IMMERSION CORPORATION AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.35
This Amended and Restated Employment Agreement (the “Agreement”) is entered into
by and between Immersion Corporation, a Delaware corporation (the “Company”) and Xxxxxx
Xxxxxx (the “Employee”), effective as of December 1, 2007 (the “Effective Date”).
RECITALS
1. The Employee is and has been employed by the Company and is currently the
Company’s President and Chief Executive Officer.
2. The Company and the Employee are parties to an employment agreement
dated November 5, 2001, (the “Prior Agreement”).
3. The
Company and the Employee wish to amend and restate the Prior Agreement in the
form of this Agreement, effective as of the Effective Date.
4. Certain capitalized terms used in this Agreement are defined in Section 8 below.
AGREEMENT
In consideration of the mutual covenants herein contained, and in consideration of
the continuing employment of the Employee by the Company, the parties agree as follows:
1. POSITION AND RESPONSIBILITIES. The Company shall employ the Employee in the
position of President and Chief Executive Officer, reporting solely to the Board of
Directors of the Company (the “Board”), and assuming and discharging such
responsibilities as are commensurate with such position. The Employee shall comply with
and be bound by the Company’s operating policies, procedures and practices from time to
time in effect during his employment. During the Employee’s employment with the Company,
the Employee shall devote his full time, skill and attention to his duties and
responsibilities, and shall perform them faithfully, diligently and competently, and the
Employee shall use his best efforts to further the Company’s business.
2. TERM OF EMPLOYMENT. This Agreement shall become effective as of the Effective
Date, and shall supersede and replace the Prior Agreement, which shall be void and of no
further effect. This Agreement and the Employee’s employment with the Company shall
continue until terminated by reason of the Employee’s death or by either party at any
time, with or without notice, for any or no reason. The parties agree and acknowledge
that this Agreement is an “at will” agreement and that no implied covenant or standard of
practice will cause this Agreement to have any minimum period of employment.
3. BASE COMPENSATION. For all services to be rendered by the Employee to the Company
while this Agreement is in effect, the Employee shall receive a minimum annual base
salary of $300,000, payable in accordance with the Company’s standard payroll practices.
The Compensation Committee of the Board shall review the Employee’s base salary at least
annually. The annual base salary specified in this Section 3, as such base salary may be
increased during the term of this Agreement, is referred to herein as “Base
Compensation.”
4. ANNUAL INCENTIVE. For each fiscal year during the term of this Agreement, the
Employee shall be eligible to receive additional cash compensation (“Annual Incentive”)
under the Company’s annual variable compensation plan based upon specific financial
and/or other targets approved by the Compensation Committee of the Board. Unless the
Company determines otherwise, the Employee’s Annual Incentive shall be an amount equal to
a predetermined percentage of his Base Compensation. Any Annual Incentive compensation
that becomes payable to the Employee shall be paid in accordance with the Company’s
standard practices and policies.
5. OTHER BENEFITS. The Employee shall be entitled to participate in the employee
benefit plans and programs that the Company makes available to its senior executives,
subject to the rules and the regulations applicable hereto. The Company reserves the
right to cancel or change the benefit plans and programs it offers to its senior
executives at any time. The Employee will be eligible for vacation and sick leave in
accordance with the policies in effect for senior executives during the term of this
Agreement. The Company shall reimburse the Employee for all reasonable expenses actually
incurred or paid by the
Employee in the performance of his services on behalf of the Company, subject to and in accordance
with the Company’s expense reimbursement policy as from time to time in effect. Any reimbursement
of business expenses the Employee is entitled to receive pursuant to this Agreement shall (a) be
paid no later than the last day of the Employee’s taxable year following the taxable year in which
the expense was incurred, (b) not affect any other expenses that are eligible for reimbursement in
any taxable year and (c) not be subject to liquidation or exchange for another benefit.
