Exhibit 10.1

 

November 1, 2004

 

Mr. David C. Peterschmidt

c/o Openwave Systems Inc.

1400 Seaport Boulevard

Redwood City, CA 94063

 

Dear Dave:

 

On behalf of Openwave Systems, Inc. (the “Company”), we are pleased to confirm
to you in writing that the Board of Directors has unanimously approved the offer
that we previously discussed with you to serve as the Company’s President and
Chief Executive Officer. The terms of the offer are set forth below, as
supplemented by the employment terms set forth in the Company’s standard forms
of Change of Control Severance Agreement (“Change of Control Agreement”),
Confidentiality and Invention Assignment Agreement (“Confidentiality
Agreement”), and Indemnification Agreement (“Indemnification Agreement”), copies
of which are attached hereto and are referred to herein as the “Executive Offer
Documents”. The terms set forth below are effective as of November 2, 2004
(“Effective Date”), except as otherwise set forth below.

 

1. Title and Cash Compensation.

 

You will serve as the President and Chief Executive Officer of the Company and
possess the duties, responsibilities and authority customary for such position.
You will report to the Company’s Board of Directors (“Board”). Effective
November 2, 2004, your monthly base salary will be $41,666.66 per month or
$500,000 on an annualized basis. In addition, you will receive a bonus in an
amount equal to two months of your base salary, payable promptly after eight
months of your employment with the Company.

 

Commencing January 1, 2005, you shall be eligible for a semi-annual incentive
cash award from the Company under the Company’s Corporate Incentive Plan for
Executives (“CIP”), based upon a target for each semi-annual period which shall
be fifty percent (50%) of your annual base salary (i.e., $250,000 based upon
your initial base salary). Your actual annual incentive cash award may be below,
at, or above target (up to a maximum of 150% of your annual base salary) and
shall be determined based upon a combination of (a) the Company’s achievement
level against financial and performance objectives and (b) an individual
modifier component based upon your individual performance as determined by the
Compensation Committee. The terms of the CIP, including the financial and
performance objectives for the Company, shall be established by the Compensation
Committee in consultation with the full Board. For the first six full months
during which you participate in the CIP, your target bonus will be guaranteed,
and you shall receive $125,000 promptly after the Effective Date and an
additional $125,000 on or prior to May 2, 2005, provided that in both cases you
continue to serve continuously as the Company’s Chief Executive Officer from the
Effective Date until the date on which you are entitled to receive the payment.
If based on the achievement of the selected performance criteria you would be
entitled to receive an amount greater than the guaranteed bonus, you shall be
entitled to receive the excess amount above the guaranteed payments, at the time
period specified for payments under the CIP.

 

2. Equity Awards.

 

On the Effective date, the Compensation Committee will grant to you (a) an
option to purchase five hundred thousand (500,000) shares of Company common
stock (the “Option”) and (b) a restricted stock award of two hundred fifty
thousand (250,000) shares of Company common stock (the “Restricted Stock
Award”). The Option shall have an exercise price equal to the fair market value
of the Company common stock on the date of grant and shall vest over a four year
period, with twenty five percent (25%) of the shares subject to the Option
vesting on the first anniversary of the Effective Date, and an additional one
forty-eighth (1/48th) of the shares subject to the Option vesting each month
thereafter on the first day of such subsequent month. The Restricted Stock Award
shall vest over four years in four equal installments of 62,500 shares each on
the first four anniversaries of the Effective Date. All vesting for the Option
and the Restricted Stock Award shall be contingent upon your continued
employment with the Company on the applicable vesting date. Except as otherwise
expressly set forth in this letter agreement, the Option and the Restricted
Stock Award will be granted under and subject to the terms of the Company’s
standard form of non-qualified stock option agreement and restricted stock award
agreement.

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You should be aware that you will incur federal and state income taxes as a
result of your receipt or the vesting of the Restricted Stock Award, with the
timing of such income contingent upon whether you timely make an election under
Section 83(b) of the Internal Revenue Code of 1986, as amended (an “83(b)
election”). It is entirely your choice whether you make an 83(b) election and
you should consult with your own tax and financial advisors in that regard. The
Company will not provide you with any assistance in paying your taxes on the
Restricted Stock Award, regardless of whether or not you make an 83(b) election.

 

In addition, if you are terminated by the Company without Cause (as defined in
Exhibit A) (a) the next sixty two thousand five hundred (62,500) shares under
the Restricted Stock Award due to vest within the next twelve (12) months, if
any such shares remain unvested, shall accelerate and vest upon termination of
your employment, subject to your execution of an effective release of claims in
the form set forth at Exhibit B.

