-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N0r2NkJv9N7R4o1IKzYPIZ09IqT97f/8mnMrWV/WEOl4AGNzoWmBZqowTdAXBGqy 3UC8XSQBa2DITxcwuh0XFA== 0000891618-00-005318.txt : 20001225 0000891618-00-005318.hdr.sgml : 20001225 ACCESSION NUMBER: 0000891618-00-005318 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20001222 EFFECTIVENESS DATE: 20001222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMMERSION CORP CENTRAL INDEX KEY: 0001058811 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 943180138 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-52604 FILM NUMBER: 794722 BUSINESS ADDRESS: STREET 1: 801 FOX LANE CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084671900 MAIL ADDRESS: STREET 1: 801 FOX LANE CITY: SAN JOSE STATE: CA ZIP: 95131 S-8 1 f67633s-8.txt FORM S-8 1 As filed with the Securities and Exchange Commission on December 22, 2000 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 IMMERSION CORPORATION ------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 94-3180138 - --------------------------------- ---------------------------------- (State or Other (I.R.S. Employer Jurisdiction of Identification No.) Incorporation or Organization) 801 Fox Lane, San Jose, California 95131 ------------------------------------------------ (Address of Principal Executive Offices) Haptic Technologies Inc. 2000 Stock Option Plan Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan Immersion Corporation 2000 HT Non-Officer Nonstatutory Stock Option Plan HT Medical Systems, Inc. 1998 Stock Option Plan Immersion Corporation Nonstatutory Stock Option Plan and Stock Option Agreement with Robert G. O'Malley ------------------------------------------ (Full Title of the Plan) Robert G. O'Malley Chief Executive Officer and President 801 Fox Lane San Jose, California 95131 ------------------------------------------------ (Name and Address of Agent For Service) (408) 467-1900 ------------------------------------------ (Telephone Number, Including Area Code, of Agent For Service) Copy to: Sarah A. O'Dowd Heller Ehrman White & McAuliffe LLP 525 University Avenue Palo Alto, California 94301-1908 Telephone: (650) 324-7045 Facsimile: (650) 324-0638 2 CALCULATION OF REGISTRATION FEE
============================================================================================================== PROPOSED PROPOSED MAXIMUM MAXIMUM AMOUNT OFFERING AGGREGATE AMOUNT OF TITLE OF SECURITIES TO BE PRICE OFFERING REGISTRATION TO BE REGISTERED(1) REGISTERED(2) PER SHARE(3) PRICE FEE ------------------- ------------- ------------ --------- ------------ Haptic Technologies Inc. 2000 Stock Option Plan Common Stock, Par Value $0.001 391,238 $7.6875 $3,007,642 $ 794 Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan Common 500,000 $7.6875 $3,843,750 $1,015 Stock, Par Value $0.001 Immersion Corporation 2000 HT Non-Officer Nonstatutory Stock Option Plan Common 766,322 $7.6875 $5,891,100 $1,556 Stock, Par Value $0.001 HT Medical Systems, Inc. 1998 Stock Option Plan Common Stock, Par Value $0.001 68,903 $7.6875 $ 529,692 $ 140 Immersion Corporation Nonstatutory Stock Option Plan and Stock Option Agreement with 500,000 $9.00 $4,500,000 $1,188 Robert G. O'Malley Common Stock, Par Value $0.001 ==============================================================================================================
(1) The securities to be registered include options and rights to acquire the Registrant's Common Stock. (2) Pursuant to Rule 416(a), this registration statement also covers any additional securities that may be offered or issued in connection with any stock split, stock dividend or similar transaction. (3) Estimated pursuant to Rule 457 solely for purposes of calculating the registration fee. As to shares issuable under the Haptic Technologies, Inc. 2000 Stock Option Plan, 2000 Non-Officer Nonstatutory Stock Option Plan, 2000 HT Non-Officer Nonstatutory Stock Option Plan and HT Medical Systems, Inc. 1998 Stock Option Plan, the price is based upon the average of the high and low prices of the Registrant's Common Stock on December 20, 2000, as reported on the Nasdaq National Market. As to shares issuable under the Nonstatutory Stock Option Plan with Robert G. O'Malley, the price is computed upon the basis of the price at which the options may be exercised. ================================================================================ 3 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents, which have been filed by Immersion Corporation (the "Registrant") with the Securities and Exchange Commission (the "Commission"), are hereby incorporated by reference in this Registration Statement: (a) Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999; (b) Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000; (c) Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000; (d) Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000; (e) Registrant's Current Report on Form 