holders of other securities then having contractual registration rights and other holders of securities that do not have contractual registration rights; (B) Holders of Registrable Securities and holders of other securities then having contractual registration rights will have priority over holders of securities that do not have contractual registration rights; and (C) after taking into account the priority granted to holders exercising demand registration rights described in clause (A) immediately above, Holders of Registrable Securities may participate in a registration pursuant to this Section 1.2 on a pro rata basis with each other Holder of Registrable Securities and each other holder of securities then having contractual registration rights in proportion, as nearly as practicable, to the respective amounts of the Aggregate Registrable Securities held by each of such holders as of the date of the notice pursuant to Section 1.2(a)(i), subject to the provisions of this Section 1.2(b). (iii) If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter delivered at least ten days prior to the effective date of the applicable registration statement. Any Registrable Securities excluded or properly withdrawn from such underwriting will be withdrawn from such registration. Such exclusion or withdrawal will not in and of itself cause such Holder to lose any registration rights that such Holder has under this Section 1.2. 3 4 (c) Right to Terminate or Amend Registration. The Company has the right to terminate or withdraw any registration initiated by it under this Section 1.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. If, after a registration statement becomes effective, the Company advises the Holders that the Company considers it appropriate for the registration statement to be amended, the Holders will suspend any further sales of their shares until the Company advises them that the registration statement has been amended. 1.3. Shelf Registration. (a) Request for Shelf Registration on Form S-3. The Company will use commercially reasonable efforts to qualify for registration on Form S-3 under the Securities Act as soon as reasonably practicable after November 12, 2000. Initiating Holders have the right to demand that the Company file one shelf registration statement on Form S-3 (at such time as the Company is eligible to file) to register for resale pursuant to Section 5 of the Securities Act at least 75% of the outstanding Registrable Securities (but in any event not less than 75,000 shares); provided, however, that such demand is in writing and states the number of shares of Registrable Securities to be disposed of by such Initiating Holders and is subject to the terms and conditions of this Agreement. The Company will use commercially reasonable efforts to cause such shelf registration statement to be declared effective and to remain available for the resale of such Registrable Securities for a period of 12 months from the Effective Time (as defined in the Merger Agreement); provided, however, that (i) notwithstanding the effectiveness of such shelf registration statement, sales may only be made under such shelf registration statement during such times as the Company's employees are entitled to sell their shares of the Company's common stock under the Company's standard employee trading policies; (ii) a Holder may not continue to be a seller under such shelf registration statement and exercise the Holder's rights under Section 1.2; and (iii) if, after such shelf registration statement becomes effective, the Company advises the Holders of Registrable Securities that the Company considers it appropriate for such registration statement to be amended, the Holders will suspend any further sales of their shares until the Company advises them that the registration statement has been amended. The Company will use commercially reasonable efforts to pursue such amendment. Each Holder hereby covenants and agrees that, while such shelf registration statement is effective, (A) such Holder will only offer or sell Registrable Securities at such times as the Company's employees are entitled to sell their shares of the Company's common stock under the Company's standard employee trading policies and the Company has not otherwise advised them to suspend trading under clause (iii) above; and (B) the Company is entitled to place stop transfer and other similar restrictions on the Registrable Securities to ensure that such Holder only offers and sells the Registrable Securities during such times as the Holder is permitted to do so under this Agreement. 4 5 (b) Certain Company Actions. In the event that the Company receives from the Initiating Holders, a written demand that the Company effect a shelf registration in accordance with Section 1.3(a), the Company will (i) promptly give written notice of the proposed shelf registration to all other Holders; and (ii) permit any other Holder of Registrable Securities to join in such demand provided that such Holders so request inclusion in a writing received by the Company within ten days after written notice from the Company. (c) Registration of Other Securities in a Demand Registration. Any shelf registration statement filed pursuant to the demand of the Initiating Holders under this Section 1.3 may include securities of the Company other than Registrable Securities. 1.4. Lock-Up Provision. Upon receipt of a written request by the Company or by its underwriters, the Holders agree not to sell, sell short, grant an option to buy, or otherwise dispose of any of their securities of the Company (including without limitation any shares of Common Stock issued or issuable upon exercise of an option or warrant) to the same extent, and subject to the same conditions, as do the Company's executive officers. 