iPass Inc. Redwood Shores, California 94065
Exhibit
10.1
Dated:
June 3, 2009
0000
Xxxxxx Xxxxxxx
Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
June 2,
2009
Foxhill
Opportunity Master Fund, L.P.
c/o
Foxhill Capital Partners LLC
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxxxx 00000
Attention: Xxxx
Xxxxxx
The
following sets forth the agreement (the “Agreement”) between Foxhill Opportunity
Master Fund, L.P. (“FOMF”) and its affiliates listed in the signature blocks
below (collectively, “Foxhill”) and iPass Inc. (“iPass”):
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1.
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Xx.
Xxxxxxx X. Xxxxx will be appointed to the Board of Directors of iPass (the
“Board”) effective on the first business day following the execution of
this Agreement by all parties hereto, to fill a vacancy existing on the
Board, and will be appointed to the class of directors the term of which
expires at the 2009 annual meeting of stockholders (the “2009 Annual
Meeting”). Xx. Xxxxx will serve in such capacity until the 2009
Annual Meeting or until his successor is duly elected and qualified,
subject to the terms of this Agreement. Xx. Xxxxx will also be
appointed to the Corporate Governance and Nominating Committee and
Compensation Committee of the Board. Xx. Xxxxx will be the
initial Foxhill Designee (as that term is defined below). Xxxx
Xxxxxx will be moved into the class of directors the term of which expires
at the 2010 annual meeting of stockholders (the “2010 Annual
Meeting”).
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2.
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iPass
hereby covenants and agrees that, provided that Xx. Xxxxx delivers to
iPass the conditional resignation required by iPass’ bylaws, Xx. Xxxxx
will be nominated by the Board for election at the 2009 Annual Meeting, to
the class the term of office of which will expire at the 2012 annual
meeting of stockholders. Prior to the 2009 Annual Meeting, and
provided that Xx. Xxxxx delivers to iPass the conditional resignation
required by iPass’ bylaws, (i) the Board shall recommend that iPass’
stockholders vote in favor of Xx. Xxxxx at the 2009 Annual Meeting and
(ii) iPass shall solicit proxies for the election of Xx. Xxxxx at the 2009
Annual Meeting.
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3.
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Xxxx
Xxxxx is not standing for election at the 2009 Annual
Meeting. One (1) incumbent director on the Board in the class
of directors the term of office of which will expire at the 2010 Annual
Meeting will resign as of the 2009 Annual Meeting and Xxxx Xxxxxxxx will,
subject to such person consenting to such appointment, be appointed to the
Board no later than fourteen (14) days following the 2009 Annual Meeting
to the class of directors the term of office of which expires at the 2010
Annual Meeting.
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4.
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The
size of the Board will not be increased to more than ten (10) directors at
any time before the 2010 Annual Meeting, unless approved by a majority of
the independent directors and the Foxhill
Designee.
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5.
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For
so long as Foxhill continues to own not less than 5% of the outstanding
shares of iPass common stock: if the Foxhill Designee is unable
or unwilling to continue to serve on the Board and as a result there is a
vacancy created on the Board, the Board shall, consistent with its
fiduciary duties, appoint a replacement director designated by FOMF to
fill the resulting vacancy, provided that
such replacement director is reasonably acceptable to iPass (and the Board
will not unreasonably withhold acceptance of any such replacement
director); and, provided that such replacement director delivers to iPass
the conditional resignation required by iPass’ bylaws, iPass will use its
commercially reasonable efforts to secure the election to the Board of
such replacement director. iPass hereby confirms that Xx. Xxxxx
is reasonably acceptable to the Board, and his appointment to the Board in
satisfaction of the requirement of paragraph 1 meets the requirements of
this paragraph 5. For purposes of this Agreement, Xx.
Xxxxx and any replacement director shall each be deemed a “Foxhill
Designee”.
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6.
