10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For 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 of Incorporation or Organization)	(I.R.S. Employer 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 Registered
Common Stock, $0.001 Per Share Par Value	NASDAQ Global Select 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  x

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  x

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  x    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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the 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.    x

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”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-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  x

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, 2014, as reported by the NASDAQ Global Select Market on that date: $66,416,138. The determination of affiliate status for the purposes of this calculation is not necessarily a conclusive determination for other purposes. The calculation excludes approximately 9,122.334 shares held by directors, officers and stockholders whose ownership exceeded ten percent of the registrant’s outstanding Common Stock as of June 30, 2014. 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 February 27, 2015 was 65,958,694.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement in connection with our 2015 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission not later than April 30, 2015, are incorporated by reference in Part III, Items 10, 11, 12, 13 and 14 of this report on Form 10-K.

iPASS INC.

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

		Page
	PART I.
Item 1.	Business	4
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	13
	PART II.
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	27
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	28
	PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	29
Item 11.	Executive Compensation	29
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	29
Item 13.	Certain Relationships and Related Transactions, and Director Independence	29
Item 14.	Principal Accountant Fees and Services	29
	PART IV.
Item 15.	Exhibits, Financial Statement Schedules	30
SIGNATURES		53
INDEX TO EXHIBITS		56

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Disclosure Regarding Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements regarding expected future events and 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,” “will,” “anticipates,” “targets,” “goals,” “projects,” "projections'" “intends,” “plans,” “believes,” “estimates,” “potential,” variations of such words, and similar expressions are intended to identify 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 herein, for factors that may cause actual results to be different from 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.

Investors and others should note that we announce material financial information to our investors using our investor relations website, SEC filings, press releases, public conference calls and webcasts. We also use social media to communicate with our customers and the public about our company, our products and services and other matters relating to our business and market. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the U.S. social media channels including the iPass Twitter Feed, the iPass LinkedIn Feed, the iPass Google+ Feed, the iPass Facebook Page, the iPass Blog, the iPass Instagram account, and the iPass Pinterest account. These social media channels may be updated from time to time.

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PART I

Item 1. Business

Overview

iPass enables business travelers to stay connected by providing them with cost-effective and convenient global Wi-Fi access across smartphones, tablets and laptops. Founded in 1996, iPass (NASDAQ: IPAS) is the world's largest commercial Wi-Fi network, covering over 120 countries and territories and selling to over 700 large corporations, telecom service providers and other strategic partners around the world. Through its cloud-based delivery model, iPass connects business travelers to over 18 million Wi-Fi hotspots in airports, airplanes, hotels and public areas. With the growing need for fast, high bandwidth connectivity, iPass lets business travelers stay close to what matters most while on the road including access to video, unified communications, web conferencing and other cloud based applications.

Business Highlights

Strategic Mobility Assets

We believe iPass has a unique set of mobility assets that provide us with competitive advantages. We see our three core assets as follows:

Open Mobile Platform: Our Open Mobile (OM) platform is a cloud-based mobility management platform that securely manages network connectivity and subscribers across a wide variety of computing and mobile devices and provider networks. We believe this scalable subscriber management, billing and reporting platform is unique in the industry and would be time consuming and expensive to replicate. Our Open Mobile platform has the following key characteristics and functionality:

• An always-on, lightweight software agent that runs on a wide array of devices including smartphones, tablets, and laptops running operating systems including Android, the Apple (iOS), Windows and Macintosh.

• A cloud-based platform that allows businesses to configure and manage its mobility offering by providing in-depth reporting and analytics on mobile usage across the networks and devices used by the employees.

• Policy enforcement services that enable our customers to have their costs, compliance and security measures enforced across their mobile workforce.

• We exited 2014 with 814,000 active monthly users on our OM platform.

Integrated Authentication Fabric: We have a global authentication fabric of integrated servers and software that is interconnected with over 150 unique global Wi-Fi networks. This infrastructure allows us to provide secure, highly-available and seamless four-party global authentication, clearing and settlement of Wi-Fi users for our partners and customers. Our technology architecture is designed to:

• Integrate with existing enterprise security, directory, and business systems.

• Integrate with any Wi-Fi network, whether customer-owned networks or third-party provider networks.

• Embrace new access methods, devices, and applications.

• Support scalable unique users (1.3 million in 2014), authentications (10.4 million in 2014), and Wi-Fi enabled sessions (59.0 million in 2014) across both our paid and unpaid footprint.

Global Wi-Fi Footprint: We have a Wi-Fi network footprint and supply chain that consists of more than 18 million hotspots in 120 countries and territories, including major airports, convention centers, airplanes, trains, train stations, hotels, restaurants, retail, and small business locations. In the second quarter of 2014, we began including both commercial grade venues and public access and community locations that are accessible in the iPass network. Our technology integration across multiple global network providers forms the basis of our network services and we believe creates a unique cost advantage for our customers. We typically contract with network service providers, integrate their networks into our global infrastructure, and monitor their performance to ensure that our customers have a consistent and reliable end user experience.

• Our paid Wi-Fi footprint supported 5.8 million usage hours and 6.4 million network sessions in 2014 on an average of approximately 96,000 unique monthly Wi-Fi network users.

• Hotspots that cover 95% of the world’s top 100 airports and 82,000 strategic venues such as hotels and convention centers.

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Business Portfolio

On June 30, 2014 we entered into an agreement and completed the sale of our Unity Managed Network Services business unit ("Unity business"), which is reported in this filing as discontinued operations. Our Unity Business was focused on delivering and managing high speed Wi-Fi and WAN managed network solutions to customers in a variety of industries. As a result of the sale, we now currently have a single reportable operating segment, Mobility Services. Our Mobility Services, collectively referred to as Open Mobile or "OM", comprises two service offerings: (1) Open Mobile Enterprise Services, and (2) Open Mobile Exchange.

Open Mobile Enterprise Services (“iPass OME” or “OME”): We provide iPass OME to large enterprises to deliver enhanced network mobility services, addressing large enterprises’ needs to manage their mobility economics, high speed network connectivity requirements and proliferation of mobile devices, including the “bring-your-own-device” trend. OME consists primarily of our network services and platform services, as follows:

Network Services: Our network provides our enterprise and carrier customers access to more than 18 million global commercial Wi-Fi hotspots in 120 countries globally and across leading Wi-Fi venues. Our offerings span multiple geographies and are primarily focused on Wi-Fi access technologies. We continue to wind down our legacy Dial-up and 3G connectivity options as we focus our efforts on the Wi-Fi market.

Platform Services: Our cloud-based Open Mobile Platform enables enterprise users to connect from most mobile devices over a wide range of networks. These services allow our customers to effectively manage their mobile workforces by controlling costs, enforcing compliance and ensuring security when workers connect their mobile devices to the Internet and wireless networks. Effective July 1, 2012 we announced the end-of-life of our legacy iPC platform and continued to manage the wind down of the legacy platform.

Open Mobile Exchange (“iPass OMX” or “OMX”): We provide our iPass OMX to strategic partners that incorporate iPass OMX into their core products and services, geared for the mass market. OMX is best understood as our wholesale delivery mechanism to provide network and platform connectivity to the consumer market. iPass OMX strategic partners include global OEMs (Original Equipment Manufacturers), premium brand partners, software product and service providers, and telecom carriers. We continue to focus on adding new channels to further grow our OMX services revenue.

Our Strategy

We intend to leverage our unique set of mobility assets across our business portfolio offerings to drive growth in users, customers and Wi-Fi usage with a committed focus on smartphone and tablet adoption and delivering customer satisfaction via enhanced end user experience across our platform and network.

Our strategy consists of the following key elements and initiatives specific to our OM service offering:

• Increased Penetration in Existing Customers: Expand our understanding of our enterprise customers’ end users experience to drive additional virality, penetration, usage, leading to increased revenue. We strive to optimize business intelligence and turn user insights into actionable data to improve our customer activation rates and connection success rates.

• New Customer Acquisition: Judiciously invest in sales and marketing programs to increase brand awareness, deepen lead generation activities, and drive organic revenue growth. We intend to continue to expand beyond the traditional enterprise and carrier customers into mid-market business and other consumer and wholesale opportunities.

• Continue to Optimize the End User Experience: Smartphones and tablets (“SP&T”) continue to be a largely untapped market for global Wi-Fi roaming. By continuing to focus on improving service quality, connectivity success rates, and leading the evolution of the global Wi-Fi ecosystem, we plan to drive improvements in the global user experience which we expect will translate to increased user demand in the billion-plus market of Wi-Fi enabled mobile devices.

Geographic Revenue

iPass revenue is derived from the following geographical locations:

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	For the Year Ended December 31,
	2014		2013		2012
United States
Mobility Service Revenues	35	%	37	%	41	%
International
Mobility Service Revenues	65	%	63	%	59	%

Geographic revenues are determined by the location of the customer’s headquarters. One customer accounted for 10% of total revenues from continuing operations for the years ended December 31, 2014. No individual customer accounted for 10% or more of total revenues from continuing operations for the years ended December 31, 2013, and 2012.

For further financial information on the geographic information, refer to the information contained in Note 14, “Segment and Geographic Information,” in the Notes to the Consolidated Financial Statements included in Item 15. For risks attendant to foreign operations, see the risk entitled “Because a meaningful portion of our business is international, we encounter additional risks, which may impact our revenues and profitability” in “Item 1A. Risk Factors” of this Form 10-K.

Seasonality

We generally experience seasonality in our business due to decreased business travel during the summer, particularly in Europe, and during the year-end holiday season which results in lower usage of our network services. Seasonal trends or other factors, such as bad weather, may cause fluctuations in our business results.

Network Service Providers

We have contractual relationships with approximately 200 telecommunications carriers, Internet service providers and other network service providers that enable us to offer our network services around the world. We pay network service providers for access to their network on a usage, session or subscription basis. Most of these contracts have a one or two-year term, after which either party can terminate the contract with notice. The contracts we have entered into with providers are non-exclusive and may contain minimum commitments for the purchase of network access.

Sales and Marketing

Our sales organization is structured into regional account teams, which include sales management, sales engineers and customer success teams. We sell our services directly through our global sales force and indirectly through our reseller and carrier partners. We maintain sales offices or personnel in a number of cities in the United States as well as in the United Kingdom, India, Australia, Japan, Germany, France, Singapore, Netherlands, and China. As of December 31, 2014, our sales organization comprised 44 individuals: 19 in North America, 21 in Europe, Middle East and Africa (“EMEA”) and 4 in Asia Pacific. Our sales and marketing expenses from continuing operations were $15.8 million, $16.4 million and $17.9 million in 2014, 2013, and 2012, respectively.

Our reseller, wholesale, and carrier partners typically sign a one to two-year agreement with us through which we appoint them as a non-exclusive reseller of our services. Their reseller responsibilities vary and may include actively marketing and selling our services, deploying and supporting customer accounts, and implementing and managing billing for their customers. Our current sales structure allows us to offer our services without incurring the full cost of customer acquisition (sales and marketing) or customer post-sales support. Our reseller, wholesale, and carrier partners typically sell complementary hardware, software, and services, and bundle our services with their core offerings. They may also have a base of existing customers to whom they can efficiently sell our portfolio of services. In many cases our salespeople do support our reseller, wholesale, and carrier partners with closing new business, and our post-sales team may work with them to ensure successful implementation of our services. However, the enterprise or consumer remains the customer of our reseller, wholesale, and carrier partners and has no direct financial relationship with us.

We focus our marketing efforts on establishing a strong corporate reputation in the market, creating awareness and preference for our services and their benefits, educating potential customers, generating new sales opportunities, generating end-user awareness and demand within existing customer accounts and enabling our sales force and channel partners to effectively sell and deploy our service offerings. We conduct a variety of marketing programs that may include advertising, promotions, public relations, analyst relations, telemarketing, direct marketing, web and e-mail marketing, collateral and sales tools creation, seminars, events and trade shows, training, co-operative channel marketing, internet marketing and promotions.

Competition

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The market for mobile connectivity targeted at global travelers is fragmented with a variety of competitors, both direct and indirect, including telecom operators, cloud-based platform operators, cable companies, and smaller Internet service providers.  As our primary customer is the enterprise user, we partner with many point Wi-Fi providers to drive incremental users to their connectivity resources, helping to further monetize their assets via our roaming customer base.  Our unique authentication fabric and global partnership with over 150 Wi-Fi networks creates a scale and user experience that we believe is hard to replicate by any single competitor, and creates an important differentiating factor for us. However, since we do not own our Wi-Fi network, our competitors who own their Wi-Fi networks can offer lower Wi-Fi pricing than we can offer in specific markets, can bundle Wi-Fi network access with other services, and can use these additional service offerings to drive increased brand awareness.  

We believe the principal competitive factors in our industry include the following:

• Global roaming coverage;

• Ease of use and reliability of service;

• Price, both directly of Wi-Fi connectivity, and of alternative connectivity options such as 3G/4G;

• Brand awareness;

• Perceived benefit of connectivity by employees and business travelers; and

• Bundled connectivity services.

See section 1A – Risk factors for additional details regarding competitive factors that could adversely impact our business, financial condition, or results of operations.

Research and Development

We are committed to continuing to enhance our underlying technology and continuing to innovate and incorporate new technologies and features into our services and network architecture. Our research and development efforts are focused on improving and enhancing our platform and service offerings as well as developing new services, especially for smartphones and tablets. As of December 31, 2014, our research and development organization consisted of 110 employees, approximately 41 in North America and 69 in India. Our research and development expenses from continuing operations were $11.9 million, $13.3 million and $13.7 million in 2014, 2013 and 2012, respectively.

Intellectual Property

We believe our technology and platform contains valuable intellectual property. We rely on a combination of trademark, copyright, trade secret laws, patents and disclosure restrictions to protect these intellectual property rights. We license third-party technologies that are incorporated in our services. We also enter into confidentiality and proprietary rights agreements with our employees, consultants and other third parties and control access to software, documentation and other proprietary information. We have a patent portfolio, related to our Mobility Services, consisting of twenty-four U.S. patents, and six international patents. Our patents expire between 2016 and 2025. We currently have ten U.S. patent applications pending, and sixteen international patent applications pending (in the same subject areas as the U.S. patent applications). iPass and the iPass logo are registered trademarks. We have also applied for or registered company trademarks in the U.S. and numerous other countries.

Employees

As of December 31, 2014, we had 250 employees of which 118 were located in North America, 93 in Asia Pacific, and 39 in EMEA.

Available Information

We use our website, www.ipass.com, as a routine channel for distribution of important information, including news releases, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act, as amended, as soon as reasonably practicable after they are electronically filed with, or furnished to the U.S. Securities and Exchange Commission (“SEC”). All of these postings and filings are available on our website free of charge. The content on any website referred to in this Form 10-K is not incorporated by reference into this Form 10-K.

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Item 1A.    Risk Factors

Our business is subject to a number of risks, many of which are described below. If any of the events described in these risks factors actually occur, our business, financial condition or results of operations could be materially and adversely affected, which would likely have a corresponding impact on the value of our common stock. Further, the risk factors described below could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. These risk factors should be reviewed carefully.

If customer adoption and deployment of our Open Mobile Platform is slow, especially on smartphone and tablet devices, our ability to grow our Mobility Services business could be harmed.

The future success of our business will depend in large part on our current and prospective customers’ timeliness of adoption and deployment of our Open Mobile Platform. Key risks associated with our Open Mobile Platform and services are as follows:

Customer adoption and deployment of our Open Mobile Platform, especially on smartphone and tablet devices, may be slow. We believe that the growth of our business is dependent on the timely adoption and deployment of the Open Mobile Platform by our customers. In particular, smartphone and tablet devices are becoming more relied upon by our customers for their mobile computing needs and may cause our users to stop using laptops while traveling, or to use them less often. We believe it is critical for our business that our services for smartphone and tablet devices achieve market acceptance and that our customers rapidly adopt and deploy our services on smartphone and tablet devices. A material delay in the adoption and deployment of the Open Mobile Platform by our customers, on smartphone and tablet devices in particular, will adversely impact our ability to grow revenues and achieve profitability.

Customer deployment of our Open Mobile Platform may not result in increased use of our services. We believe it is important to the future success of our business that users of our Mobility Services increase their usage of our platform and network services. We believe that the deployment by our customers of our Open Mobile Platform, especially on smartphone and tablet devices, will lead to increased usage of our platform services and correspondingly, our network services, which will lead to an increase in our revenue. However, even if a significant portion of our customers deploy our Open Mobile Platform, there is no guarantee that our customers will use our services more frequently.

Our Open Mobile Platform may have technical limitations that cause our customers to delay adoption or deployment. There is risk that the Open Mobile Platform may contain technological limitations, bugs or errors that would cause our customers to not adopt or delay the adoption of the Open Mobile Platform. If some or all of these risks associated with our Open Mobile Platform were to occur, adoption and deployment of our Open Mobile Platform may not occur and our business could be harmed.

Customers must be willing to continue to pay for our platform or our revenue growth may slow. We believe that it is important that the value proposition of our Open Mobile Platform is accepted by our customers such that they are willing to pay for their users to use our mobility services. If our customers are willing to adopt our Open Mobile Platform but are not willing to pay for the platform, our ability to grow revenues and achieve profitability could be adversely impacted.

If our OMX service offerings do not achieve expanded market acceptance our ability to grow our business could be harmed.

Our OMX service offerings were introduced in 2011 and incorporate our Open Mobile Platform, global authentication fabric, and global Wi-Fi network to provide reseller, wholesale, and carrier partners around the world with the infrastructure to offer their customers new mobility services. We have entered into contracts with a number of customers for our OMX services, but ramping revenues takes time to develop. We have and plan to continue to devote significant resources to building our OMX service line of business. If OMX service offerings do not achieve expanded market acceptance and generate meaningful revenues our financial condition may be harmed.

If Global 3G/4G data roaming rates decline precipitously, our ability to grow our business could be harmed.

For our network services to be attractive to our customers, the cost of 3G/4G roaming must be meaningfully greater than the cost of our Wi-Fi network services. Currently, in certain geographies such as Asia, 3G/4G roaming prices are not significantly higher than our rates for Wi-Fi access. In Europe, legislation has been enacted mandating the reduction of wholesale 3G/4G roaming prices. If 3G/4G roaming prices do not remain meaningfully higher than our Wi-Fi network prices then our ability to sell our Mobility Services could be impacted and our business harmed.

Our decision to “End-of-Life” our legacy iPC platform product has and will continue to impact our total revenues.

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As of July 1, 2012 our iPC or legacy platform reached end-of-life. While the iPC platform continues to function for existing customers, we only provide basic support and only for customers that pay extended support fees. While we believe that the end-of-life of iPC will encourage our customers to migrate to our Open Mobile platform, iPC customers may decide to instead terminate their service with us. If the number of iPC customers who decide to terminate their service with us is greater than expected, our results of operations could be negatively impacted.

If key global Wi-Fi venues offer “no charge” Internet access to all users, our network revenues could be negatively affected.

We derive a significant portion of our network revenue from providing Wi-Fi access in certain key venues (e.g., hotels, airports and cafes). In general, these venues charge their customers for Wi-Fi access. If these venues begin offering Wi-Fi access at no charge, the amount we can charge our customers for Wi-Fi access at these venues will likely decrease or we may not charge our customers for Wi-Fi access at these venues. For example, Starbucks and certain airports in the United States have ceased charging their customers for Wi-Fi access and we have experienced reduced revenues as a result. If this trend continues at other key Wi-Fi venues, our network revenues and overall profitability may be negatively impacted.

If we do not accurately predict network usage for our Flat Rate price plans, our costs could increase without a corresponding increase in network revenue.

A significant number of our customers have purchased our Flat Rate network price plans, and we are signing new customers to this plan. In this plan, our customers pay a flat rate price to access our network services. However, in the majority of situations we continue to pay our providers based on actual network usage. The rate we charge in our Flat Rate price plans is based on statistical predictions of usage across a pool of users within a customer. If actual usage is higher than expected our ability to achieve profitability could be negatively impacted.

In 2014, we implemented certain fixed rate buying structures with some providers to mitigate this risk. However, buying network access at a fixed rate creates additional risk if our customers were to use less Wi-Fi in the future, which could negatively impact our profitability.

If demand for mobility services does not grow or grows in ways that do not require use of our services, we may experience a decline in revenues and profitability.

The growth of our business is dependent, in part, upon the increased use of mobility services and our ability to capture a higher proportion of this market. If the demand for mobility services does not continue to grow, or grows in ways that do not require use of our services, then we may not be able to grow our business, or achieve or maintain profitability. Increased usage of our Mobility Services depends on numerous factors, including:

• Willingness of enterprises to make additional information technology expenditures;

• Availability of security services necessary to ensure data privacy over a variety of networks;

• Quality, cost and functionality of our services and competing services;

• Increased adoption of wireless broadband access methods and our ability to support these new methods;

• Proliferation of smartphones, tablets and mobile handheld devices and related applications, and our ability to provide valuable services and support for those devices;

• Our ability to partner with mobile network operators and service providers that are willing to stimulate consumer awareness and adoption of our Mobility Services; and

• Our ability to timely implement technology changes to our services to meet evolving industry standards for mobile devices, Wi-Fi network access and customer business requirements.

If we are unable to meet the challenges posed by Wi-Fi access, our ability to profitably grow our business may be impaired.

A substantial portion of the growth of our business has depended, and will continue to depend, in part upon our ability to expand our global Wi-Fi network. Such an expansion may not result in additional revenues to us. Key challenges in expanding our Wi-Fi network include:

The Wi-Fi access market continues to develop at a rapid pace. We derive a significant portion of our revenues from wireless broadband “hotspots,” such as certain airports, hotels and convention centers. The Wi-Fi access market continues to develop rapidly, in particular: the market for enterprise connectivity services through Wi-Fi is characterized by evolving industry standards and specifications and there is currently no uniform standard for Wi-Fi access. Furthermore, although the use of wireless frequencies generally does not require a license in the United States and abroad, if Wi-Fi

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frequencies become subject to licensing requirements, or are otherwise restricted, this would substantially impair the growth of Wi-Fi access. Some large telecommunications providers and other stakeholders that pay large sums of money to license other portions of the wireless spectrum may seek to have the Wi-Fi spectrum become subject to licensing restrictions. If the Wi-Fi access market develops in ways that limit access growth, our ability to generate substantial revenues from Wi-Fi access could be harmed.

The Wi-Fi service provider market is highly fragmented. There are currently many Wi-Fi service providers that provide coverage in only one or a small number of hotspots. We have entered into contractual relationships with numerous Wi-Fi service providers. These contracts generally have an initial term of two years or less. We must continue to develop relationships with many providers on terms commercially acceptable to us to provide adequate coverage for our customers’ mobile workers and to expand our Wi-Fi coverage. We may also be required to develop additional technologies to integrate new wireless broadband services into our service offering. If we are unable to develop these relationships or technologies, our ability to grow our business could be impaired.

Consolidation of large Wi-Fi service providers may impair our ability to expand network service coverage, negotiate favorable network access terms, and deliver consistent service in our network. The telecommunications industry is rapidly evolving and highly competitive. These factors may cause large Wi-Fi network service providers to consolidate, which would reduce the number of network service providers from which we are able to obtain network access in key locations. If significant consolidation occurs, we will have a smaller number of network service providers to acquire Wi-Fi network access from and we may not be able to provide additional or sufficient redundant access points in some geographic areas, which could diminish our ability to provide broad, reliable, redundant coverage. Further, our ability to negotiate favorable access rates from Wi-Fi network service providers could be impaired, which could increase our network access expenses and harm our operating results.

Wi-Fi service provider actions may restrict our ability to sell our services. Some Wi-Fi network providers restrict our ability to sell access to their networks to our resellers whom they consider competitive with them. This can reduce our revenue by limiting the footprint our partners can make available to their customers.

Significant dependency on key network providers could negatively affect our revenues.

There are certain venues (hotels, airports, airplanes, cafes, etc.) globally where we depend on key providers for network access in those venues. In addition, in certain geographies we depend on a small number of providers for a large portion of network access. If such a provider were to go out of business, terminate their agreement with us, encounter technical difficulty such that network access was not available to our customers for an extended period of time, it could have a negative impact on our revenues and profitability if we cannot find an alternative provider to enable network access in those venues or geographies.

We face competition in the market for mobility services, which could make it difficult for us to succeed.

While we do not believe there are service providers in the mobility services market that offer a platform or range of services in an integrated offering as we do, we compete with a variety of service providers, including facilities-based carriers, cloud-based platform operators and mobility management solution providers. Some of these providers have substantially greater resources, larger customer bases, longer operating histories and/or greater name recognition than we have. In addition, we face the following challenges:

Many of our competitors can compete on price. Because many of our facilities-based competitors own and operate physical networks they may be able to provide additional hotspot access at little incremental cost to them. As a result, they may offer network access services at a lower cost, and may be willing to discount or subsidize network access services to capture other sources of revenue. In contrast, we have traditionally purchased network access from facilities-based network service providers to enable our network access service and in these cases, may not be able to compete aggressively on price. In addition, new cloud-based platform operators may enter the mobility services market and compete on price. In either case, we may lose business or be forced to lower our prices to compete, which could reduce our revenues.

Many of our competitors offer additional services that we do not, which enables them to bundle these services and compete favorably against us. Some of our competitors provide services that we do not, such as 3G/4G data roaming, local exchange and long distance services, voicemail and digital subscriber line, or DSL, services. Potential customers that desire these services on a bundled basis may choose to subscribe to network access from a competitor that provides these additional services.

Our potential customers may have unrelated business relationships with our competitors and consider those relationships when deciding between our services and those of our competitors. Many of our competitors are large facilities-

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based carriers that purchase substantial amounts of services or provide other services or goods unrelated to network access services. As a result, if a potential customer is also a supplier to one of our large competitors, or purchases unrelated services or goods from our competitor, the potential customer may be motivated to purchase its network access services from our competitor to maintain or enhance its business relationship with that competitor. In addition, our current or potential carrier customers may already have or may consider buying services from mobility management solution providers which may impact our ability to sell our services to those customers as well as drive market prices down for the services that we offer.

Users may take advantage of free Wi-Fi networks for Internet and corporate access. Telecommunications providers may offer free Wi-Fi as part of a home broadband or other service contract, which may force down the prices which the market will bear for our services and could reduce our revenues.

If our carrier and channel partners do not successfully market our services to their customers, then our ability to grow our revenues could be impaired.

We sell our services directly through our sales force and indirectly through our channel partners, which include telecommunication carriers, systems integrators and value-added resellers. A large percentage of our sales outside the United States are made through our carrier and channel partners. Our business depends on the efforts and the success of these carrier and channel partners in marketing our services to their customers. Our own ability to promote our services directly to our carrier and channel partners’ customers is often limited. Many of our carrier and channel partners may offer services to their customers that may be similar to, or competitive with, our services. Therefore, these channel partners may not actively promote our services. If our channel partners fail to market our services effectively, our ability to grow our revenue could be reduced and our business may be impaired.

Our revenue and overall profitability may be adversely impacted by material reductions in existing customer and partner purchase commitments.

Our customers and partners have traditionally entered into contractual provisions that require them to pay the greater of the fees generated from the use of our services or a minimum committed amount over a pre-determined time period. Minimum commitments are negotiated by customers to improve their unit pricing, effectively guaranteeing a certain volume to achieve a reduced unit price. Recent global economic conditions in certain cases caused our customers and partners to generate fees from the use of our services that are significantly less than their minimum committed amounts. Consequently this shortfall has caused some partners and customers upon renewal of their contracts with us, to renew with a lower minimum commitment and in some cases with no minimum commitment. Additionally, in some cases partners and customers are requesting a re-evaluation of their minimum commitments on a prospective basis during the term of their existing contract; to maintain these commercial relationships, we have addressed these requests on a contract by contract basis. The reduction or elimination of minimum purchase commitments could result in lower future revenues.

Our software is complex and may contain errors that could damage our reputation and decrease usage of our services.

Our software may contain errors that interrupt network access or have other unintended consequences. If network access is disrupted due to a software error, or if any other unintended negative results occur, such as the loss of billing information, a security breach, unauthorized access to our cloud-based platform or the introduction of a virus by our software onto our customers’ computers or networks, our reputation could be harmed and our business may suffer. Our contracts generally limit our exposure to incidental and consequential damages and to the extent possible, we further limit our exposure by entering into insurance policies that are designed to protect our customers and us from these and other types of losses. If these contract provisions are not enforced or enforceable, or if liabilities arise that are not effectively limited or insured, our operating results and financial condition could be harmed.

Because a meaningful portion of our business is international, we encounter additional risks, which may impact our revenues and profitability.

We generate a substantial portion of our revenues from international customers. Revenues from customers domiciled outside of the United States were approximately 65% of our revenues in 2014, of which approximately 48% and 15% were generated in the EMEA and Asia Pacific regions, respectively. The functional currency of our foreign subsidiaries is the U.S. Dollar and we currently bill nearly all of our services in U.S. Dollars. However, we pay certain expenses in local currencies. During the years ended December 31, 2014, 2013 and 2012, we have not entered into any hedging contracts to manage foreign currency exposure. Our international operations subject our business to specific risks that could negatively impact our business, including:

• Generally longer payment cycles for foreign customers;

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• The impact of changes in foreign currency exchange rates on both the attractiveness of our USD-based pricing and our operating results, particularly upon the re-measurement of assets, liabilities, revenues and expenses and the transactional settlement of outstanding local currency liabilities;

• High taxes in some foreign jurisdictions;

• Difficulty in complying with Internet and data privacy related regulations in foreign jurisdictions;

• Difficulty enforcing intellectual property rights and weaker laws protecting these rights; and

• Ability to efficiently deploy capital and generate returns in foreign jurisdictions.

We may be exposed to credit risk, collection risk and payment delinquencies on our accounts receivable.

A substantial majority of our outstanding accounts receivables are not secured. Our standard terms and conditions permit payment within a specified number of days following the receipt of our services. While we have procedures to monitor and limit exposure to credit risk on our receivables, there can be no assurance such procedures will effectively limit our collection risk and avoid losses. In addition, under poor global economic conditions, certain of our customers have faced and may face liquidity concerns and have delayed and may delay or may be unable to satisfy their payment obligations, which may have a material adverse effect on our financial condition and operating results.

Our sales cycles are lengthy and could require us to incur substantial costs that may not result in related revenues.

Our business is characterized by a lengthy sales cycle. Once a contract with a customer is signed there is typically an extended period before the customer or customer’s end-users actually begin to use our services,

which is when we begin to realize network revenues. As a result, we may invest a significant amount of time and effort in attempting to secure a customer which may not result in any revenues in the near term. Even if we enter into a contract, we may have incurred substantial sales-related expenses well before we recognize any related revenues. If the expenses associated with sales efforts increase and, we are not successful in our sales efforts, or we are unable to generate associated offsetting revenues in a timely manner, our operating results could be harmed.

Cyber security risks and privacy concerns related to Internet-based services could reduce demand for our services.

The secure transmission of confidential information and mission critical data when using Internet-based services is extremely important to our customers. A key component of our ability to attract and retain customers is the security measures that we have engineered into our network for the authentication of the end-user’s credentials. These measures are designed to protect against unauthorized access to our customers’ networks. Because techniques used to obtain unauthorized access or to sabotage networks change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures against unauthorized access or sabotage. If an actual or perceived breach of network security occurs, that is attributable to our services, the market perception of the effectiveness of our cyber security measures could be harmed resulting in a negative impact to our business.

As part of providing our services, we collect certain information about the users of our service. As such we must comply with evolving laws and regulations regarding the protection and disclosure of such user information. While we have taken steps to comply with applicable privacy laws and regulations and to protect user information, any well-publicized compromises of our users’ data may reduce demand for our services and harm our business.

We rely significantly on information technology to accurately bill our customers and any failure, inadequacy or interruption of that technology could negatively impact our ability to report on our financial performance on a timely basis.

A key component of our ability to attract and retain customers is the timely and accurate furnishing of monthly detail billing records of activity on our network, rated for the agreements in place with both our customers and our suppliers. Our ability to meet these billing requirements, as well as to effectively manage and maintain our books and records and internal reporting requirements, depends significantly on our internal information technology.

If licenses to third party technologies do not continue to be available to us at a reasonable cost, or at all, our business and operations may be adversely affected.

We license technologies from several software providers that are incorporated into our services. We anticipate that we will continue to license technology from third parties in the future. Licenses to third party technologies may not continue to be available to us at a reasonable cost, or at all. The loss of the right to use these technologies or other technologies

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that we license could have an adverse effect on our services and increase our costs or cause interruptions, degradations or delays in our services until substitute technologies, if available, are developed or identified, licensed and successfully integrated into our services.

Litigation arising out of intellectual property infringement could be expensive and disrupt our business.

We cannot be certain that our services do not, or will not, infringe upon patents, trademarks, copyrights or other intellectual property rights held by third parties, or that other parties will not assert infringement claims against us. Any claim of infringement of proprietary rights of others, even if ultimately decided in our favor, could result in substantial costs and diversion of our resources. Successful claims against us may result in an injunction or substantial monetary liability, which in either case could significantly impact our results of operations or materially disrupt the conduct of our business. If we are enjoined from using a technology, we will need to obtain a license to use the technology, but licenses to third-party technology may not be available to us at a reasonable cost, or at all.

To compete we must attract and retain key employees, and our failure to do so could harm our results of operations.

To compete we must attract and retain executives, sales representatives, engineers and other key employees. Hiring and retaining qualified executives, sales representatives and engineers are critical to our business, and competition for experienced employees in our industry can be intense. If we experience significant turnover of our executives, sales representatives, engineers and other key employees it will be difficult to achieve our business objectives and could adversely impact our results of operations.

If we fail to develop and effectively market our brand, our operating results may be harmed.

We believe that expanding awareness of the iPass brand is important to growing and achieving acceptance of our iPass Open Mobile Platform. We have increased our marketing efforts, including new promotional and marketing activities, to further implement our global marketing objectives. These promotional and marketing activities may not result in any increased revenue. Further, any potential revenue increase as a result of these promotional and marketing activities may not offset the expenses incurred in further promoting the iPass brand.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

We currently lease approximately 48,000 square feet of space for our headquarters in Redwood Shores. We recently signed a lease renewal and effective May 1, 2015, we will lease approximately 25,000 square feet of space for our headquarters in Redwood Shores, California under a lease that expires in 2020. We also lease sales and support offices in other parts of the United States and abroad in EMEA and Asia Pacific. We believe that our principal facility in Redwood Shores, and sales and support offices in other parts of the United States and abroad are adequate for our business needs, and we expect that additional facilities will be available in other jurisdictions to the extent we need to add new offices.

Item 3. Legal Proceedings

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Price Range of Common Stock

Our common stock is traded on the NASDAQ Global Select Market under the symbol “IPAS”. The following table sets forth the intra-day high and low sale price of our common stock, in each quarterly period presented within the two most recent years, as reported on the NASDAQ Global Select Market:

	Price range
	High		Low
Year ended December 31, 2014:
First Quarter	$	1.88	$	1.45
Second Quarter	1.70		1.05
Third Quarter	1.82		1.11
Fourth Quarter	1.67		1.32
Year ended December 31, 2013:
First Quarter	$	2.37	$	1.85
Second Quarter	2.08		1.56
Third Quarter	2.36		1.78
Fourth Quarter	2.20		1.29

We had 65,958,694 shares of our common stock outstanding as of February 27, 2015, held by 115 holders of record, although there are a significantly larger number of beneficial owners of our common stock.

Dividends

We did not pay cash dividends on our common stock in 2014, 2013, or 2012. We currently do not expect to pay cash dividends, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on the financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.

Unregistered Sales of Equity Securities and Use of Proceeds

During the year ended December 31, 2014, the Compensation Committee of our Board of Directors authorized the withholding of shares upon the vesting of restricted stock awards held by an executive officer in order to satisfy tax obligations that are triggered/realized at the time of vesting; the number of shares that have been withheld from the total amount vested in order to satisfy certain tax obligations is set forth in the table below.

Date Shares Withheld	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or approximate dollar value) of Shares (or units) That May Yet Be Purchased Under the Plans or Programs
August 29, 2014	37,580	$	1.16	$	—	$	—
October 10, 2014	3,757	$	1.57	$	—	$	—

(1) In this table, the number of shares that have been withheld are referred to as the “Total Number of Shares Purchased.” We do not currently have any stock repurchase plan in place.

(2) The price per share was equal to the closing market price of our common stock on the date the shares were withheld.

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Performance Graph⁽¹⁾ 

The performance line graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the NASDAQ Market Index and the Russell 2000 Index for the five years ended December 31, 2014. The graph and table assumes that $100 was invested on December 31, 2009 in our common stock, the NASDAQ Market Index and the Russell 2000 Index and that all the dividends were reinvested.

	12/31/09		12/31/10		12/31/11		12/31/12		12/31/13		12/31/14
iPass Inc.	$	100.00	$	127.32	$	144.64	$	186.40	$	159.92	$	139.55
Russell 2000 Index	100.00		126.81		121.52		141.42		196.32		205.93
NASDAQ Market Index	100.00		118.02		117.04		137.47		192.62		221.02

We do not believe that there is any published industry or line of business indices that are directly relevant to our line of business. In addition, we do not believe that we can construct a peer group index as many of the services similar to ours are only a small portion of the business of the companies providing such services. Consequently, in addition to the NASDAQ Market Index, we are comparing our stock price performance to the Russell 2000 Index because we believe that this broad market index provides a reasonable comparison of stockholder returns.

⁽¹⁾ This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of iPass under the 1933 Act or the 1934 Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Item 6. Selected Financial Data

The following table sets forth selected financial data from continuing operations as of the end of, and for, the last five fiscal years. This selected financial data should be read in conjunction with the consolidated financial statements and related notes included in Item 15 of this report.

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	Year Ended December 31,
	2014			2013			2012			2011			2010
	(In thousands, except per share data)
Statement of Continuing Operations Data
Revenue	$	69,804		$	77,729		$	92,530		$	110,703		$	128,675
Total cost of revenues and operating expenses	89,253			92,673			98,533			113,667			133,454
Operating loss	(19,449		)	(14,944		)	(6,003		)	(2,965		)	(4,779		)
Net loss from continuing operations	(12,205		)	(14,705		)	(5,991		)	(3,312		)	(3,914		)
Basic and diluted net loss per share from continuing operations	(0.19		)	(0.23		)	(0.10		)	(0.06		)	(0.07		)
Cash dividends declared per common share	—			—			—			0.07			0.48
Total assets	$	55,255		$	54,916		$	60,124		$	63,105		$	73,982
Total stockholders’ equity	38,481			29,242			36,901			37,447			37,822

On June 30, 2014, we signed and closed the sale of our Unity Managed Network Services business unit. As a result, fiscal 2014 results of operations and all prior comparative periods are recast to reflect the Unity Managed Network Services business as a discontinued operation.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section is organized as follows:

Key Corporate Objectives	Our overall strategy and goals
Significant Trends and  Events	Operating, financial and other material highlights affecting our company
Key Operating Metrics	Discussion of key metrics and measures that we use to evaluate our operating performance
Segment Financial Information and Geographic Information	Discussion of the segment of our business: Mobility Services
Critical Accounting Policies and Estimates	Accounting policies and estimates that we believe are most important to understanding the assumptions and judgments incorporated in our reported financial results
Results of Operations	An analysis of our financial results comparing the years ended December 31, 2014, December 31, 2013 and December 31, 2012
Liquidity and Capital Resources	An analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity

Overview

We provide global enterprises and telecommunications carriers with cloud-based mobility management and Wi-Fi connectivity services.

As announced on July 1, 2014, we signed and closed the sale of our Unity Managed Network Services business unit ("Unity business") on June 30, 2014. Our Unity business was focused on delivering and managing high speed Wi-Fi and WAN managed network solutions to customers in a variety of industries. Our fourth quarter 2014 and fiscal 2014 results of operations and all prior comparative periods are recast to reflect the Unity business as a discontinued operation, and our MD&A focuses primarily on our continuing operations. For a detailed discussion of our business, see “Item 1. Business.”

