Exhibit 99.1
IMMERSION CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "OPTION AGREEMENT") is made
and entered into as of the Date of Option Grant, by and between Immersion
Corporation (the "COMPANY") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "OPTIONEE").
Pursuant to the employment agreement entered into by and between the
Company and the Optionee, the Company has granted to the Optionee, as a material
inducement to the Optionee becoming an employee of the Company, an option to
purchase a total of 200,000 shares of the Company's Common Stock, par value
$0.001 per share (the "STOCK"), upon the terms and conditions set forth in this
Option Agreement.
1. Definitions and Construction.
1.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "AFFILIATE" means a parent or subsidiary corporation as defined
in Sections 424(e) and (f), respectively of the Internal Revenue Code of 1986,
as amended.
(b) "DATE OF OPTION GRANT" means March 1, 2004.
(c) "NUMBER OF OPTION SHARES" means 200,000 shares of Stock, as
adjusted from time to time pursuant to Section 9.
(d) "EXERCISE PRICE" means $9.24 per share of Stock, as adjusted
from time to time pursuant to Section 9.
(e) "INITIAL VESTING DATE" means the date occurring one (1) year
after the Date of Option Grant.
(f) "VESTED RATIO" means, on any relevant date, the ratio determined
as follows:
Vested Ratio
------------
Prior to Initial Vesting Date 0
On Initial Vesting Date, provided the Optionee's Service has 1/4
not terminated prior to such date
Plus Vested Ratio
---- ------------
For each full month of the Optionee's continuous Service from 1/48
the Initial Vesting Date until the Vested Ratio equals
1/1, an additional
(g) "OPTION EXPIRATION DATE" means the date 10 years after the Date
of Option Grant.
(h) "COMPANY" means Immersion Corporation, a Delaware corporation,
and any Affiliate or any successor corporation thereto.
(i) "DISABILITY" means the inability of the Optionee, in the opinion
of a qualified physician acceptable to the Company, to perform the major duties
of the Optionee's position with the Company because of the sickness or injury of
the Optionee.
(j) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(k) "SERVICE" means the Optionee's employment or service with the
Company. Optionee's Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Optionee renders Service to the
Company or a change in the Company for which the Optionee renders such Service,
provided that there is no interruption or termination of the Optionee's Service.
Furthermore, the Optionee's Service with the Company shall not be deemed to have
terminated if the Optionee takes any military leave, sick leave, or other bona
fide leave of absence approved by the Company; provided, however, that if any
such leave exceeds 90 days, the Optionee's Service shall be deemed to have
terminated on the 91st day of such leave unless the Optionee's right to return
to Service with the Company is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Company or
required by law, a leave of absence shall not be treated as Service for purposes
of determining the Optionee's Vested Ratio. The Optionee's Service shall be
deemed to have terminated either upon an actual termination of Service or upon
the corporation for which the Optionee performs Service ceasing to be a Company.
Subject to the foregoing, the Company, in its sole discretion, shall determine
whether the Optionee's Service has terminated and the effective date of such
termination.
1.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall include the
singular. Use of the term "or" is not intended to be exclusive, unless the
context clearly requires otherwise.
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2. TAX STATUS OF OPTION. This Option is intended to be a nonstatutory
stock option and shall not be treated as an incentive stock option within the
meaning of Section 422(b) of the Code.
3. ADMINISTRATION. All questions of interpretation concerning the Option
Agreement shall be determined by the Board or a duly appointed Committee of the
Board authorized to administer and interpret the Option Agreement and the Option
(the Board or such Committee, as the case may be, being referred to as the
"Administrator"). All determinations by the Administrator shall be final and
binding upon all persons having an interest in the Option. Any officer of the
Company, other than the Optionee, shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is
the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
4. EXERCISE OF THE OPTION.
4.1 RIGHT TO EXERCISE. Except as otherwise provided herein, the Option
shall be exercisable on and after the Initial Vesting Date and prior to the
termination of the Option (as provided in Section 6) in an amount not to exceed
the Number of Option Shares multiplied by the Vested Ratio less the number of
shares previously acquired upon exercise of the Option. In no event shall the
Option be exercisable for more shares than the number of Option Shares.
