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EXHIBIT 10.15
IPASS INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made effective as of the 10th day of
May, 1999, between IPASS INC., a California corporation ("Company"), and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("Executive").
WHEREAS, the Company desires to secure the services of Executive as the
Company's President and Chief Executive Officer, and Executive desires to
perform such services for the Company, on the terms and conditions as set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements set forth below, it is mutually agreed as follows:
1. EFFECTIVE DATE, TERM, AND DUTIES. The employment of Executive by the
Company hereunder shall commence upon the date on which Executive commences
employment with the Company and shall continue thereafter on the same terms and
conditions until terminated pursuant to Section 4. Executive shall have such
duties as the Board of Directors of the Company (the "Board of Directors") may
from time to time prescribe consistent with his position as President and Chief
Executive Officer of the Company. Executive shall report directly to the Board
of Directors. Executive shall devote his full time, attention, energies and best
efforts to the business of the Company. The Company shall maintain an office for
Executive at the Company's corporate headquarters, which is currently located in
Mountain View, California. The Board of Directors will elect Executive to the
Board of Directors and the Company shall use its best efforts to have Executive
elected and re-elected to the Board at each Annual Stockholder Meeting held
during his period of service as Chief Executive Officer of the Company.
2. COMPENSATION. The Company shall pay and Executive shall accept as
full consideration for the Services, compensation consisting of the following:
2.1 BASE SALARY. $275,000 per year base salary, payable in
installments in accordance with the Company's normal payroll practices, less
such deductions or withholding required by law.
2.2 BONUS. Opportunity to receive a cash incentive bonus (the
"Bonus") at an annual target bonus of $175,000 per anniversary year. An
anniversary year shall run from May 10 to May 9. The Bonus for a given
anniversary year shall be paid in quarterly installments, and the amount of each
installment payment shall be determined by the Board of Directors based upon the
Board's assessment of Executive's performance compared to the business
objectives determined by the Board. For the anniversary year ending on May 9,
2000, Executive shall be guaranteed a minimum Bonus of $100,000, which shall be
paid to Executive within thirty (30) days of the date on which Executive
commences employment with the Company. For purposes of determining Executive's
Bonus for the anniversary year ending May 9, 2000, the minimum Bonus shall be
applied as if Executive had received $25,000 of such minimum Bonus with
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respect to each quarter in such anniversary year, and Executive shall receive
such amount as shall be determined by the Board of Directors in excess of
$25,000.
In addition, upon commencement of employment Executive shall receive a
sign-on bonus in the amount of $110,000, less such deductions or withholding
required by law.
2.3 STOCK OPTIONS. Executive shall be entitled to a grant of an
incentive stock option for seven percent (7%) or 706,012 shares of the Company's
common stock under the Company's 1997 Stock Option Plan (the "Stock Option
Plan") to be awarded by the Company's Board of Directors as of the date on which
Executive commences employment. Such option shall be granted at the fair market
value of the Company's common stock on the date of grant, shall be exercisable
in full on the date of grant, and shall vest (i.e., no longer be subject to the
Company's repurchase right) as to twenty-five percent (25%) of the shares
subject to the option on the first anniversary date of the date of grant and
2.0833% of the shares subject to the option each month thereafter, so long as
Executive has been continuously performing services for the Company from the
date of grant to the appropriate vesting date or as otherwise provided in
Section 4 hereof. All calculations of vested shares shall be rounded to the
nearest whole share and Executive shall not vest in a total number of shares
which is greater than the number of shares subject to the option. Executive will
be able to purchase any or all of the shares subject to the option with a
promissory note to the maximum extent permitted by state corporate law in effect
on the date of exercise. The interest rate shall be the minimum rate allowable
under the Internal Revenue Code (the "Code") for a mid-term loan and shall be
subject to annual compounding in order to avoid imputed interest, original issue
discount, or treatment of the loan as a below market loan. The note shall be
non-recourse debt as to seventy percent (70%) of the principal amount and
recourse debt as to thirty percent (30%) of the principal amount and all accrued
but unpaid interest. The maximum term shall be five years, with acceleration of
all indebtedness upon Executive's termination of service with the Company. To
the extent that the aggregate exercise price of the option exceeds the limits of
Section 422(d) of the Code, the option shall be an incentive stock option to the
maximum extent permitted by law and shall be a non-qualified stock option as to
the remainder. Other terms and conditions shall be the same as the standard
terms of other options issued by the Company under the terms of the Stock Option
Plan.
