RETENTION AND OWNERSHIP CHANGE EVENT AGREEMENT
Exhibit 99.2
RETENTION AND OWNERSHIP
CHANGE EVENT AGREEMENT
CHANGE EVENT AGREEMENT
This Amended and Restated Retention and Ownership Change Event Agreement (“Agreement”) is made
effective as of the last date set forth below by and between Immersion Corporation (the “Company”)
and Xxxxxx X. Xxxxxx (“Executive”).
RECITALS
In order to make available compensation pursuant to this Agreement that will not be subject to
taxation under Section 409A (as defined below), Executive and the Board of Directors of the Company
(the “Board”) have determined that it is in the best interests of the Company and Executive to
offer the Retention and Ownership Change Event Agreement by and between the Company and Executive.
The Company intends that income provided to Executive pursuant to this Agreement will not be
subject to taxation under Section 409A, and 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 Executive 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 Executive, the Company shall not
be responsible for the payment of any applicable taxes on compensation paid or provided to
Executive pursuant to this Agreement.
The Board has determined that it is in the best interests of the Company to assure that the
Company will have the continued dedication and service of the Executive, notwithstanding the
possibility or occurrence of a Change in Control (as defined below) of the Company.
AGREEMENT
In recognition thereof, the parties now agree as follows:
| 1. | Definitions. For purposes of this Agreement: |
| (a) | “Change in Control” means the occurrence of any of the following: |
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the total combined voting power of the Company’s
then-outstanding securities entitled to vote generally in the election of the Company’s Board of
Directors; provided, however, that the following acquisitions shall not constitute a Change in
Control: (1) an acquisition by any such person who on the effective date of such transaction is the
beneficial owner of more than fifty percent (50%) of such voting power, (2) any acquisition
directly from the Company, including, without limitation, a public offering of securities, (3) any
acquisition by the Company, (4) any acquisition by a trustee or other fiduciary under an employee
benefit plan of the Company or
1
(5) any acquisition by an entity owned directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the voting securities of the Company; or
(ii) an Ownership Change Event or series of related Ownership Change Events (collectively, a
“Transaction”) in which the stockholders of the Company immediately before the Transaction do not
retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding securities entitled to vote
generally in the election of Directors or, in the case of an Ownership Change Event described in
Section 1(c)(iii), the entity to which the assets of the Company were transferred (the
“Transferee”), as the case may be; or
(iii) a liquidation or dissolution of the Company;
provided, however, that a Change in Control shall be deemed not to include a transaction described
in subsections (i) or (ii) of this Section 1(a) in which a majority of the members of the Board of
Directors of the continuing, surviving or successor entity, or parent thereof, immediately after
such transaction is comprised of incumbent members. Notwithstanding the foregoing, to the extent
that any amount that constitutes deferred compensation subject to and not exempted from the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”),
would become payable under this Agreement by reason of a Change in Control, such amount shall
become payable only if the event constituting a Change in Control would also constitute a change in
ownership or effective control of the Company or a change in the ownership of a substantial portion
of the assets of the Company within the meaning of Section 409A.
(b) “Good Reason” means any of the following conditions, which condition(s) remain(s) in
effect thirty (30) days after written notice to the Board or the Company’s Chief Executive Officer
from Executive of such condition(s):
(i) a material decrease in Executive’s base salary, other than a material decrease that
applies generally to other executives of the Company at Executive’s level;
(ii) a material, adverse change in the Executive’s title, authority, responsibilities, or
duties; or
(iii) the relocation of the Executive’s work place for the Company to a location that is more
than forty (40) miles distant from Executive’s present work location for the Company;
provided, that such written notice must be given within thirty (30) days following the first
occurrence of any of the good reason conditions set forth in this subsection (b) and the
Executive’s resignation must occur within six (6) months following the first occurrence of the good
reason condition.
(c) “Ownership Change Event” means the occurrence of any of the following with respect to the
Company: (i) the direct or indirect sale or exchange in a single or series of
2
related transactions by the stockholders of the Company of more than fifty percent (50%) of the
voting stock of the Company; (ii) a merger or consolidation in which the Company is a party;
or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company
(other than a sale, exchange or transfer to one or more subsidiaries of the Company).
(d) a termination for “Cause” means Executive’s termination based upon (1) Executive’s theft,
dishonesty, misconduct, breach of fiduciary duty, or falsification of any Company documents or
records; (2) Executive’s material failure to abide by the Company’s code of conduct or other
policies (including, without limitation, policies relating to confidentiality and reasonable
workplace conduct); (3) Executive’s unauthorized use, misappropriation, destruction or diversion of
any tangible or intangible asset or corporate opportunity of the Company (including, without
limitation, Executive’s improper use or disclosure of the Company’s confidential or proprietary
information); (4) any intentional act by the Executive that has a material detrimental effect on
the Company’s reputation or business; (5) Executive’s repeated failure or inability to perform any
reasonable assigned duties after written notice from the Company of, and a reasonable opportunity
to cure, such failure or inability; (6) Executive’s conviction (including any plea of guilty or
nolo contendere) for any criminal act that impairs Executive’s ability to perform her duties for
the Company.