8-K dated October 13, 2000; (f) Registrant's Current Report on Form 8-K dated September 15, 2000; (g) Registrant's Current Report on Form 8-K dated March 24, 2000; and (h) The description of the Registrant's Common Stock contained in the Registrant's Registration Statement on Form 8-A12G filed on November 5, 1999 under the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment to this registration statement which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. ITEM 4. DESCRIPTION OF SECURITIES Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 102(b) of the Delaware General Corporation Law authorizes a corporation to provide in its Certificate of Incorporation that a director of the corporation shall not be personally liable to corporation or its stockholders for monetary damages for breach or alleged breach of the director's "duty of care." While this statute does not change directors' duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. The statute has no effect on a director's duty of loyalty or liability for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, illegal payment of dividends or stock redemptions or repurchases, or for any transaction from which the director derives an improper benefit. As permitted by the statute, the Registrant has adopted provisions in its Amended and Restated Certificate of Incorporation which eliminate to the fullest extent permissible under Delaware law the personal liability of its directors to the Registrant and its stockholders for monetary damages for breach or alleged breach of their duty of care. II-1 4 Section 145 of the General Corporation Law of the State of Delaware provides for the indemnification of officers, directors, employees and agents of a corporation. The Bylaws of the Registrant provide for indemnification of its directors, officers, employees and agents to the full extent permitted by Delaware law, including those circumstances in which indemnification would otherwise be discretionary under Delaware law. The Registrant's Bylaws also empower it to enter into indemnification agreements with its directors and officers and to purchase insurance on behalf of any person whom it is required or permitted to indemnify. The Registrant has entered into agreements with its directors and officers that require the Registrant to indemnify such persons to the fullest extent permitted under Delaware law against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that such person is or was a director or an officer of the Registrant or any of its affiliated enterprises. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. Section 145 of the General Corporation Law of the State of Delaware provides for indemnification in terms sufficiently broad to indemnify such individuals, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS
Item No. Description of Item - --------------------------------------------------------------------------- 5.1 Opinion of Heller Ehrman White & McAuliffe LLP 23.1 Independent Auditors' Consent 23.2 Consent of Heller Ehrman White & McAuliffe LLP (filed as part of Exhibit 5.1) 24.1 Power of Attorney (See page II-4) 99.1 Haptic Technologies Inc. 2000 Stock Option Plan (Incorporated by reference to Exhibit 10.30 filed with the Registrant's Form S-4 dated September 6, 2000) 99.2 Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan (Incorporated by reference to Exhibit 10.29 filed with the Registrant's Form S-4 dated September 6, 2000) 99.3 Immersion Corporation 2000 HT Non-Officer Nonstatutory Stock Option Plan (Incorporated by reference to Exhibit 2.4 filed with the Registrant's Current Report on Form 8-K dated October 13, 2000) 99.4 HT Medical Systems, Inc. 1998 Stock Option Plan 99.5 Immersion Corporation Nonstatutory Stock Option Plan and Stock Option Agreement with Robert G. O'Malley
II-2 5 ITEM 9. UNDERTAKINGS A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. The undersigned registrant hereby undertakes that, for purposes of determining liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 6 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of San Jose, State of California, on this 22nd day of December, 2000. IMMERSION CORPORATION By: /s/ Robert G. O'Malley ----------------------------------- Robert G. O'Malley Chief Executive Officer and President POWER OF ATTORNEY TO SIGN AMENDMENT KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Robert G. O'Malley and Victor Viegas with full power of substitution, such person's true and lawful attorneys-in-fact and agents for such person in such person's name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-8 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as he or such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof. II-4 7 Pursuant to the requirements of the Securities Act, this Registration Statement on Form S-8 has been signed by the following persons in the capacities and on the dates indicated.
