Sample Business Contracts


Technology Product Development Agreement - Immersion Corp. and Logitech Inc.


                    TECHNOLOGY PRODUCT DEVELOPMENT AGREEMENT
                    IMMERSION CORPORATION AND LOGITECH, INC.

        This Technology Product Development Agreement (the "Agreement") between
        Immersion Corporation, a California corporation, with principal offices
        in San Jose, California (hereinafter "Immersion") and Logitech Inc., a
        California corporation, with principal offices in Fremont, California
        (hereinafter "Logitech"), is entered into as of April 13, 1998 (the
        "Effective Date").

                                    RECITALS

        WHEREAS, Logitech and Immersion desire to establish a mutually
        beneficial business relationship and to develop, verify and launch under
        their best efforts high quality and competitively priced "FEELit Mouse"
        force-feedback Planar Force Feedback Cursor Control Devices; and,

        WHEREAS, Immersion is in the business of developing certain computer
        peripheral force feedback industrial, business, gaming, arcade and
        medical devices, and represents it is the owner and/or licensee of
        certain know-how, trade secrets and issued or pending patents; and,

        WHEREAS, Logitech is in the business of developing, manufacturing and
        distributing software and electrical computer peripheral devices such as
        input data, gaming, and control devices including, but not limited to,
        Planar Force Feedback Cursor Control Devices, and represents it is the
        owner and/or licensee of certain know-how, trade secrets and issued or
        pending patents; and,

        WHEREAS, Logitech desires to develop internally and with third parties,
        use, manufacture and distribute Planar Force Feedback Cursor Control
        Devices which utilize FEELit Mouse technology.

        NOW, THEREFORE, in consideration of the promises and agreements set
        forth below and the other consideration cited herein, the parties agree
        as follows:

1.      PURPOSE AND SCOPE OF THE AGREEMENT

        1.1    PURPOSE. The purpose of this Agreement is to expressly define the
               terms and conditions of Logitech's and Immersion's business
               relationship with respect to force-feedback Planar Force Feedback
               Cursor Control Device projects.


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        1.2    SCOPE. The scope of this Agreement encompasses Immersion's and
               Logitech's respective development, service and support rights and
               obligations regarding Planar Force Feedback Cursor Control Device
               projects provided for herein.

2.      DEFINITIONS

        In this Agreement, including the Exhibits hereto, the following words
        and expressions shall have the following meanings:

        2.1    AFFILIATES. This means any corporation or business entity which
               is controlled by, controls, or is under common control of a
               Party. For this purpose, the meaning of the word "control" shall
               include, without limitation, direct or indirect ownership of more
               than fifty percent (50%) of the voting shares of interest of such
               corporation or business entity.

        2.2    DEFECT. This means, with respect to any non-software Deliverable,
               failure to materially conform to the applicable then-current
               Specifications for such non-software Deliverable.

        2.3    DEFECT CORRECTION. This means either a modification or addition
               that eliminates or works around a Defect in a non-software
               Deliverable so as to cause the non-software Deliverable to comply
               with the applicable then-current Specification.

        2.4    DELIVERABLES. This means the various deliverables, which are
               tangible implementations or items, including interim deliverables
               or final prototype deliverables, identified as such and described
               in Exhibit B ("Development Schedule"), or any subsequent
               development schedule attached hereto by amendment.

        2.5    ENHANCEMENT OR ENHANCEMENTS. This means any force-feedback
               modification or addition made by Immersion under the terms of
               Section 6.7 ("Other Development") and Section 7.2 ("Enhancements
               by Immersion"), for the Planar Force Feedback Cursor Control
               Field of Use, and which is a tangible implementation, other than
               a Defect Correction or Error Correction, that when incorporated
               into the Planar Force Feedback Cursor Control Device, materially
               reduces the product cost of a Planar Force Feedback Cursor
               Control Device, or materially changes the functional capability,
               or form factor.

        2.6    ERROR. This means, with respect to any software Deliverable,
               failure of any such software Deliverable to materially conform to
               the applicable then-current Specification for such software
               Deliverable.

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        2.7    ERROR CORRECTION. This means either a modification or addition
               that eliminates or works around an Error in the software
               Deliverable so as to cause the software Deliverable to comply
               with the then-current Specification.

        2.8    FEELIT MOUSE PRODUCT. This means the final production version of
               the mouse described in the first Exhibit A ("Specifications")
               which utilizes and/or contains Immersion Product Model
               Technology, including but not limited to the applicable Immersion
               Software, documentation, Defect Corrections and Error Corrections
               thereto.

        2.9    FINAL PROTOTYPE. This means a Deliverable which is the final
               functional form of the Planar Force Feedback Cursor Control
               Device, if any, including software and hardware, produced by
               Immersion under a development schedule, which prototype serves as
               a model for the final production version of the Planar Force
               Feedback Cursor Control Device, if any, and which conforms to the
               applicable Specification.

        2.10   IMMERSION PRODUCT MODEL TECHNOLOGY. This means that subset of
               Immersion Technology delivered as a Deliverable under the terms
               of a development schedule, or as an Enhancement or New
               Technology, which is actually utilized in or in connection with
               and/or embedded in the final production version of the FEELit
               Mouse Product, any subsequent Product Model of the FEELit Mouse
               Product or any Product Model of any Planar Force Feedback Cursor
               Control Device.

        2.11   IMMERSION SOFTWARE. This means the driver software and computer
               firmware subset of the Immersion Product Model Technology
               actually utilized in or in connection with and/or embedded in the
               final production version of the FEELit Mouse Product, any
               subsequent Product Model of the FEELit Mouse Product or any
               Product Model of any Planar Force Feedback Cursor Control Device
               that acts as an interface to and controls the FEELit Mouse
               Product, any subsequent Product Model of the FEELit Mouse Product
               or any Planar Force Feedback Cursor Control Device.

        2.12   IMMERSION TECHNOLOGY. This means any and all technology created
               or acquired by Immersion, or licensed to Immersion by third
               parties, including but not limited to software created by
               employees or consultants of Immersion, (i) first developed or
               reduced to practice before or after the Effective Date solely by
               Immersion independent of the scope of the work under this
               Agreement or (ii) first developed or reduced to practice after
               the Effective Date and within the scope of a Deliverable
               developed solely by Immersion (a) under a development schedule in
               effect under the terms of this Agreement, (b) as an Enhancement
               or (c) as New Technology.


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        2.13   INTELLECTUAL PROPERTY LICENSE AGREEMENT. This means the
               Intellectual Property License Agreement between Immersion and
               Logitech dated the same date as this Agreement.

        2.14   JOINT TECHNOLOGY. This means any and all technology created
               and/or invented jointly by Immersion and Logitech employees or
               consultants after the Effective Date and within the scope of
               development of the FEELit Mouse Product or any Planar Force
               Feedback Cursor Control Device and/or any Enhancements under the
               terms of this Agreement. The term "Joint Technology" specifically
               excludes Immersion Technology and Logitech Technology.

        2.15   LOGITECH PRODUCT MODEL TECHNOLOGY. This means that subset of
               Logitech Technology which is actually utilized in or in
               connection with and/or embedded in the final production version
               of the FEELit Mouse Product, any subsequent Product Model of the
               FEELit Mouse Product or any Product Model of any Planar Force
               Feedback Cursor Control Device.

        2.16   LOGITECH TECHNOLOGY. This means any and all technology created or
               acquired by Logitech, or licensed to Logitech by third parties,
               including but not limited to software created by employees or
               consultants of Logitech (i) first developed or reduced to
               practice before or after the Effective Date solely by Logitech
               independent of the scope of the work under this Agreement or (ii)
               first developed or reduced to practice after the Effective Date
               solely by Logitech and within the scope of a development schedule
               in effect under the terms of this Agreement.

        2.17   PLANAR FORCE FEEDBACK CURSOR CONTROL FIELD OF USE. This means the
               market for Planar Force Feedback Cursor Control Devices which are
               not targeted for use in specific applications or designed for
               specific applications. The Planar Force Feedback Cursor Device
               Field of Use does not include the market for products
               specifically targeted for use in gaming, medical, industrial,
               human disabilities, military, automotive, scientific and arcade
               products and applications.

        2.18   PLANAR FORCE FEEDBACK CURSOR CONTROL DEVICE(S). This means (i) a
               force feedback computer cursor control device having the
               capability of tracking position of an endpoint in a two
               dimensional plane and applying two dimensional planar forces upon
               the user through said endpoint and (ii) one-dimensional force
               feedback cursor control embodiments, including but not limited to
               a force feedback roller for "roller mouse" cursor control
               embodiments. Planar Force Feedback Cursor Control Devices include
               but are not limited to the FEELit Mouse Product. The endpoint may
               be a mouse handle, stylus, finger tip receptacle, ball, or other
               manipulandum that can be moved by the user in two dimensional
               plane. A Planar Force Feedback Cursor Control Device can be
               mounted in any housing including but not limited to a housing
               shared by a


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               keyboard, track ball or other interface peripheral that provides
               additional functionality. Planar Force Feedback Cursor Control
               Devices specifically do not include (i) devices that can apply
               three dimensional forces through the device or (ii) a "Gaming
               Device" as that term is defined in the Intellectual Property
               License Agreement between Immersion and Logitech dated April 2,
               1997.

