Document:

exv10w1

Exhibit 10.1

2010

Executive Incentive Plan

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OBJECTIVES 

The primary aim of the 2010 Executive Incentive Plan (the “Plan”) is to focus Immersion’s
executive management efforts on meeting Immersion’s revenue, EBITDA profit, and business
objectives, and to reward the achievement of those goals.

ELIGIBILITY 

In addition to your base salary, you are eligible to earn an incentive payment pursuant to the
Plan [Based on the achievement of incentives to be determined by the Company’s Compensation
Committee] [and its Attachment A]. In order to be eligible to earn any payment under this Plan,
you must sign and date a copy of the Plan on the space provided below and return it to Human
Resources. An executive’s eligibility to participate in this Plan will be subject to the review
and approval of the CEO and CFO of the Company, and before they become earned, any payments to
be made under this Plan are subject to the review and approval of the Company’s Compensation
Committee, with input from the Company’s CEO. Any interpretation of this Plan shall be made by
the Company’s Compensation Committee in its sole discretion. This Plan supersedes all prior
executive bonus, incentive, and/or variable compensation plans of the Company, as well as any
such provisions in any employment agreement, which are of no further force or effect.

Employees hired between January 1 and December 31, 2010, who are permitted to participate in the
Plan shall be eligible to participate on a pro-rata basis, based upon their employment start
date and contingent upon their continued active employment through the Payment Date (defined
below). The proration will be based on the number of work days that the employee was employed by
the Company during 2010.

PLAN ADMINISTRATION 

This Plan is effective for calendar year 2010 only. The Company may cancel, suspend, amend, or
revise all or any part of the Plan for any reason at any time.

To the extent earned, payments under the Plan will be wages and will be subject to withholding
of federal and state income and employment taxes. Earned payments under this Plan will be paid
on the next regular payroll date following the later of (a) February 15, 2011, (b) the date on
which the Company’s Income Statement for 2010 has been finalized, or (c) the date on which the
Company’s 2010 earnings have been publicly disclosed (the “Payment Date”), but in no event will
such payments be made any later than March 15, 2011.

Nothing in this Plan shall in any way alter the at-will employment relationship between the
Company and its executives. All employees of the company are employed on an “at-will” basis,
which means that either the employee or the Company may terminate the relationship at any time,
with or without cause or notice.

In the event that a participant receives payment under this Plan and the Company later
determines or uncovers an act or event of fraud or financial misstatements, the Company shall
have the right, at its own discretion, to recover any or all of the bonus paid to the
participant.

For purposes of this Plan, a participant’s employment with Immersion terminates on the last day
on which work duties are actually performed by the participant. Periods of pay in lieu of
notice, severance, or any other post-termination benefits or compensation period shall not be
deemed periods of employment for purposes of this Plan. Subject only to the second paragraph of
the “Eligibility” section above, in order to earn any payment under the Plan, a participant must
be continuously employed by Immersion from January 1, 2010 through the Payment Date. A
participant who resigns from his or her employment with Immersion prior to the Payment Date for
any reason, or whose employment is terminated by Immersion prior to the Payment Date for any
reason, will not earn any payment under this Plan.

Provided they meet the eligibility requirements described in this Plan [and Attachment A],
participants

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who are on an approved leave of absence at any time during calendar year 2010 will
earn a pro-rated payment under this Plan based upon the portion of the year that they are
actively employed and not on leave status. To the extent that a participant is on an approved
leave of absence on the Payment Date, he/she will receive payment under this Plan on the Payment
Date (subject to pro-ration, if applicable, as described in this
paragraph). [To the extent that
a participant is on an unapproved leave of absence on the Payment Date, he/she will not earn any
payment under this Plan unless he/she returns to active employment with Immersion, at which time
he/she will receive his/her Plan payment (subject to pro-ration, if applicable, as described in
this paragraph); provided that if such participant does not return to active employment by March
15, 2011, he/she shall forfeit his/her right to such incentive payment.]

PLAN DEFINITIONS 

Revenue is revenue that is recognized by Immersion for the applicable period in accordance with
generally accepted accounting principles and as reported in the Company’s audited financial
statements.

EBITDA Profit is Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA
includes Executive Incentive Plan payment amounts for the purposes of this calculation.
Excluded from the calculation are the following expenses and charges: stock compensation
expense, discontinued operations, restatement charges, and restructuring charges.

Target Incentive is the “target” payment that a participant would earn under the Plan if all of
the Company performance targets and participant’s MBO’s are met, and the participant’s
performance is fully satisfactory as determined by the Company’s CEO. The amount of the Target
Incentive is a percentage of the participant’s annual base salary as of January 1, 2010 (or as
of such participant’s first day of employment is such participant is hired after January 1,
2010), which percentage is determined by management. The actual Plan payment earned by a
participant will vary depending on (i) the extent to which Company performance targets and
participant’s MBO’s are met, and (ii) the CEO’s evaluation of the participant’s performance.