Signature Capacity Date - ------------------------------- ------------------------------------- ------------------ /s/ Robert G. O'Malley Chief Executive Officer, President December 22, 2000 - ------------------------------- and Director Robert G. O'Malley /s/ Louis B. Rosenberg Chairman of the Board of Directors December 22, 2000 - ------------------------------- Louis B. Rosenberg, Ph.D /s/ Victor Viegas Chief Financial Officer and Vice December 22, 2000 - ------------------------------- President, Finance Victor Viegas /s/ Charles Boesenberg Director December 22, 2000 - ------------------------------- Charles Boesenberg /s/ Steven Blank Director December 22, 2000 - ------------------------------- Steven Blank /s/ Jonathan Rubinstein Director December 22, 2000 - ------------------------------- Jonathan Rubinstein
II-5 8 Index to Exhibits
Item No. Description of Item - --------------------------------------------------------------------------- 5.1 Opinion of Heller Ehrman White & McAuliffe LLP 23.1 Independent Auditors' Consent 23.2 Consent of Heller Ehrman White & McAuliffe LLP (filed as part of Exhibit 5.1) 24.1 Power of Attorney (See page II-4) 99.1 Haptic Technologies Inc. 2000 Stock Option Plan (Incorporated by reference to Exhibit 10.30 filed with the Registrant's Form S-4 dated September 6, 2000) 99.2 Immersion Corporation 2000 Non-Officer Nonstatutory Stock Option Plan (Incorporated by reference to Exhibit 10.29 filed with the Registrant's Form S-4 dated September 6, 2000) 99.3 Immersion Corporation 2000 HT Non-Officer Nonstatutory Stock Option Plan (Incorporated by reference to Exhibit 2.4 filed with the Registrant's Current Report on Form 8-K dated October 13, 2000) 99.4 HT Medical Systems, Inc. 1998 Stock Option Plan 99.5 Immersion Corporation Nonstatutory Stock Option Plan and Stock Option Agreement with Robert G. O'Malley
EX-5.1 2 f67633ex5-1.txt EXHIBIT 5.1 1 EXHIBIT 5.1 OPINION OF HELLER EHRMAN WHITE & MCAULIFFE LLP December 22, 2000 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Registration Statement on Form S-8 Ladies and Gentlemen: We have acted as counsel to Immersion Corporation, a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-8 (the "Registration Statement") which the Company proposes to file with the Securities Exchange Commission on or about December 22, 2000 for the purposes of registering under the Securities Exchange Act of 1933, as amended, 2,226,463 shares of its Common Stock, $0.001 par value (the "Shares"). Of the Shares, 391,238 are issuable under the Haptic Technologies, Inc. 2000 Stock Option Plan assumed by the Company on March 9, 2000, 500,000 are issuable under the Company's 2000 Non-Officer Nonstatutory Stock Option Plan, 766,322 are issuable under the Company's 2000 HT Non-Officer Nonstatutory Stock Option Plan, 68,903 are issuable under the HT Medical Systems, Inc. 1998 Stock Option Plan assumed by the Company on September 29, 2000 and 500,000 are issuable under the Company's Nonstatutory Stock Option Plan and Stock Option Agreement with Robert G. O'Malley (collectively, the "Plans"). We have assumed the authenticity of all records, documents and instruments submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all records, documents and instruments submitted to us as copies. In rendering our opinion, we have examined the following records, documents and instruments: (a) The Amended and Restated Certificate of Incorporation of the Company, certified by the Delaware Secretary of State as of December 3, 2000, and certified to us by an officer of the Company as being complete and in full force as of the date of this opinion; (b) The Bylaws of the Company certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; (c) A Certificate of Good Standing relating to the Company issued by the Secretary of State of the State of Delaware as of December 3, 2000 and verified as being in full force and effect in a "bring-down" letter from GKL Corporate/Search, Inc. dated December 21, 2000, a corporate search agent; (d) A Certificate of Status Foreign Corporation issued by the Secretary of State of the State of California as of December 3, 2000 and verified as being in full force and effect in a "bring-down" letter from GKL Corporate/Search, Inc. dated December 21, 2000, a corporate search agent; (e) A Certificate of an officer of the Company (i) attaching records certified to us as constituting all records of proceedings and actions of the Board of Directors, including any committee thereof, and shareholders of the Company relating to the Shares, and the Registration Statement, and (ii) certifying as to certain factual matters; (d) The Registration Statement; (e) The Plans; and 2 (f) A letter from EquiServe, the Company's transfer agent, dated December 20, 2000, as to the number of shares of the Company's common stock that were outstanding on December 19, 2000. This opinion is limited to the federal law of the United States of America and the Delaware General Corporation Law, and we disclaim any opinion as to the laws of any other jurisdiction. We further disclaim any opinion as to any other statute, rule, regulation, ordinance, order or other promulgation of any other jurisdiction or any regional or local governmental body or as to any related judicial or administrative opinion. Based on the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion, and assuming that (i) the Registration Statement becomes and remains effective during the period when the Shares are offered and issued, (ii) the full consideration stated in the Plans is paid for each Share and that such consideration