 

3. Other Benefits.

 

If your employment is terminated by the Company without Cause (as defined in
Exhibit A), provided that you sign an effective release of claims substantially
in the form set forth at Exhibit B (with the final terms and conditions of the
form as reasonably determined by the Company) and confirm in writing your
agreement to be bound by the non-compete terms set forth at Exhibit C and the
terms of the Confidentiality Agreement, with such reasonable changes to the
non-compete terms as the Company may require to revise the list of competitors
but without increasing the number of competitors, and to otherwise update the
non-compete terms as appropriate at the date of such confirmation, you will
receive, in lieu of any cash severance based upon your base salary or target
incentive cash bonus payable under the Executive Severance Benefit Policy, the
following benefits: (1) twelve (12) months’ base salary based upon rates then in
effect for you and paid over the next year in equal installments in accordance
with the Company’s regular payroll periods, (2) your annual target incentive
cash award based upon the target annual bonus then in effect for you and paid
over the next year in equal installments in accordance with the Company’s
regular payroll periods, and (3) full payment by the Company of your COBRA
premiums for health care coverage for you and your covered spouse and dependents
for a period not to exceed twelve months. In the event that your employment is
terminated by the Company at a time that would entitle you to benefits under the
Change of Control Agreement, your benefits under that agreement shall be reduced
by the benefits you receive hereunder, as described in further detail in your
Change of Control Agreement.

 

As an employee, you also will continue to be eligible to receive our standard
employee benefits except to the extent that this letter agreement provides you
with more valuable benefits than the Company’s standard policies.

 

4. Additional Terms.

 

You should be aware that your employment with the Company is for no specified
period and constitutes “at will” employment. As a result, you are free to resign
at any time, for any reason or for no reason. Similarly, the Company is free to
conclude its employment relationship with you at any time, with or without
cause, subject to the severance obligations under or referred to in this letter.

 

The terms of this offer letter may only be changed by written agreement,
although the Company may from time to time, in its sole discretion, adjust the
salaries and benefits paid to you and its other employees. This offer letter
will be governed by the internal laws of the State of California.

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Please review the terms of this letter and the Executive Offer Documents to make
sure they are consistent with your understanding. Should you have any questions
with regard to any of the items indicated above or the terms of the Executive
Offer Documents, please contact Susan Gonzalez, the Company’s Vice President of
Human Resources. Kindly indicate your agreement with the terms contained in this
offer letter and the Executive Offer Documents by signing and returning the
original signed offer letter and the Executive Offer Documents as appropriate so
that they are received by Ms. Gonzalez no later than November 2, 2004.

 

/S/ BERNARD PUCKETT

         

Bernard Puckett

Chairman of the Board

        Agreed and Accepted:        

/S/ DAVID C. PETERSCHMIDT

      

November 1, 2004

David C. Peterschmidt

     

Date

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EXHIBIT A

 

Definitions

 

“Cause” shall mean (i) gross negligence or willful misconduct in the performance
of your duties to the Company; (ii) repeated unexplained or unjustified absences
from the Company; (iii) a material and willful violation of any federal or state
law which if made public would injure the business or reputation of the Company
as reasonably determined by the Board of Directors of the Company; (iv) refusal
or willful failure to act in accordance with any specific lawful direction or
order of the Board of Directors of the Company or written order or formal
written policy of the Company; (v) unsatisfactory performance after prior
written notice and a reasonable opportunity to cure the unsatisfactory
performance in accordance with the Company’s policies, (vi) commission of any
act of fraud with respect to the Company; (vii) conviction of a felony or a
crime involving moral turpitude causing material harm to the standing and
reputation of the Company, in each case as reasonably determined by the Board of
Directors of the Company.

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EXHIBIT B

 

Form of Release

 

This general release of claims (“Release”) is being executed pursuant to the
terms set forth in that Letter Agreement relating to employment terms dated
November 1, 2004, between me and the Company (the “Agreement”), which Agreement
I have previously executed. Certain capitalized terms used in this Release are
defined in the Agreement.

 

I hereby confirm my obligations under the form of the Company’s Confidential
Information and Invention Assignment Agreement, which I have previously signed.

 

I, on behalf of myself and my heirs, estate, executors, administrators,
successors and assigns, do hereby release, acquit and forever discharge
Openwave, its parents and subsidiaries, and their officers, directors, agents,
servants, employees, shareholders, successors, assigns and affiliates, of and
from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys fees, damages, indemnities and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed (other than my rights under the Agreement
and any claim for indemnification I may have as a result of any third party
action against me based on my employment with the Company), arising out of or in
any way related to agreements, events, acts or conduct at any time prior to and
including the date I execute this Release, including, but not limited to: all
such claims and demands directly or indirectly arising out of or in any way
connected with my employment with the Company or the termination of that
employment, including but not limited to, claims of intentional and negligent
infliction of emotional distress, any and all tort claims for personal injury,
claims or demands related to salary, bonuses, commissions, stock, stock options,
or any other ownership interests in the Company, vacation pay, fringe benefits,
expense reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law or cause of action including, but
not limited to, the federal Civil Rights Act of 1964, the federal Age
Discrimination in Employment Act of 1967 (“ADEA”), the federal Employee
Retirement Income Security Act of 1974, the federal Rehabilitation Act of 1973,
the federal Americans with Disabilities Act of 1990, the federal Fair Labor
Standards Act, the federal Family Medical Leave Act, the California Fair
Employment and Housing Act, and any amendments to the foregoing laws; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing;
provided, however, that nothing in this paragraph shall be construed in any way
to release the Company from its obligation to indemnify me pursuant to the
Company’s indemnification obligation pursuant to agreement, its bylaws or
applicable law.

