AMENDED AND RESTATED EXECUTIVE CORPORATE TRANSACTION AND SEVERANCE
SECTION 1. INTRODUCTION.
The iPass Inc. Executive Corporate Transaction and Severance Benefit Plan (the Plan) was initially established effective August 9th, 2007 and subsequently amended and restated effective December 23, 2008. The Plan is hereby amended and restated effective June 29, 2011 (the Amendment Effective Date). If a Participant experienced a Covered Termination (as such term is defined below) prior to the Amendment Effective Date, the provisions of the Plan in effect at the time of such Covered Termination shall govern. The purpose of the Plan is to provide for the payment of severance benefits to certain eligible executive employees of iPass Inc. (the Company) or its Affiliates (as such term is defined below) in the event that such employees are subject to qualifying employment terminations, and additional benefits if such qualifying employment terminations occur within eighteen (18) months following a Change in Control (as such term is defined below). In addition, Section 7 below provides certain benefits upon the consummation of a Change in Control without regard to a qualifying employment termination. This Plan shall supersede any generally applicable severance or change in control plan, policy, or practice, whether written or unwritten, with respect to each employee who becomes a Participant in the Plan. For the purposes of the foregoing sentence, a generally applicable severance or change in control plan, policy or practice is a plan, policy or practice in which benefits are not conditioned upon (i) being designated a participant, (ii) receiving an award such as a stock option, or (iii) the employee electing to participate. This Plan shall not supersede any individually negotiated employment contract or agreement, or any written plans that are not of general application, and, except as set forth in the Participation Notice, such Participants severance benefit, if any, shall be governed by the terms of such individually negotiated employment contract, agreement, or written plan, and shall be governed by this Plan only to the extent that the reduction pursuant to Section 5(b) below does not entirely eliminate benefits under this Plan. This document also constitutes the Summary Plan Description for the Plan.
SECTION 2. DEFINITIONS.
For purposes of the Plan, except as set forth in an applicable Participation Notice, the following terms are defined as follows:
(a) Affiliate means a parent corporation of the Company or a subsidiary corporation of the Company (whether now or hereafter existing), as those terms are defined in Sections 424(e) and (f), respectively, of the Code.
(b) Base Salary means the Participants monthly base pay (excluding incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation).
(c) Board means the Board of Directors of iPass Inc.
(d) Cause shall mean the occurrence of any of the following (and only the following): (i) conviction of the Participant of any felony involving fraud or act of dishonesty against the Company or its Affiliates; (ii) conduct by the Participant which, based upon good faith and reasonable factual investigation and determination of the Board, demonstrates gross unfitness to serve; or (iii) intentional, material violation by the Participant of any contractual, statutory, or fiduciary duty of the Participant to the Company or its Affiliates.
(e) Change in Control shall mean the occurrence of any of the following events; provided the event also constitutes a change in the ownership or effective control or a change in the ownership of a substantial portion of the assets within the meaning of Treas. Reg. Section 1.409A-3(i)(5):
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Companys then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an institutional investor, any affiliate thereof or any other Exchange Act Person that acquires the Companys securities in a transaction or series of related transactions that are primarily a private financing transaction for the Company or (B) solely because the level of Ownership held by any Exchange Act Person (the Subject Person) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction;
(iii) there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Affiliates to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportion as their Ownership of the Company immediately prior to such sale, lease, license or other disposition; or
(iv) individuals who, on the date this Plan is adopted by the Board, are members of the Board (the Incumbent Board) cease for any reason to constitute at least a majority of the members of the Board; (provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board); or
Once a Change in Control has occurred, no future events shall constitute a Change in Control for purposes of the Plan. Furthermore, no event shall be treated as a Change in Control under the Plan if the Participants in the Plan immediately prior to such event hold a majority of the voting power of the outstanding securities of the Company or the surviving or acquiring corporation immediately following such event.
(f) Change in Control Termination means a Covered Termination which occurs within eighteen (18) months after a Change in Control.
(g) COBRA means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(h) Code means the Internal Revenue Code of 1986, as amended.
(i) Company means iPass Inc. or, following a Change in Control which is a sale of assets or a merger in which iPass Inc. is not the surviving entity, the entity to which the assets are sold or the surviving entity resulting from such transaction, respectively.