in respect of each Share includes payment of cash or other lawful consideration, (iii) appropriate certificates evidencing the Shares are executed and delivered by the Company, and (iv) all applicable securities laws are complied with, it is our opinion that when issued and sold by the Company, after payment therefore in the manner provided in the Plans and Registration Statement, the Shares will be legally issued, fully paid and nonassessable. This opinion is rendered to you in connection with the Registration Statement and is solely for your benefit. This opinion may not be relied upon by you for any other purpose, or relied upon by any other person, firm, corporation or other entity for any purpose, without our prior written consent. We disclaim any obligation to advise you of any change of law that occurs, or any facts of which we may become aware, after the date of this opinion. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, /s/ Heller Ehrman White & McAuliffe LLP EX-23.1 3 f67633ex23-1.txt EXHIBIT 23.1 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Immersion Corporation on Form S-8 of our reports dated February 4, 2000 (March 9, 2000 as to Note 14) and February 4, 2000 appearing in the Annual Report on Form 10-K of Immersion Corporation for the year ended December 31, 1999. /s/ Deloitte & Touche LLP San Jose, California December 22, 2000 EX-99.4 4 f67633ex99-4.txt EXHIBIT 99.4 1 EXHIBIT 99.4 HT MEDICAL SYSTEMS, INC. 1998 STOCK OPTION PLAN The purpose of this Plan is to encourage and enable certain officers, employees, Directors, consultants and agents of HT Medical Systems, Inc. (the "Company"') to acquire an interest in the Company through the granting of options, as herein provided, to acquire its Common Stock, without par value (the "Common Stock"). Two separate forms of option may be granted pursuant to this Plan: Incentive Stock Options under the provisions of Section 422A of the Internal Revenue Code of 1954, as amended (the "Code") (referred to herein as "Incentive Stock Options") and other options (referred to as "Non-Qualified Options"). Both forms of option will be referred to collectively hereunder as "options". 1 SHARES OF STOCK SUBJECT TO THE PLAN The stock that may be issued and sold pursuant to options granted under the Plan shall not exceed, in the aggregate, 20% of the total number of outstanding shares of Common Stock, which may be (i) authorized but unissued shares, (ii) treasury shares, or (iii) shares previously reserved for issue upon exercise of options under the Plan, which options have expired or terminated; provided, however, that the number of shares subject to the Plan shall be subject to adjustment as provided in Section 9. 2 ELIGIBILITY AND GRANTING OF OPTIONS (a) Non-Qualified Options may be granted hereunder to any officer, employee, Director, consultant or agent of the Company. Incentive Stock Options may only be granted to employees of the Company, including those who are Directors. (b) The Board of Directors of the Company (the "Board") shall determine the persons to be granted options (the "Optionees"), the number of shares subject to each option (which cannot with respect to any one Optionee exceed 5% of the then outstanding shares of Common Stock), whether the options shall be Incentive Stock Options or Non-Qualified Options, and the terms of the options, consistently with the provisions of this Plan. The Board may appoint a committee of three (3) or more persons who may exercise the powers of the Board in granting options under the Plan. (c) Each member of the Board (other than Directors who are employees of the Company) shall receive a single grant of Non-Qualified Options to purchase not more than fifteen thousand shares of Common Stock for an exercise price equal to the fair market value of the Common Stock as of the date of grant. Such options shall vest in eight equal quarterly installments over a period of two years and shall be exercisable for a period of ten years from the date of grant. 1 2 3 PRICE AND LIMITATION ON GRANT OF OPTIONS (a) The purchase price of shares which may be purchased under each Incentive Stock Option shall, except as provided in Paragraph (b) below, be at least equal to the fair market value per share of the outstanding Common Stock of the Company at the time the option is granted as determined by the Board in its discretion. The aggregate fair market value (determined as of the time the option is granted) of the stock for which an individual may be granted Incentive Stock Options which vest in any calendar year under this Plan and all other plans of the Company and any parent or subsidiary of the Company (as defined in Section 425 of the Code) shall not exceed $100,000 plus any "unused limit carryover" as that term is defined in Section 422A of the Code. (b) The purchase price of shares which may be purchased under each Incentive Stock Option issued to a person who, immediately prior to the grant of such option owns (directly or indirectly) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of its parent or subsidiaries (a "restricted individual") shall be at least equal to 110 percent of the fair market value of the stock subject to the option, as determined in Paragraph 3(a) above. (c) The purchase price of shares, which may be purchased under each Non-Qualified Option, shall be such amount as may be determined by the Board of Directors of the Company. (d) In no event shall the purchase price of any shares be less than that permitted by applicable laws, rules or regulations. 