(e) “Separation from Service” shall have the meaning determined by Treasury Regulations issued
pursuant to Section 409A.
2. Termination Without Cause. In the event that the Company or its successor
terminates Executive’s employment without Cause and Executive is not entitled to receive the
severance pay and benefits described in Section 3 below, Executive will be entitled to receive the
following payment and benefits, provided that prior to the sixtieth (60th) day following the date
of such termination Executive has signed a general release of known and unknown claims of known and
unknown claims in a form satisfactory to the Company, and the period for revocation has lapsed
without the general release having been revoked:
(a) payment in a lump sum on the sixtieth (60th) day following Executive’s termination of
employment of an amount equal to six (6) months’ base salary at Executive’s final base salary rate,
subject to applicable withholding; and
(b) commencing on the sixtieth (60th) day following Executive’s termination of employment,
payment of the premiums (including reimbursement to Executive of any such premiums paid by
Executive during such sixty (60) day period) necessary to continue Executive’s group health
insurance coverage under COBRA until the earlier of (i) six (6) months following Executive’s
termination date, or (ii) the date on which Executive first becomes eligible to obtain other group
health insurance coverage. Thereafter, Executive may elect to purchase continued group health
insurance coverage at her own expense in accordance with COBRA. Notwithstanding the foregoing,
payment of such premiums shall not commence unless and until Executive has incurred a Separation
from Service.
In the event that a Change in Control constituting a change in ownership or effective control
of the Company or a change in the ownership of a substantial portion of the assets of the Company
within the meaning of Section 409A (a “Section 409A Change in Control Event”)
3
occurs on or before the ninetieth (90th) day following a date on which Executive experiences a
termination of employment in connection with which Executive is entitled to receive the payment
provided by Section 2(a), Executive will be entitled to receive the following additional payment
and benefits:
(c) payment on the sixtieth (60th) day following the Section 409A Change in Control Event of
an amount equal to six (6) months’ base salary at Executive’s final base salary rate, subject to
applicable withholding; and
(d) commencing with the seventh (7th) month following Executive’s termination of employment,
payment of the premiums necessary to continue Executive’s group health insurance coverage under
COBRA until the earlier of (i) twelve (12) months following Executive’s termination date, or (ii)
the date on which Executive first becomes eligible to obtain other group health insurance coverage.
Thereafter, Executive may elect to purchase continued group health insurance coverage at her own
expense in accordance with COBRA. Notwithstanding the foregoing, payment of such premiums shall
not commence unless and until Executive has incurred a Separation from Service.
3. Termination Without Cause or Resignation for Good Reason Due to a Change in
Control. In the event that, within one (1) year following a Change in Control, the Company or
its successor terminates Executive’s employment without Cause or Executive resigns for Good Reason,
Executive will be entitled to receive the following payment and benefits, provide that prior to the
sixtieth (60th) day following the date of such termination Executive has signed a general release
of known and unknown claims of known and unknown claims in a form satisfactory to the Company, and
the period for revocation has lapsed without the general release having been revoked:
(a) payment in a lump sum on the sixtieth (60th) day following Executive’s termination of
employment of an amount equal to twelve (12) months’ base salary at Executive’s final base salary
rate, subject to applicable withholding; and
(b) commencing on the sixtieth (60th) day following Executive’s termination of employment,
payment of the premiums (including reimbursement to Executive of any such premiums paid by
Executive during such sixty (60) day period) necessary to continue Executive’s group health
insurance coverage under COBRA until the earlier of (i) twelve (12) months following Executive’s
termination date, or (ii) the date on which Executive first becomes eligible to obtain other group
health insurance coverage. Thereafter, Executive may elect to purchase continued group health
insurance coverage at her own expense in accordance with COBRA. Notwithstanding the foregoing,
payment of such premiums shall not commence unless and until Executive has incurred a Separation
from Service.
4. Voluntary Termination. In the event that Executive resigns from her employment
with the Company at any time (other than a resignation for Good Reason during the period covered by
Section 3), or in the event that Executive’s employment terminates at any time as a result of her
death or disability (meaning Executive is unable to perform her duties for any consecutive six (6)
month period, with or without reasonable accommodation, as a result of a
physical and/or mental impairment), Executive will be entitled to no compensation or benefits
4
from the Company other than those earned through the date of Executive’s termination. Executive
agrees that if she resigns from her employment with the Company, she will provide the Company with
20 calendar days’ written notice of such resignation. The Company may, in its sole discretion,
elect to waive all or any part of such notice period and accept the Executive’s resignation at an
earlier date.