MBO’s are specific business milestones which must be completed in a timely manner, in strict
accordance with the stated terms and conditions associated with each MBO, to the satisfaction of
the CFO and CEO.

	 	 	 	 	 

	 

	 	 	 	 
	Executive

	 	Date
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	VP of Human Resources

	 	Date	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	CFO

	 	Date	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	CEO

	 	Date	 	 

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Attachment A

EXECUTIVE INCENTIVE PLAN STATEMENT OF GOALS FOR YEAR 2010

Name

Percent of Base Salary Payment at Plan: 60%

The following is a statement of financial, strategic and tactical objectives for 2010 that will
serve as a basis for overall performance evaluation and determination of year-end executive
incentive award.

CEO Discretionary Multiplier: The Company’s Compensation Committee will determine a performance
“weighting” to be applied to the Executive’s incentive calculation as determined by the
Compensation Committee with input from the CEO. The weighting factor will typically range from 0.80
to 1.20, which factor is then multiplied by the Executive’s incentive calculation to determine the
Executive’s overall incentive payment.

Plan Components: The Plan has two independent components: Corporate Financial Metrics and
Individual MBO’s. Within each component you will be measured against specific goals.

	A.	 	70% of your target bonus will be based on Corporate performance as follows.

	 	•	 	Achieve GAAP Revenue of $XXM. Achieve EBITDA Profit of $XXM. The EBITDA
Profit amount for the purpose of this calculation comprises the GAAP EBITDA Profit
prior to stock compensation expense, discontinued operations, restatement charges, and
restructuring charges. Payment amounts will be pro-rated between matrix levels. No
payments shall occur from performance below any minimum matrix target: (Min. Revenue:
$XXM or Min EBITDA Profit: $XXM)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Revenue / EBITDA Profit Targets	 	$XXM	 	$XXM	 	$XXM	 	$XXM	 	$XXM
	$XXM
	 	 	125.0	%	 	 	137.5	%	 	 	150.0	%	 	 	175.0	%	 	 	200.0	%
	$XXM
	 	 	100.0	%	 	 	112.5	%	 	 	125.0	%	 	 	150.0	%	 	 	175.0	%
	$XXM
	 	 	75.0	%	 	 	87.5	%	 	 	100.0	%	 	 	125.0	%	 	 	150.0	%
	$XXM
	 	 	62.5	%	 	 	75.0	%	 	 	87.5	%	 	 	112.5	%	 	 	137.5	%
	$XXM
	 	 	50.0	%	 	 	62.5	%	 	 	75.0	%	 	 	100.0	%	 	 	125.0	%

	B.	 	30% of your target bonus will be based on individual MBO’s as follows.

	 	•	 	For payment to be made under the MBO component of the Plan, certain financial
targets must be met:

	 	1.	 	Participants will be eligible for 100% MBO payout when the
company is >/= 80% of revenue target and EBITDA profitable;
	 
	 	2.	 	Participants will be eligible for 50% MBO payout when the company
is < 80% of revenue target and EBITDA profitable;
	 
	 	3.	 	No payments will be earned under this component if the company is
not EBITDA profitable.

	 	•	 	Goals and Objectives will be agreed upon between the Plan Participant and the CEO.
	 
	 	•	 	Achievement of such goals and objectives shall be made by the Company’s Compensation
Committee with input from the CEO.

Page 4exv10w1

Exhibit 10.1

February 25, 2010

Mr. Thomas Lacey

7914 Indian Arrow Court

Orangevale, CA 95662

Dear Tom:

On behalf of Phoenix Technologies Ltd. (the “Company”), I am pleased to offer you employment as
President and Chief Executive Officer, reporting to the Board of Directors of the Company. Your
employment with the Company will commence on the date both parties sign this offer letter (the
“Offer Letter”), which we anticipate to be February 25, 2010 (“Hire Date”). On your Hire Date, the
Board of Directors will grant you an option to purchase 400,000 shares of the Company’s common
stock pursuant to the stock option agreement attached hereto as Exhibit A (“Stock Option
Agreement”), and will authorize a grant of 425,000 shares of restricted stock to you effective as
of the Hire Date, pursuant to the restricted stock agreement attached hereto as Exhibit B
(“Restricted Stock Purchase Agreement”). In addition, on your Hire Date, you will be offered the
severance and change of control agreement attached hereto as Exhibit C (the “Severance and
Change of Control Agreement”). Furthermore, on your Hire Date, you will be appointed as a member
of the Board of Directors of the Company.

