Technology Product Development Agreement

Certain information in this document has been omitted and filed separately with

the Commission. Confidential treatment has been requested with respect to the

omitted portions.





CONFIDENTIAL TREATMENT REQUESTED - EDITED COPY





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").





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.







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





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



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.







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







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,



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.







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



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.







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



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







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







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

Deliver ...