        2.19   NEW TECHNOLOGY. This means any force-feedback technology
               modification or addition made by Immersion, for the Planar Force
               Feedback Cursor Control Field of Use, other than a Defect
               Correction or Error-Correction, that when incorporated into a
               Planar Force Feedback Cursor Control Device, materially changes
               the utility, efficiency, market value, functional capability or
               application, and which is developed by Immersion on a
               non-exclusive basis and made "generally available" for use in
               Planar Force Feedback Cursor Control Devices in the Planar Force
               Feedback Cursor Control Field of Use and which is delivered by
               Immersion to Logitech as a tangible implementation pursuant to
               the terms of Section 7.4 ("New Technology"). For purposes of this
               definition, "generally available" shall mean offered under
               nonexclusive license to any one unaffiliated third party (other
               than the original third party for whom the technology,
               modification or addition was originally developed) for use in
               Planar Force Feedback Cursor Control Devices in the Planar Force
               Feedback Cursor Control Field of Use.

        2.20   OEM OR OEMS. This means any third party (not including
               Affiliates) that does not manufacture Planar Force Feedback
               Cursor Control Devices and that wishes to purchase finished
               Planar Force Feedback Cursor Control Devices for sale in the
               Planar Force Feedback Cursor Control Field of Use under its own
               brand name.

        2.21   PARTY OR PARTIES.  This means Immersion and/or Logitech.

        2.22   PRODUCT LAUNCH. This means the date on which first
               commercial-level shipping of the FEELit Mouse Product or any
               Product Model commences to third party unaffiliated customers of
               Logitech or a Logitech Affiliate.

        2.23   PRODUCT MODEL. This means a single model of the FEELit Mouse
               Product or any other Planar Force Feedback Cursor Control Device.
               "Product Model" shall mean each variation of a FEELit Mouse
               Product or Planar Force Feedback Cursor Control Device which (i)
               differs by virtue of addition of or alteration through an
               Enhancement or (ii) constitutes a change in form factor or (iii)
               incorporates a material change in force-feedback functionality
               made by a party other than Immersion. Purely cosmetic alterations
               (e.g., color or styling) to the physical appearance of the FEELit
               Mouse Product or a Planar Force Feedback Cursor Control Device,
               or changes that do not alter the force-feedback functionality but
               reduce manufacturing costs shall not be deemed a Product Model.


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        2.24   QUARTER OR QUARTERS. This means Logitech's yearly fiscal
               quarters. Specifically, Logitech's yearly fiscal quarters begin
               and end on the following dates: first quarter, April 1 - June 30;
               second quarter, July 1 - September 30; third quarter, October 1 -
               December 31; and fourth quarter, January 1 - March 31.

        2.25   ROYALTY BEARING PRODUCT. This means a Planar Force Feedback
               Cursor Control Device which either (1) incorporates or utilizes
               Immersion Product Model Technology that is not otherwise made
               generally available to the public by Immersion without charge or
               (2) is covered by a Licensed Patent as defined in the
               Intellectual Property License Agreement or by a copyright of
               Immersion embodied in any Immersion Product Model Technology that
               is not otherwise made generally available to the public by
               Immersion without charge generally.

        2.26   SPECIFICATION(S). This means the FEELit Mouse Product
               specification attached hereto as Exhibit A ("Specification") and
               each Planar Force Feedback Cursor Control Device specification
               associated with a development schedule which is attached by
               amendment to this Agreement.

        2.27   YEAR. This means any full four-Quarter period.

        2.28   Any reference to the words "PURCHASE," "SALE," or "SELL," when
               used in connection with intellectual property, shall mean
               license.

3.      EXHIBITS

        The following Exhibits shall be attached hereto and incorporated in
        their entirety by this reference.

        EXHIBIT A ("Specification"), the Specification, contains the description
        of the FEELit Mouse Product.

        EXHIBIT B ("Development Schedule"), the Development Schedule, contains
        the Milestones, Deliverables and Deliverable Due Dates. The parties
        agree to complete Exhibit B within thirty (30) days of the Effective
        Date and add such Exhibit B to this Agreement by written amendment
        within such time period.

        EXHIBIT C ("Change Order Form"), is the Change Order Form.

        EXHIBIT D ("Software License Agreement") is the end user software
        license agreement.

        EXHIBIT E ("Immersion  Packaging Labeling  Specification") is the
        Immersion Packaging Labeling specification.

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4.      TERM

        The initial term of this Agreement shall be for a period of five (5)
        years commencing on the Effective Date, unless otherwise earlier
        terminated by the Parties according to the terms of this Agreement.
        Thereafter, this Agreement shall automatically renew for subsequent
        two-year periods, unless either party terminates the Agreement by
        written notice at least one hundred eighty (180) days prior to the end
        of the initial term or any renewal term.

5.      ENGAGEMENT OF SERVICES

        5.1    PROJECT ASSIGNMENT. Subject to the terms of this Agreement,
               Immersion and Logitech will render the services and develop the
               Deliverables described in Exhibit B ("Development Schedule"),
               based upon Exhibit A ("Specifications"), which development
               schedule and/or Specification may be modified by the Parties from
               time to time in accordance with the procedures described in
               Section 6.6 ("Modification of Specification"). Immersion shall
               dedicate full-time employees of sufficient technical and
               professional caliber to define, develop, complete and verify the
               Planar Force Feedback Cursor Control Device it develops with
               Logitech in accordance with Exhibit B ("Development Schedule"),
               based on Exhibit A ("Specifications"), and will assist Logitech
               in launching and supporting the resulting Planar Force Feedback
               Cursor Control Device in accordance with the terms of Section 7.1
               ("Technical Service and Support").

        5.2    PERFORMANCE OF SERVICES. Logitech has selected Immersion to
               perform the services described in this Agreement based upon
               Logitech receiving Immersion's personal services. Immersion may
               not, therefore, subcontract or otherwise assign and delegate its
               obligations under this Agreement without Logitech's prior written
               consent.

        5.3    PRESS RELEASE. Each of the Parties agree to credit appropriately
               the other Party in all press releases, promotions, advertisement
               and announcements that mention the force feedback Planar Force
               Feedback Cursor Control Devices. Prior to a Party releasing any
               information that references the other Party, the publishing Party
               shall obtain the other Party's prior written approval. The
               parties shall announce their FEELit Mouse partnership within six
               months of the Effective Date.

6.      PLANAR FORCE FEEDBACK CURSOR CONTROL DEVICE DEVELOPMENT

        6.1    FUNDING. Logitech shall fund all costs related to its internal
               development of the Planar Force Feedback Cursor Control Devices.
               In consideration of the duties and obligations of Immersion with
               respect to its development obligations hereunder for Logitech,
               Logitech will pay Immersion on a reasonable time and material
               basis. Immersion will be liable for all taxes levied against
               Immersion which arise


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               in connection with Immersion's performance under this Agreement
               and the payments received from Logitech. Any payment designated
               as due and payable based upon completion of development of a
               specified Deliverable(s) and acceptance by Logitech shall not be
               payable until Logitech's acceptance thereof.


               6.1.1  FEELit MOUSE PRODUCT FUNDING. In consideration of the
                      duties and obligations of Immersion with respect to
                      development pursuant to Exhibit B ("Development Schedule")
                      by Immersion, Logitech will pay Immersion a total amount
                      of three hundred and sixty two thousand dollars ($362,000)
                      (US Dollars) ("Development Fee"), which sum is in addition
                      to the eight thousand dollars ($8,000) to be paid by
                      Logitech to Immersion under the terms of the Parties'
                      Phase 0 Term Sheet, receipt of which previous payment is
                      hereby acknowledged by Immersion. The Development Fee will
                      be payable based on a segmented development schedule with
                      scheduled deliverables as described in Exhibit B
                      ("Development Schedule").

        6.2    DEVELOPMENT MILESTONES. Immersion's development obligation under
               the terms of this Agreement as described in Exhibit B
               ("Development Schedule") shall be conducted on a first priority
               basis. The FEELit Mouse Product development schedule is described
               with particularity in Exhibit B ("Development Schedule") and the
               schedule is divided into milestones ("Milestones"), each of which
               require the delivery of one or more Deliverables on specific
               Deliverable due dates ("Deliverable Due Dates"). Upon completion
               of each Milestone associated with a Deliverable under Exhibit B
               ("Development Schedule") as amended in writing by the Parties
               from time to time, Immersion shall promptly deliver to Logitech
               the applicable Deliverable called for under such Milestone.
               Logitech agrees to promptly complete and deliver to Immersion
               Deliverables required to be completed and delivered by Logitech
               pursuant to the terms of Exhibit B ("Development Schedule").

