Exhibit 10.3
September 12, 2005
EMPLOYMENT TRANSITION &
RELEASE AGREEMENT
This Employment Transition and
Release Agreement (“Agreement”) by and between Openwave
Systems Inc. (the “Company” or “Openwave”),
and Joshua Pace (“Employee”) is made on September 12,
2005, but effective as of September 30, 2005 (the “Effective
Date”).
Factual Recitals
A. Employee is currently employed by
the Company as the Senior Vice President and Chief Financial
Officer, and Employee and the Company have mutually decided to
transition Employee’s employment from the Effective Date
through December 31, 2006, and then to terminate Employee’s
employment with the Company effective at close of business on
December 31, 2006;
B. The Company and Employee have
entered into the following agreements (collectively, the
“Pre-existing Agreements”) which were in force and
effect just prior to entry into this Agreement:
Employment Offer Letter Agreement
dated February 28, 2005 (“Employment Letter
Agreement”).
Confidential Information and
Invention Assignment Agreement (the “Confidentiality
Agreement”) dated April 24, 2003 (“Confidentiality
Agreement”);
Indemnification Agreement by and
between the Company and Executive dated August 14, 2002
(“Indemnification Agreement”); and
Change of Control Severance
Agreement dated July 27, 2004 (“Change of Control
Agreement”).
C. Employee is a potential
beneficiary under the Company’s Executive Severance
Policy.
D. In lieu of the Company’s
obligations to make any payments to Employee under the Pre-existing
Agreements, the Executive Severance Policy, and any other
agreement, plan, program, policy or arrangement, except as
otherwise expressly set forth below, the parties have agreed to the
terms set forth in this Agreement.
NOW THEREFORE, in consideration of
the mutual promises made herein, the Company and Employee
(collectively referred to as “the Parties”) hereby
agree as follows:
A. Final and
ExclusiveAgreement. This Agreement supersedes the Employment
Letter Agreement, the Change of Control Agreement, and all other
agreements, plans, programs, policies, and arrangements relating to
the terms of Employee’s employment, including the amendment
or termination of such terms. Notwithstanding the foregoing, the
Indemnification Agreement and the Confidentiality Agreement shall
remain in full force and effect according to their
terms.
September 12, 2005
B. Resignation and Transition
Period . Employee hereby resigns as the Chief Financial Officer
of the Company on September 30, 2005. From October 1, 2005 through
December 31, 2005 (the “Initial Transition Period”),
subject to the effectiveness of Employee’s release of all
claims in substantially the form attached hereto as Exhibit
B (as described in Section H below) and Employee’s
attendance at one or more meetings prior to October 1, 2005 at a
time mutually convenient to the Company and Employee in order to
address transitional administrative matters, Employee will serve as
an non-officer employee-advisor to the Chief Financial Officer of
the Company, with such responsibilities and duties as the Chief
Executive Officer or the Chief Financial Officer of the Company
shall assign. Employee will be available for up to 40 hours of work
per week as needed during normal business hours (defined as 9 AM to
5 PM (Pacific Standard Time) on each Monday through Friday,
excluding Company holidays) and when reasonably necessary during
non-normal business hours. During the Initial Transition Period,
Employee will continue to earn his full base salary at the rate of
$27,500 per month (or $330,000 on an annualized basis, the
“Base Salary”), paid semi-monthly in accordance with
the Company’s normal payroll practices. Employee will
continue to receive standard company benefits available to
employees, including without limitation, health care insurance,
vacation accrual, life insurance, and disability insurance.
Employee shall also continue to vest in his stock options and
restricted stock during the Initial Transition Period. The Parties
agree that set forth at Exhibit A is an accurate summary of
Employee’s outstanding options to purchase common stock of
the Company and grants of shares of restricted common stock of the
Company (such options and grants, the “Equity Awards”).
During the Initial Transition Period, Employee will continue to be
eligible to participate in the Company’s Corporate Incentive
Plan (“CIP”) with a target bonus of 60% of his Base
Salary. In addition, Employee will be paid that one-time bonus in
the amount of one hundred fifty thousand dollars ($150,000.00)
described in the Employment Letter Agreement as soon as
administratively reasonable following the Effective Date of this
Agreement. Employee will not be eligible to participate in the CIP
or other Company bonus program during fiscal year 2006 other than
as expressly described herein.
From January 1, 2006 through
December 31, 2006, (the “Subsequent Transition
Period”), Employee will serve as a part-time employee, with
such responsibilities as the Chief Financial Officer of the Company
shall reasonably assign. Employee will be available for up to 40
hours per month as may be reasonably requested by the Company.
During the Subsequent Transition Period, Employee will continue to
earn his Base Salary plus an incentive bonus equal to 60% of his
Base Salary regardless of actual Company performance paid
semi-monthly in accordance with the Company’s normal payroll
practices (or a total of $22,000 per semi-monthly payroll period).
