form10q062009ex10_3.htm


    EXHIBIT
10.3



    
      [IPASS
LETTERHEAD]



     

    May 28,
2009

     

    


    VIA HAND
DELIVERY

    


    Frank
Verdecanna

    c/o iPass
Inc.

    3800
Bridge Parkway

    Redwood
Shores, CA 94065

    


    Re:           Separation
Agreement

     

    Dear
Frank:

     

    This
letter contains the terms of the separation agreement (the “Agreement”) which iPass Inc.
(“the Company”) is offering to you to aid in your employment
transition.

     

    1. Separation.  As
discussed, your last date of employment with the Company is expected to be
Friday, July 31, 2009 (the “Separation
Date”).  Between the date you receive this Agreement and the
Separation Date, you will use your best efforts to continue to perform your
assigned duties (including transitioning your duties), and will continue to
fully comply with all of your legal obligations to the Company (including
complying with all Company policies).  On the Separation Date, the
Company will pay you all accrued salary, and all accrued and unused vacation
earned through the Separation Date, subject to standard payroll deductions and
withholdings.  You are entitled to these payments regardless of
whether or not you sign this Agreement.  In addition, regardless of
whether you sign this Agreement:  (a) you will remain eligible for the
$12,500 discretionary bonus pursuant to the terms and conditions of the February
27, 2009 letter agreement between you and the Company; and (b) if your
employment continues through June 30, 2009, you will be eligible to earn a bonus
for the Second Quarter of 2009 (the “Second Quarter Bonus”) under
the terms and conditions of the Company’s 2009 Annual Executive Management Bonus
Plan (the “Executive Bonus
Plan”).  You agree that, if the Second Quarter Bonus is earned,
as determined by the Compensation Committee of the Company’s Board of Directors
(the “Compensation
Committee”), the Second Quarter Bonus will be paid to you on or about the
same time that Second Quarter bonuses are paid to other participants in the
Executive Bonus Plan.

     

    2. Severance
Benefits.  If:  (i) you timely sign, date and return
this Agreement; and (ii) on or within seven (7) days after the Separation Date,
you sign, date and return the Separation Date Release attached hereto as Exhibit A;
then you will receive the following severance benefits (the “Severance Benefits”) pursuant
to the terms of the iPass Inc. Executive Corporation Transaction and Severance
Benefit Plan (the “Severance
Plan” a copy of which will be provided to you on the Separation
Date):

     

    (a)           Severance
Payment.  The Company will pay you a cash severance amount
equal to the product of your current Base Salary (as defined in the Severance
Plan) multiplied by six (6) months, less required deductions and withholdings
(the “Base Severance
Payment”).  The Base Severance Payment will be paid in a lump
sum on the first payroll date after the Separation Date (provided you have
returned the fully signed Separation Date Release on or within seven (7) days
after the Separation Date).

     

    (b)           Bonus Severance Payment. Under
Section 4(a) of the Severance Plan, the Company will pay you a cash severance
bonus amount equal to one quarter of your target bonus under the Executive Bonus
Plan, less required deductions and withholdings (the “Bonus Severance
Payment”).  The Bonus Severance Payment will be paid in a lump
sum on the first payroll date after the Separation Date (provided you have
returned the fully signed Separation Date Release on or within seven (7) days
after the Separation Date).

     

    (c)           Health
Insurance.  To the extent provided by the federal COBRA law or,
if applicable, state insurance laws (collectively, “COBRA”), and by the Company’s
current group health insurance policies, you will be eligible to continue your
group health insurance benefits.  Later, you may be able to convert to
an individual policy through the provider of the Company’s health insurance, if
you wish.  You will be provided with a separate notice more
specifically describing your rights and obligations to continuing health
insurance coverage under COBRA.  If you timely elect continued group
health insurance coverage pursuant to COBRA, the Company will, as an additional
severance benefit, pay your COBRA premiums sufficient to continue group health
insurance coverage for you and your covered dependents (if applicable) at the
level of coverage in effect as of the Separation Date, through the earlier of
either: (i) twelve (12) months from the Separation Date; or (ii) the date that
you become eligible for group health insurance coverage through another
employer.  You must promptly notify me in writing if you become
eligible for group health insurance coverage through another employer prior to
the expiration of the twelve month period after the Separation
Date.