        6.3    DELIVERY AND ACCEPTANCE OF DELIVERABLES BY LOGITECH. Upon
               completion of each Deliverable, Immersion shall deliver to
               Logitech such Deliverable, including documentation, if included
               as part of the Deliverable requirement, for evaluation by
               Logitech. Logitech shall review, test, and evaluate each
               Deliverable and where indicated in the Development Schedule,
               accept or reject each Deliverable in accordance with Exhibit B
               ("Development Schedule") and make the associated payment, if any,
               for accepted Deliverables. Logitech shall provide Immersion with
               written acceptance of each Deliverable (for which acceptance is
               indicated as a requirement in the Development Schedule), or a
               written statement of Defects and/or Errors to be corrected within
               ten (10) business days after such delivery unless a different
               acceptance time period for a Deliverable is described in Exhibit
               B ("Development Schedule") or as otherwise mutually agreed upon
               in a


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               writing signed by the Parties. Immersion shall promptly correct
               such Defects and/or Errors and return the corrected Deliverables
               for retesting and reevaluation, and unless otherwise provided for
               in Exhibit B ("Development Schedule"), Logitech shall within ten
               (10) business days after such redelivery provide Immersion with
               written acceptance or a statement of Defects and/or Errors to be
               corrected. The foregoing procedure shall be repeated until
               Logitech accepts the Deliverable or finally rejects the
               Deliverable and either terminates the Agreement or the
               development project related to the unacceptable Deliverable
               pursuant to Section 12 ("Termination").

        6.4    PROGRAM MANAGERS. Immersion and Logitech shall each appoint a
               program manager ("Program Manager"). Each Party reserves the
               right to change such Program Manager, at any time, upon written
               notice to the other Party. Immersion's appointed Program Manager
               as of the Effective Date is Ken Martin. Logitech's appointed
               Program Manager as of the Effective Date is Laurent Plancherel.

        6.5    STATUS MEETINGS. The Parties shall notify each other of any
               anticipated problems and any indication of delay in fixed or
               tentative schedules. At least once each month, the Parties shall
               conference, as mutually agreed, for progress discussions
               describing in detail the status of the work performed and
               discussion of possible resolution of any problems which have
               arisen.

        6.6    MODIFICATION OF SPECIFICATION. Logitech may modify the
               Specifications at any time during development after consulting
               with Immersion. If any such modification requires an increase in
               the time or cost to perform by Immersion, an equitable adjustment
               shall be negotiated and mutually agreed upon in writing by
               Immersion and Logitech. Such changes will be implemented only
               pursuant to a change order form in the form of Exhibit C ("Change
               Order Form"), signed by both Parties. Such changes will become
               effective and will be deemed incorporated into the Agreement as
               an amendment to the applicable exhibit or section of the
               Agreement. This procedure is used to control the technical
               configuration of the Deliverables, as well as to control and
               document costs and schedules. Logitech shall not be liable for
               any work performed by Immersion which differs from the
               then-current Specification and/or development schedule prior to
               such work being authorized in a signed Change Order Form.

        6.7    OTHER DEVELOPMENT. Should Logitech desire to have Immersion
               design other Planar Force Feedback Cursor Control Devices after
               the FEELit Mouse Product and/or Enhancements, the Parties will
               mutually agree in writing upon a supplemental development
               schedule substantially in the form of Exhibit B
               ("Development Schedule"), and reasonable associated development
               fees, and an accompanying Exhibit A ("Specifications") and shall
               amend this Agreement to

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               incorporate such project. Except as provided in Section 7.4 ("New
               Technology"), all terms and conditions of this Agreement, and the
               Intellectual Property License Agreement including royalty rates
               set forth in the Intellectual Property License Agreement, Section
               3 ("Royalties"), shall apply to any Planar Force Feedback Cursor
               Control Device developed under this Agreement unless otherwise
               mutually agreed in writing.


7.      IMMERSION'S POST-DEVELOPMENT OBLIGATIONS

        7.1    TECHNICAL SERVICE AND SUPPORT. Immersion shall provide Logitech
               with ongoing engineering and technical support up to at least
               sixty (60) hours per week for the Planar Force Feedback Cursor
               Control Device, as reasonably requested by Logitech. So long as
               Logitech has "preferred customer status," Immersion will provide
               such ongoing engineering and technical support on a first
               priority basis. If Logitech does not have "preferred customer
               status", Immersion will continue to provide such ongoing
               engineering and technical support on an as-available basis
               without the sixty (60) hour per week minimum commitment. In
               consideration of any such support, whether on a priority or
               as-available basis, Logitech shall pay Immersion at a reasonable
               time and materials rate.

               7.1.1  EXCEPTION. Immersion shall promptly provide Error
                      Corrections without charge for any Errors, including
                      software Errors in any Immersion Software including any
                      firmware.

        7.2    ENHANCEMENTS BY IMMERSION. So long as Logitech has "preferred
               customer status," and in accordance with Section 6.7 ("Other
               Development") above, an Enhancement project shall be scheduled on
               a first priority basis. If Logitech does not have "preferred
               customer status", Immersion may agree to provide Enhancements
               under the terms of this Section 7.2 ("Enhancements by Immersion")
               on a case by case and time available basis but Immersion will be
               under no obligation to accept an Enhancement project.

        7.3    OEM REFERRAL. Should an OEM contact Immersion concerning
               manufacture of a Planar Force Feedback Cursor Control Device for
               the Planar Force Feedback Cursor Control Field of Use, Immersion
               agrees to direct such OEM to contact Logitech with respect to
               manufacturing such Planar Force Feedback Cursor Control Device.
               The obligation of Immersion to direct OEMs to Logitech is
               independent of Logitech having "preferred customer status" and is
               not required for such referrals. Logitech agrees that when
               contacted by any OEM referred by Immersion, Logitech will include
               Immersion Product Model Technology and/or technology covered by
               the Licensed Patents as defined in the Intellectual Property
               License Agreement in any initial proposals or designs for
               manufacturing a Planar Force Feedback Cursor Control Device for
               such OEM. If Logitech's proposal or


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               design incorporating Immersion Product Model Technology and/or
               technology covered by the Licensed Patents as defined in the
               Intellectual Property License Agreement is accepted, Logitech
               agrees to make good faith efforts to utilize Immersion Product
               Model Technology and/or technology covered by the Licensed
               Patents as defined in the Intellectual Property License Agreement
               in the Planar Force Feedback Cursor Control Device manufactured
               for such OEM and to pay royalties therefor to Immersion in
               accordance with this Agreement. If the OEM in its own discretion
               elects to reject Logitech's proposal and/or design which
               incorporates Immersion Product Model Technology and/or technology
               covered by the Licensed Patents as defined in the Intellectual
               Property License Agreement, then (i) Immersion agrees and
               acknowledges that Logitech may manufacture a Planar Force
               Feedback Cursor Control Device for the OEM without incorporating
               Immersion Product Model Technology and/or technology covered by
               the Licensed Patents and (ii) Logitech agrees and acknowledges
               that Immersion may enter into an agreement with the OEM with
               respect to Planar Force Feedback Cursor Control Devices in the
               Planar Force Feedback Cursor Control Field of Use.

        7.4    NEW TECHNOLOGY. So long as Logitech has "preferred customer
               status", if Immersion develops and decides to make "generally
               available" and to license, on a nonexclusive basis, to any one
               unaffiliated third party (other than the original third party for
               whom the New Technology was originally developed) any New
               Technology for use in Planar Force Feedback Cursor Control
               Devices in the Planar Force Feedback Cursor Control Field of Use,
               Immersion shall provide Logitech with an opportunity to license
               such New Technology, under the terms of a separate agreement, on
               a nonexclusive basis and on terms at least as favorable as those
               upon which such New Technology is offered by Immersion to others,
               which royalty terms may or may not be as favorable as the royalty
               terms in the Intellectual Property License Agreement Section 3
               ("Royalties"). If Logitech does not have "preferred customer
               status", Immersion may decide to offer New Technology under the
               terms of this Section 7.4 ("New Technology") but is not obligated
               to do so.

        7.5    NOTICE OF IMMERSION MANUFACTURE. Immersion shall provide Logitech
               with twelve (12) months' written notice prior to commencement by
               Immersion of distribution of a Planar Force Feedback Cursor
               Control Device for the Planar Force Feedback Cursor Control Field
               of Use to be manufactured by Immersion or manufactured by a third
               party on Immersion's behalf for distribution by Immersion under
               Immersion's name. Upon expiration of this notice period,
               Immersion may, but shall no longer be obligated to offer Logitech
               Enhancements in accordance with Section 7.2 ("Enhancements by
               Immersion"), may but shall no longer be obligated to offer OEMs
               to Logitech in accordance with Section 7.3


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               ("OEM Referral"), and may but shall no longer be obligated to
               provide New Technology under Section 7.4 ("New Technology").

        7.6    LOGITECH PREEMPTION PROTECTION. Provided that Logitech is in
               compliance with its development obligations under the terms of
               this Agreement, which will be measured by Logitech making
               substantial progress toward meeting its milestones as indicated
               in Exhibit B ("Development Schedule"), Immersion agrees not to
               enter into an agreement with any third party manufacturer which
               will permit such third party manufacturer to ship a mouse product
               for the Planar Force Feedback Cursor Control Field of Use which
               incorporates similar Immersion Technology as incorporated into
               the FEELit Mouse Product (a "Similar Product") on or before three
               (3) months after the Product Launch Commitment Date as defined in
               Section 8.4 ("Product Launch Commitment").

        7.7    ADVISEMENT PERIOD. Although Immersion's development relationship
               with Logitech under the terms of this Agreement is not exclusive,
               Immersion agrees, during the Advisement Period (as defined
               below), to provide Logitech with written notice if Immersion
               enters into an agreement with a third party manufacturer which
               will permit such third party manufacturer to produce a Similar
               Product that is scheduled or planned to ship during calendar
               1999. Such notice will not identify the third party manufacturer
               and will not provide details regarding the Similar Product but
               will simply advise Logitech that such an agreement has been
               signed. For purposes of this Agreement, the Advisement Period
               shall be a period which commences on the Effective Date of this
               Agreement and ends three (3) months after the Product Launch
               Commitment Date.