Key Corporate Objectives

We are focused on driving revenue growth and profitability by adding new customers through brand awareness, improving our customer activation rates, and optimizing end user experience. Our plan is to continue to expand the strategic value of our business by leveraging our mobility assets to address both large and compelling market opportunities and to execute on key growth initiatives in our business. For a detailed discussion regarding our key corporate objectives, see section entitled “Our Strategy” under “Item 1. Business.”

Significant Trends and Events

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The following describes significant trends and events that impacted our financial condition, results of operations, and/or the direction of our business in 2014:

Continued Focus on Growing Users

We have continued to show solid progress against two key metrics: (i) the number of active OM Platform Active users; and (ii) the number of OP Wi-Fi Network users. During 2014, we grew our Open Mobile Platform users from 622,000 for the fourth quarter of 2013 to 814,000 for the fourth quarter of 2014. We grew our Open Mobile Wi-Fi Network users from 67,000 for the fourth quarter of 2013 to 84,000 for the fourth quarter of 2014. Our Open Mobile growth has been driven by a combination of organic customer user and usage ramps, legacy platform customer migrations, and new enterprise customer acquisition. We are focused on growing Open Mobile revenues by growing these two key metrics. See “Key Operating Metrics” below for a full discussion of our user metrics.

Broadened our Wholesale OMX Distribution Channels

Our OMX business was originally developed as a wholesale product for our carrier partners to resell Wi-Fi network access to their end-users. While this is still a viable distribution channel for the OMX business, in 2014 we saw success in broadening that wholesale distribution to a variety of other reseller partners, including original equipment manufacturers (OEMs), premium branding partners, and software product and service providers. Opening these new distribution channels in 2014 resulted in growing OMX revenue by 29% year over year and has provided new opportunities to monetize our Wi-Fi network with consumers.

Sold our Unity Managed Network Services Business

We announced on July 1, 2014, that we signed and closed the sale of the Unity business on June 30, 2014. Our fourth quarter 2014 results of operations and all prior comparative periods are recast to reflect the Unity business as a discontinued operation. Selling our non-strategic Unity business has allowed management to focus time and resources fully on our OM business.

Actively Managed the Wind Down of our Legacy Revenues

We define our legacy revenue to include Dial-up and 3G network, our iPC platform, and iPC user driven network usage. Legacy revenues represented 17% of our 2014 revenue, down from 38% for 2013. We exited the fourth quarter of 2014 with legacy revenue representing 11% of revenue for the quarter. We have actively terminated supply agreements for dial and 3G services and will continue to wind down those revenue streams. We have migrated a significant portion of our iPC users to OM and will continue to migrate or terminate the remaining iPC users.

Key Operating Metrics

Described below are key metrics that we use to evaluate our operating performance and our success in transforming our business and driving future growth.

OM Wi-Fi Network Users

OM Wi-Fi Network Users is the number of our platform users each month in a given quarter that paid for Wi-Fi network services from iPass.

OM Platform Active Users

OM Platform Active Users is the number of users who were billed Open Mobile platform fees and who have used or deployed Open Mobile.

The following table summarizes the number of active users of iPass OME services (in thousands). Each metric below is calculated as the average number of active users per month, during a given quarter, for which a fee was billed by iPass for either Wi-Fi or Platform services:

	For the Quarter Ended
	December 31, 2014	September 30, 2014	June 30, 2014	March 31, 2014	December 31, 2013
Wi-Fi Network Users	84	78	80	71	67
Active Platform Users	814	765	753	681	622

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)

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Adjusted EBITDA is used by our management as a measure of operating efficiency, financial performance and as a benchmark against our peers and competitors. In addition, we also use this metric as a factor in our incentive compensation payouts. Management also believes that Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties to understand our performance excluding the impact of items which may obscure trends in our core operating performance. Furthermore, the use of Adjusted EBITDA facilitates comparisons with other companies in our industry which may use similar financial measures to supplement their GAAP (accounting principles generally accepted in the United States) results. We define Adjusted EBITDA as net loss adjusted for interest, income taxes, depreciation and amortization, stock-based compensation, restructuring charges, net income (loss) from discontinued operations, collection of previously written off bad debt expense from bankruptcy proceeding, certain state sales and federal tax items and other discrete items, and other non-operating income. We adjust for these excluded items because we believe that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of our control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual or infrequent and we do not expect them to occur in the ordinary course of business; or non-cash expenses involving stock option grants and restricted stock issuances. Adjusted EBITDA is not a measure determined in accordance with GAAP and should not be considered in isolation or as a substitute for operating income (loss), net income (loss) or any other measure determined in accordance with GAAP.

The following table reconciles Adjusted EBITDA to GAAP net loss (in thousands):

	Year Ended December 31,
	2014			2013			2012
Adjusted EBITDA income (loss)	$	(13,651	)	$	(9,368	)	$	(1,736	)
Interest income (expense)	(119		)	(18		)	19
Income tax benefit (expense)	7,101			782			269
Depreciation of property and equipment	(3,154		)	(2,397		)	(2,010		)
Amortization of intangible assets	—			—			(169		)
Stock-based compensation	(1,996		)	(3,061		)	(2,346		)
Restructuring (charges) benefit	(733		)	(653		)	(26		)
Other non-operating income	2			10			8
Collection of previously written off bad debt expense from bankruptcy proceeding	345			—			—
Net income (loss) from discontinued operations	19,179			2,393			1,613
GAAP Total Net income (loss)	$	6,974		$	(12,312	)	$	(4,378	)

Segment Financial Information and Geographic Information

On June 30, 2014 we entered into an agreement and completed the sale of our Unity business segment, which is reported in this filing as discontinued operations. Therefore, we currently have a single reportable operating

segment, Mobility Services.

Mobility Services reflects our two primary areas of mobility services, (i) enterprise mobility services that consist of Open Mobile Enterprise services, our legacy enterprise mobility services and other ancillary services including professional consulting and other value-add services, and (ii) our Open Mobile Exchange services that were launched in 2011.

For a more complete discussion of business risks that Mobility Services faces see the discussion that appears in Part I, “Item 1A. Risk Factors,” of this Form 10-K.

For further information on the Mobility Services segment and geographic information, refer to the information contained in Note 14, “Segment and Geographic Information,” in the Notes to the Consolidated Financial Statements included in Item 15. For risks attendant to foreign operations, see the risk entitled “Because a meaningful portion of our business is international, we encounter additional risks, which may impact our revenues and profitability” in “Item 1A. Risk Factors” of this Form 10-K.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the

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reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on our historical experience, knowledge of current conditions and our belief of what could occur in the future considering available information, including assumptions that are believed to be reasonable under the circumstances. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these policies. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition. We believe our most significant estimates, judgments and assumptions used in the preparation of our consolidated financial statements are used in the following critical accounting policies.

Revenue Recognition

Our revenue recognition policy requires us to make certain estimates and judgments, for example, in the recognition of monthly minimum commitment (“MMC”) revenue.

For customers that have agreed to a MMC fee in connection with network usage, such customer’s monthly invoice reflects the greater of the customer’s actual usage during the month or the customer’s contractually committed monthly minimum for that month. If the MMC exceeds actual usage (“Shortfall”), we determine whether the Shortfall is fixed or determinable in accordance with the revenue recognition criteria. If we conclude that the Shortfall is fixed or determinable, based upon customer specific collection history, and all other revenue recognition criteria have been met, we recognize as revenue the amount of the Shortfall which is invoiced. If the customer is in a Shortfall situation and it is determined that the Shortfall is not fixed or determinable, we recognize revenue only when the Shortfall is collected.

Performance -Based Restricted Stock Awards

Certain restricted stock awards have performance-based goals based on the achievement of targeted quarterly revenue of Open Mobile or targeted EBITA, which require an assessment of the probability and timing of vesting. We amortize stock-based compensation expense for performance-based awards on a graded vesting basis over the vesting period, after assessing probability of achieving the requisite performance criteria.  Estimating the time in which we expect to achieve the requisite performance criteria requires judgment. If events or circumstances occur that cause us to revise our estimated vest dates, we recognize the unamortized expense prospectively over the revised estimated vesting period.  Such a change in estimated vest dates could have a material impact on our financial statements. We believe vesting of all performance-based restricted stock awards is probable at December 31, 2014.

Recently Issued Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-11, Income Taxes: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires the unrecognized tax benefit to be presented as a reduction of a deferred tax asset for a net operating loss carryforward, or similar tax loss or tax credit carryforward, except that, if a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position, then the unrecognized tax benefit should be presented as a liability. ASU No. 2013-11 is effective prospectively for fiscal years, and interim periods within those years beginning after December 15, 2013. The adoption of ASU No. 2013-11 has not had a material impact on our financial position or results of operations.

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 changes the requirements for reporting discontinued operations under current U.S. GAAP (Accounting Standards Codification Subtopic 205-20 Discontinued Operations, “ASC 205-20”) and provides a new definition of discontinued operations. ASU No. 2014-08 is effective prospectively for fiscal years, and interim periods within those years beginning after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. We have not adopted ASU 2014-08 in the current fiscal year. We do not expect that this guidance will materially impact our consolidated financial statements.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2017. Early application is not permitted. The standard permits the use of either

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the retrospective or cumulative effect transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

On August 27, 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess an entity's ability to continue as a going concern, and provide related footnote disclosures in certain circumstances. The new standard is effective for us in the first annual period ending after December 31, 2016. Early adoption is permitted. We have not adopted ASU 2014-15 in the current fiscal year. We do not expect that this guidance will materially impact our consolidated financial statements.

Results of Operations

Sources of Revenues

On June 30, 2014, we entered into an agreement and completed the sale of our Unity business. Accordingly, we currently have a single reportable operating segment, Mobility Services, and analyze revenue from continuing operations. Within Mobility Services, we differentiate and analyze our Open Mobile and legacy generated revenues separately.

Open Mobile generated revenues consist of:

• Network—Wi-Fi and minimum customer commitments based on the number of network users sourced from the Open Mobile platform.

• Platform—Fees based on the number of Open Mobile Platform Active users and other fees specific to providing additional value add services to Open Mobile customers.

• Open Mobile Exchange—Revenues generated from our OMX customers.

Legacy generated revenues consist of Dial-up and 3G network, our iPC platform, and related platform services, as well as iPC driven network usage, including iPC user driven Wi-Fi and minimum commit shortfall.

	For the Year Ended December 31,
	2014		2013		2012
	(in thousands)
Mobility Services	$	69,804	$	77,729	$	92,530
Open Mobile	57,737		47,915		27,057
Open Mobile Enterprise:	54,697		45,553		26,271
Network	38,625		29,710		13,963
Platform and other fees	16,072		15,843		12,308
Open Mobile Exchange	3,040		2,362		786
Legacy iPC	12,067		29,814		65,473

For the year ended December 31, 2014 compared to 2013, Mobility Service revenue decreased $7.9 million or 10% as the decrease in legacy iPC revenue of $17.7 million outpaced the increase in Open Mobile ("OM") revenue of $9.8 million. Legacy iPC declines were attributed to customer terminations, anticipated usage reductions in our 3G and Dial-up services, and continued migrations to OM. Growth in OM was attributable to organic growth of OM network and active platform users, and migration of Legacy iPC customers.

For the year ended December 31, 2013 compared to 2012, Mobility Service revenue decreased $14.8 million or 16% as the decrease in legacy iPC revenue of $35.7 million outpaced the increase in OM revenue of $20.9 million. Legacy iPC declines were attributed to migrations, customer terminations, and anticipated usage reductions in our 3G and Dial-up services. Growth in OM was attributable to organic growth of OM network and active platform users, and migration of Legacy iPC customers.

Network Gross Margin

We use network gross margin as a metric to assist us in assessing the profitability of our various network services. Our overall network gross margin is defined as network revenue less network access costs divided by network revenue.

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	Year Ended December 31,
	2014		2013		2012
Network Gross Margin (%)	40.9	%	45.4	%	51.6	%

The 4.5 and 6.2 percentage point decreases in network gross margin from 2013 to 2014 and 2012 to 2013, respectively, were primarily due to decreases in high margin revenue streams such as monthly minimum commitment revenue and Dial-up, as well as the impact of higher Wi-Fi usage by customers on flat rate price plans, and weakening of US dollar against currencies we buy network access costs.

Cost of Revenues and Operating Expenses

Network Access Costs (NAC)

NAC consist of charges for network access which we pay to our network service providers and other direct cost of sales.

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except percentages)
Network access costs	$	29,608		$	29,253		$	32,766
As a percentage of revenue	42.4		%	37.6		%	35.4		%

Network access costs increased approximately $0.4 million or 1% from 2013 to 2014 primarily due to the increase of OME and OMX network access costs of $2.4 million driven by the growth in Wi-Fi network users and usage, partially offset by the decrease of 3G network access costs of $2.1 million due to a decline on 3G legacy customer usage. In addition, network access costs as a percentage of revenue increased by 4.8 percentage points from 37.6% for 2013 to 42.4% for 2014 primarily due to the decrease in minimum commitment and platform revenue of 25% and 14%, respectively. Minimum commitment and platform revenue have no associated network access costs.

Network access costs decreased approximately $3.5 million or 11% from 2012 to 2013 primarily due to the decrease of 3G network access costs of $4.2 million due to termination of 3G legacy customers, partially offset by the increase of $0.7 million related to OME and OMX network access costs due to the growth in Wi-Fi network users and usage. In addition, network access costs as a percentage of revenue increased by 2.2 percentage points from 35.4% for 2012 to 37.6% for 2013 primarily due to the decrease in minimum commitment and platform revenue of 35% and 12%, respectively.

Network Operations

Network operations expenses consist of compensation and benefits for our network engineering, customer support and network access quality personnel, outside consultants, transaction center fees, network equipment depreciation, inventory costs, and allocated overhead costs.

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except percentages)
Network operations expense	$	13,159		$	12,701		$	13,525
As a percentage of revenue	18.9		%	16.3		%	14.6		%

The increase in network operations expenses of approximately $0.5 million or 4% for 2014 compared to 2013 was primarily due to the increase in depreciation and maintenance expense of $1.1 million as we have invested to refresh our technology infrastructure. This increase is partially offset by decreases in headcount-related costs of $0.6 million as we continue to manage our cost structure.

The decrease in network operations expenses of approximately $0.8 million or 6% for 2013 compared to 2012 was primarily due to a decrease in legacy 3G card inventory expense and headcount-related costs of approximately $0.5 million and $0.3 million, respectively.

Research and Development

Research and development expenses consist of compensation and benefits for our research and development personnel, consulting, and allocated overhead costs.

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	Year Ended December 31,
	2014			2013			2012
	(In thousands, except percentages)
Research and development expenses	$	11,921		$	13,317		$	13,733
As a percentage of revenue	17.1		%	17.1		%	14.8		%

The decrease in research and development expenses of approximately $1.4 million or 11% for 2014 compared to 2013 was primarily due to the decrease in headcount, consulting, and support and maintenance cost of approximately $1.4 million as our OM platform has reached increasing product maturity.

The decrease in research and development expenses of approximately $0.4 million or 3% for 2013 compared to 2012 was primarily due to lower headcount-related costs of approximately $0.4 million.

Sales and Marketing

Sales and marketing expenses consist of compensation, benefits, advertising and promotion costs, and allocated overhead costs.

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except percentages)
Sales and marketing expenses	$	15,759		$	16,396		$	17,872
As a percentage of revenue	22.6		%	21.1		%	19.3		%

The decrease in sales and marketing expenses of approximately $0.7 million or 4% for 2014 compared to 2013 was primarily due to lower headcount-related costs of approximately $1.0 million. This decrease was offset by increases in marketing program expenses of $0.2 million.

The decrease in sales and marketing expenses of approximately $1.5 million or 8% for 2013 compared to 2012 was mainly due to lower headcount-related costs of $1.3 million, and a decrease of $0.2 million related to marketing programs.

General and Administrative

General and administrative expenses consist primarily of compensation and benefits for general and administrative personnel, facilities, legal and accounting expenses.

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except percentages)
General and administrative expenses	$	18,073		$	20,353		$	20,442
As a percentage of revenue	25.9		%	26.2		%	22.1		%

The decrease in general and administrative expenses of approximately $2.3 million or 11% for 2014 compared to 2013 was primarily due to a decrease in headcount, consulting, and professional services expenses of $2.0 million associated with ongoing cost management initiatives, and a decrease in depreciation expense of $0.3 million.

The decrease in general and administrative expenses of approximately $0.1 million for 2013 compared to 2012 was primarily due to decrease in headcount, payroll tax, consulting expenses of $0.3 million, a decrease in facility costs of $0.4 million, a decrease in rent expense of $0.2 million, partially offset by an increase in depreciation expense of $0.8 million related to our going "live" with our ERP system.

Restructuring Charges

During the third quarter of 2014, the Company announced a restructuring plan (Q3 2014 Plan) to re-align its cost structure as a result of the divestiture of its Unity business, which resulted in workforce reduction of approximately 20 employees worldwide and the termination of lease contracts for certain leased facilities.

In the first quarter of 2013, we announced a restructuring plan (Q1 2013 Plan) to re-align our cost structure to focus investments, resources and operating expenses on our growing Open Mobile business, which resulted in a workforce reduction of 16 positions across all functional areas and termination of a lease contract.

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During the year ended December 31, 2009, we announced restructuring plans (2009 Plans) to reduce our operating costs and focus our resources on key strategic priorities, which resulted in a workforce reduction of 146 positions across all functional areas and abandonment of certain facilities and termination of a contract obligation. We completed all terminations by the first quarter of 2010.

We incurred a restructuring charge of approximately $0.7 million for the year ended December 31, 2014, compared to the restructuring charge of $0.7 million and $26,000 for the same period in 2013 and 2012, respectively. These activities were related to our Q3 2014, Q1 2013 and 2009 Plans.

Non-Operating Income and Expenses

Interest and other income and expenses

During the years ended December 31, 2014, and 2013, we acquired enterprise database software and infrastructure hardware, which were financed through a vendor, and incurred approximately $0.1 million and $30,000 of interest expenses, respectively.

During the year ended December 31, 2014, we collected approximately $0.3 million on final bankruptcy court settlement of a customer receivable from 2004 that had previously written off as uncollectible.

Foreign Exchange Gains and Losses

Foreign exchange gains and losses primarily include realized and unrealized gains and losses on foreign currency transactions. Foreign currency exchange rate fluctuations impact the re-measurement of certain assets and liabilities denominated in currencies other than the U.S. Dollar and generate unrealized foreign exchange gains or losses. In addition, some of our network access costs are invoiced in currencies other than the U.S. Dollar. The transactional settlement of these outstanding invoices and other cross-currency transactions generate realized foreign exchange gains or losses depending on the fluctuation of exchange rates between the date of invoicing and the date of payment.

During the years ended December 31, 2014, 2013 and 2012, we did not enter into any hedging contracts and foreign exchange losses were less than $0.1 million, $0.5 million and $0.3 million, respectively. The foreign exchange losses in 2014 and 2013 were mainly due to weakening of the U.S. dollar against Euro and British Pound at the time we settled certain non-U.S. Dollar denominated network access costs as well as the unfavorable re-measurement of foreign currency denominated assets and liabilities. During the second half of 2014, the US dollar strengthened, minimizing the foreign exchange impact on the year. The foreign exchange loss in 2012 was primarily due to the unfavorable re-measurement of foreign currency denominated assets and liabilities.

Provision For (Benefit From) Income Taxes

Income tax expense was recorded in discontinued operations for the year ended December 31, 2014, 2013, and 2012 of approximately $7.3 million, $1.4 million, and $0.9 million, respectively. This primarily reflects tax expense on discontinued operations offsetting benefit in continuing operations of $7.1 million, $0.8 million, and $0.3 million for the year ended December 31, 2014, 2013, and 2012 respectively. The offsetting tax benefits in 2014 represent the Company’s ability to utilize net operating losses to offset tax associated with the gain on the sale of the Unity business. The offsetting tax benefits in 2012 and 2013 represent the Company’s ability to utilize net operating losses to offset tax associated with the discontinued operation’s income.

As a result of the sale of Unity and the discontinued operations presentation, the effective tax rate for continuing operations was a benefit of 36%, 5%, and 4% for 2014, 2013 and 2012, respectively as income from the discontinued operations, including the gain on sale in 2014, was offset by benefit in the continuing operations.

Divestiture of Business Segment

We announced on July 1, 2014, that we had completed the sale of our Unity business for $28.1 million to Tolt Solutions, and accrued approximately $2.2 million of transaction costs which were fully paid as of December 31, 2014. Of the purchase price, $1.4 million was placed in an escrow account until June 30, 2015, to satisfy any claims for the indemnification obligations of iPass for breaches of representations, warranties and covenants and certain other specified matters. The sale resulted in a before tax gain of $25.0 million in the second quarter of 2014. The purchase agreement was signed and the sale was completed on June 30, 2014.

Unity focused on delivering high speed Wi-Fi and WAN managed network solutions to customers in a variety of industries, including retail, financial services, and healthcare. In accordance with applicable accounting guidance for the

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disposal of long-lived assets, the results of the Unity business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented.

The following table presents the revenues and components of discontinued operations, net of tax.

	Six Months Ended June 30,			Year Ended  December 31,
	2014			2013			2012
Revenue	15,458			33,386			33,548
Income from discontinued operations before income taxes	1,506			3,744			2,524
Gain on sale of discontinued operations before income taxes	25,014			—			—
Provision for income taxes	(7,341		)	(1,351		)	(911		)
Income from discontinued operations, net of tax	$	19,179		$	2,393		$	1,613

In accordance with ASC 205-20 Discontinued Operations, the above table excluded certain shared overhead costs and transfer pricing adjustments that were previously allocated to the Unity business segment in the historical iPass consolidated financial statements that were filed with the Securities and Exchange Commission. The provisions for income taxes primarily reflect tax expense on discontinued operations including the gain on sale, which is mostly offset by benefit in continuing operations.

Liquidity and Capital Resources

We had cash and cash equivalents of $33.8 million at December 31, 2014, compared to $24.0 million at December 31, 2013.

	Twelve months ended December 31,
	2014			2013			2012
	(In thousands)
Cash Flows
Net cash used in (provided by) operating activities	$	(14,836	)	$	(2,432	)	$	3,463
Net cash provided by (used in) investing activities	25,532			(1,598		)	(3,494		)
Net cash (used in) provided by financing activities	(899		)	1,225			1,414
Net increase (decrease) in cash and cash equivalents	$	9,797		$	(2,805	)	$	1,383

Operating Activities

Net cash from operating activities decreased by approximately $12.4 million from $2.4 million used for the year ended December 31, 2013 to $14.8 million for the same period in 2014. This decrease is mainly due to an increase in net loss after adjusting for the gain on sale of discontinued operations, and changes in working capital mainly driven by timing of payments and reduction of accrued liabilities.

Net cash used in operating activities in 2013 was $2.4 million, compared to net cash provided by operating activities of $3.5 million in 2012 mainly due to an increase in net loss.

Investing Activities

Net cash provided by investing activities increased by approximately $27.1 million from the net cash used in investing activities of $1.6 million for the year ended December 31, 2013 to the net cash provided by investing activities of $25.5 million for the same period in 2014. This increase is mainly due to cash proceeds from the sale of discontinued operations of $26.8 million and $1.0 million decrease in purchases of property and equipment, offset by lower cash generated from release of restricted cash of $0.6 million.

Net cash used in investing activities in 2013 was approximately $1.6 million, compared to net cash used in investing of $3.5 million in 2012, with the reduction mainly due to investment in our ERP system in 2012 that went "live" in January 2013.

Financing Activities

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Net cash from financing activities decreased by approximately $2.1 million from the net cash provided by financing activities of $1.2 million for the year ended December 31, 2013 to the net cash used in financing activities of $0.9 million for the same period in 2014, mainly due to a decrease in the proceeds from the exercise of stock options of $1.2 million and approximately $0.9 million driven by increase in principal payments for vendor financed property and equipment.

Net cash provided by financing activities in 2013 was $1.2 million, compared to net cash provided by financing activities of $1.4 million in 2012, with reduction mainly due to approximately $0.3 million of principal payments for vendor financed property and equipment in 2013.  

Sources of Cash and Future Cash Requirements

We have historically relied on existing cash and cash equivalents and cash flow from operations for our liquidity needs. We use a professional investment management firm to manage a large portion of our cash which is invested primarily in money market accounts. We believe that based on our current business plan and revenue prospects and our anticipated cash flows from operations, our existing cash balances will be sufficient to meet our working capital and operating resource expenditure requirements for at least the next twelve months.

The amount of cash and cash equivalents held by our foreign subsidiaries as of December 31, 2014 and 2013 was $0.9 million and $0.9 million, respectively. We currently do not intend to distribute any of our cumulative earnings by our foreign subsidiaries to the parent company in the U.S.

Primary Uses of Cash

Our principal use of cash in 2014 was for network access costs, payroll related expenses, transactions costs related to the sale of the Unity business segment, settlement of restructuring obligations, payments for vendor financing equipment purchase, and general operating expenses including marketing, office rent, and capital expenditures.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. We did not have any off-balance sheet arrangements at December 31, 2014 and December 31, 2013 as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Contractual Obligations

	Total		Less Than 1  Year		1-3 Years		3-5 Years
	(In thousands)
Operating Lease Obligations	$	7,436	$	1,806	$	3,531	$	2,099
Other Purchase Commitments	6,649		5,946		703		—
Total Contractual Obligations (1)	$	14,085	$	7,752	$	4,234	$	2,099

(1) See Note 11. Commitments and Contingencies and Note 8. Vendor Financed Property and Equipment

As of December 31, 2014, we had unrecognized tax benefits of $0.8 million associated with our uncertain tax positions (as per Note 9 Income Taxes). We are unable to estimate when any cash settlement with a taxing authority might occur. 

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third-parties. In addition, we have entered into indemnification agreements with our directors and certain of our officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and certain of our officers and employees, in certain circumstances. iPass’ product agreements typically include a limited indemnification provision for claims from third parties relating to breach of agreements and iPass’ intellectual property. Certain indemnification agreements may not be subject to maximum loss clauses. If the potential loss from any indemnification claim is considered probable and the amount or the range of the loss can

25

be estimated, we accrue a liability for the estimated loss. To date, claims under such indemnification provisions have not been significant.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Exchange Rate Risk

We are exposed to foreign currency exchange rate risk inherent in conducting business globally in numerous currencies, of which the most significant to our operations for the year ended December 31, 2014 were the Euro, the British Pound, and the Indian Rupee. We are primarily exposed to foreign currency fluctuations related to network access costs denominated in currencies other than the U.S. Dollar. As such, we benefit from a stronger U.S. Dollar and may be adversely affected by a weaker U.S. Dollar relative to the foreign currency. Currently, we do not enter into currency forward exchange or option contracts to hedge foreign currency exposures. The impact of foreign currency fluctuations is also discussed in “Foreign exchange gains (losses)” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Interest Rate Risk

As of December 31, 2014, we had cash and cash equivalents of $33.8 million, restricted cash of $1.6 million and no short-term investments. As of December 31, 2013, we had cash and cash equivalents of $24.0 million, restricted cash of $0.3 million and no short-term investments. Our cash balances are held primarily in bank deposits and money market accounts with a remaining maturity of three months or less at the time of purchase. As a result, we do not believe we are exposed to material interest rate risk.

Item 8. Financial Statements and Supplementary Data

Financial Statements

Our financial statements required by this item are set forth in Item 15 of this report and incorporated by reference here. See Item 15(a)(1) for a listing of financial statements provided in the section titled “Financial Statements.”

Supplementary Data

The following tables present our operating results from continuing operations for each of the eight quarters during 2014 and 2013. This data has been derived from unaudited condensed consolidated financial statements that, in the opinion of our company’s management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such information when read in conjunction with our annual audited consolidated financial statements and notes thereto appearing elsewhere in this report. These operating results are not necessarily indicative of results for any future period (in thousands, except per share amounts):

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	Quarter Ended
	March 31			June 30			September 30			December 31
Year Ended December 31, 2014
Revenues	$	17,637		$	17,762		$	17,250		$	17,155
Operating loss	(6,021		)	(4,580		)	(4,829		)	(4,019		)
Net loss from continuing operations	(5,946		)	(715		)	(3,113		)	(2,431		)
Basic and diluted net loss per share from continuing operations	$	(0.09	)	$	(0.01	)	$	(0.05	)	$	(0.04	)
Total net loss	(5,549		)	20,877			(4,409		)	(3,945		)
Total net (loss) income per share	(0.09		)	0.32			(0.07		)	(0.06		)
	Quarter Ended
	March 31			June 30			September 30			December 31
Year Ended December 31, 2013
Revenues	$	20,909		$	20,288		$	18,539		$	17,993
Operating loss	(4,068		)	(2,518		)	(3,443		)	(4,915		)
Net loss from continuing operations	(3,871		)	(2,212		)	(3,565		)	(5,057		)
Basic and diluted net loss per share from continuing operations	$	(0.06	)	$	(0.04	)	$	(0.05	)	$	(0.08	)
Total net loss	(3,375		)	(1,586		)	(2,842		)	(4,509		)
Total net loss per share	$	(0.05	)	$	(0.03	)	$	(0.04	)	$	(0.07	)

On June 30, 2014, we signed and closed the sale of our Unity Managed Network Services business unit. As a result, all quarters set forth above are recast to reflect the Unity Managed Network Services business as a discontinued operation.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, management of the company conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Exchange Act), as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level, as of the end of the period covered by this report, to ensure that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by us in such reports is accumulated and communicated to the company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such terms is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management of the company conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) in Internal Control-Integrated Framework. Based on that evaluation, our management concluded that, as of December 31, 2014, our internal control over financial reporting was effective based on these criteria. KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Form 10-K and, as part of the audit, has issued a report, included herein on the effectiveness of iPass’ internal control over financial reporting as of December 31, 2014.

Changes in Internal Control Over Financial Reporting

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During the quarter ended December 31, 2014 there have been no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Procedures and Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within iPass have been detected.

Item 9B. Other Information

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information relating to our executive officers and directors will be presented under the captions “Executive Officers” and “Proposal 1—Election of Directors” in our definitive proxy statement in connection with our 2015 Annual Meeting of stockholders to be filed with the Securities and Exchange Commission not later than April 30, 2015 (the “Proxy Statement”). That information is incorporated here by reference.

Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 will be presented under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement. That information is incorporated into this report by reference.

Information concerning our Code of Ethics will be presented under the caption “Code of Conduct and Ethics” in “Proposal—1 Election of Directors” in the Proxy Statement. That information is incorporated here by reference.

Information concerning procedures for recommending nominees for director will be presented under the caption “Corporate Governance and Nominating Committee” in “Proposal 1—Election of Directors” in the Proxy Statement. That information is incorporated here by reference.

Information relating to our audit committee and the audit committee financial experts will be presented under the captions “Information Regarding the Board of Directors and its Committees” and “Audit Committee” in the “Proposal—1 Election of Directors” in the Proxy Statement. That information is incorporated here by reference.

Item 11. Executive Compensation

Information relating to director and executive compensation and other matters required by this Item 11 will be presented under the caption “Executive Compensation and Related Information,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the Proxy Statement. That information is incorporated here by reference.

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

Information relating to the security ownership of our common stock by our management and other beneficial owners will be presented under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement. That information is incorporated here by reference.

Information relating to securities authorized for issuance under equity compensation plans will be presented under the caption “Securities Authorized for Issuance Under Equity Compensation Plans” in the Proxy Statement. That information is incorporated here by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information relating to certain relationships of our directors and executive officers and related transactions and the independence of our directors will be presented under the captions “Independence of the Board of Directors” in the “Proposal—1 Election of Directors” and “Certain Relationships and Related Transactions” in the Proxy Statement. That information is incorporated here by reference.

Item 14. Principal Accounting Fees and Services

The information required by this item will be included under the caption “Principal Accountant Fees and Services” in the “Proposal—2 Ratification of Independent Auditors” in the Proxy Statement. That information is incorporated here by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following financial statements are filed as part of this report:

1. Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	31
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2014 and 2013	32
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014, 2013, and 2012	33
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2014, 2013, and 2012	34
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013, and 2012	35
Notes to Consolidated Financial Statements	36

2. Financial Statement Schedules

Schedule II—Valuation and Qualifying Accounts Receivable 55

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

3. Exhibits

See the Exhibit Index which follows the signature page of this Annual Report on Form 10-K, which is incorporated here by reference.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

iPass Inc.:

We have audited the accompanying consolidated balance sheets of iPass Inc. and subsidiaries (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2014.. In connection with our audits of the consolidated financial statements, we also have audited the accompanying financial statement schedule. We also have audited the Company’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of iPass Inc. and subsidiaries as of December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by COSO.

/s/ KPMG LLP

Santa Clara, California

March 13, 2015

31

iPASS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)

	As of December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	33,814		$	24,017
Accounts receivable, net of allowance for doubtful accounts of $172 and $1,010, respectively	10,063			15,297
Prepaid expenses and other current assets	4,318			4,329
Total current assets	48,195			43,643
Property and equipment, net	6,213			8,442
Other assets	847			2,831
Total assets	$	55,255		$	54,916
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,301		$	9,334
Accrued liabilities	7,188			9,100
Deferred revenue, short-term	437			3,212
Total current liabilities	14,926			21,646
Deferred revenue, long-term	115			2,191
Vendor financed property and equipment	854			1,586
Other long-term liabilities	879			251
Total liabilities	$	16,774		$	25,674
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.001 par value (250,000,000 shares authorized; 64,753,694 and 64,451,031 shares issued and outstanding, respectively)	65			65
Additional paid-in capital	220,368			218,103
Accumulated deficit	(181,952		)	(188,926		)
Total stockholders’ equity	38,481			29,242
Total liabilities and stockholders’ equity	$	55,255		$	54,916

See accompanying notes to Consolidated Financial Statements

32

iPASS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

	For the Year Ended December 31,
	2014			2013			2012
Revenues	$	69,804		$	77,729		$	92,530
Cost of revenues and operating expenses:
Network access costs	29,608			29,253			32,766
Network operations	13,159			12,701			13,525
Research and development	11,921			13,317			13,733
Sales and marketing	15,759			16,396			17,872
General and administrative	18,073			20,353			20,442
Restructuring charges and related adjustments	733			653			26
Amortization of intangible assets	—			—			169
Total cost of revenues and operating expenses	$	89,253		$	92,673		$	98,533
Operating loss	(19,449		)	(14,944		)	(6,003		)
Interest (expense) income, net	(119		)	(18		)	19
Foreign exchange losses	(67		)	(507		)	(288		)
Other income (expenses), net	329			(18		)	12
Loss from continuing operations before income taxes	(19,306		)	(15,487		)	(6,260		)
Benefit from income taxes	7,101			782			269
Net loss from continuing operations	$	(12,205	)	$	(14,705	)	$	(5,991	)
Net income from discontinued operations	$	19,179		$	2,393		$	1,613
Total net income (loss)	$	6,974		$	(12,312	)	$	(4,378	)
Total comprehensive net income (loss)	$	6,974		$	(12,312	)	$	(4,378	)
Total net income (loss) per share - basic and diluted
Loss from continuing operations	$	(0.19	)	$	(0.23	)	$	(0.10	)
Income from discontinued operations	$	0.30		$	0.04		$	0.03
Total net income (loss) per share	$	0.11		$	(0.19	)	$	(0.07	)
Weighted average shares outstanding - basic and diluted	62,613,671			63,411,162			60,711,317

See accompanying notes to Consolidated Financial Statements

33

iPASS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

	Common Stock			Additional Paid-In Capital		Accumulated Comprehensive Income (Loss)	Accumulated Deficit		Total Stockholders’ Equity
	Shares		Amount
Balances, December 31, 2011	59,139		59	209,624		—	(172,236	)	37,447
Exercise of stock options—common stock issued	1,248		2	1,367		—	—		1,369
Restricted stock granted	1,048		—	—		—	—		—
Employee stock purchase plan—common stock issued	186		—	203		—	—		203
Repurchased common stock	(85	)	—	(158	)	—	—		(158	)
Stock-based compensation	—		—	2,418		—	—		2,418
Net loss	—		—	—		—	(4,378	)	(4,378	)
Balances, December 31, 2012	61,536		61	213,454		—	(176,614	)	36,901
Exercise of stock options—common stock issued	1,139		4	1,270		—	—		1,274
Restricted stock granted	1,985		—	—		—	—		—
Restricted stock canceled	(346	)	—	—		—	—		—
Employee stock purchase plan—common stock issued	137		—	216		—	—		216
Stock-based compensation	—		—	3,163		—	—		3,163
Net loss	—		—	—			(12,312	)	(12,312	)
Balances, December 31, 2013	64,451		65	218,103		—	(188,926	)	29,242
Exercise of stock options—common stock issued	135		—	139		—	—		139
Restricted stock granted	480		—	—		—	—		—
Restricted stock canceled	(390	)	—	—		—	—		—
Employee stock purchase plan—common stock issued	119		—	158		—	—		158
Repurchased common stock	(41	)	—	(49	)	—	—		(49	)
Stock-based compensation	—		—	2,017		—	—		2,017
Net income	—		—	—		—	6,974		6,974
Balances, December 31, 2014	64,754		65	220,368		—	(181,952	)	38,481

See accompanying notes to Consolidated Financial Statements

34

iPASS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year Ended December 31,
	2014			2013			2012
Cash flows from operating activities:
Net income (loss)	$	6,974		$	(12,312	)	$	(4,378	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Gain on sale of discontinued operations	(25,014		)	—			—
Stock-based compensation	2,017			3,163			2,418
Amortization of intangible assets	—			—			169
Depreciation, amortization and accretion	3,330			2,776			2,110
Deferred income taxes	(53		)	203			117
Loss on disposal of property and equipment	54			22			3
(Recovery of) provision for doubtful accounts	(169		)	134			(66		)
Changes in operating assets and liabilities:
Accounts receivable	2,816			1,828			4,113
Prepaid expenses and other current assets	(404		)	625			878
Other assets	232			785			718
Accounts payable	(1,637		)	2,063			(1,138		)
Accrued liabilities	(3,406		)	(277		)	(821		)
Deferred revenue	(329		)	(1,218		)	(365		)
Other liabilities	753			(224		)	(295		)
Net cash (used in) provided by operating activities	(14,836		)	(2,432		)	3,463
Cash flows from investing activities:
Purchases of property and equipment	(1,318		)	(2,318		)	(4,465		)
Proceeds from sale of discontinued operations	26,750			—			—
Change in restricted cash	100			720			971
Net cash provided by (used in) investing activities	25,532			(1,598		)	(3,494		)
Cash flows from financing activities:
Net proceeds from issuance of common stock	248			1,490			1,414
Principal payments for vendor financed property and equipment	(1,147		)	(265		)	—
Net cash (used in) provided by financing activities	(899		)	1,225			1,414
Net increase (decrease) in cash and cash equivalents	9,797			(2,805		)	1,383
Cash and cash equivalents at beginning of year	24,017			26,822			25,439
Cash and cash equivalents at end of year	$	33,814		$	24,017		$	26,822
Supplemental disclosures of cash flow information:
Net cash paid for taxes	$	259		$	261		$	375
Accrued amounts for acquisition of property and equipment	73			98			321
Vendor financing of property and equipment	501			2,597			—

See accompanying notes to Consolidated Financial Statements

35

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of iPass Inc. (the “Company”) and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated.

The Company reports comprehensive income (loss) in a single continuous financial statement within the Consolidated Statements of Comprehensive Income (Loss). The Company’s comprehensive income (loss) is equivalent to its net income (loss) because the Company does not have any transactions that are recorded through other comprehensive income (loss).

