EXHIBIT 10.42

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered
into as of the 20th day of January 2003 (the “Effective Date”), by and between
Donald Listwin (the “Executive”) and Openwave Systems Inc., a Delaware
corporation (the “Corporation”). This Agreement supercedes and replaces the
employment agreement dated September 18, 2000, previously entered into between
the parties.

 

For ease of reference, this Agreement is divided into the following Parts:

 

FIRST PART: TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION AND BENEFITS
DURING EMPLOYMENT

 

SECOND PART: COMPENSATION AND BENEFITS IN CASE OF INVOLUNTARY TERMINATION

 

THIRD PART: COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL

 

FOURTH PART: PARACHUTE PAYMENTS, CONFIDENTIAL INFORMATION, SUCCESSORS,
MISCELLANEOUS PROVISIONS, SIGNATURE PAGE

 

FIRST PART: TERM OF EMPLOYMENT, DUTIES AND SCOPE,

COMPENSATION AND BENEFITS DURING EMPLOYMENT

 

Section 1. Term of Employment

 

(a) At-Will. Subject to the terms and conditions of this Agreement, Executive’s
employment with the Corporation is “at will” and Executive or the Corporation
are free to terminate the employment relationship at any time, with or without
Cause upon at least thirty (30) days written notice.

 

(b) Termination for Cause. The Corporation may terminate the Executive’s
employment at any time for Cause. For all purposes under this Agreement, “Cause”
shall mean (1) a willful failure by the Executive to substantially perform the
Executive’s duties under this Agreement, other than a failure resulting from the
Executive’s complete or partial incapacity due to physical or mental illness or
impairment, (2) a willful act by the Executive that constitutes gross misconduct
and that is materially injurious to the Corporation, (3) a willful breach by the
Executive of a material provision of this Agreement, (4) a material and willful
violation of a federal or state law or regulation applicable to the business of
the Corporation that is materially and demonstrably injurious to the
Corporation, or (5) a material failure to achieve such reasonable financial and
other performance measures as shall be agreed upon by the Compensation Committee
of the Board of Directors and the Executive; all as determined by the
Compensation Committee of the Board of Directors in good faith; provided,
however, that failure of the parties to reasonably agree to such performance
measures shall not be grounds for termination for cause. No act, or failure to
act, by the Executive shall be considered “willful” unless committed without
good faith and without a reasonable belief that the act or omission was in the
Corporation’s best interest.

 

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(c) Termination for Disability. The Corporation may terminate the Executive’s
employment for Disability by giving the Executive not less than thirty-(30)
day’s advance written notice. For all purposes under this Agreement,
“Disability” shall mean that the Executive, at the time the notice is given, has
been unable to perform the Executive’s duties under this Agreement for a period
of not less than six (6) consecutive months as a result of the Executive’s
incapacity due to physical or mental illness. In the event that the Executive
resumes the performance of substantially all of the Executive’s duties under
this Agreement before the termination of the Executive’s employment under this
Section 1 becomes effective, the notice of termination shall automatically be
deemed to have been revoked.

 

(d) Termination of Agreement. This Agreement shall expire when all obligations
of the parties hereunder have been satisfied.

 

Section 2. Duties and Scope of Employment

 

(a) Position. The Corporation agrees to employ the Executive in the positions of
President and Chief Executive Officer (“PCEO”). Executive shall be given such
duties, responsibilities and authorities as are appropriate to his position.
Executive shall also serve as a Director on the Corporation’s Board of Directors
(the “Board”).

 

(b) Obligations. During the Agreement, the Executive shall devote the
Executive’s full business efforts and time to the business and affairs of the
Corporation as needed to carry out his duties and responsibilities hereunder
subject to the overall supervision of the Board. The foregoing shall not
preclude the Executive from engaging in appropriate civic, charitable or
religious activities or from devoting a reasonable amount of time to private
investments or from serving on the boards of directors of other entities, as
long as such activities and service do not interfere or conflict with the
Executive’s responsibilities to the Corporation.

 

Section 3. Base Compensation

 

Effective December 20, 2002, the Corporation shall pay to the Executive as
compensation for services a base salary at the annual rate of $400,000, or at
such other rate as the Compensation Committee of the Board may determine from
time to time. Such salary shall be payable in accordance with the standard
payroll procedures of the Corporation. The annual compensation specified in this
Section 3, together with any increases in such compensation that the
Compensation Committee of the Board may grant from time to time, is referred to
in this Agreement as “Base Compensation.”