5. Termination for Cause. If Executive’s employment is terminated by the Company at
any time for Cause as defined above in paragraph 1, Executive will be entitled to no compensation
or benefits from the Company other than those earned through the date of her termination for Cause.
6. Compliance With Section 409A.
(a) Notwithstanding anything set forth herein to the contrary, no amount payable pursuant to
Section 2 or Section 3 of the Agreement which constitutes a “deferral of compensation” within the
meaning of Treasury Regulations promulgated pursuant to Section 409A (the “Section 409A
Regulations”) shall be paid unless and until Executive has incurred a Separation from Service.
Furthermore, to the extent that Executive is a “specified employee” of the Company as of the date
of Executive’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 paid to Executive before the
date (the “Delayed Payment Date”) which is first day of the seventh month after the date of
Executive’s separation from service or, if earlier, the date of Executive’s death following such
separation from service. All such amounts that would, but for this paragraph, become payable prior
to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date.
(b) The parties intend that the payments and benefits provided to Executive pursuant to this
Agreement be paid in compliance with Section 409A so that no excise tax is incurred under Section
409A. To the extent permitted by Section 409A and the Section 409A Regulations, the parties agree
to modify this Agreement, the timing (but not the amount(s)) of the payments or benefits provided
herein, or both, to the extent necessary to comply with Section 409A.
7. At-Will Employment. Notwithstanding anything contained in this Agreement, the
parties acknowledge and agree that Executive’s employment with the Company is and shall continue to
be “at-will.”
8. Dispute Resolution. In the event of any dispute or claim between the parties,
including any claims relating to or arising out of this Agreement or the termination of Executive’s
employment with the Company for any reason, Executive and the Company agree that all such disputes
shall be fully resolved by binding arbitration conducted by the American Arbitration Association
(“AAA”) in Santa Xxxxx County, under the AAA’s National Rules for the Resolution of Employment
Disputes then in effect, which are available online at the AAA’s
website at xxx.xxx.xxx. Executive
and the Company each acknowledge and agree that they are waiving their respective rights to have
any such disputes or claims tried by a judge or jury.
5
9. Notices. Notices and all other communications contemplated by this Agreement shall
be in writing and shall be deemed to have been duly given when personally delivered or when
received if mailed by U.S. registered or certified mail, return receipt requested and postage
prepaid. In the case of the Executive, mailed notices shall be addressed to the Executive at the
home address which the Executive most recently communicated to the Company in writing. In the case
of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Chief Executive Officer.
10. Successors.
(a) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or purchase of all or
substantially all of the Company’s business and/or assets) shall assume the Company’s obligations
under this Agreement in writing and agree expressly to perform the Company’s obligations under this
Agreement in the same manner and to the same extent that the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this Agreement, the term
“Company” shall include any successor to the Company’s business and/or assets which executes and
delivers the assumption agreement described in this subsection (a) or which becomes bound by the
terms of this Agreement by operation of law.
(b) Executive’s Successors. Without the written consent of the Company, the Executive
shall not assign or transfer this Agreement or any right or obligation under this Agreement to any
other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights
of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
11. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive shall not be required to mitigate the amount
of any payment contemplated by this Agreement, nor shall any such payment be reduced by any
earnings that the Executive may receive from any other source.
(b) Modification/Waiver. No provision of this Agreement may be amended, modified,
waived or discharged unless the amendment, modification, waiver or discharge is agreed to in
writing and signed by the Executive and by an authorized officer of the Company (other than
Executive). No waiver by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of any other condition
or provision or of the same condition or provision at another time.
(c) Integration. This Agreement constitutes the entire agreement and understanding
between the parties regarding Executive’s retention and severance benefits, and it supersedes all
prior or contemporaneous agreements, whether written or oral, regarding that subject matter,
including the Prior Agreement.
(d) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California.
6
(e) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
(f) Employment Taxes. All payments made pursuant to this Agreement shall be subject
to withholding of applicable income and employment taxes.
(g) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.
THE PARTIES SIGNING BELOW HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND AND AGREE TO EACH
AND EVERY PROVISION CONTAINED HEREIN.
Dated: |
4 December 2008 | /s/ Xxxxxx | X. Xxxxxx | |||||||
| Xxxxxx X. Xxxxxx | ||||||||||
| Immersion Corporation | ||||||||||
Dated:
|
4 December 2008 | By: | /s/ X.X. Xxxxxx | |||||||
| Its: | CFO/VP Finance | |||||||||
7