The Consolidated Statements of Comprehensive Income (Loss) have been reclassified for all periods presented to reflect discontinued operations treatment. (Refer to Note 15 for discussion related to Divestiture of Business Segment).

Note 2. Significant Accounting Policies

Use of Estimates

The preparation of the consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to the valuation of accounts receivables, other long-lived assets, stock-based compensation, legal contingencies, network access costs, income taxes, and sales tax liabilities. These estimates and assumptions are based on management’s best estimates and judgment. Actual results could differ from the estimates made by management with respect to these and other items.

Foreign Currency Accounting

The U.S. Dollar is the functional currency for the Company and all of its subsidiaries; therefore, the Company does not have a translation adjustment recorded through accumulated other comprehensive income (loss). While the Company’s revenue contracts are denominated in United States (“U.S.”) dollars, the Company has foreign operations that incur expenses in various foreign currencies. Monetary assets and liabilities are remeasured using the current exchange rate at the balance sheet date. Non-monetary assets and liabilities and capital accounts are remeasured using historical exchange rates. Foreign currency expenses are remeasured using the average exchange rates in effect during the year. Foreign currency exchange gains and losses are presented separately in the Consolidated Statements of Comprehensive Loss.

Cash Equivalents

The Company considers all highly-liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds.

Restricted Cash

The Company’s restricted cash consists of cash deposited with a national financial institution in connection with irrevocable letters of credit issued to a network service provider. The total amount of restricted cash included in other assets (non-current) on the Consolidated Balance Sheets was $0.2 million and $0.3 million at December 31, 2014 and 2013, respectively. In addition $1.4 million of restricted cash was included in other current assets in the Consolidated Balance Sheet as of December 31, 2014, which was placed into an escrow account associated with the sale of its Unity business segment.

Concentrations of Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. Substantially all of the Company’s cash and cash equivalents are held by two financial institutions. The Company is exposed to risk in the event of default by these financial institutions or the issuers of these securities to the extent the balances are in excess of amounts that are insured by the FDIC.

36

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s receivables are derived from revenue earned from customers located primarily in the United States and Europe. The Company provides credit to its customers in the normal course of business and requires no collateral to secure accounts receivable. The Company maintains an allowance for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. The allowance for doubtful accounts is based on customer-specific identification, which encompasses various factors, including; the Company’s review of credit profiles of its customers, age of the accounts receivable balances, contractual terms and conditions, current economic conditions that may affect a customer’s ability to pay and historical payment experience. As of December 31, 2014, accounts receivables from European customers represented 51% of total accounts receivable of which 82% were due within the Company’s standard credit term of 30 days and 97% were aged less than 90 days past due.

As of December 31, 2014, one individual customer accounted for 12% of total accounts receivable. As of December 31, 2013, no individual customer represented 10% or more of total accounts receivable. For the years ended December 31, 2014, 2013, and 2012, no individual customer represented more than 10% of total revenues.

For the year ended December 31, 2014, two suppliers represented 14% and 13% of total network access costs, respectively. For the year ended December 31, 2013, one individual supplier represented 13% of total network access costs. For the year ended December 31, 2012 two suppliers accounted for 16% and 14% of total network access costs, respectively. No other individual supplier represented more than 10% of total network access costs in 2014, 2013 and 2012.

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation or amortization. Depreciation of property and equipment and amortization of leasehold improvements are computed using the straight-line method over the estimated useful lives of the respective assets as follows:

• Equipment: 3 to 5 years

• Furniture and fixtures: 5 years

• Computer software: 3 to 5 years

• Leasehold improvements: the shorter of the useful life of the leasehold improvements or the term of the underlying lease

• Construction in progress: various depending on the underlying asset being developed

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to the statement of comprehensive loss. Expenditures for maintenance and repairs are charged to expense as incurred.

Construction in progress is related to the construction or development of property and equipment that has not yet been placed in service. Depreciation for equipment and computer software begins once it is placed in service and depreciation for leasehold improvements commences once they are ready for intended use.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, along with net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. The Company records net deferred tax assets to the extent management believe these assets would more likely than not be realized. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event management was to determine that the Company would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company’s policy with respect to its undistributed foreign subsidiaries’ earnings is to consider those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S. federal, state or foreign income taxes has been provided. As of December 31 2014, approximately $8.9 million of foreign earnings have been deemed repatriated under the US tax law. Only the US federal and state income tax consequences have been provided on those earnings, however, they will not be deemed to be repatriated under foreign laws. The major foreign jurisdictions where the Company has operations

37

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

includes India and the U.K. Upon distribution of earnings from India and the U.K. in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes in the various foreign countries. At December 31, 2014 and 2013, the cumulative undistributed earnings of the Company’s foreign subsidiaries approximated $12.9 million and $11.5 million, respectively. The amount of cash and cash equivalents held by the Company’s foreign subsidiaries as of December 31, 2014 and 2013 was $0.9 million and $0.9 million, respectively. The Company currently does not intend to distribute any of its remaining unrepatriated earnings by its foreign subsidiaries to the parent company in the U.S. If the income is to be distributed, the net of $4.0 million will be subject to US tax.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Actual results could differ materially from these estimates and could significantly affect the effective tax rate and cash flows in future years.

The Company recognizes estimated interest and penalties relating to income tax uncertainties as a component of the provision for income taxes.

Stock-Based Compensation

Stock-based compensation expense is estimated at the grant date based on the award’s fair value and is recognized as expense over the award’s requisite service period. Awards that vest based on service criteria are expensed on a straight-line basis. Awards having accelerated vesting based on achieving certain performance criteria are expensed on graded vesting basis over the vesting period, after assessing the probability of achieving the requisite performance criteria. The Company’s stock-based payment awards to employees and directors include stock options, restricted stock units and awards, and employee purchase rights granted in connection with the Employee Stock Purchase Plan. Certain restricted stock awards have performance-based goals based on the achievement of targeted quarterly revenue of Open Mobile, targeted EBITA or targeted number of active Open Mobile monetized users, which require an assessment of the probability and timing of vesting. The Company estimates the fair value of restricted stock based on the day prior to the date of grant. The Company estimates the fair value of stock options and employee purchase rights on the date of grant using the Black-Scholes option-pricing model that requires the use of assumptions such as expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The expected stock price volatility is based on historical volatility and the expected term is based on the historical average expected term. Because stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The expected forfeiture rate is based upon the historical experience of employee turnover and certain other factors. To the extent the actual forfeiture rate is different from the expected rate, stock-based compensation expense is adjusted accordingly.

Revenue Recognition

Revenue is recognized when all four revenue recognition criteria have been met; persuasive evidence of an arrangement exists, service has been provided to the customer, the fee is fixed or determinable, and collection is reasonably assured. When the above criteria are not met, revenue is deferred and recognized upon cash collection, upon acceptance of a completion certificate from the customer or when the product is shipped, depending on the type of fee or service arrangement.

Network Fees

The Company recognizes network fees during the period the services are rendered to the end-users based on usage or a flat fee. The Company has two types of flat fee arrangements for its network services. The first is a recurring flat fee that is billed at the same dollar amount each month. The second is a recurring fee calculated based on a flat fee per user per month, of which the dollar amount billed would differ month-to-month depending on the number of users using the Company’s services during a given month. The Company frequently requires customers to commit to minimum network fees associated with monthly, quarterly or annual minimum network usage or over the term of the arrangement. For customers that have agreed to a Minimum Monthly Commitment (MMC), the customer’s monthly invoice reflects the greater of the customer’s actual usage for the month or the MMC for that month. If the MMC exceeds actual usage (a “Shortfall”), the Company determines whether the Shortfall is fixed or determinable. If the Company concludes that the Shortfall is fixed or determinable, based upon customer specific billing history, and other revenue recognition criteria have been met, the Company recognizes as revenue the amount of Shortfall which is invoiced. If the Company concludes that the Shortfall is not fixed or determinable, the Company recognizes revenue when the Shortfall amount is collected. The Company also bills certain network fees upfront and recognizes such fees ratably over the term as services are provided.

38

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Platform Services and Other Fees

Platform services are any services that allow a user to connect to a network using the iPass application. Fees for this service are typically based upon a monthly rate, and revenue is recognized during the month the services are provided. Revenue related to iPassConnect (“iPC”) fees, including extended support fees as the iPC product reached end-of-life in 2012, and Open Mobile Platform fees are typically based upon a monthly rate (per user rate or a flat fee) and are recognized during the month the services are provided. Start-up support service fees representing charges to new customers, customization services and standard training may be billed up-front in advance and recognized as revenue over the term of the contract or service delivery.

Deferred Revenue

The Company defers revenue for services that are billed in advance or prepaid as required per customer agreements. Revenue is recognized as the services are being delivered, or ratably over the contract term, depending on the nature of the service. Amounts expected to be recognized as revenue within one year are classified as short-term.

Network Access Costs

Network access costs represent the amounts paid to network access providers monthly for the usage of their networks. The Company has minimum purchase commitments with some network service providers for access that it expects to utilize during the term of the contracts. Costs of minimum purchase contracts are recognized as network access costs at the greater of the minimum commitment or actual usage.

Advertising Expenses

Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2014, 2013, and 2012 were approximately $0.1 million each year.

Internal Use Software Development Costs

The Company follows the guidance set forth in ASC 350-40, Internal Use Software, (“ASC 350-40”), in accounting for the development of its application service and other internal use applications. ASC 350-40 requires companies to capitalize qualifying computer software costs, which are incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. The Company capitalized $0.3 million, $0.3 million, and $2.6 million in 2014, 2013, and 2012 respectively. $2.6 million of capitalized software cost in 2012 related to the development of a replacement enterprise resource planning (ERP) system.

Depreciation expense related to the purchase of the ERP system was approximately $0.7 million, and $0.7 million in 2014 and 2013, respectively. $0.2 million of amortization expense was recorded in 2014, 2013, and 2012 related to internal use software capitalized in 2011. Management evaluates the useful lives of the Company’s assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments to long lived assets during the years ended December 31, 2014, 2013 and 2012.

Note 3. Financial Instruments and Fair Value

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction in the principal or most advantageous market between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The three levels of inputs that may be used to measure fair value are as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities;

• Level 2—Inputs other than Level 1 either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

39

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The recurring fair values of these financial assets (excluding cash) were determined using the following inputs at December 31, 2014 and December 31, 2013, respectively:

	As of December 31, 2014								As of December 31, 2013
	Fair Value Measured Using						Total Balance		Fair Value Measured Using						Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Money market funds(1)	$	29,306	$	—	$	—	$	29,306	$	18,304	$	—	$	—	$	18,304
Total financial assets	$	29,306	$	—	$	—	$	29,306	$	18,304	$	—	$	—	$	18,304

(1) Held in cash and cash equivalents on the Company’s consolidated balance sheets.

There were no transfers between Level 1, 2, and 3 between December 31, 2014, and December 31, 2013. As of December 31, 2014, and December 31, 2013, the carrying amount of accounts receivable, accounts payable, and accrued liabilities, approximates fair value due to their short maturities. (Refer to Note 7 and 8 for discussion related to Accrued Restructuring and Vendor Financed Property and Equipment).

Note 4. Property and Equipment

Property and equipment, net consisted of the following:

	Year Ended December 31,
	2014			2013
	(In thousands)
Equipment	$	10,242		$	15,134
Furniture and fixtures	1,923			2,110
Computer software	9,356			12,279
Construction in progress	306			749
Leasehold improvements	912			1,252
	22,739			31,524
Less: Accumulated depreciation and amortization	(16,526		)	(23,082		)
Property and equipment, net	$	6,213		$	8,442

Depreciation expense for continuing operations was approximately $3.2 million, $2.4 million, and $2.0 million for the years ended December 31, 2014, 2013, and 2012, respectively. Depreciation expense for discontinued operations was approximately $0.2 million, $0.4 million, and $0.1 million for the same periods.

During the year ended December 31, 2014, the Company retired approximately $8.5 million of gross property and equipment related to continuing operations, and recorded a loss on disposal of approximately $0.1 million. As part of completing the sale of its Unity business segment on June 30, 2014, the Company included approximately $2.0 million of gross property and equipment related to the discontinued operations in the gain on sale calculation.

During 2013, the Company acquired approximately $2.6 million of enterprise database software and infrastructure hardware. During April 2014, the Company acquired approximately $0.5 million of additional enterprise infrastructure hardware. As of December 31, 2014, the Company held approximately $2.0 million of this enterprise database software and infrastructure hardware in computer software and equipment.

40

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 5. Other Assets

Other assets (non-current) consisted of the following:

	Year Ended December 31,
	2014		2013
	(In thousands)
Deferred installation costs and other long-term assets	$	—	$	1,677
Deposits	563		808
Long-term deferred tax asset, net	134		96
Restricted cash	150		250
	$	847	$	2,831

Note 6. Accrued Liabilities

Accrued liabilities consisted of the following:

	Year Ended December 31,
	2014		2013
	(In thousands)
Tax liabilities	$	1,300	$	1,044
Accrued restructuring liabilities—current(1)	160		200
Accrued bonus, commissions and other employee benefits	2,043		2,395
Accrued for vendor financed property and equipment	832		746
Amounts due to customers	1,016		1,059
Other accrued liabilities	1,837		3,656
	$	7,188	$	9,100

(1) See Note 7. Accrued Restructuring

Note 7. Accrued Restructuring

During the year ended December 31, 2009, the Company announced restructuring plans (the “2009 Plans”) to reduce operating costs and focus resources on key strategic priorities, which resulted in a workforce reduction of 146 positions across all functional areas and abandonment of certain facilities and termination of a contract obligation. As of December 31, 2014, the Company had remaining lease payments of approximately $0.1 million, which were recorded at fair value at the time of restructuring plan was announced. Management made assumptions in determining the fair value of the lease liabilities. The discounted cash flow valuation technique used to determine the Level 3 fair value included inputs, such as the future rent payment schedule, the discount rate and sublease income based on the executed sublease agreement through the end of the lease terms.

During the first quarter of 2013, the Company announced a restructuring plan (the “Q1 2013 Plan”) to re-align its cost structure to focus investments, resources and operating expenses on the Company’s growing Open Mobile business, which resulted in a workforce reduction of 16 positions across all functional areas and termination of a lease contract. As of December 31, 2014, the Company completed all of the related payments associated with this restructuring plan.

During the third quarter of 2014, the Company announced a restructuring plan (the "Q3 2014 Plan") to re-align its cost structure as a result of the divestiture of its Unity business, which resulted in a workforce reduction of approximately 20 employees worldwide and the termination of lease contracts for certain leased facilities. The Company recorded approximately $0.7 million of restructuring charges during the current fiscal year, and had less than $0.1 million of payments remaining as of December 31, 2014.

The following is a rollforward of restructuring liability for the Q3 2014, Q1 2013, and 2009 Plans:

41

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Beginning balance	$	317		$	483		$	736
Restructuring charges and related adjustments	733			653			26
Payments and adjustments	(890		)	(819		)	(279		)
Ending balance	$	160		$	317		$	483

As of December 31, 2014, less than $0.1 million of the balance represents employee termination costs and remaining $0.1 million mainly relates to exit cost of certain leased facilities.

As of December 31, 2014 and 2013, approximately $0.2 million and $0.2 million of the restructuring liability are included in accrued liabilities, respectively. The remaining restructuring liability of approximately $0.1 million is included in long-term liabilities at December 31, 2013. 

42

Note 8. Vendor Financed Property and Equipment

In October, 2013, the Company acquired enterprise database software and infrastructure hardware. This purchase was financed through a vendor and is to be paid over three years. In April 2014, the Company acquired additional enterprise infrastructure hardware which was financed through the vendor and is to be paid over two years. The total purchase financed by a vendor was approximately $3.1 million. Since October 2013, the Company made approximately $1.4 million of principal payments, and as of December 31, 2014, approximately $0.8 million and $0.9 million were recorded to accrued liabilities and vendor financed property and equipment, respectively based on the payment terms. The Company expects to pay principal payments of $0.8 million and $0.9 million in fiscal year 2015 and fiscal year 2016, respectively.

As of December 31, 2014, $0.9 million of vendor financed property and equipment is recorded at cost, which approximates a Level 3 fair value liability. The discounted cash flow valuation technique used to determine the Level 3 fair value, included inputs such as the future payment schedule based on the executed purchase agreement and a discount rate.

Note 9. Income Taxes

The provision for income taxes is based on continuing operations income (loss) for 2014, 2013 and 2012 before taxes as follows:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
U.S Source	$	(20,306	)	$	(16,819	)	$	(6,894	)
Non-U.S. Source	1,000			1,332			634
Loss before income taxes	$	(19,306	)	$	(15,487	)	$	(6,260	)

The provision for income taxes for continuing operations consisted of the following:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Current:
U.S. federal	$	—		$	—		$	—
State	(3		)	32			30
Foreign	278			334			495
	$	275		$	366		$	525
Deferred:
U.S. federal	$	(7,107	)	$	(1,351	)	$	(911	)
State	(219		)	—			—
Foreign	(50		)	203			117
	$	(7,376	)	$	(1,148	)	$	(794	)
Benefit from income taxes	$	(7,101	)	$	(782	)	$	(269	)

Income tax expenses were recorded in discontinued operations for the year ended December 31, 2014, 2013, and 2012 of approximately $7.3 million, $1.4 million, and $0.9 million, respectively. This primarily reflects tax expense on discontinued operations offsetting benefit in continuing operations of $7.1 million, $0.8 million, and $0.3 million for the years ended December 31, 2014, 2013, and 2012 respectively. The offsetting tax benefits in 2014 represent the Company’s ability to utilize net operating losses to offset tax associated with the gain on the sale of the Unity business. The offsetting tax benefits in 2012 and 2013 represent the Company’s ability to utilize net operating losses to offset tax associated with the discontinued operation’s income.

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss and tax credit carry forwards. As of December 31, 2014 and 2013, the Company provided a full valuation allowance on its net deferred tax assets in the United States, Israel, Australia and Japan. The components of deferred tax assets consisted of the following:

43

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended December 31,
	2014			2013
	(In thousands)
Deferred tax assets:
Net operating loss carry forwards	$	23,526		$	46,364
Reserves and accruals	1,517			2,728
Research and other tax credits	5,880			6,328
Share based compensation	3,133			3,780
Property and equipment	3,224			43
Total deferred tax assets	$	37,280		$	59,243
Valuation allowance	(35,348		)	(58,218		)
Net deferred tax assets	$	1,932		$	1,025
Deferred tax liabilities:
Property and equipment	(1,606		)	(751		)
Total net deferred tax assets	$	326		$	274

The provision for income taxes for continuing operations differed from the amounts computed by applying the U.S. federal income tax rate to pretax loss before income taxes as a result of the following:

	Year Ended December 31,
	2014		2013		2012
Federal statutory rate	(35	)%	(35	)%	(35	)%
State taxes, net of federal benefit	(1	)	(7	)	(4	)
Foreign tax rate differential	(1	)	1		6
Amortization of stock-based compensation	2		1		1
Research and development benefit	(2	)	(9	)	(2	)
Deemed repatriated foreign earnings	2		2		61
Other	—		—		1
Valuation Allowance	(1	)	42		(32	)
Provision for income taxes	(36	)%	(5	)%	(4	)%

As of December 31, 2014, the Company had gross cumulative net operating loss carry forwards for federal and state tax reporting purposes of approximately $67.2 million and $48.1 million, respectively, which expire in various periods between 2015 and 2034. In addition, $7.6 million and $3.9 million for federal and state respectively, are related to stock compensation deductions in excess of book deductions, the tax effect of which would be to credit accumulated paid-in capital if realized. Utilization of the net operating loss and tax credit carryforwards are subject to annual limitations due to certain ownership change rules provided by the Internal Revenue Service Code of 1986, as amended and similar state provisions. Also included in the valuation allowance as of December 31, 2014 is approximately $2.2 million related to net operating loss carry forwards in Israel.

As of December 31, 2014, the Company also has research and development tax credit carry forwards of approximately $4.4 million and $6.7 million for federal and state income tax purposes, respectively. If not utilized, the federal carry forwards will expire in various amounts through 2034.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits (in thousands):

44

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Balance at January 1, 2013	$	5,773
Increases for positions taken in prior years	282
Increases for positions related to the current year	832
Settlements with taxing authorities	(320		)
Balance at December 31, 2013	$	6,567
Increases for positions taken in prior years	5
Increases for positions related to the current year	186
Decreases for positions taken in prior years	(18		)
Decreases for statutes lapsing	(66		)
Settlements with taxing authorities	—
Balance at December 31, 2014	$	6,674

The increase in unrecognized tax benefits primarily relates to certain research and development tax credits and the establishment of reserve on transfer pricing.

As of December 31, 2014 and 2013 , the company had $0.8 million and $0.8 million, respectively, of unrecognized tax benefits that if recognized will have an impact on the company's effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in 2015. Decreases in the unrecognized tax benefits will result from the lapsing of statutes of limitations and the possible completion of tax audits in various jurisdictions. Increases will primarily result from tax positions expected to be taken on tax returns for 2015.

In accordance with its accounting policy, the Company recognizes interest and penalties related to income tax matters in the provision for income taxes; which were not considered material during 2014, 2013 and 2012.

Given the uncertainty as to settlement terms, the timing of payments and the impact of such settlements on other uncertain tax positions, the range of estimated potential changes in underlying uncertain tax positions is between a decrease of $0.8 million and an increase of $0.3 million.

The Company’s major taxing jurisdictions are U.S. Federal, California, the U.K. and India. In the normal course of the Company’s business, the Company is subject to income tax audits in various jurisdictions. Years 2007 to 2014 remain open to examination by certain of these major taxing jurisdictions.

The Company currently has income tax audits in progress in India and has accrued approximately $0.8 million in connection with these audits.

Note 10. Stockholders’ Equity

Equity Incentive Plans

The Company has two stock plans that permit it to grant stock options, restricted stock awards and restricted stock units to employees (“Employee Plan”) and to directors (“Director Plan”). Stock options granted to employees generally vest 25% on the first anniversary of the grant date with the remainder vesting ratably over the following 36 months; stock options generally expire 10 years after the date of grant. Restricted stock awards give the recipient the right to receive shares upon the lapse of the instruments’ time and/or performance based restrictions. The restricted stock awards with time-based restrictions are considered outstanding at the time of grant, as the holders are entitled to dividends and voting rights. Employees may surrender a portion of their award shares to satisfy minimum statutory tax withholding obligations with respect to the vesting of restricted stock awards. Restricted stock awards with only performance-based restrictions are not considered outstanding until the performance criteria have been met and therefore are not entitled to dividends or voting rights at the time of grant. The performance-based restricted stock awards vest upon the achievement of pre-defined performance goals, including targeted earnings before interest, taxes and amortization (“EBITA”), targeted number of Open Mobile platform active users, and targeted quarterly revenue of Open Mobile.

During 2014 and 2013, the Company had granted a total of 420,000 and 1,935,000 shares of performance-based restricted stock awards, respectively, that vest based on targeted quarterly revenue of Open Mobile which carry a service-condition to vest in full if performance has not been met at December 31, 2017, however, vesting will be accelerated upon the achievement of performance goals; none of which had vested at December 31, 2014 as the performance goals had not been met.

45

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company has a total of 753,925 outstanding shares of performance-based restricted stock awards related to targeted EBITA, none of which had vested as of December 31, 2014. No performance-based restricted stock awards were granted during the year ended December 31, 2012. During 2011, the Company had granted a total of 280,000 shares of performance-based restricted stock awards related to targeted number of Open Mobile platform active users which carry a service condition to vest four years from the grant date, however, vesting will be accelerated upon the achievement of performance goals; all of which had vested at December 31, 2014 based on achievement of the targeted number of Open Mobile platform active users. Vesting of all performance-based restricted stock awards is considered probable.

The number of shares authorized for issuance is automatically increased by 5% annually under the Employee Plan. Upon exercise, new shares are issued. As of December 31, 2014, 25,526,755 shares were available for grant under all plans.

The following table summarizes the stock option and restricted stock activity under the Plans for the indicated periods:

	Shares Available for Future Grant		Number of Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Number of Restricted Stock Awards and Units Outstanding		Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2011	18,011,756		9,535,000		$	1.82			1,051,090		$	1.52
Authorized	3,206,969
Granted(1)	(1,993,000	)	945,500		$	2.31	$	0.81	1,047,500		$	2.16
Options Exercised			(1,247,776	)	$	1.10
Restricted Stock Vested(1)									(178,116	)	$	1.77
Terminated/cancelled/forfeited	995,912		(944,196	)	$	3.04			(51,716	)	$	1.80
Balance at December 31, 2012	20,221,637		8,288,528		$	1.85			1,868,758		$	1.85
Authorized	3,326,811
Granted(2)	(3,070,000	)	1,085,000		$	1.81	$	0.70	1,985,000		$	1.86
Options Exercised			(1,138,718	)	$	1.12
Restricted Stock Vested(2)									(558,083	)	$	2.06
Terminated/cancelled/forfeited	974,230		(628,230	)	$	2.70			(346,000	)	$	1.88
Balance at December 31, 2013	21,452,678		7,606,580		$	1.89			2,949,675		$	1.81
Authorized	3,472,551
Granted(3)	(1,505,000	)	1,025,000		$	1.56	$	0.60	480,000		$	1.18
Options Exercised	—		(135,499	)	$	1.03
Restricted Stock Vested(3)	—								(336,913	)	$	2.01
Terminated/cancelled/forfeited	2,106,526		(1,675,189	)	$	2.76			(431,337	)	$	1.98
Balance at December 31, 2014	25,526,755		6,820,892		$	1.64			2,661,425		$	1.65

(1) Restricted stock granted during 2012 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2012 represent 229,832 restricted stock awards released (net of 51,716 shares withheld for taxes).

(2) Restricted stock granted during 2013 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2013 represent 558,083 restricted stock awards released.

(3) Restricted stock granted during 2014 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2014 represent 378,250 restricted stock awards released (net of 41,337 shares withheld for taxes).

The aggregate intrinsic value of options exercised was less than $0.1 million, $1.0 million, and $1.1 million for the years ended December 31, 2014, 2013, and 2012, respectively.

The following table summarizes the stock options outstanding and exercisable by range of exercise prices as of December 31, 2014:

46

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (in Years)	Weighted- Average Exercise Price per Share		Number Exercisable	Weighted-Average Exercise Price per Share
$0.71—  1.05	1,674,308	4.68	$	0.96	1,674,308	$	0.96
1.06 —  1.48	1,472,255	4.32	1.26		1,372,255	1.26
1.49 —  1.62	1,442,113	7.70	1.58		716,927	1.55
1.63 —  2.32	1,595,000	7.99	1.93		713,011	1.98
2.33 —5.74	637,216	2.36	3.73		634,049	3.73
Total	6,820,892	5.80	1.64		5,110,550	1.61

	Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2014	6,820,892	$	1.64	5.80	$	869
Options vested and expected to vest at December 31, 2014	6,518,107	$	1.64	5.65	$	869
Options exercisable at December 31, 2014	5,110,550	$	1.61	4.81	$	857

Stock-Based Compensation

The following table sets forth the total stock-based compensation expense from continuing operations included in the Company’s Consolidated Statements of Comprehensive Loss:

	Year Ended December 31,
	2014		2013		2012
			(In thousands)
Network operations	$	202	$	332	$	200
Research and development	266		350		257
Sales and marketing	452		677		441
General and administrative	1,076		1,702		1,448
Total	$	1,996	$	3,061	$	2,346

The following table sets forth the total stock-based compensation expense by award-type:

	Year Ended December 31,
	2014		2013		2012
	(In thousands)
Stock options	$	815	$	838	$	1,122
Restricted stock	1,105		2,157		1,128
Employee stock purchase plan	76		66		96
Total	$	1,996	$	3,061	$	2,346

Above tables are different from the stock-based compensation expenses disclosed in the consolidated statements of cash flows, which includes stock-based compensation expenses related to discontinued operations.

As of December 31, 2014, there was $0.8 million of total unrecognized stock-based compensation expense related to stock options, net of expected forfeitures that will be recognized over the weighted average period of 2.5 years. As of December 31, 2014, there was $1.3 million of total unrecognized compensation cost related to the unvested restricted stock awards granted, net of expected forfeitures which is expected to be recognized over the remaining weighted average vesting period of 2.4 years.

Valuation Assumptions

47

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The weighted average estimated fair value of stock options granted during the years ended December 31, 2014, 2013, and 2012 were calculated under the Black-Scholes option-pricing model, using the following weighted-average assumptions:

	Year Ended December 31,
	2014		2013		2012
Risk-free rate	1.07	%	0.89	%	0.35	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	53	%	50	%	52	%
Expected term	3.5 years		3.8 years		3.1 years

Expected volatility is based on the historical volatility of the Company’s common stock. The expected term of stock options granted is based on the historical average expected term. The risk-free rate for periods within the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. During the year ended December 31, 2014, 2013 and 2012, the Company did not pay any cash dividends on its common stock and does not expect to pay cash dividends in the future. 

The total grant date fair value of the restricted awards stock granted during the years ended December 31, 2014, 2013, and 2012 was approximately $0.6 million, $3.7 million, and $2.3 million, respectively, which will be recognized over the requisite service periods.

Employee Stock Purchase Plan

Under the Company’s Employee Stock Purchase Plan (“ESPP”), the Company can grant stock purchase rights to all eligible employees during a one-year offering period with purchase dates at the end of each six-month purchase period (each April and October). As of December 31, 2014, the Company reserved 7.5 million shares of common stock for issuance under the ESPP plan and approximately 4.7 million shares remain available for future issuance. The ESPP plan permits employees to purchase common stock through payroll deductions of up to 15% on an employee’s compensation, including commissions, overtime, bonuses and other incentive compensation. The purchase price per share is equal to the lower of 85% of the fair market value per share at the beginning of the offering period, or 85% of the fair market value per share on the semi-annual purchase date. No participant may purchase more than 2,500 shares per offering or $25,000 worth of common stock in any one calendar year. During the years ended December 31, 2014, 2013 and 2012, 118,501, 137,091, and 186,275 shares were purchased at average per share prices of $1.27, $1.60, and $1.09, respectively.

Compensation cost related to the Company’s employee stock purchase plan is calculated using the fair value of the employees’ purchase rights granted. The estimated fair value of employee purchase rights granted during the years ended December 31, 2014, 2013, and 2012 was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Year Ended December 31,
	2014		2013		2012
Risk-free rate	0.10	%	0.09	%	0.09	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	63	%	51	%	55	%
Expected term	0.5 to 1 year		0.5 to 1 year		0.5 to 1 year

Note 11. Commitments and Contingencies

Leases and Purchase Commitments

The Company leases facilities under operating leases that expire at various dates through October 2020. Certain leases are cancellable prior to lease expiration dates. The terms of certain operating leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the respective lease periods and has accrued for rent expense incurred but not paid. Future minimum lease payments under these operating leases, including approximately $0.1 million of future payments on leases accounted for under the Company’s restructuring plans, as of December 31, 2014, are as follows:

48

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Operating Leases
	(In thousands)
Year ending December 31:
2015	$	1,806
2016	1,310
2017	1,171
2018	1,050
2019 and thereafter	$	2,099
	$	7,436

Rent expense for operating leases, excluding leases accounted for under the Company’s restructuring plan for the years ended December 31, 2014, 2013, and 2012 was $2.3 million, $2.3 million, and $2.4 million, respectively.

The Company has contracts with certain network service providers which have minimum purchase commitments that expire on various dates through 2017. Future minimum purchase commitments under all agreements are as follows:

Year ending December 31:	Minimum Purchase Commitments
	(In thousands)
2015	$	5,946
2016	659
2017	$	44
	$	6,649

Included above, the Company has a future minimum purchase commitment of approximately $0.4 million related to an annual support fee for acquired enterprise infrastructure hardware to be paid in the next two years. In addition, the Company expects to pay principal payments related to vendor financed property and equipment of $0.8 million, and $0.9 million in fiscal year 2015 and fiscal year 2016, respectively.

Sales Tax Liabilities

The Company’s sales and use tax filings are subject to customary audits by authorities in the jurisdictions where it conducts business in the United States, which may result in assessments of additional taxes. During fiscal year 2009, the Company determined that additional sales taxes were probable of being assessed for multiple states as a result of the preliminary findings specific to a sales and use tax audit that had been initiated in the same year. As a result, in the third quarter of 2009, the Company estimated an incremental sales tax liability of approximately $5.0 million, including interest and penalties of approximately $1.5 million. During subsequent years, this liability was reduced through sales tax payments, settlements with certain state tax authorities and revised estimates of the sales tax liability to $0.9 million in 2014, $0.8 million in 2013 and $0.8 million in 2012, which is included in other long-term liabilities.

Legal Proceedings

The Company is involved in legal proceedings and claims arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any such pending legal proceeding or claim will result in a judgment or settlement that would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third-parties. Certain indemnification agreements may not be subject to maximum loss clauses. If the potential loss from any indemnification claim is considered probable and the amount or the range of the loss can be estimated, the Company accrues a liability for the estimated loss. To date, claims under such indemnification provisions have not been significant.

Note 12. Employee 401(k) Plan

49

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company sponsors a 401(k) plan covering all employees. Matching contributions to the plan are at the discretion of the Company. During the years ended December 31, 2014, 2013 and 2012, there have been no employer contributions under this plan.

Note 13. Net Loss Per Common Share

Basic net income (loss) per share is computed by dividing net income (loss) available to shareholders by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) available to shareholders by the weighted average number of diluted shares outstanding. Unvested participating securities that vest based on service are included in the weighted daily average number of shares outstanding used in the calculation of basic net income per share and excluded in the calculation of basic net loss per share.

When an entity has a loss from continuing operations, including potential shares in the denominator of diluted per-share computations for continuing operations will generally be antidilutive, even if the entity has net income after adjusting for discontinued operations. That is, including potential shares in the denominator of the earnings per share calculation for a loss-making entity will generally decrease the loss per share and, therefore those shares should be excluded from calculations of diluted earnings per share. Accordingly, for all periods presented, basic weighted-average shares outstanding were used in calculating the diluted net income (loss) per share.

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except per share amounts)
Numerator:
Net loss from continuing operations	$	(12,205	)	$	(14,705	)	$	(5,991	)
Net income from discontinued operations	19,179			2,393			1,613
Net income (loss)	6,974			(12,312		)	(4,378		)
Denominator:
Weighted average shares outstanding - basic and diluted	62,613,671			63,411,162			60,711,317
Total income (loss) per share - basic and diluted:
Loss from continuing operations	$	(0.19	)	$	(0.23	)	$	(0.10	)
Income from discontinued operations	$	0.30		$	0.04		$	0.03
Total net income (loss) per share	$	0.11		$	(0.19	)	$	(0.07	)

The following weighted average potential shares of common stock have been excluded from the computation of diluted net income (loss) per share because the effect of including these shares would have been anti-dilutive:

	Year Ended December 31,
	2014	2013	2012
Options to purchase common stock	4,703,978	3,329,281	2,473,024
Restricted stock awards, including participating securities	2,195,750	2,615,705	1,819,261
Total	6,899,728	5,944,986	4,292,285

The weighted-average exercise price of options to purchase common stock excluded from the computation was $2.20, $2.84, and $3.59, for the years ended December 31, 2014, 2013, and 2012, respectively.

Note 14. Segment and Geographic Information

Prior to 2014, the Company had two reportable operating segments, Mobility Services and iPass Unity Network Services (“Unity”). The Mobility Services segment includes services that help enterprises manage the networks, connections and devices used by their mobile workforce. The iPass Unity segment provided customers with Wi-Fi and Wide Area Network solutions.

On June 30, 2014, the Company entered into an agreement and completed the sale of its Unity business segment, which is reported in this filing as discontinued operations. Therefore, the Company currently has a single reportable operating segment, Mobility Services.

50

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes total Company revenue from continuing operations by country or by geographical region:

	For the Year Ended December 31,
	2014		2013		2012
United States	35	%	37	%	41	%
EMEA	48	%	49	%	44	%
Asia Pacific	15	%	13	%	14	%
Rest of the world	2	%	1	%	1	%

No individual country, except for the United States, Germany, and the United Kingdom, accounted for 10% or more of total revenues for the years ended December 31, 2014, 2013, and 2012. Revenues in Germany accounted for 15%, 11%, and 9% of total revenues in 2014, 2013, and 2012, respectively. Revenues in the United Kingdom accounted for 11%, 13%, and 12% of total revenues in 2014, 2013, and 2012, respectively. One customer accounted for 10% of total revenues for the years ended December 31, 2014. No individual customer accounted for 10% or more of total revenues for the years ended December 31, 2013, and 2012. International revenues are determined by the location of the customer’s headquarters.

Note 15. Divestiture of Business Segment

On June 30, 2014 the Company entered into an agreement and completed the sale of its Unity business segment for gross cash proceeds of approximately $28.1 million, and accrued approximately $2.2 million of transaction costs which were fully paid as of December 31, 2014. The Company recorded a gain on sale of approximately $25.0 million. The gross cash proceeds included $1.4 million that was placed into an escrow account to cover any contingent claims made by the buyer against iPass through June 30, 2015 and is recorded in Prepaid Expenses and Other Current Assets on the Consolidated Balance Sheets. As of December 31, 2014, no claims have been made against the escrow account. In accordance with ASC 205-20, the results of operations for the Unity business segment are reported as discontinued operations.  The Company did not have any assets held for sale as of December 31, 2013 or prior to the sale in the second quarter of 2014.

Concurrent with the sale of its Unity business segment, iPass and the buyer entered into a transition services agreement pursuant to which each of the parties will provide certain transitional, administrative, and support services to the other party for a period up to six months, which may be extended upon mutual agreement. Such services provided to the buyer by iPass were recorded as contra-expense since the Company was reimbursed for the service cost incurred. Activity associated with transitional service is not considered significant relative to the consolidated financial statements of the Company and substantially concluded as of December 31, 2014.

Income tax expense was recorded in discontinued operations for the year ended December 31, 2014, 2013, and 2012 of approximately $7.3 million, $1.4 million, and $0.9 million, respectively. This primarily reflects tax expense on income or gains from discontinued operations with an offsetting benefit in continuing operations of $7.1 million, $0.8 million, and $0.3 million for the year ended December 31, 2014, 2013, and 2012 respectively. The offsetting tax benefits in 2014 represent the Company’s ability to utilize net operating losses to offset tax associated with the gain on the sale of the Unity business.

The following table presents the revenues and components of discontinued operations, net of tax.

	Six Months  ended June 30,			Year Ended  December 31,
	2014			2013			2012
Revenue	15,458			33,386			33,548
Income from discontinued operations before income taxes	1,506			3,744			2,524
Gain on sale of discontinued operations before income taxes	25,014			—			—
Provision for income taxes	(7,341		)	(1,351		)	(911		)
Income from discontinued operations, net of tax	$	19,179		$	2,393		$	1,613

51

iPASS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table above excludes certain shared overhead costs and transfer pricing adjustments that were previously allocated to the Unity business segment in the historical iPass consolidated financial statements that were filed with the Securities and Exchange Commission ("SEC") as ASC 205-20 prohibits the allocation of general overhead costs to the discontinued operation. The provisions for income taxes primarily reflect tax expense on discontinued operations including the gain on sale, which is mostly offset by benefit in continuing operations.

Note 16. Subsequent Event

On February 16, 2015, it was determined that Evan Kaplan, Chief Executive Officer and President of iPass Inc., would cease to be an officer and employee of iPass effective at a date in early March 2015, immediately following the filing of the iPass Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

On February 16, 2015, the Board of Directors of iPass appointed Gary Griffiths as Chief Executive Officer and President of iPass Inc., effective at such time as Mr. Kaplan ceases to operate in that role.

On February 22, 2015, the Board of Directors appointed Michael Chang as a director of iPass, to serve in such capacity until the next annual meeting or until his earlier death, resignation or removal. In connection with his appointment, Mr. Chang was appointed to the Audit Committee and the Compensation Committee of the Board of Directors, replacing Gary Griffiths on those committees.