8.      LOGITECH'S OBLIGATIONS

        8.1    DEVELOPMENT. Logitech shall (i) work with Immersion to produce
               each set of Exhibit A ("Specifications") which shall include
               product features, performance and design criteria, power
               requirements, schematics, quality requirements, and the
               preliminary component summary; and Exhibit B ("Development
               Schedule"), including technical assistance in the development
               thereof; (ii) review, test and evaluate the Immersion
               Deliverables for conformance with the applicable Specification,
               and (iii) deliver the Logitech Deliverables to Immersion for use
               in development in accordance with Exhibit B ("Development
               Schedule"). Immersion agrees not to disclose or copy for any
               purpose Logitech's Specifications and Deliverables without the
               express written consent of Logitech or in fulfillment of
               Immersion's obligations under this Agreement.


                                       12
<PAGE>   13

        8.2    PREFERRED CUSTOMER STATUS.

               8.2.1  REQUIREMENTS. Logitech shall have "preferred customer
                      status" during the first four quarter period (the "Initial
                      Period") following the Product Launch. If the Product
                      Launch falls within the first half of a Quarter, such
                      Quarter will be counted as the first such Quarter. If the
                      Product Launch falls in the second half of a Quarter, the
                      next Quarter will be counted as the first such Quarter.
                      Thereafter, except as provided in Section 7.5 ("Notice of
                      Immersion Manufacture"), for so long as (i) Logitech
                      continues to timely pay royalties to Immersion according
                      to the Intellectual Property License Agreement Section 3
                      ("Royalties") in an amount equal to at least three hundred
                      twenty thousand dollars ($320,000) ("Minimum Annual
                      Revenue Requirement") per four Quarter period (a "Revenue
                      Period") beginning at the expiration of the Initial
                      Period, payable on a quarterly basis as set forth in
                      Section 8.2.2 ("Minimum Annual Revenue Requirement"); and
                      (ii) Logitech is not distributing (directly or through
                      OEMs) any force-feedback Planar Force Feedback Cursor
                      Control Device which is not a Royalty Bearing Product,
                      Immersion agrees to grant Logitech "preferred customer
                      status." Notwithstanding the foregoing, Logitech may, by
                      written notice given at least thirty (30) days prior to
                      the first day of any given Revenue Period terminate the
                      "preferred customer status" for the upcoming Revenue
                      Period. Upon termination of "preferred customer status" as
                      described herein all of the obligations of Immersion and
                      Logitech, and any provisions in this Agreement, which are
                      contingent upon "preferred customer status" shall be null
                      and void and of no further force or effect upon expiration
                      of the then current four Quarter period. If Logitech does
                      not send a termination notice as permitted herein, the
                      "preferred customer status" will continue for the duration
                      of the upcoming Revenue Period, except as otherwise
                      provided herein. If Immersion does not receive a
                      termination notice from Logitech as provided herein,
                      Immersion will send a notice to Logitech, confirming that
                      no termination notice has been received, within thirty
                      (30) days after the subject Revenue Period commences;
                      however a failure by Immersion to send such notice will
                      not be a material breach and will in no way change
                      Logitech's "preferred customer status."

               8.2.2  MINIMUM ANNUAL REVENUE REQUIREMENT. Each Minimum Annual
                      Revenue Requirement shall consist of four (4) payments of
                      eighty thousand dollars ($80,000) each. Each quarterly
                      payment shall be referred to as a "Quarterly Payment".
                      Each such Quarterly Payment shall be due on the last day
                      of each Quarter ("Preferred Status Quarter") and is
                      payable within forty-five (45) days after the end of each
                      Preferred Status Quarter. Royalties accrued in each
                      Preferred Status Quarter as provided in the

                                       13
<PAGE>   14

                      Intellectual Property License Agreement Section 3
                      ("Royalties") shall be credited toward the Quarterly
                      Payments due for such Preferred Status Quarter. If the
                      actual royalties due for the Preferred Status Quarter are
                      less than the Quarterly Payment due, Logitech will submit
                      the actual royalty payment and Logitech will pay the
                      difference between the Quarterly Payment due and the
                      actual royalties due for the Preferred Status Quarter. If
                      the actual royalties due for the Preferred Status Quarter
                      are greater than the Quarterly Payment due, such excess
                      amount shall be credited toward future Quarterly Payments
                      within the same Revenue Period. Actual royalties paid in
                      excess of the Minimum Annual Revenue Requirement for a
                      given Revenue Period will not be applied as a credit
                      toward Quarterly Payments due for Preferred Status
                      Quarters in a later Revenue Period. Should Logitech not
                      timely pay any required Quarterly Payment and fail to make
                      such payment within ten (10) days of receiving written
                      notice from Immersion and unless otherwise agreed to in
                      writing by the Parties, preferred customer status benefits
                      as described in Sections 7.1 ("Technical Services and
                      Support"), 7.2 ("Enhancement by Immersion") and 7.4 ("New
                      Technology") shall no longer be in force or effect,
                      effective as of the date on which such Quarterly Payment
                      was due.

               8.2.3  TERMINATION OF PREFERRED CUSTOMER STATUS. If Logitech
                      terminates its "preferred customer status" by distributing
                      (either directly or through OEMs) a force-feedback Planar
                      Force Feedback Cursor Control Device in the Planar Force
                      Feedback Cursor Control Field of Use which is not a
                      Royalty Bearing Product, Logitech agrees to provide
                      Immersion with six (6) months' prior written notice. Upon
                      expiration of such notice period, (i) Logitech shall no
                      longer be obligated to pay the Quarterly Payments starting
                      on the date the next Quarterly Payment would have come due
                      after the expiration of the six (6) month notice, however,
                      Logitech will submit a pro rata Quarterly Payment for the
                      portion of the Quarter in which the "preferred customer
                      status" was in effect prior to the expiration date of the
                      six (6) month notice which shall be applied in accordance
                      with Section 8.2.2 ("Minimum Annual Revenue Requirement")
                      and (ii) all of the obligations of Immersion and Logitech,
                      and any provisions in this Agreement which are contingent
                      upon "preferred customer status" shall be null and void
                      and of no further force or effect upon expiration of the
                      notice period.

        8.3    DEVELOPER UNITS. Subject to the timely completion of Immersion's
               development obligations under the terms of this Agreement,
               Logitech agrees to produce one hundred (100) FEELit Mouse units
               (PVT) at least six (6) months prior to the Product Launch.
               Immersion shall be responsible for providing such units to
               software developers in a timely manner.

                                       14
<PAGE>   15

               8.4    PRODUCT LAUNCH COMMITMENT. Logitech agrees to use
                      reasonable efforts to launch the FEELit Mouse Product with
                      a "Product Availability Date" or "PAD" on or before July
                      23, 1999 (such date (and not the actual shipment date)
                      shall be referred to as the "Product Launch Commitment
                      Date"). Immersion recognizes that the actual shipment date
                      may be adjusted to a later date due to unforeseen events,
                      manufacturing issues, and/or sourcing issues and that
                      Logitech, by way of this provision, is merely confirming
                      Logitech's commitment of the resources and priority level
                      to make Product Launch by July 23, 1999 a strong
                      possibility. The parties have designated a date in the
                      milestone schedule in Exhibit B ("Milestone Schedule") as
                      the "Design Freeze" date, after which Immersion shall not
                      be responsible for schedule delays resulting from
                      subsequent Logitech changes to the design specification of
                      the FEELit Mouse. Immersion acknowledges that Immersion
                      may be responsible for several time sensitive and critical
                      steps in a given milestone schedule which will need to be
                      completed prior to the Design Freeze date. The parties
                      agree that the Product Launch Commitment Date of July 23,
                      1999 is dependent upon this Design Freeze date identified
                      in the milestone schedule in Exhibit B ("Milestone
                      Schedule") being met. Therefore, the parties agree that
                      for each day that the Design Freeze is adjusted to a later
                      date substantially due to Immersion's failure to complete
                      milestones which are substantially Immersion's
                      responsibility to complete and substantially within
                      Immersion's control and upon which the Design Freeze date
                      is dependent, the Product Launch Commitment Date will be
                      moved back one day not including weekends.

               8.5    OEM SOLE SOURCE INITIATIVE. The parties intend to
                      negotiate in good faith to sign an OEM Purchase Agreement
                      under which, for the first eighteen (18) months of such
                      agreement, Logitech agrees to purchase all of its
                      peripheral device components requirements which can be met
                      by certain FEELit Mouse Controller Chip and Custom
                      Actuator Core components as defined in the OEM Purchase
                      Agreement.

9.      FINANCIAL TERMS

               9.1    DEVELOPMENT FEES. Development of the FEELit Mouse Product
                      will be funded in accordance with the terms of Section 6.1
                      ("Funding") and any subsequent development will be funded
                      as provided under the terms of Section 6.7 ("Other
                      Development").

               9.2    NEW TECHNOLOGY ROYALTIES. New Technology will be provided
                      under royalties which are subject to the terms of Section
                      7.4 ("New Technology") and which are mutually agreed upon
                      in writing by Immersion and Logitech.

