Document:

Document

2019
Executive Incentive Plan 

Executive Name

 

     OBJECTIVES 

The primary aim of the 2019 Executive Incentive Plan (the “Plan”) is to focus Immersion’s executive management efforts on meeting Immersion’s Revenue, Non-GAAP Net Income (“NGNI”), 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 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 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.

To earn any payment under the Plan, a participant must be continuously employed by Immersion from January 1, 2019 through the Payment Date, and achieve the stated goals as set forth in Attachment A hereto.  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. 

Employees hired between January 1 and December 31, 2019, 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) and achievement of stated goals. The proration will be based on the number of work days that the employee was employed by the Company during 2019.

         PLAN ADMINISTRATION 

This Plan is effective for calendar year 2019 only.  The Plan Administrator is the Compensation Committee of the Board of Directors.  The Plan Administrator may cancel, suspend, amend, or revise all or any part of the Plan for any reason at any time.  In addition, the Plan Administrator reserves full discretion to modify, alter and/or change the actual bonus payout at its sole discretion.  

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, 2020, (b) the date on which the Company’s Income Statement for 2019 has been finalized, or (c) the date on which the Company’s 2019 earnings have been publicly disclosed (the “Payment Date”), but in no event will such payments be made any later than March 15, 2020.

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 that is, in the sole determination of the Company, the result of or based in any way upon fraudulent activity and/or misstated financials or otherwise inaccurate financial reporting, 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. 

Provided they meet the eligibility requirements described in this Plan and Attachment A, participants who are on an approved leave of absence at any time during calendar year 2019 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, 2020, 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. 

NGNI is GAAP Net Income adjusted to reflect cash tax expense, less Stock-Based Compensation.  NGNI also excludes certain non-recurring charges including discontinued operations, restructuring costs, litigation expenses, and other charges as agreed by the Compensation Committee of the Board of Directors.

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 February 4, 2019 (or as of such participant’s first day of employment if such participant is hired after February 4, 2019), which percentage is determined by the Compensation Committee with input from the CEO.  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 CEO.  

                                                
Executive                                Date

                                                
Head of Human Resources                         Date

                                                
CFO                                Date

                                                
CEO                                Date

Attachment A

EXECUTIVE INCENTIVE PLAN STATEMENT OF GOALS FOR YEAR 2019
Executive Name

Percent of Base Salary Payment at Plan:  Target%

The following is a statement of financial, strategic and tactical objectives for 2019 that will serve as a basis for overall performance evaluation and determination of year-end executive incentive award.  

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. This factor is then multiplied by each plan component calculation (Corporate Financial Metrics and MBO’s, separately) to determine the Executive’s overall incentive payment.

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

Plan Payout:  In order to receive payment for the corporate metrics component and the MBO component, the company must meet 80% of Revenue and NGNI targets.  The Litigation MBOs are measured independently and will be paid as such.

		
	A.
	[***]% of your target bonus will be based on Corporate performance as follows.

 
Achieve GAAP Revenue of $32,429,879.  Achieve NGNI of ($4,092,000). NGNI amount for the purpose of this calculation also excludes certain non-recurring charges including discontinued operations, litigation expenses, and other charges as agreed by the Compensation Committee of the Board of Directors.  Payment amounts will be pro-rated between matrix levels. The metrics are measured separately and paid additively. No payments shall occur from performance below any minimum matrix target: (Min. Revenue: $25,943,903 or Min. NGNI: ($4,910,400)) 

	
							
	Revenue (Weighted [***]%)
	Threshold
	 
	Target
	 
	Maximum
	 

	Revenue
	$25,943,903
	$29,186,891
	$32,429,879
	$35,672,867
	$38,915,855
	 

	% of target achievement
	80%
	90%
	100%
	110%
	120%
	 

	Payout (as % of target)
	50%
	75%
	100%
	150%
	200%
	 

	 
	 
	 
	 
	 
	 
	 

	NGNI (Weighted [***]%)
	Threshold
	 
	Target
	 
	 
	Maximum

	NGNI
	$(4,910,400)
	$(4,501,200)
	$(4,092,000)
	$(3,682,800)
	$(3,273,600)
	$0

	% of target achievement
	80%
	90%
	100%
	110%
	120%
	 

	Payout (as % of target)
	50%
	75%
	100%
	100%
	100%
	200%

*NGNI bonus capped at 100% until breakeven reached, at which point bonus will be paid out at 200%