6. TERMINATION OF EMPLOYMENT.
(a) TERMINATION WITHOUT CAUSE OR FOR CONSTRUCTIVE REASON. If the Company terminates the
Employee’s employment other than for “Cause,” or if the Employee terminates his employment for a
“Constructive Reason” (as those terms are defined in Section 8), then, provided that the Executive
has executed a full general release, in a form satisfactory to Company, of all claims, known or
unknown, that the Employee may have against the Company arising out of or any way related to
Employee’s employment or termination of employment with Company and such release has become
effective on or before the forty-fifth (45th) day following the Employee’s termination of
employment, in addition to all earned but unpaid Base Compensation and any other amounts to which
the Employee is entitled:
(i) the Company shall pay the Employee an amount equal to his Base Compensation for a
period of twelve (12) months, with fifty percent (50%) of such amount to be paid in a lump sum on
the forty-fifth (45th) day following such termination of employment and the remaining 50% of such
amount to be paid in a lump sum on the first day of the seventh month following such termination of
employment;
(ii) for a period of twelve (12) months following the Employee’s termination of
employment, the Company shall continue to provide the Employee with the same health, dental and
vision benefits as provided to the Employee immediately prior to such termination or, at the
election of the Company and provided that the Employee makes a timely election to obtain continued
group health insurance (COBRA) under the Company’s applicable group health plan, the Company will
pay the Employee’s COBRA premiums for such period of twelve (12) months or, in any event until the
Employee is eligible to receive health insurance benefits under another group health plan,
whichever occurs first,
(iii) the Company shall pay to the Employee any earned but unpaid Annual Incentive,
prorated to the date of the Employee’s termination of employment, reimburse all reasonable
business-related expenses and pay all other benefits required by law or by the terms of the
applicable plan or benefit program; and
(iv) except as otherwise provided under Section 7(a) below with respect to a termination
in connection with a Change of Control, the Employee shall immediately vest in an additional
seventy-five percent (75%) of his then unvested Company stock and Company stock options.
All options, to the extent unexercised and exercisable by the Employee on the date on which the
Employee’s Service is terminated, may be exercised by the Employee within six (6) months (or such
other longer period of time as determined by the Board, in its sole discretion) after the date on
which the Employee’s Service terminated, but in any event no later than the Option Expiration Date.
(b) TERMINATION AS A RESULT OF DEATH; DISABILITY. In the event of the Employee’s death
or termination of employment by reason of the Employee’s “Disability,” (as such terms are defined
in Section 8), during the term of this Agreement, then:
(i) the Company shall pay the Employee or to the representative of the Employee’s estate
all amounts of unpaid Base Compensation and any earned but unpaid Annual Incentive, reimburse all
reasonable business-related expenses and pay all other benefits required by law or by the terms of
the applicable plan or benefit program;
(ii) the Employee’s then unvested Company stock and Company stock options shall
immediately vest with respect to the number of shares that would have vested had the Employee’s
employment continued for an additional twenty-four (24) months; and
(iii) in the event of the Employee’s termination of employment by reason of Disability,
the Company shall pay to the Employee in a lump sum on the first day of the seventh month
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following such termination of employment an amount equal to his Base Compensation for a period of
six (6) months, less any disability payments made by the Company or its insurance carriers.
All options, to the extent unexercised and exercisable on the date on which the Employee’s Service
is terminated, may be exercised by the Employee’s guardian or legal representative at any time
prior to the expiration of 12 months after the date on which the Employee’s Service terminated, but
in any event no later than the Option Expiration Date.
(c) VOLUNTARY TERMINATION; TERMINATION FOR CAUSE. In the event the Employee’s employment with
the Company terminates either (i) voluntarily by the Employee without a “Constructive Reason,” of
(ii) involuntarily by the Company for “Cause,” then
the Company shall have no further obligations
hereunder except to pay to the Employee all amounts of unpaid Base Compensation and any earned but
unpaid Annual Incentive, reimburse all reasonable business-related expenses and pay all other
benefits required by law or by the terms of the applicable plan or benefit program.
