UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549


_______________





Form
10-K/A


Amendment
No. 1





(Mark
One)





R
                ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT
      OF 1934For
      the fiscal year ended December 31, 2008OR£
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934For
      the transition period from
                to





Commission
File Number: 000-50327


_______________





iPass
Inc.


(Exact
name of Registrant as specified in its charter)


_______________





Delaware
              93-1214598(State
      or Other Jurisdiction
              (I.R.S.
      Employerof
      Incorporation or Organization)
              Identification
      No.)





3800
Bridge Parkway


Redwood
Shores, California 94065


(Address
of principal executive offices) (Zip Code)








Registrant’s
telephone number, including area code: (650) 232-4100


_______________





Securities
registered pursuant to Section 12(b) of the Act:





Title
      of Each Class
              Name
      of Each Exchange on Which RegisteredCommon
      Stock, $0.001 Per Share Par Value
              NASDAQ
      Global Market





Securities
registered pursuant to Section 12(g) of the Act:


None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes £ No R





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes £ No R







1




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes R No £





Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes £ No £





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. £





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
 See the definitions of large “accelerated filer”, large accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):




Large
      accelerated filer £
              
              Accelerated
      filer RNon-accelerated
      filer £ (Do
      not check if a smaller reporting Company)
              
              Smaller
      reporting company £





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes £ No R





Aggregate
market value of the registrant’s common stock held by non-affiliates of the
registrant, based upon the closing price of a share of the registrant’s common
stock on June 30, 2008 as reported by the Nasdaq Global Market on that date:
$90,858,050.  The determination of affiliate status for the purposes
of this calculation is not necessarily a conclusive determination for other
purposes. The calculation excludes approximately 18,841,756 shares held by
directors, officers and stockholders whose ownership exceeded five percent of
the registrant’s outstanding Common Stock as of June 30, 2008. Exclusion of
these shares should not be construed to indicate that such person controls, is
controlled by or is under common control with the registrant.





The
number of shares outstanding of the Registrant’s Common Stock, $0.001 par value,
as of March 1, 2009 was 62,618,093.


2




EXPLANATORY NOTE: This
Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) amends the
Registrant’s Annual Report on Form 10-K, as filed by the Registrant on March 16,
2009 (the “Report”), and is being filed solely to replace Part III, Item 10
through Item 14. The reference on the cover of the Report to the
incorporation by reference of the Registrant’s Definitive Proxy Statement into
Part III of the Report is hereby amended to delete that reference. Except as
otherwise stated herein, no other information contained in the Report has been
updated by this Amendment No. 1, except the outstanding number of shares of
the Registrant’s common stock, as reflected on the cover page. In addition,
we are also including Exhibits 31.1 and 31.2 required by the filing of this
Amendment No. 1.




3




iPASSINC.


FORM
10-K/A


FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2008


Amendment
No. 1





TABLE
OF CONTENTS






PART
      IIIItem
      10.
                          
                          Directors, Executive Officers and Corporate
      Governance
                          
                          5Item
      11.
                          
                          Executive Compensation
                          
                          8Item
      12.
                          
                          Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
                          
                          28Item
      13.
                          
                          Certain Relationships and Related Transactions, and Director
      Independence
                          
                          30Item
      14.
                          
                          Principal Accounting Fees and Services
                          
                          31Signatures
                          
                          32


4
 Table of Contents


This
Amendment No. 1 contains forward-looking statements regarding future events and
our future results that are based on current expectations, estimates, forecasts,
and projections about the industries in which we operate and the beliefs and
assumptions of our management. Words such as “expects,” “anticipates,”
“targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” variations of such words, and similar expressions are intended to
identify such forward-looking statements. In addition, any statements which
refer to projections of our future financial performance, our anticipated growth
and trends in our business, and other characterizations of future events or
circumstances, are forward-looking statements. Readers are cautioned that these
forward-looking statements are only predictions and are subject to risks,
uncertainties, and assumptions that are difficult to predict. Therefore, actual
results may differ materially and adversely from those expressed in any
forward-looking statements. Readers are directed to risks and uncertainties
identified below, under “Item 1A. Risk Factors” and elsewhere in this Form 10-K,
for factors that may cause actual results to be different than those expressed
in these forward-looking statements. Any forward-looking statement speaks only
as of the date on which it is made, and except as required by law, we undertake
no obligation to revise or update publicly any forward-looking statements for
any reason.







PART
III





Item10.
            Directors,
      Executive Officers and Corporate
Governance




Set forth
below is information regarding our directors and executive officers as of April
1, 2009.




Name
              
              Age
              
              PositionEvan
      L. Kaplan
              
              49
              
              President,
      Chief Executive Officer and DirectorAllan
      R. Spies
              
              60
              
              DirectorPeter
      G. Bodine
              
              46
              
              DirectorArthur
      C. Patterson
              
              65
              
              DirectorA.
      Gary Ames
              
              64
              
              DirectorJohn
      D. Beletic
              
              57
              
              Chairman
      of the Board and DirectorPeter
      C. Clapman
              
              73
              
              DirectorStanley
      P. Gold
              
              66
              
              DirectorOlof
      Pripp
              
              50
              
              DirectorRobert
      J. Majteles
              
              44
              
              Nominee
      for DirectorFrank
      E. Verdecanna
              
              38
              
              Vice
      President and Chief Financial OfficerJohn
      C. Charters
              
              47
              
              Chief
      Operating OfficerJavendra
      Patel
              
              52
              
              Senior
      Vice President, Product
Development







Evan L. Kaplan has served as
our President and Chief Executive Officer, and as a member of our Board of
Directors, since November 2008.  From February 1996 to July 2007, Mr.
Kaplan served as founder, President, Chief Executive Officer and Chairman of
Aventail Corporation, a pioneer in the virtual private networking (VPN)
equipment and services market and a long time strategic partner of iPass
Inc.  After Aventail was acquired by SonicWALL, Inc., an IT security
and data backup and recovery solution company in 2007, Mr. Kaplan remained with
SonicWALL from July 2007 until January 2008 as Vice President of Business
Development. From January
2008 until July 2008, Mr. Kaplan was on extended vacation with his
family.  From July 2008 until November 2008, Mr. Kaplan acted as a
consultant to iPass.




Allan R. Spies has served as
a member of our Board of Directors since December 2002, and as our lead
independent director from February 2007 until October 2008.  From 1997
until his retirement in June 2000, Mr. Spies served as Executive Vice President
and Chief Financial Officer of US West Communications, a telecommunications
company that was acquired by Qwest Communications International, Inc. in June
2000.  Mr. Spies also serves on the board of InfoNow Corporation, a
provider of enterprise channel management software.




Peter G. Bodine has served as
a member of our Board of Directors since November 1998.  Mr. Bodine
has served as a general partner of APV Technology Partners, a venture capital
firm, since 1994 and as a managing director of Allegis Capital, LLC,a venture capital firm,
since 2006.  He served as Executive Vice President of Asia Pacific
Ventures, a consulting and advisory firm, from December 1992 until October
2005.




5
 Table of Contents


Arthur C. Patterson has
served as a member of our Board of Directors since December 1996.  Mr.
Patterson is a general partner of Accel Partners, a venture capital firm that he
founded in 1983.  Mr. Patterson also serves on the board of Actuate
Corporation, an enterprise reporting software company and MetroPCS
Communications, Inc., a wireless communications company.




A. Gary Ames has served as a
member of our Board of Directors since July 2002.  From July 1995
until his retirement in June 2000, Mr. Ames served as President and Chief
Executive Officer of MediaOne International, a broadband and wireless
company.  Mr. Ames serves on the boards of SuperValu, Inc., a food and
drug retailer, and F5 Networks, Inc., an application traffic management
company.




John D. Beletichas served as
a member of our Board of Directors since November 1999 and as our Chairman since
November 2008.  Since July 2002 he has been a venture partner with Oak
Investment Partners, a venture capital firm.  He also serves as
Chairman of Fiber Tower Inc., a provider of wireless backhaul services to mobile
network carriers, where he previously served from August 2006 to September 2008
as Executive Chairman.  From July 2002 to September 2004, Mr. Beletic
also served as Executive Chairman of Oculan Corporation, a network monitoring
and intrusion detection company.  From August 1994 until December
2001, Mr. Beletic served as Chief Executive Officer and Chairman of the Board of
PageMart Inc., a wireless messaging service, and Weblink Wireless, Inc., a
communications service company.  Previously, Mr. Beletic was Chairman
and CEO of Tigon Corporation, a voicemail service provider, which was acquired
by Ameritech Corporation, a telecommunications company.  Mr. Beletic
also serves on the board of Tessco Technologies, a wireless technology
provider.




Peter C. Clapman has served
as a member of our Board of Directors since February 2007.  From
November 1972 to July 2005, he served as senior vice president and chief counsel
for TIAA-CREF (Teachers Insurance and Annuity Association of America and College
Retirement and Equities Fund), an investment fund.  Mr. Clapman serves
as the independent chairman of the board of trustees of the AARP mutual
funds.  Mr. Clapman also serves as a board member of the National
Association of Corporate Directors and on its Governance Committee.




Stanley P. Gold has served as
a member of our Board of Directors since March 2008.  Mr. Gold also
serves as President and Chief Executive Officer of Shamrock Holdings, Inc.
(“SHI”), a diversified investment company owned by the Roy E. Disney
family.  He also serves as an executive officer of certain
subsidiaries of SHI, including Shamrock Holdings of California, Inc., and
Shamrock Capital Advisors, Inc. Prior to joining SHI in 1978, Mr. Gold was a
partner in the law firm of Gang, Tyre, Ramer & Brown.  Mr. Gold
serves as a member of the Board of Trustees for the University of Southern
California; Chairman of the Board of the Jewish Federation of Greater Los
Angeles; and as a member of the Board of Governors of the Hebrew Union
College-Jewish Institute of Religions.  He has previously served as a
director of The Walt Disney Company; Ansell, Ltd.; and Enterra
Corporation.




Olof Pripphas served as a
member of our Board of Directors since April 2006. Mr. Pripp has served as
a consultant with Spencer Stuart, a global executive search firm, since January
2008, and prior to this, he served as the Managing Partner of
Heidrick & Struggles European Chief Information Officer practice since
October 2005. Mr. Pripp has served as a Partner of IBM Business Consulting
Services SA in Geneva, Switzerland since October 2002. In this role, he has
acted as the Global Relationship Partner for one of IBM’s largest service
accounts worldwide. From 1989 to September 2002, Mr. Pripp served in a
variety of capacities at PwC Consulting, most recently as a Partner and Global
Technology Industry Leader.




Robert J. Majteles has served
as the managing partner of Treehouse Capital LLC, an investment firm, since
2001.  Mr. Majteles currently sits on the boards of directors of
Macrovision Solutions Corporation, a digital entertainment technology company,
U.S. Auto Parts Network, Inc., an ecommerce company focused on auto parts, Unify
Corporation, a business software and services company, Comarco, Inc, a company
focused on the design and manufacture of mobile power devices, and Adept
Technology, Inc., a robotics systems and services company.  In
addition, Mr. Majteles is a Lecturer at U.C. Berkeley, at both the graduate and
undergraduate levels.  Mr. Majteles holds a B.A. from Columbia
University and a J.D. from Stanford University.  Mr. Majteles has
consented to serve as a director of iPass if elected at iPass’ 2009 Annual
Meeting of Stockholders.




Frank E. Verdecanna has
served as our Vice President and Chief Financial Officer since December
2005.  From July 2005 to December 2005, Mr. Verdecanna served as our
Vice President and Interim Chief Financial Officer.  In December 2004,
Mr. Verdecanna was appointed as Vice President in addition to his role as
Corporate Controller.  Mr. Verdecanna was appointed Principal
Accounting Officer by our Board of Directors in January 2003 and joined us in
October 2000 as Corporate Controller.  Prior to joining us, Mr.
Verdecanna was Vice President and Chief Financial Officer for Impact Hire, Inc.,
a recruiting software and service provider, from October 1999 to October
2000.  From November 1996 to June 1999, Mr. Verdecanna served in
various positions, most recently, as Corporate Controller for Interlink Computer
Sciences, Inc., a public enterprise software company until its acquisition by
Sterling Software, Inc. From December 1993 to November 1996, Mr. Verdecanna
worked for Coopers and Lybrand L.L.P., leaving as a senior
associate.




6
 Table of Contents




John C. Charters has served
as our Chief Operating Officer since November 2004.  From July 2003 to
November 2004, Mr. Charters served as the Chief Executive Officer of the
Charters Group, an independent consulting services company.  From
April 2002 until July 2003, Mr. Charters served as the Chief Executive Officer
of Expanets Communications, a majority owned subsidiary of Northwestern
Corporation and a reseller of voice and data equipment.  In September
2003, Northwestern Corporation voluntarily filed for bankruptcy.  From
December 1999 until February 2002, Mr. Charters served as a Founder and Chief
Executive Officer of Qwest CyberSolutions, a joint venture formed by Qwest
Communications and KPMG Consulting and a provider of complex business
applications hosting and management services nationwide.  Mr. Charters
was the subject of a broad SEC investigation that included his activities while
at Expanets, Inc., a subsidiary of Northwestern Corporation, alleging that Mr.
Charters had partial responsibility for material misrepresentations and
omissions in Northwestern’s public filings with the SEC and in other public
statements.  Mr. Charters was employed at Expanets from April 2002 to
July 2003.  In 2007, Mr. Charters settled a civil action brought by
the SEC without admitting or denying guilt.  In connection with the
settlement, Mr. Charters paid a civil penalty of $50,000.




Javendra Patelhas served as
our Senior Vice President of Product Development since March
2009.  From August 2001 to June 2008, Mr. Patel was Vice President of
Engineering at VeriSign, an infrastructure services company.  Prior to
his appointment to Vice President at VeriSign, Mr. Patel held various positions
with increasing responsibilities at VeriSign, starting in March
1997.  Earlier in his career, Mr. Patel was employed at Taligent, a
software development company, Apple Computer, Inc., a consumer electronics and
software company, Daisy Systems Corporation, a computer-aided engineering
company, and Visual Edge Software Ltd., a software development
company.  Mr. Patel holds an M.S. in Computer Science from Case
Western Reserve University.