In addition, should Executive commence employment with the Company at its
Mountain View headquarters on a part-time basis of an average of at least ten
(10) hours per week during the week of May 10, 1999, and should Executive be
working exclusively for the Company on a full-time basis on or before June 21,
1999, Executive shall be entitled to an additional grant of an incentive stock
option for one half of one percent (0.5%) or 50,429 shares of the Company's
common stock under the Stock Option Plan to be awarded by the Board of Directors
as of the date on which Executive commences employment. Such option shall be
granted at the fair market value of the Company's common stock on the date of
grant and shall otherwise have the same terms and conditions as the option
described in the preceding paragraph.
2.4 PREFERRED STOCK PURCHASE. Executive shall be entitled to
purchase up to a maximum of one million dollars ($1,000,000) worth of preferred
stock of the Company upon the next occasion at which the Company issues shares
of its preferred stock. The terms and
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conditions of such purchase shall be the same as those agreed to with all other
investors as part of such issuance.
2.5 INDEMNIFICATION. In the event Executive is made, or threatened
to be made, a party to any legal action or proceeding, whether civil or
criminal, by reason of the fact that Executive is or was a director or officer
of the Company, Executive shall be indemnified by the Company, and the Company
shall pay Executive's related expenses when and as incurred, all to the fullest
extent permitted by law, as more fully described in that Indemnification
Agreement attached as Exhibit A.
3. BENEFITS. Executive shall receive such pension, profit sharing,
vacation, health and welfare, and fringe benefits as the Board of Directors may,
from time to time, determine to provide for the key executives of the Company.
In addition, Executive shall receive relocation benefits as follows: (1) a
maximum of $75,000 for moving expenses and for travel expenses incurred by
Executive to visit his immediate family or vice versa prior to the time that
Executive's immediate family joins him in California, and (2) a maximum of
$75,000 for expenses incurred by Executive to identify and occupy temporary
housing through the date of Executive's first anniversary of employment. All
such amounts paid to Executive or to third parties for costs related to
Executive's relocation shall be reduced by applicable deductions and
withholding. Upon the execution of this Agreement by both parties, the Company
shall pay Executive an amount equal to $100,000, less applicable deductions and
withholding. For purposes of this Agreement, moving costs shall include, but not
be limited to, costs for packing and moving household goods, closing costs
related to sale of Executive's principal residence in Maryland and purchase of a
new residence in California, and transportation costs incurred by Executive and
members of Executive's household in moving to California. The Company will not
include in Executive's taxable income any amount which is treated as a
"qualified moving expense reimbursement" under the Code, which Executive
acknowledges shall require that Executive substantiate such expenses to the
Company.
Finally, Executive shall receive a non-transferable relocation "bridge"
loan with the following material terms and conditions: (1) principal of
$400,000; (2) maximum interest rate of 6%; (3) treatment as recourse debt and
secured by any securities of the Company purchased by Executive and Executive's
new principal residence in California; (4) maximum term of the earliest of the
following: (a) sale of Executive's current principal residence, (b) six months
following the date of a Change in Control (as defined below) in the ownership of
the Company, or (c) three years from the date that Executive commences
employment with the Company; and other terms and conditions as shall be
determined by the Company. The proceeds of this loan may only be used to
purchase Executive's new principal residence.