 

I agree that the claims released pursuant to this Release include all claims
against individual employees of Openwave, whether or not such employees were
acting within the scope of their employment.

 

I acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.” I
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any jurisdiction of similar effect with respect to my release of
any claims I may have against the Company.

 

At Openwave’s request, I agree to cooperate fully in connection with any legal
matter, proceeding or action relating to Openwave.

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I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
under the Agreement for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release; (B) I have the right to
consult with an attorney prior to executing this Release; (C) I have twenty-one
(21) days to consider this Release (although I may choose to voluntarily execute
this Release earlier); (D) I have seven (7) days following my execution of this
Release to revoke the Release; and (E) this Release shall not be effective until
the date upon which the revocation period has expired, which shall be the eighth
(8th) day after I execute this Release.

 

EXECUTIVE  

David C. Peterschmidt

Date:

   

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EXHIBIT C

 

Non-Compete Terms

 

Reference is made to that certain letter agreement relating to employment terms
between you and the Company, dated             , 2004 (the “Employment
Agreement”). If your employment is terminated without cause as more fully
described in the Employment Agreement, the Company has agreed to provide you
with certain payments and benefits to which you would not otherwise be entitled.
As a necessary condition to your entitlement to such payments, you have agreed
not to compete with the Company as more fully described below. Should you
violate the terms set forth below, the Company shall not be required to make any
future payments to you under the severance provisions of the Employment
Agreement or otherwise and shall be entitled to recover prior payments made to
you under such provisions.

 

In your role as President and Chief Executive Officer of the Company, you
acknowledge that you have acquired knowledge of sensitive and confidential
information relating to product development road maps, marketing plans,
competitive plans and pricing strategies, trade secrets and other confidential
information of the Company (the “Confidential Information”). Were you to
directly or indirectly be engaged in any business in direct competition with the
Company or its subsidiaries, you acknowledge that Confidential Information could
readily be used by you and provide the competing business with a significant
competitive advantage against the Company.

 

Therefore, you agree that during your employment with the Company and for a
period ending twelve (12) months from the termination of your employment with
the Company, you will not, without the written consent of the Company, whether
as an individual, proprietor, partner, stockholder, officer, employee, director,
consultant, joint venturer, investor, lender, or in any other capacity
whatsoever, in all cities, counties, states, and countries worldwide, in which
the business of the Company or its affiliates is then being conducted or its
products are being sold:

 

engage in any business role (at or with 7/24 Solutions, Access Japan, Comverse,
Logica CMG, Ericsson, Hewlett Packard, Microsoft, Nortel, Nokia, Opera Software
ASA, Siemens, Symbian or Qualcomm (or any of their subsidiaries or affiliates
controlled by or under common control with the respective entity)) with a
business, division, or product group that is in Competition with the existing
business of the Company or its subsidiaries

 

A business, division, or product group shall be deemed to be in “Competition”
with the Company or its subsidiaries if it is engaged in or has taken concrete
steps toward engaging in the business of providing (A) software or systems that
enable Internet connectivity, or enables or provides data services, on mobile
devices (such as messaging and location or location related services) to
communication service providers or enterprise customers, whether the software is
located on the server or the client (e.g., mobile device), or (B) messaging
software to communication service providers, Internet service providers or
enterprise customers, either as carried on or being developed by the Company or
its affiliates as of the date of your termination.

 

Notwithstanding the foregoing, you may own, directly or indirectly, solely as a
passive investment, securities of any entity traded on any national securities
exchange or automated quotation system if you are not a controlling person of,
or a member of a group which controls such entity, and you do not, directly or
indirectly, “beneficially own” (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, without regard to the sixty (60) day period
referred to in Rule 13d-3(d)(1)(i)) one percent (1.0%) or more of any class of
securities of such entity. The Company understands that you expect to serve as a
member of the board of directors of certain other companies and agrees not to
unreasonably withhold consent for you to serve in such capacities either during
or after your employment with the Company.

 

You acknowledge that the Company may be irreparably harmed if you if you default
in your obligations under this Exhibit C and that it would be extremely
impracticable to measure the resulting damages. Accordingly, the Company, in
addition to any other available rights or remedies, may sue in equity for
specific performance to enforce its rights under this Exhibit C, and you
expressly waive the defense that a remedy in damages will be adequate for such a
default.

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The parties intend that the covenants and agreements contained in this Exhibit C
and the Employment Agreement shall be deemed to be a series of separate
covenants and agreements. If, in any judicial proceeding, a court shall refuse
to enforce all of the separate covenants deemed included in this Exhibit C and
the Employment Agreement, then such unenforceable covenants shall be deemed
eliminated from the provisions of this Agreement for the purpose of such
proceeding to the extent necessary to permit the remaining separate covenants to
be enforced in such proceeding. If any one or more of the covenants contained in
this Agreement is for any reason held to be excessively broad as to duration,
geographical scope, activity or subject, the parties request that the applicable
court construe it by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as then in effect.