                                       15
<PAGE>   16

10.     OWNERSHIP OF TECHNOLOGY

        10.1   IMMERSION TECHNOLOGY. Immersion shall retain ownership of all
               Immersion Technology (and Immersion Product Model Technology).

        10.2   LOGITECH TECHNOLOGY. Logitech shall retain ownership of all
               Logitech Technology (and Logitech Product Model Technology).

        10.3   JOINT TECHNOLOGY. All Joint Technology shall be jointly owned by
               Immersion and Logitech. Exploitation of and subsequent
               development of Joint Technology, including commercial development
               and/or licensing, will be by each Party without financial
               accounting to, or the consent of, the other Party. Each Party
               agrees to assist the other Party in any reasonable manner to
               obtain and enforce intellectual property rights with respect to
               the Joint Technology for the requesting Party's benefit in any
               and all countries, and each Party agrees to execute, when
               requested, applications and assignments to the requesting Party
               and any other lawful documents deemed necessary by the requesting
               Party to carry out the ownership provisions of this Agreement. If
               called upon to render assistance under this Section 10.3 ("Joint
               Technology"), a Party will be entitled to a fair and reasonable
               fee, in addition to reimbursement of expenses incurred, at the
               prior written request of the other Party.

        10.4   JOINT TECHNOLOGY COPYRIGHTS. Each Party agrees to execute, upon
               written request of the other Party, a signed transfer of an
               undivided one-half interest in any Joint Technology copyright to
               the other Party (so that the Parties are joint owners of the
               copyright).

        10.5   JOINT TECHNOLOGY INVENTIONS. Immersion and Logitech will
               determine whether any Joint Technology inventions were conceived
               or first actually or constructively reduced to practice within
               the scope of development of the FEELit Mouse Product, or any
               Planar Force Feedback Cursor Control Device and/or any
               Enhancements during the term of the Agreement, and the Parties
               will discuss the circumstances of the invention. The Parties will
               discuss whether a patent application should be filed for a
               particular Joint Technology invention or, in the alternative, the
               Joint Technology invention should be kept as a trade secret by
               the Parties. If the Parties mutually agree to file a patent for a
               particular Joint Technology invention, the Parties will discuss
               the patent filing details, including but not limited to which
               Party shall file and prosecute the U.S. and any foreign patent
               applications. The cost of such filing and prosecution shall be
               evenly distributed between the Parties. If the Parties cannot
               mutually agree to file for a patent for a particular Joint
               Technology invention, such Joint Invention shall be treated as a
               trade secret by both Parties provided, however, such treatment
               shall not prevent either party from shipping a product based upon
               such trade secret. In


                                       16

<PAGE>   17

               any case where the Parties mutually agree to file for a patent,
               the application shall include all inventors and the Parties shall
               jointly own the patent. Should both Parties agree not to file for
               a patent such Joint Invention shall be treated as a trade secret
               by both Parties, provided, however, such treatment shall not
               prevent either party from shipping a product based upon such
               trade secret. Assignment of patent(s) issuing from application(s)
               for Joint Technology inventions shall be made jointly to
               Immersion and Logitech.

        10.6   SURVIVAL OF JOINT TECHNOLOGY OBLIGATIONS. The obligations set
               forth in this Section 10 ("Ownership of Technology") shall
               survive the expiration or termination of this Agreement.

11.     LOGITECH DEVELOPMENT LICENSE TO IMMERSION

        Logitech grants Immersion a non-exclusive license to use the Logitech
        Technology under Logitech's intellectual property rights, provided to
        Immersion hereunder for purposes of performing Immersion's development
        obligations under any development schedule attached to this Agreement,
        to have and distribute internally Logitech Technology and to modify or
        copy the materials exclusively for the purpose of performing the
        development activities required under this Agreement. Immersion's
        intellectual property license to Logitech with respect to all
        Deliverables delivered hereunder and all development performed under the
        terms of this Agreement, with the exception of Joint Technology is
        described and subject to the terms and conditions of the Intellectual
        Property License Agreement.

12.     TERMINATION

        12.1   TERMINATION BY LOGITECH WITHOUT CAUSE. Logitech may terminate
               this Agreement and/or any development project without cause upon
               sixty (60) days written notice.

        12.2   TERMINATION FOR CAUSE. Immersion may terminate this Agreement
               and/or any development project by written notice if Logitech
               materially breaches Section 16 ("Confidentiality") or if Logitech
               fails to make development payments as provided in this Agreement
               and any Exhibit B ("Development Schedule"). Immersion's
               termination shall become effective upon thirty (30) days written
               notice of breach, provided Logitech fails to cure its breach
               within the notice period. Logitech may terminate this Agreement
               upon thirty (30) days written notice if Immersion materially
               breaches this Agreement and fails to cure its breach during the
               notice period.

        12.3   EFFECT OF TERMINATION. If either Party terminates this Agreement
               and/or a development project hereunder, both Parties will stop
               all work in progress and minimize all related costs (e.g. pending
               materials orders). If a Party


                                       17

<PAGE>   18

               independently elects to proceed with its work in progress it
               shall be solely responsible for related costs. If Logitech
               requests that Immersion complete work in progress, Logitech shall
               be responsible for related costs according to the applicable
               Exhibit B ("Development Schedule"). If Immersion terminates the
               Agreement as provided in Section 12.2 ("Termination for Cause"),
               or Logitech terminates the Agreement or an Exhibit B
               ("Development Schedule") without cause Logitech shall pay
               Immersion for Deliverables due and delivered up to the effective
               date of termination and Logitech shall also pay for development
               fees then owing under this Agreement based upon a pro rata
               portion of the number of calendar days elapsed since completion
               of the last Deliverable for which payment was due and the number
               of the days between such Deliverable and the next sequent
               Deliverable for work done for such deliverable. If Logitech
               terminates this Agreement or an Exhibit B ("Development
               Schedule") for cause, no further payments shall be due under this
               Agreement except for Deliverables accepted up to the date of
               termination. In no event, however, will either Party's liability
               under this Agreement for any development project of a Planar
               Force Feedback Cursor Control Device exceed the amounts set forth
               in the applicable Exhibit B ("Development Schedule"). NEITHER
               PARTY SHALL BE LIABLE TO THE OTHER FOR DAMAGES OF ANY SORT AS A
               RESULT OF TERMINATING THIS AGREEMENT IN ACCORDANCE WITH THE TERMS
               OF THE AGREEMENT.

        12.4   THIRD PARTY ACQUISITION OF IMMERSION.

               12.4.1 SPECIAL HANDLING PROVISIONS. In the case of a merger or
                      acquisition where Immersion is not the surviving entity or
                      in the case of a sale of assets by Immersion in accordance
                      with the terms of Section 18.2 ("Succession and
                      Assignment"), Immersion is not required to obtain
                      Logitech's prior approval to assign this Agreement,
                      however, Immersion will provide Logitech with written
                      notice as soon as possible, consistent with and subject to
                      Immersion's obligations of confidentiality with respect to
                      such merger, acquisition or sale of assets transaction.
                      Immersion recognizes that Logitech may have concerns with
                      respect to the assignee of this Agreement ("Assignee") if
                      such Assignee is viewed by Logitech to be a competitor,
                      however, notwithstanding competitive concerns, Logitech
                      may not desire to terminate this Agreement. Immersion
                      therefore agrees to permit Logitech to be able to require
                      that the following "special handling" provisions described
                      in this Section 12.4 ("Third Party Acquisition of
                      Immersion") be implemented if so requested by Logitech, in
                      writing.

               12.4.2 CONFIDENTIAL INFORMATION SPECIAL HANDLING. If Logitech
                      desires to prevent the Assignee from accessing Logitech's
                      confidential information


                                       18
<PAGE>   19

                      after assignment of this Agreement because such Assignee
                      is viewed by Logitech as a competitor, Logitech may so
                      notify Immersion in writing and Immersion will implement
                      special procedures to keep the Logitech confidential
                      information separate from the Assignee's information and
                      will limit disclosure of the Logitech confidential
                      information to those employees who had previously had
                      access prior to the assignment of the Agreement. In such
                      case, the Logitech confidential information will be stored
                      and used in a separate area in order to limit access to
                      only those former Immersion employees who are authorized
                      to work with such Logitech confidential information. If
                      invoked, such special procedures will be observed for at
                      least ninety (90) days from the date of notice by Logitech
                      so as to give Logitech time to assess the situation,
                      however, Logitech must cancel the special procedures or
                      terminate this Agreement in accordance with Section 12.1
                      ("Termination by Logitech Without Cause"), effective one
                      year from the date of the written notice which invoked the
                      special procedures unless the Assignee, in its sole
                      discretion, agrees in writing to continue the special
                      procedures, for the mutual benefit of the Parties. Upon
                      Logitech's request Immersion shall return any and all
                      copies of Logitech's confidential information or, at
                      Logitech's option, Immersion shall destroy such copies and
                      notify Logitech in writing when such copies have been
                      destroyed, however if Logitech requests such return or
                      destruction, immersion shall be released from all
                      obligations under this Agreement which Immersion is unable
                      to perform without access to such confidential
                      information, if any.