Section
16(A) Beneficial Ownership Reporting Compliance




Section
16(a) of the Securities Exchange Act of 1934, or the 1934 Act, requires iPass’
directors and executive officers, and persons who own more than ten percent of a
registered class of iPass’ equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of common stock and
other equity securities of iPass.  Officers, directors and greater
than ten percent stockholders are required by SEC regulation to furnish iPass
with copies of all Section 16(a) forms they file.




To iPass’ knowledge, based solely on a review of the copies of such reports
furnished to iPass, during the fiscal year ended December 31, 2008, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with, except as
follows:  Each of Kenneth D. Denman, John C. Charters, Anurag Lal,
Bruce K Posey, Frank Verdecanna, Joel Wachtler and Michael J. McConnell filed
one Form 4 one day late.




Code
of Conduct and Ethics




We have
adopted a code of conduct and ethics that applies to all members of our Board of
Directors and employees, including the principal executive officer, principal
financial officer and principal accounting officer.  This code of
conduct and ethics is posted on our Website.  The Internet address for
our Website is http://www.ipass.com, and our code of conduct and ethics may be
found as follows:




1.
            From
      our main Web page, first click on
“Investors.”




2.
            Next,
      click on “Corporate Governance.”




3.
            Then,
      click on “Code of Conduct.”




4.
            Finally,
      click on “Code of Conduct and
Ethics.”




We intend
to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding
amendments to, or waivers from, a provision of this code of conduct and ethics
by posting such information on our website, at the address and location noted
above.




7
 Table of Contents




Audit
Committee




The Audit
Committee of the Board of Directors oversees our corporate accounting and
financial reporting process.  For this purpose, the Audit Committee
performs several functions.  The Audit Committee evaluates the
performance of and assesses the qualifications of the independent registered
public accounting firm; determines and approves the engagement of the
independent registered public accounting firm; determines whether to retain or
terminate the existing independent registered public accounting firm or to
appoint and engage a new independent registered public accounting firm; reviews
and approves the retention of the independent registered public accounting firm
to perform any proposed permissible non-audit services; monitors the rotation of
partners of the independent registered public accounting firm on our audit
engagement team as required by law; confers with management and the independent
registered public accounting firm regarding the effectiveness of internal
controls over financial reporting; establishes procedures, as required under
applicable law, for the receipt, retention and treatment of complaints received
by iPass regarding accounting, internal accounting controls or auditing matters
and the confidential and anonymous submission by employees of concerns regarding
questionable accounting or auditing matters; and meets to review our annual
audited financial statements and quarterly financial statements with management
and the independent registered public accounting firm, including reviewing
iPass’ disclosures under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” The Audit Committee met six times during
2008.  Our Audit Committee Charter is available on our website at
www.ipass.com.




The Audit
Committee has three members:  Allan R. Spies (Chairman), A. Gary Ames,
and Olof Pripp.The Board of
Directors has reviewed the Nasdaq listing standards definition of independence
for Audit Committee members and has determined that all members of our Audit
Committee, both in 2008 and currently, are independent (as independence is
currently defined in Rule 5605(c)(2) of the Nasdaq listing
standards).  The Board of Directors has determined that Mr. Spies
qualifies as an “audit committee financial expert,” as defined in applicable
Securities and Exchange Commission (SEC) rules.  The Board of
Directors made a qualitative assessment of Mr. Spies’ level of knowledge and
experience based on a number of factors, including his formal education and
experience as Chief Financial Officer of U.S. West Communications, a
telecommunications company that was acquired by Qwest Communications
International.




Item11.
            Executive
      Compensation





Compensation
Discussion and Analysis




Business
Overview and Strategy




iPass is
a global provider of software-based mobility management services for enterprises
and businesspeople.  In 2008, we pursued a potential sale of the
business.  However, upon careful evaluation of our alternatives, the
Board of Directors determined that it is in the best interest of shareholders to
leverage our current market position as an independent entity by undertaking a
turnaround of the business under new leadership.  Our strategic vision
for iPass is to use our software-enabled virtual network to become the leading
provider of secure enterprise connectivity services worldwide.  We are
pursuing the following tactics in order to achieve this objective:




·
            Expand
      our enterprise and individual customer
base;




·
            Increase
      user penetration within our existing customer
  base;




·
            Continue
      to expand our wireless broadband coverage and service
      offerings;




·
            Continue
      to enhance our virtual network;




·
            Leverage
      and extend our endpoint management capabilities;
  and




·
            Manage
      our network access and operating costs to a reasonable level while we
      pursue revenue growth.




Our
compensation structure supports our business strategy to enhance the value of
our stockholders’ investments.




8
 Table of Contents




Executive
Compensation Philosophy, Principles and Policies




We
operate in a volatile business environment in which competition for executive
talent is intense.  In order to attract, motivate, and retain those
key executive officers with the ability to drive our success, we have
established our compensation program to be competitive with that of other
companies with which we compete for talent, and provide incentives to drive both
short-term and long-term stockholder value.  The philosophy of our
Compensation Committee (the “Committee”) is that we pay for performance, not
merely effort.  As a result, the Committee has established the
following principles and policies to guide the design and operation of our
executive compensation program:




·
            Compensation
      programs must enable us to attract and retain talent from the internet
      software and services industry and technology industries in
      general;




·
            Incentive
      awards should be based on both financial results and strategic goals that
      support the long-term business
objectives;




·
            Incentive
      programs should motivate the right behaviors and reward executive officers
      based on results, not effort; and,




·
            The
      compensation strategy should be straightforward and easy to understand to
      facilitate clear communication of expectations to executive officers and
      transparency with stockholders.




The
Compensation Committee reviews these guidelines periodically to ensure continued
alignment with the business strategy.  For example, while our
philosophy has been that our incentive program should reward both financial
results and the achievement of specific strategic objectives, the Committee
decided to base the 2008 cash incentive program exclusively on financial results
with the intention of fostering greater collaboration among the executive
team.  The achievement of strategic objectives is still considered in
setting compensation levels, although less directly than it had been in the
past.  We discuss the impact of this change on our incentive program
in greater detail under “Quarterly Incentive Program.”




Market
Positioning Philosophy




We target
the 50th percentile, defined as the middle point of relevant peer group and
survey market data (the “50th percentile”), for each element of compensation and
with respect to total compensation.  The Committee has determined this
is an appropriate target market position as it has allowed iPass to attract and
retain the level of talent it believes will improve operational performance and
stockholder value.




The
Committee determines peer group formation, with assistance from Mercer (US) Inc.
(“Mercer”) a consultant retained by the Committee.  Peer companies are
selected primarily based on industry similarity and company size, which is
measured by revenue and market capitalization.  The Committee chooses
industry criteria to produce a set of peer companies that represent a sampling
of executive labor for which iPass competes.  The Committee considers
company size criteria as a proxy for executive job complexity.




In late
2007, the Committee worked with Mercer to review the peer group for future
benchmarking and analysis.  This was done to ensure the peer group
continued to meet the Committee’s selection criteria, but also to address the
fact that certain peers had merged or been acquired and were no longer public
companies.  The peer group used for benchmarking in 2008 was comprised
of United Online Inc, Realnetworks Inc, Infospace Inc, Openwave Systems Inc,
Digital River Inc, Ariba Inc, S1 Corp, Sonicwall Inc, Jupitermedia Corp,
Navisite Inc, Entrust Inc, Saba Software Inc, Tumbleweed Communications Co, and
Web.Com Inc. We do not expect to make any changes to the peer group used for
executive compensation benchmarking in the next fiscal year.




Our
executive compensation philosophy targets the 50th percentile for performance at
a fully proficient level as determined by the Committee.  The program
provides downside risk and upside potential that is aligned with
performance.  Compensation below the 50th percentile is paid if
performance objectives are not met.  Above 50th percentile
compensation may be paid when performance objectives are
exceeded.  Reflecting performance results, the actual compensation
received in 2008 (including incentives paid for 2008 performance and the value
of equity awards granted in 2008) was positioned below the peer group 50th
percentile for all executives.




Role
of CEO and Management in Compensation




On
October 31, 2008, Kenneth D. Denman resigned as the President and Chief
Executive Officer of iPass, and as the Chairman of the Board of Directors,
effective as of the close of business on November 10, 2008.  Effective
immediately following Mr. Denman’s resignation, the Board appointed Evan L.
Kaplan as President and Chief Executive Officer, and as a member of the Board of
Directors.  The Board also elected John D. Beletic as the Chairman of
the Board effective immediately following Mr. Denman’s
resignation.  The Board believes that splitting the role of President
and CEO from the Chairman role in this manner will result in a more effective
governance structure.




9
 Table of Contents




During
their respective periods of employment as CEO of iPass, Mr. Denman and Mr.
Kaplan, in consultation with the Vice President of Human Resources, provided the
Committee with the following:




·
            Input
      on the individual performance of executive
  officers;




·
            Input
      and advice on succession planning
  considerations;




·
            Recommendations
      on the design and structure of quarterly incentive and long-term equity
      incentive compensation;




·
            Information
      on recruiting and hiring trends and key employment statistics;
      and,




·
            Other
      information as requested by the
Committee.




The CEO,
Vice President of Human Resources and General Counsel generally attend Committee
meetings.  However, at each in person meeting the Committee holds an
executive session without management present.  In addition, neither
Mr. Denman or Mr. Kaplan were present during the deliberations or voting with
regards to their own individual compensation packages.




Role
of External Consultant




Mercer
provides information, analyses, and advice regarding executive compensation, as
described below.  At the Committee’s direction, Mercer provided the
following services for the Committee during fiscal 2008:




·
            Evaluated
      the competitive positioning of our executive officers’ base salaries,
      annual incentive and long-term incentive compensation relative to our
      primary peers and the broader
industry;




·
            Advised
      the Committee on Chief Executive Officer and other executive officer
      target award levels within the long-term equity incentive program and, as
      needed, on actual compensation actions, including the new hire
      compensation package offered to Mr.
Kaplan;




·
            Assessed
      the alignment of company compensation levels relative to performance of
      iPass against our primary peers and relative to our articulated
      compensation philosophy;




·
            Briefed
      the Committee on executive compensation trends among our peers and broader
      industry;




·
            Evaluated
      the impact of our equity programs on annual share use, run rate and total
      dilution and provided input on the reasonableness of alternative actions
      related to outstanding and prospective equity
  grants;




·
            Supported
      the Committee with its succession planning activities for the executive
      officer group;




·
            Evaluated
      the current compensation arrangements for Directors and provided
      recommendations for improving the alignment with competitive practices;
      and,




·
            Provided
      ongoing advice as needed.




The
Mercer consultant who performs these services reports directly to the Committee
chair.  Other Mercer or related entity consultants may report directly
to iPass management when performing other services such as providing
non-executive compensation market data.




Competitive
Market Assessments




In order
to ensure alignment of executive compensation with the above internal objectives
and external market practice, we conduct, with assistance from Mercer, an annual
assessment of executive compensation versus market.  This assessment
includes an evaluation of base salary, annual incentive opportunities, and long
term incentives against (1) the compensation practices of the peer group of
companies described above, as disclosed in each company’s annual proxy statement
and (2) broader industry published survey compensation data.  The peer
group data provides highly specific data on executive officer compensation for
all elements of pay, whereas the broader industry published survey data provides
market information on a job-by-job basis.  Mercer typically blends the
two sources of data, as appropriate, to develop a market composite for each of
the executive officers.  The Committee takes the market assessment
into consideration, in concert with other factors, when making decisions
regarding executive compensation design and specific actions.




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Compensation
and Benefits Elements




We use
four core compensation and benefits elements to provide a competitive overall
compensation and benefits package that is tied to creating stockholder value and
supporting the execution of our business strategies, as follows:




·
            Base
      Salary;




·
            Quarterly
      Cash Incentives;




·
            Long-term
      Equity Incentives (which has historically included Stock Options,
      Restricted Stock and Performance Share Awards);
  and




·
            401(k)
      and other benefits also provided to the broader employee
      population.




The
Committee determines the target value of each compensation element primarily
based on data collected during the competitive market assessment.  In
addition to reviewing competitive market values, the Committee considers other
factors in managing target compensation levels each year, including the impact
of equity grants on dilution, the accounting costs associated with certain award
vehicles, the tax implications of various compensation elements for iPass and
executives, and iPass’ cash flow requirements.




Base
salary is intended to directly compensate executives for the time and service
they provide in their respective roles.  The Committee establishes the
Quarterly Cash Incentive as a variable pay component intended to reward
executives for the achievement of iPass’ short-term
objectives.  Long-term Equity Incentives also provide variable
compensation which the Committee grants to motivate and reward executives for
the achievement of iPass’ long-term objectives, including the creation of
shareholder value.  The 401(k) and other benefits provided to
executives are intended to provide them with competitive retirement benefits and
health and welfare protections.




The
target opportunity for the Quarterly Cash Incentive is stated as a fixed dollar
amount.  The short-term variable component increases at higher salary
levels, as both an absolute amount and as a percentage of the total compensation
package.  Equity awards are not directly linked to other pay
components, but in general the value of equity awards and the percentage of
total compensation such awards represent also increase at higher salary
levels.  Some benefit values (such as retirement earnings) are linked
to salary, but benefit contribution rates do not vary based on pay or level in
the organization.




In sum,
the Committee establishes the total reward package with the intent to provide a
competitive level of compensation and benefits to executives, while placing an
increasing emphasis on variable pay for performance at more senior levels in the
organization.  The emphasis on long-term compensation versus
short-term compensation (and the emphasis on equity rewards versus cash
compensation), also increase at more senior levels.  The specific
purpose and mechanics of each compensation element is described in more detail
below.




The
Committee may also take into consideration factors specific to the individual
executive officer, such as individual performance, past compensation and
relative positioning to other executives within iPass when taking specific
actions relating to compensation.  For example, the Committee
considers historical compensation outcomes (such as expected gain on unvested
equity awards) in determining the level and timing of annual equity
awards.  The Committee reviews and considers each component for each
executive officer before making compensation decisions.




Currently,
we do not offer our executive officers any perquisites or supplemental
retirement benefits that are not available to employees below the executive
level.