4.2 METHOD OF EXERCISE. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such
other representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Chief Financial Officer of the Company, or other authorized
representative of the Company, prior to the termination of the Option as set
forth in Section 6, accompanied by full payment of the aggregate Exercise Price
for the number of shares of Stock being purchased. The Option shall be deemed to
be exercised upon receipt by the Company of such written notice and the
aggregate Exercise Price.
4.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise provided
below, payment of the aggregate Exercise Price for the number of shares of Stock
for which the Option is being exercised shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of whole shares of Stock owned by
the Optionee having a Fair Market Value (as determined by the Company without
regard to any restrictions on transferability applicable to such stock by reason
of federal or state securities laws or agreements with an underwriter for the
Company) not less than the aggregate Exercise Price, (iii) by means of a
Cashless Exercise, as defined in Section 4.3(c), or (iv) by any combination of
the foregoing.
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(b) TENDER OF STOCK. Notwithstanding the foregoing, the Option may
not be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
(c) CASHLESS EXERCISE. A "CASHLESS EXERCISE" means the assignment in
a form acceptable to the Company of the proceeds of a sale or loan with respect
to some or all of the shares of Stock acquired upon the exercise of the Option
pursuant to a program or procedure approved by the Company (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System). The Company reserves, at any and all times, the right, in the Company's
sole and absolute discretion, to decline to approve or terminate any such
program or procedure.
4.4 TAX WITHHOLDING. At the time the Option is exercised, in whole or
in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from payroll and any other amounts payable to the
Optionee, and otherwise agrees to make adequate provision for (including by
means of a Cashless Exercise to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company, if any, which arise in connection with the Option,
including, without limitation, obligations arising upon (i) the exercise, in
whole or in part, of the Option, (ii) the transfer, in whole or in part, of any
Stock acquired upon exercise of the Option, (iii) the operation of any law or
regulation providing for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any Stock acquired upon exercise of the Option. The
Optionee is cautioned that the Option is not exercisable unless the tax
withholding obligations of the Company are satisfied. Accordingly, the Optionee
may not be able to exercise the Option when desired even though the Option is
vested, and the Company shall have no obligation to issue a certificate for such
Stock.
4.5 CERTIFICATE REGISTRATION. Except in the event the Exercise Price is
paid by means of a Cashless Exercise, the certificate for the Stock as to which
the Option is exercised shall be registered in the name of the Optionee, or, if
applicable, in the names of the heirs of the Optionee.
4.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of shares of Stock upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of shares of Stock upon exercise would
constitute a violation of any applicable federal, state or foreign securities
laws or other law or regulations or the requirements of any stock exchange or
market system upon which the Stock may then be listed. In addition, the Option
may not be exercised unless (i) a registration statement under the Securities
Act shall at the time of exercise of the Option be in effect with respect to the
Stock issuable upon exercise of the Option or (ii) in the opinion of legal
counsel to the Company, the Stock issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. THE OPTIONEE IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED
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UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT
BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.
Questions concerning this restriction should be directed to the Chief Financial
Officer of the Company. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of any
Stock subject to the Option shall relieve the Company of any liability in
respect of the failure to issue or sell such Stock as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
4.7 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NONTRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the Optionee's guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 7, may be exercised by
the Optionee's legal representative or by any person empowered to do so under
the deceased Optionee's will or under the then applicable laws of descent and
distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no longer
be exercised on the first to occur of (a) the Option Expiration Date, (b) the
last date for exercising the Option following termination of the Optionee's
Service as described in Section 7, or (c) a Transfer of Control to the extent
provided in Section 8.
7. EFFECT OF TERMINATION OF SERVICE.
7.1 OPTION EXERCISABILITY.
(a) DISABILITY. If the Optionee's Service with the Company is
terminated because of the Disability of the Optionee, the Option, to the extent
unexercised and exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee (or the Optionee's guardian or
legal representative) at any time prior to the expiration of 12 months after the
date on which the Optionee's Service terminated, but in any event no later than
the Option Expiration Date.