 

Section 4. Incentive Compensation

 

Effective December 20, 2002, based upon achievement of financial and other
performance objectives by the Corporation under the Corporation’s “Corporate
Incentive Plan”, the Corporation shall award to the Executive an incentive cash
award based upon a target which shall be 85% (which percentage may be adjusted
from time to time by the Compensation Committee of the Board) of the Base
Compensation, with the actual Incentive Compensation to be determined to be
below, at, or above target, in accordance with the achievement level against the
financial and other performance objectives. Any compensation paid to the
Executive as Incentive Compensation shall

 

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be in addition to the Base Compensation. Notwithstanding the foregoing, the
Corporate Incentive Plan does not currently permit any payments until the
Company is profitable. The Compensation Committee of the Board will review the
Executive’s base and incentive compensation package annually to ensure that it
remains competitive.

 

Section 5. Retention Bonus

 

Executive shall receive a bonus equal to $375,000 on each of the following
respective payment dates provided he is still employed with the Corporation on
the corresponding payment date. Executive shall be eligible for a additional
bonus of up to an additional $375,000 on each of the following respective
payment dates based upon the achievement of written financial objectives
corresponding to such payment date, established by the Compensation Committee of
the Board. The payment dates are March 31, 2003, and September 30, 2003.

 

Section 6. Equity Compensation

 

The Executive shall continue to be considered for future awards under the
Corporation’s existing and any new compensation and benefit plans in order to
ensure that Executive’s long-term incentives are competitive.

 

Section 7. Executive Benefits

 

During the Agreement, the Executive shall be eligible to participate in all
employee and executive benefit plans and executive compensation programs
maintained by the Corporation, including (without limitation) savings or
profit-sharing plans, deferred compensation plans, stock option, incentive or
other bonus plans, life, disability, health, accident and other insurance
programs, and similar plans or programs. Executive shall also be covered under
the Corporation’s standard director and officer insurance and indemnification
programs.

 

Section 8. Death or Disability

 

If Executive’s employment with the Corporation is terminated at any time due to
death or Disability, Executive shall receive (a) one (1) year of health coverage
pursuant to COBRA and at the expense of the Corporation, comparable to that
provided to other senior executives of the Corporation, for himself (unless
termination was due to his death) and his family and (b) continuance of life
insurance coverage in the amount provided under the Corporation’s standard group
life insurance policy applicable to the Corporation’s employees generally on his
life for one (1) year following termination (if termination was due to
Disability). To the extent that the Corporation finds it undesirable to cover
the Executive under the group life insurance and health plans of the
Corporation, the Corporation shall provide the Executive (at the Corporation’s
expense) with the same level of coverage under individual policies to the extent
available.

 

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SECOND PART: COMPENSATION AND BENEFITS IN CASE

OF INVOLUNTARY TERMINATION

 

Section 9. Terminations

 

This Second Part of the Agreement, consisting of Sections 9 through 10,
describes the benefits and compensation, if any, payable in case of a Qualifying
Termination of employment. The Third Part of the Agreement, consisting of
Sections 11 and 12, describes benefits and compensation, if any, payable in case
of a Change in Control.

 

Section 10. Termination Without Cause; Involuntary Termination

 

In the event that, during the Agreement, the Executive’s employment terminates
in a Qualifying Termination, as defined in Section 10(a), then, after executing
the release of claims described in Section 10(c), the Executive shall be
entitled to receive the payments and benefits described in Section 8 and Section
10(b).

