Employment Agreement - Immersion Inc. and Stuart Mitchell
IMMERSION, INC
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Immersion, Inc., a Delaware corporation (the "Company) and Stuart
Mitchell (the "Employee"), effective as of November 5, 2001 (the "Effective
Date).
RECITALS
1. The Employee is and has been employed by the Company and is currently the
Company's Executive Vice-President, Business Development.
2. The Company and the Employee are parties to an employment letter
agreement dated August 11, 1999, (the "Letter Agreement").
3. The Company and the Employee wish to amend and restate the Letter
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 Executive Vice-President, Business Development, reporting to the
Company's Executive Vice President, CFO 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 Letter 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 $200,000, payable in accordance with the Company's
standard payroll practices. Currently the Employee's salary is reduced as a
result of a company-wide salary reduction program. The Employee's base salary
shall be
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reviewed at least annually by the Company's Executive Vice President, CFO. 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 senior management and/or the
Company's Board of Directors (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 thereto.
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.
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, in addition to any other amounts to which the
Employee is entitled: (i) the Company shall continue to pay the Employee his
Base Compensation for a period of six (6) months after the termination date;
(ii) 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 the after-tax cash equivalent, (provided that such amount is
sufficient for the Employee to purchase his own policy), for so long as the
Employee is entitled to continuation of Base Compensation as provided herein,
provided that such coverage shall become secondary if the Employee receives
coverage from a subsequent employer, (iii) the Company shall pay to the Employee
all amounts of unpaid Base Compensation and prorate 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, 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 an additional 12 months of his then unvested Company
stock and Company stock options. All options and grants, 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 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
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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) 12 months of
the Employee's then unvested Company stock and Company stock options shall vest,
and (iii) in the event of disability, the Company shall continue to pay the
Employee his Base Compensation for a period of six (6) months after the
termination date, 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," (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.
7. CHANGE OF CONTROL.
(a) ACCELERATED VESTING. Upon a "Change of Control" (as defined in
Section 8), the Employee shall immediately vest an additional 12 months of his
then unvested Company stock and Company stock options. Notwithstanding the
forgoing, in the event (i) the Company terminates the Employee's employment
other than for Cause, or (ii) the Employee terminates his employment for a
Constructive Reason, in either case during the period beginning three (3) months
prior to a Change of Control, then upon such termination the Employee shall vest
an additional 12 months 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 Management; (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 contendre 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 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 January 1, 2002, 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
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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 a senior business development
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 Business Development Vice President or Operations General Manager
and/or the Company continues to operate as an independent subsidiary or
independent controlled affiliate, then no Constructive Reason shall have
occurred; (iii) A reduction of more than fifteen percent (15%) of the Employee's
Base Compensation (the employee agrees that this condition does not apply to the
current company-wide salary reduction program and that the Employee may
voluntarily elect to participate in future salary reduction programs); 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
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be required to perform such obligations in the absence of a succession. Other
than for purposes of Section 8(c) (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.
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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, INC.
By:__________________________________
Title:_______________________________
EMPLOYEE
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Stuart Mitchell