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Until
the earlier to occur of (i) December 31, 2010, and (ii) the date no
Foxhill Designee is serving as a member of the Board and FOMF has advised
iPass in writing that iPass is no longer obligated to nominate or appoint
a Foxhill Designee to the Board under this Agreement (which notice shall
be binding on all Foxhill
entities):
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(a)
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Foxhill
will vote all of the shares it owns in support of each slate of Directors
nominated by the Board (and will not support or participate in any
“withhold the vote” or similar campaign, or support any other nominees
other than the slate of Directors nominated by the
Board);
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(b)
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Except
for the candidate FOMF is entitled to have appointed pursuant to paragraph
1 or nominated as a Foxhill Designee pursuant to paragraph 2 or designated
as a replacement for a Foxhill Designee who has left the Board pursuant to
paragraph 5 above, Foxhill will not propose (other than a
private proposal to the Board or committee thereof as permitted by
paragraph 5(c)) any candidates for election as directors of iPass;
and
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(c)
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Foxhill
will not: (i) propose (pursuant to Rule 14a-8 or
otherwise) any proxy resolutions or nominees for director for approval by
iPass stockholders; provided, however, that
Foxhill will be entitled to make any non-public proposals or nominee
suggestions it wishes solely to the Board or a committee thereof; or
(ii) except as permitted pursuant to paragraph 7, support any
proxy resolutions or conduct any proxy solicitations or seek to advise or
influence in any manner any person with respect to the voting of iPass
voting securities against the recommendation of the Board on such
matters.
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provided, however, that
nothing herein shall limit Foxhill’s rights as a stockholder to nominate
directors for approval by iPass stockholders at the 2011 annual meeting of
stockholders.
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7.
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Notwithstanding
the foregoing or anything to the contrary herein, nothing in this
Agreement shall in any way limit Foxhill’s rights as a stockholder to
freely vote its securities on any matter submitted to a vote of the
stockholders of iPass (other than with respect to the election of
directors as set forth in paragraph 6(a)) or limit the ability of the
Foxhill Designee to exercise its rights as a member of the Board while
serving as a member of the Board.
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8.
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Subject
to the appointment of the person specified in paragraph 1 as a director of
iPass and iPass’ and the Board’s continued compliance with the terms
hereof, Foxhill withdraws its previously announced notice of its intent to
nominate directors with respect to the 2009 Annual
Meeting.
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9.
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The
Board will, subject to the limitations set forth in this paragraph 9,
return capital to iPass stockholders as
follows:
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a.
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the
Board will seek stockholder approval, at a special meeting called for such
purpose, of an amendment to iPass’ outstanding stock options and other
equity awards, and related plans, such that the value of such stock
options and other equity awards, in the good faith determination of the
Board, shall not be impaired by the declaration and payment of an
extraordinary dividend or stock repurchase, the proxy statement for the
stockholder vote with respect to such matters to be filed no later than
July 15, 2009;
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b.
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if
the iPass stockholders shall approve the amendments described in
subparagraph a. above, then the Board shall declare a dividend in an
amount per share such that the aggregate amount of the dividend shall
equal approximately $20 million, such declaration to occur as soon as
practicable following stockholder approval of the amendments described in
subparagraph a. above; and
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c.
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following
the payment of such dividend, the Board shall use its commercially
reasonable efforts to return an additional $20 million to the iPass
stockholders by the end of 2009 (the “Second Capital Reduction”), in a
form, or combination of forms, to be determined at the discretion of the
Board, which may be in the form of a tender offer, cash dividend or other
form determined by the Board, such Board action with respect to the return
of cash pursuant to this subparagraph c. (e.g., by the authorization to
file a Schedule TO, or declaration of a dividend record date), to occur on
or before such date as the Board, in its good faith determination, shall
enable iPass to complete the Second Capital Reduction before December 31,
2009; provided,
however, that if the Board determines that the Second Capital
Reduction shall be in the form of a self tender offer, and such self
tender offer shall not be fully subscribed, then the failure to deliver
the full $20 million of the Second Capital Reduction shall not be a breach
of this Agreement, and the Board shall use the remaining portion of the
Second Capital Reduction for a stock buyback program or a cash dividend to
be completed on or prior to December 31,
2010.
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Notwithstanding
anything to the contrary set forth in this paragraph 9, the Board shall not be
obligated to return any amount of cash if (i) the Board shall have submitted the
return of such cash to the iPass stockholders for approval and the iPass
stockholders shall not have approved such return of cash, or (ii) the Board
shall have determined, with the advice of counsel, that the return of such cash
would cause the Board to be in breach of its fiduciary duties, or to be in
violation of applicable law.
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10.