4 PERIOD OF OPTION, VESTING, AND LIMITATIONS ON RIGHT TO EXERCISE All options shall be evidenced by written agreements executed by the Company and the Optionee, which in the case of Incentive Stock Options shall be in the form of the Incentive Stock Option Agreement attached hereto as Exhibit A, and in the case of Non-Qualified Options may be in the form of the Non-Qualified Option Agreement attached hereto as Exhibit B. All Incentive Stock Option Agreements, and such Non-Qualified Option Agreements as the Board may determine, shall provide that any options granted thereunder shall vest and become exercisable in equal annual installments over a period of not less than three years from the date of grant. In addition, in the case of Options which have been in effect for more than six months, all vesting will automatically accelerate, and such Options shall immediately become fully vested and exercisable, upon the completion of an underwritten public offering of the Company's securities which results in gross proceeds to the Company of not less than $10,000,000. Each Incentive Stock Option shall be exercisable at such time or times as are set forth in the Incentive Stock Option Agreement related thereto, but in no event after the expiration of ten (10) years from the date such option is granted. An Incentive Stock Option granted to a restricted 2 3 individual (as defined in Paragraph 3(b) above) shall not be exercisable after the expiration of 5 years from the date such option is granted. A Non-Qualified Option shall be exercisable for such consideration, in such manner and at such time or times as shall be set forth in the Non-Qualified Option Agreement related thereto, which shall contain such provisions as the Board shall determine in granting such an option, and may be exercisable for a period of ten years from the date such option is granted, but in no event after such period. An Optionee may exercise an option with respect to a number of shares, not a fractional number, which is less than the full number of shares for which the Option may then be exercised. The delivery of certificates representing shares under any option will be contingent upon receipt by the Company from the Optionee (or a purchaser acting in his stead in accordance with the provisions of the option) of the full purchase price for such shares (which may be paid as specified in the following sentence) and the fulfillment of any other requirements contained in the option or in applicable provisions of law; and until such receipt of the purchase price and fulfillment of other requirements no Optionee or person entitled to exercise the option shall be, or shall be deemed to be, a holder of any shares subject to the option for any purpose. The purchase price of shares may be paid either in United States dollars in cash or by check, bank draft or money order payable to the order of the Company, or through the delivery of shares of Common Stock with an aggregate fair market value on the date of exercise equal to the purchase price, or in any combination of the foregoing; provided, however, that the Company shall not be obligated to purchase or accept the surrender of any such shares if such action would be prohibited by applicable law or determined by the Board to be not in the best interests of the Company. The Company may, in its discretion, require an Optionee to pay to the Company the amount, or make such other arrangements (including the withholding of Common Shares which would otherwise be delivered upon exercise), at the time of exercise or thereafter, that the Company deems necessary to satisfy its obligation to withhold federal, state or local income or other taxes (which for purposes of this Section includes an Optionee's FICA obligation) incurred by reason of the exercise. 5 NON-TRANSFERABILITY OF OPTION Each option granted under the Plan shall provide that it is personal to the Optionee, is not transferable by the Optionee in any manner otherwise than by will or the laws of descent and distribution and is exercisable, during the Optionee's lifetime, only by the Optionee. In the event of any attempt by the Optionee to assign, pledge or otherwise dispose of any option (except as provided for herein) or in the event of any levy, attachment, execution or similar process upon rights or interests conferred hereby, the Company may terminate the option by notice to the Optionee and the option shall thereupon become null and void. 3 4 6 CESSATION OF EMPLOYMENT OR AFFILIATION BY OPTIONEE The following provisions shall apply in the event of the cessation of an Optionee's employment or affiliation with the Company: (a) In the case of an Incentive Stock Option, in the event of the cessation by the Optionee of his or her employment with the Company: (i) If an Optionee shall cease to be employed by the Company otherwise than by reason of retirement, disability or death (as defined in Section 105 of the Code), each option held by the Optionee, together with all rights hereunder (including the right to any options not then vested), shall terminate 45 days after the date of cessation of employment, to the extent not previously exercised. (ii) If an Optionee shall cease to be employed by the Company by reason of retirement or disability, each vested option held by the Optionee shall be exercisable until the termination date set forth in the option or until one year after the date of cessation of employment, whichever comes first, provided that no such extension shall be construed to grant an optionee any rights to options not vested on the date of termination. (iii) If an Optionee shall die while employed