4. BENEFITS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL.
Executive's employment by the Company shall terminate immediately upon
Executive's receipt of written notice of termination by the Company, upon the
Company's receipt of notice of termination by Executive, or upon Executive's
death or Disability. "Disability" shall mean any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than 4
months and which renders Executive unable to perform effectively the duties and
responsibilities of his
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office with or without reasonable accommodation as determined by the
circumstances. Except in connection with a termination for Cause (as defined in
Section 4.2), or on account of death or Disability (as defined above), or a
voluntary termination by Executive other than for Good Reason (as defined in
Section 4.6), upon execution by Executive of an effective release of claims
substantially in the form attached as Exhibit B as shall be finally determined
by the Company, the Company shall provide Executive with termination benefits
upon termination of employment, as follows:
4.1 TERMINATION BENEFITS. An amount equal to one year's base salary and
target bonus at the time of termination shall be paid by the Company in twelve
equal monthly installments following termination of employment. All such amounts
shall be paid by the Company as soon as administratively possible at or
following the time such amount becomes due and payable and following the first
point in time that the Company is entitled to deduct such payments for income
tax purposes in compliance with applicable law, including but not limited to the
provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). All of the unvested shares subject to option held by Executive on
the date of such termination that would have vested over the succeeding twelve
month period shall vest on the dates on which such shares would have become
vested had Executive remained employed with the Company for such twelve month
period. The options shall remain exercisable for the period specified in such
options following Executive's termination of employment.
4.2 CIRCUMSTANCES UNDER WHICH TERMINATION BENEFITS WOULD NOT BE PAID.
The Company shall not be obligated to pay Executive the termination benefits or
provide the additional option vesting described in Section 4.1 above if
Executive's employment is terminated for Cause, on account of Executive's death
or Disability, or on account of Executive's voluntary termination other than for
Good Reason (as defined in Section 4.6). For purposes of this Agreement, "Cause"
shall be limited to (1) Executive's gross misconduct or fraud in the performance
of his employment, including the appropriation or attempted appropriation of a
material business opportunity or funds or property of the Company or the
securing or attempt to secure any personal profit in connection with any
transaction entered into on behalf of the Company which is not approved by the
Board of Directors, (2) Executive's conviction or guilty plea with respect to
any felony (except for motor vehicle violations); or (3) Executive's material
breach of this Agreement (or any other agreement incorporated by reference into
this Agreement) after written notice delivered to Executive of such breach and a
reasonable opportunity (which in any event shall not exceed thirty (30) days) to
cure such breach.
In addition, the Company's obligation to provide any further benefits
under Section 4.1 shall immediately cease in the event that Executive either (a)
violates the terms of the Company's standard form of Employee Confidentiality
and Assignment of Inventions Agreement signed by Executive or (b) competes with
the Company during the term of his employment or within twelve (12) months
following termination of employment. For purpose of this Agreement, Executive
"competes" with the Company if he engages in (whether as an employee,
consultant, proprietor, partner, director or otherwise), or has any ownership
interest in, or participates in the financing, operation, management or control
of, any person, firm, corporation or business which sells products or services
which directly compete with the products or services either offered by the
Company at the time or at the termination of Executive's employment were, and at
that time are, are being developed for offering by the
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Company (a "Competing Company'). In the event that the Competing Company has one
or more lines of business which do not compete with the Company, Executive will
not be in violation of this provision if he is involved only with the line or
lines of business which do not compete with the Company and he has no managerial
or ownership control over any competing line of business. It is agreed that
ownership of no more than 2% of the outstanding voting stock of a publicly
traded corporation shall not constitute a violation of this provision.
4.3 CHANGE IN CONTROL BENEFITS. Should there occur a Change in
Control (as defined below) and either Executive's employment is terminated
without "Cause" (as defined above) upon or within 13 months after the Change in
Control (as defined below) or Executive terminates his employment for "Good
Reason" (as defined below) upon or within 13 months after the Change in Control,
then all of the unvested shares and options held by Executive on the date of
such Change in Control that are scheduled to vest over the succeeding twenty
four month period shall immediately vest and any unexercised options shall
remain exercisable for the period specified in such options.
4.4 DEFINITION OF CHANGE IN CONTROL. For purposes of this
Agreement, the term "Change in Control" shall have the following definition: (a)
any consolidation or merger of the Company with or into any other corporation or
other entity or person, or any other corporate reorganization, in which the
shareholders of the Company prior to such consolidation, merger or
reorganization shall own less than fifty percent (50%) of the voting securities
of the controlling continuing or surviving entity of such consolidation, merger
or reorganization, or (b) any transaction or series of related transactions in
which in excess of fifty percent (50%) of the Company's voting power is
transferred to a person unrelated to the transferor(s). For purposes of
determining whether the shareholders 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.