(j) Constructive Termination means a resignation of employment by a Participant no later than twelve (12) months after an action or event which constitutes Good Reason is undertaken by the Company or occurs and such termination results in a separation from service with the Company within the meaning of Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition of termination of employment thereunder).
(k) Covered Termination means either (i) an Involuntary Termination Without Cause, or (ii) a Constructive Termination. Termination of employment of a Participant due to death or disability shall not constitute a Covered Termination unless a voluntary termination of employment by the Participant immediately prior to the Participants death or disability would have qualified as a Constructive Termination. The foregoing notwithstanding, the following events shall not constitute a Covered Termination: (i) the Participant resigns his or her employment with the Company in order to accept employment with another entity that is controlled (directly or indirectly) by the Company or is otherwise an Affiliate of the Company; (ii) the Participants employment is terminated, but the Participant is subsequently rehired within 32 days after such termination of employment by the Company or an Affiliate for a Substantially Equivalent or Comparable Position as the Participants last position with the Company or an Affiliate; and (iii) in connection with a Change in Control, the Participants employment is terminated but prior to such termination the Participant is offered but does not accept a Substantially Equivalent or Comparable Position with the Company or an Affiliate of the Company or the entity acquiring the Company or its assets pursuant to the Change in Control.
(l) Eligible Employee means an individual who is (i) employed by the Company or its Affiliates at the Vice President level and above (excluding the Chief Executive Officer), and (ii) has been designated an Eligible Employee by the Plan Administrator in its sole discretion (either by a specific designation or by virtue of being a member of a class of employees who have been so designated).
(m) Entity means a corporation, partnership or other entity.
(n) ERISA means the Employee Retirement Income Security Act of 1974, as amended.
(o) Exchange Act Person means any natural person, Entity or group (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that Exchange Act Person shall not include (A) the Company or any subsidiary of the Company, (B) any employee benefit plan of the Company or any subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company.
(p) Good Reason shall mean any of the following actions or events: (i) the Company requires that the Participant relocate to a worksite that is more than sixty (60) miles from its principal executive office as of the Effective Date; (ii) the Company materially reduces the Participants Base Salary below its then-existing gross rate; or (iii) the Participants duties or responsibilities are materially reduced within the 18- month period following a Change in Control; provided however that, in order to qualify as Good Reason, the Participant must submit to the Company a written notice, within ninety (90) days after the occurrence of any of the actions or events described in (i), (ii) or (iii) above, describing the applicable actions or events, and provide the Company with at least thirty (30) days from its receipt of the Participants written notice in which to cure such actions or events prior to termination of the Participants employment, and provided further that, the Participants employment must terminate no later than twelve (12) months after the applicable actions or events described in (i), (ii) or (iii) above. For the purposes of clause (iii) of the preceding sentence, the following shall not constitute a material reduction in the Participants duties or responsibilities: (x) a mere change in title, (y) a change in reporting responsibilities that does not otherwise result in a material diminution of duties or responsibilities or (z) any change in duties or responsibilities as a result of the Company ceasing to be a publicly traded corporation.
(q) Involuntary Termination Without Cause means a termination by the Company of a Participants employment relationship with the Company or an Affiliate of the Company for any reason other than for Cause and such termination results in a separation from service with the Company within the meaning of Treasury Regulation Section 1.409A-1(h) (without regard to any permissible alternative definition of termination of employment thereunder).
(r) Own, Owned, Owner, Ownership A person or Entity shall be deemed to Own, to have Owned, to be the Owner of, or to have acquired Ownership of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power,
which includes the power to vote or to direct the voting, with respect to such securities.(q) Participant means an individual (i) who is an Eligible Employee and (ii) who has received a Participation Notice from the Company and executed and returned such Participation Notice to the Company. The Participation Notice shall designate the Participant as either a Tier I Participant or a Tier II Participant, provided that, in the absence of such specific designation, the Participant shall be deemed a Tier II Participant for purposes of the Plan. The determination of whether an employee is a Participant, and the designation of either a Tier I Participant or a Tier II Participant, shall be made by the Plan Administrator, in its sole discretion, and such determination shall be binding and conclusive on all persons.