1.5. Expenses of Registration. All reasonable expenses incurred in connection with any registration pursuant to this Agreement, including all registration, filing and qualification fees, printing expenses, fees and expenses of counsel for the Company and expenses of any special audits incidental to or required by such registration, will be borne by the Company except as follows: (a) The Company will not be required to pay fees or expenses of legal counsel of the Holders. (b) The Company will not be required to pay underwriters' discounts or commissions relating to the sale of the Registrable Securities. All fees, expenses, discounts and commissions referred to in Sections 1.5(a) or 1.5(b) will be allocated to and paid by the Holders participating in the offering pro rata based on the number of their Registrable Shares. 1.6. Registration Procedures. In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder participating therein advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will furnish such number of prospectuses and other documents incident thereto as a Holder selling Registrable Securities under a registration statement may, from time to time, reasonably request. 5 6 1.7. Indemnification. (a) The Company's Indemnification. To the extent permitted by law, the Company will indemnify, defend and hold each Holder of Registrable Securities, each of its officers and directors, and each person who controls such Holder within the meaning of the Securities Act, with respect to which such registration as has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter of the Registrable Securities held by such Holder harmless from, against and in respect of all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document incident to any such registration or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration. Furthermore, the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 1.7 does not apply to amounts paid in settlement of any such claim, loss, damage, liability, or action if such settlement is effected without the consent of the Company (which consent will not be unreasonably withheld); and provided further, that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder or underwriter specifically for use therein. (b) Holder's Indemnification. Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify, defend and hold the Company, each of its directors and officers, each legal counsel and independent accountant of the Company, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company within the meaning of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder, harmless from, against and in respect of all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading. Furthermore, each Holder will reimburse the Company, such Holders, such directors, officers, persons or underwriters for any reasonable legal or 6 7 any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with information furnished to the Company by such Holder for use therein; provided, however, the total amount for which any Holder is liable under this Section 1.7 will not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration. (c) Indemnification Procedure. Each party entitled to indemnification under this Section 1.7 (the "Indemnified Party") will give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and will permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who will conduct the defense of such claim or litigation, is approved by the Indemnified Party (whose approval will not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein will not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, will, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. (d) Survival. The obligations of the Company and Holders under this Section 1.7 will survive the completion of any offering of Registrable Securities in a registration statement under this Agreement or otherwise. (e) Conflict. Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreement entered into in connection with any underwritten public offering are in conflict with the foregoing provisions, the provisions in such underwriting agreement will control. 1.8. Information by Holder. It is a condition precedent of the Company's obligations under this Agreement that each Holder or Holders of Registrable Securities included in any registration promptly furnishes to the Company such information regarding such Holder or Holders as the Company may request and as may be required in connection with any registration, qualification or compliance referred to herein. 1.9. Rule 144 Reporting. With a view to making available to Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the 7 8 Registrable Securities to the public without registration, the Company agrees to use commercially reasonable efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) File with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; (c) So long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Holder may reasonably request in complying with any rule or regulation of the SEC allowing the Holder to sell any Registrable Securities without registration. 1.10. Transfer of Registration Rights. The right to cause the Company to register Registrable Securities pursuant to this Agreement may be assigned to a transferee or assignee reasonably acceptable to the Board of Directors of the Company in connection with any transfer or assignment of Registrable Securities in other than a public offering provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws; (ii) such assignee or transferee acquires at least 80% of such Holder's Registrable Securities immediately prior to the transfer; and (iii) such transferee or assignee of such rights is not a person deemed by the Board of Directors of the Company, in its reasonable judgment, to be a competitor or potential competitor of the Company. 