Base
Salary




We
provide salaries to executive officers as compensation for defined job
responsibilities and services to iPass.  The Committee bases annual
salary determinations on competitive assessment, experience and proficiency in
the role, the need to retain key talent and individual and company
performance.




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In
reviewing these factors, the Committee, in arms’ length negotiations with Mr.
Kaplan, agreed to set Mr. Kaplan’s base salary at $350,000 per year at the time
of his hire, which is consistent with the salary rate of the previous CEO, Mr.
Denman, and approximately 20% below the 50th percentile of the market composite
calculated for this position, as defined above.  This salary rate is
effective through January 1, 2010.




In 2008,
Barbara M. Nelson was appointed Vice President and Chief Technology
Officer.  The Committee increased her base salary to $200,000 at the
time of her appointment, which approximates the 50th percentile of the market
composite for this position, as defined above, to reflect base salary consistent
with her new position.  The Committee decided not to make salary
adjustments for any of the other executive officers in 2008 because the
Committee did not believe that increases to fixed compensation for executive
officers would be appropriate given corporate performance
levels.  Based on the annual market assessment, 2008 salary levels
ranged from 6% above to 20% below the market 50th percentile.




Quarterly
Cash Incentives




The
Committee pays cash bonuses to provide incentives to executive officers to
perform to their greatest potential.  The Committee has determined
that quarterly cash incentives are appropriate for the organization given the
rapidly changing business environment in which iPass operates.  These
incentives are intended to focus management on the near-term operational
objectives that are important to the longer-term success of the
business.  The Committee sets goals at the beginning of the fiscal
year and reviews and approves payouts quarterly.  While the Committee
has the ability to adjust the quarterly performance goals to reflect changing
business conditions, no such adjustments were made to the goals that were
established at the beginning of the fiscal year for 2008.




Target
Amounts:The Committee determines target annual bonus amounts
for each executive officer at the beginning of the plan year.  In
2008, the Committee decided to keep the target bonuses amounts consistent with
the prior year, other than for Mr. Posey, whose target annual bonus increased
from $100,000 to $125,000, and for Mr. Charters, whose target annual bonus
increased from $120,000 to $150,000.  The Committee determined that
these increases were appropriate due to the performance and added
responsibilities of Mr. Posey and Mr. Charters.  The annual target
bonus amounts for the executive officers range from $60,000 to $250,000 (30% to
71% of base salary).




As part
of his employment agreement, Mr. Kaplan was provided an initial target annual
bonus amount of $250,000 (71% of base salary) contingent upon achieving the
performance goals established each year as part of the management incentive
plan.  This amount was determined in arms’ length negotiations with
Mr. Kaplan.  Payment of this target amount, prorated based on his
start date, was guaranteed for 2008 because of the short duration from the date
of hire to the end of the year which would make it difficult for Mr. Kaplan to
influence 2008 company performance, and paid along with the other bonuses earned
in Q4.  Effective January 1, 2010, Mr. Kaplan’s target bonus amount
will be increased to at least $350,000 (100% of current base salary) if his
performance meets the expectations of the Board.




At the
time of her appointment, the Committee approved a target annual bonus amount of
$60,000 for Ms. Nelson (30% of base salary) to reflect target annual bonus
consistent with her new position.  This amount is positioned near the
50th percentile of the market.




While the
target bonus approximates the 50th percentile of the market, actual payout
amounts for executive officers are determined based upon company
performance.  The Committee determines a threshold for performance
below which no bonus will be earned.  If performance exceeds the
threshold, the actual bonus earned is calculated linearly based on the following
scale:




Performance
      Levels
                          
                          Payout
      as % of TargetBelow
      Threshold – Unacceptable performance
                          
                          
                          0
                          %Threshold
      Goal – Lower than expected performance
                          
                          
                          50
                          %Target
      – Expected performance
                          
                          
                          100
                          %Upper
      Goal – Exceptional performance
                          
                          
                          150
                          %Above
      Upper Goal – Exceptional and improbable performance
                          
                          Uncapped
      and Linearly Determined




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The
Committee considers market practice when determining the payout threshold and
the upper potential of the program.  While the bonus amount that may
be earned by executives is not capped at a specific level, the Committee
believes that the performance goals at the upper level are sufficiently
difficult that there is a low likelihood of executives actually earning an award
in excess of 150% of target.




In 2008,
the quarterly cash incentive program resulted in below target bonuses for all
four quarters which, in the Committee’s view, is reasonable given the objectives
set for 2008 and iPass’ performance relative to such objectives.




Performance Measures and
Weightings:In 2007, bonus amounts were based on corporate
financial performance and, with the exception of the CEO, the achievement of
individual performance objectives.  In 2008, the Committee made the
decision to base quarterly incentives entirely on performance as measured
against corporate financial objectives for all executives.  This
decision was made to foster greater collaboration and teamwork among the
executive team, as well as to improve internal equity among the executives as a
group.




The
metrics used to evaluate executive performance were chosen to motivate
executives to achieve iPass’ business plan.  The relative weightings
of the metrics reflect the Committee’s perspective regarding iPass’ short-term
business priorities.  Our corporate measures for 2008 were weighted as
follows for all of the executive officers:




Q1
      & Q3
                  
                  Q2
      & Q4Performance
      Measures
                  
                  1)
      iPass revenues
                    2)
      Broadband revenues
                    3)
      Non-GAAP operating expenses
                  
                  1)
      iPass revenues
                    2)
      Broadband revenues
                    3)
      Non-GAAP operating expenses
                    4)
      Contract monthly order valueWeighting
                  
                  All
      measures weighted equally
                  
                  Contract
      monthly order value weighted twice as much as the other measures to
      reflect semi-annual
measurement





Total
Revenues, Broadband Revenues and Non-GAAP Operating Expenses are measured
quarterly, while 6-month Contract Monthly Order Value is measured at the end of
Q2 and Q4.




The
Committee believes that overall revenue growth is critical to secure iPass’
position as a market leader in the mobility management
space.  Performance against the total revenue metric reflects
management’s ability to grow the customer base, leverage existing client
relationships, manage the loss of revenues from legacy parts of the business and
expand the business in new service areas and geographies.




While
total revenue growth is important, the Committee believes that increasing
revenues from broadband software and services is particularly important to the
business strategy.  Therefore, the Committee uses a second revenue
metric specifically focused on expanding the broadband business to motivate
executives to concentrate their efforts and investments in this
area.




Contract
monthly order value also measures managements’ ability to grow the business,
with special emphasis on securing new enterprise contracts.  This
metric captures our ability to develop new business relationships and is a
leading indicator of future revenue generation.




Quarterly
bonus awards are also based partly on non-GAAP operating expenses, because the
ability to control costs while growing the business is fundamental to iPass’
profitability.  Non-GAAP operating expenses exclude equity
plan-related compensation expenses, restructuring charges, amortization of
intangible assets, and cumulative effect of change in accounting principles,
which are charges and gains which management does not consider reflective of the
company’s core operating business.




We adjust
for the excluded items because the Committee believes that, in general, these
items possess one or more of the following characteristics:  their
magnitude and timing is largely outside of the company’s control; they are
unrelated to the ongoing operation of the business in the ordinary course; they
are unusual and the company does not expect them to occur in the ordinary course
of business; or they are non-operational, or non-cash expenses involving stock
option grants.




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Performance Targets, Business
Results and Bonus Payouts:The Committee sets the incentive
plan goals at the beginning of each year in alignment with the business
plan.  The Committee set target performance goals for 2008 at levels
that require significant improvement over prior year results.  The
Committee made no adjustments to the quarterly performance goals during the
year.




The table
below shows the cumulative quarterly performance goals for each metric at the
threshold, target and upper performance levels, as well as the actual cumulative
2008 results.  As discussed above, contract monthly order value was
measured semi-annually.




Cumulative
      2008 Performance Goals
                
                Threshold
      Goal
                
                
                Target
      Goal
                
                
                Upper
      Goal
                
                
                Actual
      2008 ResultsRevenues
                
                $
                203,000,000
                
                
                $
                211,000,000
                
                
                $
                219,000,000
                
                
                $
                191,368,000Broadband
      Revenues
                
                
                103,770,900
                
                
                
                115,301,000
                
                
                
                126,831,100
                
                
                
                103,711,380Non-GAAP
      Operating Expenses
                
                
                116,909,000
                
                
                
                110,909,000
                
                
                
                104,909,000
                
                
                
                109,759,000Contract
      Monthly Order Value
                
                
                3,840,000
                
                
                
                4,800,000
                
                
                
                5,760,000
                
                
                
                3,398,000





Corporate
performance against the pre-established goals for each measure resulted in
executives earning the following quarterly bonus amounts (as a percent of
target):  first quarter – 59.4%; second quarter – 39.8%; third quarter
– 26.8%; and fourth quarter – 26.8%.  As a result, the total bonus
amount earned by executives was 38.2% of target in aggregate.  Mr.
Denman received a bonus payment for the first three quarters of the year as
described above, for a total bonus amount of 42.0% of target in
aggregate.  The Committee believes that below target bonus awards are
reasonable in light of overall corporate results.




As
discussed previously, Mr. Kaplan was guaranteed to receive his target bonus
amount for 2008 as part of his employment agreement, prorated based on his time
of service.  This amounted to a total bonus award of $40,082 for
2008.




In
addition to the bonus payments described above, in February 2009 the Board of
Directors approved one-time discretionary retention bonuses that ranged from
$7,500 to $14,500 for the executive officers.  These bonus payments
are intended to retain certain key executives during a period of leadership
transition.  The bonuses will be payable provided the executives
remain active employees through June 30, 2009.




Long-Term
Equity Incentives (LTEI)




In order
to ensure a strong link to the long-term interests of stockholders, the
Committee places significant emphasis of executive compensation on long-term
equity incentives.  The Committee based the amount of LTEIs awarded on
competitive LTEIs levels in the market.  The Committee targets the
50th percentile (with option values measured by the Black-Scholes option pricing
model), with the understanding that above target value will be realized if
stockholder value is created.  The Committee also considers the impact
of awards to executive officers on total shareholder dilution and the expenses
accrued for stock-based compensation.




In recent
years, both peer group and published survey stock grant practices indicated a
shift from the use of options only to a mix of options and other equity
vehicles.  Prior to 2006, LTEI’s to our executive officers and
employees were created solely through the use of stock options.  In
2006, we moved to a blend of stock options, restricted shares and performance
share awards (“PSAs”).  In 2007, we continued to use options, but made
all stock grants performance-based (i.e., time-based vesting for restricted
stock was eliminated for executive officers).




In
February 2008, given business uncertainty and retention concerns emanating from
a potential transaction or reorganization of iPass, the Committee decided not to
grant stock options to executive officers and instead granted a combination of
service-based restricted shares and PSAs.  The Committee determined
that full-value shares provide more retention value and more stability than
stock options, which have additional downside risk and upside
potential.




While
targeting equity values at the 50th percentile of the market is the philosophy
of the Committee, in 2008 the Committee focused primarily on share usage to
determine the size of the awards.  The reason for this change is that
iPass’ stock price was lower in 2008 than in 2007, and providing a 50th
percentile LTEI value would have used more shares than the Committee felt was
appropriate.  Furthermore, the Committee did not feel it was
appropriate to increase the number of shares awarded due to a decrease in stock
price.




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Considering
the target value to participants and the cost and the dilutive impact of the
PSAs, the Committee decided to hold the number of PSAs constant from 2007 to
2008 and provide one share of restricted stock in 2008 for every 3 options that
were granted in 2007.  The Committee believes that his approach
resulted in a share usage rate that is reasonably aligned with peer group and
broader industry practices, especially when evaluated on a net basis (i.e.,
shares granted minus shares cancelled or expired).




The
Committee generally grants annual equity awards following the first major
Committee meeting of the year, unless otherwise specified by our board of
directors or the Committee.  The Committee grants all stock option
grants to named executive officers with an exercise price equal to or above the
fair market value of the underlying stock on the date of grant.  iPass
does not grant equity compensation awards in anticipation of the release of
material nonpublic information.  Similarly, iPass does not time the
release of material nonpublic information based on equity award grant
dates.




Restricted
Shares




Restricted
shares are intended to align the interests of executive officers and
stockholders through ownership, while at the same time providing meaningful
retention value to executive officers through the use of service-based vesting
provisions.  The move from stock options to restricted stock was made
to enhance the retention value of the long-term equity incentive program during
a period of business volatility and uncertainty.




On
February 12, 2008, Mr. Denman was granted 45,000 shares of restricted stock,
Messrs. Verdecanna, Charters, Posey, and Wachtler were granted 20,600 shares
each.  Ms. Nelson received two grants in 2008:  February 12,
2008 – 19,550 and May 28, 2008 – 1,050, totaling 20,600 shares.  These
shares vest 50% on June 15, 2009 and 50% on June 15, 2010.  The
Committee considered the current equity holdings of key executive officers in
determining the vesting schedule.




Performance
Share Awards (PSAs)




The
Committee uses PSAs to focus executive officers on operating excellence and the
creation of economic and stockholder value.  Because the vesting of
PSAs is contingent upon meeting predefined financial or strategic objectives,
executives are rewarded for a combination of strong business results and
positive shareholder return.




On
February 12, 2008, Mr. Denman was granted 45,000 performance shares and Messrs.
Verdecanna, Charters, Posey, and Wachtler were granted 20,600 performance shares
each.  On May 28, 2008, Ms. Nelson was granted 20,600 performance
shares.  The vesting of these performance shares granted is based on
the achievement of Return on Invested Capital goals and non-GAAP Operating
income goals, with each weighted 50% and measured as of the end of
2008.  These performance metrics differ from the Quarterly Cash
Incentives metrics because, while the Quarterly Cash Incentives are intended to
focus executives on business growth and expense management, the PSAs focus on
the results of these efforts over time.  Operating income is maximized
by growing revenue while controlling expenses, while return on invested capital
measures how efficiently profits are generated by taking into account the amount
of capital used achieve such results.




As with
the Quarterly Bonus Plan, the threshold and target performance goals were
derived from the business plan.  The use of non-GAAP operating income
reflects the Committee’s belief that the performance metrics used to determine
executive compensation outcomes should exclude factors deemed to be largely
outside the control of management.