(s) Participation Notice means the latest notice delivered by the Company to a Participant informing the employee that the employee is a Participant in the Plan, substantially in the form of Annex I hereto.
(t) Plan Administrator means the Board or any committee duly authorized by the Board to administer the Plan. The Plan Administrator may, but is not required to be, the Compensation Committee of the Board. The Board may at any time administer the Plan, in whole or in part, notwithstanding that the Board has previously appointed a committee to act as the Plan Administrator.
(u) Severance Period means (i) in the case of a Covered Termination that is not a Change in Control Termination, three (3) months for a Tier II Participant and six (6) months for a Tier I Participant, and (ii) in the case of a Change in Control Termination, nine (9) months for a Tier II Participant and twelve (12) months for a Tier I Participant.
(v) Substantially Equivalent or Comparable Position is one that offers the Participant substantially the same Base Salary; provided, however, that a position shall not be considered to be a Substantially Equivalent or Comparable Position if a resignation of employment by the Participant would constitute a Constructive Termination.
SECTION 3. ELIGIBILITY FOR BENEFITS.
(a) General Rules. Subject to the limitations set forth in this Section 3 and Section 5, in the event of a Covered Termination, the Company shall provide the severance benefits described in Section 4 to each affected Participant. Upon the consummation of a Change in Control, the Company shall provide each Participant the benefits described in Section 7. For the avoidance of doubt, a person who is not (and was not) a Participant shall not be eligible for benefits pursuant to the Plan whether or not such person is (or was) an Eligible Employee.
(b) Exceptions to Benefit Entitlement. A Participant will not receive benefits under the Plan (or will receive reduced benefits under the Plan) in the following circumstances, as determined by the Plan Administrator in its sole discretion:
(i) The Participant has executed an individually negotiated employment contract or agreement with the Company relating to severance or change in control benefits that is in effect on his or her termination date and which provides benefits that the Plan Administrator, in its sole discretion, determines to be of greater value than the benefits provided for in this Plan, in which case such Participants severance benefit, if any, shall be governed by the terms of such individually negotiated employment contract or agreement and shall be governed by this Plan only to the extent that the reduction pursuant to Section 5(b) below does not entirely eliminate benefits under this Plan.
(ii) The Participant is entitled to receive benefits under another severance benefit plan maintained by the Company (e.g., the iPass Inc. Severance Benefit Plan) on his or her termination date and which provides benefits that the Plan Administrator, in its sole discretion, determines to be of greater value than the benefits provided for in this Plan, in which case such Participants severance benefit, if any, shall be governed by the terms of such other severance benefit plan and shall be governed by this Plan only to the extent that the reduction pursuant to Section 5(b) below does not entirely eliminate benefits under this Plan.
(iii) The Participants employment terminates or is terminated for any reason other than a Covered Termination.
(iv) The Participant does not confirm in writing that he or she shall be subject to the Companys Employee Proprietary Information and Inventions Agreement.
(v) The Participant has failed to execute or has revoked the release within the applicable period of time specified in Section 5(a).
(vi) The Participant has failed to return all Company Property. For this purpose, Company Property means all paper and electronic Company documents (and all copies thereof) created and/or received by the Participant during his or her period of employment with the Company and other Company materials and property which the Participant has in his or her possession or control, including, but not limited to, Company files, notes, drawings records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, operational and personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, leased vehicles, computers, computer equipment, software programs, facsimile machines, mobile telephones, servers), credit and calling cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). As a condition to receiving benefits under the Plan, Participants must not make or retain copies, reproductions or summaries of any such Company documents, materials or property. However, a Participant is not required to return his or her personal copies of documents evidencing the Participants hire, termination, compensation, benefits and stock options and any other documentation received as a shareholder of the Company.