(d) COMPLIANCE WITH SECTION 409A. Notwithstanding anything set forth herein to the contrary,
no amount payable pursuant to this Agreement which constitutes a “deferral of compensation” within
the meaning of the Treasury Regulations issued pursuant to Section 409A of the Internal Revenue
Code (the “Section 409A Regulations”) shall be paid unless and until the Employee has incurred a
“separation from service” within the meaning of the Section 409A Regulations. Furthermore, to the
extent that the Employee is a “specified employee” within the meaning of the Section 409A
Regulations as of the date of the Employee’s separation from service, no amount that constitutes a
deferral of compensation which is payable on account of the Employee’s separation from service
shall be paid to the Employee before the date (the “Delayed Payment Date”) which is first day of the
seventh month after the date of the Employee’s separation from service or, if earlier, the date of
the Employee’s death following such separation from service. All such amounts that would, but for
this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the
Delayed Payment Date.
The Company intends that income provided to the Employee pursuant to this Agreement will not
be subject to taxation under Section 409A of the Internal Revenue Code. The provisions of this
Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of
Section 409A. However, the Company does not guarantee any particular tax effect for income provided
to the Employee pursuant to this Agreement. In any event, except for the Company’s responsibility
to withhold applicable income and employment taxes from compensation paid or provided to the
Employee, the Company shall not be responsible for the payment of any applicable taxes on
compensation paid or provided to the Employee pursuant to this Agreement.
7. CHANGE OF CONTROL.
(a) ACCELERATED VESTING. Upon a “Change of Control” (as defined in Section 8), the
Employee shall immediately vest in an additional seventy-five percent (75%) of his then unvested
Company stock and Company stock options. Notwithstanding the forgoing, in the event that a Change
of Control occurs on or before the date three (3) months following the date on which either (i) the
Company terminates the Employee’s employment other than for Cause, or (ii) the Employee terminates
his employment for a Constructive Reason, then in either case upon the date of such subsequent
Change of Control the Employee shall vest in an additional seventy-five percent of his then
unvested Company stock and Company stock options.
8. DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings:
(a) CAUSE. “Cause” means: (i) the Employee’s willful and repeated failure to comply
with the lawful written direction of the Board, after receiving written notice; (ii) the
Employee’s gross negligence or willful misconduct in the performance his duties, after
receiving written notice; or (iii) the conviction of or entry of a plea of nolo
contendere or guilty to a felony or a crime causing demonstrable material harm to the
Company.
(b) CHANGE OF CONTROL “Change of Control” means:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3
| Xxxxxx Amended And Restated Employment Agreement, December 1, 2007 | Page 3 |
under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%)
or more of the total voting power represented by the Company’s then outstanding voting securities;
or
(ii) A change in the composition of the Board occurring within a three-year period, as a
result of which fewer than a majority of the directors are “Incumbent Directors.” “Incumbent
Directors” shall mean directors who either (A) are directors of the Company as of December 1, 2007,
or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least
a majority of the Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors of the Company); or
(iii) The consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity (or parent
thereof)) at least sixty percent (60%) of the total voting power represented by the voting
securities of the Company or such surviving entity (or parent) outstanding immediately after such
merger or consolidation; provided, however, that any person who acquired securities of the Company
prior to the occurrence of a merger or consolidation in contemplation of such transaction, and who
after such transaction possesses direct or indirect beneficial ownership of at least ten percent
(10%) of the securities of the Company or the surviving entity (or parent) immediately following
such transaction, shall not be included in the group of shareholders of the Company immediately
prior to such transaction; or
(iv) The consummation of the sale, lease or other disposition by the Company of all or
substantially all of the Company’s assets.