For below
threshold performance, no shares are earned.  If the threshold
performance goals are met, 50% of the shares are earned.  If the
targets are met or exceeded, 100% of the shares would be earned.  For
performance between threshold and target, straight line interpolation is used to
determine the amount earned.  If performance shares are earned, they
would vest 50% in 2009 and 50% in 2010.




At the
end of 2008, it was determined that the thresholds for Return on Invested
Capital and Operating Income were not met and therefore no shares vested except
those shares that vested pursuant to Mr. Denman’s severance agreement, as
discussed under “Employment, Severance, and Change-in-Control
Agreements."




CEO
New Hire Equity Awards




In
connection with his hire, Mr. Kaplan was granted an option to purchase 500,000
shares with an exercise price of $1.70, the fair market value of our common
stock on the date of grant.  Mr. Kaplan was also granted 500,000
performance shares, the vesting of which is conditional upon continued service
and the achievement of certain EBITA (earnings before interest, taxes and
amortization) goals.  These equity awards were agreed to in arm’s
length negotiations with Mr. Kaplan and necessary to recruit Mr. Kaplan to
iPass, and are intended to provide strong retention value going
forward.  We do not plan to grant any additional equity to Mr. Kaplan
in 2009.




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The stock
option grant is intended to align Mr. Kaplan’s interests with those of
stockholders and motivate long-term stockholder value creation.  The
Committee chose to grant stock options rather than restricted stock, because the
Committee believes that stock options provide more upside incentive to
turnaround the business.  In addition, stock options have value only
to the extent the price of our common stock on the date of exercise exceeds the
exercise price, which is equal to the fair market value of the stock on the date
of grant.  As a result, Mr. Kaplan will only realize a benefit from
such grants to the extent that he is able to create value for
shareholders.  The options vest over four years, with 25% vesting
after one year and the remaining 75% of options vesting ratably on a monthly
basis over the following three years.  The options expire after ten
(10) years.




The
performance shares are intended to motivate a turnaround of iPass by focusing
the CEO on returning the company to profitability and generating profitable
revenue growth.  The performance shares will vest in five separate
tranches upon the achievement of specified EBITA goals as measured over the four
previous quarters.  The EBITA goals are not tied to a specific
timeline.  Any losses incurred in quarters prior to Mr. Kaplan’s
appointment as CEO are excluded from the calculation.




Other
Benefits




We offer
additional benefits designed to be competitive with overall market practices,
and to attract and retain the talent we need.  All salaried employees
are eligible to participate in our Section 401(k) plan, health care coverage,
life insurance, disability, paid time off and paid holidays.




Other
Compensation




In
connection with his employment offer, Mr. Kaplan is eligible to receive certain
relocation benefits, including the following:




·
            Monthly
      reimbursement of up to $10,000 to cover reasonable temporary living
      expenses for up to six months from the date of hire, subject to end upon
      the close of a purchase of residence in the San Francisco Bay
      Area;




·
            An
      additional payment to cover any tax liabilities associated with these
      payments (Taxable Living Expenses
Gross-Up);




·
            Reimbursement
      for reasonable relocation expenses, subject to certain
      conditions;




·
            An
      additional payment to cover any tax liabilities associated with these
      payments (Taxable Relocation Expenses Gross-Up);
  and




·
            Up
      to $12,000 to cover additional relocation expenses not covered
      above.




The
Committee deemed these benefits necessary to attract Mr. Kaplan to the
organization, and arrived at these amounts in arm’s length negotiations with Mr.
Kaplan.




2009
Cash Compensation




Reflecting
the current economic conditions and iPass’ financial results, the Committee
determined that base salary levels will not be increased in 2009 for the named
executives.  In addition, the Committee decided to keep the target
bonuses consistent with the prior year for all of the named
executives.




In early
2009, the Committee determined that the quarterly cash incentive program would
remain largely unchanged, except as noted below:




·
            Consistent
      with the prior year, and for the same reasons, the Committee established
      the financial metrics against which performance would be measured as
      revenues, non-GAAP operating expenses, contract monthly order value and
      broadband revenues, each weighted equally.  All of the financial
      measures, including contract monthly order value, will be measured on a
      quarterly basis in 2009 to simplify administration.  In
      addition, the broadband revenue goal will focus exclusively on mobile
      broadband revenues in the second through fourth quarters of the
      2009.  This change in emphasis better reflects iPass’ near-term
      strategic priorities.




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·
            The
      bonus amounts will be based entirely on financial performance for the
      first quarter of 2009, but will be shifted to 80% financial and 20%
      personal performance for the second through fourth quarters of 2009,
      except for the President and CEO, whose bonus will be based entirely on
      company financial performance for all four quarters.  The
      Committee’s decision to incorporate the personal performance objectives
      was based on input from Mr. Kaplan with the intent to focus the management
      team on key strategic and operational goals that can be affected at the
      individual level and which are critical to the execution of iPass’
      business strategy.  Since Mr. Kaplan is ultimately responsible
      for defining the business strategy, the Committee believes that his
      performance should be evaluated entirely based on the financial outcomes
      of this strategy, rather than the achievement of the specific objectives
      that comprise it.




iPass
established financial performance targets for all four quarters in alignment
with the 2009 business operating plan.  Based on the information
available at the time the goals were established, the Committee believes that
the target performance goals are sufficiently difficult to meet and that there
is a greater likelihood executives will earn a below-target bonus than an
above-target bonus.  The Committee retains the flexibility to change
the goals based on new information or to reflect external developments prior to
the start of each quarterly performance period.




Personal
performance objectives will be established for each executive prior to the start
of the second through fourth quarters.  At the end of each quarterly
performance period the Committee, with input from Mr. Kaplan, will determine the
level of achieved results against the personal performance
objectives.




Supplementary
Compensation Policies




Employment,
Severance, and Change-in-Control Agreements




iPass
provides severance benefits to its executive officers in the event of
termination without cause.  iPass also provides benefits in the event
that an executive officer’s employment is involuntarily terminated following a
corporate change-in-control.  These benefits are triggered only to the
extent that both a qualifying change-in-control takes place and the executive is
terminated without cause or constructively terminated (otherwise known as a
“double-trigger”).  The purpose of these benefits is to promote
management continuity and cooperation during a potential transaction that is
being pursued by the Board to maximize shareholder value (such as a merger with
or acquisition by another company), despite the fact that such a transaction may
jeopardize the future employment of iPass executives.




These
change-in-control benefits include a lump sum cash payment based on the
executive officer’s annual salary plus annual bonus target, continued health
benefits coverage for a period of time, and accelerated vesting of all equity
awards in the case of a change in control of the company within 18 months of
iPass being acquired.  The full benefits and related terms and
conditions are comprehensively explained in the “Supplementary Compensation
Policies” and “Potential Payments Upon Termination or Change-in-Control”
sections of this document.




In
connection with his hire, Mr. Kaplan was guaranteed certain severance benefits
if the Board terminates him without cause or he resigns for Good Reason,
including:  (a) a lump sum cash severance payment equal to 12 months
of base salary; (b) the prorated portion of the target bonus for the year less
any payments already made for the year, calculated at the rate at which bonuses
were paid earlier in the year (or in the prior year, if the first quarter bonus
has not yet been determined); (c) the target bonus for the year multiplied by
the rate at which bonuses were earned in the prior four quarters; (d) payment of
COBRA premiums for up to 18 months and (e) accelerated vesting of the time-based
component of any equity awards for 12 months and extended exercisability of
option grants for up to 9 months.  In addition, upon the close of a
Corporate Transaction, vesting conditions of outstanding equity grants, whether
determined by the passage of time or in reference to performance targets, shall
be deemed satisfied.




In
determining the value, terms and structure of severance and change-in-control
benefits, the Committee, in consultation with Mercer, considered market
practice, the value of such benefits to the executives and the aggregate
potential cost of such a program assuming actual
termination.  Additionally, in determining the level of severance
benefits the Committee considered iPass’ past experience and precedent for
providing severance in the event of a company-initiated
termination.  The Committee introduced these benefits with a focus on
retaining key executive officers by providing a market competitive level of
protection and security during the current period of
uncertainty.


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Although
the circumstances of his resignation did not qualify Mr. Denman for severance
benefits under the terms of his offer letter, the Board agreed to provide him
with a severance package equal to what he would have received had his employment
been terminated other than for cause in recognition of his agreement to
faithfully continue his job duties through the termination date and to cooperate
in transitioning the CEO responsibilities to Mr. Kaplan, as well as his
agreement to certain post-employment restrictions, including nondisparagement of
the company and nonsolicitation of employees for up to one year.  The
severance benefits were composed of (i) an amount equal to nine months of base
salary, (ii) an additional “bonus” severance amount equal to 75% of the 2008
bonus opportunity multiplied by the average bonus earned as a percent of target
for the first three quarters of the year, (iii) payment of Mr. Denman’s COBRA
premiums for up to 18 months and (iv) nine months of vesting acceleration of
outstanding stock option and other equity awards, irrespective of whether
performance conditions are met.  The total value of these benefits is
detailed in the “Summary Compensation Table”.




Compensation
of Executive Officers




The
following table shows for the fiscal years ended December 31, 2008, 2007, and
2006, compensation awarded or paid to, or earned by, our Chief Executive
Officer, Chief Financial Officer, and our other three most highly compensated
executive officers at December 31, 2008 (the “Named Executive
Officers”).




Summary
Compensation Table




Name
      and Principal Position
                  
                  Year
                  
                  Salary
                      ($)
                  
                  
                  Bonus
                      ($)
                  
                  
                  Stock
      Awards
                      ($)(1)
                  
                  
                  Option
      Awards
                      ($)(2)
                  
                  
                  Non-Equity
      Incentive Plan Compensation
                      ($)
                  
                  
                  All
      Other Compensation
                      ($)
                  
                  
                  Total
                      ($)Evan
      L. Kaplan
                  
                  2008
                  
                  $
                  58,334
                  
                  
                  
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  14,465
                  
                  
                  $
                  40,082
                  
                  
                  $
                  68,097
                  (3)
                  
                  $
                  196,072President
      and ChiefExecutive
      OfficerKenneth
      Denman
                  
                  2008
                  
                  $
                  325,319
                  
                  
                  
                  —
                  
                  
                  $
                  295,204
                  (4)
                  
                  $
                  (37,331
                  )(5)
                  
                  $
                  111,317
                  
                  
                  $
                  272,520
                  (6)
                  
                  $
                  967,029President
      and Chief
                  
                  2007
                  
                  $
                  350,000
                  
                  
                  
                  —
                  
                  
                  $
                  139,621
                  
                  
                  $
                  362,362
                  
                  
                  $
                  106,148
                  
                  
                  $
                  7,623
                  (7)
                  
                  $
                  965,754Executive
      Officer*
                  
                  2006
                  
                  $
                  350,000
                  
                  
                  
                  —
                  
                  
                  $
                  42,889
                  
                  
                  $
                  355,551
                  
                  
                  $
                  103,792
                  
                  
                  $
                  7,299
                  (8)
                  
                  $
                  859,531Frank
      Verdecanna,
                  
                  2008
                  
                  $
                  230,000
                  
                  
                  
                  —
                  
                  
                  $
                  48,253
                  
                  
                  $
                  106,737
                  
                  
                  $
                  44,828
                  
                  
                  $
                  7,170
                  (9)
                  
                  $
                  436,988Chief
      Financial Officer
                  
                  2007
                  
                  $
                  230,000
                  
                  
                  
                  —
                  
                  
                  $
                  58,176
                  
                  
                  $
                  119,344
                  
                  
                  $
                  75,487
                  
                  
                  $
                  7,881
                  (10)
                  
                  $
                  490,8882006
                  
                  $
                  214,375
                  (11)
                  
                  
                  —
                  
                  
                  $
                  17,875
                  
                  
                  $
                  81,645
                  
                  
                  $
                  73,461
                  
                  
                  $
                  6,955
                  (12)
                  
                  $
                  394,311John
      Charters,
                  
                  2008
                  
                  $
                  270,000
                  
                  
                  
                  —
                  
                  
                  $
                  48,253
                  
                  
                  $
                  174,240
                  
                  
                  $
                  53,794
                  
                  
                  $
                  16,330
                  (13)
                  
                  $
                  562,617Chief
      Operating Officer
                  
                  2007
                  
                  $
                  270,000
                  
                  
                  
                  —
                  
                  
                  $
                  58,176
                  
                  
                  $
                  231,538
                  
                  
                  $
                  89,535
                  
                  
                  $
                  12,551
                  (14)
                  
                  $
                  661,8002006
                  
                  $
                  270,000
                  
                  
                  
                  —
                  
                  
                  $
                  17,875
                  
                  
                  $
                  216,007
                  
                  
                  $
                  86,076
                  
                  
                  $
                  10,175
                  (15)
                  
                  $
                  600,133Bruce
      K. Posey,
                  
                  2008
                  
                  $
                  250,000
                  
                  
                  
                  —
                  
                  
                  $
                  48,253
                  
                  
                  $
                  103,803
                  
                  
                  $
                  53,308
                  
                  
                  $
                  8,219
                  (16)
                  
                  $
                  463,583Senior
      Vice President,
                  
                  2007
                  
                  $
                  250,000
                  
                  
                  
                  —
                  
                  
                  $
                  58,176
                  
                  
                  $
                  130,020
                  
                  
                  $
                  76,612
                  
                  
                  $
                  6,123
                  (17)
                  
                  $
                  520,931General
      Counsel and Secretary**
                  
                  2006
                  
                  $
                  250,000
                  
                  
                  
                  —
                  
                  
                  $
                  17,875
                  
                  
                  $
                  121,099
                  
                  
                  $
                  75,171
                  
                  
                  $
                  2,361
                  (18)
                  
                  $
                  466,506Joel
      Wachtler,
                  
                  2008
                  
                  $
                  200,000
                  
                  
                  
                  —
                  
                  
                  $
                  48,253
                  
                  
                  $
                  106,331
                  
                  
                  $
                  45,053
                  
                  
                  $
                  6,344
                  (19)
                  
                  $
                  405,980Vice
      President of
                  
                  2007
                  
                  $
                  200,000
                  
                  
                  
                  —
                  
                  
                  $
                  29,089
                  
                  
                  $
                  165,541
                  
                  
                  $
                  75,412
                  
                  
                  $
                  6,820
                  (20)
                  
                  $
                  476,862Marketing
      and Strategy***
                  
                  2006
                  
                  $
                  200,000
                  
                  
                  
                  —
                  
                  
                  $
                  18,649
                  
                  
                  $
                  193,955
                  
                  
                  $
                  71,315
                  
                  
                  $
                  5,749
                  (21)
                  
                  $
                  489,668


______________________________




*
            Mr.
      Denman resigned as a director, officer and employee of iPass effective
      November 10, 2008.