 

(a) Qualifying Termination. A Qualifying Termination occurs if:

 

(1) The Corporation terminates the Executive’s employment for any reason other
than Cause, Death or Disability; or

 

(2) The Executive experiences an Involuntary Termination not resulting from a
Change in Control. For purposes of this Agreement, Involuntary Termination shall
mean the occurrence of any of the following without the Executive’s prior
written consent: (i) a greater than 10% reduction in Executive’s base
compensation, incentive compensation target and benefits except if a majority of
the Board vote to reduce the salary of the Executive and the rest of the
Corporation’s executive officers by the same percentage amount for the same time
period, (ii) a material change in Executive’s status or his responsibilities
(excluding loss of title as President of the Corporation), (iii) the
Corporation’s failure to continue Executive as its CEO, (iv) the Corporation’s
failure to nominate Executive for re-election as a member of the Board (unless
Executive’s employment is terminated for Cause), (v) if Executive is not at all
times the Chief Executive Officer of the Corporation’s ultimate parent entity
(if any), or (vi) a requirement to relocate, except for office relocations that
would not increase the Executive’s one-way commute distance by more than thirty
(30) miles. For purposes of greater clarity, termination for Cause, death or
Disability shall not give rise to an Involuntary Termination.

 

(b) Payments and Benefits. The Corporation shall pay to the Executive following
the date of termination of employment, any remaining payments not yet paid under
Section 5 (payable within 5 business days following such termination); and the
following aggregate payments and benefits which shall be spread ratably over the
succeeding twelve (12) months, in accordance with standard payroll procedures:

 

(1) One (1) times the Executive’s Base Compensation in effect on the date of the
termination of employment;

 

(2) One (1) times the Executive’s target Incentive Compensation for the year in
which Executive’s employment is terminated;

 

(3) 50% of Executive’s then unvested stock options and 50% of Executive’s then
unvested Restricted Stock shall become vested. In addition, Executive shall have
one (1) year after the date of Qualifying Termination to exercise all vested
options and Executive’s remaining

 

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unvested options, if any, shall not expire until the earlier of (i) their
original expiration date or (ii) one (1) year after the date of Qualifying
Termination; and

 

(4) Health and Life Insurance Coverage. The same level of health and life
insurance coverage provided under Section 8 above. This coverage will be
provided for one (1) year after termination of employment with any remaining
COBRA benefits to begin thereafter. The obligation of the Corporation to provide
continued health and life insurance benefits under this Section 10 shall cease
if Executive becomes employed by another employer and such employer provides the
Executive with life insurance and health plan coverage that is comparable to the
coverage contemplated by this Section 10.

 

(c) Release of Claims. As a condition to the receipt of the payments and
benefits described in this Section 10, the Executive shall be required to
execute a release of all claims arising out of the Executive’s employment or the
termination thereof including, but not limited to, any claim of discrimination
under state or federal law, but excluding claims for indemnification from the
Corporation under any indemnification agreement with the Corporation, its
certificate of incorporation and by-laws or applicable law or claims for
directors and officers’ insurance coverage.

 

(d) Conditions to Receipt of Payments and Benefits. In view of Executive’s
position and his access to Confidential Information, as a condition to the
receipt of cash payments and health and life insurance benefits described in
this Section 10, the Executive shall not, without the Corporation’s written
consent, for a period of twelve months following Executive’s termination of his
employment, directly or indirectly, alone or as a partner, joint venturer,
officer, director, Executive, consultant, agent or stockholder (other than a
less than 5% stockholder of a publicly traded company) (i) engage in any
activity which is in direct competition with the business, the products or
services of the Corporation, (ii) solicit any of the Corporation’s Executives,
consultants or customers, (iii) hire any of the Corporation’s Executives or
consultants in an unlawful manner or actively encourage Executives or
consultants to leave the Corporation, or (iv) otherwise breach his Confidential
Information obligations.

 

(e) No Mitigation. The Executive shall not be required to mitigate the amount of
any payment or benefit contemplated by this Section 10, nor shall any such
payment or benefit be reduced by any earnings or benefits that the Executive may
receive from any other source.

 

THIRD PART: COMPENSATION AND BENEFITS IN CASE OF

A CHANGE IN CONTROL

 

Section 11. Change in Control

 

(a) If Executive is still employed by the Corporation and there is a Change in
Control, 50% of Executive’s then unvested stock options in the Corporation shall
become vested and 50% of the Executive’s then unvested Restricted Stock shall
vest. His remaining unvested stock options and Restricted Stock shall continue
to vest at the same rate of vesting as before the Change in Control subject to
Section11(b) below.