(c) Termination of Benefits. A Participants right to receive benefits under this Plan shall terminate immediately if, at any time prior to or during the period for which the Participant is receiving benefits hereunder, the Participant, without the prior written approval of the Plan Administrator:
(i) willfully breaches a material provision of the Companys Employee Proprietary Information and Inventions Agreement;
(ii) encourages or solicits any of the Companys then current employees to leave the Companys employ for any reason or interferes in any other manner with employment relationships at the time existing between the Company and its then current employees; or
(iii) induces any of the Companys then current clients, customers, suppliers, vendors, distributors, licensors, licensees or other third party to terminate their existing business relationship with the Company or interferes in any other manner with any existing business relationship between the Company and any then current client, customer, supplier, vendor, distributor, licensor, licensee or other third party.
SECTION 4. AMOUNT OF BENEFITS.
In the event of a Participants Covered Termination, the Participant shall be entitled to receive the benefits provided by this Section 4 except as may otherwise be provided in the Participants Participation Notice.
(a) Cash Severance Benefits. The Company shall make a cash severance payment to the Participant in an amount equal to the product of (i) the Participants Base Salary, as in effect on the date of a Covered Termination, multiplied by (ii) the number of months in the Severance Period. In addition, the Company shall make an additional cash severance payment to the Participant as follows: (i) provided that the Participant received an overall performance rating equivalent to or greater than Meets Expectations in the most recent performance evaluation cycle preceding termination of the Participants employment, in the case of a Covered Termination that is not a Change in Control Termination, in an amount equal to one quarter of the Participants target bonus amount under the Companys annual bonus plan, and (ii) in the case of a Change in Control Termination, in an amount equal to the product of (x) one-twelfth (1/12th) of the Participants target bonus amount under the Companys annual bonus plan, multiplied by (y) the number of months in the Severance Period. Such severance payments shall be paid in accordance with Section 6.
(b) Health Continuation Coverage.
(i) Provided that the Participant is eligible for, and has made an election at or timely after the Covered Termination pursuant to COBRA under a health, dental, or vision plan sponsored by the Company, each such Participant shall be entitled to payment by the Company of all of the applicable premiums (inclusive of premiums for the Participants dependents for such health, dental, or vision plan coverage as in effect immediately prior to the date of the Covered Termination) for such health, dental, or vision plan coverage for a period of months following the date of the Covered Termination equal to two times the Severance Period, with such coverage counted as coverage pursuant to COBRA.
(ii) No such premium payments (or any other payments for health, dental, or vision coverage by the Company) shall be made following the earliest of (A) the close of the period of months following the date of the Covered Termination equal to two times the Severance Period, (B) the Participants death, (C) the effective date of the Participants coverage by a health, dental, or vision insurance plan of a subsequent employer, or (D) the expiration of the Participants eligibility for substantially equivalent health insurance coverage in connection with new employment (such period from the date of the Covered Termination through the earliest of (A) through (D), the COBRA Payment Period). Each Participant shall be required to notify the Plan Administrator immediately if the Participant becomes covered by or eligible for a health, dental, or vision insurance plan of a subsequent employer. Upon the conclusion of such period of COBRA Payment Period, the Participant will be responsible for the entire payment of premiums required under COBRA for the duration of the COBRA period.
(iii) For purposes of this Section 4(b), (i) references to COBRA shall be deemed to refer also to analogous provisions of state law, and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by the Participant under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the Participant.
(iv) Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that its payment of COBRA premiums pursuant to this Section 4(b) would result in adverse consequences to the Company (including, without limitation, Section 2716 of the Public Health Service Act), then in lieu of paying COBRA premiums pursuant to this Section 4(b), the Company will pay the Participant on the last day of each remaining month of the Revised COBRA Payment Period, as defined below, a fully taxable cash payment equal to the COBRA premium for that month, subject to applicable tax withholding (such amount, the Special Severance Payment), such Special Severance Payment to be made without regard to the Participants payment of COBRA premiums. The Revised COBRA Payment Period shall end on the earlier of (x) the date on which the Participant commences other employment and (y) the close of the period of months following the date of the Covered Termination equal to two times the Severance Period.
(c) Option Grant and Restricted Stock Vesting Acceleration. Upon a Change in Control, (i) the vesting and exercisability of 50% of all outstanding options to purchase the Companys common stock and all restricted stock issued pursuant to any equity incentive plan of the Company that are held by the Participant on such date shall be accelerated, and (ii) 50% of all reacquisition or repurchase rights held by the Company with respect to common stock issued or issuable (or with respect to similar rights or other rights with respect to stock of the Company issued or issuable pursuant to any equity incentive plan of the Company) pursuant to any other stock award granted to the Participant by the Company shall lapse.