4.5 HANDLING OF GOLDEN PARACHUTE PAYMENTS. In the event that any
severance or other benefits provided to Executive (i) constitute "parachute
payments" within the meaning of Section 280G of the Code and (ii) but for this
Section 4.5, such severance and/or benefits would be subject to the excise tax
imposed by Section 4999 of the Code ("Excise Tax"), then Executive's benefits
under this Section 4.5 shall be payable either:
(A) in full,
(B) as to such lesser amount which would result in no
portion of such benefits being subject to excise tax under Section 4999 of the
Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income employment taxes, the excise tax imposed by Section 4999,
and all other applicable taxes, results in the receipt by Executive on an
after-tax basis, of the greatest amount of benefits under Section 4.5. Unless
the Company and Executive otherwise agree in writing, any determination required
under this Section 4.5 shall be made in writing by independent public
accountants agreed to by the Company and Executive (the "Accountants"), whose
determination shall be conclusive and binding upon Executive and the Company for
all purposes. For purposes
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of making the calculations required by this Section 4.5, the Accountants may
make reasonable assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and Executive shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 4.5. The Company
shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 4.5.
If, notwithstanding any reduction described in this Section 4.5, the IRS
determines that Executive is liable for the Excise Tax as a result of the
receipt of the payment of benefits as described above, then Executive shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that Executive challenges the final IRS
determination, a final judicial determination, a portion of the payment equal to
the "Repayment Amount." The Repayment Amount with respect to the payment of
benefits shall be the smallest such amount, if any, as shall be required to be
paid to the Company so that Executive's net after-tax proceeds with respect to
any payment of benefits (after taking into account the payment of the Excise Tax
and all other applicable taxes imposed on such payment) shall be maximized. The
Repayment Amount with respect to the payment of benefits shall be zero if a
Repayment Amount of more than zero would not result in Executive's net after-tax
proceeds with respect to the payment of such benefits being maximized. If the
Excise Tax is not eliminated pursuant to this paragraph, Executive shall pay the
Excise Tax.
Notwithstanding any other provision of this Section 4.5, if (i) there is a
reduction in the payment of benefits as described in this Section 4, (ii) the
IRS later determines that Executive is liable for the Excise Tax, the payment of
which would result in the maximization of Executive's net after-tax proceeds
(calculated as if Executive's benefits had not previously been reduced), and
(iii) Executive pays the Excise Tax, then the Company shall pay to Executive
those benefits which were reduced pursuant to this Section 4.5 contemporaneously
or as soon as administratively possible after Executive pays the Excise Tax so
that Executive's net after-tax proceeds with respect to the payment of benefits
is maximized.
4.6 DEFINITION OF GOOD REASON. For purposes of this Agreement,
"Good Reason" means (i) reduction of Executive's base salary in effect upon
commencement of employment, immediately prior to the occurrence of a Change in
Control, or immediately prior to the occurrence of Executive's termination of
employment, whichever is greatest, (ii) failure to provide a package of welfare
benefit plans which, taken as a whole, provides substantially similar benefits
to those in which the Executive is entitled to participate immediately prior to
the occurrence of termination of employment (except that employee contributions
may be raised to the extent of any cost increases imposed by third parties) or
any action by the Company which would adversely affect Executive's participation
or reduce Executive's benefits under any of such plans, (iii) change in
Executive's responsibilities or authority (which will not necessarily be
triggered by a change in title or reporting relationships unless such change
occurs prior to the occurrence of a Change in Control) resulting in a material
diminution of Executive's scope of responsibilities and span of control,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith which is remedied by the Company promptly after notice
thereof is given by Executive, (iv) request that Executive relocate to a
worksite that is more than 35 miles from his prior worksite, unless Executive
accepts such relocation
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opportunity, (v) material reduction in Executive's duties, (vi) failure or
refusal of a successor to the Company to assume the Company's obligations under
this Agreement, or (vii) material breach by the Company or any successor to the
Company of any of the provisions of this Agreement.