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iPass
will reimburse Foxhill for its reasonable and documented out-of-pocket
expenses incurred in the commencement of the proxy contest, in an amount
not to exceed $150,000, within ten (10) business days of receiving
reasonably satisfactory documentation with respect to such
expenses.
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11.
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The
Board shall include, and recommend that iPass stockholders vote in favor
of, the declassification proposal in iPass’ revised definitive proxy
statement for the 2009 Annual
Meeting.
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12.
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Promptly
after the execution of this Agreement, iPass and Foxhill will issue a
joint press release in the form attached hereto as Schedule
A.
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13.
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Each
of FOMF and the other entities included within Foxhill agrees that it will
cause its controlled affiliates, current and future, to comply with the
terms of this Agreement as if party
hereto.
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14.
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This
Agreement may only be modified through a written agreement signed by iPass
and by FOMF. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and thereof
and supersedes all prior and contemplated arrangements and understandings
with respect thereto. This Agreement may be signed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same
Agreement.
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15.
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This
Agreement and the legal relations hereunder between the parties hereto
shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to contracts made and performed therein,
without giving effect to the principles of conflicts of law
thereof. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of Delaware and of the United States of America, in
each case located in the County of New Castle, for any action, proceeding
or investigation in any court or before any governmental authority arising
out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any action, proceeding or investigation
relating thereto except in such courts), and further agrees that service
of any process, summons, notice or document by registered mail to its
respective address set forth in this Agreement shall be effective service
of process for any action, proceeding or investigation brought against it
in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action,
proceeding or investigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware or
the United States of America, in each case located in the County of New
Castle, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action,
proceeding or investigation brought in any such court has been brought in
an inconvenient forum.
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16.
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Each
party hereto shall do and perform or cause to be done and performed all
such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party
hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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If you
are in agreement please sign below.
Very truly yours,
By: /s/Xxxx
Xxxxxx
Xxxx
Xxxxxx
Chief
Executive Officer and President
Accepted
and agreed as of the date set forth above.
Foxhill
Opportunity Master Fund, L.P.
By: Foxhill
Opportunity Offshore Fund Ltd.
its general partner
By: Foxhill
Capital Partners LLC
its investment manager
By: /s/Xxxx
Xxxxxx
Xxxx
Xxxxxx
Managing
Member
Foxhill
Opportunity Fund, L.P.
By: Foxhill
Capital (GP), LLC
its general partner
By: /s/Xxxx
Xxxxxx
Xxxx
Xxxxxx
Managing
Member
Foxhill
Opportunity Offshore Fund, LTD.
By:
/s/Xxxx
Xxxxxx
Xxxx
Xxxxxx
Director
Foxhill
Capital (GP), LLC
By: /s/Xxxx
Xxxxxx
Xxxx
Xxxxxx
Managing
Member
Foxhill
Capital Partners, LLC
By:
/s/Xxxx
Xxxxxx
Xxxx
Xxxxxx
Managing
Member
/s/Xxxx
Xxxxxx
Schedule
A
Press
Release
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Editorial
Contacts
Investor
Relations
xx@xXxxx.xxx
000-000-0000
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iPass
to Return Up to $40 Million of Capital to Stockholders
Company
Settles Proxy Contest with Foxhill and Appoints a Foxhill Nominee to the
Board
REDWOOD SHORES, Calif. — June
[ ], 2009 — iPass Inc. (NASDAQ: IPAS), a global provider of services
that unify the management of enterprise mobility, today announced that its board
of directors has determined to take steps to return up to $40 million to
stockholders under certain conditions, which determination has been reflected in
a settlement agreement with Foxhill Opportunity Master Fund, L.P.
(Foxhill). iPass also announced that, as part of the settlement
agreement with Foxhill, the iPass board of directors has agreed to immediately
appoint a Foxhill nominee, Xxxxxxx X. Xxxxx, to the board of directors. In
return, Foxhill will withdraw its previously announced notice to solicit proxies
to elect three of its nominees on the iPass board of directors at the 2009
annual meeting of stockholders. As a result, Foxhill will not be
delivering any proxies it receives at the 2009 annual meeting.
The
settlement agreement calls for the board of directors to declare a $20 million
cash dividend to stockholders “as soon as practicable” following stockholder
approval, at a special meeting of stockholders, of an amendment to iPass’
outstanding stock options and equity awards, and related plans. The amendment
would provide that the value of the equity awards would not be impaired by the
dividend. The special meeting is expected to occur in the third quarter of
2009.
