form8foxhillagreementex10_1.htm


    Exhibit
10.1

     

    Dated: 
June 3, 2009

    iPass
Inc.

    3800
Bridge Parkway

    Redwood
Shores, California  94065

    


    June 2,
2009

    


    Foxhill
Opportunity Master Fund, L.P.

    c/o
Foxhill Capital Partners LLC

    502
Carnegie Center, Suite 104

    Princeton,
New Jersey 08540

    Attention:  Neil
Weiner

    


         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”):

    


    
      	
              1.  

            	
              Mr.
      Kenneth H. Traub 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”).  Mr. Traub 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.  Mr. Traub will also be
      appointed to the Corporate Governance and Nominating Committee and
      Compensation Committee of the Board.  Mr. Traub will be the
      initial Foxhill Designee (as that term is defined below).  Evan
      Kaplan will be moved into the class of directors the term of which expires
      at the 2010 annual meeting of stockholders (the “2010 Annual
      Meeting”).

            


    

    


    
      	
              2.  

            	
              iPass
      hereby covenants and agrees that, provided that Mr. Traub delivers to
      iPass the conditional resignation required by iPass’ bylaws, Mr. Traub
      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 Mr. Traub delivers to iPass the conditional resignation
      required by iPass’ bylaws, (i) the Board shall recommend that iPass’
      stockholders vote in favor of Mr. Traub at the 2009 Annual Meeting and
      (ii) iPass shall solicit proxies for the election of Mr. Traub at the 2009
      Annual Meeting.

            


    

    


    
      	
              3.  

            	
              Olof
      Pripp 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 Gary Griffith 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.

            


    

    


    
      	
              4.  

            	
              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.

            


    

    


    
      	
              5.  

            	
              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 Mr. Traub
      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, Mr.
      Traub and any replacement director shall each be deemed a “Foxhill
      Designee”.

            


    

    


    
      	
              6.  

            	
              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):

            


    

    


    
      	
               
      

            	
              (a)

            	
              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);

            


    

    


    
      	
               
      

            	
              (b)

            	
              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

            


    

    


    
      	
               
      

            	
              (c)

            	
              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.

            


    

    


    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.

    


    
      	
              7.  

            	
              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.

            


    

    


    
      	
              8.  

            	
              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.

            


    

    


    
      	
              9.  

            	
              The
      Board will, subject to the limitations set forth in this paragraph 9,
      return capital to iPass stockholders as
follows:

            


    

    


    
      	
               
      

            	
              a.

            	
              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;

            


    

    


    
      	
               
      

            	
              b.

            	
              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

            


    

    


    
      	
               
      

            	
              c.

            	
              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.

            


    

    


    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.

    


    
      	
              10.  

            	
              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.

            


    

    


    
      	
              11.  

            	
              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.

            


    

    


    
      	
              12.  

            	
              Promptly
      after the execution of this Agreement, iPass and Foxhill will issue a
      joint press release in the form attached hereto as Schedule
      A.

            


    

    


    
      	
              13.  

            	
              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.

            


    

    


    
      	
              14.  

            	
              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.

            


    

    


    
      	
              15.  

            	
              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.

            


    

    


    
      	
              16.  

            	
              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.

            


    

     

    If you
are in agreement please sign below.

    


    Very truly yours,

    


    iPass
Inc.

    


    


    


    By:  /s/Evan
Kaplan

        Evan
Kaplan

        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/Neil
Weiner

        Neil
Weiner

        Managing
Member

    


    Foxhill
Opportunity Fund, L.P.

    


    By:  Foxhill
Capital (GP), LLC

    its general partner

    


    By:    /s/Neil
Weiner

        Neil
Weiner

        Managing
Member

    


    Foxhill
Opportunity Offshore Fund, LTD.

    


    


    By:   
/s/Neil
Weiner

        Neil
Weiner

        Director

    


    Foxhill
Capital (GP), LLC

    


    


    By:    /s/Neil
Weiner

        Neil
Weiner

        Managing
Member

    


    


    Foxhill
Capital Partners, LLC

    


    By:   
/s/Neil
Weiner

        Neil
Weiner

        Managing
Member

    


     

    /s/Neil
Weiner

    Neil
Weiner


    

      
        
           


        

        
           


          
            

          

        

        
           


        

      


      Schedule
A

      


      Press
Release

      


      
        	
                Editorial
      Contacts

                Investor
      Relations

                ir@iPass.com

                650-232-4113

              	 
      


      

      


      


      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, Kenneth H. Traub, 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.

      


      Mr.
Traub, 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.  Mr. Traub is a private investor and
strategic management consultant. Mr. Traub 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. Mr. Traub
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 Gary Griffiths to the board of
directors, following the resignation of an incumbent director after the 2009
annual meeting.  Mr. Griffiths will be nominated at or shortly
following the 2009 annual meeting.  With the election of this
candidate and of Mr. Traub, 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.

      


      Gary
Griffiths is chairman and CEO of LiteScape Technologies, a private company that
develops and sells VoIP and mobile software applications. Prior to joining
LiteScape, Gary was a vice president at Cisco and President of Product and
Operations at Web-EX prior to its acquisition by Cisco. Griffiths is a
thirty–five year veteran of the high–tech industry.  Griffiths 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. Gary held senior management positions with IBM for more than 16
years. A graduate of the United States Naval Academy, Gary 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. Gary has a B.S. in
Aerospace Engineering from the United States Naval Academy and an M.S. in
business administration from the George Washington 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
Evan Kaplan, 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.”

      


      Neil
Weiner, 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.” Mr.
Weiner added, “We are encouraged by the board’s responsiveness to stockholders
and believe Mr. Traub and Mr. Griffiths 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 www.sec.gov. 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 www.sec.gov. 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.