		
	B.
	[***]% of your target bonus will be based on Litigation MBO’s and Personal MBO’s as follows.

Litigation MBOs ([***]%):
		
	1.
	(90%) Successful management of current Samsung litigation matters in the best long-term interests of company/shareholders as measured by:

		
	a.
	World-class execution of all litigation related matters

		
	b.
	World-class management of any settlement discussions

		
	c.
	Operation of Business with best business strategies while in litigation

		
	2.
	(10%) Successful management of current Motorola litigation matter in the best long-term interests of company/shareholders as measured by:

		
	a.
	World-class execution of all litigation related matters

		
	b.
	World-class management of any settlement discussions

		
	c.
	Operation of Business with best business strategies while in litigation

With respect to 1 and 2 above, it should be noted that litigation is inherently uncertain, and there is not certainty that either litigation/settlement shall conclude in 2019.  In the event this occurs through no fault of the executive team, the Board’s assessment of the executive team’s performance shall be made against the point reached in the litigation /settlement.

Personal MBOs ([***]%):
		
	•
	Goals and Objectives will be agreed upon between the Plan Participant and the CEO.

		
	•
	Evaluation of the achievement of such goals and objectives shall be made by the Company’s Compensation Committee with input from the CEO

Page 1a1252019akermanofferlett

    December 2, 2019                                                      RE:  Employment with Immersion Canada Corporation    Dear Aaron:          Immersion  Canada  Corporation, (the “Company”) an  affiliate of  Immersion  Corporation  (“Immersion”) is pleased to present this offer for the position of Chief Finance Officer, on the terms set  forth in this agreement, effective upon your acceptance by execution of a counterpart copy of this letter  where indicated below.          Reporting Duties and Responsibilities.  In this position, you will report to Ramzi Haidamus, CEO.                Salary and Benefits.  Your annual base salary of $310,000 CAD, less applicable taxes, payable in  accordance with the Company’s customary payroll practice, is $11,923.08 CAD bi-weekly.  In addition,  you will be eligible for a bonus in accordance with the Company’s Executive Incentive Plan of up to 50%  of your salary. This offer is for a full time, salaried position, located at the offices of the Company, except  as to travel to other locations that may be necessary to fulfill your responsibilities here. Our Company’s  focal reviews are normally conducted during the first quarter of the fiscal year at which time your  performance will be evaluated.  You will also receive the Company’s standard employee benefits  package beginning on your employment start date.  A copy of our current benefits package will be  provided to you on your first day of employment.  Please note that the Company's benefit package is  subject to change at any time.                You will receive a sign-on bonus in the amount of $40,000 CAD, less applicable taxes, when you  start your employment with Immersion.  In the event that you voluntarily leave Immersion before one  year of employment you will be required to pay back the bonus on a pro-rata basis.  The bonus will be  paid within 30 days of your start date.                Vacation.  You will also be entitled to four (4) weeks of vacation annually.  Beginning from your  start date, your vacation will accrue at a rate of 6.1539 hours per pay period.  Vacation time should be  taken by the Employee at such time, as may be acceptable to the Company, having regard to the  operations of the business.                Professional Development and Professional Fees.  A reasonable amount of expenses related to  your professional development are eligible for full payment or reimbursement.  Additionally, any  reasonable fees related to professional dues, membership or certifications will be paid at 100%.                                

 

