IPass, the Redwood City developer of business-mobility software whose board has spent much of the last two years struggling with large and disgruntled investors, has agreed to “take steps to return to shareholders” up to $40 million, according to a deal it has reached with Foxhill Master Fund. Foxhill, which owns about 7 percent of iPass’s outstanding shares, had launched a proxy battle to declassify the iPass board, forcing all directors to stand for re-election each year rather than serving in various overlapping terms. It also nominated three people of its own choosing to serve on the iPass board.
One of the three, Kenneth Traub, has been elected to the iPass board, which also agreed as part of its settlement with Foxhill to appoint a second new director, Gary Griffiths, to the board shortly after the company’s 2009 annual meeting following the resignation one of its current directors.
Griffith, who was not among the dissident slate originally nominated by Foxhill, is chairman and chief executive of 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 in charge of operations at Web-EX prior to its acquisition by Cisco.
The board at iPass agreed to continue to advocate in favor of the declassification of the board and to pay up to $150,000 to cover Foxhill’s expenses related to its proxy battle.
The $40 million is designed to be distributed in two stages, with $20 million set to be paid “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 second half of the money would be returned by the end of this year through a tender offer, cash dividend or other form determined by the board of directors, subject to certain conditions, including an approval vote of the shareholders and the assurance by legal counsel that such payment would not breach the board’s fiduciary duty.