     

    (d)           Prorated Third Quarter Bonus Payment.
To earn a bonus for the Third Quarter of 2009 under the Executive Bonus
Plan, you must remain employed through the end of the Third Quarter (e.g. through September 30,
2009), in addition to meeting the other terms and conditions of the Executive
Bonus Plan.  Notwithstanding that we expect your employment to
terminate prior to September 30, 2009, as an additional severance benefit, you
will be eligible for a prorated bonus payment for the Third Quarter based on the
complete calendar months you remain employed during the Third Quarter, and
provided that the other terms and conditions for receipt of a bonus under the
Executive Bonus Plan are met.  The Third Quarter bonus amount, if any,
will be determined by the Compensation Committee.  In the unlikely
event that your employment continues through September 30, then you will be
eligible for a Third Quarter bonus under the full terms and conditions of the
Executive Bonus Plan.  If owed, the Third Quarter bonus payment will
be paid to you on or about the same time that Third Quarter bonuses are paid to
other participants in the Executive Bonus Plan.

     

    (e)           Retention of Laptop Computer and Cell
Phone. As an additional severance benefit, the Company will permit you to
retain the Company’s laptop computer and cell phone provided for your use in
connection with your employment (the “Electronic Equipment”), and
the Company will transfer to you its ownership interest in the Electronic
Equipment effective as of the Separation  Date.  The
Electronic Equipment is being provided to you in “as is” condition and without
warranty or guarantee of any kind.  You are solely responsible for any
tax consequences of the Company’s transfer of its ownership interest in the
Electronic Equipment.  In addition, prior to the Separation Date, at
the Company’s request you must provide the Electronic Equipment to the Company
for the purpose of deletion of confidential and proprietary information, and
licensed materials, from the Electronic Equipment.

     

    3. Equity
Awards.  Vesting of your outstanding stock options and any
other equity awards (the “Options”) will cease on the
Separation Date and your unvested Options shall terminate.  Your
Options, including your rights to exercise any vested shares, are governed by
the terms of your operative agreements with the Company and the applicable
equity plan.

     

    4. No Other Compensation or
Benefits.  You acknowledge that, except as expressly provided
in this Agreement, you have not earned and will not receive from the Company any
additional compensation (including base salary, bonus, incentive compensation,
variable compensation, or equity), severance, or benefits before or after the
Separation Date, with the exception of any vested benefits you may have under
the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account) or any
vested Options (if timely exercised by you).

     

    5. Expense
Reimbursements.  You agree that, within thirty (30) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement.  The Company will
reimburse you for these expenses pursuant to its regular business
practice.

     

    6. Return of Company Property. By
the close of business on the Separation Date, or earlier if requested by the
Company, you agree to return to the Company all Company documents (and all
copies thereof) and other Company property which you have in your possession or
control (other than the Electronic Equipment, as discussed in Section 2(e)),
including, but not limited to, Company files, notes, drawings, records, plans,
forecasts, reports, financial data, payroll information, spreadsheets, studies,
analyses, proposals, agreements, research and development information, sales and
marketing information, customer lists, prospect information, pipeline reports,
sales reports, operational and personnel information, specifications, code,
software, databases, computer-recorded information, tangible property and
equipment (including, but not limited to, computers, facsimile machines, mobile
telephones, servers), credit cards, entry cards, identification badges and keys;
and any materials of any kind which contain or embody any proprietary or
confidential information of the Company (and all reproductions thereof in whole
or in part).  You agree that you will make a diligent search to locate
any such documents, property and information within the required
timeframe.  In addition, if you have used any personally owned
computer, server, or e-mail system to receive, store, review, prepare or
transmit any Company confidential or proprietary data, materials or information,
then no later than the Separation Date, you must provide the Company with a
computer-useable copy of such information and then permanently delete and
expunge such Company confidential or proprietary information from those systems
without retaining any reproductions (in whole or in part); and you agree to
provide the Company access to your system as requested to verify that the
necessary copying and/or deletion is done.  You agree that, after the
applicable timeframes noted above, you will neither use nor possess Company
property.  Your
timely compliance with this paragraph is a condition precedent to your receipt
of the Severance Benefits.