Upon a Change in Control Termination, (i) the vesting and exercisability of 100% of the outstanding options to purchase the Companys common stock and all restricted stock issued pursuant to any equity incentive plan of the Company that are held by the Participant on such date shall be accelerated, and (ii) 100% of the reacquisition or repurchase rights held by the Company with respect to common stock issued or issuable (or with respect to similar rights or other rights with respect to stock of the Company issued or issuable pursuant to any equity incentive plan of the Company) pursuant to any other stock award granted to the Participant by the Company shall lapse.
Notwithstanding the provisions of this Section 4(c), in the event that the provisions of this Section 4(c) regarding acceleration of vesting of a stock award would adversely affect a Participants stock award (including, without limitation, its status as an incentive stock option under Section 422 of the Code) that is outstanding on the date the Participant commences participation in the Plan, such acceleration of vesting shall be deemed null and void as to such option or other stock award unless the affected Participant consents in writing to such acceleration of vesting as to such option or other stock award within thirty (30) days after becoming a Participant in the Plan.
All acceleration of vesting and exercisability or the lapse of repurchase or reacquisition rights under this Section 4(c) will be done on an installment-by-installment basis, except as otherwise provided in Section 5(c).
(d) Other Employee Benefits. All other benefits (such as life insurance, disability coverage, and 401(k) plan coverage) shall terminate as of the Participants termination date (except to the extent that a conversion privilege may be available thereunder).
(e) Additional Benefits. Notwithstanding the foregoing, the Plan Administrator may, in its sole discretion, provide benefits in addition to those pursuant to Sections 4(a), 4(b), and 4(c) to one or more Participants chosen by the Plan Administrator, in its sole discretion, and the provision of any such benefits to a Participant shall in no way obligate the Company to provide such benefits to any other Participant, even if similarly situated.
SECTION 5. LIMITATIONS ON BENEFITS.
(a) Release. In order to be eligible to receive benefits under the Plan, a Participant must execute a general waiver and release in substantially the form attached hereto as Exhibit A, Exhibit B, or Exhibit C, as appropriate, and such release must become effective in accordance with its terms within sixty (60) days following a Covered Termination; provided, however, no such release shall require the Participant to forego any unpaid salary, any accrued but unpaid vacation pay or any benefits payable pursuant to this Plan. With respect to any outstanding option held by the Participant, no provision set forth in this Plan granting the Participant additional rights to exercise the option can be exercised unless and until the release becomes effective. Unless a Change in Control has occurred, the Plan Administrator, in its sole discretion, may modify the form of the required release to comply with applicable law and shall determine the form of the required release, which may be incorporated into a termination agreement or other agreement with the Participant.
(b) Certain Reductions. The Plan Administrator, in its sole discretion, shall have the authority to reduce a Participants severance benefits, in whole or in part, by any other severance benefits, pay in lieu of notice, or other similar benefits payable to the Participant by the Company that become payable in connection with the Participants termination of employment pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act or comparable state law (collectively, the WARN Act), (ii) a written employment or severance agreement with the Company, or (iii) any Company policy or practice providing for the Participant to remain on the payroll for a limited period of time after being given notice of the termination of the Participants employment. The benefits provided under this Plan are intended to satisfy, in whole or in part, any and all statutory obligations and other contractual obligations of the Company, including benefits provided by offer letter or employment agreements, that may arise out of a Participants termination of employment, and the Plan Administrator shall so construe and implement the terms of the Plan. The Plan Administrators decision to apply such reductions to the severance benefits of one Participant and the amount of such reductions shall in no way obligate the Plan Administrator to apply the same reductions in the same amounts to the severance benefits of any other Participant, even if similarly situated. In the Plan Administrators sole discretion, such reductions may be applied on a retroactive basis, with severance benefits previously paid being re-characterized as payments pursuant to the Companys statutory or other contractual obligations.