                Restricted Stock Units.  Effective upon your start date, Immersion will grant you 70,000  Restricted Stock Units (RSUs).  The Restricted Stock Units will vest over a three-year period.  Assuming  your continued employment by Immersion, one-third of the shares will vest on each of the first, second  and third anniversaries of your start date, as per the terms and conditions of the applicable plan.                Stock Options.  Effective upon your start date, the Company will grant you an option to purchase  140,000 shares of the Company’s Common Stock pursuant to the Company’s stock option plan and  standard stock option agreement.  All options will have an exercise price that will be equal to the fair  market value of the Company’s Common Stock on the 10th business day in the month following the  month of your start date.  The options will become exercisable over a four-year exercise schedule with  25% of the shares vesting at the end of your first twelve months of service, and with an additional  2.083% vesting per month thereafter, at the close of each month during which you remain employed  with the Company.                Change of Control Benefits.  Concurrently with this Agreement, the Company is entering into the  Retention and Ownership Change Event Agreement.                Background Investigation. This offer is contingent upon the completion of a satisfactory  investigation (concerning your background and references) to which you consent by having applied for  this position.  This agreement may be revoked in the event the results of the investigation do not meet  Immersion’s requirements.                Confidential Information.  As an employee of the Company, you will have access to certain  Company and Immersion confidential information and you may during the course of your employment,  develop certain information or inventions that will be the property of the Company and/or Immersion.   To protect the interest of the Company, you will need to sign the Company’s standard “Employee  Inventions and Confidentiality Agreement” as a condition of your employment.  A copy of the  agreement is attached for your review, and you will be required to sign that agreement on or before the  first day of your employment with the Company.  We wish to impress upon you that we do not wish you  to bring with you any confidential or proprietary material of any former employer or to violate any other  obligation to your former employers.                Indefinite Term Employment.  While we look forward to a long and profitable relationship,  should you decide to accept our offer, you will be an employee of the Company for an indefinite term,  which means that our employment relationship can be terminated by either of us for any reason at any  time in accordance with law and subject to the terms of the Retention and Ownership Change Event  Agreement.  Any statements or representations to the contrary (and indeed, any statements  contradicting any provision in this letter) should be regarded by you as ineffective.  Further, your  participation in any stock option or benefit program is not to be regarded as a commitment to continue  your employment for any particular period of time.                Authorization to Work.  By accepting our offer, you solemnly declare that there is nothing  preventing you from lawfully working in Canada.  Once your employment begins, you will be required to  provide us with proof of your social insurance number for group insurance and payroll deduction  purposes.                Dispute Resolution.  In the event of any dispute or claim arising out of or relating to your  employment relationship with the Company, the termination of that relationship for any reason, or this  agreement (including, but not limited to any claims of wrongful termination, breach of contract, fraud,  infliction of emotional distress, or age, sex, race, national origin, disability, religious or other   

 

  discrimination, harassment or retaliation), you and the Company agree that all such disputes or claims  shall be resolved exclusively by binding arbitration conducted by a single arbitrator in conformity with  the rules on Arbitration contained in the Civil Code of Quebec and the Quebec Code of Civil Procedure.  You and the Company hereby waive your rights to have any such disputes or claims tried by a court of  law.  Such arbitration shall be held in Montreal, Quebec.                Compliance with Rules.  By accepting employment with the Company, you agree to comply with  all of the policies, rules, procedures, and other guidelines set forth by the Company, whether in the  employee handbook or elsewhere.                Term of Offer.    This offer will remain open until close of business on December 5, 2019.  If you  decide to accept our offer, and we hope that you will, please sign the enclosed copy of this letter in the  space indicated and return it to me.  Upon your signature below, this will become our binding  agreement with respect to the subject matter of this letter, superseding in its entirety all other or prior  agreements by you with the Company as to the specific subjects of this letter.  This letter agreement will  be binding upon and inure to the benefit of our respective successors and assigns, and heirs,  administrators and executors, and will be governed by Quebec law.  This letter agreement may only be  amended or modified by a writing signed by you and an authorized officer of the Company.                Language.  We agree that this offer of employment letter be drafted in English. Nous convenons  que cette lettre d’offre d’emploi soit rédigée en anglais.                We are excited and pleased to have you join the Immersion team in this exciting role and we  look forward to a mutually beneficial working relationship.            Sincerely,    Immersion Canada Corporation    /s/ Patricia Winter  Patricia Winter  Head of Human Resources                                    

 

  Agreed and Accepted   I agree to accept employment with Immersion Canada Corporation on the terms and conditions set forth  in this letter agreement.        /s/ Aaron Akerman                      12/5/2019        Aaron Akerman                          Date      Anticipated Start Date: The start date will be on a date to be mutually agreed upon by the parties  following the Company’s written notice to you confirming the satisfactory completion of the background  and reference investigation contemplated in this Agreement.    For purposes of this Agreement, the term “start date” shall mean the day on which you commence  employment with the Company.

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