(b) DEATH. If the Optionee's Service with the Company is terminated
because of the death of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee's legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee's death at any time
prior to the expiration of 12 months after the date on which the Optionee's
Service terminated, but in any event no later than the Option Expiration Date.
The
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Optionee's Service shall be deemed to have terminated on account of death if
the Optionee dies within three months after the Optionee's termination of
Service.
(c) OTHER TERMINATION OF SERVICE. If the Optionee's Service with the
Company terminates for any reason, except Disability or death, the Option, to
the extent unexercised and exercisable by the Optionee on the date on which the
Optionee's Service terminated, may be exercised by the Optionee within six
months (or such other longer period of time as determined by the Administrator,
in its sole discretion) after the date on which the Optionee's Service
terminated, but in any event no later than the Option Expiration Date.
7.2 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods set
forth in Section 7.1 is prevented by the provisions of Section 4.6, the Option
shall remain exercisable until three months after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date. The Company makes no representation as to
the tax consequences of any such delayed exercise. The Optionee should consult
with the Optionee's own tax advisor as to the tax consequences to the Optionee
of any such delayed exercise.
7.3 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding the
foregoing, if a sale within the applicable time periods set forth in Section 7.1
of Stock acquired upon the exercise of the Option would subject the Optionee to
suit under Section 16(b) of the Exchange Act, the Option shall remain
exercisable until the earliest to occur of (i) the 10th day following the date
on which a sale of such Stock by the Optionee would no longer be subject to such
suit, (ii) the 190th day after the Optionee's termination of Service, or (iii)
the Option Expiration Date. The Company makes no representation as to the tax
consequences of any such delayed exercise. The Optionee should consult with the
Optionee's own tax advisor as to the tax consequences to the Optionee of any
such delayed exercise.
8. TRANSFER OF CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single or series
of related transactions by the stockholders of the Company of more than 50% of
the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all
of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
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(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change Event or
a series of related Ownership Change Events (collectively, the "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than 50% of the total combined voting power of the outstanding voting stock
of the Company or the corporation or corporations to which the assets of the
Company were transferred (the "TRANSFEREE CORPORATION(S)"), as the case may be.
For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of the Transaction, own the
Company or the Transferee Corporation(s), as the case may be, either directly or
through one or more subsidiary corporations. The Administrator shall have the
right to determine whether multiple sales or exchanges of the voting stock of
the Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
8.2 EFFECT OF TRANSFER OF CONTROL ON OPTION. In the event of a Transfer
of Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "ACQUIRING CORPORATION"),
may either assume the Company's rights and obligations under the Option or
substitute for the Option a substantially equivalent option for the Acquiring
Corporation's stock. For purposes of this Section 8.2, the Option shall be
deemed assumed if, following the Transfer of Control, the Option confers the
right to purchase in accordance with its terms and conditions, for each share of
Stock subject to the Option immediately prior to the Transfer of Control, the
consideration (whether stock, cash or other securities or property) to which a
holder of a share of Stock on the effective date of the Transfer of Control was
entitled. The Option shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control to the extent that the Option is neither
assumed or substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control.
Notwithstanding the foregoing, Stock acquired upon exercise of the Option prior
to the Transfer of Control and any consideration received pursuant to the
Transfer of Control with respect to such Stock shall continue to be subject to
all applicable provisions of this Option Agreement except as otherwise provided
herein. Furthermore, notwithstanding the foregoing, if the corporation the stock
of which is subject to the Option immediately prior to an Ownership Change Event
described in Section 8.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than 50% of the total combined voting power of its voting stock is
held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code, the Option shall not
terminate unless the Administrator otherwise provides in its sole discretion.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the
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shares which are of the same class as the Stock that is subject to the Option
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change Event) shares of another corporation (the "NEW SHARES"),
the Administrator may unilaterally amend the Option to provide that the Option
is exercisable for New Shares. In the event of any such amendment, the Number of
Option Shares and the Exercise Price shall be adjusted in a fair and equitable
manner, as determined by the Administrator, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 9 shall be rounded up or down to the nearest whole
number, as determined by the Administrator, and in no event may the Exercise
Price be decreased to an amount less than the par value, if any, of the stock
subject to the Option. The adjustments determined by the Administrator pursuant
to this Section 9 shall be final, binding and conclusive.
10. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. The Optionee shall have no rights
as a stockholder with respect to any Stock covered by the Option until the date
of the issuance of a certificate for the Stock for which the Option has been
exercised (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company). No adjustment shall be made
for dividends, distributions or other rights for which the record date is prior
to the date such certificate is issued, except as provided in Section 9. If the
Optionee is an Employee, the Optionee understands and acknowledges that, except
as otherwise provided in a separate, written employment agreement between a
Company and the Optionee, the Optionee's employment is "at will" and is for no
specified term. Nothing in this Option Agreement shall confer upon the Optionee
any right to continue in the Service of a Company or interfere in any way with
any right of the Company to terminate the Optionee's Service as an Employee at
any time.
11. LEGENDS. The Company may at any time place legends referencing any
applicable federal, state or foreign securities law restrictions on all
certificates representing Stock subject to the provisions of this Option
Agreement.
12. PUBLIC OFFERING. The Optionee hereby agrees that in the event of any
underwritten public offering of equity securities made by the Company pursuant
to an effective registration statement filed under the Securities Act, the
Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any
option to purchase or make any short sale of, or otherwise dispose of any shares
of Stock of the Company or any rights to acquire Stock of the Company for such
period of time from and after the effective date of such registration statement
as may be established by the underwriter for such public offering; provided,
however, that such period of time shall not exceed 180 days from the effective
date of the registration statement to be filed in connection with such public
offering. The foregoing limitation shall not apply to shares registered in the
public offering under the Securities Act.
13. RESTRICTIONS ON TRANSFER OF STOCK. No Stock acquired upon exercise of
the Option may be sold, exchanged, transferred (including, without limitation,
any transfer to a nominee or agent of the Optionee), assigned, pledged,
hypothecated or otherwise disposed of, including by operation of law, in any
manner which violates any of the provisions of this Option Agreement, and any
such attempted disposition shall be void. The Company shall not be required (a)
to transfer on its books any Stock which will have been transferred in violation
of
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any of the provisions set forth in this Option Agreement or (b) to treat as
owner of such Stock or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such Stock will have been so transferred.
14. BINDING EFFECT. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
15. TERMINATION OR AMENDMENT. The Administrator may terminate or amend the
Option Agreement or the Option at any time; provided, however, that except as
provided in Section 8.2 in connection with a Transfer of Control, no such
termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Optionee unless such termination or
amendment is necessary to comply with any applicable law or government
regulation. No amendment or addition to this Option Agreement shall be effective
unless in writing.
16. NOTICES. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given (except to the extent that this
Option Agreement provides for effectiveness only upon actual receipt of such
notice) upon personal delivery or upon deposit in the United States Post Office,
by registered or certified mail, with postage and fees prepaid, addressed to the
other party at the address shown below that party's signature or at such other
address as such party may designate in writing from time to time to the other
party.
17. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein or therein, and there are no agreements,
understandings, restrictions, representations, or warranties among the Optionee
and the Company with respect to such subject matter other than those as set
forth or provided for herein or therein. To the extent contemplated herein or
therein, the provisions of this Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.
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18. APPLICABLE LAW. This Option Agreement shall be governed by the law of
the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
IMMERSION CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer and
Director
Address: ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under this Option Agreement. The
undersigned acknowledges receipt of a copy of the Option Agreement.
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OPTIONEE
Date: March 1, 2004 /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Optionee's Address and Phone Number:
_________________________________________
_________________________________________
(____) __________________________________
Optionee's spouse indicates by the execution of this Option Agreement her
consent to be bound by the terms thereof as to her interests, whether as
community property or otherwise, if any, in the options granted hereunder, and
in any exercised Stock.
OPTIONEE'S SPOUSE
Date: March 1, 2004 /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Spouse's Address and Phone Number:
_________________________________________
_________________________________________
(____) __________________________________
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