**
            Mr.
      Posey resigned as an iPass employee and officer effective January 30,
      2009.


***
            Mr.
      Wachtler resigned as an iPass employee and officer effective March 31,
      2009.


(1)
            The
      dollar amounts in this column reflect the dollar amount recognized for
      financial statement reporting purposes for the fiscal years ended December
      31, 2008, 2007, and 2006 in accordance with FAS 123(R), ignoring the
      estimates of forfeiture, related to non-option awards and include amounts
      from awards granted in and prior to 2008.  Assumptions used in
      the calculation of these amounts are included in footnote 2 to our audited
      financial statements for the fiscal year ended December 31, 2008 included
      in our Annual Report on Form 10-K.


(2)
            The
      dollar amount in this column represent the compensation cost for the years
      ended December 31, 2008, 2007, and 2006 of stock option awards granted in
      and prior to 2008.  These amounts have been calculated in
      accordance with SFAS No. 123R ignoring the estimates of forfeiture and
      using the Black-Scholes option-pricing model.  Assumptions used
      in the calculation of these amounts are included in footnote 2 to our
      audited financial statements for the fiscal year ended December 31, 2008
      included in our Annual Report on Form
10-K.


18
 Table of Contents




(3)
              Consists
      of $45,331 for relocation assistance and temporary living expenses,
      $21,378 for a tax gross-up adjusted for relocation assistance and
      temporary living expenses, $1,313 contributed by us on behalf of Mr.
      Kaplan to defined company benefit plan, and $75 for life insurance
      premiums paid by us.


(4)
              The
      dollar amount includes an increase of $135,003 as a result of Mr. Denman’s
      accelerated vesting.


(5)
              The
      dollar amount includes a decrease of $256,677 as a result of Mr. Denman’s
      accelerated vesting.


(6)
              Consists
      of $262,500 in severance, $9,230 contributed by us on behalf of Mr. Denman
      to defined company benefit plans, and $790 for life insurance premiums
      paid by us.


(7)
              Consists
      of $6,656 contributed by us on behalf of Mr. Denman to defined company
      benefit plans, $431 for life insurance premiums paid by us, and $536 for
      reimbursement for home office related
expenses.


(8)
              Consists
      of $1,422 for reimbursement for home office related expenses, $5,465
      contributed by us on behalf of Mr. Denman to defined company benefit plans
      and $412 for life insurance premiums paid by
us.


(9)
              Consists
      of $6,900 contributed by us on behalf of Mr. Verdecanna to defined company
      benefit plans and $270 for life insurance premiums paid by
    us.


(10)
              Consists
      of $6,900 contributed by us on behalf of Mr. Verdecanna to defined company
      benefit plans, $259 for life insurance premiums paid by us, and $722 for
      reimbursement for home office related
expenses.


(11)
              Mr.
      Verdecanna’s salary increased to $230,000 as of August 16,
      2006.


(12)
              Consists
      of $722 for reimbursement for home office related expenses; $5,986
      contributed by us on behalf of Mr. Verdecanna to defined company benefit
      plans and $247 for life insurance premiums paid by
  us.


(13)
              Consists
      of $12,704 for reimbursement for commuting related expenses; $3,194
      contributed by us on behalf of Mr. Charters to defined company benefit
      plans and $432 for life insurance premiums paid by
  us.


(14)
              Consists
      of $8,926 for reimbursement for commuting related expenses; $3,194
      contributed by us on behalf of Mr. Charters to defined company benefit
      plans and $431 for life insurance premiums paid by
  us.


(15)
              Consists
      of $7,388 for reimbursement for commuting related expenses; $2,512
      contributed by us on behalf of Mr. Charters to defined company benefit
      plans and $275 for life insurance premiums paid by
  us.


(16)
              Consists
      of $6,875 contributed by us on behalf of Mr. Posey to defined company
      benefit plans and $1,344 for life insurance premiums paid by
      us.


(17)
              Consists
      of $4,833 contributed by us on behalf of Mr. Posey to defined company
      benefit plans and $1,290 for life insurance premiums paid by
      us.


(18)
              Consists
      of $1,728 contributed by us on behalf of Mr. Posey to defined company
      benefit plans and $633 for life insurance premiums paid by
    us.


(19)
              Consists
      of $5,000 contributed by us on behalf of Mr. Wachtler to defined company
      benefit plans and $1,344 for life insurance premiums paid by
      us.


(20)
              Consists
      of $5,584 contributed by us on behalf of Mr. Wachtler to defined company
      benefit plans and $1,236 for life insurance premiums paid by
      us.


(21)
              Consists
      of $4,513 contributed by us on behalf of Mr. Wachtler to defined company
      benefit plans and $1,236 for life insurance premiums paid by
      us.




19
 Table of Contents


Grants
of Plan-Based Awards




The
following table sets forth information concerning plan-based grants to our Named
Executive Officers during fiscal 2008.  Stock awards were granted
under our 2003 Equity Incentive Plan, and provide for vesting of the underlying
common stock set forth below.  Stock options were granted at an
exercise price equal to the closing sale price of the common stock on The Nasdaq
Global Market on the last market trading day prior to the grant date in
accordance with the provisions of our 2003 Equity Incentive Plan.




Grants
of Plan Based Awards In Fiscal 2008




Estimated Future
      Payouts Under Non-
              
              
              Estimated
      Future Payouts Under Equity
              
              
              All
      Other
              
              
              All
      OtherEquity
      Incentive Plan Awards
              
              
              Incentive
      Plan Awards
              
              
              Stock
              
              
              Option
              
              
              Exercise
              
              
              GrantName
              
              Grant
      Date
              
              Threshold
                  ($)
              
              
              Target
                  ($)(1)
              
              
              Maximum
                  ($)
              
              
              Threshold
                  (#)
              
              
              Target
                  (#)
              
              
              Maximum
                  (#)
              
              
              Awards:
                  Number
      of
                  Shares
      of
                  Stock
      or
                  Units
                  (#)
              
              
              Awards:
                  Number
      of
                  Securities
                  Underlying
                  Options
                  (#)
              
              
              or
      Base
                  Price
      of
                  Stock
      and
                  Option
                  Awards
                  ($/Sh)
              
              
              Date
      Fair
                  Value
      of
                  Stock
      and
                  Option
                  Awards
                  ($)(2)Kenneth
      D.
              
              2/12/08
              
              $
              75,000
              
              
              $
              150,000
              
              
              
              (3
              )Denman*
              
              2/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              22,500
              
              
              
              45,000
              (4)
              
              
              45,000
              
              
              
              
              
              
              
              
              
              
              
              $
              131,4002/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              45,000
              (5)
              
              
              
              
              
              
              
              $
              131,400Evan
      L.
              
              11/6/08
              
              $
              125,000
              
              
              $
              250,000
              
              
              
              (3
              )Kaplan
              
              11/6/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              100,000
              
              
              
              500,000
              (6)
              
              
              500,000
              
              
              
              
              
              
              
              
              
              
              
              
              $
              850,00011/6/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              500,000
              (7)
              
              $
              1.70
              
              
              $
              383,450Frank
              
              2/12/08
              
              $
              50,000
              
              
              $
              100,000
              
              
              
              (3
              )Verdecanna
              
              2/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              10,300
              
              
              
              20,600
              (8)
              
              
              20,600
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              60,1522/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              20,600
              (9)
              
              
              
              
              
              
              
              
              
              $
              60,152John
              
              2/12/08
              
              $
              75,000
              
              
              $
              150,000
              
              
              
              (3
              )Charters
              
              2/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              10,300
              
              
              
              20,600
              (8)
              
              
              20,600
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              60,1522/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              20,600
              (9)
              
              
              
              
              
              
              
              
              
              $
              60,152Bruce
      K.
              
              2/12/08
              
              $
              62,500
              
              
              $
              125,000
              
              
              
              (3
              )Posey**
              
              2/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              10,300
              
              
              
              20,600
              (8)
              
              
              20,600
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              60,1522/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              20,600
              (9)
              
              
              
              
              
              
              
              
              
              $
              60,152Joel
      *
              
              2/12/08
              
              $
              50,000
              
              
              $
              100,000
              
              
              
              (3
              )Wachtler**
              
              2/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              10,300
              
              
              
              20,600
              (8)
              
              
              20,600
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              60,1522/12/08
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              20,600
              (9)
              
              
              
              
              
              
              
              
              
              $
              60,152


______________________________


*
              Mr.
      Denman resigned as a director, officer and employee of iPass effective
      November 10, 2008.


**
              Mr.
      Posey resigned as an iPass employee and officer effective January 30,
      2009.


***
              Mr.
      Wachtler resigned as an iPass employee and officer effective March 31,
      2009.


(1)
              This
      column sets forth the aggregate annual target amount of each named
      executive officer’s quarterly cash bonus award for the year ended December
      31, 2008 for each of our named executive officers.  The actual
      cash bonus award earned for the year ended December 31, 2008 for each
      named executive officer is set forth in the 2008 Summary Compensation
      Table above.  As such, the amounts set forth in this column do
      not represent additional compensation earned by the named executive
      officers for the year ended December 31,
2008.


(2)
              Represents
      the grant date fair value of such award determined in accordance with FAS
      123R, calculated using the Black-Scholes
model.


(3)
              There
      is no maximum estimated future payout under non-equity incentive plan
      awards, since each Named Executive Officer’s bonus increases with
      performance under the management bonus plan, as described in the
      “Compensation Discussion and Analysis” section
  above.


(4)
              These
      performance based shares were initially subject to vest in the following
      manner:  50% on June 15, 2009 and 50% on June 15,
      2010.  Due to the acceleration of vesting resulting from Mr.
      Denman’s separation from the company, 50% of the shares vested on November
      7, 2008 and 50% were forfeited on November 7,
  2008.


(5)
              These
      service-based shares were initially subject to vest in the following
      manner:  50% on June 15, 2009 and 50% on June 15,
      2010.  Due to the acceleration of vesting resulting from Mr.
      Denman’s separation from the company, 50% of the shares vested on November
      7, 2008 and 50% were forfeited on November 7,
  2008.


(6)
              These
      performance-based shares shall be earned upon the achievement of certain
      performance criteria, as described in the “Employment, Severance, and
      Change-in Control Agreements” section
below.


(7)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on November 5, 2009 and the remaining 75% of the shares
      vest monthly over the following 36
months.


(8)
              These
      performance based shares were initially subject to vest in the following
      manner:  50% on June 15, 2009 and 50% on June 15,
      2010.  This award was cancelled on 12/31/08 because the
      performance targets were not
achieved.


(9)
              These
      service-based shares are subject to vest in the following
      manner:  50% on June 15, 2009 and 50% on June 15,
      2010.




See
“Compensation Discussion and Analysis” above for a discussion of our annual
bonus structure and other elements of compensation.


20
 Table of Contents




Outstanding
Equity Awards at Fiscal Year-end




The
following table shows for the fiscal year ended December 31, 2008, certain
information regarding outstanding equity awards at fiscal year end for the Named
Executive Officers.




Outstanding
Equity Awards at December 31, 2008




Option
      Awards
                
                Stock
      AwardsName
                
                Number
      of Securities Underlying Unexercised Options (#)
      Exercisable
                
                
                Number
      of Securities Underlying Unexercised Options (#)
      Unexercisable
                
                
                Option
      Exercise Price
                
                Option
      Expiration Date
                
                Number
      of Shares or Units of Stock That Have Not Vested (#)
                
                
                Value
      of Shares or Units of Stock That Have Not Vested ($)
                
                
                Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other
      Rights That Have Not Vested
                    (#)
                
                
                Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares,
      Units or Other Rights That Have Not Vested
                    ($)Evan
      L. Kaplan
                
                
                0
                
                
                
                500,000
                (1)
                
                $
                1.70
                
                11/5/2018
                
                
                
                
                
                
                
                
                500,000
                (2)
                
                $
                610,000Kenneth
      D. Denman*
                
                
                400,000
                
                
                
                0
                (3)
                
                $
                5.05
                
                8/10/2014108,000
                
                
                
                0
                (4)
                
                $
                6.51
                
                5/10/201654,000
                
                
                
                0
                (5)
                
                $
                5.09
                
                2/7/2017Frank
      Verdecanna
                
                
                35,000
                
                
                
                0
                (6)
                
                $
                4.75
                
                10/18/2010
                
                
                20,600
                (7)
                
                $
                25,1325,000
                
                
                
                0
                (8)
                
                $
                4.75
                
                1/19/201119,375
                
                
                
                0
                (9)
                
                $
                0.50
                
                12/12/201115,000
                
                
                
                0
                (10)
                
                $
                10.60
                
                5/2/201430,000
                
                
                
                0
                (11)
                
                $
                5.05
                
                8/10/201425,000
                
                
                
                0
                (12)
                
                $
                5.75
                
                7/28/201545,000
                
                
                
                0
                (13)
                
                $
                6.51
                
                5/10/20160
                
                
                
                49,400
                (14)
                
                $
                5.09
                
                2/7/2017John
      Charters
                
                
                300,000
                
                
                
                0
                (15)
                
                $
                6.49
                
                11/30/2014
                
                
                20,600
                (7)
                
                $
                25,13245,000
                
                
                
                0
                (13)
                
                $
                6.51
                
                5/10/20160
                
                
                
                75,000
                (14)
                
                $
                5.09
                
                2/7/2017Bruce
      K. Posey**
                
                
                99,847
                
                
                
                0
                (16)
                
                $
                0.85
                
                7/24/2012
                
                
                20,600
                (7)
                
                $
                25,13249,583
                
                
                
                0
                (17)
                
                $
                5.05
                
                8/10/201450,000
                
                
                
                0
                (12)
                
                $
                5.75
                
                7/28/201545,000
                
                
                
                0
                (13)
                
                $
                6.51
                
                5/10/20160
                
                
                
                49,400
                (14)
                
                $
                5.09
                
                2/7/2017Joel
      Wachtler***
                
                
                100,000
                
                
                
                0
                (18)
                
                $
                20.02
                
                10/20/2013
                
                
                20,600
                (7)
                
                $
                25,13240,000
                
                
                
                0
                (10)
                
                $
                10.60
                
                5/2/2014105,000
                
                
                
                0
                (19)
                
                $
                5.05
                
                8/10/201445,000
                
                
                
                0
                (13)
                
                $
                6.51
                
                5/10/20160
                
                
                
                49,400
                (14)
                
                $
                5.09
                
                2/7/2017


______________________________


*
              Mr.
      Denman resigned as a director, officer and employee of iPass effective
      November 10, 2008.


