Re: Amendment of Offer Letter Agreement
EXHIBIT
10.1
November
12, 2007
Xxxxxxx
X. Xxxxxx
0000
Xxxxxx Xxxxxxx
Xxxxxxx
Xxxxxx, XX 00000
Re: Amendment
of Offer Letter Agreement
Dear
Xxx:
As
we
have discussed, this letter agreement confirms an amendment (the
“Amendment”) to the terms of your employment offer
letter agreement with iPass Inc. (the “Company”) dated
November 13, 2001 (the “Offer Letter”). The
Amendment is effective as of the date that you sign and return it (the
“Effective Date”).
Pursuant
to this Amendment:
(1) the
ninth paragraph of the Offer Letter (for purposes of clarity, the paragraph
beginning with “Your employment
with the Company is at the will of each party . . ..”) is superseded in
its entirety and replaced with the following new paragraph:
Your
employment with the Company is at the will of each party, is not for a specific
term and can be terminated by you or by the Company at any time, with or
without
Cause (as defined in Appendix A), and with or without advance
notice. Subject to satisfaction of the conditions set forth in
Appendix A hereto, you shall be entitled to such severance benefits and change
in control benefits, as applicable, as are set forth in Appendix A
hereto.
(2) There
is added to the Offer Letter Appendix A hereto.
Except
as
modified herein, all other terms of the Offer Letter shall remain in full
force
and effect. This Amendment, together with the Offer Letter and your
Employee Proprietary Information and Inventions Agreement, constitutes the
entire agreement between you and the Company regarding the terms of your
employment. It supersedes any prior statements, representations or
promises made to you concerning the subjects contained in this Amendment
and the
Offer Letter, and only can be modified in a writing signed by you and a duly
authorized member of the Company’s Board of Directors. This Amendment
will bind the heirs, personal representatives, successors and assigns of
both
you and the Company, and inure to the benefit of both you and the Company,
their
heirs, successors and assigns. If any provision of this Amendment is
determined to be invalid or unenforceable, in whole or in part, this
determination shall not affect any other provision of this Amendment and
the
provision in question shall be modified so as to be rendered enforceable
in a
manner consistent with the intent of the parties insofar as possible under
applicable law. This Amendment shall be construed and enforced in
accordance with the laws of the State of California without regard to conflicts
of law principles. Any ambiguity in this Amendment shall not be
construed against either party as the drafter. Any waiver of a breach
of this Amendment, or rights hereunder, shall be in writing and shall not
be
deemed to be a waiver of any successive breach or rights
hereunder. This Amendment may be executed in counterparts which shall
be deemed to be part of one original, and facsimile signatures shall be
equivalent to original signatures.
Please
sign below to indicate your understanding and acceptance of these new
terms.
Sincerely,
iPass Inc. | |
By:
|
/s/ Xxxx X. Xxxxxxx |
Xxxx X. Xxxxxxx - | |
Member of the Board of Directors |
Understood
and Accepted By:
/s/ Xxxxxxx X. Xxxxxx |
Xxxxxxx X. Xxxxxx |
Date: | 12/20/07 |
Appendix
A
X. Xxxxxxxxx
Benefits.
If
the
Company terminates your employment without Cause or if you resign for Good
Reason (as defined below) (each, a "Covered
Termination"), and you sign, date, return to the Company and allow
to become effective a general release of all known and unknown claims in
the
form provided to you by the Company (which may, at the Company’s election, be
contained in a separation agreement) (the “Release”),
then you will be eligible for the following as your sole severance benefits
(the
“Severance Benefits”):
(1) Base
Salary Severance Payment. You will receive a severance payment equal to
nine (9) months of your base salary in effect as of the employment termination
date (the “Termination Date”), subject to required
payroll deductions and withholdings and paid in a lump sum within ten (10)
business days after the effective date of the Release.
(2) Prorated
Bonus Severance Payment. You will receive an additional
severance payment in an amount up to nine-twelfths (9/12) of your annual
performance bonus target amount in effect as of the Termination Date, with
the
specific amount of the additional severance payment to be determined by the
Compensation Committee of the Board of Directors, in its sole discretion
(the
“Prorated Bonus Severance Payment”). The
Prorated Bonus Severance Payment will be subject to required payroll deductions
and withholdings and paid in a lump sum within ten (10) business days after
the
effective date of the Release.
(3) Health
Insurance. If you timely elect continued group health insurance
coverage pursuant to federal COBRA law or comparable state insurance laws
(collectively, “COBRA”), the Company will pay your
COBRA premiums sufficient to continue group health insurance coverage for
you
and your covered dependents (if applicable) at the level of coverage in effect
as of the Termination Date, through the earlier of either (i) eighteen (18)
months after the Termination Date, or (ii) the date that you become eligible
for
group health insurance coverage through another employer. In the
event you receive the Severance Benefits, you must promptly notify the Company
in writing if you become eligible for group health insurance coverage through
another employer within eighteen (18) months after the Termination
Date.
(4) Equity
Award Acceleration. You will receive accelerated
vesting of any equity awards (including but not limited to restricted stock)
which are not fully vested as of the Termination Date (collectively, the
“Equity Awards”), as follows: (i) if the
Covered Termination does not occur within eighteen (18) months after the
consummation of a Corporate Transaction (as defined below), the Equity Awards
shall receive nine (9) months of vesting acceleration, effective as of the
Termination Date, and (ii) if the Covered Termination occurs within eighteen
(18) months after the consummation of a Corporate Transaction, the Equity
Awards
will receive full vesting acceleration, effective as of the Termination
Date.