Employee will receive those standard company benefits available to
similarly situated part-time employees of the Company and
understands that he is not likely to be eligible for group health
coverage; provided, however, that Employee will not earn or accrue
any additional vacation time or floating holiday time for calendar
year 2006. In the event that Employee is not eligible for group
health coverage, the Company shall, at Company’s expense,
provide Employee and his eligible dependents with medical, dental
and vision insurance benefit coverage in accordance with the
requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985 (“COBRA Coverage”), providing Employee
timely executes and delivers all necessary COBRA Coverage election
documentation which will be sent to Employee promptly after
the commencement of the Subsequent Transition Period. Such
Company-paid COBRA Coverage shall continue until the earlier of (1)
the Subsequent Transition Period and (2) the time that Employee is
no longer eligible for COBRA Coverage. Thereafter, if Employee
wishes to continue COBRA Coverage and is eligible to do so,
Employee will be required to pay all requisite premiums for such
continued coverage. Nothing in this Agreement shall be intended to
affect Employee’s rights to COBRA Coverage or any other law
establishing Employee’s rights to health care continuation
coverage. Employee shall also continue to vest in his Equity Awards
during the Subsequent Transition Period.
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September 12, 2005
Any references in this Agreement to
the “Transition Period” shall refer to both the Initial
Transition Period and the Subsequent Transition Period.
C. Final Date of Employment; Exit
Interview . Employee’s employment with the Company will
end at 5 PM (Pacific Standard Time) on December 31, 2006
(“Final Date of Employment”). On or immediately prior
to Employee’s Final Date of Employment, Employee agrees to
execute an effective release of claims substantially in the form
attached as Exhibit C (as further described in Section H
below) and the Company will pay Employee all salary, wages,
bonuses, accrued but unused vacation and floating holidays, if any,
commissions and any and all other cash compensation due to Employee
through and including the Final Date of Employment. Employee agrees
to schedule and attend an exit interview with the Company’s
human resources department on or prior to December 31, 2006.
Employee also agrees to return all Company equipment, and all other
Company property in his possession or control at or prior to the
exit interview, or in any event, if for any reason no such
interview takes place, on or before the Final Date of
Employment.
D. Separation Compensation .
Employee’s employment during the Transition Period will
continue to be on an at-will basis. If at any time during the
Transition Period, Employee terminates his employment for any
reason or if his employment is terminated by the Company for
“Cause” (as defined below), Employee’s Equity
Awards will immediately cease vesting and, upon payment of any
accrued but unpaid Base Salary and paid time off, Employee will
have no further rights to any payments or benefits from the
Company, other than pursuant to the Indemnification Agreement or as
otherwise required under applicable law. If, prior to the Final
Date of Employment, Employee’s employment is terminated by
the Company without Cause (such termination date, the
“Separation Date”), and subject to Employee’s
execution of an effective release of claims substantially in the
form attached as Exhibit C and continued compliance with all
of the restrictive covenants set forth or referred to in Section F
below and Exhibit D hereto, the Company will provide
Employee with the following:
1. From the Separation Date through
December 31, 2006 (the “Severance Period”), the Company
will continue to pay Employee his Base Salary in semi-monthly
payments, subject to withholding for customary payroll and income
taxes.
2. During the Severance Period, the
Company shall, at Company’s expense, provide Employee and his
eligible dependents with medical, dental and vision insurance
benefit coverage in accordance with the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA Coverage”), providing Employee timely
executes and delivers all necessary COBRA Coverage election
documentation which will be sent to Employee promptly after
Employee’s Separation Date. Thereafter, if Employee wishes to
continue COBRA Coverage, Employee will be required to pay all
requisite premiums for such continued coverage.
3. The vesting of Employee’s
unvested Equity Awards shall be accelerated such that, as of the
Separation Date, Employee will be vested in that number of shares
subject to the Equity Awards as he would have been had his
employment with the Company continued until December 31, 2006.
Employee shall have the time period set forth in the applicable
stock option agreement and plan, to exercise any stock options that
are vested as of the Separation Date. Employee acknowledges that
generally options issued by the Company expire within ninety (90)
days or three (3) months after termination of employment, which in
Employee’s case shall be within ninety (90) days or three (3)
months after the Separation Date. Upon their expiration, such
options may no longer be exercised and automatically become void
and of no further force or effect.
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September 12, 2005
If Employee shall fail to comply in
all material respects with any of the restrictive covenants set
forth in or referred to in Section F below and Exhibit D
hereto, and if such failure shall continue for a period of 10 days
following written notice to Employee from the Company of such
failure, the Company shall be permitted, along with all other
remedies available to the Company to correct or compensate for such
a violation, to immediately cease making any further payments under
this Section D, to immediately cease providing any further benefits
under this Section D and to confirm that all Equity Awards shall
immediately expire (with any unvested shares of the Company’s
common stock subject to such Equity Awards to be returned to the
Company), and to require Employee to return to the Company any
amounts or benefits pre