by the Company, or at any time after cessation of employment by reason of retirement or disability, an Option may be exercised at any time or from time to time prior to the termination date set forth in the Option or until one year after the date of death, whichever comes first, by the person or persons to whom the Optionee's rights under each option shall pass by will or by the applicable laws of descent and distribution, provided that no such extension shall be construed to grant an optionee any rights to options not vested on the date of termination. Any person or persons to whom an Optionee's rights under an option shall have passed by will or by the applicable laws of descent and distribution shall be subject to all terms and conditions of the Plan and the option applicable to the Optionee. (b) In the case of a Non-Qualified Option, in the event of the cessation by the Optionee of his or her affiliation with the Company, the termination of the options shall be governed by the terms of the applicable Non-Qualified Option Agreement. 7 NOTIFICATION OF SALES OF SHARES Any Optionee who disposes of shares of Common Stock acquired upon the exercise of an Incentive Stock Option either (a) within two years after the date of the grant of the option under which the shares were acquired or (b) within one year after the transfer of such shares to the 4 5 Optionee, shall notify the Company of such disposition and of the amount realized upon such disposition. 5 6 8 DILUTION OR OTHER ADJUSTMENTS The terms of the options and the number of shares subject to this Plan shall be equitably adjusted in such manner as to prevent dilution or enlargement of option rights in the following instances: (a) the declaration of a stock dividend payable to the holders of Common Stock; (b) a split-up of the Common Stock or a reverse split thereof; (c) a recapitalization of the Company under which shares of one or more different classes of stock of the Company are distributed in exchange for or upon the Common Stock without payment of any valuable consideration by the holders thereof. The terms of any such adjustment shall be conclusively determined by the Board. 9 STOCKHOLDER'S AGREEMENT All holders of shares of Common Stock issued upon exercise of options issued pursuant hereto shall, as a condition of issuance of such shares, become parties and become subject to the terms and provisions of the Stockholders' Agreement among the Company and the holders of Common Stock, and all certificates evidencing such shares shall contain the legends required by such Agreement. 10 ADMINISTRATION AND AMENDMENT OF THE PLAN The Plan shall be administered by the Board, or a committee thereof as provided in Section 2, which shall effect the grant of options under the Plan, determine the form of options to be granted in each case, and make any other determination under or interpretation of any provision of the Plan and any option. The Board or such committee shall maintain separate records with respect to Incentive Stock Options and Non-Qualified Options granted under the Plan to facilitate determination of the appropriate tax treatment for such options. Any of the foregoing actions taken by the Board or such committee shall be final and conclusive. The Board may amend and make such changes in and additions to the Plan as it may deem proper and in the best interest of the Company; provided, however, that no such action shall adversely affect or impair any options theretofore granted under the Plan without the consent of the Optionee; and provided, further, that no amendment (i) increasing the maximum number of shares which may be issued under the Plan, except as provided in Section 9, (ii) extending the term of the Plan or any option, (iii) changing the minimum exercise price of options to be granted under the Plan, (iv) changing the requirements as to eligibility for participation in the Plan (except as provided in Section 2(b)), or (v) materially increasing in any other way the benefits accruing the Optionees, shall be adopted without the approval of the shareholders of the Company. 6 7 11 EXPIRATION AND TERMINATION OF THE PLAN Options may be granted under the Plan at any time, or from time to time, within ten (10) years from the date the Plan is adopted or the date on which it is approved by the shareholders of the Company, whichever is earlier, as long as the total number of shares purchased under the Plan and subject to outstanding options under the Plan does not exceed 20% of the total outstanding shares of the Common Stock of the Company, subject to adjustment as provided in Section 9. The Plan may be abandoned or terminated at any time by the Board, except with respect to any options then outstanding under the Plan. 12 EFFECT OF CERTAIN TRANSACTIONS If the Company is merged into or consolidated with another corporation under circumstances where the Company is not the surviving corporation, or if the Company is liquidated or sells or otherwise disposes of all or substantially all of its assets to another corporation while unexercised options remain outstanding under the Plan, without limitation of any rights which Optionees may have under Section 10, (i) after the effective date of such merger, consolidation or sale, as the case may be, each holder of an outstanding option shall be entitled, upon exercise of such option, to receive in lieu of shares of Common Stock, shares of such stock or other securities as the holders of shares of Common Stock received pursuant to the terms of the merger, consolidation or sale; and (ii) the Board shall waive any discretionary limitations provided in the stock option agreement so that all options from and after a date, specified by the Board, prior to the effective date of such merger, consolidation, liquidation or sale, as the case may be, shall be exercisable in full (provided that no such acceleration shall be granted to optionees who have served the Company for less than one year as of such effective date). 