(c) CONSTRUCTIVE REASON. “Constructive Reason” means the occurrence of any
one or more of the following without the Employee’s prior written consent:
(i) A material adverse change in the Employee’s position that causes it to be of less
stature or of less responsibility; provided, however, that if after a Change of Control the Employee
is still the most senior operations and/or finance executive of the Company and the Company
continues to operate as an independent subsidiary or independent controlled affiliate, then no
Constructive Reason shall have occurred;
(ii) A
change in the position to whom the Employee reports; provided, however, that if
after a Change of Control the Employee reports to the Company’s Chief Executive Officer and the
Company continues to operate as an independent subsidiary or independent controlled affiliate, then
no Constructive Reason shall have occurred;
(iii) An involuntary reduction of more than fifteen percent (15%) of the
Employee’s Base Compensation; or
(iv) Relocating the Employee to a facility or location more than thirty (30) miles from
his then current location.
This provision applies only if the Employee elects to terminate his employment within thirty (30)
days after the occurrence of a Constructive Reason.
(d) DISABILITY. “Disability” means that the Employee has been unable to
substantially perform his duties under this Agreement as a result of his incapacity due to
physical or mental illness, and such inability, at least 90 days after its commencement, is determined to be
total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or the
Employee’s legal representative (such agreement as to acceptability not to be unreasonably withheld).
9. SUCCESSORS.
(a) COMPANY’S SUCCESSORS. Any successor, whether direct or indirect and whether by
purchase, lease, merger, consolidation, liquidation or otherwise, to all or substantially all of
the Company’s business and/or assets shall assume the obligations under this Agreement and shall
perform the obligations under this Agreement in the same manner and
to the same extent as the
Company would be required to perform such obligations in the absence of a succession. Other than
for purposes of Section 8(c)
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(the definition of “Constructive Reason”), the term “Company” shall include any such successor
to the Company’s business and/or assets.
(b) EMPLOYEE’S SUCCESSORS. The terms of this Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or
legal representatives, executors, administrators, successors, heirs, devisees and legatees.
10. NOTICE.
(a) MANNER. Any notice hereby required or permitted to be given shall be sufficiently given if
in writing and upon mailing by registered or certified mail, postage prepaid, to either party at
the address of such party or such other address as shall have been designated by written notice by
such party to the other party.
(b) EFFECTIVENESS. Any notice or other communication required or permitted to be given under
this Agreement will be deemed given on the day when delivered in person, or the third business day
after the day on which such notice was mailed in accordance with Section 10(a).
11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the
internal substantive laws, but not the choice of law rules, of the state of California.
12. SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement, or
any terms hereof, shall not affect the validity or enforceability of any other provision or term of
this Agreement.
13. INTEGRATION.
Except as otherwise expressly provided herein, this Agreement,
together with
the Confidential Information, Invention Assignment and Arbitration Agreement between the Employee
and the Company (the “Confidential Information Agreement”), represent the entire agreement and
understanding between the parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements, whether written or oral. No waiver, alteration or modification of any
of the provisions of this Agreement shall be binding unless in writing and signed by duly
authorized representatives of the parties hereto.
14. EMPLOYMENT TAXES. The payments made pursuant to this Agreement will be subject to
applicable income and employment taxes.
15. COUNTERPARTS. This Agreement may be executed by either of the parties hereto in one
or more counterparts, none of which need contain the signature of more than one party hereto,
and each of which shall be deemed to be an original, and all of which together shall
constitute a single agreement.
16. ARBITRATION. Any dispute or controversy arising out of, or relating to, this Agreement or
the Employee’s employment or termination thereof shall be settled by binding arbitration in
accordance with the provisions of Section 9 of the Confidential Information Agreement, which are
incorporated by reference herein.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of
the Company by a duly authorized officer, as of the Effective Date.
| IMMERSION CORPORATION |
||||
| By: | /s/ Xxxx Xxxxxxx | |||
| Xxxx Xxxxxxx | ||||
| Title: | Chairman, Compensation Committee | |||
| EMPLOYEE |
||||
| /s/ Xxxxxx Xxxxxx | ||||
| Xxxxxx Xxxxxx | ||||
| Xxxxxx Amended And Restated Employment Agreement. December 1, 2007 | Page 5 |