On February 18, 2015, the Company announced it had concluded the strategic alternatives review process that was initiated in September of 2014. 

52

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
	Evan L. Kaplan President and Chief Executive Officer (Principal Executive Officer)

Date: March 13, 2015

53

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Gary A. Griffiths and Karen J. Willem, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/    EVAN L. KAPLAN	President, Chief Executive Officer and Director (Principal Executive Officer)	March 13, 2015
Evan L. Kaplan
/S/    KAREN J. WILLEM	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	March 13, 2015
Karen J. Willem
/S/    DARIN R. VICKERY	Vice President and Corporate Controller (Principal Accounting Officer)	March 13, 2015
Darin R. Vickery
/S/    JOHN D. BELETIC	Chairman and Director	March 13, 2015
John D. Beletic
/S/    MICHAEL M. CHANG	Director	March 13, 2015
Michael M. Chang
/S/ GARY A. GRIFFITHS	Director	March 13, 2015
Gary A. Griffiths
/S/    ROBERT J. MAJTELES	Director	March 13, 2015
Robert J. Majteles
/S/    MICHAEL J. TEDESCO	Director	March 13, 2015
Michael J. Tedesco

54

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS RECEIVABLE

Classification	Balance at Beginning of Year		Additions Charged to (recovered from) Costs and Expenses			Deductions		Balance at End of Year
	(In thousands)
Allowance for doubtful accounts:
Year ended December 31
2014	$	1,010	$	(169	)	$	669	$	172
2013	1,173		134			297		1,010
2012	1,605		(66		)	366		1,173

55

INDEX TO EXHIBITS

Exhibit Number	Description of Document
2.1	Purchase Agreement by and between iPass Inc., Tolt Solutions, Inc., and MNS Holdings LLC. (Filed as Exhibit 2.1 to our Form 8-K (SEC File No. 000-50327), filed on July 7, 2014, and incorporated by reference herein.)
3.1	Amended and Restated Certificate of Incorporation. (Filed as Exhibit 3.1 to our Form 10-Q (SEC File No. 000-50327), filed on November 13, 2003, and incorporated by reference herein.)
3.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation. (Filed as Exhibit 3.2 to our Form 10-Q (SEC File No. 000-50327), filed on August 7, 2009, and incorporated by reference herein.)
3.3	Certificate of Change to Amended and Restated Certificate of Incorporation. (Filed as Exhibit 3.1 to our Form 8-K (SEC File No. 000-50327), filed on February 3, 2010, and incorporated by reference herein.)
3.4	Amended and Restated By-Laws. (Filed as Exhibit 3.4 to our Form 10-Q (SEC File No. 000-50327), filed on November 7, 2013, and incorporated by reference herein.)
4.1	Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.
4.2	Specimen stock certificate. (Filed as Exhibit 4.2 to our Registration Statement on Form S-1/A (SEC File No. 333-102715), filed on July 1, 2003, and incorporated by reference herein.)
10.1*	iPass Inc. 2003 Equity Incentive Plan. (Filed as Appendix A to our Proxy Statement (SEC File No. 000-50327), filed on July 14, 2009, and incorporated by reference herein.)
10.2*	Form of Stock Option Grant Notice under the 2003 Equity Incentive Plan. (Filed as Exhibit 10.1.1 to our Form 10-K (SEC File No. 000-50327), filed on March 16, 2006, and incorporated by reference herein.)
10.3*	Form of Restricted Stock Grant Notice and Agreement for Vice Presidents and above, under the Company’s 2003 Equity Incentive Plan. (Filed as Exhibit 10.1 to our Form 10-Q (SEC File No. 000-50327), filed on May 10, 2007, and incorporated by reference herein.)
10.4*	Form of Restricted Stock Grant Notice and Agreement for below Vice Presidents, under the Company’s 2003 Equity Incentive Plan. (Filed as Exhibit 10.2 to our Form 10-Q (SEC File No. 000-50327), filed on May 10, 2007, and incorporated by reference herein.)
10.5*	Form of Performance Shares Grant Notice and Agreement, under the Company’s 2003 Equity Incentive Plan. (Filed as Exhibit 10.3 to our Form 10-Q (SEC File No. 000-50327), filed on May 10, 2007, and incorporated by reference herein.)
10.6*	iPass Inc. 2003 Non-Employee Directors Plan. (Filed as Appendix B to our Proxy Statement (SEC File No. 000-50327), filed on July 14, 2009, and incorporated by reference herein.)
10.7*	Forms of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under the 2003 Non-Employee Directors Plan. (Filed as Exhibit 10.2.1 to our Form 10-K (SEC File No. 000-50327), filed on March 29, 2007, and incorporated by reference herein.)
10.8*	Forms of Stock Option Grant Notice and Stock Option Agreement under the 2003 Non-Employee Directors Plan. (Filed as Exhibit 10.2.2 to our Form 10-K (SEC File No. 000-50327), filed on March 29, 2007, and incorporated by reference herein.)
10.9*	iPass Inc. 2003 Employee Stock Purchase Plan and form of related agreements, as amended. (Filed as Exhibit 10.7 to our Registration Statement Form S-1, as amended (SEC File No. 333-102715), originally filed on January 24, 2003 and amended on July 1, 2003, and incorporated by reference herein.)
10.10*	Outside Director Compensation Arrangement. (Previously disclosed under the caption “Compensation of Directors” in our Definitive Proxy Statement on Schedule 14A (SEC File No. 000-50327), filed on April 23, 2013, and incorporated by reference herein.)
10.11*	iPass Inc. Amended and Restated Executive Corporate Transaction and Severance Benefit Plan, as amended. (Filed as Exhibit 10.1 to our Form 8-K (SEC File No. 000-50327), filed on July 6, 2011, and incorporated by reference herein.)
10.12*	iPass Inc. Key Employee Corporate Transaction and Severance Benefit Plan. (Filed as Exhibit 10.26 to our Form 10-K (SEC File No. 000-50327), filed on March 16, 2009, and incorporated by reference herein.)
10.13*	iPass Inc. Severance Benefit Plan. (Filed as Exhibit 10.25 to our Form 10-K (SEC File No. 000-50327), filed on March 16, 2009, and incorporated by reference herein.)

56

10.14*	Employment Agreement, dated November 1, 2008, between Registrant and Evan L. Kaplan. (Filed as Exhibit 10.28 to our Form 10-K (SEC File No. 000-50327), filed on March 16, 2009, and incorporated by reference herein.)
10.15*	Amendment to the Employment Agreement, dated May 28, 2009, between Registrant and Evan L. Kaplan (Described in our Form 8-K (SEC File No. 000-50327), filed on June 1, 2009, which description is incorporated by reference herein).
10.16*	Amendment to the Employment Agreement, dated February 15, 2012, between Registrant and Evan L. Kaplan. (Filed as Exhibit 10.16 to our Form 10-K (SEC File No. 000-50327), filed March 7, 2012, and incorporated herein by reference.)
10.17*	2013 Executive Management Bonus Plan. (Described in Item 5.02 of our Form 8-K (SEC File No. 000-50327), filed on March 20, 2013, which description is incorporated by reference herein.)
10.18*	Form of Indemnity Agreement. (Filed as Exhibit 10.1 to our Form 10-Q (SEC File No. 000-50327), filed on November 7, 2014, and incorporated by reference herein.)
10.19	Lease Agreement, dated October 26, 1999, between iPass Inc. and Westport Joint Venture (as amended). (Filed as Exhibit 10.8 to our Registration Statement Form S-1, as amended (SEC File No. 333-102715), originally filed on January 24, 2003 and amended on July 1, 2003, and incorporated by reference herein.)
10.20	OEM Service Provider License Agreement, dated February 29, 2000, between RSA Security, Inc. and iPass Inc., and amendments thereto. (Filed as Exhibit 10.13 to our Form 10-K (SEC File No. 000-50327), filed on March 16, 2006, and incorporated by reference herein.)
10.21	Support Agreement, dated February 29, 2000, between RSA Security, Inc. and iPass Inc. (Filed as Exhibit 10.14 to our Form 10-K (SEC File No. 000-50327), filed on March 16, 2006, and incorporated by reference herein.)
10.22*	Offer Letter with Karen Willem dated June 7, 2013. (Filed as Exhibit 10.1 to our Form 10-Q (SEC File No. 000-50327), filed on August 8, 2013, and incorporated by reference herein.)
10.23*	Offer Letter with June Bower dated November 6, 2013. (Filed as Exhibit 10.25 to our Form 10-K (SEC File No. 000-50327), filed on March 11, 2014, and incorporated by reference herein.)
10.24*	Amendment to the annual salary and total cash compensation for Barbara Nelson, Senior Vice President and Chief Technology Officer. (Described in Item 5.02 of our Form 8-K (SEC File No. 000-50327), filed on August 1, 2014, and incorporated herein by reference.)
10.25	Lease Agreement, dated September 22, 2014, between iPass Inc. and Westport Office Park, LLC.
10.26*	2014 Executive Management Bonus Plan. (Described in Item 5.02 of our Form 8-K (Registration No. 000-50327), filed on April 29, 2014, and Item 5.02 of our Form 8-K (SEC File No. 000-50327), filed on October 3, 2014, which descriptions are incorporated herein by reference.)
10.27*	2015 Executive Management Bonus Plan. (Described in Item 5.02 of our Form 8-K (SEC File No. 000-50327), filed on February 20, 2015, which description is incorporated herein by reference.)
10.28*	Offer Letter with Gary A. Griffiths, dated February 16, 2015.
10.29*	Offer Letter with Patricia Hume, dated February 16, 2015.
21.1	Subsidiaries of the Registrant.
23.1	Consent of Independent Registered Public Accounting Firm.
24.1	Power of Attorney (reference is made to the signature page of this Form 10-K).
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document

57

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Indicates management contract, compensatory plan or arrangement.

58

EX-10.25

LEASE AGREEMENT
By and BetweenWESTPORT OFFICE PARK, LLC,
a California limited liability company
("Landlord")
andIPASS INC., a Delaware corporation("Tenant")
September 22, 2014

LEASE AGREEMENT

THIS LEASE AGREEMENT, (this "Lease") is made and entered into as of September 22, 2014 by and between WESTPORT OFFICE PARK, LLC, a California limited liability company ("Landlord"), and Tenant identified in the Basic Lease Information below.

BASIC LEASE INFORMATION

Tenant: IPASS INC., a Delaware corporation

Premises: Suite 200 on the second (2^nd) floor of the Building, containing approximately 25,269 square feet of rentable area, outlined in Exhibit B to this Lease.

Building: The Building commonly known as 3800 Bridge Parkway, Redwood City, California 94065. The rentable area of the Building is 50,315 square feet.

Base Rent:

Period(In Months)	AnnualBase Rent	MonthlyBase Rent
05/01/2015 - 04/30/2016	$970,329.60	$80,860.80
05/01/2016 - 04/30/2017	$999,439.49	$83,286.62
05/01/2017 - 04/30/2018	$1,029,422.67	$85,785.22
05/01/2018 - 04/30/2019	$1,060,305.35	$88,358.78
05/01/2019 - 04/30/2020	$1,092,114.51	$91,009.54
05/01/2020 - 10/31/2020	$1,124,877.95	$93,739.83

Security Deposit Amount: $120,272.28

Tenant's Building Percentage: 50.222%

Tenant's Common Area Building Percentage: 2.53%

Commencement Date: May 1, 2015

Expiration Date: October 31, 2020

Landlord's Address:
c/o The Prudential Insurance Company of America
4 Embarcadero Center, 27^th Floor
San Francisco, CA 94111
Attn: PRISA II Asset Management

With a copy by the same method to:

SMRH:422502059.9 -1-

c/o The Prudential Insurance Company of America
7 Giralda Farms
Madison, New Jersey 07940
Attention: James Marinello, Esquire

With a copy by the same method to:Harvest Properties, Inc.
6425 Christie Avenue, Suite 220
Emeryville, California 94608
Attention: Joss Hanna

Address for rental payment:
Payments via FedEx/UPS/Courier:JP Morgan Chase
2710 Media Center Dr.
Building #6, Suite #120
Los Angeles, CA 90065
Attn: PREI's Westport Office Park/100170Payments via regular mail (lockbox address):Remit to: PREI's Westport Office Park #171201    P. O. Box 100170    Pasadena, CA 91189-0170Payments via either FED wire or ACH wire:Bank Account Name:
Harvest Properties, Inc. LLC,
as agent for PREI's Westport Office Park
Bank Account Number 921254751
Bank Name: JP Morgan Chase Bank, N.A.
Bank City & State Location: Baton Rouge, LAABA Routing Number: 071000013

Tenant's Address:
The Premises
Attention: Mike Badgis, VP HR and Worldwide Administration

With a copy to:

Cooley LLP

3175 Hanover Street

SMRH:422502059.9 -2-

Palo Alto, California 94304-1130

Attention: Tim Moore

Landlord's Broker: Harvest Properties.

Tenant's Broker: Colliers International.

Maximum Parking Allocation: Eighty-three (83), which is based on a parking ratio of 3.3 non‑exclusive parking spaces per one thousand (1,000) square feet of rentable space in the Premises.

Tenant Improvement Allowance: $379,035.00

The Basic Lease Information is incorporated into and made part of this Lease. Each reference in this Lease to any Basic Lease Information shall mean the applicable information set forth in the Basic Lease Information, except that in the event of any conflict between an item in the Basic Lease Information and this Lease, this Lease shall control. Additional defined terms used in the Basic Lease Information shall have the meanings given those terms in this Lease.

ARTICLE 1PREMISES; COMMON AREAS

1.1Subject to all of the terms and conditions hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises. The property shown on Exhibit A to this Lease and all improvements thereon and appurtenances on that land thereto, including, but not limited to, the Building, other office buildings, access roadways, and all other related areas, shall be collectively hereinafter referred to as the "Project." Tenant acknowledges and agrees that Landlord may elect to sell one or more of the buildings within the Project and that upon any such sale Tenant's pro-rata share of those Operating Expenses and Taxes (each as defined below) allocated to the areas of the Project other than buildings may be adjusted accordingly and reasonably by Landlord. The parties hereto hereby acknowledge that the purpose of Exhibit A and Exhibit B are to show the approximate location of the Premises in the Building and the general layout of the Project and such Exhibits are not meant to constitute an agreement, representation or warranty as to the construction of the Premises, the Building or the Project, the precise area of the Premises, the Building or the Project or the specific location of the Building, "Common Areas," as that term is defined in Section 1.3, below, or the elements thereof or of the accessways to the Premises, or the Project.

1.2For purposes of this Lease, (1) "rentable area" and "usable area" shall be calculated pursuant to the Standard Method for Measuring Floor Area in Office Buildings (ANSI/BOMA Z65.1, 1996); (2) "rentable square feet" and "rentable footage" shall have the same meaning as the term "rentable area;" and (3) "usable square feet" and "usable square footage" shall have the same meaning as the term "usable area." Notwithstanding anything to the contrary in this Lease, the recital of the rentable area herein above set forth is for descriptive purposes only. Tenant shall have no right to terminate this Lease or receive any adjustment or

SMRH:422502059.9 -3-

rebate of any Base Rent or Additional Rent (as hereinafter defined) payable hereunder if said recital is incorrect. Tenant has inspected the Premises and is fully familiar with the scope and size thereof and agrees to pay the full Base Rent and Additional Rent set forth herein in consideration for the use and occupancy of said space, regardless of the actual number of square feet contained therein. Notwithstanding anything to the contrary in this Lease, in no event shall the rentable area of the Premises or the Building be increased above the amounts set forth in the Basic Lease Information above.

1.3Tenant shall have the non-exclusive right to use in common with other tenants in the Project, and subject to the rules and regulations referred to in Article 27 of this Lease, those portions of the Project which are provided, from time to time, for use in common by Landlord, Tenant and any other tenants of the Project (such areas, together with such other portions of the Project designated by Landlord, in its discretion, including certain areas designated for the exclusive use of certain tenants, or to be shared by Landlord and certain tenants, are collectively referred to herein as the "Common Areas"). The Common Areas shall consist of the "Project Common Areas" and the "Building Common Areas." The term "Project Common Areas," as used in this Lease, shall mean the portion of the Project reasonably designated as such by Landlord. The term "Building Common Areas," as used in this Lease, shall mean the portions of the Common Areas located within the Building reasonably designated as such by Landlord. The manner in which the Common Areas are maintained and operated shall be at the reasonable discretion of Landlord and the use thereof shall be subject to such rules, regulations and restrictions as Landlord may make from time to time; provided, however, that the Common Areas shall at all times be maintained in a first class manner. Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project and the Common Areas. Subject to "Applicable Laws," as that term is defined in Section 5.1(a) of this Lease, except when and where Tenant's right of access is specifically excluded in this Lease, and except in the event of an emergency, Tenant shall have the right of access to the Premises, the Building, and the parking facilities servicing the Building twenty-four (24) hours per day, seven (7) days per week during the "Term," as that term is defined in Section 2.1, below.

ARTICLE 2TERM AND CONDITION OF PREMISES

2.1The term of this Lease (the "Term") shall commence on the Commencement Date and end on the Expiration Date, unless sooner terminated (the "Termination Date") as hereinafter provided. The Commencement Date of this Lease and the obligation of Tenant to pay Base Rent, Additional Rent and all other charges hereunder shall not be delayed or postponed by reason of any delay by Tenant in performing changes or alteration in the Premises not required to be performed by Landlord. In the event the Term shall commence on a day other than the first day of a month, then the Base Rent shall be immediately paid for such partial month prorated in accordance with Section 4.4 below.

2.2Tenant is currently in possession of the Premises and the balance of the Building other than the Premises (the “First Floor Space”) pursuant to that certain Lease

SMRH:422502059.9 -4-

Agreement dated October 26, 1999 (as amended by that certain Commencement Letter dated March 16, 2000, that certain Request for State Incorporation Change dated March 24, 2000 and that certain First Amendment to Lease dated February 28, 2007) (collectively, the “Existing Lease”), by and between Landlord, as landlord, and Tenant (formerly known as Ipass, Inc., a California corporation), as tenant. The Existing Lease shall expire by its own terms on April 30, 2015. Landlord hereby waives and releases Tenant’s from its removal and restoration obligations under the Existing Lease with respect to the First Floor Space, Landlord accepts the First Floor Space in its then-existing as-is condition and, notwithstanding anything the contrary in the Existing Lease, Tenant’s sole obligation at the expiration of the Existing Lease with respect to the condition of the First Floor Space shall be to remove its personal property from the First Floor Space and deliver the First Floor Space to Landlord broom clean. Landlord shall be responsible at its sole cost for the construction of a corridor in the first floor of the Building from the rear exit stairwell to the Building rear exit. Tenant shall surrender possession of and vacate the First Floor Space to Landlord no later than April 30, 2015. The parties acknowledge that the fire suppression system at the Building previously installed by Tenant shall be treated the same as all other alterations and need not be removed or restored by Tenant. If Tenant does not vacate the First Floor Space on or before April 30, 2015, Tenant shall be deemed to be holding over in the First Floor Space. The parties hereby acknowledge and agree that, effective as of the Commencement Date, Tenant shall be deemed to have accepted possession of the Premises in its “as is” condition and configuration pursuant to this Lease. Tenant agrees that the Premises are in good order and satisfactory condition, and that there are no representations or warranties by Landlord regarding the condition and/or compliance of the Premises or the Building. Landlord currently holds a security deposit under the Existing Lease (as defined below) that exceeds the amount of the required Security Deposit Amount under this Lease. Accordingly, effective on the Commencement Date, a portion of the existing security deposit equal to the required Security Deposit Amount under this Lease shall be deemed to have been returned to Tenant and redeposited under this Lease and the balance of the existing security deposit in excess of the required Security Deposit Amount under this Lease shall be returned to Tenant pursuant to the terms of the Existing Lease.

2.3Effective on February 28, 2015 (the "Contraction Effective Date") the Premises shall thereafter be deemed reduced by the space shown on Exhibit I attached hereto (the "Contraction Space") for all purposes under this Lease and Tenant and its subtenant shall vacate the Contraction Space prior to the Contraction Effective Date. Following the Contraction Effective Date, Landlord and Tenant will enter into an amendment of this Lease evidencing the deletion of the Contraction Space from the Premises and making such adjustments to the Lease as are necessary to reflect the deletion of the Contraction Space from the Premises, including without limitation the calculation of the Base Rent and adjustment of Tenant's Building Percentage. Landlord hereby waives and releases Tenant’s from its removal and restoration obligations under the Existing Lease with respect to the Contraction Space, Landlord accepts the Contraction Space in its then-existing as-is condition and, notwithstanding anything the contrary in the Existing Lease, Tenant’s sole obligation on the Contraction Effective Date with respect to the condition of the Contraction Space shall be to remove its personal property from the Contraction Space and deliver the Contraction Space to Landlord broom clean.

SMRH:422502059.9 -5-

ARTICLE 3USE, NUISANCE, OR HAZARD

3.1The Premises shall be used and occupied by Tenant solely for general office purposes and for no other purposes without the prior written consent of Landlord.

3.2Tenant shall not use, occupy, or permit the use or occupancy of the Premises for any purpose which Landlord, in its reasonable discretion, deems to be illegal, immoral, or dangerous; permit any public or private nuisance; do or permit any act or thing which may disturb the quiet enjoyment of any other tenant of the Project; keep any substance or carry on or permit any operation which might introduce offensive odors or conditions into other portions of the Project, use any apparatus which might make undue noise or set up vibrations in or about the Project; permit anything to be done which would increase the premiums paid by Landlord for fire and extended coverage insurance on the Project or its contents or cause a cancellation of any insurance policy covering the Project or any part thereof or any of its contents; or permit anything to be done which is prohibited by or which shall in any way conflict with any law, statute, ordinance, or governmental rule, regulation or covenants, conditions and restrictions affecting the Project, including without limitation the CC&R's (as defined below) now or hereinafter in force. Should Tenant do any of the foregoing without the prior written consent of Landlord, and the same is not cured within five (5) business days after notice from Landlord (which five (5) business day period shall be subject to extension if the nature of the breach is such that it is not possible to cure the same within such five (5) business day period so long as the Tenant commences the cure of such breach within such five (5) day period and diligently prosecutes the same to completion) it shall constitute an Event of Default (as hereinafter defined) and shall enable Landlord to resort to any of its remedies hereunder.

3.3The ownership, operation, maintenance and use of the Project shall be subject to certain conditions and restrictions contained in an instrument ("CC&R's") recorded or to be recorded against title to the Project. Tenant agrees that regardless of when those CC&R's are so recorded, this Lease and all provisions hereof shall be subject and subordinate thereto; provided, however, that except as required by Applicable Laws (as defined below), Tenant's obligation to comply with CC&R's recorded after the date of this Lease shall be subject to Tenant's prior consent, which will not be withheld unless the same would materially adversely affect Tenant's rights under this Lease. Accordingly, as a consequence of that subordination, during any period in which the entire Project is not owned by Landlord, (a) the portion of Operating Expenses and Taxes (each as defined below) for the Common Areas shall be allocated among the owners of the Project as provided in the CC&R's, and (b) the CC&R's shall govern the maintenance and insuring of the portions of the Project not owned by Landlord.

ARTICLE 4RENT

4.1Tenant hereby agrees to pay Landlord the Base Rent. For purposes of Rent adjustment under the Lease, the number of months is measured from the first day of the calendar month in which the Commencement Date falls. Each monthly installment (the "Monthly Rent") shall be payable by check or by money order or electronic transfer of funds on

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or before the first day of each calendar month. In addition to the Base Rent, Tenant also agrees to pay Tenant's Share of Operating Expenses and Taxes (each as hereinafter defined), and any and all other sums of money as shall become due and payable by Tenant as hereinafter set forth, all of which shall constitute additional rent under this Lease (the "Additional Rent"). Landlord expressly reserves the right to apply any payment received to Base Rent or any other items of Rent that are not paid by Tenant. The Monthly Rent and the Additional Rent are sometimes hereinafter collectively called "Rent" and shall be paid when due in lawful money of the United States without demand, deduction, abatement, or offset to the addresses for the rental payment set forth in the Basic Lease Information, or as Landlord may designate from time to time.

4.2In the event any Monthly or Additional Rent or other amount payable by Tenant hereunder is not paid within five (5) days after its due date, Tenant shall pay to Landlord a late charge (the "Late Charge"), as Additional Rent, in an amount of five percent (5%) of the amount of such late payment. Failure to pay any Late Charge shall be deemed a Monetary Default (as hereinafter defined). Provision for the Late Charge shall be in addition to all other rights and remedies available to Landlord hereunder, at law or in equity, and shall not be construed as liquidated damages or limiting Landlord's remedies in any manner. Failure to charge or collect such Late Charge in connection with any one (1) or more such late payments shall not constitute a waiver of Landlord's right to charge and collect such Late Charges in connection with any other similar or like late payments. Notwithstanding the foregoing provisions of this Section 4.2, the Late Charge shall not be imposed with respect to the first late payment in any calendar year during the Term unless the applicable payment due from Tenant is not received by Landlord within five (5) days following written notice from Landlord that such payment was not received when due. Following the first such written notice from Landlord in any calendar year during the Term (but regardless of whether such payment has been received within such five (5) day period), the Late Charge will be imposed without notice for any subsequent payment due from Tenant during such calendar year which is not received within five (5) days after its due date.

4.3Simultaneously with the execution hereof, Tenant shall (i) deliver to Landlord the Rent Payable Upon Execution as payment of the first installment of Monthly Rent and Tenant's Share of Operating Expenses and Taxes due hereunder and (ii) be deemed to have delivered to Landlord an amount equal to the Security Deposit Amount to be held by Landlord as security for Tenant's faithful performance of all of the terms, covenants, conditions, and obligations required to be performed by Tenant hereunder (the "Security Deposit"). The Security Deposit shall be held by Landlord as security for the performance by Tenant of all of the covenants of this Lease to be performed by Tenant and Tenant shall not be entitled to interest thereon. The Security Deposit is not an advance rent deposit, an advance payment of any other kind, or a measure of Landlord's damages in any case of Tenant's default. If Tenant fails to perform any of the covenants of this Lease to be performed by Tenant, including without limitation the provisions relating to payment of Rent, the removal of property at the end of the Term, the repair of damage to the Premises caused by Tenant, and the cleaning of the Premises upon termination of the tenancy created hereby, then Landlord shall have the right, but no obligation, to apply the Security Deposit, or so much thereof as may be necessary, for the payment of any Rent or any other sum in default and/or to cure any other such failure by Tenant.

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If Landlord applies the Security Deposit or any part thereof for payment of such amounts or to cure any such other failure by Tenant, then Tenant shall immediately pay to Landlord the sum necessary to restore the Security Deposit to the full amount then required by this Section 4.3 Landlord's obligations with respect to the Security Deposit are those of a debtor and not a trustee. Landlord shall not be required to maintain the Security Deposit separate and apart from Landlord's general or other funds and Landlord may commingle the Security Deposit with any of Landlord's general or other funds. Upon termination of the original Landlord's or any successor owner's interest in the Premises or the Building, the original Landlord or such successor owner shall be released from further liability with respect to the Security Deposit upon the original Landlord's or such successor owner's complying with California Civil Code Section 1950.7. Subject to the foregoing, Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafter in force, which (a) establish a time frame within which a landlord must refund a security deposit under a lease, and/or (b) provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage caused by the default of Tenant under this Lease, including without limitation all damages or Rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code. So long as no Event of Default then exists, the unused portion of the Security Deposit shall be returned to Tenant or the last assignee of Tenant's interest under this Lease within thirty (30) days following expiration or termination of the Term of this Lease.

4.4If the Term commences on a date other than the first day of a calendar month or expires or terminates on a date other than the last day of a calendar month, the Rent for any such partial month shall be prorated to the actual number of days in such partial month.

4.5All Rents and any other amount payable by Tenant to Landlord hereunder, if not paid when due, shall bear interest from the date due until paid at a rate equal to the prime commercial rate established from time to time by Bank of America, plus four percent (4%) per annum; but not in excess of the maximum legal rate permitted by law. Failure to charge or collect such interest in connection with any one (1) or more delinquent payments shall not constitute a waiver of Landlord's right to charge and collect such interest in connection with any other or similar or like delinquent payments.

4.6If Tenant fails to make when due two (2) consecutive payments of Monthly Rent or makes two (2) consecutive payments of Monthly Rent which are returned to Landlord by Tenant's financial institution for insufficient funds, Landlord may require, by giving written notice to Tenant, that all future payments of Rent shall be made in cashier's check or by money order. The foregoing is in addition to any other remedy of Landlord hereunder, at law or in equity.

ARTICLE 5RENT ADJUSTMENT

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5.1Definitions.

(a)"Operating Expenses", as said term is used herein, shall mean all expenses, costs, and disbursements of every kind and nature which Landlord shall pay or become obligated to pay because of or in connection with the ownership, operation, management, security, repair, restoration, replacement, or maintenance of the Project, or any portion thereof. Operating Expenses shall be computed in accordance with generally accepted real estate practices, consistently applied, and shall include, but not be limited to, the items as listed below:

(i)Wages, salaries, other compensation and any and all taxes, insurance and benefits of, the Building manager and of all other persons engaged in the operation, maintenance and security of the Project;

(ii)Payments under any equipment rental agreements or management agreements, including without limitation the cost of any actual or charged management fee and all expenses for the Project management office including rent, office supplies, and materials therefor;

(iii)Costs of all supplies, equipment, materials, and tools and amortization (including interest on the unamortized cost) of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project, or any portion thereof;

(iv)All costs incurred in connection with the operation, maintenance, and repair of the Project including without limitation, the following: (A) the cost of operation, repair, maintenance and replacement of all systems and equipment and components thereof of the Project; (B) the cost of janitorial, alarm, security and other services, replacement of wall and floor coverings, ceiling tiles and fixtures in common areas, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (C) the cost of licenses, certificates, permits and inspections and the cost of contesting any governmental enactments which are reasonably anticipated by Landlord to increase Operating Expenses, and the cost incurred in connection with a transportation system management program or similar program; (D) the cost of landscaping, decorative lighting, and relamping, the cost of maintaining fountains, sculptures, bridges; (E) costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute “Taxes” as that term is defined below; and (F) costs and expenses of complying with, or participating in, conservation, recycling, sustainability, energy efficiency, waste reduction or other programs or practices implemented or enacted from time to time at the Building, including, without limitation, in connection with any LEED (Leadership in Energy and Environmental Design) rating or compliance system or program, including that currently coordinated through the U.S. Green

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Building council or Energy Star rating and/or compliance system or program (collectively, "Conservation Costs").

(v)The cost of supplying all utilities, the cost of operating, maintaining, repairing, replacing, renovating and managing the utility systems, mechanical systems, sanitary, storm drainage systems, communication systems and escalator and elevator systems, and the cost of supplies, tools, and equipment and maintenance and service contracts in connection therewith.

(vi)The cost of all insurance carried by Landlord in connection with the Project as reasonably determined by Landlord, including without limitation commercial general liability insurance, physical damage insurance covering damage or other loss caused by fire, earthquake, flood or other water damage, explosion, vandalism and malicious mischief, theft or other casualty, rental interruption insurance and such insurance as may be required by any lessor under any present or future ground or underlying lease of the Building or Project or any holder of a mortgage, deed of trust or other encumbrance now or hereafter in force against the Building or Project or any portion thereof, and any deductibles payable thereunder; including, without limitation, Landlord's cost of any self insurance deductible or retention;

(vii)Capital improvements made to or capital assets acquired for the Project, or any portion thereof, after the Commencement Date that (1) are intended to reduce Operating Expenses or (2) are necessary for the health, safety and/or security of the Project, its occupants and visitors and are deemed advisable and the reasonable judgment of Landlord or (3) Conservation Costs, or (4) are required under any and all applicable laws, statutes, codes, ordinances, orders, rules, regulations, conditions of approval and requirements of all federal, state, county, municipal and governmental authorities and all administrative or judicial orders or decrees and all permits, licenses, approvals and other entitlements issued by governmental entities, and rules of common law, relating to or affecting the Project, the Premises or the Building or the use or operation thereof, whether now existing or hereafter enacted, including, without limitation, the Americans with Disabilities Act of 1990, 42 USC 12111 et seq. (the "ADA") as the same may be amended from time to time, all Environmental Laws (as hereinafter defined), and any CC&R's, or any corporation, committee or association formed in connection therewith, or any supplement thereto recorded in any official or public records with respect to the Project or any portion thereof (collectively, "Applicable Laws")(except for capital repairs, replacements or other improvements to remedy a condition existing prior to the Commencement Date which an applicable governmental authority, if it had knowledge of such condition prior to the Commencement Date, would have then required to be remedied pursuant to then-current governmental laws or regulations in their form existing as of the Commencement Date and pursuant to the then-current interpretation of such governmental laws or regulations by the applicable governmental authority as of

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the Commencement Date), which capital costs, or an allocable portion thereof, shall be amortized over the useful life thereof as reasonably determined by Landlord, together with interest on the unamortized balance at a rate determined by Landlord not to exceed 8% per annum;

(viii)fees, charges and other costs, including management fees (or amounts in lieu thereof), consulting fees, legal fees and accounting fees, of all contractors, engineers, consultants and other persons engaged by Landlord or otherwise incurred by or charged by Landlord in connection with the management, operation, maintenance and repair of the Buildings and the Project; and

(ix)payments, fees or charges under the CC&R's and any easement, license, operating agreement, declaration, restricted covenant, or instrument pertaining to the sharing of costs by the Project, or any portion thereof.

Expressly excluded from Operating Expenses are the following items:

(x)Advertising and leasing commissions;

(xi)Repairs and restoration paid for by the proceeds of any insurance policies or amounts otherwise reimbursed to Landlord or paid by any other source (other than by tenants paying their share of Operating Expenses);

(xii)Principal, interest, and other costs directly related to financing the Project or ground lease rental or depreciation;

(xiii)The cost of special services to tenants (including Tenant) for which a special charge is made;

(xiv)The costs of repair of casualty damage or for restoration following condemnation to the extent covered by insurance proceeds or condemnation awards;

(xv)The costs of any capital expenditures except as expressly permitted to be included in Operating Expenses as provided under clauses (vi), and (vii) above;

(xvi)The costs, including permit, license and inspection costs and supervision fees, incurred with respect to the installation of tenant improvements within the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space within the Project or promotional or other costs in order to market space to potential tenants;

(xvii)The legal fees and related expenses and legal costs incurred by Landlord (together with any damages awarded against Landlord) due

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to the violation by Landlord or any tenant of the terms and conditions of any lease of space in the Project;

(xviii)Costs incurred: (x) to comply with Applicable Laws with respect to any Hazardous Materials (as defined below) which were in existence in, on, under or about the Project (or any portion thereof) prior to the Commencement Date, and were of such a nature that a federal, state or municipal governmental or quasi-governmental authority, if it had then had knowledge of the presence of such Hazardous Materials, in the state, and under the conditions that they then existed in, on, under or about the Project, would have then required the removal, remediation or other action with respect thereto; (y) with respect to Hazardous Materials which are disposed of or otherwise introduced into, on, under or about the Project after the date hereof by Landlord or Landlord’s agents or employees and are of such a nature, at time of disposition or introduction, that a federal, state or municipal governmental or quasi-governmental authority, if it had then had knowledge of the presence of such Hazardous Materials, in the state, and under the conditions, that they then existed in, on, under or about the Project, would have then required the removal, remediation or other action with respect thereto; and/or (z) to comply with the Order (as defined below); provided, however, Operating Expenses shall include costs incurred in connection with the clean-up, remediation, monitoring, management and administration of (and defense of claims related to) the presence of (1) Hazardous Materials used by Landlord (provided such use is not negligent and is in compliance with Applicable Laws) in connection with the operation, repair and maintenance of the Project to perform Landlord’s obligations under this Lease (such as, without limitation, fuel oil for generators, cleaning solvents, and lubricants) and which are customarily found or used in Comparable Buildings and (2) Hazardous Materials created, released or placed in the Premises, Building or the Project by Tenant (or Tenant’s affiliates or their tenants, contractors, employees or agents) prior to or after the Commencement Date;

(xix)The attorneys' fees in connection with the negotiation and preparation of or enforcement of letters, deal memos, letters of intent, leases, subleases and/or assignments, space planning costs, and other costs and expenses incurred in connection with lease, sublease and/or assignment negotiations and transactions with present or prospective tenants or other occupants of the Project;

(xx)The expenses in connection with services or other benefits which are not available to Tenant;

(xxi)The overhead and profit paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in the Project to the extent the same exceeds the costs of such goods and/or services rendered by qualified, unaffiliated third parties on a competitive basis;

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(xxii)The costs arising from Landlord's charitable or political contributions;

(xxiii)The costs (other than ordinary maintenance and insurance) for sculpture, paintings and other objects of art;

(xxiv)The interest and penalties resulting from Landlord's failure to pay any items of Operating Expense when due;

(xxv)The Landlord's general corporate overhead and general and administrative expenses, costs of entertainment, dining, automobiles or travel for Landlord's employees, and costs associated with the operation of the business of the partnership or entity which constitutes Landlord as the same are distinguished from the costs of the operation of the Project, including partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord's interest in the Project, costs of any disputes between Landlord and its employees (if any) not engaged in the operation of the Project, disputes of Landlord with management, or outside fees paid in connection with disputes with other Project tenants or occupants (except to the extent such dispute is based on Landlord's good faith efforts to benefit Tenant or meet Landlord's obligations under this Lease);

(xxvi)The costs arising from the gross negligence or willful misconduct of Landlord;

(xxvii)The management office rental to the extent such rental exceeds the fair market rental for such space;

(xxviii)Reserves for future expenses; provided, however, the maintenance of such reserve shall not prohibit Landlord from passing through to Tenant (as an Operating Expense) items includable in Operating Expenses pursuant to the Lease once such items have been purchased from such reserve or once the expenses covered by such reserve have been incurred;

(xxix)Salaries, wages, benefits and other compensation paid to officers and employees of Landlord who are not assigned in whole or in part (and, if in part, then on a pro rata basis based on the amount of time devoted to the Building or the Project) to the operation, management, maintenance or repair of the Building or the Project;

(xxx)Items and services which Landlord offers selectively to one or more tenants of the Building or the Project (not including Tenant) without reimbursement;

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(xxxi) Depreciation, except on materials, tools, supplies and vendor-type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party where such depreciation would otherwise have been included in the charge for such third parties' services;

(xxxii)the cost of installing or upgrading any utility metering for any part of the Building or the Project;

(xxxiii)management fees in excess of an amount equal to three percent (3%) of all gross receipts for the Project (as fully grossed up for a one hundred percent (100%) occupancy level);

(xxxiv)The costs of correction of latent defects in the Project to the extent covered by warranties; and

(xxxv)The costs of Landlord's membership in professional organizations (such as, by way of example and without limitation, BOMA) in excess of $2,500.00 per year.

(b)"Taxes" shall mean all ad valorem taxes, personal property taxes, and all other taxes, assessments, embellishments, use and occupancy taxes, transit taxes, water, sewer and pure water charges not included in Section 5.1.(a)(v) above, excises, levies, license fees or taxes, and all other similar charges, levies, penalties, or taxes, if any, which are levied, assessed, or imposed, by any Federal, State, county, or municipal authority, whether by taxing districts or authorities presently in existence or by others subsequently created, upon, or due and payable in connection with, or a lien upon, all or any portion of the Project, or facilities used in connection therewith, and rentals or receipts therefrom and all taxes of whatsoever nature that are imposed in substitution for or in lieu of any of the taxes, assessments, or other charges included in its definition of Taxes, and any costs and expenses of contesting the validity of same; but excluding net income taxes of Landlord or the owner of any interest in the Building or the Project, franchise, capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed against the Building or the Project or any portion thereof or interest therein.