(c) Parachute Payments. Except as otherwise provided in an agreement between a Participant and the Company, if any payment or benefit the Participant would receive in connection with a Change in Control from the Company or otherwise (Payment) would (i) constitute a parachute payment within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), then such Payment shall be equal to the Reduced Amount. The Reduced Amount shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Participants receipt of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Reduced Amount, reduction shall occur in a manner necessary to provide the Participant with the greatest economic benefit. If more than one manner of reduction of payments or benefits necessary to arrive at the Reduced Amount yields the greatest economic benefit, the payments and benefits shall be reduced pro rata.
(d) Mitigation. Except as otherwise specifically provided herein, a Participant shall not be required to mitigate damages or the amount of any payment provided under this Plan by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Plan be reduced by any compensation earned by a Participant as a result of employment by another employer or any retirement benefits received by such Participant after the date of the Participants termination of employment with the Company, except for health continuation coverage provided pursuant to Section 4(b).
(e) Non-Duplication of Benefits. Except as otherwise specifically provided for herein, no Participant is eligible to receive benefits under this Plan or pursuant to other contractual obligations more than one time. This Plan is designed to provide certain severance pay and change in control benefits to Participants pursuant to the terms and conditions set forth in this Plan. The payments pursuant to this Plan are in addition to, and not in lieu of, any unpaid salary, bonuses or benefits to which a Participant may be entitled for the period ending with the Participants Covered Termination.
SECTION 6. TIME OF PAYMENT AND FORM OF BENEFITS.
(a) General Rules. Except as otherwise set forth in this Plan, the cash severance benefits under Section 4(a) of the Plan, if any, shall be paid in a single lump sum payment on the first payroll date following the Participants Covered Termination. In no event shall payment of any Plan benefit set forth in Section 4 be made prior to the effective date of the release described in Section 5(a). For the avoidance of doubt, in the event of an acceleration of the exercisability of an option (or other award) pursuant to Section 4(c), such option (or other award) shall not be exercisable with respect to such acceleration of exercisability unless and until the effective date of the release described in Section 5(a).
(b) Application of Section 409A. Notwithstanding anything to the contrary herein, the following provisions apply to the extent benefits provided herein are deferred compensation (Deferred Plan Benefits) within the meaning of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively Section 409A). Deferred Plan Benefits shall not commence until the Participant has a separation from service for purposes of Section 409A or a change in the ownership or effective control or a change in the ownership of a substantial portion of the assets within the meaning of Treas. Reg. Section 1.409A-3(i)(5). Each installment of a Deferred Plan Benefit is a separate payment for purposes of Treas. Reg. Section 1.409A-2(b)(2)(i), and the Deferred Plan Benefits are intended to satisfy the exemptions from application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if such exemptions are not available and the Participant is, upon separation from service, a specified employee for purposes of Section 409A, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the timing of the Deferred Plan Benefits payments shall be delayed until the earlier of (i) six (6) months and one day after the Participants separation from service, or (ii) the Participants death.
Except to the minimum extent that payments must be delayed because the Participant is a specified employee, all amounts will be paid as soon as practicable in accordance with the Companys normal payroll practices.
The benefits pursuant to the Plan are intended to qualify for an exemption from application of Section 409A or comply with its requirements to the extent necessary to avoid adverse personal tax consequences under Section 409A, and any ambiguities herein shall be interpreted accordingly.
(c) Withholding. All payments under the Plan will be subject to all applicable withholding obligations of the Company, including, without limitation, obligations to withhold for federal, state and local income and employment taxes. The Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to awards granted pursuant to the iPass Inc 2003 Equity Incentive Plan (the Stock Plan) as provided in the Stock Plan or in the applicable award agreements.
(d) Indebtedness of Participants. If a Participant is indebted to the Company on the effective date of his or her Covered Termination, the Plan Administrator reserves the right to offset any severance payments under the Plan by the amount of such indebtedness.
SECTION 7. CHANGE IN CONTROL BENEFITS.