13 MISCELLANEOUS PROVISIONS (a) The right of the Company to terminate at will (whether by dismissal, discharge or otherwise) the Optionee's employment or affiliation (as the case may be) with it at any time is specifically reserved. Neither the Optionee nor any person entitled to exercise the Optionee's rights in the event of the Optionee's death shall have any rights of a shareholder with respect to the shares of Common Stock subject to each option, except to the extent that, and until, such Shares shall have been issued upon the exercise of each option. (b) Any expenses of administering the Plan shall be borne by the Company. (c) In addition to such other rights of indemnification as they may have as members of the Board, or the Committee, the members of the Board and any committee appointed pursuant to Section 2 shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them 7 8 may be party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding, a Board or committee member shall, in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such Board or committee member undertakes to handle and defend it on such member's own behalf. (d) The Plan shall be governed by Maryland law. 8 EX-99.5 5 f67633ex99-5.txt EXHIBIT 99.5 1 EXHIBIT 99.5 IMMERSION CORPORATION NONSTATUTORY STOCK OPTION PLAN AND STOCK OPTION AGREEMENT THIS NONSTATUTORY STOCK OPTION PLAN (the "PLAN") was adopted by the Board of Directors of Immersion Corporation on October 22, 2000, and this STOCK OPTION AGREEMENT (the "OPTION AGREEMENT") is made and entered into as of October 22, 2000, by and between Immersion Corporation and Robert G. O'Malley (the "OPTIONEE"). Under the Plan an option (the "OPTION") to purchase a total of 500,000 shares of the Common Stock, Par value $0.001 per share, (the "Stock") may be granted to the Optionee. The Company has granted to the Optionee pursuant to the Plan an option to purchase shares of 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 October 22, 2000. (c) "NUMBER OF OPTION SHARES" means 500,000 shares of Stock, as adjusted from time to time pursuant to Section 9. (d) "EXERCISE PRICE" means $9.00 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 not terminated prior to such date 1/4
2 Plus For each full month of the Optionee's 1/48 continuous Service from 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. 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 Plan 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. 2 3 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 (i) full payment of the aggregate Exercise Price for the number of shares of Stock being purchased and (ii) an executed copy, if required herein, of the then current forms of escrow and security agreement referenced below. The Option shall be deemed to be exercised upon receipt by the Company of such written notice, the aggregate Exercise Price, and, if required by the Company, such executed agreements. 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), (iv) in the Company's sole discretion at the time the Option is exercised, by the Optionee's recourse promissory note for the aggregate Exercise Price, or (v) by any combination of the foregoing. (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. (d) PAYMENT BY PROMISSORY NOTE. No promissory note shall be permitted if an exercise of the Option using a promissory note would be a violation of any law. The promissory note permitted in the Company's sole discretion by clause (iv) of Section 4.3(a) shall be a full recourse note in a form satisfactory to the Company, with principal payable no more than four years after the date the Option is exercised. Interest on the principal balance of the promissory note shall be payable in annual installments at the minimum interest rate necessary to avoid imputed interest pursuant to all applicable sections of the Code. Such recourse promissory note shall be secured by the shares of Stock acquired pursuant to the then current form of security agreement as approved by the Company. At any time the Company is subject to the regulations promulgated by the Board of Governors of the Federal Reserve System or any other governmental entity affecting the extension of credit in connection with the Company's securities, any promissory note shall comply with such applicable regulations, and the Optionee shall pay the unpaid principal and accrued interest, if any, to the extent necessary to comply with such applicable 3 4 regulations. Except as the Company in its sole discretion shall determine, the Optionee shall pay the unpaid principal balance of the promissory note and any accrued interest thereon upon termination of the Optionee's Service with the Participating Company Group for any reason, with or without cause. 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 or release such Stock from any escrow provided for herein. 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 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. 