(c)"Lease Year" shall mean the twelve (12) month period commencing January 1st and ending December 31st.

(d)"Tenant's Building Percentage" shall mean Tenant's percentage of the entire Building as determined by dividing the Rentable Area of the Premises by the total Rentable Area of the Building. If there is a change in the total Building Rentable Area as a result of an addition to the Building, partial destruction, modification or similar cause, which event causes a reduction or increase on a permanent basis, Landlord shall cause adjustments in the computations as shall be necessary to provide for any such changes. Landlord shall, at Landlord's option, have the right to segregate Operating

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Expenses into two (2) separate categories, one (1) such category, to be applicable only to Operating Expenses incurred for the Building and the other category applicable to Operating Expenses incurred for the Common Areas and/or the Project as a whole. If Landlord so segregates Operating Expenses into two (2) categories, two (2) Tenant's Building Percentages shall apply, one (1) such Tenant's Building Percentage shall be calculated by dividing the Rentable Area of the Premises by the total Rentable Area in the Building ("Tenant's Building Only Percentage"), and the other Tenant's Building Percentage to be calculated by dividing the Rentable Area of the Premises by the total Rentable Area of all buildings in the Project ("Tenant's Common Area Building Percentage"). Consequently, if Landlord elects to so segregate Operating Expenses into two (2) categories, any reference in this Lease to "Tenant's Building Percentage" shall mean and refer to both Tenant's Building Only Percentage and Tenant's Common Area Building Percentage of Operating Expenses.

(e)"Tenant's Tax Percentage" shall mean the percentage determined by dividing the Rentable Area of the Premises by the total Rentable Area of all buildings in the Project.

(f)"Market Area" shall mean the Redwood Shores submarket of Redwood City, California (the "City").

(g)"Comparable Buildings" shall mean comparable Class "A" office/R&D use buildings in the Market Area.

5.2Tenant shall pay to Landlord, as Additional Rent, Tenant's Share (as hereinafter defined) of the Operating Expenses. "Tenant's Share" shall be determined by multiplying Operating Expenses for any Lease Year or pro rata portion thereof, by Tenant's Building Percentage. Landlord shall, in advance of each Lease Year, estimate what Tenant's Share will be for such Lease Year based, in part, on Landlord's operating budget for such Lease Year, and Tenant shall pay Tenant's Share as so estimated each month (the "Monthly Escalation Payments"). The Monthly Escalation Payments shall be due and payable at the same time and in the same manner as the Monthly Rent.

5.3Landlord shall, within one hundred fifty (150) days after the end of each Lease Year, or as soon thereafter as reasonably possible, provide Tenant with a written statement of the actual Operating Expenses incurred during such Lease Year for the Project and such statement shall set forth Tenant's Share of such Operating Expenses. Tenant shall pay Landlord, as Additional Rent, the difference between Tenant's Share of Operating Expenses and the amount of Monthly Escalation Payments made by Tenant attributable to said Lease Year, such payment to be made within thirty (30) days of the date of Tenant's receipt of said statement (except as provided in Section 5.4 below); similarly, Tenant shall receive a credit if Tenant's Share is less than the amount of Monthly Escalation Payments collected by Landlord during said Lease Year, such credit to be applied to future Monthly Escalation Payments to become due hereunder or to be paid by Landlord to Tenant following the expiration of this Lease. If utilities, janitorial services or any other components of Operating Expenses increase during any Lease Year, Landlord may revise (no more than twice per year) Monthly Escalation Payments due during

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such Lease Year by giving Tenant written notice to that effect; and thereafter, Tenant shall pay, in each of the remaining months of such Lease Year, a sum equal to the amount of the revised difference in Operating Expenses multiplied by Tenant's Building Percentage divided by the number of months remaining in such Lease Year.

5.4If, within sixty (60) days following Tenant's receipt of the Operating Expense statement or Taxes statement, neither party hereto delivers to the other party a notice referring in reasonable detail to one (1) or more errors in such statement, it shall be deemed conclusively that the information set forth in such statement(s) is correct. Tenant shall, however, be entitled to conduct or require an audit to be conducted, provided that (a) not more than one (1) such audit may be conducted during any Lease Year of the Term, (b) the records for each Lease Year may be audited only once, (c) such audit is commenced within sixty (60) days following Tenant's receipt of the applicable statement, and (d) such audit is completed and a copy thereof is delivered to Landlord within one hundred twenty (120) days following Landlord’s providing full access to Tenant's auditor. If Landlord responds to any such audit with an explanation of any issues raised in the audit, such issues shall be deemed resolved unless Tenant responds to Landlord with further written objections within thirty (30) days after receipt of Landlord's response to the audit. In no event shall payment of Rent ever be contingent upon the performance of such audit. For purposes of any audit, Tenant or Tenant's duly authorized representative, at Tenant's sole cost and expense, shall have the right, upon fifteen (15) days' written notice to Landlord, to inspect Landlord's books and records pertaining to Operating Expenses and Taxes at the offices of Landlord or Landlord's managing agent during ordinary business hours, provided that such audit must be conducted so as not to interfere with Landlord's business operations and must be reasonable as to scope and time. If actual Operating Expenses or Taxes are finally determined (by agreement of the parties, arbitration or a court of competent jurisdiction) to have been overstated or understated by Landlord for any calendar year, then the parties shall within thirty (30) days thereafter make such adjustment payment or refund as is applicable, and if actual Operating Expenses and Taxes are finally determined (by agreement of the parties, arbitration or a court of competent jurisdiction) to have been overstated by Landlord for any calendar year by in excess of seven percent (7%), then Landlord shall pay the reasonable cost of Tenant's audit, not to exceed $2,500.00.

5.5If the occupancy of the Building during any part of any Lease Year is less than one hundred percent (100%), Landlord shall make an appropriate adjustment of the variable components of Operating Expenses for that Lease Year, as reasonably determined by Landlord using sound accounting and management principles, to determine the amount of Operating Expenses that would have been incurred had the Building been one hundred percent (100%) occupied. This amount shall be considered to have been the amount of Operating Expenses for that Lease Year. For purposes of this Section 5.5, "variable components" include only those component expenses that are affected by variations in occupancy levels.

5.6Tenant shall pay to Landlord, as Additional Rent, "Tenant's Tax Share" (as hereinafter defined) of the Taxes. "Tenant's Tax Share" shall be determined by multiplying Taxes for any Lease Year or pro rata portion thereof, by Tenant's Tax Percentage. Landlord shall, in advance of each Lease Year, estimate what Tenant's Tax Share will be for such Lease Year and

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Tenant shall pay Tenant's Tax Share as so estimated each month (the "Monthly Tax Payments"). The Monthly Tax Payments shall be due and payable at the same time and in the same manner as the Monthly Rent.

5.7Landlord shall, within one hundred fifty (150) days after the end of each Lease Year, or as soon thereafter as reasonably possible, provide Tenant with a written statement of the actual Taxes incurred during such Lease Year for the Project and such statement shall set forth Tenant's Tax Share of such Taxes. Tenant shall pay Landlord, as Additional Rent, the difference between Tenant's Tax Share of Taxes and the amount of Monthly Tax Payments made by Tenant attributable to said Lease Year, such payment to be made within thirty (30) days of the date of Tenant's receipt of said statement; similarly, Tenant shall receive a credit if Tenant's Tax Share is less than the amount of Monthly Tax Payments collected by Landlord during said Lease Year, such credit to be applied to future Monthly Tax Payments to become due hereunder (or to be paid by Landlord to Tenant upon the expiration of this Lease). If Taxes increase during any Lease Year, Landlord may revise Monthly Tax Payments due during such Lease Year by giving Tenant written notice to that effect; and, thereafter, Tenant shall pay, in each of the remaining months of such Lease Year, a sum equal to the amount of revised difference in Taxes multiplied by Tenant's Tax Percentage divided by the number of months remaining in such Lease Year.

5.8If the Taxes for any Lease Year are changed as a result of protest, appeal or other action taken by a taxing authority, the Taxes as so changed shall be deemed the Taxes for such Lease Year. If in any year the Project is less than one hundred percent (100%) occupied, the elements of Taxes which vary depending the elements of Taxes which vary depending upon the build out of rentable area shall be calculated as if the tenant improvements in the Project were constructed in one hundred percent (100%) of the rentable area in the Project, and all tenant improvements in the Project were fully assessed for real estate tax purposes. Any expenses incurred by Landlord in attempting to protest, reduce or minimize Taxes shall be included in Taxes in the Lease Year in which those expenses are paid. Landlord shall have the exclusive right to conduct such contests, protests and appeals of the Taxes as Landlord shall determine is appropriate in Landlord's sole discretion.

5.9Tenant's obligation with respect to Additional Rent and the payment of Tenant's Share of Operating Expenses and Tenant's Tax Share of Taxes shall survive the Expiration Date or Termination Date of this Lease and Landlord shall have the right to retain the Security Deposit, or so much thereof as it deems necessary, to secure payment of Tenant's Share of Operating Expenses and Tenant's Tax Share of Taxes for the final year of the Lease, or part thereof, during which Tenant was obligated to pay such expenses.

ARTICLE 6SERVICES TO BE PROVIDED BY LANDLORD

6.1Subject to Articles 5 and 10 herein, and provided Tenant is not in monetary default (beyond any applicable notice and cure periods) under this Lease, Landlord agrees to furnish or cause to be furnished to the Premises the utilities and services described in the Standards for Utilities and Services, attached hereto as Exhibit G, subject to the conditions and in accordance with the standards set forth herein.

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6.2Landlord shall not be liable for any loss or damage arising or alleged to arise in connection with the failure, stoppage, or interruption of any such services; nor shall the same be construed as an eviction of Tenant, work an abatement of Rent, entitle Tenant to any reduction in Rent, or relieve Tenant from the operation of any covenant or condition herein contained; it being further agreed that Landlord reserves the right to discontinue temporarily such services or any of them at such times as may be necessary by reason of repair or capital improvements performed within the Project, accident, unavailability of employees, repairs, alterations or improvements, or whenever by reason of strikes, lockouts, riots, acts of God, or any other happening or occurrence beyond the reasonable control of Landlord. In the event of any such failure, stoppage or interruption of services, Landlord shall use reasonable diligence to have the same restored. Neither diminution nor shutting off of light or air or both, nor any other effect on the Project by any structure erected or condition now or hereafter existing on lands adjacent to the Project, shall affect this Lease, abate Rent, or otherwise impose any liability on Landlord.

6.3Landlord shall have the right to reduce heating, cooling, or lighting within the Premises and in the public area in the Building as required by any mandatory fuel or energy-saving program.

6.4Unless otherwise provided by Landlord, Tenant shall separately arrange with the applicable local public authorities or utilities, as the case may be, for the furnishing of and payment of all telephone and facsimile services as may be required by Tenant in the use of the Premises. Tenant shall directly pay for such telephone and facsimile services as may be required by Tenant in the use of the Premises, including the establishment and connection thereof, at the rates charged for such services by said authority or utility; and the failure of Tenant to obtain or to continue to receive such services for any reason whatsoever shall not relieve Tenant of any of its obligations under this Lease.

6.5Landlord shall have the exclusive right, but not the obligation, to provide any locksmithing services, and Landlord shall also have the non-exclusive right, but not the obligation, to provide any additional services which may be required by Tenant, including without limitation additional repairs and maintenance, provided that Tenant shall pay to Landlord upon billing, the sum of all costs to Landlord of such additional services plus an administration fee. If Tenant requests the Landlord provide locksmithing services and Landlord declines, then Tenant shall not be obligated to use Landlord's locksmithing services. Charges for any utilities or service for which Tenant is required to pay from time to time hereunder, shall be deemed Additional Rent hereunder and shall be billed on a monthly basis.

6.6At all times during the Term Landlord shall have the right to select the utility company or companies that shall provide electric, and/or other utility services (but excluding telecommunications services) to the Premises and, subject to all Applicable Requirements, Landlord shall have the right at any time and from time to time during the Term to either (a) contract for services from electric, telecommunication and/or other utility service provider(s) other than the provider with which Landlord has a contract as of the date of this Lease (the “Current Provider”), or (b) continue to contract for services from the Current

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Provider. The cost of such utility services and any energy management and procurements services in connection therewith shall be Operating Expenses.

6.7If Tenant is billed directly by a public utility with respect to Tenant's electrical usage at the Premises, upon request from time to time, Tenant shall provide monthly electrical utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord's option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant's electricity usage with respect to the Premises directly from the applicable utility company.

6.8Notwithstanding anything to the contrary in Section 6.2 or elsewhere in this Lease, if (a) Landlord fails to provide Tenant with the electrical service or elevator service described in Section 6.1, or Landlord enters the Premises and such entry interferes with Tenant's reasonable use of the Premises (b) such failure or Landlord's entry is not due to any one or more Force Majeure Events or to an event covered by Article 19, (c) Tenant has given Landlord reasonably prompt written notice of such failure or that such entry by Landlord is unreasonably interfering with Tenant's use of the Premises and (d) as a result of such failure or entry all or any part of the Premises are rendered untenantable (and, as a result, all or such part of the Premises are not used by Tenant during the applicable period) for more than five (5) consecutive business days, then Tenant shall be entitled to an abatement of Rent proportional to the extent to which the Premises are thereby rendered unusable by Tenant, commencing with the later of (i) the sixth business day during which such untenantability continues or (ii) the sixth business day after Landlord receives such notice from Tenant, until the Premises (or part thereof affected) are again usable or until Tenant again uses the Premises (or part thereof rendered unusable) in its business, whichever first occurs. The foregoing rental abatement shall be Tenant's exclusive remedy therefor. Notwithstanding the foregoing, the provisions of Article 19 below and not the provisions of this subsection shall govern in the event of casualty damage to the Premises or Project and the provisions of Article 20 below and not the provisions of this subsection shall govern in the event of condemnation of all or a part of the Premises or Project.

ARTICLE 7REPAIRS AND MAINTENANCE BY LANDLORD

7.1Landlord shall provide for the cleaning and maintenance of the public portions of the Project in keeping with the ordinary standard for Comparable Buildings as part of Operating Expenses. Unless otherwise expressly stipulated herein, Landlord shall not be required to make any improvements or repairs of any kind or character to the Premises during the Term, except such repairs as may be required to the exterior walls, corridors, windows, roof, HVAC, integrated Building utility, mechanical, electrical and plumbing systems and other Base Building (as defined below) elements and other structural elements and equipment of the Project, and subject to Section 13.4, below, such additional maintenance as may be necessary because of the damage caused by persons other than Tenant, its agents, employees, licensees, or invitees. As used in this Lease, the "Base Building" shall include the structural portions of the Building, and the public restrooms, elevators, exit stairwells and the systems and equipment located in the internal core of the Building.

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7.2Landlord or Landlord's officers, agents, and representatives (subject to any security regulations imposed by any governmental authority) shall have the right to enter all parts of the Premises at all reasonable hours upon reasonable prior notice to Tenant (other than in an emergency) to inspect, clean, make repairs, alterations, and additions to the Project or the Premises which it may deem necessary or desirable, to make repairs to adjoining spaces, to cure any defaults of Tenant hereunder that Landlord elects to cure pursuant to Section 22.5, below, to show the Premises to prospective tenants (during the final nine (9) months of the Term or at any time after the occurrence of an Event of Default that remains uncured), mortgagees or purchasers of the Building, or to provide any service which it is obligated or elects to furnish to Tenant provided in each of the foregoing cases Landlord uses commercially reasonable efforts to minimize disturbance and disruption to Tenant and its business and operations at the Premises; and Tenant shall not be entitled to any abatement or reduction of Rent by reason thereof. Landlord shall have the right to enter the Premises at any time and by any means in the case of an emergency.

7.3Except as otherwise expressly provided in this Lease, Tenant hereby waives all rights it would otherwise have under California Civil Code Sections 1932(1) and 1942(a) or any successor statutes to deduct repair costs from Rent and/or terminate this Lease as the result of any failure by Landlord to maintain or repair.

ARTICLE 8REPAIRS AND CARE OF PROJECT BY TENANT

8.1If the Building, the Project, or any portion thereof, including but not limited to, the elevators, boilers, engines, pipes, and other apparatus, or members of elements of the Building (or any of them) used for the purpose of climate control of the Building or operating of the elevators, or of the water pipes, drainage pipes, electric lighting, or other equipment of the Building or the roof or outside walls of the Building and also the Premises improvements, including but not limited to, the carpet, wall coverings, doors, and woodwork, become damaged or are destroyed through the negligence or misuse of Tenant, its servants, agents, employees, or anyone permitted by Tenant to be in the Building, or through it or them, then the reasonable cost of the necessary repairs, replacements, or alterations shall be borne by Tenant who shall pay the same to Landlord as Additional Rent within thirty (30) days after demand, subject to Section 13.4 below. Landlord shall have the exclusive right, but not the obligation, to make any repairs necessitated by such damage.

8.2Subject to Section 13.4 below, Tenant agrees, at its sole cost and expense, to repair or replace any damage or injury done to the Project, or any part thereof, caused by Tenant, Tenant's agents, employees, licensees, or invitees which Landlord elects not to repair, provided that Landlord furnishes immediate access to Tenant to any portion of the Building outside the Premises that is necessary for such repairs. Tenant shall not injure the Project or the Premises and shall (except to the extent of the acts or omissions of Landlord or other tenants of the Project, which shall be the responsibility of Landlord) maintain the elements of the Premises not to be maintained by Landlord pursuant to this Lease in a clean, attractive condition and in good repair. If Tenant fails to keep such elements of the Premises in such good order, condition,

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and repair as required hereunder, Landlord may (provided that Landlord has given Tenant written notice and at least thirty (30) days to repair same) restore the Premises to such good order and condition and make such repairs without liability to Tenant for any loss or damage that may accrue to Tenant's property or business by reason thereof, and within thirty (30) days after completion thereof, Tenant shall pay to Landlord, as Additional Rent, upon demand, the cost of restoring the Premises to such good order and condition and of the making of such repairs, plus an additional charge of ten percent (10%) thereof. Tenant shall leave the Premises at the end of each business day in a reasonably tidy condition for the purpose of allowing the performance of Landlord's cleaning services. Upon the Expiration Date or the Termination Date, Tenant shall surrender and deliver up the Premises to Landlord in the same condition in which it existed at the Commencement Date, excepting only ordinary wear and tear and damage arising from any cause not required to be repaired by Tenant. Upon the Expiration Date or the Termination Date, Landlord shall have the right to re-enter and take possession of the Premises.

8.3Tenant shall provide its own janitorial and cleaning services to the Premises at Tenant's sole cost and expense. Landlord is not obligated to provide any janitorial or cleaning services to the Premises.

ARTICLE 9TENANT'S EQUIPMENT AND INSTALLATIONS

9.1If heat-generating machines or equipment, including telephone equipment, cause the temperature in the Premises, or any part thereof, to exceed the temperatures the Building's air conditioning system would be able to maintain in such Premises were it not for such heat-generating equipment, then Landlord reserves the right to install supplementary air conditioning units in the Premises, and the cost thereof, including the cost of installation and the cost of operation and maintenance thereof, including water, shall be paid by Tenant to Landlord within thirty (30) days after demand by Landlord.

9.2Except for desk or table-mounted typewriters, adding machines, office calculators, dictation equipment, personal computers, servers and other office equipment consistent with first-class general office use in Comparable Buildings, Tenant shall not install within the Premises any fixtures, equipment, facilities, or other improvements without the specific written consent of Landlord, subject to Article 15, below. Tenant shall not, without the specific written consent of Landlord (which consent shall not be unreasonably withheld, conditioned, or delayed), install or maintain any apparatus or device within the Premises which shall increase the usage of electrical power or water for the Premises to an amount greater than would be normally required for general office use for space of comparable size in the Market Area; and if any such apparatus or device is so installed, Tenant agrees to furnish Landlord a written agreement to pay for any additional costs of utilities as the result of said installation.

ARTICLE 10FORCE MAJEURE

10.1It is understood and agreed that with respect to any service or other obligation to be furnished or obligations to be performed by either party, in no event shall either

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party be liable for failure to furnish or perform the same when prevented from doing so by strike, lockout, breakdown, accident, supply, or inability by the exercise of reasonable diligence to obtain supplies, parts, or employees necessary to furnish such service or meet such obligation; or because of war or other emergency; or for any cause beyond the reasonable control with the party obligated for such performance; or for any cause due to any act or omission of the other party or its agents, employees, licensees, invitees, or any persons claiming by, through, or under the other party; or because of the failure of any public utility to furnish services; or because of order or regulation of any federal, state, county or municipal authority (collectively, "Force Majeure Events"). Nothing in this Section 10.1 shall limit or otherwise modify or waive Tenant's obligation to pay Base Rent and Additional Rent as and when due pursuant to the terms of this Lease.

ARTICLE 11CONSTRUCTION, MECHANICS' AND MATERIALMAN'S LIENS

11.1Tenant shall not suffer or permit any construction, mechanics' or materialman's lien to be filed against the Premises or any portion of the Project by reason of work, labor services, or materials supplied or claimed to have been supplied to Tenant. Nothing herein contained shall be deemed or construed in any way as constituting the consent or request of Landlord, expressed or implied, by inference or otherwise, for any contractor, subcontractor, laborer, or materialman to perform any labor or to furnish any materials or to make any specific improvement, alteration, or repair of or to the Premises or any portion of the Project; nor of giving Tenant any right, power, or authority to contract for, or permit the rendering of, any services or the furnishing of any materials that could give rise to the filing of any construction, mechanics' or materialman's lien against the Premises or any portion of the Project.

11.2If any such construction, mechanics' or materialman's lien shall at any time be filed against the Premises or any portion of the Project as the result of any act or omission of Tenant, Tenant covenants that it shall, within twenty (20) days after Tenant has notice of the claim for lien, procure the discharge thereof by payment or by giving security or in such other manner as is or may be required or permitted by law or which shall otherwise satisfy Landlord. If Tenant fails to take such action, Landlord, in addition to any other right or remedy it may have, may take such action as may be reasonably necessary to protect its interests. Any amounts paid by Landlord in connection with such action, all other expenses of Landlord incurred in connection therewith, including reasonable attorneys' fees, court costs, and other necessary disbursements shall be repaid by Tenant to Landlord within thirty (30) days after demand.

ARTICLE 12ARBITRATION

12.1In the event that a dispute arises under Section 5.3 above, the same shall be submitted to arbitration in accordance with the provisions of applicable state law, if any, as from time to time amended. Arbitration proceedings, including the selection of an arbitrator, shall be conducted pursuant to the rules, regulations, and procedures from time to time in effect as promulgated by the American Arbitration Association (the "Association"). Prior written

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notice of application by either party for arbitration shall be given to the other at least ten (10) days before submission of the application to the said Association's office in the city wherein the Building is situated (or the nearest other city having an Association office). The arbitrator shall hear the parties and their evidence. The decision of the arbitrator may be entered in the appropriate court of law; and the parties consent to the jurisdiction of such court and further agree that any process or notice of motion or other application to the court or a judge thereof may be served outside the state wherein the Building is situated by registered mail or by personal service, provided a reasonable time for appearance is allowed. The costs and expenses of each arbitration hereunder and their apportionment between the parties shall be determined by the arbitrator in his or her award or decision, subject to the penultimate sentence of this section. No arbitrable dispute shall be deemed to have arisen under this Lease (a) prior to the expiration of the period of twenty (20) days after the date of the giving of written notice by the party asserting the existence of the dispute, together with a description thereof sufficient for an understanding thereof, and (b) where Tenant disputes the amount of a Tenant payment required hereunder (e.g., Operating Expense excess under Section 5.3 hereof), prior to Tenant paying in full the amount billed by Landlord, including the disputed amount. The prevailing party in such arbitration shall be reimbursed for its expenses, including reasonable attorneys' fees. Notwithstanding the foregoing, in no event shall this Article 12 affect or delay Landlord's unlawful detainer rights under California law.

ARTICLE 13INSURANCE

13.1Landlord shall maintain, as a part of Operating Expenses, special causes of loss form property insurance on the Project in an amount equal to the full replacement cost of the Project, subject to such deductibles as Landlord may determine. Landlord shall not be obligated to insure, and shall not assume any liability of risk of loss for, any of Tenant's furniture, equipment, machinery, goods, supplies, improvements or alterations upon the Premises. Such insurance shall be maintained with an insurance company selected, and in amounts desired, by Landlord or Landlord's mortgagee, and payment for losses thereunder shall be made solely to Landlord subject to the rights of the holder of any mortgage or deed of trust which may now or hereafter encumber the Project. Additionally Landlord may maintain such additional insurance, including, without limitation, earthquake insurance, flood insurance, liability insurance and/or rent insurance, as Landlord may in its sole discretion elect. The cost of all such additional insurance shall also be part of the Operating Expenses. Any or all of Landlord's insurance may be provided by blanket coverage maintained by Landlord or any affiliate of Landlord under its insurance program for its portfolio of properties or by Landlord or any affiliate of Landlord's program of self insurance, and in such event Operating Expenses shall include the portion of the reasonable cost of blanket insurance or self-insurance that is allocated to the Project.

13.2Tenant, at its own expense, shall maintain with insurers authorized to do business in the State of California and which are rated A- and have a financial size category of at least VIII in the most recent Best's Key Rating Guide, or any successor thereto (or if there is none, an organization having a national reputation), (a) commercial general liability insurance with the following minimum limits: General Aggregate $3,000,000.00 (when combined with

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Umbrella/Excess Liability); Products/Completed Operations Aggregate $2,000,000.00; Each Occurrence $2,000,000.00 (when combined with Umbrella/Excess Liability); Personal and Advertising Injury $1,000,000.00; Medical Payments $5,000.00 per person, (b) Umbrella/Excess Liability on a following form basis with the following minimum limits: General Aggregate $5,000,000.00; Each Occurrence $5,000,000.00; (c) Workers' Compensation with statutory limits; (d) Employer's Liability insurance with the following limits: Bodily injury by disease each employee $1,000,000.00; Bodily injury by accident each accident $1,000,000.00; Bodily injury by disease policy limit $1,000,000.00; (e) property insurance on special causes of loss insurance form covering any and all personal property of Tenant including but not limited to alterations, improvements (inclusive of the initial improvements (if any) constructed pursuant to Exhibit C), betterments, furniture, fixtures and equipment in an amount not less than their full replacement cost, with a deductible not to exceed $25,000.00; and (f) business auto liability insurance having a combined single limit of not less than One Million Dollars ($1,000,000.00) per accident and insuring Tenant against liability for claims arising out of ownership, maintenance or use of any owned (if any), hired or non-owned automobiles. At all times during the Term, such insurance shall be maintained, and Tenant shall cause a current and valid certificate of such policies to be deposited with Landlord. If Tenant fails to have a current and valid certificate of such policies on deposit with Landlord at all times during the Term and such failure is not cured within three (3) business days following Tenant's receipt of notice thereof from Landlord, Landlord shall have the right, but not the obligation, to obtain such an insurance policy, and Tenant shall be obligated to pay Landlord the amount of the premiums applicable to such insurance within thirty (30) days after Tenant's receipt of Landlord's request for payment thereof. Said policy of general liability insurance shall name Landlord and Landlord's managing agent as additional insureds and Tenant as the insured and Tenant shall use reasonable good faith efforts to cause such insurance to be noncancellable with respect to Landlord except after thirty (30) days' written notice from the insurer to Tenant. Tenant shall provide Landlord with thirty (30) days' notice of cancellation or non-renewal of any insurance Tenant is required to maintain pursuant to this Lease.

13.3Tenant shall adjust annually the amount of coverage established in Section 13.2 hereof to such amount as in Landlord's reasonable opinion, adequately protects Landlord's interest; provided the same is consistent with the amount of coverage customarily required of comparable tenants in Comparable Buildings.

13.4Notwithstanding anything in this Lease to the contrary, Landlord and Tenant each hereby waives any and all rights of recovery, claim, action, or cause of action against the other, its agents, employees, licensees, or invitees for any loss or damage to or at the Premises or the Project or any personal property of such party therein or thereon by reason of fire, the elements, or any other cause which would be insured against under the terms of (i) special causes of loss form property insurance or (ii) the liability insurance referred to in Section 13.2, to the extent of such insurance, regardless of cause or origin, including omission of the other party hereto, its agents, employees, licensees, or invitees. Landlord and Tenant covenant that no insurer shall hold any right of subrogation against either of such parties with respect thereto. This waiver shall be ineffective against any insurer of Landlord or Tenant to the extent that such waiver is prohibited by the laws and insurance regulations of the State of

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California. The parties hereto agree that any and all such insurance policies required to be carried by either shall be endorsed with a subrogation clause, substantially as follows: "This insurance shall not be invalidated should the insured waive, in writing prior to a loss, any and all right of recovery against any party for loss occurring to the property described therein, " and shall provide that such party's insurer waives any right of recovery against the other party in connection with any such loss or damage.

13.5In the event Tenant's occupancy or conduct of business in or on the Premises, whether or not Landlord has consented to the same, results in any increase in premiums for the insurance carried from time to time by Landlord with respect to the Building, Tenant shall pay any such increase in premiums as Rent within thirty (30) days after bills for such additional premiums shall be rendered by Landlord. In determining whether increased premiums are a result of Tenant's use or occupancy of the Premises, a schedule issued by the organization computing the insurance rate on the Building showing the various components of such rate, shall be conclusive evidence of the several items and charges which make up such rate. Tenant shall promptly comply with all reasonable requirements of the insurance authority or of any insurer now or hereafter in effect relating to the Premises.

ARTICLE 14QUIET ENJOYMENT

14.1Provided Tenant is not in default under this Lease after the expiration of any period for cure in the performance of all its obligations under this Lease, including, but not limited to, the payment of Rent and all other sums due hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance by Landlord, subject to the provisions and conditions set forth in this Lease.

ARTICLE 15ALTERATIONS

15.1Except as set forth in Exhibit C, Tenant agrees that it shall not make or allow to be made any alterations, physical additions, or improvements in or to the Premises without first obtaining the written consent of Landlord in each instance. As used herein, the term "Minor Alteration" refers to an alteration that (a) does not affect the outside appearance of the Building and is not visible from the Common Areas, (b) is non-structural and does not impair the strength or structural integrity of the Building, and (c) does not affect the mechanical, electrical, HVAC or other systems of the Building. Landlord agrees not to unreasonably withhold its consent to any Minor Alteration. Landlord's consent to any other alteration may be conditioned, given, or withheld in Landlord's sole discretion. Notwithstanding the foregoing, Landlord consents to any repainting, recarpeting, or other purely cosmetic changes or upgrades to the Premises, so long as (i) the aggregate cost of such work is less than $25,000.00 in any twelve-month period, (ii) such work constitutes a Minor Alteration (iii) no building permit is required in connection therewith, and (iv) such work conforms to the then existing Building standards. At the time of said request, Tenant shall submit to Landlord plans and specifications of the proposed alterations, additions, or improvements; and Landlord shall have a period of not less than twenty (20) days therefrom in which to review and approve or disapprove said plans; provided

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that if Landlord determines in good faith that Landlord requires a third party to assist in reviewing such plans and specifications, Landlord shall instead have a period of not less than forty (40) days in which to review and approve or disapprove said plans. Tenant shall pay to Landlord upon demand the reasonable actual out of pocket cost and expense of Landlord in (A) reviewing said plans and specifications, and (B) inspecting the alterations, additions, or improvements to determine whether the same are being performed in accordance with the approved plans and specifications and all laws and requirements of public authorities, including, without limitation, the fees of any architect or engineer employed by Landlord for such purpose. In any instance where Landlord grants such consent, and permits Tenant to use its own contractors, laborers, materialmen, and others furnishing labor or materials for Tenant's construction (collectively, "Tenant's Contractors"), Landlord's consent shall be deemed conditioned upon each of Tenant's Contractors (1) not unreasonably interfering with any laborer utilized by Landlord, Landlord's contractors, laborers, or materialmen; and (2) furnishing Landlord with evidence of acceptable liability insurance, worker's compensation coverage and if required by Landlord, completion bonding, and if at any time such entry by one or more persons furnishing labor or materials for Tenant's work shall cause unreasonable interference, the consent granted by Landlord to Tenant may be withdrawn immediately upon written notice from Landlord to Tenant. Tenant, at its expense, shall obtain all necessary governmental permits and certificates for the commencement and prosecution of alterations, additions, or improvements and for final approval thereof upon completion, and shall cause any alterations, additions, or improvements to be performed in compliance therewith and with all applicable laws and requirements of public authorities and with all applicable requirements of insurance bodies. All alterations, additions, or improvements shall be diligently performed in a good and workmanlike manner, using new materials and equipment at least equal in quality and class to be better than (a) the original installations of the Building, or (b) the then standards for the Comparable Building. Upon the completion of work and upon request by Landlord, Tenant shall provide Landlord copies of all waivers or releases of lien from each of Tenant's Contractors. No alterations, modifications, or additions to the Project or the Premises shall be removed by Tenant either during the Term or upon the Expiration Date or the Termination Date without the express written approval of Landlord. Tenant shall not be entitled to any reimbursement or compensation resulting from its payment of the cost of constructing all or any portion of said improvements or modifications thereto unless otherwise expressly agreed by Landlord in writing. Tenant agrees specifically that no food, soft drink, or other vending machine shall be installed within the Premises, without the prior written consent of Landlord, which shall not be unreasonably withheld, delayed or conditioned.

15.2Landlord's approval of Tenant's plans for work shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules, and regulations of governmental agencies or authorities, including, but not limited to, the Americans with Disabilities Act. Landlord may, at its option, at Tenant's expense, require that Landlord's contractors be engaged for any work upon the integrated Building mechanical or electrical systems or other Building or leasehold improvements.

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15.3At least five (5) days prior to the commencement of any work permitted to be done by persons requested by Tenant on the Premises, Tenant shall notify Landlord of the proposed work and the names and addresses of Tenant's Contractors. During any such work on the Premises, Landlord, or its representatives, shall have the right to go upon and inspect the Premises at all reasonable times, and shall have the right to post and keep posted thereon notices of non-responsibility or to take any further action which Landlord may deem to be proper for the protection of Landlord's interest in the Premises.

ARTICLE 16FURNITURE, FIXTURES, AND PERSONAL PROPERTY

16.1Tenant, at its sole cost and expense, may remove its trade fixtures, office supplies and moveable office furniture and equipment not attached to the Project or Premises provided:

(a)Such removal is made prior to the Expiration Date or the Termination Date;

(b)No Event of Default exists under this Lease at the time of such removal; and

(c)Tenant promptly repairs all damage caused by such removal.

16.2If Tenant does not remove its trade fixtures, office supplies, and moveable furniture and equipment as herein above provided prior to the Expiration Date or the Termination Date (unless prior arrangements have been made with Landlord and Landlord has agreed in writing to permit Tenant to leave such items in the Premises for an agreed period), then, in addition to its other remedies, at law or in equity, Landlord shall have the right to have such items removed and stored at Tenant's sole cost and expense and all damage to the Project or the Premises resulting from said removal shall be repaired at the cost of Tenant; Landlord may elect that such items automatically become the property of Landlord upon the Expiration Date or the Termination Date, and Tenant shall not have any further rights with respect thereto or reimbursement therefor subject to the provisions of applicable law. All other property in the Premises, any alterations, or additions to the Premises (including wall-to-wall carpeting, paneling, wall covering, specially constructed or built-in cabinetry or bookcases), and any other article attached or affixed to the floor, wall, or ceiling of the Premises shall become the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof at the Expiration or Termination Date regardless of who paid therefor; and Tenant hereby waives all rights to any payment or compensation therefor. Except as set forth below, if, however, Landlord so requests, in writing, Tenant shall remove, prior to the Expiration Date or the Termination Date, any and all alterations, additions, fixtures, equipment, and property placed or installed in the Premises and shall repair any damage caused by such removal. Except as set forth below, in addition, if any alterations performed by Tenant do not use materials that conform to the building standards used by Landlord at the time of the particular alteration, Tenant shall (a) at Tenant's sole cost and expense, no later than the expiration of the Term (or no later than fifteen (15) days after the earlier termination of the Term) cause the improvements in the Premises to be restored

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to conform to Landlord's building standard at Tenant's sole cost and expense, or (b) if Landlord so elects in writing, Tenant shall pay Landlord a lump-sum amount determined by Landlord in its reasonable judgment sufficient to pay the cost of restoring the improvements in the Premises to building standard. Prior to commencing any alteration or other improvement, Tenant may request that Landlord notify Tenant whether or not the proposed alteration will be required by Landlord to be removed at the end of the Term.

16.3All the furnishings, fixtures, equipment, effects, and property of every kind, nature, and description of Tenant and of all persons claiming by, through, or under Tenant which, during the continuance of this Lease or any occupancy of the Premises by Tenant or anyone claiming under Tenant, may be on the Premises or elsewhere in the Project shall be at the sole risk and hazard of Tenant, and if the whole or any part thereof shall be destroyed or damaged by fire, water, or otherwise, or by the leakage or bursting of water pipes, steam pipes, or other pipes, by theft, or from any other cause, no part of said loss or damage is to be charged to or be borne by Landlord unless due to the gross negligence or willful misconduct of Landlord or its employees, agents or contractors.

16.4The parties acknowledge that the generator at the Building previously installed by Tenant remains the sole property of Tenant and may be used solely by Tenant. Tenant's rights to continue the use of that generator shall be subject to the following additional terms and provisions: (a) the exercise of Tenant's rights under this Section shall be subject to Tenant's compliance with all laws and acquisition of all approvals and permits required from applicable governmental authorities; (b) the installation, maintenance, monitoring and removal of the generator and storage tank shall be at Tenant's sole cost and expense; (c) Tenant shall comply with all laws pertaining to the operation, maintenance and monitoring of storage tanks, along with any additional reasonable requirements imposed by Landlord in connection therewith, and shall provide Landlord with evidence of such compliance in such form and at such times as Landlord requires; (d) Tenant shall maintain and repair the generator and any storage tank and shall be responsible for all reporting, monitoring, clean up and remediation activities and costs pertaining to any storage tank and materials stored therein or released therefrom; (e) Tenant shall remove the generator and any storage tank at the expiration or earlier termination of the Lease (and obtain a customary closure certificate from applicable governmental authorities in connection with such removal), and restore any damage to the Building or Common Areas that occurs in connection with such removal.

ARTICLE 17PERSONAL PROPERTY AND OTHER TAXES

17.1During the Term hereof, Tenant shall pay, prior to delinquency, all business and other taxes, charges, notes, duties, and assessments levied, and rates or fees imposed, charged, or assessed against or in respect of Tenant's occupancy of the Premises or in respect of the personal property, trade fixtures, furnishings, equipment, and all other personal and other property of Tenant contained in the Project (including without limitation taxes and assessments attributable to the cost or value of any leasehold improvements made in or to the Premises by or for Tenant (to the extent that the assessed value of those leasehold improvements

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exceeds the assessed value of standard office improvements in other space in the Project regardless of whether title to those improvements is vested in Tenant or Landlord)), and shall hold Landlord harmless from and against all payment of such taxes, charges, notes, duties, assessments, rates, and fees, and against all loss, costs, charges, notes, duties, assessments, rates, and fees, and any and all such taxes. Tenant shall cause said fixtures, furnishings, equipment, and other personal property to be assessed and billed separately from the real and personal property of Landlord. In the event any or all of Tenant's fixtures, furnishings, equipment, and other personal property shall be assessed and taxed with Landlord's real property, Tenant shall pay to Landlord Tenant's share of such taxes within thirty (30) days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to Tenant's property.

17.2The demised property herein may be subject to a special assessment levied by the City of Redwood as part of an Improvement District.