 

(b) If a Qualifying Termination occurs in connection with a Change in Control or
within eighteen (18) months after a Change in Control, the Executive will
receive a cash severance

 

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payment equal to one (1) times the sum of his Base Compensation and target
Incentive Compensation less any severance payments previously made under Section
10(b) above. Such severance will be paid in a lump sum within ten (10) days of
the Qualifying Termination. Executive shall receive the same health and life
insurance benefits provided in Section 8. Additionally, all of Executive’s
unvested Restricted Stock and stock options, if any, shall vest in full and
Executive shall have one (1) year after the date of Qualifying Termination to
exercise his vested options.

 

Section 12. Definition of Change in Control

 

For all purposes under this Agreement, “Change in Control” means the occurrence
of any of the following events:

 

(i) The sale, exchange, lease or other disposition of all or substantially all
of the assets of the Corporation to a person or group of related persons (as
such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that will
continue the business of the Corporation in the future;

 

(ii) A merger or consolidation involving the Corporation in which the voting
securities of the Corporation owned by the shareholders of the Corporation
immediately prior to such merger or consolidation do not represent, after
conversion if applicable, more than fifty percent (50%) of the total voting
power of the surviving controlling entity outstanding immediately after such
merger or consolidation; provided that any person who (1) was a beneficial owner
(within the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange Act)
of the voting securities of the Corporation immediately prior to such merger or
consolidation, and (2) is a beneficial owner of more than 20% of the securities
of the Corporation immediately after such merger or consolidation, shall be
excluded from the list of “shareholders of the Corporation immediately prior to
such merger or consolidation” for purposes of the preceding calculation); or

 

(iii) The direct or indirect acquisition of beneficial ownership of at least
fifty percent (50%) of the voting securities of the Corporation by a person or
group of related persons (as such terms are defined or described in Sections
3(a)(9) and 13(d)(3) of the Exchange Act); provided, that “person or group of
related persons” shall not include the Corporation, a subsidiary of the
Corporation, or an employee benefit plan sponsored by the Corporation or a
subsidiary of the Corporation (including any trustee of such plan acting as
trustee).

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions (i) immediately following which the record holders of
the common stock of the Corporation immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of transactions ;or

 

(iv) Approval by the stockholders of the Corporation of a complete liquidation
or dissolution of the Corporation.

 

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FOURTH PART: PARACHUTE PAYMENTS, CONFIDENTIAL INFORMATION,

SUCCESSORS, MISCELLANEOUS PROVISIONS, SIGNATURE PAGE

 

Section 13. Parachute Payments

 

In the event that the severance and other benefits provided for in this
Agreement or otherwise payable to the Executive (i) constitute “parachute
payments” within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), and are subject to the excise tax imposed by
Section 4999 of the Code (or any corresponding provisions of state income tax
law), then the Executive’s severance benefits under Section 11 shall be:

 

(a) delivered in full, and

 

(b) in addition, the Executive shall receive an additional lump sum cash
payment, taking into account all applicable federal, state, local and other
income, employment and other taxes and the excise tax imposed by Section 4999
(assuming for purposes of this calculation that the Employee is liable for such
taxes at the highest marginal tax rate) that results in no reduction to the
Employee in the amount or the value of the benefits under Section 3 of this
Agreement as a result of the application of Sections 280G and 4999 of the Code
(and any corresponding provisions of state tax law). Unless the Corporation and
the Employee otherwise agree in writing, any determination required under this
Section 13(b) shall be made in writing by independent tax accountants or tax
counsel designated by the Company in its reasonable discretion (the “Tax
Counsel”), whose determination shall be conclusive and binding upon the
Executive and the Corporation for all purposes. For purposes of making the
calculations required by this Section 13(b), the Tax Counsel 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 Corporation and the Employee shall furnish to the
Tax Counsel such information and documents as the Tax Counsel may reasonably
request in order to make a determination under this Section 13(b). The
Corporation shall bear all costs the Tax Counsel may reasonably incur in
connection with any calculations contemplated by this Section 13(b).

 

Section 14. Confidential Information

 

Executive hereby confirms his obligations under that certain Confidentiality and
Inventions and Assignment Agreement (“CIAA”) dated September 7, 2000 and entered
into between the Executive and the Corporation.