Immediately upon the consummation of a Change in Control, any specified performance target or vesting condition determined by reference to the operations of the Company or an Affiliate in any stock option agreement or any restricted stock award issued to a Participant pursuant to any equity incentive plan of the Company shall immediately be deemed satisfied. Accordingly, such performance targets or conditions need not be satisfied following the Change in Control in order for the Participant to remain eligible to vest in such stock option or such restricted stock. However, except as provided under Section 4(c), any requirement specified in such stock option agreement or such restricted stock award that such Participant continue to render services for the Company or an Affiliate following the Change in Control shall remain in effect, and the Participant shall not vest in such stock option or such restricted stock unless and until such post-Change in Control service requirement has been satisfied.
SECTION 8. REEMPLOYMENT.
In the event of a Participants reemployment by the Company during the period of time in respect of which severance benefits pursuant to Section 4(a), 4(b), 4(c) or 4(e) have been paid, the Plan Administrator, in its sole and absolute discretion, may require such Participant to repay to the Company all or a portion of such severance benefits as a condition of reemployment.
SECTION 9. RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.
(a) Exclusive Discretion. The Plan Administrator shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan, and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan. The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons.
(b) Amendment or Termination. The Company reserves the right to amend or terminate this Plan, any Participation Notice issued pursuant to the Plan (including but not limited to changing the designation of any Participant as a Tier I Participant or a Tier II Participant), or the benefits provided hereunder at any time; provided, however, that no such amendment or termination shall occur following a Change in Control or a Covered Termination as to any Participant who would be adversely affected by such amendment or termination unless such Participant consents in writing to such amendment or termination. Any action amending or terminating the Plan or any Participation Notice shall be in writing and executed by a duly authorized officer of the Company.
SECTION 10. NO IMPLIED EMPLOYMENT CONTRACT.
The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Company, or (ii) to interfere with the right of the Company to discharge any employee or other person at any time, with or without cause, and with or without advance notice, which right is hereby reserved.
SECTION 11. LEGAL CONSTRUCTION.
This Plan is intended to be governed by and shall be construed in accordance with ERISA and, to the extent not preempted by ERISA, the laws of the State of California.
SECTION 12. CLAIMS, INQUIRIES AND APPEALS.
(a) Applications for Benefits and Inquiries. Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing by an applicant (or his or her authorized representative). The Plan Administrator is set forth in Section 14(d).
(b) Denial of Claims. In the event that any application for benefits is denied in whole or in part, the Plan Administrator must provide the applicant with written or electronic notice of the denial of the application, and of the applicants right to review the denial. Any electronic notice will comply with the regulations of the U.S. Department of Labor. The notice of denial will be set forth in a manner designed to be understood by the applicant and will include the following:
(i) the specific reason or reasons for the denial;
(ii) references to the specific Plan provisions upon which the denial is based;
(iii) a description of any additional information or material that the Plan Administrator needs to complete the review and an explanation of why such information or material is necessary; and
(iv) an explanation of the Plans review procedures and the time limits applicable to such procedures, including a statement of the applicants right to bring a civil action under Section 502(a) of ERISA following a denial on review of the claim, as described in Section 12(d) below.
This notice of denial will be given to the applicant within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application. If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial ninety (90) day period.
This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.
(c) Request for a Review. Any person (or that persons authorized representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within sixty (60) days after the application is denied. A request for a review shall be in writing and shall be addressed to:
Attn: Vice President of Human Resources
3800 Bridge Parkway
Redwood Shares, CA 94065
A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent. The applicant (or his or her representative) shall have the opportunity to submit (or the Plan Administrator may require the applicant to submit) written comments, documents, records, and other information relating to his or her claim. The applicant (or his or her representative) shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim. The review shall take into account all comments, documents, records and other information submitted by the applicant (or his or her representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
(d) Decision on Review. The Plan Administrator will act on each request for review within sixty (60) days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional sixty (60) days), for processing the request for a review. If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial sixty (60) day period. This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the review. The Plan Administrator will give prompt, written or electronic notice of its decision to the applicant. Any electronic notice will comply with the regulations of the U.S. Department of Labor. In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will set forth, in a manner calculated to be understood by the applicant, the following:
(i) the specific reason or reasons for the denial;
(ii) references to the specific Plan provisions upon which the denial is based;
(iii) a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to his or her claim; and
(iv) a statement of the applicants right to bring a civil action under Section 502(a) of ERISA.