The board
of directors has also determined to return up to an additional $20 million to
stockholders by the end of 2009 through a tender offer, cash dividend or other
form determined by the board of directors, subject to certain
conditions.
Xx.
Xxxxx, the Foxhill nominee, will serve a term that expires at the 2009 annual
meeting. Given that he met certain conditions, the board of directors agreed to
nominate him at the 2009 annual meeting for election to a term that expires at
the 2012 annual meeting. Xx. Xxxxx is a private investor and
strategic management consultant. Xx. Xxxxx served as vice president and
corporate advisor of JDS Uniphase Corporation (JDSU), a provider of optical
products and test and measurement solutions for the communications industry,
from February 2008 to September 2008. He served as president, chief executive
officer and a member of the board of directors of American Bank Note
Holographics (ABNH), a producer and marketer of optical security devices, from
April 1999 to February 2008, at which time ABNH was acquired by JDSU. Xx. Xxxxx
managed an extensive turnaround of ABNH, and under his leadership, ABNH's
stockholders enjoyed a gain of over 1000% from 2001 through the sale to
JDSU. He will serve as the Foxhill designee, and will be appointed to
the iPass board’s Corporate Governance and Nominating Committee and the
Compensation Committee.
iPass
also announced that it intends to appoint Xxxx Xxxxxxxxx to the board of
directors, following the resignation of an incumbent director after the 2009
annual meeting. Xx. Xxxxxxxxx will be nominated at or shortly
following the 2009 annual meeting. With the election of this
candidate and of Xx. Xxxxx, the board of directors will be fixed at 10
directors. The size of the board of directors will not be increased
to more than 10 directors before the 2010 annual meeting pursuant to the terms
of the settlement agreement.
Xxxx
Xxxxxxxxx is chairman and CEO of LiteScape Technologies, a private company that
develops and sells VoIP and mobile software applications. Prior to joining
LiteScape, Xxxx was a vice president at Cisco and President of Product and
Operations at Web-EX prior to its acquisition by Cisco. Xxxxxxxxx is a
thirty–five year veteran of the high–tech industry. Xxxxxxxxx was the
founding CEO of on–demand desktop management company Everdream, which was sold
to Dell in 2007. In 1995, he was co-founder and CEO of SegaSoft
Networks, one of the pioneers in interactive entertainment, which was sold to
Sega in 1999. Xxxx held senior management positions with IBM for more than 16
years. A graduate of the United States Naval Academy, Xxxx served as an officer
aboard nuclear fast attack submarines for five years, and was an associate
professor of systems engineering at the US Naval Academy. Xxxx has a B.S. in
Aerospace Engineering from the United States Naval Academy and an M.S. in
business administration from the Xxxxxx Xxxxxxxxxx University. He is
on the board of directors of Silicon Graphics International (NASD: SGI) and
Simco Electronics, and is an advisor to Parthenon Capital and number of private
technology companies.
Under the
settlement agreement, until December 31, 2010 (or earlier if a Foxhill nominee
no longer serves on the board of directors), Foxhill will support the iPass
board of directors’ proxy slates and not support or participate in any “withhold
the vote” or similar campaign or support any nominees other than the board of
directors’ slate; will not propose or support any proxy resolutions or conduct
any proxy solicitations against the recommendation of the board of directors;
and will propose nominees or proxy resolutions only to the board of directors’
Corporate Governance and Nominating Committee.
The
settlement agreement also provides that the iPass board of directors will
continue to recommend that iPass stockholders vote in favor of the proposal to
declassify the board at the 2009 annual meeting.
“The
board will welcome the contributions of the new Directors, and is pleased that
this agreement will allow everyone at iPass to keep their focus on achieving
positive operating cash flow and non-GAAP profitability in fiscal 2009," said
Xxxx Xxxxxx, president and chief executive officer of iPass. "The
determination to return significant cash to our stockholders is a strong
statement of the board’s confidence that we are well on the path toward
completing our corporate transformation and driving renewed revenue growth and
profitability.”
Xxxx
Xxxxxx, the managing member of Foxhill Capital Partners, LLC, the investment
manager of Foxhill, commented, “We are very pleased that the board has
determined to return capital to stockholders and to appoint one of our highly
qualified nominees who is committed to maximizing the value of iPass shares for
all stockholders, and continues to support the declassification proposal.” Xx.