     

    7. Proprietary Information
Obligations.  You acknowledge and reaffirm your continuing
obligations under your Employee Proprietary Information and Inventions Agreement
that you signed on October 16, 2000 (the “Proprietary Information
Agreement”), which include but are not limited to your continuing
obligations not to use or disclose any confidential or proprietary information
of the Company.

     

    8. Nondisparagement.  You
agree not to disparage the Company, and the Company’s officers, directors,
employees, shareholders and agents, in any manner likely to be harmful to them
or their business, business reputation or personal reputation, and the Company
agrees to direct its officers and directors not to disparage you in any manner
likely to be harmful to your business, business reputation or personal
reputation; provided that all parties may respond accurately and fully to any
question, inquiry or request for information when required by legal
process.

     

    9. No Admissions.  The
promises and payments in consideration of this Agreement shall not be construed
to be an admission of any liability or obligation by either party to the other
party, and neither party makes any such admission.

     

    10. Cooperation and
Assistance.  You agree that you will not voluntarily provide
assistance, information or advice, directly or indirectly (including through
agents or attorneys), to any person or entity in connection with any claim or
cause of action of any kind brought against the Company, nor shall you induce or
encourage any person or entity to bring such claims.  However, it will
not violate this Agreement if you testify truthfully when required to do so by a
valid subpoena or under similar compulsion of law.  Further, you agree
to voluntarily cooperate with the Company if you have knowledge of facts
relevant to any threatened or pending litigation against the Company by making
yourself reasonably available without further compensation for interviews with
the Company or its legal counsel, for preparing for and providing deposition
testimony, and for preparing for and providing trial testimony.

     

    11. Nonsolicitation.  You
agree that for one year following the Separation Date, you will not, directly or
indirectly, solicit, induce or encourage, or attempt to solicit, induce or
encourage, any employee, consultant, or independent contractor of the Company to
terminate his or her relationship with the Company in order to become an
employee, consultant, or independent contractor to or for any other person or
entity.

     

    12. Release of
Claims.

     

    (a)           General Release.  In
exchange for the consideration provided to you under this Agreement to which you
would not otherwise be entitled, you hereby generally and completely release the
Company and its current and former directors, officers, employees, shareholders,
partners, agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) of and from
any and all claims, liabilities and obligations, both known and unknown, that
arise out of or are in any way related to events, acts, conduct, or omissions
occurring prior to or on the date you sign this Agreement (collectively, the
“Released
Claims”).

     

    (b)           Scope of
Release.  The Released Claims include, but are not limited
to:  (i) all claims arising out of or in any way related to your
employment with the Company, or the termination of that employment;
(ii) all claims related to your compensation or benefits from the Company,
including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company; (iii) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(iv) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (v) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the California Labor Code (as amended), and the
California Fair Employment and Housing Act (as amended).

     

    (c)           Excluded Claims.
Notwithstanding the foregoing, the following are not included in the
Released Claims (the “Excluded
Claims”): (i) any rights or claims for indemnification you may have
pursuant to any written indemnification agreement with the Company to which you
are a party; the charter, bylaws, or operating agreements of the Company; any
insurance policies for which you are a named insured (including without
limitation any Directors and Officers insurance policy); or under applicable
law; (ii) any rights which are not waivable as a matter of law; and (iii)
any claims for breach of this Agreement.  In addition, nothing in this
Agreement prevents you from filing, cooperating with, or participating in any
proceeding before the Equal Employment Opportunity Commission, the Department of
Labor, the California Department of Fair Employment and Housing, or any other
government agency, except that you acknowledge and agree that you are hereby
waiving your right to any monetary benefits in connection with any such claim,
charge or proceeding.  You hereby represent and warrant that, other
than the Excluded Claims, you are not aware of any claims you have or might have
against any of the Released Parties that are not included in the Released
Claims.