1.11. Registration Rights Granted to Other Securities. From and after the date of this Agreement, the Company may enter into any agreement with any holder or prospective holder of any securities of the Company providing for the granting to such holder of any registration rights or add additional holders as parties to this Agreement with regard to any or all securities of the Company held by them. 1.12. Termination of Registration Rights. The registration rights contained in this Agreement automatically terminate as to any Holder of Registrable Securities, at such time as such Holder is eligible to sell all of such Holder's Registrable Securities then held in any three month period under Rule 144 under the Securities Act. 2. Miscellaneous. 2.1. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into by and between California residents and to be wholly performed within the State of California. 8 9 2.2. Adjustments for Stock Splits and Certain Other Changes. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock of the Company of any class or series, then, upon the occurrence of any subdivision, combination or stock dividend of such stock, the specific number of shares so referenced in this Agreement will automatically be proportionally adjusted to reflect the effect on the outstanding shares of such stock by such subdivision, combination or stock dividend. 2.3. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 2.4. Headings. The headings of the Sections of this Agreement are for convenience and will not by themselves determine the interpretation of this Agreement. 2.5. Notices. Any notice required or permitted hereunder will be given in writing and will be conclusively deemed effectively given upon personal delivery, or five days after deposit in the United States mail, by registered or certified mail (or by airmail, if notice is sent outside the United States), postage prepaid, addressed (i) if to the Company, as set forth below the Company's name on the signature page of this Agreement, and (ii) if to a Shareholder, as set forth below such Shareholder's name on the relevant signature page of this Agreement, or at such other address as the Company or such Shareholder may designate by ten days' advance written notice to the Shareholders or the Company, respectively. Any notice sent outside the United States will also be telexed or telecopied. 2.6. Amendment of Agreement. Except as otherwise provided in Section 1, any provision of this Agreement may be amended and the observance thereof may be waived, only by a written instrument signed by the Company and by persons holding a majority of the Registrable Securities as defined in Section 1 of this Agreement. Any amendment or waiver effected in accordance with this paragraph will be binding upon each holder of any Registrable Securities then outstanding, each subsequent holder of all such Registrable Securities and the Company. 2.7. Jurisdiction and Venue. The parties consent to the jurisdiction of all federal and state courts in the Northern District of California and agree that state court venue will lie exclusively in Santa Clara County, California. 2.8. Specific Performance. The parties acknowledge and agree that it will be impossible to measure in money the damage arising from a party's failure to comply with any of the material obligations imposed by this Agreement and that, in the event of any such failure, the parties will not have an adequate remedy at law or in damages. Therefore, in addition to any other remedy available at law or in equity, each party consents to the issuance of an injunction or the enforcement of other equitable remedies 9 10 against it, at the suit of an aggrieved party, to compel performance of the material terms of this Agreement. 2.9. Remedies Cumulative. All remedies, whether under this Agreement, provided by law or otherwise will be cumulative and not alternative. 2.10. Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof, and no party will be liable or bound to any other party in any manner by any warranties, representations or covenants relating to such subject matter, except as specifically set forth herein. 2.11. Severability. In case any provision of this Agreement is declared invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. 2.12. Interpretation; Rules of Construction. This Agreement has been negotiated by the parties and is to be interpreted according to its fair meaning and not strictly for or against any party. The parties waive any rule of law or judicial precedent that provides that contractual ambiguities are to be construed against the party who drafted the contractual provision in question. All references in this Agreement to "parties" refer to the parties to this Agreement unless expressly indicated otherwise. References in this Agreement to Sections or subsections are to Sections and subsections of this Agreement unless expressly indicated otherwise. At each place in this Agreement where the context so requires, the masculine, feminine or neuter gender includes the others and the singular or plural number includes the other. "Including" means "including without limitation" and "or" is used in the inclusive sense of "and/or." [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK] 10 11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. IMMERSION CORPORATION By: /s/ Louis Rosenberg ------------------------------------- Louis Rosenberg, President Corporate Address: 801 Fox Lane San Jose, CA 95131 "SHAREHOLDER" By: /s/ * ------------------------------------- Name: * ----------------------------------- Title: ---------------------------------- Address: ----------------------------------------- ----------------------------------------- ----------------------------------------- * By approximately all of the Shareholders 11 -----END PRIVACY-ENHANCED MESSAGE-----