II. Corporate
Transaction Benefits.
Immediately
upon the consummation of a Corporate Transaction, any specified performance
target or vesting condition determined by reference to performance targets
or
operations of the Company or an Affiliate in any restricted stock award issued
to you 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 Corporate Transaction in order for you
to
remain eligible to vest in such restricted stock. However, any
requirement specified in such restricted stock award that you continue to
render
services for the Company or an Affiliate following the Corporate Transaction
shall remain in effect, and you shall not vest in such restricted stock unless
and until such post-Corporate Transaction service requirement (if any) has
been
satisfied.
III. Definitions.
For
purposes of the Amendment, the following definitions will apply:
(1) Definition
of Affiliate. “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 Internal Revenue
Code of 1986, as amended (the “Code”).
(2) Definition
of Cause. “Cause” shall mean the occurrence
of any of the following (and only the following): (i) your conviction of
any
felony involving fraud or act of dishonesty against the Company or its
Affiliates; (ii) conduct by you which, based upon good faith and reasonable
factual investigation and determination of the Company’s Board of Directors,
demonstrates gross unfitness to serve; or (iii) intentional, material violation
by you of any contractual, statutory, or fiduciary duty owed by you to the
Company or its Affiliates.
(3) Definition
of Good Reason. “Good Reason” shall mean any
of the following actions or events: (i) the Company requires you to 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 your
base
salary below its then-existing gross rate; or (iii) following a Corporate
Transaction, you are not the Chief Executive Officer of the combined business
entity (unless you agree in writing not to be the Chief Executive Officer
of the
combined business entity). Notwithstanding the foregoing, in order to
qualify as “Good Reason,” you must submit to the Company or its successor (as
applicable) a written notice, within ninety (90) days after the initial
occurrence of any of the actions or events described in the preceding sentence,
describing the applicable actions or events, and provide the Company or its
successor with at least thirty (30) days from its receipt of your written
notice
in which to cure such actions or events prior to termination of your employment,
and provided that, your employment must terminate no later than twelve
(12) months after the applicable actions or events described in (i), (ii)
and
(iii) above.
(4) Definition
of Corporate Transaction. “Corporate
Transaction” shall mean the occurrence of either of the following
events: (i) the sale of all or substantially all of the assets of the Company;
or (ii) a merger of the Company with or into another entity in which the
stockholders of the Company immediately prior to the closing of the transaction
own less than a majority of the ownership interest of the Company immediately
following such closing; provided, however, for purposes of determining
whether the stockholders of the Company prior to the occurrence of a transaction
described above own less than fifty percent (50%) of the voting securities
of
the relevant entity afterwards, only the lesser of the voting power held
by a
person either before or after the transaction shall be counted in determining
that person’s ownership afterwards. Once a Corporate Transaction has
occurred, no future events shall constitute a Corporate Transaction for purposes
of this Amendment.
IV. Parachute
Payments and Deferred Compensation.
(1) Parachute
Payments. If any payment or benefit that you would receive
in connection with a Corporate Transaction from the Company or otherwise
(“Corporate Transaction 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 the Company shall
cause to be determined, before any amounts of the Corporate Transaction Payment
are paid to you, which of the following two alternatives would maximize your
after-tax proceeds: (i) payment in full of the entire amount of the Corporate
Transaction Payment (a “Full Payment”), or (ii)
payment of only a part of the Corporate Transaction Payment so that you receive
the largest payment possible without the imposition of the Excise Tax (a
“Reduced Payment”). Following such
determination, whichever amount results in your receipt, on an after-tax
basis,
of the greater amount of the Corporate Transaction Payment notwithstanding
that
all or some portion of the Corporate Transaction Payment may be subject to
the
Excise Tax, shall be the amount paid to you. For purposes of
determining whether to make a Full Payment or a Reduced Payment, the Company
shall cause to be taken into account all applicable federal, state and local
income and employment taxes and the Excise Tax (all computed at the highest
applicable marginal rate, net of the maximum reduction in federal income
taxes
which could be obtained from a deduction of such state and local taxes).
If a
Reduced Payment is made, (i) the Corporate Transaction Payment shall be paid
only to the extent permitted under the Reduced Payment alternative, and you
shall have no rights to any additional payments and/or benefits constituting
the
Corporate Transaction Payment, and (ii) reduction in payments and/or benefits
shall occur in the following order unless you elect in writing a different
order
(provided, however, that such election shall be subject to Company
approval if made on or after the date on which the event that triggers the
Corporate Transaction Payment occurs): (1) reduction of cash payments; (2)
cancellation of accelerated vesting of equity awards other than stock options;
(3) cancellation of accelerated vesting of stock options; and (4) reduction
of
other benefits paid to you. In the event that acceleration of compensation
from
your equity awards is to be reduced, such acceleration of vesting shall be
cancelled by first cancelling such acceleration for the vesting installment
that
will vest last and continuing by cancelling as a priority such acceleration
for
vesting installments with the latest vesting, unless you elect in writing
a
different order for cancellation prior to the event triggering the Corporate
Transaction Payment.
(2) Deferred
Compensation. Any cash severance payments provided under
Sections I(1) and I(2) above shall be paid no later than the later of: (i)
December 31st of the calendar year in which the Covered Termination occurs,
or
(ii) the fifteenth (15th) day of the third calendar month following the date
of
the Covered Termination. It is the intention of the preceding
sentence to apply the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4) to such
payments.