               12.4.3 TERMINATION OF OBLIGATIONS. After receipt by Logitech of
                      notice from Immersion as described in Section 12.4.1
                      ("Special Handling Provisions"), Immersion may but shall
                      no longer be obligated to refer OEMs to Logitech in
                      accordance with Section 7.3 ("OEM Referral") and (iii)
                      provide New Technology under Section 7.4 ("New
                      Technology"). For six (6) months after receipt of such
                      notice, Immersion shall continue to provide to End User in
                      accordance with Section 7.2 ("Enhancements by Immersion")
                      on a reasonable (versus priority) commercial basis.

        13.    SOURCE CODE ESCROW. Logitech may request Immersion to deposit
               Source Code materials and if so, then Immersion shall promptly
               provide to a mutually agreeable escrow agent, under the terms of
               a mutually agreeable escrow agreement, all Immersion Software
               source code, drawings, specifications, and other information
               necessary for Logitech to continue development or support of each
               Final Prototype or Deliverable described in the applicable
               Exhibit B ("Development Schedule") ("Source Code Materials"),
               which is being developed under Exhibit B ("Development
               Schedule"). Immersion shall promptly deposit any future updates
               or revisions with the escrow agent. Under the terms of the escrow
               agreement, the escrow agent shall be instructed to deliver


                                       19
<PAGE>   20

               such Source Code Materials to Logitech upon a certification from
               Logitech that Immersion has become bankrupt and is unable to
               perform any of its material software development obligations
               relating to software, including firmware, pursuant to Exhibit B
               ("Development Schedule") prior to completion of the Final
               Prototype of any Planar Force Feedback Cursor Control Device and
               acceptance by Logitech pursuant to the terms of this Agreement
               and/or fails to perform any of its material software development
               obligations relating to software, including firmware, pursuant to
               Exhibit B ("Development Schedule") prior to completion of the
               Final Prototype of any Planar Force Feedback Cursor Control
               Device and acceptance by Logitech pursuant to the terms of this
               Agreement or Logitech terminates the Agreement for cause based on
               Immersion's failure to perform any of its material software
               development obligations relating to software, including firmware,
               pursuant to Exhibit B ("Development Schedule") prior to
               completion of the Final Prototype of any Planar Force Feedback
               Cursor Control Device and acceptance by Logitech pursuant to the
               terms of this Agreement. If Logitech elects to disclose Source
               Code materials (other than firmware source code designated by
               Immersion as "Authorized For Modification" pursuant to Section
               2.2.1 of the Intellectual Property License Agreement) to any
               Affiliate and prior to any disclosure, Logitech shall enter into
               a written agreement with such Affiliate and such written
               agreement shall contain terms similar to subsections (i)-(v)
               below. Logitech will not disclose Source Code material (other
               than firmware source code designated by Immersion as "Authorized
               For Modification" pursuant to Section 2.2.1 of the Intellectual
               Property License Agreement) to any third parties without
               Immersion's prior written consent. Such disclosures, if any,
               shall be upon terms similar to subsections (i)-(v) below. The
               escrow agreement will include the following minimum terms and
               conditions, which shall not be applicable to the firmware source
               code that is designated by Immersion as "Authorized For
               Modification" pursuant to Section 2.2.1 of the Intellectual
               Property License Agreement, use of which is governed by the
               Intellectual Property License Agreement:

        (i)    Immersion will grant Logitech the right to use the Source Code
               Materials solely for the purpose of maintaining object code
               versions of the Immersion Software portion of the Immersion
               Product Model Technology in the Planar Force Feedback Cursor
               Control Devices or to continue development or support of the
               Planar Force Feedback Cursor Control Devices.

        (ii)   Logitech will acknowledge and agree that use of the Source Code
               Materials is furnished to Logitech on a confidential and secret
               basis for the sole and exclusive use of Logitech, and not for
               copying, distribution, sale, sublicense or disclosure to third
               parties except as provided under the Intellectual Property
               License Agreement signed by the Parties. In the event that
               Logitech obtains the Source Code Materials pursuant to the terms
               of the escrow agreement, Logitech will agree that it will not
               publish, disclose or otherwise divulge the Immersion Source Code
               to any person, except officers, employees and independent
               contractors of Logitech who have entered into non-disclosure
               agreements and need access to the Immersion Source Code Materials
               to perform their duties. Logitech may make one

                                       20
<PAGE>   21

               (1) machine-readable copy of the Immersion Source Code Materials
               solely for backup and archival purposes. Logitech agrees to
               reproduce and include all copyright and other proprietary notices
               appearing in or on any and all Immersion Source Code Materials
               provided to Logitech by the escrow agent on any copy made by
               Logitech.

        (iii)  Logitech will agree to take all necessary steps to prevent
               unauthorized disclosure of the Immersion Source Code Materials,
               including but not limited to the following:

                      (a) The building in which Logitech uses the Immersion
               Source Code Materials shall have restricted access twenty-four
               (24) hours a day;

                      (b) The Immersion Source Code Materials shall be used only
               in a location within such building to which access is further
               restricted to persons authorized to use the Immersion Source
               Code;

                      (c) Logitech shall prevent telephone or other remote
               access to the Immersion Source Code Materials from other
               locations; and


                      (d) The Immersion Source Code Materials shall be installed
               only on a single computer system which is password protected, and
               all Immersion Source Code Materials files will be password
               protected.

(iv)    Logitech shall be liable to Immersion or its successor company for all
        direct and indirect, consequential, special and incidental damages
        resulting from any unauthorized disclosure by Logitech of the Immersion
        source code. To the extent, if any this Section 13 ("Source Code
        Escrow") is inconsistent or conflicts with any provision of this
        Agreement, this Section 13 ("Source Code Escrow") shall be controlling.

(v)     The obligations of this Section 13 ("Source Code Escrow") shall survive
        any termination or expiration of the escrow agreement.

14.     LOGITECH WARRANTY.

        Logitech represents and warrants that it will not knowingly provide to
        Immersion any data, specifications, designs or similar information that
        infringe upon or violate any intellectual property rights of a third
        party.

15.     TRADEMARK INFRINGEMENT INDEMNIFICATION BY IMMERSION

        Subject to prompt notification by Logitech, cooperation by Logitech and
        control of all litigation and/or settlement by Immersion, Immersion
        shall indemnify, defend and hold Logitech harmless from and against any
        and all claims, damages, liabilities, judgments, settlements, costs and
        expenses (including reasonable attorneys' fees) suffered or incurred by
        Logitech arising out of a claim of infringement of any Immersion
        trademark, service

                                       21
<PAGE>   22

        mark, or trade name resulting from the labeling requirement of
        Intellectual Property License Agreement Section 2.5 ("Label
        Requirements"). In the case of an infringement or alleged infringement
        of any such Immersion trademark, service mark, or trade name, Immersion
        will have the right to require Logitech to stop using such trademark,
        service mark, or trade name and will provide a new trademark to be used
        in connection with the Immersion Product Model Technology.

16.     CONFIDENTIALITY.

        16.1   OBLIGATIONS. During the course of this Agreement, each Party may
               be a disclosing Party (hereinafter called Discloser) for
               transmitting certain proprietary information to the other Party
               (hereinafter called Recipient). Recipient agrees to treat as
               confidential all such proprietary information, including all
               information, written or oral, relating thereto, including, but
               not limited to, know how, concepts, techniques, drawings,
               specifications, processes, computer programs, designs and
               systems, manufacturing and marketing information, received from
               Discloser, and Recipient agrees not to publish such information
               or disclose same to others except to those employees,
               subcontractors and sublicensees to whom disclosure is necessary
               to order to carry out the purpose for which such information is
               supplied. Recipient shall inform such employees, subcontractors
               and sublicensees of the confidential nature of such information
               and of their obligation to keep same confidential. Recipient
               further agrees not to use such proprietary information for
               Recipient's own benefit or for the benefit of others, other than
               in accordance with this Agreement, without Discloser's prior
               written consent, and that all tangible materials, including
               written material, photographs, discs or other documentation
               embodying such proprietary information shall remain the sole
               property of Discloser and shall be delivered to Discloser upon
               Discloser's request. Upon Discloser's request a Receiving party
               shall return any and all copies of Discloser's confidential
               information or, at Discloser's option, the Receiving party shall
               destroy such copies and notify Discloser in writing when such
               copies have been destroyed.

        16.2   EXCEPTIONS. The foregoing obligations of confidentiality do not
               apply to information which was previously known to Recipient, is
               rightfully received from a third party by Recipient, or becomes
               publicly known or available without breach of this Agreement by
               Recipient.

17.     LIMITATION OF LIABILITY.

        17.1   EXCEPT AS PROVIDED IN SECTION 13 ("SOURCE CODE ESCROW"), IN NO
               EVENT WILL LOGITECH OR IMMERSION BE LIABLE FOR LOST PROFITS, OR
               ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
               HOWEVER CAUSED AND ON ANY


                                       22
<PAGE>   23

               THEORY OF LIABILITY, ARISING IN ANY WAY IN CONNECTION WITH THIS
               AGREEMENT. THIS LIMITATION WILL APPLY EVEN IF LOGITECH AND
               IMMERSION HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES
               AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
               LIMITED REMEDY.