ARTICLE 18ASSIGNMENT AND SUBLETTING

18.1Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld (except that Landlord shall in no event be obligated to consent to an encumbrance of this Lease or any transfer by operation of law): (a) assign, convey, mortgage or otherwise transfer this Lease or any interest hereunder, or sublease the Premises, or any part thereof, whether voluntarily or by operation of law; or (b) permit the use of the Premises or any part thereof by any person other than Tenant and its employees. Any such transfer, sublease or use described in the preceding sentence (a "Transfer") occurring without the prior written consent of Landlord shall, at Landlord's option, be void and of no effect. Landlord's consent to any Transfer shall not constitute a waiver of Landlord's right to withhold its consent to any future Transfer. Landlord may require as a condition to its consent to any assignment of this Lease that the assignee execute an instrument in which such assignee assumes the remaining obligations of Tenant hereunder; provided that the acceptance of any assignment of this Lease by the applicable assignee shall automatically constitute the assumption by such assignee of all of the remaining obligations of Tenant that accrue following such assignment. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation hereof shall not work a merger and shall, at the option of Landlord, terminate all or any existing sublease or may, at the option of Landlord, operate as an assignment to Landlord of Tenant's interest in any or all such subleases.

18.2For purposes of this Lease, the term "Transfer" shall also include (i) if a Tenant is a partnership or limited liability company, the withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners, members or managers thereof, or transfer of twenty-five percent (25%) or more of partnership or membership interests therein within a twelve (12) month period, or the dissolution of the partnership or the limited liability company without immediate reconstitution thereof, and (ii) if Tenant is a corporation whose stock is not publicly held and not traded through an exchange or over the counter or any other form of entity, (A) the dissolution, merger, consolidation or other

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reorganization of Tenant, the sale or other transfer of more than an aggregate of fifty percent (50%) of the voting shares or other interests of or in Tenant (other than to immediate family members by reason of gift or death and other than to an Affiliate (as defined below)), within a twelve (12) month period, or (B) the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12) month period.

18.3If Tenant desires the consent of Landlord to a Transfer, Tenant shall submit to Landlord, at least thirty (30) days prior to the proposed effective date of the Transfer, a written notice (the "Transfer Notice") which includes (a) the name of the proposed sublessee or assignee, (b) the nature of the proposed sublessee's or assignee's business, (c) the terms and provisions of the proposed sublease or assignment, and (d) current financial statements and information on the proposed sublessee or assignee. Upon receipt of the Transfer Notice, Landlord may request additional information concerning the Transfer or the proposed sublessee or assignee (the "Additional Information"). Subject to Landlord's rights under Section 18.6, Landlord shall not unreasonably withhold its consent to any assignment or sublease (excluding an encumbrance or transfer by operation of law), which consent or lack thereof shall be provided within thirty (30) days of receipt of Tenant's Transfer Notice; provided, however, Tenant hereby agrees that it shall be a reasonable basis for Landlord to withhold its consent if Landlord has not received the Additional Information requested by Landlord. Without limiting any other reasonable basis for Landlord to withhold its consent to the proposed Transfer, Landlord and Tenant agree that for purposes of this Lease and any Applicable Law, Landlord shall not be deemed to have unreasonably withheld its consent if, in the judgment of Landlord: (i) the transferee is of a character or engaged in a business which is not in keeping with the standards or criteria used by Landlord in leasing the Project, or the general character or quality of the Project; (ii) the financial condition of the transferee is such that it may not be able to perform its obligations in connection with this Lease (or otherwise does not satisfy Landlord’s standards for financial standing with respect to tenants under direct leases of comparable economic scope); (iii) the transferee is a tenant of or negotiating for space in the Project or occupies space in the Project or has negotiated with Landlord within the preceding ninety (90) days (or is currently negotiating with Landlord) to lease space in the Project and there is reasonable available space for such transferee in the Project, (iv) any person or entity which directly or indirectly controls, is controlled by, or is under common control with, the transferee, is a tenant of or negotiating for space in the Project or occupies space in the Project or has negotiated with Landlord within the preceding ninety (90) days (or is currently negotiating with Landlord) to lease space in the Project and there is reasonable available space for such transferee in the Project, and the transferee was formed or is being used as a subterfuge to avoid the application of this clause; (v) the transferee has the power of eminent domain, is a governmental agency or an agency or subdivision of a foreign government; (vi) an Event of Default by Tenant has occurred and is uncured at the time Tenant delivers the Transfer Notice to Landlord; (vii)  such a Transfer would violate any term, condition, covenant, or agreement of Landlord involving the Project or any other tenant's lease within it or would give an occupant of the Project a right to cancel or modify its lease; (viii) intentionally omitted; (ix) in Landlord’s judgment, the use of the Premises by the proposed transferee would not be comparable to the types of office use by other tenants in the Project, would result in more than a reasonable density of occupants per square foot of the Premises, would increase the

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burden on elevators or other Building systems or equipment over the burden thereon prior to the proposed Transfer, would require increased services by Landlord or would require any alterations to the Project to comply with applicable laws; (x) the transferee intends to use the space for purposes which are not permitted under this Lease; (xi) the terms of the proposed Transfer would allow the transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the transferee to occupy space leased by Tenant pursuant to any such right); (xii) the proposed Transfer would result in more than three subleases per each full floor of the Premises being in effect at any one time during the Term; (xiii) any ground lessor or mortgagee whose consent to such Transfer is required pursuant to the applicable ground lease or loan documents fails to consent thereto. Tenant hereby waives any right to terminate the Lease and/or recover damages as remedies for Landlord wrongfully withholding its consent to any Transfer and agrees that Tenant's sole and exclusive remedy therefor shall be to seek specific performance of Landlord's obligation to consent to such Transfer.

18.4Landlord and Tenant agree that, in the event of any approved assignment or subletting, the rights of any such assignee or sublessee of Tenant herein shall be subject to all of the terms, conditions, and provisions of this Lease, including, without limitation, restriction on use, assignment, and subletting and the covenant to pay Rent. Landlord may collect the rent owing by the assignee or sublessee directly from such assignee or sublessee and apply the amount so collected to the Rent herein reserved. No such consent to or recognition of any such assignment or subletting shall constitute a release of Tenant or any guarantor of Tenant's performance hereunder from further performance by Tenant or such guarantor of covenants undertaken to be performed by Tenant herein. Tenant and any such guarantor shall remain liable and responsible for all Rent and other obligations herein imposed upon Tenant, and Landlord may condition its consent to any Transfer upon the receipt of a written reaffirmation from each such guarantor in a form acceptable to Landlord (which shall not be construed to imply that the occurrence of a Transfer without such a reaffirmation would operate to release any guarantor). Consent by Landlord to a particular assignment, sublease, or other transaction shall not be deemed a consent to any other or subsequent transaction. In any case where Tenant desires to assign, sublease or enter into any related or similar transaction, whether or not Landlord consents to such assignment, sublease, or other transaction, Tenant shall pay any reasonable attorneys' fees incurred by Landlord in connection with such assignment, sublease or other transaction, including, without limitation, fees incurred in reviewing documents relating to, or evidencing, said assignment, sublease, or other transaction; provided that those costs shall not exceed $1,500 with respect to any single Transfer so long as Tenant and the proposed transferee execute Landlord's standard form of consent document without negotiation. All documents utilized by Tenant to evidence any subletting or assignment for which Landlord's consent has been requested and is required hereunder, shall be subject to prior approval (not to be unreasonably withheld, conditioned or delayed) by Landlord or its attorney.

18.5Tenant shall be bound and obligated to pay Landlord a portion of any sums or economic consideration payable to Tenant by any sublessee, assignee, licensee, or other transferee, within ten (10) days following receipt thereof by Tenant from such sublessee, assignee, licensee, or other transferee, as the case might be, as follows:

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(a)In the case of an assignment, fifty percent (50%) of any sums or other economic consideration received by Tenant directly as a result of such assignment (but not any consideration for Tenant’s other assets or goodwill) shall be paid to Landlord, after first deducting reasonable costs incurred by Tenant in connection with the Transfer for the following: (i) broker fees, (ii) legal fees incurred in connection with the negotiation and documentation of the Transfer, (iii) accounting fees incurred in connection with the negotiation and documentation of the Transfer, (iv) costs of tenant improvements constructed by Tenant (with Landlord’s prior consent) in connection with the Transfer, (v) reasonable tenant improvement allowances granted by Tenant, and (vi) reasonable rent abatements or concessions granted by Tenant (collective, the “Transaction Costs”).

(b)In the case of a subletting, fifty percent (50%) of any sums or economic consideration received by Tenant as a result of such subletting shall be paid to Landlord after first deducting the Transaction Costs, which shall be amortized over the term of the sublease.

(c)Tenant shall provide Landlord with a detailed statement setting forth any sums or economic consideration Tenant either has or will derive from such Transfer, the deductions permitted under (a) and (b) of this Section 18.5, and the calculation of the amounts due Landlord under this Section 18.5. In addition, Landlord or its representative shall have the right at all reasonable times to audit the books and records of Tenant with respect to the calculation of the Transfer profits. If such inspection reveals that the amount paid to Landlord was incorrect, then within thirty (30) days of Tenant’s receipt of the results of such audit, Tenant shall pay Landlord the deficiency and the cost of Landlord’s audit.

18.6If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. or any successor or substitute therefor (the "Bankruptcy Code"), any and all monies or other consideration payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord, and shall not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any such monies or other consideration not paid or delivered to Landlord shall be held in trust for the benefit of Landlord and shall be promptly paid or delivered to Landlord. Any person or entity to whom this Lease is so assigned shall be deemed, without further act or deed, to have assumed all of the remaining obligations arising under this Lease as of the date of such assignment. Any such assignee shall, upon demand therefor, execute and deliver to Landlord an instrument confirming such assumption.

18.7Landlord shall have the following option with respect to any assignment or subletting proposed by Tenant:

(a)Landlord has the option, by written notice to Tenant (the "Recapture Notice") within thirty (30) days after receiving any Transfer Notice to recapture the space covered by the proposed sublease or the entire Premises in the case of

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an assignment (the "Subject Space") by terminating this Lease for the Subject Space or taking an assignment or a sublease of the Subject Space from Tenant. A timely Recapture Notice terminates this Lease or creates an assignment or a sublease for the Subject Space for the same term as the proposed Transfer, effective as of the date specified in the Transfer Notice; provided, however, if Tenant delivers a written notice to Landlord within ten (10) days after receiving any Recapture Notice which rescinds its prior Transfer Notice, then the Recapture Notice shall automatically terminate and be of no force or effect. After such termination, Landlord may (but shall not be obligated to) enter into a lease with the party to the sublease or assignment proposed by Tenant.

(b)To determine the new Base Rent under this Lease in the event Landlord recaptures the Subject Space without terminating this Lease, the original Base Rent under the Lease shall be multiplied by a fraction, the numerator of which is the rentable square feet of the Premises retained by Tenant after Landlord's recapture and the denominator of which is the total rentable square feet in the Premises before Landlord's recapture. The Additional Rent, to the extent that it is calculated on the basis of the rentable square feet within the Premises, shall be reduced to reflect Tenant's proportionate share based on the rentable square feet of the Premises retained by Tenant after Landlord's recapture. This Lease as so amended shall continue thereafter in full force and affect. Either party may require a written confirmation of the amendments to this Lease necessitated by Landlord's recapture of the Subject Space. If Landlord recaptures the Subject Space, Landlord shall, at Landlord's sole expense, construct any partitions required to segregate the Subject Space from the remaining Premises retained by Tenant. Tenant shall, however, pay for painting, covering or otherwise decorating the surfaces of the partitions facing the remaining Premises retained by Tenant.

18.8Notwithstanding the foregoing, Tenant may Transfer all or part of its interest in this Lease or all or part of the Premises (a “Permitted Transfer”) to the following types of entities (a “Permitted Transferee”) without the written consent of Landlord and with neither Section 18.3, Section 18.5 nor Section 18.7 applying thereto: (a) any parent, subsidiary or affiliate corporation which Controls (as defined below), is Controlled by or is under common Control with Tenant (collectively, an “Affiliate”); (b) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity in which or with which Tenant, an Affiliate of Tenant, or their respective corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions governing merger and consolidation of business entities, so long as in both cases (a) and (b), (i) Tenant’s obligations hereunder are assumed by the Permitted Transferee; and (ii) the Permitted Transferee satisfies the Net Worth Threshold as of the effective date of the Permitted Transfer; or (c) any corporation, limited partnership, limited liability partnership, limited liability company or other business entity which acquires all or substantially all of Tenant’s assets and/or ownership interests, if the Tenant upon completion of the Permitted Transfer satisfies the Net Worth Threshold as of the effective date of the Transfer. Tenant shall remain liable for the performance of all of the obligations of Tenant hereunder, or if Tenant no longer exists because of a merger, consolidation, or acquisition, the surviving or acquiring entity shall expressly assume in writing, the obligations of Tenant hereunder. Additionally, the Permitted Transferee who is or becomes

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the Tenant shall comply with all of the terms and conditions of this Lease, whether accruing prior to and/or from and after the consummation of the Transfer. No later than ten (10) days prior to the effective date of any Permitted Transfer, Tenant agrees to furnish Landlord with (1) copies of the instrument effecting any of the foregoing Transfers, (2) documentation establishing Tenant’s satisfaction of the requirements set forth above applicable to any such Transfer, and (3) evidence of insurance as required under this Lease with respect to the Permitted Transferee. To the extent that legal requirements or confidentiality requirements do not permit Tenant to give Landlord prior notice of the Permitted Transfer, then Tenant may in lieu of the prior notice required under this Section give Landlord notice within ten (10) days after the effective date of the Permitted Transfer, together with the items required in (1), (2) and (3), above in this Section 18.8. The occurrence of a Permitted Transfer shall not waive Landlord’s rights as to any subsequent Transfers. As used herein, the term “Net Worth Threshold” shall mean the proposed Permitted Transferee has a tangible net worth equal to or greater than that of the Tenant immediately preceding such Transfer (determined in accordance with generally accepted accounting principles consistently applied and excluding from the determination of total assets all assets which would be classified as intangible assets under generally accepted accounting principles, including, without limitation, goodwill, licenses, trademarks, trade names, copyrights and franchises), and as evidenced by financial statements audited by a certified public accounting firm reasonably acceptable to Landlord or certified to be accurate by Tenant’s chief financial officer. The term “Control” shall mean the possession of the power to direct or cause the direction of the management and policy of such corporation, partnership, limited liability company or other entity, whether through the ownership of voting securities, by statute or by contract, and whether directly or indirectly through Affiliates. In addition, Landlord's consent shall not be required (and Section 18.3, Section 18.5 and Section 18.7 shall not apply) with respect to the infusion of additional equity capital in Tenant or an initial public offering of equity securities of Tenant under the Securities Act of 1933, as amended, which results in Tenant's stock being traded on a national securities exchange, including, but not limited to, the NYSE, the NASDAQ Stock Market or the NASDAQ Small Cap Market System.

ARTICLE 19DAMAGE OR DESTRUCTION

19.1Casualty. If the Premises or Building should be damaged or destroyed by fire or other casualty, Tenant shall give immediate written notice to Landlord. Within thirty (30) days after receipt from Tenant of such written notice, Landlord shall notify Tenant whether the necessary repairs can reasonably be made: (a) within ninety (90) days; (b) in more than ninety (90) days but in less than one hundred eighty (180) days; or (c) in more than one hundred eighty (180) days, in each case after the date of the issuance of permits for the necessary repair or reconstruction of the portion of the Premises or Building which was damaged or destroyed.

19.1.1Less Than 90 Days. If the Premises or Building should be damaged only to such extent that rebuilding or repairs can reasonably be completed within ninety (90) days after the issuance of permits for the necessary repair or reconstruction of the portion of the Premises which was damaged or destroyed, this Lease shall not terminate and, provided that insurance proceeds are available to pay for the full repair of all damage, Landlord

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shall repair the Premises or Building, except that Landlord shall not be required to rebuild, repair or replace Tenant's furniture, fixtures, furnishings, or equipment (collectively, "Tenant's Property") which may have been placed in, on or about the Premises by or for the benefit of Tenant. If Tenant is required to vacate all or a portion of the Premises during Landlord's repair thereof, the Base Rent payable hereunder shall be abated proportionately on the basis of the size of the area of the Premises that is damaged (i.e., the number of square feet of floor area of the Premises that is damaged compared to the total square footage of the floor area of the Premises) from the date Tenant vacates all or a portion of the Premises that was damaged only to the extent rental abatement insurance proceeds are received by Landlord and only during the period the Premises are unfit for occupancy.

19.1.2Greater Than 90 Days. If the Premises or Building should be damaged only to such extent that rebuilding or repairs can reasonably be completed in more than ninety (90) days but in less than one hundred eighty (180) days after the issuance of permits for the necessary repair or reconstruction of the portion of the Premises which was damaged or destroyed, then Landlord shall have the option of: (a) terminating the Lease effective upon the occurrence of such damage, in which event the Base Rent shall be abated from the date Tenant vacates the Premises; or (b) electing to repair the Premises, provided insurance proceeds are available to pay for the full repair of all damage (except that Landlord shall not be required to rebuild, repair or replace Tenant's Property). If Tenant is required to vacate all or a portion of the Premises during Landlord's repair thereof, the Base Rent payable hereunder shall be abated proportionately on the basis of the size of the area of the Premises that is damaged (i.e., the number of square feet of floor area of the Premises that is damaged compared to the total square footage of the floor area of the Premises) from the date Tenant vacates all or a portion of the Premises that was damaged only to the extent rental abatement insurance proceeds are received by Landlord and only during the period the Premises are unfit for occupancy. In the event that Landlord should fail to substantially complete such repairs within one hundred eighty (180) days after the issuance of permits for the necessary repair or reconstruction of the portion of the Premises which was damaged or destroyed (such period to be extended for delays caused by Tenant or because of any Force Majeure Events, as hereinafter defined), and Tenant has not reoccupied the Premises, Tenant shall have the right, as Tenant's exclusive remedy, within ten (10) days after the expiration of such one hundred eighty (180) day period, and provided that such repairs have not been substantially completed within such ten (10) day period, to terminate this Lease by delivering written notice to Landlord as Tenant's exclusive remedy, whereupon all rights of Tenant hereunder shall cease and terminate thirty (30) days after Landlord's receipt of such notice.

19.1.3Greater Than 180 Days. If the Premises or Building should be so damaged that rebuilding or repairs cannot be completed within one hundred eighty (180) days after the issuance of permits for the necessary repair or reconstruction of the portion of the Premises or Building which was damaged or destroyed, either Landlord or Tenant may terminate this Lease by giving written notice within ten (10) days after notice from Landlord specifying such time period of repair, and this Lease shall terminate and the Rent shall be abated from the date Tenant vacates the Premises. In the event that neither party elects to terminate this Lease, Landlord shall commence and prosecute to completion the repairs to the Premises or Building,

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provided insurance proceeds are available to pay for the repair of all damage (except that Landlord shall not be required to rebuild, repair or replace Tenant's Property). If Tenant is required to vacate all or a portion of the Premises during Landlord's repair thereof, the Base Rent payable hereunder shall be abated proportionately on the basis of the size of the area of the Premises that is damaged (i.e., the number of square feet of floor area of the Premises that is damaged compared to the total square footage of the floor area of the Premises), from the date Tenant vacates all or a portion of the Premises that was damaged only to the extent rental abatement insurance proceeds are received by Landlord and only during the period that the Premises are unfit for occupancy.

19.1.4Casualty During the Last Year of the Lease Term. Notwithstanding any other provisions hereof, if the Premises or Building shall be damaged within the last year of the Lease Term, and if the cost to repair or reconstruct the portion of the Premises or Building which was damaged or destroyed shall exceed $50,000, then, irrespective of the time necessary to complete such repair or reconstruction, Landlord shall have the right, in its sole and absolute discretion, to terminate the Lease effective upon the occurrence of such damage, in which event the Rent shall be abated from the date Tenant vacates the Premises. The foregoing right shall be in addition to any other right and option of Landlord under this Article 19.

19.2Uninsured Casualty. Tenant shall be responsible for and shall pay to Landlord Tenant's Share of any deductible or retention amount payable under the property insurance for the Building as part of Operating Expenses. In the event that the Premises or any portion of the Building is damaged to the extent Tenant is unable to use the Premises and such damage is not covered by insurance proceeds received by Landlord or in the event that the holder of any indebtedness secured by the Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right at Landlord's option, in Landlord's sole and absolute discretion, either (i) to repair such damage as soon as reasonably possible at Landlord's expense, or (ii) to give written notice to Tenant within thirty (30) days after the date of the occurrence of such damage of Landlord's intention to terminate this Lease as of the date of the occurrence of such damage. In the event Landlord elects to terminate this Lease, Tenant shall have the right within ten (10) days after receipt of such notice to give written notice to Landlord of Tenant's commitment to pay the cost of repair of such damage, in which event this Lease shall continue in full force and effect, and Landlord shall make such repairs as soon as reasonably possible subject to the following conditions: Tenant shall deposit with Landlord Landlord's estimated cost of such repairs not later than five (5) business days prior to Landlord's commencement of the repair work. If the cost of such repairs exceeds the amount deposited, Tenant shall reimburse Landlord for such excess cost within thirty (30) business days after receipt of an invoice from Landlord. Any amount deposited by Tenant in excess of the cost of such repairs shall be refunded within thirty (30) days of Landlord's final payment to Landlord's contractor. If Tenant does not give such notice within the ten (10) day period, or fails to make such deposit as required, Landlord shall have the right, in Landlord's sole and absolute discretion, to immediately terminate this Lease to be effective as of the date of the occurrence of the damage.

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19.3Waiver. The provisions of this Lease, including this Article 19, constitute an express agreement between Landlord and Tenant with respect to damage to, or destruction of, all or any portion of the Premises or the Project, and any statute or regulation of the State of California, including without limitation Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties (and any other statute or regulation now or hereafter in effect with respect to such rights or obligations), shall have no application to this Lease or to any damage or destruction to all or any portion of the Premises or the Project.

ARTICLE 20CONDEMNATION

20.1Total Condemnation. If all of the Premises is condemned by eminent domain, inversely condemned or sold under threat of condemnation for any public or quasi-public use or purpose ("Condemned"), this Lease shall terminate as of the earlier of the date the condemning authority takes title to or possession of the Premises, and Rent shall be adjusted to the date of termination.

20.2Partial Condemnation. If any portion of the Premises or Building is condemned and such partial condemnation materially impairs Tenant's ability to use the Premises for Tenant's business as reasonably determined by Landlord, Landlord shall have the option in Landlord's sole and absolute discretion of either (i) relocating Tenant to comparable space within the Project or (ii) terminate this Lease as of the earlier of the date title vests in the condemning authority or as of the date an order of immediate possession is issued and Rent shall be adjusted to the date of termination. If such partial condemnation does not materially impair Tenant's ability to use the Premises for the business of Tenant, Landlord shall promptly restore the Premises to the extent of any condemnation proceeds recovered by Landlord, excluding the portion thereof lost in such condemnation, and this Lease shall continue in full force and effect except that after the date of such title vesting or order of immediate possession Rent shall be adjusted as reasonably determined by Landlord.

20.3Award. If the Premises are wholly or partially condemned, Landlord shall be entitled to the entire award paid for such condemnation, and Tenant waives any claim to any part of the award from Landlord or the condemning authority; provided, however, Tenant shall have the right to recover from the condemning authority such compensation as may be separately awarded to Tenant in connection with costs in removing Tenant's merchandise, furniture, fixtures, leasehold improvements and equipment to a new location. No condemnation of any kind shall be construed to constitute an actual or constructive eviction of Tenant or a breach of any express or implied covenant of quiet enjoyment. Tenant hereby waives the effect of Sections 1265.120 and 1265.130 of the California Code of Civil Procedure.

20.4Temporary Condemnation. In the event of a temporary condemnation not extending beyond the Term, this Lease shall remain in effect, Tenant shall continue to pay Rent and Tenant shall receive any award made for such condemnation except damages to any of Landlord's property. If a temporary condemnation is for a period which extends beyond the Term, this Lease shall terminate as of the date of initial occupancy by the condemning authority

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and any such award shall be distributed in accordance with the preceding section. If a temporary condemnation remains in effect at the expiration or earlier termination of this Lease, Tenant shall pay Landlord the reasonable cost of performing any obligations required of Tenant with respect to the surrender of the Premises.

ARTICLE 21HOLD HARMLESS

21.1Tenant agrees to defend, with counsel approved by Landlord, all actions against Landlord, any member, partner, trustee, stockholder, officer, director, employee, or beneficiary of Landlord (collectively, "Landlord Parties"), holders of mortgages secured by the Premises or the Project and any other party having an interest therein (collectively with Landlord Parties, the "Indemnified Parties") with respect to, and to pay, protect, indemnify, and save harmless, to the extent permitted by law, all Indemnified Parties from and against, any and all liabilities, losses, damages, costs, expenses (including reasonable attorneys' fees and expenses), causes of action, suits, claims, demands, or judgments of any nature to which any Indemnified Party is subject because of its estate or interest in the Premises or the Project arising from (a) injury to or death of any person, or damage to or loss of property on the Premises, the Project, on adjoining sidewalks, streets or ways, or, in any of the foregoing cases, connected with the use, condition, or occupancy by Tenant (or its employees, contractors, invitees or agents) of the Premises, the Project sidewalks streets, or ways, except to the extent, if any, caused by the gross negligence or willful misconduct or breach of this Lease of or by Landlord or its employees, contractors or agents, (b) any violation of this Lease by or attributable to Tenant, or (c) subject to Section 13.4, any act, fault, omission, or other misconduct of Tenant or its agents, contractors, licensees, sublessees, or invitees. Tenant agrees to use and occupy the Premises and other facilities of the Project at its own risk, and hereby releases the Indemnified Parties from any and all claims for any damage or injury to the fullest extent permitted by law except to the extent of Landlord’s gross negligence, wilful misconduct or breach of this Lease.

21.2Tenant agrees that Landlord shall not be responsible or liable to Tenant, its agents, employees, or invitees for fatal or non-fatal bodily injury or property damage occasioned by the acts or omissions of any other tenant, or such other tenant's agents, employees, licensees, or invitees, of the Project. Landlord shall not be liable to Tenant for losses due to theft, burglary, or damages done by persons on the Project.

ARTICLE 22DEFAULT BY TENANT

22.1The term "Event of Default" refers to the occurrence of any one (1) or more of the following:

(d)Failure of Tenant to pay when due any sum required to be paid hereunder (the "Monetary Default") within five (5) days of receipt of written notice from Landlord; provided, however, that Tenant acknowledges that any such written notice provided hereunder shall be in lieu of, and not in addition to, any notice to pay rent or quit pursuant to any applicable statutes;

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(e)Failure of Tenant, after fifteen (15) days written notice thereof, to perform any of Tenant's obligations, covenants, or agreements except a Monetary Default, provided that if the cure of any such failure is not reasonably susceptible of performance within such fifteen (15) day period, then an Event of Default of Tenant shall not be deemed to have occurred so long as Tenant has promptly commenced and thereafter diligently prosecutes such cure to completion;

(f)Tenant, or any guarantor of Tenant's obligations under this Lease (the "Guarantor"), admits in writing that it cannot meet its obligations as they become due; or is declared insolvent according to any law; or assignment of Tenant's or Guarantor's property is made for the benefit of creditors; or a receiver or trustee is appointed for Tenant or Guarantor or its property; or the interest of Tenant or Guarantor under this Lease is levied on under execution or other legal process; or any petition is filed by or against Tenant or Guarantor to declare Tenant bankrupt or to delay, reduce, or modify Tenant's debts or obligations; or any petition filed or other action taken to reorganize or modify Tenant's or Guarantor's capital structure if Tenant is a corporation or other entity. Any such levy, execution, legal process, or petition filed against Tenant or Guarantor shall not constitute a breach of this Lease provided Tenant or Guarantor shall vigorously contest the same by appropriate proceedings and shall remove or vacate the same within ninety (90) days from the date of its creation, service, or filing;

(g)The abandonment (as defined in California Civil Code section 1951.3) of the Premises by Tenant;

(h)The discovery by Landlord that any financial statement given by Tenant or any of its assignees, subtenants, successors-in-interest, or Guarantors was materially false; or

(i)If Tenant or any Guarantor shall die, cease to exist as a corporation or partnership, or be otherwise dissolved or liquidated or become insolvent, or shall make a transfer in fraud of creditors.

22.2In the event of any Event of Default by Tenant, Landlord, at its option, may pursue one or more of the following remedies without notice or demand in addition to all other rights and remedies provided for at law or in equity:

(a)Landlord may continue this Lease in full force and effect, and this Lease shall continue in full force and effect as long as Landlord does not terminate Tenant's right to possession, and Landlord shall have the right to collect Rent when due. Landlord may enter the Premises and relet it, or any part of it, to third parties for Tenant's account, provided that any Rent in excess of the Rent due hereunder shall be payable to Landlord. Tenant shall be liable immediately to Landlord for all costs Landlord incurs in reletting the Premises, including, without limitation, brokers' commissions, expenses of cleaning and redecorating the Premises required by the reletting and like costs. Reletting may be for a period shorter or longer than the remaining Term of this Lease. Tenant shall pay to Landlord the Rent and other sums due under this Lease on the dates the Rent is

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due, less the Rent and other sums Landlord receives from any reletting. No act by Landlord allowed by this Section 22.2(a) shall terminate this Lease unless Landlord notifies Tenant in writing that Landlord elects to terminate this Lease.

"The lessor has the remedy described in Civil Code Section 1951.4 (lessor may continue the lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign subject only to reasonable limitations)."

(b)Landlord may terminate Tenant's right to possession of the Premises at any time by giving written notice to that effect. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the Premises or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession. On termination, Landlord shall have the right to remove all personal property of Tenant and store it at Tenant's cost and to recover from Tenant as damages: (i) the worth at the time of award of unpaid Rent and other sums due and payable which had been earned at the time of termination; plus (ii) the worth at the time of award of the amount by which the unpaid Rent and other sums due and payable which would have been payable after termination until the time of award exceeds the amount of the Rent loss that Tenant proves could have been reasonably avoided; plus (iii) the worth at the time of award of the amount by which the unpaid Rent and other sums due and payable for the balance of the Term after the time of award exceeds the amount of the Rent loss that Tenant proves could be reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease, or which, in the ordinary course of things, would be likely to result therefrom, including, without limitation, any costs or expenses incurred by Landlord: (A) in retaking possession of the Premises, including reasonable attorneys' fees and costs therefor; (B) maintaining or preserving the Premises for reletting to a new tenant, including repairs or alterations to the Premises for the reletting; (C) leasing commissions; (D) any other costs necessary or appropriate to relet the Premises; and (E) at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by the laws of the State of California.

The "worth at the time of award" of the amounts referred to in Sections 22.2(b)(i) and 22.2(b)(ii) shall be calculated by allowing interest at the lesser of twelve percent (12%) per annum or the maximum rate permitted by law, on the unpaid Rent and other sums due and payable from the termination date through the date of award. The "worth at the time of award" of the amount referred to in Section 22.2(b)(iii) shall be calculated by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award, plus one percent (1%). Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other present or future law, if Tenant is evicted or Landlord takes possession of the Premises by reason of any Event of Default by Tenant.

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22.3If Landlord shall exercise any one or more remedies hereunder granted or otherwise available, it shall not be deemed to be an acceptance or surrender of the Premises by Tenant whether by agreement or by operation of law; it is understood that such surrender can be effected only by the written agreement of Landlord and Tenant. No alteration of security devices and no removal or other exercise of dominion by Landlord over the property of Tenant or others in the Premises shall be deemed unauthorized or constitute a conversion, Tenant hereby consenting to the aforesaid exercise of dominion over Tenant's property within the Premises after any Event of Default.

22.4Each right and remedy provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, including, but not limited to, suits for injunctive relief and specific performance. The exercise or beginning of the exercise by Landlord of any one or more of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity, or by statute or otherwise shall not preclude the simultaneous or later exercise by Landlord for any or all other rights or remedies provided for in this Lease or now or hereafter existing at or in equity or by statute or otherwise. All such rights and remedies shall be considered cumulative and non-exclusive. All costs incurred by Landlord in connection with collecting any Rent or other amounts and damages owing by Tenant pursuant to the provisions of this Lease, or to enforce any provision of this Lease, including reasonable attorneys' fees from the date such matter is turned over to an attorney, whether or not one or more actions are commenced by Landlord, shall also be recoverable by Landlord from Tenant. If any notice and grace period required under subparagraphs 22.1(a) or (b) was not previously given, a notice to pay rent or quit, or to perform or quit, as the case may be, given to Tenant under any statute authorizing the forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by subparagraphs 22.1(a) or (b). In such case, the applicable grace period under subparagraphs 22.1(a) or (b) and under the unlawful detainer statute shall run concurrently after the one such statutory notice, and the failure of Tenant to cure the default within the greater of the two (2) such grace periods shall constitute both an unlawful detainer and an Event of Default entitling Landlord to the remedies provided for in this Lease and/or by said statute.

22.5If Tenant should fail to make any payment or cure any default hereunder within the time herein permitted and such failure constitutes an Event of Default (except in the case where if Landlord in good faith believes that action prior to the expiration of any cure period under Section 22.1 is necessary to prevent damage to persons or property, in which case Landlord may act without waiting for such cure period to expire), Landlord, without being under any obligation to do so and without thereby waiving such default, may make such payment and/or remedy such default for the account of Tenant (and enter the Premises for such purpose), and thereupon, Tenant shall be obligated and hereby agrees to pay Landlord, upon demand, all reasonable costs, expenses, and disbursements, plus ten percent (10%) overhead cost incurred by Landlord in connection therewith.

22.6Intentionally Omitted.

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22.7Nothing contained in this Article 22 shall limit or prejudice the right of Landlord to prove and obtain as damages in any bankruptcy, insolvency, receivership, reorganization, or dissolution proceeding, an amount equal to the maximum allowed by any statute or rule of law governing such a proceeding and in effect at the time when such damages are to be proved, whether or not such amount be greater, equal, or less than the amounts recoverable, either as damages or Rent, referred to in any of the preceding provisions of this Article 22. Notwithstanding anything contained in this Article to the contrary, any such proceeding or action involving bankruptcy, insolvency, reorganization, arrangement, assignment for the benefit of creditors, or appointment of a receiver or trustee, as set forth above, shall be considered to be an Event of Default only when such proceeding, action, or remedy shall be taken or brought by or against the then holder of the leasehold estate under this Lease.

22.8Landlord is entitled to accept, receive, in check or money order, and deposit any payment made by Tenant for any reason or purpose or in any amount whatsoever, and apply them at Landlord's option to any obligation of Tenant, and such amounts shall not constitute payment of any amount owed, except that to which Landlord has applied them. No endorsement or statement on any check or letter of Tenant shall be deemed an accord and satisfaction or recognized for any purpose whatsoever. The acceptance of any such check or payment shall be without prejudice to Landlord's rights to recover any and all amounts owed by Tenant hereunder and shall not be deemed to cure any other default nor prejudice Landlord's rights to pursue any other available remedy, Landlord's acceptance of partial payment of Rent does not constitute a waiver of any rights, including without limitation any right Landlord may have to recover possession of the Premises.

22.9In the event that Tenant's right of possession of the Premises is terminated prior to the end of the initial term by reason of default, then immediately upon such termination, an amount shall be due and payable by Tenant to Landlord equal to the unamortized portion as of that date (which amortization shall be based on an interest rate of eleven percent (11%) per annum and the number of months of unexpired Lease term) of the sum of (a) the cost of Landlord's Work (if any), (b) the Allowance (if any), (c) the value of any free Base Rent (i.e., the Base Rent stated in this Lease to be abated as an inducement to Tenant's entering into this Lease) enjoyed as of that date by Tenant, and (d) the amount of all commissions paid by Landlord in order to procure this Lease (collectively, the "Inducements"). Notwithstanding the foregoing, Landlord shall not be entitled to recover such unamortized portions of the Inducements as provided in this Section 22.9 if, following an uncured default under this Lease by Tenant, Landlord elects to pursue its remedy against Tenant pursuant to California Civil Code Section 1951.4, or if Landlord recovers the discounted present value of all rent payable for the entire term of the Lease pursuant to California Civil Code Section 1951.2. To the extent Landlord recovers the discounted present value of some, but not all, of the rent payable following the termination of this Lease resulting from Tenant's default, the number of months of such rent so recovered by Landlord shall be subtracted from the "number of months of unexpired lease term" in the formula set forth above.

22.10Tenant waives the right to terminate this Lease on Landlord's default under this Lease. Tenant's sole remedy on Landlord's default is an action for damages or injunctive or

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declaratory relief. Landlord's failure to perform any of its obligations under this Lease shall constitute a default by Landlord under this Lease if the failure continues for thirty (30) days after written notice of the failure from Tenant to Landlord. If the required performance cannot be completed within thirty (30) days, Landlord's failure to perform shall constitute a default under the Lease unless Landlord undertakes to cure the failure within thirty (30) days and diligently and continuously attempts to complete this cure as soon as reasonably possible. All obligations of each party hereunder shall be construed as covenants, not conditions.

ARTICLE 23INTENTIONALLY OMITTED

ARTICLE 24INTENTIONALLY OMITTED

ARTICLE 25ATTORNEYS' FEES

25.1All costs and expenses, including reasonable attorneys' fees (whether or not legal proceedings are instituted), involved in collecting rents, enforcing the obligations of Tenant, or protecting the rights or interests of Landlord under this Lease, whether or not an action is filed, including without limitation the cost and expense of instituting and prosecuting legal proceedings or recovering possession of the Premises after default by Tenant or upon expiration or sooner termination of this Lease, shall be due and payable by Tenant on demand, as Additional Rent. In addition, and notwithstanding the foregoing, if either party hereto shall file any action or bring any proceeding against the other party arising out of this Lease or for the declaration of any rights hereunder, the prevailing party in such action shall be entitled to recover from the other party all costs and expenses, including reasonable attorneys' fees incurred by the prevailing party, as determined by the trier of fact in such legal proceeding. For purposes of this provision, the terms "attorneys' fees" or "attorneys' fees and costs," or "costs and expenses" shall mean the fees and expenses of legal counsel (including external counsel and in-house counsel) of the parties hereto, which include printing, photocopying, duplicating, mail, overnight mail, messenger, court filing fees, costs of discovery, and fees billed for law clerks, paralegals, investigators and other persons not admitted to the bar for performing services under the supervision and direction of an attorney. For purposes of determining in-house counsel fees, the same shall be considered as those fees normally applicable to a partner in a law firm with like experience in such field. In addition, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs incurred in enforcing any judgment arising from a suit or proceeding under this Lease, including without limitation post-judgment motions, contempt proceedings, garnishment, levy and debtor and third party examinations, discovery and bankruptcy litigation, without regard to schedule or rule of court purporting to restrict such award. This post-judgment award of attorneys' fees and costs provision shall be severable from any other provision of this

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Lease and shall survive any judgment/award on such suit or arbitration and is not to be deemed merged into the judgment/award or terminated with the Lease.

ARTICLE 26NON-WAIVER

26.1Neither acceptance of any payment by Landlord from Tenant nor, failure by Landlord to complain of any action, non-action, or default of Tenant shall constitute a waiver of any of Landlord's rights hereunder. Time is of the essence with respect to the performance of every obligation of each party under this Lease in which time of performance is a factor. Waiver by either party of any right or remedy arising in connection with any default of the other party shall not constitute a waiver of such right or remedy or any other right or remedy arising in connection with either a subsequent default of the same obligation or any other default. No right or remedy of either party hereunder or covenant, duty, or obligation of any party hereunder shall be deemed waived by the other party unless such waiver is in writing, signed by the other party or the other party's duly authorized agent.