Xxxxxx added, “We are encouraged by the board’s responsiveness to stockholders
and believe Xx. Xxxxx and Xx. Xxxxxxxxx will add significant expertise to the
board.”
As
previously reported, iPass had approximately $68 million in cash and cash
equivalents and short-term investments at March 31, 2009, and 62.6 million
shares outstanding as of April 30, 2009.
About
iPass
iPass
helps enterprises unify the management of remote and mobile connectivity and
devices. With iPass software and services, customers can create easy-to-use
broadband solutions for their mobile workers, home offices and branch and retail
locations, complete with device management, security validation and unified
billing. iPass offerings are powered by its leading global virtual network,
on-demand management platform, and award-winning client software. The iPass
global virtual network unifies hundreds of wireless, broadband and dial-up
providers in over 160 countries. Hundreds of Global 2000 companies rely on iPass
services, including General Motors, Nokia, and Reuters. Founded in 1996, iPass
is headquartered in Redwood Shores, Calif., with offices throughout North
America, Europe and Asia.
About
Foxhill
Foxhill
Capital Partners, LLC, located in Princeton, New Jersey, is the
investment advisor to Foxhill, a Cayman Islands exempted
limited partnership that acts as a collective investment vehicle.
Cautionary
Statements
The
statement in this press release regarding iPass' belief that it is on the path
toward renewed revenue growth and profitability is a forward-looking statement.
Actual results may differ materially from the expectations contained in this
statement due to a number of risks and uncertainties, including: the rate of
decline in use of narrowband/dial technology as a means of enterprise
connectivity may be faster than iPass predicts; the risk that the current
economic downturn and the associated customer layoffs and travel reductions will
have a greater negative impact on iPass than it predicts; the risk that the
swine flu will cause travel reductions that will have a greater negative impact
on iPass than it predicts; the risk that iPass will not be able to generate
broadband revenues in the manner expected; rapidly emerging changes in the
nature of markets served by iPass, which may not be compatible with iPass'
services; increased competition, which may cause pricing pressure on the fees
iPass charges; iPass could unexpectedly lose current integrated broadband access
points if one or more current broadband access point providers perceive iPass'
services to be competing with the provider's services in a manner that renders
the relationship with iPass detrimental to the provider; iPass may not
be able to establish additional relationships with broadband access point
providers, including providers of 2.5G/3G Mobile Data, at the level iPass
expects if it is unable to negotiate such relationships on terms acceptable to
both iPass and the providers on the timeframe iPass currently expects for
any number of reasons, including perceived competition with the providers; and
iPass may not be able to generate revenue from new services if market acceptance
of those new services is not as iPass expects. Detailed information about
potential factors that could potentially affect iPass' business, financial
condition and results of operations is included in iPass' Quarterly Report on
Form 10-Q under the caption "Factors Affecting Operating Results," in Item 2 of
that report, filed with the Securities and Exchange Commission (the "SEC") on
May 8, 2009 and available at the SEC's Web site at xxx.xxx.xxx. iPass undertakes
no responsibility to update the information in this press release if any
forward-looking statement later turns out to be inaccurate.
In
addition, the return of capital described above is subject to certain conditions
being met, which if they do not occur may result in no amounts, or a lesser
amount, being returned to stockholders in the form of a dividend, stock
repurchase or other form.
iPass® is
a registered trademark of iPass Inc.
Tender
offer statement
This
press release is for informational purposes only and is not an offer to buy, or
the solicitation of an offer to sell, any shares. The full details of any tender
offer, including complete instructions on how to tender shares, will be included
in the offer to purchase, the letter of transmittal and related materials, which
would be mailed to shareholders promptly following commencement of the offer.
Shareholders should read carefully the offer to purchase, the letter of
transmittal and other related materials when they are available because they
will contain important information. Shareholders may obtain free copies, when
available, of the offer to purchase and other related materials that will be
filed by iPass Inc. with the Securities and Exchange Commission at the
Commission’s website at xxx.xxx.xxx. When available, shareholders also may
obtain a copy of these documents, free of charge, from iPass Inc.’s
information agent, if any, to be appointed in connection with the
offer.