5. DISPUTE RESOLUTION. The Company and Executive agree that any dispute
regarding the interpretation or enforcement of this Agreement or any dispute
arising out of Executive's employment or the termination of that employment with
the Company, except for disputes regarding the interpretation of those
agreements referred to in Section 7 and disputes involving the protection of the
Company's intellectual property, shall be decided by confidential, final and
binding arbitration conducted by Judicial Arbitration and Mediation Services
("JAMS") under the then-existing JAMS rules, rather than by litigation in court,
trial by jury, administrative proceeding, or in any other forum.
6. COOPERATION WITH THE COMPANY AFTER TERMINATION OF EMPLOYMENT.
Following termination of Executive's employment for any reason, Executive shall
fully cooperate with the Company in all matters relating to the winding up of
his pending work on behalf of the Company and the orderly transfer of any such
pending work to other employees of the Company as may be designated by the
Company, which transition period shall not exceed sixty (60) days following
Executive's termination of employment.
7. CONFIDENTIALITY; RETURN OF PROPERTY. As a condition of Executive's
employment, Executive agrees to execute and be bound by the Company's standard
form of Employee Confidentiality and Assignment of Inventions Agreement in the
form attached hereto as Exhibit C.
8. GENERAL.
8.1 WAIVER. Neither party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to have waived any
breach by the other party of any of the provisions of this Agreement. Further,
the waiver by either party of a particular breach of this Agreement by the other
shall neither be construed as, nor constitute, a continuing waiver of such
breach or of other breaches by the same or any other provision of this
Agreement.
8.2 SEVERABILITY. If for any reason a court of competent
jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without materially
altering the intention of the parties, the remainder of the Agreement shall
continue in full force and effect as if the offending provision were not
contained herein.
8.3 NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
considered effective either (a) upon personal service, or (b) upon delivery
either by facsimile or e-mail and upon depositing such notice or communication
in the U.S. Mail, postage prepaid, return receipt requested and addressed to the
Chairman of the Board of the Company at its principal corporate address, and to
Executive at his most recent address shown on the Company's corporate records,
or at any other
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address which he may specify in any appropriate notice to the Company, or (c)
upon only depositing such notice in the U.S. Mail as described in (b) above.
8.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together constitutes one and the same instrument and in making proof hereof it
shall not be necessary to produce or account for more than one such counterpart.
8.5 ENTIRE AGREEMENT. The parties hereto acknowledge that each has
read this Agreement, understands it, and agrees to be bound by its terms. The
parties further agree that this Agreement and any documents attached hereto or
incorporated by reference constitute the complete and exclusive statement of the
agreement between the parties and supersedes all proposals (oral or written),
understandings, representations, conditions, covenants, and all other
communications between the parties relating to the subject matter hereof.
Notwithstanding anything to the contrary, the terms of this Agreement shall
govern all options issued to Executive by the Company on and after the effective
date of this Agreement, and the Company shall use its best efforts to place
appropriate language describing the relevant terms of this Agreement in all
options issued or to be issued to Executive by the Company.
8.6 GOVERNING LAW. This Agreement shall be governed by the law of
the State of California.
8.7 ASSIGNMENT AND SUCCESSORS. The Company shall have the right to
assign its rights and obligations under this Agreement to an entity which
acquires all or substantially all of the assets of the Company. The rights and
obligation of the Company under this Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of the Company. Executive shall
not have any right to assign his obligations under this Agreement and shall only
be entitled to assign his rights under this Agreement by will, the laws of
descent and distribution, or any method of transfer approved by the Company.
8.8 DURATION. This Agreement is for no specific term, and either
Executive or Company may terminate this Agreement in writing at any time, for
any reason, or for no reason. Notwithstanding the foregoing, the Company's
obligations to make severance payments, pay vested pension and other benefits,
unpaid accrued vacation, unemployment compensation claims, workers' compensation
claims, and provide accelerated stock vesting to Executive and Executive's
obligations to the Company pursuant to Section 4 and the Employee
Confidentiality and Assignment of Inventions Agreement, as well as any
provisions relating to the determination or enforcement of such obligations,
shall survive termination of this Agreement.
8.9 AMENDMENTS. This Agreement and the terms and conditions of the
matters addressed in this Agreement may only be amended in writing executed both
by the Executive and a duly authorized representative of the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
IPASS INC. EXECUTIVE
By: By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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