 

Section 15. Successors

 

(a) Corporation’s Successors. The Corporation shall require any successor
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Corporation’s business and/or assets, by an agreement in substance and form
satisfactory to the Executive, to assume this Agreement and to agree expressly
to perform this Agreement in the same manner and to the same extent as the
Corporation would be required to perform it in the absence of a succession. The
Corporation’s failure to obtain such agreement prior to the effectiveness of a
succession shall be a breach of this Agreement and shall entitle the Executive
to all of the compensation and benefits to which the Executive would have been
entitled hereunder if the Corporation had involuntarily terminated the
Executive’s employment without Cause or Disability, on the date when such
succession becomes effective. For all purposes under this Agreement, the term
“Corporation” shall include any successor to the Corporation’s business

 

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and/or assets that executes and delivers the assumption agreement described in
this Section 15(a) or that becomes bound by this Agreement by operation of law.

 

(b) Executive’s Successors. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of, and be enforceable by, the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

 

Section 16. Miscellaneous Provisions

 

(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Executive and by an authorized officer of the Corporation
(other than the Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

 

(b) Whole Agreement. Except for the CIAA, the Restricted Stock Bonus Agreement
dated as of December 20, 2002, between the Corporation and the Executive, the
Memorandum relating to Stock Option Cancellation and Options Agreement dated
August 7, 2002, from the Compensation Committee of the Board to the Executive,
there are no agreements, representations or understandings (whether oral or
written and whether express or implied) between the parties with respect to the
subject matter hereof that are not expressly set forth in this Agreement. In
addition, the Executive hereby acknowledges and agrees that this Agreement and
the agreements listed above, supersede in their entirety any agreements between
the Executive and the Corporation in effect immediately prior to the effective
date of this Agreement. As of the Effective Date, any such agreement shall
terminate without any further obligation by either party thereto, and the
Executive hereby relinquishes any further rights that the Executive may have had
under any such prior agreement.

 

(c) Notice. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of the Executive, mailed notices
shall be addressed to the Executive at the home address that the Executive most
recently communicated to the Corporation in writing. In the case of the
Corporation, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of the Board.

 

(d) No Setoff. Except as provided in Section 10, there shall be no right of
setoff or counterclaim, with respect to any claim, debt or obligation, against
payments to the Executive under this Agreement.

 

(e) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the State of
California, irrespective of California’s choice-of-law principles.

 

(f) Severability; Specific Performance. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect. If in the opinion of any court of

 

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competent jurisdiction the covenants in Sections 10(d) or 14 of this Agreement
are not reasonable in any respect, such court shall have the right, power and
authority to, and it is the parties intent that such court, excise or modify
such provision or provisions of any covenant that the court believes is not
reasonable and to enforce the remainder of any such covenant as so amended. Any
breach of the covenants contained in Sections 10(d) and 14 would irreparably
injure the Corporation.

 

(g) Arbitration. Except as otherwise provided in Section 13 and in the
enforcement of Section 10(d) or 14 (in which case the Corporation may seek
specific performance of covenants from a court of competent jurisdiction, and
the parties hereby exclusively submit and consent to the jurisdiction and venue
of the federal and state courts located in Santa Clara County, California), any
dispute or controversy arising out of the Executive’s employment or the
termination thereof, including, but not limited to, any claim of discrimination
under state or federal law, shall be settled exclusively by arbitration in Palo
Alto, California, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award in
any court having jurisdiction.

 

(h) No Assignment of Benefits. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor’s
process, and any action in violation of this Section 16(h) shall be void.

 

(i) Limitation of Remedies. If the Executive’s employment terminates for any
reason, the Executive shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement.

 

(j) Withholding Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable taxes.

 

(k) Benefit Coverage Non-Additive. In the event that the Executive is entitled
to life insurance and health plan coverage under more than one provision
hereunder or under any other plan, policy, or arrangement of the Corporation,
only one provision shall apply, and neither the periods of coverage nor the
amounts of benefits shall be additive.

 

(l) Discharge of Responsibility. The payments under this Agreement, when made in
accordance with the terms of this Agreement shall fully discharge all
responsibilities of the Corporation to the Executive that existed at the time of
termination of the Executive’s employment.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Corporation by its duly authorized officer, as of the day and year first
above written.

 

EXECUTIVE

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Donald Listwin

 

OPENWAVE SYSTEMS INC.

 

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Bernard Puckett,

Chairman of the Board of Directors, on behalf of the Compensation Committee of
the Board of Directors

 

 

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