(e) Rules and Procedures. The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial of benefits to do so at the applicants own expense.
(f) Exhausting of Remedies. No legal action for benefits under the Plan may be brought until the applicant (i) has submitted a written application for benefits in accordance with the procedures described by Section 12(a) above, (ii) has been notified by the Plan Administrator that the application is denied, (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 12(c) above, and (iv) has been notified that the Plan Administrator has denied the appeal. Notwithstanding the foregoing, if the Plan Administrator does not respond to an applicants claim or appeal within the relevant time limits specified in this Section 12, the applicant may bring legal action for benefits under the Plan pursuant to Section 502(a) of ERISA.
SECTION 13. BASIS OF PAYMENTS TO AND FROM PLAN.
The Plan shall be unfunded, and all benefits hereunder shall be paid only from the general assets of the Company.
SECTION 14. OTHER PLAN INFORMATION.
(a) Employer and Plan Identification Numbers. The Employer Identification Number assigned to the Company (which is the Plan Sponsor as that term is used in ERISA) by the Internal Revenue Service is 93-1214598. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 503.
(b) Ending Date for Plans Fiscal Year. The date of the end of the fiscal year for the purpose of maintaining the Plans records is December 31.
(c) Agent for the Service of Legal Process. The agent for the service of legal process with respect to the Plan is:
Attn: General Counsel
3800 Bridge Parkway
Redwood Shares, CA 94065
(d) Plan Sponsor and Administrator. The Plan Sponsor of the Plan is:
Attn: Vice President of Human Resources
3800 Bridge Parkway
Redwood Shares, CA 94065
The Plan Administrator of the Plan is as set forth in Section 2(r). The Plan Sponsors and Plan Administrators telephone number is (650) 232-4100. The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.
SECTION 15. STATEMENT OF ERISA RIGHTS.
Participants in this Plan (which is a welfare benefit plan sponsored by iPass Inc.) are entitled to certain rights and protections under ERISA. If you are a Participant, you are considered a participant in the Plan for the purposes of this Section 15 and, under ERISA, you are entitled to:
(a) Receieve Information About Your Plan and Benefits.
(i) Examine, without charge, at the Plan Administrators office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration;
(ii) Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and an updated (as necessary) Summary Plan Description. The Administrator may make a reasonable charge for the copies; and
(iii) Receive a summary of the Plans annual financial report, if applicable. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.
(b) Prudent Actions By Plan Fiduciaries. In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate the Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer, your union or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA.
(c) Enforce Your Rights.
(i) If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
(ii) Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
(iii) If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.
(iv) If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
(d) Assistance With Your Questions. If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
SECTION 16. GENERAL PROVISIONS.
(a) Notices. Any notice, demand or request required or permitted to be given by either the Company or a Participant pursuant to the terms of this Plan shall be in writing and shall be deemed given when delivered personally or deposited in the U.S. mail, First Class with postage prepaid, and addressed to the parties, in the case of the Company, at the address set forth in Section 14(d) and, in the case of a Participant, at the address as set forth in the Companys employment file maintained for the Participant as previously furnished by the Participant or such other address as a party may request by notifying the other in writing.
(b) Transfer and Assignment. The rights and obligations of a Participant under this Plan may not be transferred or assigned without the prior written consent of the Company. This Plan shall be binding upon any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company without regard to whether or not such person or entity actively assumes the obligations hereunder.
(c) Waiver. Any Partys failure to enforce any provision or provisions of this Plan shall not in any way be construed as a waiver of any such provision or provisions, nor prevent any Party from thereafter enforcing each and every other provision of this Plan. The rights granted the Parties herein are cumulative and shall not constitute a waiver of any Partys right to assert all other legal remedies available to it under the circumstances.
(d) Severability. Should any provision of this Plan be declared or determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.
(e) Section Headings. Section headings in this Plan are included for convenience of reference only and shall not be considered part of this Plan for any other purpose.
SECTION 17. EXECUTION.
To record the amendment and restatement of the Plan as set forth herein, iPass Inc. has caused its duly authorized officer to execute the same as of the Amendment Effective Date.
By: /s/ Mike Badgis
Title: Vice President Human Resources