        17.2   EXCEPT WITH RESPECT TO THE PARTIES' OBLIGATIONS SET FORTH IN
               SECTION 13 ("SOURCE CODE ESCROW") AND WITH RESPECT TO ANY
               QUARTERLY PAYMENTS DUE AND PAYABLE BY LOGITECH HEREUNDER, IN NO
               CASE WILL EITHER PARTY'S TOTAL CUMULATIVE LIABILITY OR
               OBLIGATIONS UNDER THE TERMS OF OR ARISING OUT OF THIS AGREEMENT
               EXCEED ONE MILLION U.S. DOLLARS ($1,000,000).

18.     GENERAL PROVISIONS

        18.1   ENTIRE AGREEMENT. This Agreement and its exhibits, together with
               the Intellectual Property License Agreement, constitutes the
               complete agreement of the parties and supersedes any other
               agreements, written or oral (including all correspondence,
               emails, such as but not limited to the letter regarding Phase 0
               dated February 20, 1998 concerning the subject matter hereof and
               such materials do not have any effect upon the rights and
               obligations of the Parties under this Agreement. This Agreement
               and the Intellectual Property License Agreement in no way
               supersede or affect the Intellectual Property License Agreement
               between Immersion and Logitech dated April 2, 1997 and/or the
               Technology Product Development Agreement between Immersion and
               Logitech dated April 2, 1997.

        18.2   SUCCESSION AND ASSIGNMENT. Either party may assign this Agreement
               provided that the other party has consented in writing to the
               assignment or delegation and provided, further, that the rights
               and obligations of the parties may be assigned to a corporate
               successor in interest in the case of a merger or acquisition or
               in the case of a sale of assets without the prior approval of the
               other party. Any attempt to assign this Agreement in violation of
               the provisions of this Section 18.2 ("Succession and Assignment")
               shall be void.

        18.3   NOTICES. Notices required under this Agreement shall be addressed
               as follows, except as otherwise revised by written notice:

                                       23
<PAGE>   24

               TO IMMERSION:                       TO LOGITECH:
               Louis B. Rosenberg, Ph.D.           General Counsel
               President                           Logitech, Inc.
               Immersion Corporation               6505 Kaiser Drive
               2158 Paragon Drive                  Fremont, CA 94555-3615
               San Jose, CA 95131

        18.4   GOVERNING LAW. The validity, interpretation and performance of
               this Agreement shall be governed by the substantive laws of the
               State of California, without the application of any principle
               that leads to the application of the laws of any other
               jurisdiction.

        18.5   NO AGENCY. Neither party is to be construed as the agent or to be
               acting as the agent of the other party hereunder in any respect.

        18.6   NO RECRUITMENT. During the term of this Agreement and for one (1)
               year after the termination or expiration of this Agreement, each
               Party agrees not to recruit any employee of the other Party.

        18.7   MULTIPLE COUNTERPARTS. This Agreement may be executed in several
               counterparts, all of which taken together shall constitute one
               single Agreement between the parties.

        18.8   NO WAIVER. No delay or omission by either Party hereto to
               exercise any right or power occurring upon any noncompliance or
               default by the other party with respect to any of the terms of
               this Agreement shall impair any such right or power or be
               construed to be a waiver thereof. A waiver by either of the
               parties hereto of any of the covenants, conditions, or agreements
               to be performed by the other shall not be construed to be a
               waiver of any succeeding breach thereof or of any covenant,
               condition, or agreement herein contained. Unless stated
               otherwise, all remedies provided for in this Agreement shall be
               cumulative and in addition to and not in lieu of any other
               remedies available to either party at law, in equity, or
               otherwise.

        18.9   SEVERABILITY. If any one or more of the provisions of this
               Agreement shall be held to be invalid, illegal or unenforceable,
               the validity, legality or enforceability of the remaining
               provisions of this Agreement shall not in any way be affected or
               impaired thereby.

        18.10  AMENDMENTS IN WRITING. Any amendment to this Agreement shall be
               in writing and signed by both parties hereto.

        18.11  INTERPRETATION. Since this Agreement was prepared by both parties
               hereto, it shall not be construed against any one party as the
               drafting party.

                                       24
<PAGE>   25

        18.12  DISPUTE RESOLUTION. Except in the case of a breach of an
               obligation related to a Party's intellectual property rights, in
               the event either Party concludes that it is in its best interest
               to file any legal action against the other, the Party shall
               contact the other Party's management and at least two (2) senior
               managers from each Party shall meet without legal counsel or
               interruption for a minimum amount of three (3) eight (8) hour
               periods and diligently attempt to resolve all disputed matters.
               If the Parties are unable to resolve their difference and either
               Party desires to file a legal action against the other, at least
               two (2) senior managers from each Party and their respective
               counsels shall meet for three (3) eight (8) hour periods and
               diligently attempt to resolve all disputed matters. Either Party
               may request that an independent third party, bound to mutually
               agreed upon legations of confidentially, attend such meeting in
               order to assist the Parties in reaching a reasonable resolution.
               All oral and written information exchanged in these meetings
               shall be exchanged in an effort to settle all disputed matters.
               If either Party still desires to file a legal action against the
               other after these prescribed meetings such Party may file a legal
               action against the other Party as allowed by applicable law in
               Santa Clara County state court or in the Federal Circuit. The
               Parties agree that if a Party does not attend all of the
               prescribed meetings it waives its rights to any monetary damages
               in the legal action(s) it files.

        18.13  SURVIVAL. Sections 6.1 ("Funding"), 6.1.1 ("FEELit Mouse Product
               Funding"), 10 ("Ownership of Technology"), 12.3 ("Effect of
               Termination"), 12.4 ("Third Party Acquisition of Immersion"), 13
               ("Source Code Escrow"), 14 ("Logitech Warranty"), 15 ("Trademark
               Infringement Indemnification by Immersion"), 16
               ("Confidentiality"), 17 ("Limitation of Liability") and 18
               ("General Provisions") will continue after the expiration or
               termination of this Agreement.

        18.14  FORCE MAJEURE. With the exception of the obligation to pay monies
               due and owing, each Party hereto shall be excused from
               performance hereunder for any period and to the extent that it is
               prevented from performing any services pursuant hereto, in whole
               or in part, as a result of delays caused by the other Party or an
               act of God, war, civil disturbance, court order, governmental
               action, laws, orders, regulations, directions or requests, or as
               a result of events such as acts of public enemies, earthquakes,
               fires, floods, strikes or other labor disturbances of the other
               Party or any third party, or other cause beyond its reasonable
               control and which it could not have prevented by reasonable
               precautions, and such nonperformance shall not be a default
               hereunder or a ground for termination hereof.

                                       25
<PAGE>   26

        IN WITNESS WHEREOF, the authorized representatives of the parties hereto
have signed this Agreement as of the date and year last set forth below.

LOGITECH:                                   IMMERSION:

LOGITECH, INC.                              IMMERSION CORPORATION

By:    /s/ W. H. Hausen                      By:   /s/ Louis Rosenberg
   --------------------------                   --------------------------------
Name:  W. H. Hausen                         Name: Louis Rosenberg
     ------------------------                    -------------------------------

Title: SVP/GM                              Title: President
      -----------------------                    -------------------------------

Date:  4/13/98                              Date: April 13, 1998
     ------------------------                    -------------------------------


                                       26
<PAGE>   27

                                    EXHIBIT A
                                  SPECIFICATION

        Immersion shall develop a Mouse Product to conform to the following
basic specifications: The Mouse Product shall be a two degree of freedom mouse
controller with active force feedback functionality along each of the two
displacement axes. The Mouse Product will be fixed by a linkage to a mouse pad
that houses the actuators and sensors. The Mouse Product will allow both
absolute position data and relative position data to be reported to the host
computer. The Mouse Product must be compatible with Intel based personal
computers (or equivalent) running Microsoft Windows 98 and NT operating systems.
It must connect to the PC through a universal Serial Bus ("USB") interface using
the USB communication protocol for "HID" and/or "PID" class devices (or HID
equivalent). In addition to receiving position data and button press data from
the Mouse Product across the USB, the host computer will command force
sensations on the Mouse Product by sending a high level force command with
command parameters across the USB. The completed work must include host drivers,
firmware and electromechanical hardware that work together to allow cursor
related force feedback sensations to be generated by a processor on-board the
Mouse Product (for example, physical detent sensations when traversing a menu
item). Said sensations must be appropriately coordinated with events running in
host software applications. The programming of coordination between force
sensations and software events will be achieved using a high-level Application
Programming Interface ("API") that allows software developers to command force
feedback sensations from their applications. For gaming applications, the
Windows API will use the "DirectX" force feedback implementation as its core and
the Mouse Product must have compatible firmware that locally produces all key
features supported by the then current DirectX 6.0 (Direct-Input) specification.
For non-gaming applications, API will also enable advanced features not
necessarily specified by DirectX as included in the current FEELit API
specification. The device must be able to provide mouse functionality (no force
feedback) when powered by USB only, in low power mode (4.4V, 100 mA) to comply
with the USB Specification at power up.

        Requirement Overview: The Mouse Product must be a high quality, premium
cursor control peripheral capable of providing accurate positioning data and
producing realistic force feedback sensations. The product must consist of the
following subsystems:

        Mouse Handle: Logitech to provide the design. A deadman switch is not
        currently provided from Immersion but may be included by Logitech if it
        proves necessary.