ARTICLE 27RULES AND REGULATIONS

27.1Such reasonable rules and regulations applying to all lessees in the Project for the safety, care, and cleanliness of the Project and the preservation of good order thereon are hereby made a part hereof as Exhibit D, and Tenant agrees to comply with all such rules and regulations. Landlord shall have the right at all times to change such rules and regulations or to amend them in any reasonable and non-discriminatory manner as may be deemed advisable by Landlord, all of which changes and amendments shall be sent by Landlord to Tenant in writing and shall be thereafter carried out and observed by Tenant. Landlord shall not have any liability to Tenant for any failure of any other lessees of the Project to comply with such rules and regulations.

ARTICLE 28ASSIGNMENT BY LANDLORD

28.1Landlord shall have the right to transfer or assign, in whole or in part, all its rights and obligations hereunder and in the Premises and the Project. In such event, no liability or obligation shall accrue or be charged to Landlord with respect to the period from and after such transfer or assignment and assumption of Landlord's obligations by the transferee or assignee.

ARTICLE 29LIABILITY OF LANDLORD

29.1It is expressly understood and agreed that the obligations of Landlord under this Lease shall be binding upon Landlord and its successors and assigns and any future owner of the Project only with respect to events occurring during its and their respective ownership of the Project. In addition, Tenant agrees to look solely to Landlord's interest in the

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Project for recovery of any judgment against Landlord arising in connection with this Lease, it being agreed that neither Landlord nor any successor or assign of Landlord nor any future owner of the Project, nor any partner, shareholder, member, or officer of any of the foregoing shall ever be personally liable for any such judgment. The limitations of liability contained in this Section 29.1 shall inure to the benefit of Landlord's and the Landlord Parties' present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have any liability for the performance of Landlord's obligations under this Lease. Notwithstanding any contrary provision herein, neither Landlord nor the Landlord Parties shall be liable under any circumstances for any indirect or consequential damages or any injury or damage to, or interference with, Tenant's business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.

ARTICLE 30SUBORDINATION AND ATTORNMENT

30.1This Lease, at Landlord's option, shall be subordinate to any present or future mortgage, ground lease or declaration of covenants regarding maintenance and use of any areas contained in any portion of the Building, and to any and all advances made under any present or future mortgage and to all renewals, modifications, consolidations, replacements, and extensions of any or all of same. Tenant agrees, with respect to any of the foregoing documents, that no documentation other than this Lease shall be required to evidence such subordination. If any holder of a mortgage shall elect for this Lease to be superior to the lien of its mortgage and shall give written notice thereof to Tenant, then this Lease shall automatically be deemed prior to such mortgage whether this Lease is dated earlier or later than the date of said mortgage or the date of recording thereof. Tenant agrees to execute such documents as may be further required to evidence such subordination or to make this Lease prior to the lien of any mortgage or deed of trust, as the case may be, and by failing to do so within five (5) days after written demand, Tenant does hereby make, constitute, and irrevocably appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place, and stead, to do so. This power of attorney is coupled with an interest. Tenant hereby attorns to all successor owners of the Building, whether or not such ownership is acquired as a result of a sale through foreclosure or otherwise. As of the date of this Lease, there is no (a) deed of trust or mortgage encumbering the Project or (b) ground lease affecting the Building.

30.2Each party shall, at such time or times as the other party may request, upon not less than ten (10) days' prior written request by the requesting party, sign and deliver to the requesting party a certificate stating whether this Lease is in full force and effect; whether any amendments or modifications exist; whether any Monthly Rent has been prepaid and, if so, how much; whether to the knowledge of the certifying party there are any defaults hereunder; and in the circumstance where Landlord is the requesting party, such other information and agreements as may be reasonably requested, it being intended that any such statement delivered pursuant to this Article may be relied upon by the requesting party and by any prospective

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purchaser of all or any portion of the requesting party's interest herein, or a holder or prospective holder of any mortgage encumbering the Building. Tenant's failure to deliver such statement within five (5) days after Landlord's second written request therefor shall constitute an Event of Default (as that term is defined elsewhere in this Lease) and shall conclusively be deemed to be an admission by Tenant of the matters set forth in the request for an estoppel certificate.

30.3Tenant shall deliver to Landlord prior to the execution of this Lease and thereafter at any time upon Landlord's request, Tenant's current audited financial statements, including a balance sheet and profit and loss statement for the most recent prior year (collectively, the "Statements"), which Statements shall accurately and completely reflect the financial condition of Tenant. Landlord shall have the right to deliver the same to any proposed purchaser of the Building or the Project, and to any encumbrancer of all or any portion of the Building or the Project. Notwithstanding the foregoing, if (i) Tenant is required to file reports under the Securities Exchange Act of 1934, as amended, (ii) Tenant is current in its reporting obligations thereunder, and (iii) the reports required by such act are available to the public, including Landlord, then Tenant shall not be obligated to provide Landlord with financial statements pursuant to this Section 30.3.

30.4As a condition to the subordination in Section 30.1 of this Lease to its mortgage or deed of trust, any future mortgagee or beneficiary shall deliver to Tenant a written subordination and non-disturbance agreement in recordable form acceptable to such mortgagee or beneficiary in its sole discretion providing that so long as Tenant performs all of the terms of this Lease, Tenant's possession under this Lease shall not be disturbed and Tenant shall not be joined by the holder of any mortgage or deed of trust in any action or proceeding to foreclose thereunder, except where such is necessary for jurisdictional or procedural reasons. Landlord agrees to use commercially reasonable efforts to obtain a written subordination and non-disturbance agreement from such mortgagee or beneficiary in a form reasonably acceptable to Tenant; provided that Tenant shall pay all costs incurred by Landlord in obtaining that subordination and non-disturbance agreement. "Commercially reasonable efforts" of Landlord shall not require Landlord to incur any cost, expense or liability to obtain such agreement, it being agreed that Tenant shall be responsible for any fee or review costs charged by such mortgagee or beneficiary. Landlord's failure to obtain a non-disturbance, subordination and attornment agreement for Tenant shall have no effect on the rights, obligations and liabilities of Landlord and Tenant or be considered to be a default by Landlord hereunder.

ARTICLE 31HOLDING OVER

31.1In the event Tenant, or any party claiming under Tenant, retains possession of the Premises after the Expiration Date or Termination Date, such possession shall be that of a holdover tenant and an unlawful detainer. No tenancy or interest shall result from such possession, and such parties shall be subject to immediate eviction and removal. Tenant or any such party shall pay Landlord, as Base Rent for the period of such holdover, an amount equal to one hundred fifty percent (150%) of the Base Rent otherwise provided for herein, during the time of holdover together with all other Additional Rent and other amounts payable pursuant to the

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terms of this Lease. Tenant shall also be liable for any and all damages sustained by Landlord as a result of such holdover. Tenant shall vacate the Premises and deliver same to Landlord immediately upon Tenant's receipt of notice from Landlord to so vacate. The Rent during such holdover period shall be payable to Landlord on demand. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend the Term of this Lease.

ARTICLE 32SIGNS

32.1No sign, symbol, or identifying marks shall be put upon the Project, Building, in the halls, elevators, staircases, entrances, parking areas, or upon the doors or walls, without the prior written approval of Landlord. Should such approval ever be granted, all signs or lettering shall conform in all respects to the sign and/or lettering criteria established by Landlord. Landlord, at Landlord's sole cost and expense, reserves the right to change the door plaques as Landlord deems reasonably desirable.

32.2Tenant may retain one line of signage (the "Monument Signage") on the Building monument sign identifying Tenant's name. The graphics, materials, color, design, lettering, size and specifications of Tenant's Monument Signage shall be subject to the approval of Landlord and all applicable governmental authorities and shall conform to Landlord's approved sign plan for the Building. At the expiration or earlier termination of this Lease or termination of Tenant's sign rights as provided below, Landlord shall, at Tenant's sole cost and expense, cause the Monument Signage to be removed and the area of the monument sign affected by the Monument Signage to be restored to the condition existing prior to the installation of Tenant's Monument Signage. The right to Monument Signage is personal to the initially named Tenant in this Lease or any Permitted Transferee. All of Tenant's rights to install and maintain Monument Signage on the monument sign in accordance with this Section 32.2 shall permanently terminate upon notice from Landlord following (a) a Monetary Default under this Lease and/or (b) the date upon which Tenant or any Permitted Transferee ceases to occupy all or substantially all of the Premises.

32.3Landlord, at Tenant's sole cost and expense, shall provide Tenant with Building standard lobby and suite signage.

32.4Landlord hereby approves of Tenant's signage that is existing and installed as of the date of this Lease.

ARTICLE 33HAZARDOUS SUBSTANCES

33.1Except for Hazardous Material (as defined below) contained in products used by Tenant for ordinary cleaning and office purposes in quantities not violative of applicable Environmental Requirements ("Ordinary Materials"), Tenant shall not permit or cause any party to bring any Hazardous Material upon the Premises and/or the Project or transport, store, use, generate, manufacture, dispose, or release any Hazardous Material on or from the Premises and/or the Project without Landlord's prior written consent. Tenant, at its sole cost and expense, shall

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operate its business in the Premises in strict compliance with all Environmental Requirements (as defined below) and all requirements of this Lease. Tenant shall complete and certify to disclosure statements as requested by Landlord from time to time relating to Tenant's transportation, storage, use, generation, manufacture, or release of Hazardous Materials (other than Ordinary Materials) on the Premises, and Tenant shall promptly deliver to Landlord a copy of any notice of violation relating to the Premises or the Project of any Environmental Requirement.

33.2The term "Environmental Requirements" means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, permits, authorizations, orders, policies or other similar requirements of any governmental authority, agency or court regulating or relating to health, safety, or environmental conditions on, under, or about the Premises or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; the Clean Air Act; the Clean Water Act; the Toxic Substances Control Act and all state and local counterparts thereto; all applicable California requirements, including, but not limited to, Sections 25115, 25117, 25122.7, 25140, 25249.8, 25281, 25316 and 25501 of the California Health and Safety Code and Title 22 of the California Code of Regulations, Division 4.5, Chapter 11, and any policies or rules promulgated thereunder as well as any County or City ordinances that may operate independent of, or in conjunction with, the State programs, and any common or civil law obligations including, without limitation, nuisance or trespass, and any other requirements of Article 3 of this Lease. The term "Hazardous Materials" means and includes any substance, material, waste, pollutant, or contaminant that is or could be regulated under any Environmental Requirement or that may adversely affect human health or the environment, including, without limitation, any solid or hazardous waste, hazardous substance, asbestos, petroleum (including crude oil or any fraction thereof, natural gas, synthetic gas, polychlorinated biphenyls (PCBs), and radioactive material). For purposes of Environmental Requirements, to the extent authorized by law, Tenant is and shall be deemed to be the responsible party, including without limitation, the "owner" and "operator" of Tenant's "facility" and the "owner" of all Hazardous Materials brought on the Premises by Tenant, its agents, employees, contractors or invitees, and the wastes, by-products, or residues generated, resulting, or produced therefrom.

33.3Tenant, at its sole cost and expense, shall remove all Hazardous Materials stored, disposed of or otherwise released by Tenant, its assignees, subtenants, agents, employees, contractors or invitees (collectively, the "Tenant Parties") onto or from the Premises, in a manner and to a level that complies with all Environmental Requirements and does not limit any future uses of the Premises or require the recording of any deed restriction or notice regarding the Premises. Tenant shall perform such work at any time during the Term of the Lease upon written request by Landlord or, in the absence of a specific request by Landlord, before Tenant's right to possession of the Premises terminates or expires. If Tenant fails to perform such work within the time period specified by Landlord or before Tenant's right to possession terminates or expires (whichever is earlier), Landlord may at its discretion, and without waiving any other remedy available under this Lease or at law or equity (including without limitation an action to compel Tenant to perform such work), perform such work at Tenant's cost. Tenant shall pay all costs

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incurred by Landlord in performing such work within thirty (30) days after Landlord's request therefor. Such work performed by Landlord is on behalf of Tenant and Tenant remains the owner, generator, operator, transporter, and/or arranger of the Hazardous Materials for purposes of Environmental Requirements. Tenant agrees not to enter into any agreement with any person, including without limitation any governmental authority, regarding the removal of Hazardous Materials that have been disposed of or otherwise released onto or from the Premises without the written approval of Landlord.

33.4Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all losses (including, without limitation, diminution in value of the Premises or the Project and loss of rental income from the Project), claims, demands, actions, suits, damages (including, without limitation, punitive damages), expenses (including, without limitation, remediation, removal, repair, corrective action, or cleanup expenses), and costs (including, without limitation, actual attorneys' fees, consultant fees or expert fees and including, without limitation, removal or management of any asbestos brought into the Premises, regardless of whether such removal or management is required by law) which are brought or recoverable against, or suffered or incurred by Landlord as a result of any release of Hazardous Materials or any breach of the requirements under this Article 33 by Tenant, its agents, employees, contractors, subtenants, assignees or invitees, regardless of whether Tenant had knowledge of such noncompliance. The obligations of Tenant under this Article 33 shall survive any termination of this Lease.

33.5Landlord shall have access to, and a right to perform inspections and tests of, the Premises to determine Tenant's compliance with Environmental Requirements, its obligations under this Article 33, or the environmental condition of the Premises. Access shall be granted to Landlord upon Landlord's prior notice to Tenant and at such times so as to minimize, so far as may be reasonable under the circumstances, any disturbance to Tenant's operations. Such inspections and tests shall be conducted at Landlord's expense, unless such inspections or tests reveal that Tenant has not complied with any Environmental Requirement, in which case Tenant shall reimburse Landlord for the reasonable cost of such inspection and tests. Landlord's receipt of or satisfaction with any environmental assessment in no way waives any rights that Landlord holds against Tenant. Tenant shall promptly notify Landlord of any communication or report that Tenant makes to any governmental authority regarding any possible violation of Environmental Requirements or release or threat of release of any Hazardous Materials onto or from the Premises. Tenant shall, within five (5) days of receipt thereof, provide Landlord with a copy of any documents or correspondence received from any governmental agency or other party relating to a possible violation of Environmental Requirements or claim or liability associated with the release or threat of release of any Hazardous Materials onto or from the Premises.

33.6In addition to all other rights and remedies available to Landlord under this Lease or otherwise, Landlord may, in the event of a breach of the requirements of this Article 33 by Tenant or any other of the Tenant Parties that is not cured within thirty (30) days following notice of such breach by Landlord, require Tenant to provide financial assurance (such as insurance, escrow of funds or third party guarantee) in an amount and form satisfactory to

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Landlord. The requirements of this Article 33 are in addition to and not in lieu of any other provision in the Lease.

33.7Landlord hereby informs Tenant, and Tenant hereby acknowledges, that the Premises and adjacent properties overlie a former solid waste landfill site commonly known as the Westport Landfill ("Former Landfill"). Landlord further informs Tenant, and Tenant hereby acknowledges, that (i) prior testing has detected the presence of low levels of certain volatile and semi-volatile organic compounds and other contaminants in the groundwater, in the leachate from the landfilled solid waste, and/or in certain surface waters of the Project, as more fully described in the California Regional Water Quality Control Board, San Francisco Bay Region's ("Regional Board") Order No. R2-2003-0074 (Updated Waste Discharge Requirements and Rescission of Order No. 94-181) (“Order”), (ii) methane gas is or may be generated by the landfilled solid waste (item "i" immediately preceding and this item "ii" are hereafter collectively referred to as the "Landfill Contamination"), and (iii) the Premises and the Former Landfill are subject to the Order. The Order is attached hereto as Exhibit H. As evidenced by their initials on said Exhibit H, Tenant acknowledges that Landlord has provided Tenant with copies of the Order, and Tenant acknowledges that Tenant and Tenant’s experts (if any) have had ample opportunity to review the Order and that Tenant has satisfied itself as to the environmental conditions of the Property and the suitability of such conditions for Tenant’s intended use of the Property. Additional environmental reports are available for Tenant’s review at Landlord’s offices. In the event the Regional Board determines that the majority of the Premises cannot be occupied for a period in excess of thirty (30) days due to the any Hazardous Materials conditions related to the Landfill Contamination, then, provided Tenant has not caused and/or contributed to the incident responsible for said occupancy restriction, Tenant may terminate this Lease provided Tenant gives Landlord written notice within twenty (20) days of Tenant’s receipt of notice that the Premises cannot be occupied for the purpose referenced in this Lease of its election to so terminate the Lease in the event Tenant cannot occupy the majority of the Premises at the conclusion of the thirty (30) day period. In the event said notice is received by Landlord as required herein and the majority of the Premises cannot be occupied as referenced above, this Lease shall thereafter terminate on the date of termination referenced in said Tenant notice (which date shall not be less than thirty (30) days from the date the Premises are deemed un-occupiable). Tenant agrees to reasonably cooperate and provide Landlord and the Regional Board or their authorized representatives, upon presentation of credentials, during normal business hours, immediate entry upon the Premises to assess any and all aspects of the environmental condition of the Project and its use, including, but not limited to, conducting any environmental assessment or audit, taking samples of soil, groundwater or other water, air or building materials, the inspection of treatment equipment, monitoring equipment or monitoring methods, or sampling of any discharge governed by the Order. Nothing in this Article 33 shall be deemed to release Landlord from the obligation to comply with the Order at Landlord's sole cost and not as a reimbursable expense.

ARTICLE 34COMPLIANCE WITH LAWS AND OTHER REGULATIONS

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34.1Tenant, at its sole cost and expense, shall promptly comply with all laws, statutes, ordinances, and governmental rules, regulations, or requirements now in force or which may hereafter become in force, of federal, state, county, and municipal authorities, including, but not limited to, the Americans with Disabilities Act, with the requirements of any board of fire underwriters or other similar body now or hereafter constituted, and with any occupancy certificate issued pursuant to any law by any public officer or officers, which impose, any duty upon Landlord or Tenant, insofar as any thereof relate to or affect the condition, use, alteration, or occupancy of the Premises. Landlord's approval of Tenant's plans for any improvements shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules, and regulations of governmental agencies or authorities, including, but not limited to, the Americans with Disabilities Act. Tenant shall not be obligated to make any capital improvements to the Premises in order to comply with Applicable Laws, except to the extent the capital improvement is required due to a Trigger Event (as defined below). As used herein, the term "Trigger Event" means one or more of the following events or circumstances:

(a)Tenant's particular use of the Premises (other than normal office uses);

(b)The manner of conduct of Tenant's business or operation of its installations, equipment or other property outside those of normal office use; or

(c)The performance of any improvements or alterations by Tenant or the installation of any Tenant systems by Tenant. Notwithstanding the foregoing, if compliance work outside of the Premises is required due to the construction of the Tenant Improvements pursuant to the attached Tenant Work Letter provided that such Tenant Improvements are consistent with the Approved Plans (as defined in the attached Tenant Work Letter), Landlord shall be responsible for performing that compliance work at Landlord’s cost not reimbursable as an Operating Expense.

34.2As an inducement to Landlord to enter into this Lease, Tenant hereby represents and warrants that: (i) Tenant is not, nor is it owned or controlled directly or indirectly by, any person, group, entity or nation named on any list issued by the Office of Foreign Assets Control of the United States Department of the Treasury pursuant to Executive Order 13224 or any similar list or any law, order, rule or regulation or any Executive Order of the President of the United States as a terrorist, "Specially Designated National and Blocked Person" or other banned or blocked person (any such person, group, entity or nation being hereinafter referred to as a "Prohibited Person"); (ii) Tenant is not (nor is it owned or controlled, directly or indirectly, by any person, group, entity or nation which is) acting directly or indirectly for or on behalf of any Prohibited Person; and (iii) neither Tenant (nor any person, group, entity or nation which owns or controls Tenant, directly or indirectly) has conducted or will conduct business or has engaged or will engage in any transaction or dealing with any Prohibited Person, including without limitation any assignment of this Lease or any subletting of all or any portion of the Premises or the making or receiving of any contribution of funds, goods or services to or for the benefit of a Prohibited Person. Tenant covenants and agrees (a) to comply with all requirements

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of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect, (b) to immediately notify Landlord in writing if any of the representations, warranties or covenants set forth in this Section 34.2 are no longer true or have been breached or if Tenant has a reasonable basis to believe that they may no longer be true or have been breached, (c) not to use funds from any Prohibited Person to make any payment due to Landlord under the Lease and (d) at the request of Landlord, to provide such information as may be requested by Landlord to determine Tenant's compliance with the terms hereof. Any breach by Tenant of the foregoing representations and warranties shall be deemed an Event of Default by Tenant under this Lease and shall be covered by the indemnity provisions of Section 21.1 above. The representations and warranties contained in this subsection shall be continuing in nature and shall survive the expiration or earlier termination of this Lease.

34.3Pursuant to California Civil Code Section 1938, Tenant is hereby notified that, as of the date hereof, the Property has not undergone an inspection by a "Certified Access Specialist." Tenant acknowledges that Landlord has made no representation regarding compliance of the Premises or the Building with accessibility standards.

ARTICLE 35SEVERABILITY

35.1This Lease shall be construed in accordance with the laws of the State of California. If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws effective during the Term, then it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby. It is also the intention of both parties that in lieu of each clause or provision that is illegal, or unenforceable, there is added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and still be legal, valid, and enforceable.

ARTICLE 36NOTICES

36.1Whenever in this Lease it shall be required or permitted that notice or demand be given or served by either party to this Lease to or on the other, such notice or demand shall be given or served in writing and delivered personally, or forwarded by certified or registered mail, postage prepaid, or recognized overnight courier, addressed to Landlord's address and Tenant's address, as applicable, as specified in the Basic Lease Information. Either party may change its address for notice from time to time by serving written notice of the new address as provided in this Article 36.

36.2Notice hereunder shall become effective upon (a) delivery in case of personal delivery and (b) receipt or refusal in case of certified or registered mail or delivery by overnight courier.

ARTICLE 37OBLIGATIONS OF, SUCCESSORS, PLURALITY, GENDER

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37.1Landlord and Tenant agree that all the provisions hereof are to be construed as covenants and agreements as though the words imparting such covenants were used in each paragraph hereof, and that, except as restricted by the provisions hereof, shall bind and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors, and assigns. If the rights of Tenant hereunder are owned by two or more parties, or two or more parties are designated herein as Tenant, then all such parties shall be jointly and severally liable for the obligations of Tenant hereunder. Whenever the singular or plural number, masculine or feminine or neuter gender is used herein, it shall equally include the other.

ARTICLE 38ENTIRE AGREEMENT

38.1This Lease and any attached addenda or exhibits constitute the entire agreement between Landlord and Tenant. No prior or contemporaneous written or oral leases or representations shall be binding. This Lease shall not be amended, changed, or extended except by written instrument signed by Landlord and Tenant.

38.2THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY LANDLORD AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.

ARTICLE 39CAPTIONS

39.1Paragraph captions are for Landlord's and Tenant's convenience only, and neither limit nor amplify the provisions of this Lease.

ARTICLE 40CHANGES

40.1Should any mortgagee require a modification of this Lease, which modification will not bring about any increased cost or expense to Tenant or in any other way adversely change the rights and obligations of Tenant hereunder, then and in such event Tenant agrees that this Lease may be so modified.

ARTICLE 41AUTHORITY

41.1All rights and remedies of Landlord under this Lease, or those which may be provided by law, may be exercised by Landlord in its own name individually, or in its name by its agent, and all legal proceedings for the enforcement of any such rights or remedies, including distress for Rent, unlawful detainer, and any other legal or equitable proceedings may

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be commenced and prosecuted to final judgment and be executed by Landlord in its own name individually or in its name by its agent. Landlord and Tenant each represent to the other that each has full power and authority to execute this Lease and to make and perform the agreements herein contained, and Tenant expressly stipulates that any rights or remedies available to Landlord, either by the provisions of this Lease or otherwise, may be enforced by Landlord in its own name individually or in its name by its agent or principal.

ARTICLE 42BROKERAGE

42.1Tenant represents and warrants to Landlord that it has dealt only with Tenant's Broker and Landlord's Broker, in negotiation of this Lease. Landlord shall make payment of the brokerage fee due the Landlord's Broker pursuant to and in accordance with a separate agreement between Landlord and Landlord's Broker. Landlord's Broker shall pay a portion of its commission to Tenant's Broker pursuant to a separate agreement between Landlord's Broker and Tenant's Broker. Except for amounts owing to Landlord's Broker and Tenant's Broker, each party hereby agrees to indemnify and hold the other party harmless of and from any and all damages, losses, costs, or expenses (including, without limitation, all attorneys' fees and disbursements) by reason of any claim of or liability to any other broker or other person claiming through the indemnifying party and arising out of or in connection with the negotiation, execution, and delivery of this Lease. Additionally, except as may be otherwise expressly agreed upon by Landlord in writing, Tenant acknowledges and agrees that Landlord and/or Landlord's agent shall have no obligation for payment of any brokerage fee or similar compensation to any person with whom Tenant has dealt or may in the future deal with respect to leasing of any additional or expansion space in the Building or renewals or extensions of this Lease.

ARTICLE 43EXHIBITS

43.1Exhibits A through H are attached hereto and incorporated herein for all purposes and are hereby acknowledged by both parties to this Lease.

ARTICLE 44APPURTENANCES

44.1The Premises include the right of ingress and egress thereto and therefrom; however, Landlord reserves the right to make changes and alterations to the Building, fixtures and equipment thereof, in the street entrances, doors, halls, corridors, lobbies, passages, elevators, escalators, stairways, toilets and other parts thereof which Landlord may deem necessary or desirable; provided that Tenant at all times has a means of access to the Premises (subject to a temporary interruption due to Force Majeure Events or necessary maintenance that cannot reasonably be performed without such interruption of access). Neither this Lease nor any use by Tenant of the Building or any passage, door, tunnel, concourse, plaza or any other area connecting the garages or other buildings with the Building, shall give Tenant any right or easement of such use and the use thereof may, without notice to Tenant, be regulated or discontinued at any time and from time to time by Landlord without liability of any kind to

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Tenant and without affecting the obligations of Tenant under this Lease. In exercising its rights under this Section 44.1, Landlord shall make commercially reasonable efforts to minimize the disruption to Tenant's business operations during standard business hours.

ARTICLE 45PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM, AND JURY

45.1Tenant, for itself and for all persons claiming through or under it, hereby expressly waives any and all rights which are, or in the future may be, conferred upon Tenant by any present or future law to redeem the Premises, or to any new trial in any action for ejection under any provisions of law, after reentry thereupon, or upon any part thereof, by Landlord, or after any warrant to dispossess or judgment in ejection. If Landlord shall acquire possession of the Premises by summary proceedings, or in any other lawful manner without judicial proceedings, it shall be deemed a reentry within the meaning of that word as used in this Lease. In the event that Landlord commences any summary proceedings or action for nonpayment of Rent or other charges provided for in this Lease, Tenant shall not interpose any counterclaim of any nature or description in any such proceeding or action except to the extent that failure to interpose such counterclaim would constitute a forfeiture of that counterclaim by Tenant. Tenant and Landlord both waive a trial by jury of any or all issues arising in any action or proceeding between the parties hereto or their successors, under or connected with this Lease, or any of its provisions.

ARTICLE 46RECORDING

46.1Tenant shall not record this Lease but will, at the request of Landlord, execute a memorandum or notice thereof in recordable form satisfactory to both Landlord and Tenant specifying the date of commencement and expiration of the Term of this Lease and other information required by statute. Either Landlord or Tenant may then record said memorandum or notice of lease at the cost of the recording party.

ARTICLE 47MORTGAGEE PROTECTION

47.1Tenant agrees to give any mortgagees and/or trust deed holders, by registered mail, a copy of any notice of default served upon Landlord, provided that prior to such notice Tenant has been notified, in writing of the address of such mortgagees and/or trust deed holders. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the mortgagees and/or trust deed holders shall have an additional thirty (30) days within which to cure such default or if such default cannot be cured within that time, then such additional time as may be necessary to cure such default (including but not limited to commencement of foreclosure proceedings, if necessary to effect such cure) in which event this Lease shall not be terminated while such remedies are being so diligently pursued.

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ARTICLE 48OTHER LANDLORD CONSTRUCTION

48.1Tenant acknowledges that portions of the Project may be under construction following Tenant's occupancy of the Premises, and that such construction may result in levels of noise, dust, odor, obstruction of access, etc. which are in excess of that present in a fully constructed project. Tenant hereby waives any and all rent offsets or claims of constructive eviction which may arise in connection with such construction. If any excavation or construction is made adjacent to, upon or within the Building, or any part thereof, Tenant shall afford to any and all persons causing or authorized to cause such excavation or construction license to enter upon the Premises for the purpose of doing such work as such persons shall deem necessary to preserve the Building or any portion thereof from injury or damage and to support the same by proper foundations, braces and supports, without any claim for damages or indemnity or abatement of Rent (subject to the express provisions of this Lease), or of a constructive or actual eviction of Tenant.

48.2It is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, the Building, or any part thereof and that no representations respecting the condition of the Premises or the Building have been made by Landlord to Tenant except as specifically set forth herein or in the attached Tenant Work Letter. However, Tenant hereby acknowledges that Landlord is currently renovating or may during the Lease Term renovate, improve, alter, or modify (collectively, the "Renovations") the Project, the Building and/or the Premises. Tenant hereby agrees that such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no responsibility and shall not be liable to Tenant for any injury to or interference with Tenant's business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or of Tenant's personal property or improvements resulting from the Renovations, or for any inconvenience or annoyance occasioned by such Renovations.

48.3In exercising its rights under this Article 48, Landlord shall make commercially reasonable efforts to minimize the disruption to Tenant's business operations during standard business hours.

ARTICLE 49PARKING

49.1The use by Tenant, its employees and invitees, of the parking facilities of the Project shall be on the terms and conditions set forth in Exhibit E attached hereto and by this reference incorporated herein and shall be subject to such other agreement between Landlord and Tenant as may hereinafter be established and to such other rules and regulations as Landlord may reasonably establish. Tenant, its employees and invitees shall use no more than the Maximum Parking Allocation. Tenant's use of the parking spaces shall be confined to the Project. Tenant acknowledges that other tenants of the Project and the tenants of the other buildings, their employees and invitees, may be given the right to park at the Project provided that it does not

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materially interfere with Tenant’s right to its Maximum Parking Allocation. Tenant's right to use the Maximum Parking Allocation shall be without direct charge, other than Operating Expenses and Taxes otherwise payable under Article 5 of this Lease.

ARTICLE 50ELECTRICAL CAPACITY

50.1Tenant covenants and agrees that at all times, its use of electric energy shall never exceed the capacity of the existing feeders to the Building or the risers of wiring installation. Any riser or risers to supply Tenant's electrical requirements upon written request of Tenant shall be installed by Landlord at the sole cost and expense of Tenant, if, in Landlord's sole judgment, the same are necessary and will not cause or create a dangerous or hazardous condition or entail excess or unreasonable alterations, repairs or expense or interfere with or disrupt other tenants or occupants.

ARTICLE 51OPTION TO EXTEND LEASE

51.1Extension Option. Tenant shall have the option to extend this Lease (the "Extension Option") for one additional term of five (5) years (the "Extension Period"), upon the terms and conditions hereinafter set forth:

(a)If the Extension Option is exercised, then the Base Rent per annum for such Extension Period (the "Option Rent") shall be an amount equal to the Fair Market Rental Value (as defined hereinafter) for the Premises as of the commencement of the Extension Option for such Extension Period; provided, however, that the Option Rent shall in no event be less than the Base Rent scheduled to be paid during the year immediately prior to the commencement of the Extension Period.

(b)The Extension Option must be exercised by Tenant, if at all, only at the time and in the manner provided in this Section 51.1(b).

(i)If Tenant wishes to exercise the Extension Option, Tenant must, on or before the date occurring nine (9) months before the expiration of the initial Lease Term (but not before the date that is twelve (12) months before the expiration of the Initial Lease Term), exercise the Extension Option by delivering written notice (the "Exercise Notice") to Landlord. If Tenant timely and properly exercises its Extension Option, the Lease Term shall be extended for the Extension Period upon all of the terms and conditions set forth in the Lease, as amended, except that the Base Rent for the Extension Period shall be as provided in Section 51.1(a) and Tenant shall have no further options to extend the Lease Term.

(ii)If Tenant fails to deliver a timely Exercise Notice, Tenant shall be considered to have elected not to exercise the Extension Option.

(c)It is understood and agreed that the Extension Option hereby granted is personal to Tenant and is not transferable except to a Permitted Transferee in

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connection with an assignment of Tenant's entire interest in this Lease. In the event of any assignment or subletting of the Premises or any part thereof (other than to a Permitted Transferee), the Extension Option shall automatically terminate and shall thereafter be null and void.

(d)Tenant's exercise of the Extension Option shall, if Landlord so elects in its absolute discretion, be ineffective in the event that (i) an Event of Default by Tenant remains uncured at the time of delivery of the Exercise Notice or at the commencement of the Extension Period, or (ii) Tenant shall have reduced the size of the Premises below the size of the initial Premises by agreement with Landlord or pursuant to an express right in this Lease.

51.2Fair Market Rental Value. The provisions of this Section shall apply in any instance in which this Lease provides that the Fair Market Rental Value is to apply.

(a)"Fair Market Rental Value" means the annual amount per square foot that a willing tenant would pay and a willing landlord would accept in arm's length negotiations, without any additional inducements, for a lease of the applicable space on the applicable terms and conditions for the applicable period of time. Fair Market Rental Value shall be determined considering the most recent new direct leases (and market renewals and extensions, if applicable) in the Building and in Comparable Buildings owned or managed by Landlord in the Market Area. If there are no such direct leases that are recent, consideration shall be given to the most recent new direct leases (and market renewals and extensions, if applicable) in other Comparable Buildings in the Market Area.

(b)In determining the rental rate of comparable space, the parties shall include all escalations and take into consideration the following concessions:

(i)Rental abatement concessions, if any, being granted to tenants in connection with the comparable space;

(ii)Tenant improvements or allowances provided or to be provided for the comparable space, taking into account the value of the existing improvements in the Premises, based on the age, quality, and layout of the improvements.

(c)If in determining the Fair Market Rental Value the parties determine that the economic terms of leases of comparable space include a tenant improvement allowance, Landlord may, at Landlord's sole option, elect to do the following:

(i)Grant some or all of the value of the tenant improvement allowance as an allowance for the refurbishment of the Premises; and

(ii)Reduce the Base Rent component of the Fair Market Rental Value to be an effective rental rate that takes into consideration the total dollar value of that portion of the tenant improvement allowance that Landlord has elected not to grant to Tenant (in which case that portion of the tenant improvement allowance evidenced in the effective rental rate shall not be granted to Tenant).

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51.3Determination of Fair Market Rental Value. The determination of Fair Market Rental Value shall be as provided in this Section 51.3.

(a)Negotiated Agreement. Landlord and Tenant shall diligently attempt in good faith to agree on the Fair Market Rental Value on or before the tenth (10th) day after Tenant's exercise of the Extension Option (the "Outside Agreement Date").

(b)Parties' Separate Determinations. If Landlord and Tenant fail to reach agreement on or before the Outside Agreement Date, Landlord and Tenant shall each make a separate determination of the Fair Market Rental Value and notify the other party of this determination within five (5) days after the Outside Agreement Date.

(iii)Two Determinations. If each party makes a timely determination of the Fair Market Rental Value, those determinations shall be submitted to arbitration in accordance with subsection (c).

(iv)One Determination. If Landlord or Tenant fails to make a determination of the Fair Market Rental Value within the five (5) day period, that failure shall be conclusively considered to be that party's approval of the Fair Market Rental Value submitted within the five (5) day period by the other party.

(c)Arbitration. If both parties make timely individual determinations of the Fair Market Rental Value under subsection (b), the Fair Market Rental Value shall be determined by arbitration under this subsection (c).

(i)Scope of Arbitration. The determination of the arbitrators shall be limited to the sole issue of whether Landlord's or Tenant's submitted Fair Market Rental Value is the closest to the actual Fair Market Rental Value as determined by the arbitrators, taking into account the requirements of Section 51.2.

(ii)Qualifications of Arbitrator(s). The arbitrators must be licensed real estate brokers who have been active in the leasing of commercial multi-story properties in the Market Area over the five-year period ending on the date of their appointment as arbitrator(s).

(iii)Parties' Appointment of Arbitrators. Within fifteen (15) days after the Outside Agreement Date, Landlord and Tenant shall each appoint one arbitrator and notify the other party of the arbitrator's name and business address.

(iv)Appointment of Third Arbitrator. If each party timely appoints an arbitrator, the two (2) arbitrators shall, within ten (10) days after the appointment of the second arbitrator, agree on and appoint a third arbitrator (who shall be qualified under the same criteria set forth above for qualification of the initial two (2) arbitrators) and provide notice to Landlord and Tenant of the arbitrator's name and business address.

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(v)Arbitrators' Decision. Within thirty (30) days after the appointment of the third arbitrator, the three (3) arbitrators shall decide whether the parties will use Landlord's or Tenant's submitted Fair Market Rental Value and shall notify Landlord and Tenant of their decision. The decision of the majority the three (3) arbitrators shall be binding on Landlord and Tenant.

(vi)If Only One Arbitrator is Appointed. If either Landlord or Tenant fails to appoint an arbitrator within fifteen (15) days after the Outside Agreement Date, the arbitrator timely appointed by one of them shall reach a decision and notify Landlord and Tenant of that decision within thirty (30) days after the arbitrator's appointment. The arbitrator's decision shall be binding on Landlord and Tenant.

(vii)If Only Two Arbitrators Are Appointed. If each party appoints an arbitrator in a timely manner, but the two (2) arbitrators fail to agree on and appoint a third arbitrator within the required period, the arbitrators shall be dismissed without delay and the issue of Fair Market Rental Value shall be submitted to binding arbitration under the real estate arbitration rules of JAMS, subject to the provisions of this section.

(viii)If No Arbitrator Is Appointed. If Landlord and Tenant each fail to appoint an arbitrator in a timely manner, the matter to be decided shall be submitted without delay to binding arbitration under the real estate arbitration rules of JAMS subject the provisions of this Section 51.3(c).

51.4Cost of Arbitration. The cost of the arbitration shall be paid by the party whose submitted Fair Market Rental Value is not selected by the arbitrators.

ARTICLE 52TELECOMMUNICATIONS LINES AND EQUIPMENT

52.1Location of Tenant's Equipment and Landlord Consent:

52.1.2Tenant may install, maintain, replace, remove and use communications or computer wires, cables and related devices (collectively, the "Lines") at the Building in or serving the Premises only with Landlord's prior written consent, which consent may not be unreasonably withheld. Tenant shall locate all electronic telecommunications equipment within the Premises and shall coordinate the location of all Lines with Landlord. Any request for consent shall contain such information as Landlord may request.

52.1.3Landlord's approval of, or requirements concerning, the Lines or any equipment related thereto, the plans, specifications or designs related thereto, the contractor or subcontractor, or the work performed hereunder, shall not be deemed a warranty as to the adequacy or appropriateness thereof, and Landlord hereby disclaims any responsibility or liability for the same.

52.1.4If Landlord consents to Tenant's proposal, Tenant shall pay all of Tenant's and Landlord's third party costs in connection therewith (including without limitation all

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costs related to new Lines) and shall use, maintain and operate the Lines and related equipment in accordance with and subject to all laws governing the Lines and equipment and at Tenant's sole risk and expense. Tenant shall comply with all of the requirements of this Lease concerning alterations in connection with installing the Lines. As soon as the work is completed, Tenant shall submit as-built drawings to Landlord.

52.1.5Landlord reserves the right to require that Tenant remove any Lines located in or serving the Premises which are installed in violation of these provisions, or which are at any time in violation of any laws or present a dangerous or potentially dangerous condition (whether such Lines were installed by Tenant or any other party), within three (3) days after written notice.

52.2Reallocation of Line Space. Landlord may (but shall not have the obligation to) (a) install and relocate Lines at the Building; and (b) monitor and control the installation, maintenance, replacement and removal of, the allocation and periodic re-allocation of available space (if any) for, and the allocation of excess capacity (if any) on, any Lines now or hereafter installed at the Building by Landlord, Tenant or any other party.