**
              Mr.
      Posey resigned as an iPass employee and officer effective January 30,
      2009.


***
              Mr.
      Wachtler resigned as an iPass employee and officer effective March 31,
      2009.


(1)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on November 5, 2009 and the remaining 75% of the shares
      vest monthly over the following 36
months.


(2)
              These
      shares are performance-based shares which shall be earned upon the
      achievement of certain performance
criteria.


(3)
              The
      shares subject to the option vest in the following
      manner:  monthly in 24 equal monthly installments beginning
      November 1, 2006.


(4)
              The
      shares subject to the option vest in the following manner:  50%
      of the shares vested on May 15, 2008 and 50% of the shares vested on
      November 7, 2008 (vesting accelerated due to Mr. Denman’s resignation from
      the Company).


(5)
              The
      shares subject to the option vested in the following
      manner:  50% of the shares vested on November 7, 2008 (vesting
      accelerated due to Mr. Denman’s resignation from the Company) and 50% of
      the shares were forfeited in connection with Mr. Denman’s resignation on
      November 7, 2008.


(6)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on October 16, 2001 and the remaining 75% of the shares
      vest monthly over the following 36
months.


(7)
              The
      shares vest in the following manner:  50% of the shares vest on
      June 15, 2009 and 50% of the shares vest on June 15,
  2010.


(8)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on January 19, 2002 and the remaining 75% of the shares
      vest monthly over the following 36
months.


(9)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on November 12, 2002 and the remaining 75% of the
      shares vest monthly over the following 36
  months.


(10)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on April 1, 2005 and the remaining 75% of the shares
      vest monthly over the following 36
months.


(11)
              The
      shares subject to the option vest in the following
      manner:  monthly in 48 equal monthly installments beginning July
      1, 2004.


(12)
              The
      shares subject to the option are fully vested and exercisable on February
      1, 2007.


(13)
              The
      shares subject to the option vest in the following manner:  50%
      of the shares vest on May 15, 2008 and 50% of the shares vest on November
      15, 2008.  Includes shares that were initially subject to
      performance vesting conditions, which have been
  satisfied.


(14)
              The
      shares subject to the option vest in the following manner:  50%
      of the shares vest on May 15, 2009 and 50% of the shares vest on November
      15, 2009.


(15)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on November 29, 2005 and the remaining 75% of the
      shares vest monthly over the following 36
  months.


(16)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on July 8, 2003 and the remaining 75% of the shares
      vest monthly over the following 36
months.


(17)
              The
      shares subject to the option vest in the following
      manner:  monthly in 48 equal monthly installments beginning
      August 11, 2006.


(18)
              The
      shares subject to the option vest in the following manner:  25%
      of the shares vest on September 14, 2004 and the remaining 75% of the
      shares vest monthly over the following 36
  months.


(19)
            The
      shares subject to the option vest in the following
      manner:  monthly in 36 equal monthly installments beginning July
      1, 2004.


21
 Table of Contents




Option
Exercises and Stock Vested




The
following table shows for the fiscal year ended December 31, 2008, certain
information regarding option exercises and stock vested during the last fiscal
year with respect to the Named Executive Officers.




Option
Exercises and Stock Vested in Fiscal 2008




Stock
      AwardsName
                
                Number
      of Shares Acquired on Vesting (#)
                
                
                Value
      Realized on Vesting ($)Kenneth
      D. Denman*
                
                
                153,000
                
                
                $
                264,510Evan
      L. Kaplan
                
                
                —
                
                
                
                —Frank
      Verdecanna
                
                
                22,500
                
                
                $
                42,638John
      Charters
                
                
                22,500
                
                
                $
                42,638Bruce
      K. Posey**
                
                
                22,500
                
                
                $
                42,638Joel
      Wachtler***
                
                
                22,500
                
                
                $
                42,638


______________________________


*
              Mr.
      Denman resigned as a director, officer and employee of iPass effective
      November 10, 2008.


**
              Mr.
      Posey resigned as an iPass employee and officer effective January 30,
      2009.


***
              Mr.
      Wachtler resigned as an iPass employee and officer effective March 31,
      2009.




Supplementary
Compensation Policies




Employment,
Severance, and Change-in-Control Agreements




Kenneth
D. Denman Separation Agreement




Mr.
Denman, our former Chairman, President and Chief Executive Officer, resigned as
an iPass employee, officer and director effective November 10,
2008.  On November 3, 2008, the Company and Mr. Denman entered into a
separation agreement which provided for (i) a cash severance payment equal to
nine months of his base salary and a bonus severance amount of $47,250, (ii)
health insurance premiums for up to 18 months under the group health insurance
policies, and (iii) nine months of vesting acceleration of all outstanding stock
options and equity awards (any specified performance target conditions contained
in those stock options and equity awards did not prevent the accelerated vesting
for those awards).




22
 Table of Contents




Evan
L. Kaplan Employment Agreement




Mr.
Kaplan, our President and Chief Executive Officer, accepted employment with us
as President and Chief Executive Officer pursuant to the terms of an employment
agreement dated November 1, 2008 (the “Kaplan Employment
Agreement”).  The Kaplan Employment Agreement provides that Mr. Kaplan
is an at will employee, which means we can terminate his employment at any time,
with or without cause.  Under the Kaplan Employment Agreement, Mr.
Kaplan will receive (i) an initial annual salary of $350,000, potentially
adjusted beginning calendar year 2010 and (ii) an annual bonus, with an initial
target amount of $250,000, if he achieves the performance goals established each
year as part of the management incentive plan.  Additionally, pursuant
to the Kaplan Employment Agreement, Mr. Kaplan (i) received a 2008 annual
performance bonus based on the target amount of $250,000 and prorated to reflect
his mid-year hire, (ii) was granted an option to purchase 500,000 shares of
Company common stock, vesting with respect to 25% of the shares after one year,
and thereafter a in a series of thirty-six successive equal monthly installments
over a three-year period, and (iii) was granted performance shares covering
500,000 shares of Company common stock pursuant to the Company’s 2003 Equity
Incentive Plan.  The performance shares will vest in five installments
of 100,000 shares each upon the Company achieving specified targets for earnings
before interest, tax and amortization.




Executive
Officer Employment Agreements




Each of
our other named executive officers has a signed offer letter with
us.  These offer letters provide that the executive officer is an
at-will employee.  These offer letters provide for salary, an annual
bonus paid quarterly based upon the successful completion of specified
performance objectives and equity, as well as other customary benefits and
terms.  Information for 2008, 2007, and 2006 regarding the
compensation earned by our named executive officers is described in the
“Compensation of Executive Officers — Summary Compensation Table.”




In
addition, if within eighteen (18) months following the closing of a Corporate
Transaction, (i) the employment of the executive by iPass, or an affiliate of
iPass, is terminated by iPass without “Cause” or (ii) if the executive officer
resigns his or her employment for “Good Reason,” then all of the executive
officer’s then outstanding equity incentive awards shall vest in full upon the
date of such termination (the “Change of Control Provisions”).  For
the purposes of this provision:




·
            “Corporate
      Transaction”shall mean (i)
      the sale of all or substantially all of our assets or (ii) a merger of us
      with or into another entity in which our stockholders immediately prior to
      the closing of the transaction own less than a majority of the ownership
      interest of iPass immediately following such closing.  For
      purposes of determining whether our stockholders prior to the occurrence
      of a transaction described above own less than fifty percent (50%) of the
      voting securities of the relevant entity afterwards, only the lesser of
      the voting power held by a person either before or after the transaction
      shall be counted in determining that person’s ownership
      afterwards;




·
            “Cause” shall mean the
      occurrence of any of the following (and only the
      following):  (i) conviction of the terminated executive officer
      of any felony involving fraud or act of dishonesty against us or its
      parent corporation or subsidiary corporation (whether now or hereafter
      existing, as those terms are defined in Sections 424(e) and (f),
      respectively, of the Internal Revenue Code (“Affiliates”)); (ii) conduct
      by the terminated executive officer which, based upon good faith and
      reasonable factual investigation and determination of our Board of
      Directors, demonstrates gross unfitness to serve; or (iii) intentional,
      material violation by the terminated executive officer of any statutory
      fiduciary duty of the terminated executive officer to iPass or its
      Affiliates;




·
            “Good Reason” shall mean
      resignation by the executive officer of his or her employment because (i)
      we require that such executive officer relocate to a worksite that is more
      than 60 miles from its current principal executive office, unless such
      executive officer agrees to such a relocation; or (ii) we reduce the
      executive officer’s monthly salary below the gross rate of the
      then-existing rate at the time of the closing of the Corporate
      Transaction, unless the executive officer agrees in writing to such
      reduction.




Executive
Corporate Transaction and Severance Benefit Plan




On August
9, 2007, our Board of Directors adopted the iPass Inc. Executive Corporate
Transaction and Severance Benefit Plan (the “Plan”), and designated each of our
executive officers as participants.  Pursuant to the terms of the
Plan, each executive officer will be entitled to receive severance benefits in
the event that the termination of the executive officer’s employment with iPass
is an “Involuntarily Termination Without Cause,” or the executive officer
resigns as a result of a “Constructive Termination.” If one of these events
occur, iPass shall make a cash severance payment to the executive officer in an
amount equal to six (6) months of the executive officer’s monthly base salary,
as in effect on the date of the employment termination, or nine (9) months of
the executive officer’s monthly base salary if the employment termination is
within eighteen (18) months of an acquisition of iPass or all or substantially
all of its assets (a “Corporate Transaction Termination”).




23
 Table of Contents




In
addition, if the executive officer is entitled to the cash severance described
above and provided that the executive officer received an overall performance
rating equivalent to or greater than “meets expectations” in the most recent
performance evaluation cycle preceding termination of the executive officer’s
employment, iPass will make an additional cash severance payment to the
executive officer as follows:  (i) in the case of a termination that
is not a Corporate Transaction Termination, in an amount equal to one quarter of
the executive officer’s target bonus amount under iPass’ annual bonus plan, and
(ii) in the case of a Corporate Transaction Termination, in an amount to be
determined by the plan administrator but no greater than nine-twelfths
(9/12th) of the executive
officer’s target bonus amount under iPass’ annual bonus plan.




Further,
if the executive officer is entitled to the cash severance described above, (i)
the executive officer will also be entitled to COBRA coverage paid by iPass for
a period of eighteen (18) months in the case of a Corporate Transaction
Termination, or for a period of twelve (12) months otherwise, and (ii) in the
case of a Corporate Transaction Termination, all outstanding options to purchase
iPass’ common stock and all restricted stock issued pursuant to any equity
incentive plan of iPass that are held by the executive officer on the date of
the employment termination shall be accelerated in full.  The Plan
provides no accelerated vesting of outstanding options or restricted stock in
the event of a termination not occurring within eighteen (18) months after a
Corporate Transaction.




The Plan
also provides that, upon the consummation of a Corporate Transaction, any
specified performance target or vesting condition contained in any restricted
stock awards shall be deemed satisfied provided that the executive officer
continues to render services for iPass or an affiliate following the Corporate
Transaction for any required period of time contained in such restricted stock
awards, if any.




The
executive officers will only be entitled to the benefits described above if they
execute a release of claims against iPass.  Further, certain of the
benefits described above may be reduced in the event that the benefits would
have an adverse tax effect on the executive officer.




For the
purposes of the Plan:




·
            “Involuntary Termination
      Without Cause”means a
      termination by iPass of a participant’s employment relationship with iPass
      or an affiliate of iPass for any reason other than for
      “Cause.”




·
            “Cause”means the
      occurrence of any of the following (and only the
      following):  (i) conviction of the participant of any felony
      involving fraud or act of dishonesty against iPass or its affiliates; (ii)
      conduct by the participant which, based upon good faith and reasonable
      factual investigation and determination of the Board, demonstrates gross
      unfitness to serve; or (iii) intentional, material violation by the
      participant of any contractual, statutory, or fiduciary duty of the
      participant to iPass or its
affiliates.




·
            “Constructive
      Termination” means a resignation of employment by a participant no
      later than twelve (12) months after an action or event which constitutes
      “Good Reason” is undertaken by iPass or
occurs.




·
            “Good Reason” means
      mean either of the following actions or events:  (i) iPass
      requires that the participant relocate to a worksite that is more than
      sixty (60) miles from its principal executive office; or (ii) iPass
      materially reduces the participant’s base salary below its then-existing
      gross rate; provided
      however that,in order to qualify as “Good Reason,” the participant
      must submit to iPass a written notice, within ninety (90) days after the
      occurrence of either of the actions or events described in (i) and (ii)
      above, describing the applicable actions or events, and provide iPass with
      at least thirty (30) days from its receipt of the participant’s written
      notice in which to cure such actions or events prior to termination of the
      participant’s employment, and provided further that,
      the participant’s employment must terminate no later than twelve (12)
      months after the applicable actions or events described in (i) and (ii)
      above.