4 5 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 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 Participating Company Group 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 three 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. ADDITIONAL LIMITATION ON OPTION EXERCISE. Except as the Company and the Optionee otherwise agree, exercise of the Option pursuant to Section 7.1 following termination of the Optionee's Service may not be made by delivery of a promissory note as provided in Section 4.3(a). 7.3. 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. 7.4. 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. 5 6 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. (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. 8.3. TERMINATION FOLLOWING A TRANSFER OF CONTROL. In the event that, within 12 months following a Transfer of Control, there should occur, without the Optionee's consent, a material lessening of his duties and responsibilities as an employee or a material reduction in his title from the rate in effect as of the date of grant and, if, following such material lessening of duties or responsibilities or a material reduction in his title, the Optionee 6 7 shall, by providing written notice to the Company, voluntarily terminate his employment by the Company, then, (i) unless the Option became exercisable as to all of the Stock covered thereby prior to such Transfer of Control, such Option shall become exercisable as to 50% of the unvested Shares covered thereby (or such stock, cash or other securities or property covered thereby pursuant to Section 8.2 above) immediately upon the giving of such notice, notwithstanding anything to the contrary in Section 7.1 above, provided, however, that in no event may the Option be exercised after the Option Expiration Date. 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 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. ESCROW. 11.1. ESTABLISHMENT OF ESCROW. To ensure that Stock securing any promissory note will be available for repurchase, the Company may require the Optionee to deposit the certificate evidencing the Stock which the Optionee purchases upon exercise of the Option with an escrow agent designated by the Company under the terms and conditions of escrow and security agreements approved by the Company. If the Company does not require such deposit as a condition of exercise of the Option, the Company reserves the right at any time to require the Optionee to so deposit the certificate in escrow. Upon the occurrence of an Ownership Change Event or a change, as described in Section 8, in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Option Agreement, any and all new, substituted or additional securities or other property to which the Optionee is entitled by reason of the Optionee's ownership of shares of Stock acquired upon exercise of the Option that remain, following such Ownership Change Event or change described in Section 8, subject to any security interest held by the Company shall be immediately subject to the escrow to the same extent as such shares of Stock immediately before such event. The Company shall bear the expenses of the escrow. 11.2. DELIVERY OF SHARES TO OPTIONEE. As soon as practicable after full repayment of any promissory note secured by the Stock or other property in escrow, but not more frequently than twice each calendar year, the escrow agent shall deliver to the Optionee the Stock and any other property no longer subject to such restriction and no longer securing any promissory note. 12. STOCK DISTRIBUTIONS SUBJECT TO OPTION AGREEMENT. If, from time to time, there is any stock dividend, stock split or other change, as described in Section 9, in the character or amount of any of the outstanding 7 8 stock of the corporation the stock of which is subject to the provisions of this Option Agreement, then in such event any and all new, substituted or additional securities to which the Optionee is entitled by reason of the Optionee's ownership of the Stock acquired upon exercise of the Option shall be immediately subject to any security interest held by the Company with the same force and effect as the Stock subject to such security interest immediately before such event. 13. 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. 14. 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. 15. 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 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. 16. 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. 17. TERMINATION OR AMENDMENT. The Administrator may terminate or amend the Plan 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. 18. 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. 19. INTEGRATED AGREEMENT. This Option Agreement and the Plan constitute the entire understanding and agreement of the Optionee and the Participating Company Group 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 Participating Company Group 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. 8 9 20. 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/Louis Rosenberg --------------------------------------- Title: Chairman ------------------------------------ Address: 801 Fox Lane San Jose, CA 95131 9 10 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 Plan. OPTIONEE Date: October 22, 2000 /s/Robert G. O'Malley ----------------------- ------------------------------------ Optionee's Address and Phone Number: c/o Immersion Corporation 801 Fox Lane, San Jose CA 95131 (408) 467-1900 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: October 22, 2000 /s/Barbara O'Malley ----------------------- ------------------------------------ Spouse's Address and Phone Number: c/o Immersion Corporation 801 Fox Lane, San Jose CA 95131 (408) 467-1900 10 -----END PRIVACY-ENHANCED MESSAGE-----