Your base salary will be $250,000 annually, payable semi-monthly at the rate of $10,417, subject to
applicable withholding and deductions. Additionally, you will be eligible to receive a performance
bonus, based on criteria established by the Board of Directors, targeted at 100% of your base
salary and payable quarterly. The Company agrees to guarantee the payment of 100% of your
first-year performance bonus, which will be payable quarterly in the amount of $62,500, subject to
applicable withholding and deductions. The payment of any bonus amounts thereafter will be solely
at the discretion of the Board of Directors. The Board of Directors will review your compensation
annually in accordance with its established performance review process.

The option granted on your Hire Date will have an exercise price equal to the closing sales price
of the Company’s common stock on your Hire Date. The option will vest with respect to
1/48th of the shares subject to the option each month, so that the option is fully
vested on the fourth anniversary of your Hire Date. The option will be a nonqualified stock
option. The restricted stock grant will vest and become non-forfeitable as follows: 25,000 shares
on the Hire Date and then 1/48th of the balance of the shares each month, so that the
restricted stock grant will be fully vested on the fourth anniversary of the Hire Date. Both grants
of options and restricted stock and the tax withholding provisions of each grant shall be approved
by the Compensation Committee or the Board of Directors so that such grants and any withholding of
shares to satisfy tax withholding obligations from such grants comply with Rule 16b-3 promulgated
under the

 

 

Securities and Exchange Act of 1934, as amended, as exempt purchases (for the grants) and exempt
sales (for the withholding of shares).

The Severance and Change of Control Agreement provides, among other things, for the accelerated
vesting of your stock option and restricted share grants in the event that you are terminated
without “Cause” or for “Good Reason” in connection with a “Change of Control” (as these terms are
defined in the Severance and Change of Control Agreement). You will also be entitled to the
benefits that the Company makes available to employees at its Milpitas, California location. The
provisions of the benefits offered by the Company will be more fully explained in materials
provided under separate cover.

An additional document is attached as Exhibit D to this letter: An Employee Invention
Assignment and Proprietary Information Agreement, which contains provisions that require you to
hold in confidence any proprietary information received as an employee of the Company, and to
assign to the Company any inventions that you make while employed by the Company. We wish to
impress upon you the importance of not bringing with you any confidential or proprietary
information of any former employer.

The Company will enter into an indemnification agreement with you in the form attached hereto as
Exhibit E.

The Company will also arrange a corporate apartment for your use during the work week near the
Company’s headquarters in Milpitas, California, and cover or reimburse you for the rent for such
apartment as well as reasonable utility expenses.

The Company’s obligation to make the payments provided for in this Offer Letter and otherwise to
perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the you or others. All
legal fees and expenses which may reasonably incur as a result of any dispute or contest between
you and the Company with respect to the validity or enforceability of, or liability under, any
provision of this Agreement, or any guarantee of performance thereof (including as a result of any
dispute or contest by you about the amount of any payment pursuant to this Agreement), shall be
paid promptly, by the non-prevailing party in such dispute or contest.

This Offer Letter shall be governed by and construed in accordance with the laws of the State of
California, without reference to principles of conflict of laws. Any legal action or other legal
proceeding relating to this Offer Letter shall be brought or otherwise commenced in any state or
federal court located in Santa Clara County, California and both parties expressly and irrevocably
consent and submit to the jurisdiction of each state and federal court located in Santa Clara
County, California (and each appellate court located in the State of California), in connection
with any such legal proceeding; agree not to assert (by way of motion, as a defense or otherwise),
in any such legal proceeding commenced in any state or federal court located in Santa Clara County,
California, any claim that the party is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum, that the venue of such
proceeding is improper or that this Offer Letter or the subject matter of this Offer Letter may not
be enforced in or by such court.

 

 

This Offer Letter does not constitute a contract of employment for a fixed term, but will instead
create an “employment at will” relationship. This Offer Letter is contingent upon a satisfactory
check of your background and verification of your legal right to work in the United States. This
Offer Letter supersedes any prior representations or agreements written, verbal or otherwise
regarding the terms described above.

I believe that you will find great opportunities and professional challenges at Phoenix
Technologies, and I am confident that you will significantly contribute to the Company’s success.
Please confirm your acceptance of this offer by signing the attached copy of this Offer Letter in
the space provided and returning it, along with the other documents attached hereto, to Timothy C.
Chu, Vice President, General Counsel and Secretary of the Company.

Sincerely,

	 	 	 

	/s/ Jeffrey C. Smith
 

	 	 

Jeffrey C. Smith

Chairman of the Board

Phoenix Technologies Ltd.

Acknowledgment:

I accept the employment offer as stated above.

	 	 	 

	/s/ Thomas Lacey
 

Thomas Lacey

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