24
 Table of Contents




Potential
Payments upon Termination or Change-in-Control




Summary
of Benefits –Named Executive Officers




The
following table describes the potential payments and benefits for each of our
named executive officers under their employment agreements and the Plan, upon
employment termination without cause or resignation as a result of a
constructive termination reason and if he signs a general release of all claims
against us, as if his employment had terminated as of December 31,
2008:




Name
                
                Compensation
      and Benefits
                
                
                Termination
      Without Cause or Constructive Termination; Corporate Transaction within 18
      Months
                
                
                Termination
      Without Cause or Constructive Termination; no Corporate Transaction within
      18 MonthsKenneth
      D. Denman*
                
                
                —
                
                
                
                —
                
                
                
                —Evan
      L. Kaplan
                
                Base
      Salary
                
                
                $
                262,500
                
                
                $
                175,000Bonus
                
                
                $
                187,500
                (1)
                
                $
                62,500COBRA
      Payments
                
                
                $
                26,100
                (2)
                
                $
                17,400Accelerated
      Vesting
                
                
                $
                610,000
                (3)
                
                $
                0Frank
      E. Verdecanna
                
                Base
      Salary
                
                
                $
                172,500
                
                
                $
                115,000Bonus
                
                
                $
                75,000
                (1)
                
                $
                25,000COBRA
      Payments
                
                
                $
                26,100
                (2)
                
                $
                17,400Accelerated
      Vesting
                
                
                $
                25,132
                (3)
                
                $
                0John
      C. Charters
                
                Base
      Salary
                
                
                $
                202,500
                
                
                $
                135,000Bonus
                
                
                $
                112,500
                (1)
                
                $
                37,500COBRA
      Payments
                
                
                $
                26,478
                (2)
                
                $
                17,652Accelerated
      Vesting
                
                
                $
                25,132
                (3)
                
                $
                0Bruce
      K. Posey**
                
                Base
      Salary
                
                
                $
                187,500
                
                
                $
                125,000Bonus
                
                
                $
                93,750
                (1)
                
                $
                31,250COBRA
      Payments
                
                
                $
                26,100
                (2)
                
                $
                17,400Accelerated
      Vesting
                
                
                $
                25,132
                (3)
                
                $
                0Joel
      Wachtler***
                
                Base
      Salary
                
                
                $
                150,000
                
                
                $
                100,000Bonus
                
                
                $
                75,000
                (1)
                
                $
                25,000COBRA
      Payments
                
                
                $
                26,100
                (2)
                
                $
                17,400Accelerated
      Vesting
                
                
                $
                25,132
                (3)
                
                $
                0


______________________________


*
              Mr.
      Denman resigned as a director, officer and employee of iPass effective
      November 10, 2008.


**
              Mr.
      Posey resigned as an iPass employee and officer effective January 30,
      2009.


***
              Mr.
      Wachtler resigned as an iPass employee and officer effective March 31,
      2009.


(1)
              Assumes
      that the executive officer received an overall performance rating
      equivalent to or greater than “meets expectations” in the most recent
      performance evaluation cycle preceding termination of the executive
      officer’s employment.


(2)
              Assumes
      the executive officer would receive the full COBRA reimbursement at iPass’
      expense for eighteen (18)
months.


(3)
              With
      respect to stock options, calculated as the difference between the closing
      sales price per share on December 31, 2008, and the exercise price,
      multiplied by the number of shares subject to the accelerated
      vesting.  With respect to restricted stock, calculated as the
      value, based on the closing sales price per share on December 31, 2008, of
      the number of shares of restricted stock subject to the accelerated
      vesting.




In
addition, if the named executive officers’ employment was not terminated within
eighteen (18) months of a Corporate Transaction, and a Corporate Transaction
occurred on December 31, 2008, then any specified performance target or vesting
condition determined by reference to performance targets or operations of iPass
or an affiliate contained in any restricted stock awards issued to them would be
deemed satisfied.  However, such restricted stock awards would still
be subject to time-based vesting.




See the
table above entitled “Outstanding Equity Awards at December 31, 2008” for total
stock options held by our named executive officers as of December 31,
2008.




25
 Table of Contents




Compensation
of Directors




The
following table shows for the fiscal year ended December 31, 2008, certain
information with respect to the compensation of all our non-employee
directors:




Name
                
                Fees
      Earned or Paid in Cash
                    ($)(1)
                
                
                Stock
      Awards
                    ($)(2)(4)
                
                
                Option
      Awards
                    ($)(3)(4)
                
                
                Total
      ($)A.
      Gary Ames
                
                $
                70,000
                
                
                $
                6,569
                
                
                $
                59,493
                
                
                $
                136,062John
      D. Beletic
                
                $
                94,692
                
                
                $
                6,569
                
                
                $
                65,534
                
                
                $
                166,795Peter
      G. Bodine
                
                $
                48,000
                
                
                $
                6,569
                
                
                $
                59,493
                
                
                $
                114,062Arthur
      C. Patterson
                
                $
                51,000
                
                
                $
                6,569
                
                
                $
                59,493
                
                
                $
                117,062Allan
      R. Spies
                
                $
                84,000
                
                
                $
                17,669
                
                
                $
                59,493
                
                
                $
                161,162Olof
      Pripp
                
                $
                41,000
                
                
                $
                6,569
                
                
                $
                74,381
                
                
                $
                121,950Michael
      J. McConnell(5)
                
                $
                44,000
                
                
                $
                24,034
                
                
                $
                56,090
                
                
                $
                124,124Peter
      C. Clapman
                
                $
                46,000
                
                
                $
                24,034
                
                
                $
                56,090
                
                
                $
                126,124Stanley
      Gold (6)
                
                $
                27,667
                
                
                $
                4,380
                
                
                $
                7,220
                
                
                $
                39,267


__________________________


(1)
              This
      column reflects annual director retainer fees, annual committee chairman
      retainer fees, Board of Directors’ meeting fees and committee meeting
      fees.


(2)
              The
      dollar amount in this column represents the compensation cost for the year
      ended December 31, 2008 of stock awards granted in and prior to
      2008.  These amounts have been calculated in accordance with
      SFAS No. 123R ignoring the estimates of forfeiture and using the
      Black-Scholes option-pricing model.  Assumptions used in the
      calculation of these amounts are included in footnote 2 to our audited
      financial statements for the fiscal year ended December 31, 2008 included
      in our Annual Report on Form
10-K.


(3)
              The
      dollar amount in this column represents the compensation cost for the year
      ended December 31, 2008 of stock option awards granted in and prior to
      2008.  These amounts have been calculated in accordance with
      SFAS No. 123R ignoring the estimates of forfeiture and using the
      Black-Scholes option-pricing model.  Assumptions used in the
      calculation of these amounts are included in footnote 2 to our audited
      financial statements for the fiscal year ended December 31, 2008 included
      in our Annual Report on Form
10-K.


(4)
              At
      December 31, 2008, the following directors held stock options and shares
      of restricted stock as
follows:




Name
                
                Number
      of Shares Underlying Options
                
                
                Number
      of Shares Restricted StockMr.
      Ames
                
                
                225,000
                
                
                
                10,000Mr.
      Beletic
                
                
                368,000
                
                
                
                10,000Mr.
      Bodine
                
                
                225,000
                
                
                
                10,000Mr.
      Patterson
                
                
                225,000
                
                
                
                10,000Mr.
      Spies
                
                
                225,000
                
                
                
                16,667Mr.
      Pripp
                
                
                75,000
                
                
                
                20,000Mr.
      Clapman
                
                
                60,000
                
                
                
                15,000Mr.
      Gold(6)
                
                
                30,000
                
                
                
                10,000





(5)
              Mr.
      McConnell resigned from the Board of Directors effective October 31,
      2008.


(6)
              Mr.
      Gold was appointed to the Board of Directors on May 29,
    2008.




26
 Table of Contents




The
options and stock awards that were issued in 2008 to our non-employee directors
consist of the following grants:




Name
                
                Grant
      Date
                
                Number
      of Shares of Stock
                    (#)
                
                
                Number
      of Shares Underlying Options
                    (#)(1)
                
                
                Exercise
      or Base Price of Option Awards
                    ($/Sh)
                
                
                Grant
      Date Fair Value of Stock and Option Awards
                    ($)(2)Mr.
      Ames
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,100Mr.
      Beletic (3)
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,10011/06/08
                
                
                —
                
                
                
                200,000
                
                
                $
                1.70
                
                
                $
                120,280Mr.
      Bodine
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,100Mr.
      Patterson
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,100Mr.
      Spies
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                10,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                22,200Mr.
      Pripp
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,100Mr.
      McConnell (4)
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,100Mr.
      Clapman
                
                5/29/08
                
                
                —
                
                
                
                15,000
                
                
                $
                2.22
                
                
                $
                18,2995/29/08
                
                
                5,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                11,100Mr.
      Gold (5)
                
                5/29/08
                
                
                —
                
                
                
                30,000
                
                
                $
                2.22
                
                
                $
                36,5975/29/08
                
                
                10,000
                
                
                
                —
                
                
                $
                -
                
                
                $
                22,200


__________________________


(1)
              All
      shares subject to the options vest on the first anniversary of the date of
      grant or, if earlier, on the date of the next annual meeting following the
      date grant.


(2)
              These
      amounts have been calculated in accordance with SFAS No. 123R using the
      Black-Scholes pricing model.


(3)
              Mr.
      Beletic received a grant of 200,000 options in connection with becoming
      Chairman of the Board.


(4)
              Mr.
      McConnell resigned from the Board of Directors effective October 31,
      2008.


(5)
              Mr.
      Gold was appointed to the Board of Directors on May 29,
    2008.




The
members of our Board of Directors who are not employees of iPass are reimbursed
for travel, lodging and other reasonable expenses incurred in attending Board of
Directors’ or committee meetings.  In addition, our non-employee
directors receive the following cash compensation for services as a non-employee
director:




Annual
      cash retainer
                  
                  $
                  20,000Lead
      independent director retainer
                  
                  $
                  15,000Committee
      chairman annual retainer
                  
                  $
                  5,000Per
      meeting board meeting fees
                  
                  $
                  1,000Per
      meeting committee meeting fees
                  
                  $
                  1,000





In
addition, effective November 5, 2008, our Chairman of the Board
receives:




·
            an
      annual retainer of $80,000 per year (in lieu of the standard director
      retainer).  For 2008 the increase of $60,000 in retainer was pro
      rated for 2008.




·
            a
      stock option for 200,000 shares, with monthly vesting over three years for
      so long as he remains Chairman, and with full vesting upon a change in
      control (automatic grants under the Directors Plan, as defined and
      described below, are suspended while he is acting as
      Chairman);




·
            meeting
      fees equal to meeting fees provided to all other non-employee directors;
      and




·
            and
      a per diem fee of $3,000 per day for days spent at iPass as independent
      Non-Executive Chairman during his first three months in that capacity
      (with a maximum of three days per month).  In December 2008, the
      Board of Directors modified the Chairman’s per diem arrangement
      to:  1) extend it through March 31, 2009; and 2) change the 3
      days per month to a total of 6 days in the last two months of 2008 and a
      total of 9 days during the first quarter of
  2009.




Under the
terms of the iPass Inc.  2003 Non-Employee Directors Plan, as amended
(the “Directors Plan”), we grant stock options and restricted stock to our
non-employee directors as follows:




·
            grants
      of stock options of 30,000 shares for initial grants, and 15,000 shares
      for annual grants, and




·
            restricted
      stock awards of 10,000 shares for initial grants and 5,000 shares for
      annual grants.




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 Table of Contents




Options
granted under the Directors Plan vest as follows:  (a) with respect to
options that are awarded pursuant to initial grants, the 30,000 shares will vest
with respect to 10,000 shares on the first anniversary of the date of grant, and
thereafter in equal monthly installments over 24 months, and (b) with respect to
options that are awarded pursuant to annual grants, the 15,000 shares will vest
on the first anniversary of the date of grant or, if earlier, on the date of the
next annual meeting following the date of grant.  Options granted
under the Directors Plan may permit exercise prior to vesting, but in such event
the participant may be required to enter into an early exercise stock purchase
agreement that allows iPass to repurchase unvested shares if the participant’s
service terminates before vesting.  All outstanding options under the
Directors Plan are early exercisable.




Shares of
stock acquired under a restricted stock award are subject to forfeiture in favor
of iPass in accordance with the following vesting schedule:  (a) with
respect to restricted stock awards that are awarded pursuant to initial grants,
one third of the 10,000 shares will vest on each of the first, second and third
anniversaries of the date of grant, and (b) with respect to restricted stock
awards that are awarded pursuant to annual grants, the 5,000 shares will vest on
the first anniversary of the date of grant or, if earlier, on the date of the
next annual meeting following the date grant.




Compensation
Committee Report




The
Compensation Committee of the Board of Directors of iPass Inc. has reviewed and
discussed with management the information contained in the Compensation
Discussion and Analysis section of this Amendment No. 1 to Annual Report on Form
10-K/A and, based upon the review and discussions, recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this
Amendment No. 1 to Annual Report on Form 10-K/A.




Compensation
      Committee:Arthur
      C. Patterson, ChairmanJohn
      D. BeleticPeter
      G. Bodine




Mr.
McConnell also served on the Compensation Committee before resigning from the
Board of Directors and from the Compensation Committee effective October 31,
2008.




Compensation
Committee Interlocks and Insider Participation




As
previous noted, our compensation committee consists of Messrs. Beletic, Bodine
and Patterson.  None of our executive officers serve as a member of
the Board of Directors or compensation committee of any entity that has one or
more executive officers who serve on our Board of Directors or compensation
committee.







Item 12.
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters







Security
Ownership of Certain Beneficial Owners and Management




The
following table sets forth certain information regarding the ownership of our
common stock as of March 1, 2009, except as otherwise specified in the footnotes
to the table, by:  (a) each director and nominee for director; (b)
each of the executive officers named in the Summary Compensation Table presented
later in this Amendment No. 1 on Form 10-K/A; (c) all executive officers and
directors of iPass as a group; and (d) all those known by us to be beneficial
owners of more than five percent of our common stock.  Unless
otherwise provided, the stockholder referenced has sole voting and investment
power with respect to the outstanding shares listed.  All percentages
in this table are based on a total of 62,618,093 shares of common stock
outstanding on March 1, 2009.  Unless otherwise indicated, the address
for each listed beneficial owner is c/o iPass Inc., 3800 Bridge Parkway, Redwood
Shores, California 94065.