        Base Enclosure/Support: Immersion to provide the basic mouse pad housing
        concept and recommendations. Logitech to provide the industrial design.
        Logitech to do detailed design with input from Immersion. The support
        must carry the mouse loads, both user loads and force feedback loads,
        without introducing excessive friction or binding. The support must
        include a hard stop around the peripheral of the mouse workspace. Range
        of motion provided for the Mouse Product is specified at the end of this
        section.

        Transmission: Immersion to provide a parallel linkage design. The
        transmission will be a five-bar linkage structure that conveys
        mechanical power from actuators to the Mouse Handle.


                                       27
<PAGE>   28
        Actuator: Immersion to provide the full design of custom flat actuators
        (voice coils) optimized for the Mouse Product embodiment. Logitech will
        produce the actuator coils but Immersion will supply the Magnet Assembly
        as a separate component governed by a separate Component Supply
        Agreement.

        Spring Centering: Physical springs are not needed for this product. All
        spring centering for gaming applications will be simulated by the local
        processor.

        Power Electronics: Immersion must provide the initial design. There will
        be an external power source (brick) in the initial product. [****]
        Product will draw non-force feedback power from USB.

        Microprocessor and Interface Electronics: Immersion must provide the
        board design for controller electronics, to be industrialised by
        Logitech. Immersion will supply the FEELit Chip processor under a
        separate OEM agreement, said processor including firmware to create
        local force feedback sensations. Design will be USB high speed
        compatible. It is currently estimated that the COG for the die-shrink
        version of the FEELit Chip in production volumes (100,000 units per
        year) will be [****] or less.

        Sensors: Immersion provides recommendation and design implementation for
        sensors that monitor the motion of the mouse and report such data back
        to the host across USB via the microprocessor. It is currently estimated
        that the COG for the sensing electronics will be less than [****].

        Sensitivity: Mouse to support basic mouse ballistic scaling algorithms
        wherein mouse position sensitivity is varied with velocity of mouse
        movement. [****].

        Embedded Software: Immersion must provide the HEX code. The embedded
        software will be Direct-X and FEELit compatible and USB enabled.
        Logitech will not have access to any parts of the source code (including
        but not limited to the force feedback core) except as provided in
        Section 2.2.1 ("Firmware Source Code"). [****] After the final firmware
        is delivered, Immersion will provide access to several sections of the
        firmware including those related to [****]

        Host Software: Immersion will provide drivers that manage force feedback
        of the device in Windows 98 and NT. The driver will support the
        DirectInput API and the FeelIt API. A custom interface may be needed to
        communicate with existing Logitech MouseWare drivers. This custom
        interface would be developed between Logitech and Immersion. The general
        breakdown of the software should be such that Immersion manages the
        Force Feedback components, and Logitech's MouseWare manages the button
        programmability, wheel support, port management, and sensor and button
        reporting for cursor movement control as well as gaming movement control
        through DirectX.

*Certain information on this page has been omitted and filed separately with the
Commission.  Confidential  treatment  has been  requested  with  respect  to the
omitted portions.

                                       28
<PAGE>   29

        Switches and Buttons: The product will support three standard moue
        buttons plus [****], all processed by the FEELit Chip if possible.

        Compliance: The Immersion/Logitech design must comply with 761325-0000
        Rev A Logitech EMI standard. Exceptions to this standard must be duly
        approved by Logitech. GOI-740329-00 Rev B is the current generic
        reference for reliability. Applicable standards are the following:

               Drop: 90 cm

               Light immunity: 100 kLux

               Environmental: -40.. +70C (non Operating, 53 Hours cycle)
                              0C (operating, 8 hours)
                              +40C (operating, 90% RH, 8 hours)
                              +40C (operating, 10% RH, 8 hours)

               Vibration: refer to GOI-740329-00

               Shock: refer to GOI-740329-00

        Product Details: The product must perform as follows:

               Range of Motion: No less than [****]

               Force Output: A minimum of [****] grams (peak)

               Dimensions: The size shall be minimized within the constraints of
               packaging.

               Power Consumption: No more than [****] watts peak.

               Tracking: Allows [****].

        Target Cost: Logitech desires a product with a suggested retail price of
$99 assuming China based labor costs, approximately [****] Logitech margin, and
approximately [****] in nine-level costs. While many of the component costs,
labor costs, and other factors that affect Logitech's ability to hit any given
price target are not related to Immersion's obligations under this contract,
there are currently unknown component costs that do depend upon Immersion's
design. These unknown component costs are the cost of goods for the sensor
electronics and actuator subsystem. At the present time, the preliminary sensor
electronics component costs are estimated at [****] and the preliminary actuator
component costs are estimated at [****]. Based upon the current specification,
Immersion has informed Logitech that it expects that [****] to [****] can be cut
from the combined component costs of the sensor electronics and actuator
subsystem. Note: all costs are based upon the production volume target of
100,000 units per year.

*Certain information on this page has been omitted and filed separately with the
Commission.  Confidential  treatment  has been  requested  with  respect  to the
omitted portions.

                                       29
<PAGE>   30

                                    EXHIBIT B
                               MILESTONE SCHEDULE



PAYMENT MILESTONES                                                     AMOUNT       APPROX DATE
------------------                                                     ------       -----------
                                                                          
DESIGN STAGE                                                                          (Q2)
Actuator design has been approved
PAO PWA transferred to Logitech, and
  approved by Logitech

                                                           TOTAL        75k          AUG 98

EVT PREPARATION                                                                       (Q3)
Actuator ready for qualification
EVT actuators available in TWN
FW available for EVT

                                                           TOTAL        75k        NOV-DEC 98

EVT EXIT - DVT ENTRY                                                                  (Q4)
EVT completed successfully
DVT actuators available in TWN
FWQA1 completed

                                                           TOTAL        75k          MAR 99

DVT EXIT - PVT ENTRY                                                                  (Q1)
DVT completed successfully
PVT actuators available in TWN
FWQA2 completed successfully

                                                           TOTAL        40k        APR-MAY 99

PVT EXIT                                                                              (Q2)
PVT completed successfully
MP started

                                                           TOTAL        20k          JULY 99

SW ACTIVITIES:
To be planned according to SW milestones ...> Jim McCarthy              85k



                                       30

<PAGE>   31

                                    EXHIBIT C

                                Change Order Form

Date:

Change Control Form No.:

Description of Change:

Reason for Change:

Man Hours:

Impact on Schedule:

Affect on Cost:

Accepted by Logitech:                       Accepted by Immersion:

LOGITECH, INC.                                 IMMERSION CORPORATION

By:                                        By:
   ------------------------------             ----------------------------------
Name:                                      Name:
     ----------------------------               --------------------------------

Title:                                     Title:
      ---------------------------                -------------------------------

Date:                                      Date:
     ----------------------------               --------------------------------

                                      31
<PAGE>   32

                                    EXHIBIT D

                           Software License Agreement

SOFTWARE LICENSE AGREEMENT. LOGITECH IS WILLING TO LICENSE THE ENCLOSED SOFTWARE
TO YOU ONLY ON THE CONDITION THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS
LICENSE AGREEMENT. This is a legal agreement between (either an individual
end-user or an entity) and Logitech. By opening the software package, you are
agreeing to be bound by the terms and conditions of the Agreement. If you do not
agree to the terms of this Agreement, promptly return the software package and
other items that are part of this product in their original package with your
payment receipt to your point of purchase for a full refund.

GRANT OF LICENSE. Logitech and its suppliers grant you a nonexclusive license to
use one copy of the enclosed software program ("Software") on one computer only
with the Logitech product you have purchased. No other rights are granted. The
Software is in use if it is loaded on the computer's permanent or temporary
memory. For backup purposes only, you may make one copy of the Software. You
must include on the backup copy all copyright and other notices included on the
Software as supplied by Logitech. Installation on a network server for the sole
purpose of your internal distribution of the Software is permitted only if you
have purchased an individual Software package for each networked computer to
which the Software is distributed.

RESTRICTIONS. Logitech and its suppliers retain ownership of the Software. You
shall not decompile, disassemble, reverse-engineer, or modify the Software in
any way. You may not transmit the Software over a network (except as expressly
permitted by above), by telephone, or electronically using any means. You may
not transfer the software except upon a permanent transfer of the enclosed
Logitech product provided that all software updates are included in the
transfer, you do not retain a copy of the Software, and the transferee agrees to
be bound by the terms and conditions in the license. Upon any violation of the
provisions of this Agreement, rights to use the Software shall automatically
terminate and the Software must be returned to Logitech or all copies of the
Software destroyed.


                                       32
<PAGE>   33

                                    EXHIBIT E

                   Immersion Packaging Labeling Specification

Logitech must place or have placed the following notice or other similar mark,
at Immersion's request, on the underside (exterior) of those products which
incorporate Licensed Technology as well as on the packaging and manuals for such
products:

      "FEELit(TM)  Force Feedback Technology Licensed from Immersion
Corporation".

Logitech must also place or have placed the following FEELit Mouse logo (or
future derivative of the mark as reasonably approved by Logitech) at Immersion's
request, prominently on retail packaging and manuals such that the logo is
clearly legible and occupies a rectangular area of no less than 0.70 inches by
0.825 inches. The mark must be displayed on at least two surfaces of the retail
packaging, including the front surface and specifically not including the bottom
surface.

             [LOGO]                      [DIAGRAM]


                                       33


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