     

    (d)             Waiver of Unknown
Claims.  In giving the releases set forth in this Agreement,
which include claims which may be unknown to you at present, you acknowledge
that you have read and understand Section 1542 of the California Civil Code
which reads as follows: “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”  You hereby expressly waive and relinquish all
rights and benefits under that section and any law or legal principle of similar
effect in any jurisdiction with respect to your release of claims herein,
including but not limited to the release of unknown and unsuspected
claims.

     

    13. Dispute
Resolution.  To ensure rapid and economical resolution of any
disputes regarding this Agreement, the parties hereby agree that any and all
claims, disputes or controversies of any nature whatsoever arising out of, or
relating to, this Agreement, or its interpretation, enforcement, breach,
performance or execution, your employment with the Company, or the termination
of such employment, shall be resolved, to the fullest extent permitted by law,
by final, binding and confidential arbitration in San Francisco, CA conducted
before a single arbitrator by JAMS, Inc. (“JAMS”) or its successor, under
the then applicable JAMS arbitration rules.  The parties each acknowledge that by
agreeing to this arbitration procedure, they waive the right to resolve any such
dispute, claim or demand through a trial by jury or judge or by administrative
proceeding.  You will have the right to be represented by legal
counsel at any arbitration proceeding.  The arbitrator
shall:  (a) have the authority to compel adequate discovery for the
resolution of the dispute and to award such relief as would otherwise be
available under applicable law in a court proceeding; and (b) issue a written
statement signed by the arbitrator regarding the disposition of each claim and
the relief, if any, awarded as to each claim, the reasons for the award, and the
arbitrator’s essential findings and conclusions on which the award is
based.  The arbitrator, and not a court, shall also be authorized to
determine whether the provisions of this paragraph apply to a dispute,
controversy, or claim sought to be resolved in accordance with these arbitration
procedures.  Nothing in this Agreement is intended to prevent either
you or the Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any arbitration.

     

    14. Miscellaneous.  This
Agreement, including Exhibit A,
constitutes the complete, final and exclusive embodiment of the entire agreement
between you and the Company with regard to the subject matter
hereof.  It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein,
and it supersedes any other agreements, promises, warranties or representations
concerning its subject matter.  This Agreement may not be modified or
amended except in a writing signed by both you and a duly authorized officer of
the Company.  This Agreement will bind the heirs, personal
representatives, successors and assigns of both you and the Company, and inure
to the benefit of both you and the Company, their heirs, successors and
assigns.  If any provision of this Agreement is determined to be
invalid or unenforceable, in whole or in part, this determination shall not
affect any other provision of this Agreement and the provision in question shall
be modified so as to be rendered enforceable in a manner consistent with the
intent of the parties insofar as possible under applicable law.  This
Agreement shall be construed and enforced in accordance with the laws of the
State of California without regard to conflicts of law
principles.  Any ambiguity in this Agreement shall not be construed
against either party as the drafter.  Any waiver of a breach of this
Agreement, or rights hereunder, shall be in writing and shall not be deemed to
be a waiver of any successive breach or rights hereunder.  This
Agreement may be executed in counterparts which shall be deemed to be part of
one original, and facsimile signatures shall be equivalent to original
signatures.

     

    If this
Agreement is acceptable to you, please sign and date below within seven (7) days
after you receive it and then send me the fully signed Agreement.  The
Company’s offer contained herein will automatically expire if we do not receive
the fully signed Agreement from you within this timeframe.

     

    I wish
you the best in your future endeavors and thank you for your contributions to
the Company.

     

    Sincerely,

     

    iPass Inc.