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 Table of Contents





Shares Issuable Pursuant to
      Options
                  
                  
                  Beneficially
      Owned
                      (Including
      the Number of Shares Shown in the First Column)Name
      and Address of Beneficial Owner
                  
                  Exercisable Within 60 Days
                      of March 1,
      2009
                  
                  
                  Shares
                  
                  
                  PercentEvan
      L. Kaplan
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  *Kenneth
      D. Denman(1)
                  
                  
                  —
                  
                  
                  
                  2,528,300
                  
                  
                  
                  4.0
                  %John
      Charters
                  
                  
                  345,000
                  
                  
                  
                  388,100
                  
                  
                  
                  *Bruce
      K. Posey(2)
                  
                  
                  244,430
                  
                  
                  
                  422,063
                  
                  
                  
                  *Frank
      Verdecanna
                  
                  
                  174,375
                  
                  
                  
                  223,600
                  
                  
                  
                  *Joel
      Wachtler(3)
                  
                  
                  290,000
                  
                  
                  
                  338,800
                  
                  
                  
                  *Arthur
      C. Patterson(4)
                  
                  
                  225,000
                  
                  
                  
                  495,480
                  
                  
                  
                  *Peter
      G. Bodine(5)
                  
                  
                  225,000
                  
                  
                  
                  261,523
                  
                  
                  
                  *A.
      Gary Ames
                  
                  
                  225,000
                  
                  
                  
                  235,000
                  
                  
                  
                  *John
      D. Beletic(6)
                  
                  
                  368,000
                  
                  
                  
                  432,000
                  
                  
                  
                  *Allan
      R. Spies
                  
                  
                  225,000
                  
                  
                  
                  241,667
                  
                  
                  
                  *Olof
      Pripp
                  
                  
                  75,000
                  
                  
                  
                  95,000
                  
                  
                  
                  *Peter
      C. Clapman
                  
                  
                  60,000
                  
                  
                  
                  75,000
                  
                  
                  
                  *Stanley
      P. Gold(7)
                  
                  
                  30,000
                  
                  
                  
                  6,135,169
                  
                  
                  
                  9.8
                  %Robert
      J. Majteles
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  *Royce
      & Associates LLC(8)
                  
                  
                  —
                  
                  
                  
                  3,666,917
                  
                  
                  
                  5.9
                  %Entities
      affiliated with Shamrock Partners Activist Value Fund,
      L.L.C.(9)
                  
                  
                  —
                  
                  
                  
                  6,095,169
                  
                  
                  
                  9.7
                  %Entities
      affiliated with Foxhill Opportunity Master Fund, L.P.(10)
                  
                  
                  —
                  
                  
                  
                  4,355,162
                  
                  
                  
                  7.0
                  %Entities
      affiliated with WC Capital Management, LLC(11)
                  
                  
                  —
                  
                  
                  
                  3,531,327
                  
                  
                  
                  5.6
                  %Entities
      affiliated with Federated Investors, Inc.(12)
                  
                  
                  —
                  
                  
                  
                  3,403,446
                  
                  
                  
                  5.4
                  %All
      directors and executive officers as a group (16 persons)
                  
                  
                  —
                  
                  
                  
                  12,056,139
                  
                  
                  
                  18.5
                  %


___________________________


*Less
      than one percent (1%).




(1)
              Includes
      2,375,300 shares held by the Kenneth D. Denman Revocable
      Trust.  Mr. Denman resigned as a director, officer and employee
      of iPass effective November 10,
2008.


(2)
              Mr.
      Posey resigned as an iPass employee and officer effective January 30,
      2009.


(3)
              Mr.
      Wachtler resigned as an iPass employee and officer effective March 31,
      2009.


(4)
              Includes
      185,439 shares held by Ellmore C. Patterson Partners.  ECPP
      Managers, LLC is the General Partner of Ellmore C. Patterson Partners, and
      Mr. Patterson is a member of the board of managers of ECPP Managers, LLC.
      Does not include 187,667 shares held by the ACP Family Partnership, in
      which members of Mr. Patterson’s immediate family hold a pecuniary
      interest but over which Mr. Patterson holds no voting or investment
      power.  Mr. Patterson disclaims beneficial ownership of all of
      these shares except to the extent of his pecuniary interest
      therein.


(5)
              South
      Fork Ventures holds 18,327 shares.  Mr. Bodine is a Managing
      Member of South Fork Ventures.  Mr. Bodine disclaims beneficial
      ownership of these shares except to the extent of his pecuniary interest
      therein.


(6)
              Includes
      54,000 shares held in the name of John and Anne Partnership,
      Ltd.


(7)
              Funds
      affiliated with Shamrock Partners Activist Value Fund, L.L.C., a Delaware
      limited liability company (“Shamrock Partners”) hold 6,095,169
      shares.  Mr. Gold is the President and Chief Executive Officer
      of Shamrock Partners.  Mr. Gold disclaims beneficial ownership
      of the shares held by Shamrock Partners except to the extent of his
      pecuniary interest therein.


(8)
              The
      address for Royce & Associates, LLC is 1414 Avenue of the Americas,
      New York, NY 10019.  The data regarding the stock ownership of
      Royce & Associates, LLC is as of December 31, 2008 from the Schedule
      13G/A filed by Royce & Associates, LLC on January 26,
      2009.  Includes 3,526,917 shares held by Royce Low Priced Stock
      Fund, an investment company registered under the Investment Company Act of
      1940 and managed by Royce & Associates,
LLC.


(9)
              Shamrock
      Partners is the managing member of Shamrock Activist Value Fund GP,
      L.L.C., a Delaware limited liability company (the “General Partner”),
      which is the general partner of three funds which collectively own the
      shares reported.  Shamrock Partners has sole voting and
      investment power with respect to all of such shares, the General Partner
      has shared voting and investment power with respect to all of these
      shares, and each of the funds has shared voting and investment power with
      respect to the shares held by the respective funds.  The address
      for each of these Shamrock entities is 4444 Lakeside Drive, Burbank,
      California 91505.  The data regarding the stock ownership of
      Shamrock Partners is as of November 3, 2008 from the Schedule 13D filed by
      Shamrock Partners on November 4,
2008.


(10)
              The
      address for Foxhill Opportunity Master Fund, L.P. is c/o Foxhill Capital
      Partners, LLC, 502 Carnegie Center, Suite 104, Princeton, NJ
      08540.  The data regarding the stock ownership of Foxhill
      Opportunity Master Fund, L.P. is as of April 7, 2009 from the Schedule
      13D/A filed by Foxhill Opportunity Master Fund, L.P. on April 8, 2009.
      Each of Foxhill Opportunity Fund, L.P., Foxhill Opportunity Offshore Fund,
      Ltd., Foxhill Capital (GP), LLC, Foxhill Capital Partners, LLC, Neil
      Weiner have direct or indirect control over Foxhill Opportunity Master
      Fund, L.P., and therefore may be deemed to have, together with Foxhill
      Opportunity Master Fund, L.P., sole voting and investment power over the
      4,166,862 shares beneficially owned by Foxhill Opportunity Master Fund,
      L.P.  Also includes 83,000 shares held by Randall C. Bassett,
      95,300 shares held by Kenneth H. Traub, and 10,000 shares held by Paul A.
      Galleberg.  Each of these three persons have sole voting and
      investment power over the shares they hold.  Each of the
      entities listed above may be deemed a
group.


(11)
              The
      address for WC Capital Management, LLC is 300 Drake Landing Boulevard,
      Suite 230, Greenbrea, CA 94904.  The data regarding the stock
      ownership of WC Capital Management, LLC is as of December 31, 2008 from
      the Schedule 13G/A filed by WC Capital Management, LLC on February 13,
      2009.


(12)
              The
      address for Federated Investors, Inc. is Federated Investors Tower,
      Pittsburgh, PA 15222-3779.  The data regarding the stock
      ownership of Federated Investors, Inc. is as of December 31, 2008 from the
      Schedule 13G filed by Federated Investors, Inc. on February 13,
      2009.




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 Table of Contents




Securities
Authorized for Issuance Under Equity Compensation Plans




Information
with respect to securities authorized for issuance under equity compensation
plans as of the end of the most recently completed fiscal year is aggregated as
follows:




Plan
      Category
                
                Number
      of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
      and Rights
                    (a)
                
                
                Weighted-Average
      Exercise Price of Outstanding Options, Warrants and Rights
                    (b)
                
                
                Number
      of Securities Remaining Available for Future Issuance Under Equity
      Compensation Plans (Excluding Securities Reflected in
      Column(a))
                    (c)Equity
      compensation plans approved by stockholders
                
                
                7,121,401
                
                
                $
                5.39
                
                
                
                11,975,693Equity
      compensation plans not approved by stockholders
                
                
                —
                
                
                
                —
                
                
                
                —Total
                
                
                7,121,401
                
                
                $
                5.39
                
                
                
                11,975,693







Item13.
            Certain Relationships and
      Related Transactions, and Director
  Independence





Independence
of the Board of Directors




As
required under the listing standards of the National Association of Securities
Dealers, Inc. (the “Nasdaq listing standards”), a majority of the members of a
listed company’s Board of Directors must qualify as “independent,” as
affirmatively determined by the Board of Directors.  The Board of
Directors consults with our legal counsel to ensure that the Board of Directors’
determinations are consistent with all relevant securities and other laws and
regulations regarding the definition of “independent,” including those set forth
in pertinent listing standards of the Nasdaq Global Market, as in effect from
time to time.




Consistent
with these considerations, after review of all relevant transactions or
relationships between each director, or any of his or her family members, and
iPass, its senior management and its independent registered public accounting
firm, the Board of Directors affirmatively has determined that all of our
directors are independent directors within the meaning of the applicable Nasdaq
listing standards, except for Mr. Kaplan, our President and Chief Executive
Officer.  In making this determination, the Board of Directors
considered the Letter Agreement with Shamrock, pursuant to which Mr. Gold was
elected to the Board, and the related transactions and arrangements contained
therein, including Shamrock’s stock ownership of iPass.




TRANSACTIONS
WITH RELATED PERSONS





There
were no transactions in 2008 to which we have been a party, in which the amount
involved in the transaction exceeds $120,000, and in which any of our directors,
former or current executive officers or, to our knowledge, holders of more than
5% of our capital stock had or will have a direct or indirect material
interest.




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 Table of Contents




Policies
and Procedures For Review of Related Person Transactions




Pursuant
to the charter of our Audit Committee, unless previously approved by another
independent committee of our Board of Directors, our Audit Committee reviews
and, if determined appropriate, approves all related person
transactions.  It is management’s responsibility to bring related
person transactions to the attention of the members of the Audit
Committee.




Our Code
of Conduct and Ethics provides that our employees, which for the purposes of the
Code of Conduct and Ethics, includes our officers and directors, should avoid
conflicts of interest that occur when their personal interests may interfere in
any way with the performance of their duties or the best interests of
iPass.  Our Code of Conduct and Ethics also addresses specific types
of related person transactions and how they should be addressed.  All
of our employees, including our officers and directors, are expected and
required to adhere to the Code of Conduct and Ethics.  If an officer
or director has any questions regarding whether a potential transaction would be
in violation of the Code of Conduct and Ethics, they are required to bring this
to the attention of our Compliance Officer or General Counsel.  If the
potential transaction is a related person transaction, it would be recognized as
such and brought to the Audit Committee for pre-approval.




Further,
each of our officers and directors is knowledgeable regarding the requirements
of obtaining approval of related person transactions and is responsible for
identifying any related-person transaction involving such officer or director or
his or her affiliates and immediate family members and seeking approval from our
Audit Committee before he or she or, with respect to immediate family members,
any of their affiliates, may engage in the transaction.




Our Audit Committee will take into account all relevant factors when determining
whether to approve or disapprove of any related person transaction.




Director
and Officer Indemnification




We have entered into
indemnity agreements with certain employees, officers and directors that
provide, among other things, that we will indemnify such employee, officer or
director, under the circumstances and to the extent provided for therein, for
expenses, damages, judgments, fines and settlements he or she may be required to
pay in actions or proceedings which he or she is or may be made a party by
reason of his or her position as an employee, officer, director or other agent
of iPass, and otherwise to the full extent permitted under Delaware law and our
Bylaws.




Item14.
            Principal Accounting Fees and
      Services





The
following table represents aggregate fees billed to iPass for fiscal years ended
December 31, 2008 and December 31, 2007, by KPMG LLP, our independent registered
public accounting firm:




Fee
      Category
                
                Fiscal 2008
      Fees
                
                
                Fiscal 2007
      FeesAudit
      Fees
                
                $
                1,190,000
                
                
                $
                1,225,000Audit-Related
      Fees
                
                
                —
                
                
                
                —Tax
      Fees
                
                
                —
                
                
                
                —All
      Other Fees
                
                
                —
                
                
                
                —Total
      Fees
                
                $
                1,190,000
                
                
                $
                1,225,000





Audit
Fees.Consists of fees billed for professional services
rendered for the audit of iPass’ consolidated financial statements and review of
the interim consolidated financial statements included in quarterly reports,
review of the tax provision, comfort letters and consents, and services that are
normally provided by KPMG LLP in connection with statutory and regulatory
filings or engagements.




All of
these services were approved by the Audit Committee prior to the services being
rendered to us.




Pre-Approval
Policies and Procedures




The Audit Committee’s policy is
to pre-approve all audit and permissible non-audit services provided by the
independent registered public accounting firm.  These services may
include audit services, audit-related services, tax services and other
services.  Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget.  The
independent registered public accounting firm and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent registered public accounting firm in accordance with
this pre-approval, and the fees for the services performed to
date.  The Audit Committee may also pre-approve particular services on
a case-by-case basis.




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 Table of Contents


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




iPass
      Inc.By:  /s/ Evan
      L. Kaplan
                  
                  By:  /s/ Frank
      E. VerdecannaEvan
      L. Kaplan, President and Chief Executive Officer
                    (Principal
      Executive Officer)
                  
                  Frank
      E. Verdecanna, Vice President and Chief Financial Officer
                    (Principal
      Financial
Officer)





Date:  April
30, 2009




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 Table of Contents


Exhibit Index




To
Amendment No. 1 to Annual Report on Form 10-K/A




Exhibit
                
                Description
      of document31.1
                
                Certification
      by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                
                Certification
      by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002






34