    


    


    By:          /s/ J. Michael Badgis

    J. Michael Badgis

    Vice President, Human
Resources

    
 

    Exhibit
A – Separation Date Release

    


    


    Understood
and Agreed:

    


    
/s/ Frank
Verdecanna

    
      Frank
Verdecanna

    

    


    May
28, 2009

    Date


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
A

    


    SEPARATION
DATE RELEASE

    (To be
signed and returned on the Separation Date or within seven (7) days
after.)

    


    I
understand that my employment with iPass Inc. (the “Company”) terminated effective
July 31, 2009 (the “Separation
Date”).  The Company has agreed that if I choose to sign this
Separation Date Release (the “Release”), the Company will
pay me certain Severance Benefits pursuant to the terms of the transition and
separation agreement between me and the Company dated May 28, 2009 (the “Agreement”) and the iPass Inc.
Executive Corporation Transaction and Severance Benefit Plan (the “Severance Plan”).  I
understand that I am not entitled to the Severance Benefits unless I sign and
return this Release within the stated time period).  I further
understand that, regardless of whether I sign this Release, the Company will pay
me all of my accrued salary and accrued and unused vacation through the
Separation Date, to which I am entitled by law.

     

    In
exchange for the Severance Benefits to be provided to me under the Severance
Plan, and as required by the Severance Plan, I hereby generally and completely
release the Company and its current and former directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) of and from
any and all claims, liabilities and obligations, both known and unknown, that
arise out of or are in any way related to events, acts, conduct, or omissions
occurring prior to or on the date I sign this Release (collectively, the “Released
Claims”).  The Released Claims include, but are not limited
to:  (a) all claims arising out of or in any way related to my
employment with the Company or the termination of that employment; (b) all
claims related to my compensation or benefits from the Company, including
salary, bonuses, commissions, paid time off, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (c) all claims for breach of contract, wrongful termination, and
breach of the implied covenant of good faith and fair dealing; (d) all tort
claims, including claims for fraud, defamation, emotional distress, and
discharge in violation of public policy; and (e) all federal, state, and local
statutory claims, including claims for discrimination, harassment, retaliation,
attorneys’ fees, or other claims arising under the federal Civil Rights Act of
1964 (as amended), the federal Americans with Disabilities Act of 1990, the
federal Family and Medical Leave Act (as amended) (“FMLA”), the California Family
Rights Act (“CFRA”), the
California Labor Code (as amended), and the California Fair Employment and
Housing Act (as amended).  Notwithstanding the release in the
preceding sentence, I am not releasing any right of indemnification I may have
pursuant to any written indemnification agreement with the Company to which I am
a party, the charter, bylaws, or operating agreements of the Company, any
insurance policies for which I am a named insured (including without limitation
any Directors and Officers insurance policy), or under applicable law; and I am
not releasing any rights which are not waivable as a matter of law
(collectively, the “Excluded
Claims”).  In addition, I understand that nothing in this
Release prevents me from filing, cooperating with, or participating in any
proceeding before the Equal Employment Opportunity Commission, the Department of
Labor, the California Department of Fair Employment and Housing, or any other
government agency, except that I acknowledge and agree that I hereby waive my
right to any monetary benefits in connection with any such claim, charge or
proceeding.  I hereby represent and warrant that, other than the
Excluded Claims, I am not aware of any claims I have or might have against any
of the Released Parties that are not included in the Released
Claims.

     

    In giving
the general release herein, which includes claims which may be unknown to me at
present, I acknowledge that I have read and understand Section 1542 of the
California Civil Code, which reads as follows:  “A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.”  I
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any other jurisdiction of similar effect with respect to my
release of claims contained herein, including but not limited to any unknown or
unsuspected claims.

     

    I hereby
represent that I have been paid all compensation owed and for all hours worked,
I have received all the leave and leave benefits and protections for which I am
eligible, pursuant to FMLA, CFRA, the Company’s policies, applicable law, or
otherwise, and I have not suffered any on-the-job injury or illness for which I
have not already filed a workers’ compensation claim.

     

    


     

    By:         /s/ Frank
Verdecanna                                                       

    Frank
Verdecanna

     

    Date:      July 31,
2009