52.3Line Problems. Except to the extent arising from the gross negligence or willful misconduct of Landlord or Landlord's contractors, agents or employees, Landlord shall have no liability for damages arising from, and Landlord does not warrant that the Tenant's use of any Lines will be free from the following (collectively called "Line Problems"): (a) any shortages, failures, variations, interruptions, disconnections, loss or damage caused by the installation, maintenance, or replacement, use or removal of Lines by or for other tenants or occupants in the Building, by any failure of the environmental conditions or the power supply for the Building to conform to any requirement of the Lines or any associated equipment, or any other problems associated with any Lines by any other cause; (b) any failure of any Lines to satisfy Tenant's requirements; or (c) any eavesdropping or wiretapping by unauthorized parties. Landlord in no event shall be liable for damages by reason of loss of profits, business interruption or other consequential damage arising from any Line Problems.

52.4Electromagnetic Fields. If Tenant at any time uses any equipment that may create an electromagnetic field and/or radio frequency exceeding the normal insulation ratings of ordinary twisted pair riser cable or cause radiation higher than normal background radiation, Landlord reserves the right to require Tenant to appropriately insulate that equipment and the Lines therefor (including without limitation riser cables), and take such other remedial action at Tenant's sole cost and expense as Landlord may require in its sole discretion to prevent such excessive electromagnetic fields, radio frequency or radiation.

52.5Removal of Electrical and Telecommunications Wires.

52.5.1Within thirty (30) days after the expiration or sooner termination of the Lease, Landlord may elect by written notice to Tenant to:

(a)Retain any or all Lines installed by Tenant in the risers of the Building;

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(b)Remove any or all such Lines and restore the Premises and risers to their condition existing prior to the installation of the Lines ("Wire Restoration Work"). Landlord shall perform such Wire Restoration Work at Tenant's sole cost and expense; or

(c)Require Tenant to perform the Wire Restoration Work at Tenant's sole cost and expense.

52.5.2In the event Landlord elects to retain the Lines, Tenant covenants that Tenant shall have good right to surrender such Lines, free of all liens and encumbrances, and that all Lines shall be left in their then existing condition, reasonable wear and tear excepted, properly labeled at each end and in each telecommunications/electrical closet and junction box, and in safe condition.

52.5.3In the event Tenant fails or refuses to pay all costs of the Wire Restoration Work within thirty (30) days of Tenant's receipt of Landlord's notice requesting Tenant's reimbursement for or payment of such costs, Landlord may apply all or any portion of Tenant's Security Deposit toward the payment of such unpaid costs relative to the Wire Restoration Work. The retention or application of such Security Deposit by Landlord pursuant to this clause does not constitute a limitation on or waiver of Landlord's right to seek further remedy under law or equity. The provisions of this clause shall survive the expiration or sooner termination of the Lease.

ARTICLE 53ERISA

53.1It is understood that from time to time during the Lease Term, Landlord may be subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and as a result may be prohibited by law from engaging in certain transactions. Tenant represents and warrants to the best of its knowledge after due inquiry that at the time this Lease is entered into and at any time thereafter when its terms are amended or modified, neither Tenant nor its affiliates (within the meaning of part VI(c) of Department of Labor Prohibited Transaction Class Exemption 84-14 ("PTE 84-14", as amended), has or will have the authority to appoint or terminate The Prudential Insurance Company of America ("Prudential") as an investment manager to any employee benefit plan then holding a ten percent (10%) or greater interest in the Prudential separate account PRISA II, nor the authority to negotiate the terms of any management agreement between Prudential and any such employee pension benefit plan for its investment in PRISA II. Further, Tenant is not "related" to Prudential within the meaning of part VI(h) of PTE 84-14.

ARTICLE 54RIGHT OF FIRST OFFER

54.1As used herein, "Offer Space" means space on the first floor of the Building. Landlord may from time to time give Tenant a written notice (the "Availability Notice") identifying the particular Offer Space (the "Specific Offer Space") that is Available (as defined below). As used herein, "Available" means that the space (i) is not part of the Premises,

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(ii) is not then subject to a lease, (iii) is not then subject to any rights of a tenant to renew their lease or expand their premises as set forth in their lease (including without limitation any right of first refusal to lease or any right of expansion in favor of Yodlee, Inc., Delaware corporation (or its successors in interest) ("Yodlee")), and (iv) is not then subject to any negotiations between Landlord and a prospective tenant or an existing tenant. For purposes of this Article 54, space that is unleased as of the Commencement Date shall be considered to become Available only after the date that is nine (9) months after the Commencement Date. Until that date, Landlord shall have the right to lease such space without triggering Tenant's right of first offer. In addition, the term "Offer Space" shall exclude the Contraction Space until the expiration or earlier termination of a lease of the Contraction Space to Yodlee and the vacation of the Contraction Space by Yodlee.

54.2Tenant may inform Landlord (the "Request Notice") not more than once in any twelve (12) month period and not within six (6) months after receipt of an Availability Notice that Tenant desires to lease additional space. Landlord shall, within ten (10) business days of receiving the properly given Request Notice, deliver to Tenant an Availability Notice identifying Specific Offer Space that is Available or that Landlord in good faith determines will become Available during the twelve (12) month period after the Request Notice.

54.3The location and configuration of the Specific Offer Space shall be determined by Landlord in its reasonable discretion; provided that Landlord shall have no obligations to designate Specific Offer Space that would result in any space not included in the Specific Offer Space being not Configured For Leasing (as defined below). For purposes of this Lease, "Configured For Leasing" means the applicable space must have convenient access to the central corridor on the applicable floor and must have a size and configuration that complies with all applicable building codes and other laws and is such that Landlord judges, in its reasonable discretion, that Landlord will be able to lease such space to a third party. The Availability Notice shall:

(a)Describe the particular Specific Offer Space (including rentable area, usable area and location);

(b)Include an attached floor plan identifying such space;

(c)State the date (the "Specific Offer Space Delivery Date") the space will be available for delivery to Tenant; and

(d)Specify the Base Rent for the Specific Offer Space.

(e)Specify the increase in the security deposit that will apply to reflect the addition of the Specific Offer Space to the Premises.

(f)If the Specific Offer Space Delivery Date is after the third (3^rd) anniversary of the Commencement Date, specify the length of the term of the leasing of the Specific Offer Space that will be available (the "Specific Offer Space Term").

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54.4If Tenant wishes to exercise Tenant's rights set forth in this Article 55 with respect to the Specific Offer Space, then within five (5) business days of delivery of the Availability Notice to Tenant, Tenant shall deliver irrevocable notice to Landlord (the "First Offer Exercise Notice") offering to lease the Specific Offer Space on the terms and conditions as may be specified by Landlord in the Availability Notice.

54.5In the event Tenant fails to give a First Offer Exercise Notice in response to any Availability Notice, Tenant shall have no further rights to receive an Availability Notice and Tenant's rights under this Article 55 shall terminate and Landlord shall be free to lease the Offer Space to anyone on any terms at any time during the Term, without any obligation to provide Tenant with any further right to lease that space.

54.6If Tenant timely and validly gives the First Offer Exercise Notice, then beginning on the Specific Offer Space Delivery Date and continuing (i) if the Specific Offer Space Delivery Date is on or before the third (3^rd) anniversary of the Commencement Date, for the balance of the Term (including any extensions), or (ii) if the Specific Offer Space Delivery Date is after the third (3^rd) anniversary of the Commencement Date, for the Specific Offer Space Term:

(a)The Specific Offer Space shall be part of the Premises under this Lease (so that the term "Premises" in this Lease shall refer to the space in the Premises immediately before the Specific Offer Space Delivery Date plus the Specific Offer Space);

(b)Tenant's Building Percentage shall be adjusted to reflect the increased rentable area of the Premises.

(c)Base Rent for the Specific Offer Space shall be as specified in the Availability Notice.

(d)The security deposit Tenant must provide shall be increased by the amounts specified in the Availability Notice.

(e)Tenant's lease of the Specific Offer Space shall be on the same terms and conditions as affect the original Premises from time to time, except as otherwise provided in this section. Tenant's obligation to pay Rent with respect to the Specific Offer Space shall begin on the Specific Offer Space Delivery Date. The Specific Offer Space shall be leased to Tenant in its "as-is" condition and Landlord shall not be required to construct improvements in, or contribute any tenant improvement allowance for, the Specific Offer Space. Tenant's construction of any improvements in the Specific Offer Space shall comply with the terms of this Lease concerning alterations.

(f)If requested by Landlord, Landlord and Tenant shall confirm in writing the addition of the Specific Offer Space to the Premises on the terms and conditions set forth in this section, but Tenant's failure to execute or deliver such written confirmation shall not affect the enforceability of the First Offer Exercise Notice.

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54.7Tenant's rights and Landlord's obligations under this Article 54 are expressly subject to and conditioned upon there not existing an Event of Default by Tenant under this Lease, either at the time of delivery of the First Offer Exercise Notice or at the time the Specific Offer Space is to be added to the Premises.

54.8It is understood and agreed that Tenant's rights under this Article 54 are personal to Tenant and not transferable, except to a Permitted Transferee who is an assignee of Tenant’s entire interest in this Lease. In the event of any assignment (other than to a Permitted Transferee) or subletting of the Premises or any part thereof, this expansion right shall automatically terminate and shall thereafter be null and void.

[Signature pages follow.]

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IPASS INC.,
a Delaware corporationBy:_______________________________________
_______________________________________     [Printed Name and Title]
By:_______________________________________
_______________________________________     [Printed Name and Title]

If Tenant is a corporation, this instrument must be executed by the chairman of the board, the president or any vice president and the secretary, any assistant secretary, the chief financial officer or any assistant financial officer or any assistant treasurer of such corporation, unless the bylaws or a resolution of the board of directors shall otherwise provide, in which case the bylaws or a certified copy of the resolution, as the case may be, must be attached to this instrument.

Tenant's NAICS Code:    

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LANDLORD:
WESTPORT OFFICE PARK, LLC,
a California limited liability company

By:    THE PRUDENTIAL INSURANCE    COMPANY OF AMERICA, a New Jersey    corporation, acting solely on behalf of and    for the benefit of, and with its liability    limited to the assets of, its insurance     company separate account, PRISA II,     its member    By:_______________________________     _______________________________         [Printed Name and Title]

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EXHIBIT AThe Project

[Diagram of the Westport Office Park located in Redwood City, California.]

SMRH:422502059.9 Exhibit A

EXHIBIT B
PREMISES

(See Attached)

[Diagram of the leased premises.]

SMRH:422502059.9 Exhibit B

EXHIBIT C

TENANT IMPROVEMENTS

1.    Tenant, following the full and final execution and delivery of the Lease to which this Exhibit C is attached and insurance certificates required under the Lease, shall have the right to perform alterations and improvements in the Premises (the “Tenant Improvements”). Notwithstanding the foregoing, Tenant and its contractors shall not have the right to perform the Tenant Improvements in the Premises unless and until Tenant has complied with all of the terms and conditions of Article 14 of the Lease, including, without limitation, approval by Landlord of the final plans for the Tenant Improvements (which shall not be unreasonably withheld, conditioned or delayed) and the contractors to be retained by Tenant to perform such Tenant Improvements (which shall not be unreasonably withheld, conditioned or delayed). Tenant shall be responsible for all elements of the design of Tenant’s plans (including, without limitation, compliance with law, functionality of design, the structural integrity of the design, the configuration of the Premises and the placement of Tenant’s furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve Tenant of the responsibility for such design. In addition to the foregoing, Tenant shall be solely liable for all costs and expenses associated with or otherwise caused by Tenant’s performance and installment of the Tenant Improvements (except that Landlord shall be responsible, at Landlord’s cost not reimbursable as an Operating Expense, for any legal compliance requirements arising outside of the Premises provided that such Tenant Improvements are consistent with the Approved Plans (as defined below)). Landlord’s approval of the contractors to perform the Tenant Improvements shall not be unreasonably withheld. The parties agree that Landlord’s approval of the general contractor to perform the Tenant Improvements shall not be considered to be unreasonably withheld if any such general contractor (a) does not have trade references reasonably acceptable to Landlord, (b) does not maintain insurance as required pursuant to the terms of the Lease, (c) does not have the ability to be bonded for the work in an amount of no less than one hundred fifty percent (150%) of the total estimated cost of the Tenant Improvements, (d) does not provide current financial statements reasonably acceptable to Landlord, or (e) is not licensed as a contractor in the state/municipality in which the Premises is located. Tenant acknowledges the foregoing is not intended to be an exclusive list of the reasons why Landlord may reasonably withhold its consent to a general contractor. Notwithstanding anything to the contrary in this Exhibit C, Landlord shall be deemed to have acted reasonably in disapproving plans or designs if Landlord determines in good faith that the matter disapproved constitutes or would create a Design Problem (as defined below). As used herein, a “Design Problem” shall mean (i) adverse effect on the structural integrity of the Building; (ii) possible damage to the Building’s systems; (iii) non-compliance with applicable codes (but excluding any legal compliance requirements arising outside of the Premises to the extent such plans are consistent with the Approved Plans); (iv) adverse effect on the exterior appearance of the Building; (v) creation of the potential for unusual expenses to be incurred upon the removal of the alteration or improvement and the restoration of the Premises upon termination of this Lease, unless Tenant agrees to pay for the incremental removal costs caused by the non-typical alterations; (vi) creation of the potential for unusual expenses to be incurred in connection with the maintenance by Landlord of the alteration

SMRH:422502059.9 Exhibit C -1-

or improvement, unless Tenant agrees to pay for the incremental maintenance costs caused by the non-typical alterations, or (vii) a material effect any other tenant or occupant of the Building.

2.Provided Tenant is not in monetary default (beyond any applicable notice and cure periods), Landlord agrees to contribute up to $379,035.00 (i.e., $15.00 per rentable square foot of the Premises) (the “Tenant Improvement Allowance”) toward the cost of performing the Tenant Improvements. Except as provided below in Section 3, the Tenant Improvement Allowance may only be used for the cost of preparing design and construction documents and mechanical and electrical plans for the Tenant Improvements, obtaining any required permits, and for all hard and soft costs in connection with the Tenant Improvements. On or before the twenty-fifth (25th) day of each calendar month during the construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for payment of Tenant's Contractor, approved by Tenant, in a form to be provided by Landlord; (ii) invoices for labor rendered and materials delivered to the Premises; (iii) executed mechanic's lien releases from persons having performed the work for which reimbursement is sought, which shall comply with the appropriate provisions, as reasonably determined by Landlord, of California Civil Code Sections 8132, 8134, 8136 or 8138; and (iv) all other information reasonably requested by Landlord. On or before the last day of the following calendar month, Landlord shall deliver a check to Tenant in payment of the lesser of (A) the amounts so requested by Tenant, less a ten percent (10%) retention (the aggregate amount of such retentions to be known as the "Final Retention") and (B) the balance of any remaining available portion of the Tenant Improvement Allowance (not including the Final Retention), provided that Landlord does not dispute any request for payment based on non-compliance of any work with the drawings approved by Landlord or due to any substandard work. Landlord's payment of such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or materials supplied as set forth in Tenant's payment request. To the extent a payment request already reflects a 10% retention, then so long as the undisbursed portion of the Tenant Improvement Allowance does not exceed the Final Retention (i.e., an amount equal to 10% of the Tenant Improvement Allowance), Landlord agrees not to withhold the retention from the payment of the payment request. At such time as Landlord has made disbursements under this Section 2 in an amount equal to 90% of the Tenant Improvement Allowance, the remaining undisbursed portion of the Tenant Improvement Allowance shall be held as the Final Retention and disbursed as provided below. A check for the Final Retention payable to Tenant shall be delivered by Landlord to Tenant following the completion of construction of the Tenant Improvements, provided that (i) Tenant delivers to Landlord properly executed mechanics lien releases in compliance with both California Civil Code Section 8134 and either Section 8136 or Section 8138, and (ii) Landlord has determined that no substandard work exists which materially adversely affects the mechanical, electrical, plumbing, heating, ventilating and air conditioning, life-safety or other systems of the Building, the curtain wall of the Building, the structure or exterior appearance of the Building, or any other tenant's use of such other tenant's leased premises in the Building. Notwithstanding anything herein to the contrary, Landlord shall not be obligated to disburse any portion of the Tenant Improvement Allowance during the continuance of an uncured default under the Lease, and Landlord’s obligation to disburse shall only resume when and if such default is cured.

SMRH:422502059.9 Exhibit C -2-

3.    Except as provided herein, in no event shall the Tenant Improvement Allowance be used for the purchase of equipment, furniture or other items of personal property of Tenant. Tenant shall be responsible for all applicable state sales or use taxes, if any, payable in connection with the Tenant Improvements and/or Tenant Improvement Allowance. Notwithstanding anything to the contrary set forth herein, Tenant shall be entitled to apply up to $10.00 per rentable square foot of the Premises (that is, up to $252,690.00) of the Tenant Improvement Allowance as follows: (i) to the cost of purchasing and installing Tenant’s voice and data cabling and wiring at the Premises, and (ii) to the cost of purchasing and installing furniture, fixtures and equipment (with respect to clause (ii) only, collectively referred to herein as the “FF&E”), which FF&E shall be located at all times at the Premises and for use by Tenant in the Premises. To the extent any Tenant Improvement Allowance is applied to any FF&E, Landlord shall own all the FF&E until the expiration of the Lease (provided that Tenant, not Landlord, shall be responsible for all costs associated with such FF&E, including, without limitation, the cost of insuring the same, all maintenance and repair costs and taxes), at which time the FF&E shall become the property of Tenant as if by bill of sale hereunder. Tenant shall maintain and repair the FF&E in good and working order and shall insure the FF&E to the same extent Tenant is required to insure Tenant’s personal property pursuant to the terms of the Lease. In the event that the Lease is terminated prior to the Expiration Date, Tenant, at Landlord’s election, shall pay to Landlord the unamortized portion of the costs of the FF&E (no later than the termination date of the Lease), or, at Landlord’s election, the FF&E shall remain the property of Landlord and Tenant shall and, in such event, hereby does, waive all of its rights thereto. If Tenant does not submit a request for payment of the entire Tenant Improvement Allowance to Landlord in accordance with the provisions contained in this Exhibit C by December 31, 2015, any unused amount shall accrue to the sole benefit of Landlord, it being understood that Tenant shall not be entitled to any credit, abatement or other concession in connection therewith.

4.    In addition to the Tenant Improvement Allowance, provided Tenant is not in monetary default beyond any applicable notice and cure period, Landlord agrees to reimburse Tenant for the cost of installing paint and carpet in the Premises as provided in this Section 4 (the “Reimbursement”). The amount of the Reimbursement shall not exceed the sum of $7.50 times the number of rentable square feet in the Premises. The Reimbursement shall be paid in the same manner, and subject to the same conditions, as the Tenant Improvement Allowance, except that plans shall not be required. If Tenant does not submit a request for payment of the entire Reimbursement to Landlord in accordance with the provisions contained in this Exhibit C by December 31, 2015, any unused amount shall accrue to the sole benefit of Landlord, it being understood the Tenant shall not be entitled to any credit, abatement or other concession in connection there with.

5.    Subject to compliance with the terms of this Exhibit C, Tenant shall have the exclusive right to install, at Tenant's sole cost and expense, a security/card key system for access to the restrooms on the second floor of the Building as part of the Tenant Improvements; provided that (a) Landlord (but not any other tenants) is given reasonable access to the restrooms, (b) any such security system installed by Tenant complies with all Applicable Laws, (c) the plans and specifications for any such system shall be subject to Landlord's prior written approval which shall not be unreasonably withheld, conditioned or delayed, and (d) any such system shall be

SMRH:422502059.9 Exhibit C -3-

compatible with the Building's structure and systems. In no event shall Landlord have any liability or responsibility for the operation, maintenance or monitoring of any security system installed by Tenant and any additional costs incurred for any such monitoring, operation or maintenance and for any modification to the Building necessary as a result of the installation or operation of such system shall be paid by Tenant. Tenant shall not be entitled to use any portion of the Tenant Improvement Allowance for the cost of such system. On the expiration or earlier termination of this Lease, Tenant shall remove the security system and restore the Premises to the condition existing prior to the installation of that system at Tenant's sole cost and expense.

6.    Landlord shall not be required to perform any work or, except as provided above with respect to the Tenant Improvement Allowance, incur any costs in connection with the construction or demolition of any improvements in the Premises; provided that the foregoing shall not limit Landlord's ongoing maintenance obligations under the Lease.

7.    This Exhibit C shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original Term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.

8.    Landlord agrees that Landlord will not require Tenant to remove any of the Tenant Improvements shown on Exhibit C-1, attached hereto (the “Approved Plans”).

SMRH:422502059.9 Exhibit C -4-

EXHIBIT C-1

PLANS

[Diagram of the new floor plan with tenant improvements.]

SMRH:422502059.9 Exhibit C-1
-1-

EXHIBIT D

RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and Regulations:

1.    Except in connection with Tenant's work (if any) under Exhibit C, Tenant shall not alter any locks or install any new or additional locks or bolts on any doors or windows of the Premises without obtaining Landlord's prior written consent. Tenant shall bear the cost of any lock changes or repairs required by Tenant and Tenant shall promptly deliver any new keys to Landlord.

2.    All doors opening to public corridors shall be kept closed at all times except for normal ingress and egress to the Premises. Tenant shall assume any and all responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.

3.    Tenant, its employees and agents must be sure that the entry doors to the Premises are securely closed and locked when leaving the Premises if it is after the normal hours of business of the Project. Tenant, its employees, agents or any other persons entering or leaving the Project at any time when it is so locked, or any time when it is considered to be after normal business hours for the Project, may be required to sign the Project register. Access to the Project may be refused unless the person seeking access has proper identification or has a previously received authorization for access to the Project. Landlord and its agents shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Project of any person. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Project during the continuance thereof by any means it deems appropriate for the safety and protection of life and property.

4.    Landlord reserves the right, in the event of an emergency in Landlord's reasonable discretion, to close or limit access to the Project and/or the Premises, from time to time, due to damage to the Project and/or the Premises, to ensure the safety of persons or property or due to government order or directive, and Tenant agrees to immediately comply with any such reasonable decision by Landlord. If Landlord closes or limits access to the Project and/or the Premises for the reasons described above, Landlord's actions shall not constitute a breach of the Lease.

5.    Tenant shall not disturb, solicit, or canvass any occupant of the Project and shall cooperate with Landlord and its agents to prevent the same. Tenant, its employees and agents shall not loiter in or on the entrances, corridors, sidewalks, lobbies, halls, stairways, elevators, or any Common Areas for the purposes of smoking tobacco products or for any other purpose, nor in any way obstruct such areas, and shall use them only as a means of ingress and egress for the Premises. Smoking shall not be permitted in the Common Areas.

6.    The toilet rooms, urinals and wash bowls shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall

SMRH:422502059.9 Exhibit D
-1-

be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenants who, or whose employees or agents, shall have caused it.

7.    Except for vending machines intended for the sole use of Tenant's employees and invitees, no vending machine or machines other than fractional horsepower office machines shall be installed, maintained or operated upon the Premises without the written consent of Landlord. All vendors or other persons visiting the Premises shall be subject to the reasonable control of Landlord. Tenant shall not permit its vendors or other persons visiting the Premises to solicit other tenants of the Project.

8.    Tenant shall not use or keep in or on the Premises or the Project any kerosene, gasoline or other inflammable or combustible fluid or material, except as otherwise permitted in the Lease. Tenant shall not bring into or keep within the Premises or the Project any animals, birds or vehicles (other than passenger vehicles, forklifts or bicycles).

9.    Tenant shall not use, keep or permit to be used or kept, any noxious gas or substance in or on the Premises or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Project by reason of noise, odors, or vibrations, or to otherwise unreasonably interfere with the use of the Project by other tenants.

10.    No cooking shall be done or permitted on the Premises nor shall the Premises be used for the storage of merchandise, for loading or for any improper, objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters' Laboratory approved equipment and microwave ovens may be used in the Premises for heating food and brewing coffee, tea, hot chocolate and similar beverages for employees and visitors of Tenant, provided that such use is in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations; and provided further that such cooking does not result in odors escaping from the Premises.

11.    Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules and Regulations.

12.    No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash in the vicinity of the Project without violation of any law or ordinance governing such disposal. All trash, garbage and refuse disposal shall be made only through entry-ways and elevators provided for such purposes at such times as Landlord shall designate.

13.    Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

14.    Tenant acknowledges that the local fire department has previously required Landlord to participate in a fire and emergency preparedness program or may require Landlord

SMRH:422502059.9 Exhibit D
-2-

and/or Tenant to participate in such a program in the future. Tenant agrees to take all actions reasonably necessary to comply with the requirements of such a program including, but not limited to, designating certain employees as "fire wardens" and requiring them to attend any necessary classes and meetings and to perform any required functions.

15.    Tenant and its employees shall comply with all federal, state and local recycling and/or resource conservation laws and shall take all actions reasonably requested by Landlord in order to comply with such laws. Tenant shall comply with and participate in any program for metering or otherwise measuring the use of utilities and services, including, without limitation, programs requiring the disclosure or reporting of the use of any utilities or services. Tenant shall also cooperate and comply with, participate in, and assist in the implementation of (and take no action that is inconsistent with, or which would result in Landlord, the Building and/or the Project failing to comply with the requirements of) any conservation, sustainability, recycling, energy efficiency, and waste reduction programs, environmental protection efforts and/or other programs that are in place and/or implemented from time to time at the Building and/or the Project, including, without limitation, any required reporting, disclosure, rating or compliance system or program (including, but not limited to any LEED ([Leadership in Energy and Environmental Design] rating or compliance system, including those currently coordinated through the U.S. Green Building Council).

Landlord reserves the right at any time to reasonably change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable and nondiscriminatory Rules and Regulations as in Landlord's judgment may from time to time be necessary for the management, safety, care and cleanliness of the Project, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Project. Landlord, however, shall apply such Rules and Regulations in a nondiscriminatory manner. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them.

SMRH:422502059.9 Exhibit D
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EXHIBIT E
PARKING RULES

1.    Parking areas shall be used only for parking by vehicles no longer than full size, passenger automobiles, pickup trucks and sport utility vehicles. Tenant and its employees shall park automobiles within the lines of the parking spaces.

2.    Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities. Users of the parking area will obey all posted signs and park only in the areas designated for vehicle parking.

3.    Parking stickers and parking cards, if any, shall be the property of Landlord and shall be returned to Landlord by the holder thereof upon termination of the holder's parking privileges. Landlord may require Tenant and each of its employees to give Landlord a commercially reasonable deposit when a parking card or other parking device is issued. Landlord shall not be obligated to return the deposit unless and until the parking card or other device is returned to Landlord. Tenant will pay such replacement charges as is reasonably established by Landlord for the loss of such devices. Loss or theft of parking identification stickers or devices from automobiles must be reported to the parking operator immediately. Any parking identification stickers reported lost or stolen found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution.

4.    Unless otherwise instructed, every person using the parking area is required to park and, lock his own vehicle. Landlord will not be responsible for any damage to vehicles, injury to persons or loss of property, all of which risks are assumed by the party using the parking area.

5.    The maintenance, washing, waxing or cleaning of vehicles in the parking structure or Common Areas is prohibited.

6.    Tenant shall be responsible for seeing that all of its employees, agents and invitees comply with the applicable parking rules, regulations, laws, and agreements. Parking area managers or attendants, if any, are not authorized to make or allow any exceptions to these Parking Rules and Regulations. Landlord reserves the right to terminate parking rights for any person or entity that willfully refuses to comply with these rules and regulations.

7.    Every driver is required to park his or her own car. Tenant agrees that all responsibility for damage to cars or the theft of or from cars is assumed by the driver, and further agrees that Tenant will hold Landlord harmless for any such damages or theft.

8.    No vehicles shall be parked in the parking areas overnight except for employees or guests of Tenant who are traveling and leave their cars overnight from time to time. The parking area shall only be used for daily parking (except per the preceding sentence) and no vehicle or other property shall be stored in a parking space.

SMRH:422502059.9 Exhibit E
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9.    Any vehicle parked by Tenant, its employees, contractors or visitors in a reserved parking space or in any area of the parking area that is not designated for the parking of such a vehicle may, at Landlord's option, and without notice or demand, be towed away by any towing company selected by Landlord, and the cost of such towing shall be paid for by Tenant and/or the driver of said vehicle.

Landlord reserves the right at any time to reasonably change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable and nondiscriminatory Rules and Regulations as in Landlord's judgment may from time to time be necessary for the management, safety, care and cleanliness of the Project, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Project. Landlord, however, shall apply such Rules and Regulations in a nondiscriminatory manner. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them.

SMRH:422502059.9 Exhibit E
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EXHIBIT F
[INTENTIONALLY OMITTED]

SMRH:422502059.9 Exhibit F
-1-

EXHIBIT G
STANDARDS FOR UTILITIES AND SERVICES

The following Standards for Utilities and Services are in effect. Landlord reserves the right to adopt nondiscriminatory modifications and additions hereto:

As long as Tenant is not in monetary default (beyond any applicable notice and cure periods) under any of the terms, covenants, conditions, provisions, or agreements of this Lease, Landlord shall:

(a)    On Monday through Friday, except holidays, from 8 A.M. to 6 P.M. (and other times for a reasonable additional charge to be fixed by Landlord), ventilate the Premises and furnish air conditioning or heating on such days and hours, when in the judgment of Landlord it may be required for the comfortable occupancy of the Premises. The air conditioning system achieves maximum cooling when the window coverings are closed. Landlord shall not be responsible for room temperatures if Tenant does not keep all window coverings in the Premises closed whenever the system is in operation. Tenant agrees to cooperate fully at all times with Landlord, and to abide by all regulations and requirements which Landlord may prescribe for the proper function and protection of said air conditioning system. Tenant agrees not to connect any apparatus, device, conduit or pipe to the Building chilled and hot water air conditioning supply lines. Tenant further agrees that neither Tenant nor its servants, employees, agents, visitors, licensees or contractors shall at any time enter mechanical installations or facilities of the Building or adjust, tamper with, touch or otherwise in any manner affect said installations or facilities. The cost of maintenance and service calls to adjust and regulate the air conditioning system shall be charged to Tenant if the need for maintenance work results from either Tenant's adjustment of room thermostats or Tenant's failure to comply with its obligations under this section, including keeping window coverings closed as needed. Such work shall be charged at hourly rates equal to then current journeymen's wages for air conditioning mechanics.

(b)    Landlord reserves the right to charge Tenant for the cost to Landlord of providing such after-hours heating and air-conditioning.

(c)    Landlord shall furnish to the Premises, during the usual business hours on business days, electric current sufficient for normal office use. Tenant agrees, should its electrical installation or electrical consumption be in excess of the aforesaid quantity or extend beyond normal business hours, to reimburse Landlord monthly for the measured consumption at the average cost per kilowatt hour charged to the Building during the period. If a separate meter is not installed at Tenant's cost, such excess cost will be established by an estimate agreed upon by Landlord and Tenant, and if the parties fail to agree, as established by an independent licensed engineer. Said estimates to be reviewed and adjusted quarterly. Tenant agrees not to use any apparatus or device in, or upon, or about the Premises which may in any way increase the amount of such services usually furnished or supplied to said Premises, and Tenant further agrees not to connect any apparatus or device with wires, conduits or pipes, or other means by which such services are supplied, for the purpose of using additional or unusual amounts of such

SMRH:422502059.9 Exhibit G
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services without written consent of Landlord. Should Tenant use the same to excess, the refusal on the part of Tenant to pay upon demand of Landlord the amount established by Landlord for such excess charge shall constitute a breach of the obligation to pay Rent under this Lease and shall entitle Landlord to the rights therein granted for such breach. At all times Tenant's use of electric current shall never exceed the capacity of the feeders to the Building or the risers or wiring installation and Tenants shall not install or use or permit the installation or use of any computer, larger than personal computer, or electronic data processing equipment in the Premises, without the prior written consent of Landlord. If Tenant is billed directly by a public utility with respect to Tenant's electrical usage at the Premises, upon request from time to time, Tenant shall provide monthly electrical utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord's option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant's electricity usage with respect to the Premises directly from the applicable utility company.

(d)    Water will be available in public areas for drinking and lavatory purposes only, but if Tenant requires, uses or consumes water for any purposes in addition to ordinary drinking and lavatory purposes of which fact Tenant constitutes Landlord to be the sole judge, Landlord may install a water meter and thereby measure Tenant's water consumption for all purposes. Tenant shall pay Landlord for the cost of the meter and the cost of the installation thereof and throughout the duration of Tenant's occupancy Tenant shall keep said meter and installation equipment in good working order and repair at Tenant's own cost and expense, in default of which Landlord may cause such meter and equipment to be replaced or repaired and collect the cost thereof from Tenant. Tenant agrees to pay for water consumed, as shown on said meter, as and when bills are rendered, and on default in making such payment, Landlord may pay such charges and collect the same from Tenant. Any such costs or expenses incurred, or payments made by Landlord for any of the reasons or purposes hereinabove stated shall be deemed to be additional rent payable by Tenant and collectible by Landlord as such.

(e)    Landlord reserves the right to stop service of the elevator, plumbing, ventilation, air conditioning and electric systems, when necessary, by reason of accident or emergency or for repairs, alterations or improvements, in the judgment of Landlord desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed, and shall further have no responsibility or liability for failure to supply elevator facilities, plumbing, ventilating, air conditioning or electric service, when prevented from so doing by strike or accident or by any cause beyond Landlord's reasonable control, or by laws, rules, orders, ordinances, directions, regulations or requirements of any federal, state, county or municipal authority or failure of gas, oil or other suitable fuel supply or inability by exercise of reasonable diligence to obtain gas, oil or other suitable fuel. It is expressly understood and agreed that any covenants on Landlord's part to furnish any service pursuant to any of the terms, covenants, conditions, provisions or agreements of this Lease, or to perform any act or thing for the benefit of Tenant, shall not be deemed breached if Landlord is unable to furnish or perform the same by virtue of a strike or labor trouble or any other cause whatsoever beyond Landlord's control.

SMRH:422502059.9 Exhibit G
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EXHIBIT H

COPY OF ORDER

(See Attached.)

[California Regional Water Quality Control Board San Francisco Bay Region

Order No. R2-2003-0074 Updated Waste Discharge Requirements and Rescission of Order No. 94-181 for: Westport Landfill John Arrillaga Survivor’s Trust, The Peery Private Investment Company, Peery Public Investment Company Redwood City, San Mateo County]

SMRH:422502059.9 Exhibit H -1-

EXHIBIT I

CONTRACTION SPACE

(See Attached.)

[First Floor Suite 102 Lease Diagram]

SMRH:422502059.9 Exhibit I
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TABLE OF CONTENTS

	Page
ARTICLE 1 PREMISES; COMMON AREAS	4
ARTICLE 2 TERM AND CONDITION OF PREMISES	5
ARTICLE 3 USE, NUISANCE, OR HAZARD	7
ARTICLE 4 RENT	7
ARTICLE 5 RENT ADJUSTMENT	9
ARTICLE 6 SERVICES TO BE PROVIDED BY LANDLORD	18
ARTICLE 7 REPAIRS AND MAINTENANCE BY LANDLORD	20
ARTICLE 8 REPAIRS AND CARE OF PROJECT BY TENANT	21
ARTICLE 9 TENANT'S EQUIPMENT AND INSTALLATIONS	22
ARTICLE 10 FORCE MAJEURE	22
ARTICLE 11 CONSTRUCTION, MECHANICS' AND MATERIALMAN'S LIENS	23
ARTICLE 12 ARBITRATION	23
ARTICLE 13 INSURANCE	24
ARTICLE 14 QUIET ENJOYMENT	26
ARTICLE 15 ALTERATIONS	26
ARTICLE 16 FURNITURE, FIXTURES, AND PERSONAL PROPERTY	28
ARTICLE 17 PERSONAL PROPERTY AND OTHER TAXES	29
ARTICLE 18 ASSIGNMENT AND SUBLETTING	30
ARTICLE 19 DAMAGE OR DESTRUCTION	35
ARTICLE 20 CONDEMNATION	38
ARTICLE 21 HOLD HARMLESS	39
ARTICLE 22 DEFAULT BY TENANT	39
ARTICLE 23 INTENTIONALLY OMITTED	44
ARTICLE 24 INTENTIONALLY OMITTED	44
ARTICLE 25 ATTORNEYS' FEES	44
ARTICLE 26 NON-WAIVER	45
ARTICLE 27 RULES AND REGULATIONS	45
ARTICLE 28 ASSIGNMENT BY LANDLORD	45
ARTICLE 29 LIABILITY OF LANDLORD	45
ARTICLE 30 SUBORDINATION AND ATTORNMENT	46
ARTICLE 31 HOLDING OVER	47
ARTICLE 32 SIGNS	48
ARTICLE 33 HAZARDOUS SUBSTANCES	48
ARTICLE 34 COMPLIANCE WITH LAWS AND OTHER REGULATIONS	51
ARTICLE 35 SEVERABILITY	53
ARTICLE 36 NOTICES	53

SMRH:422502059.9 -i-

ARTICLE 37 OBLIGATIONS OF, SUCCESSORS, PLURALITY, GENDER	53
ARTICLE 38 ENTIRE AGREEMENT	54
ARTICLE 39 CAPTIONS	54
ARTICLE 40 CHANGES	54
ARTICLE 41 AUTHORITY	54
ARTICLE 42 BROKERAGE	55
ARTICLE 43 EXHIBITS	55
ARTICLE 44 APPURTENANCES	55
ARTICLE 45 PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM, AND JURY	56
ARTICLE 46 RECORDING	56
ARTICLE 47 MORTGAGEE PROTECTION	56
ARTICLE 48 OTHER LANDLORD CONSTRUCTION	57
ARTICLE 49 PARKING	57
ARTICLE 50 ELECTRICAL CAPACITY	58
ARTICLE 51 OPTION TO EXTEND LEASE	58
ARTICLE 52 TELECOMMUNICATIONS LINES AND EQUIPMENT	61
ARTICLE 53 ERISA	63
ARTICLE 54 RIGHT OF FIRST OFFER	63

SMRH:422502059.9 -ii-

EX-10.28

EXHIBIT 10.28

February 16, 2015

Gary Griffiths

Re:    Employment Offer Letter Agreement

Dear Gary,

iPass Inc. (the “Company”) is pleased to offer you the positions of President and Chief Executive Officer of the Company, reporting to the Company’s Board of Directors (the “Board”). The following letter agreement (the “Agreement”) provides the terms of our offer of employment.

I.    GENERAL TERMS OF EMPLOYMENT.

(1)    Duties and Position. You will be employed in the positions of President and Chief Executive Officer of the Company (“CEO”), reporting to the Board. You shall perform the duties of President and CEO as commonly associated with this position in the Company, as specified in the Bylaws of the Company, and as directed by the Board. If your employment with the Company terminates for any reason, you agree, if requested by the Board, to promptly tender your resignation from the Board.

(2)    Start Date. Your first date of employment will be February 23, 2015 (“Start Date”); provided, however, that you shall not assume the title or role of President and CEO until the first business day after the Company’s filing with the Securities and Exchange Commission of a Form 10-K for the year ending on December 31, 2014.

(3)    Work Location and Other Activities. You will work at the Company’s corporate headquarters which are currently located in Redwood Shores, California, subject to necessary business travel. During your employment with the Company, you will devote your best efforts and substantially all of your business time and attention (except for vacation periods and reasonable periods of illness or other incapacity permitted by the Company’s general employment policies) to the business of the Company; provided, however, that you may serve as a director of one other corporation, provided that the name of this other corporation is disclosed in advance to the Board and the Board has determined that your director position with such other corporation will not present a conflict of interest with the Company. You may also spend time on charitable and other such activities, so long as they do not materially impact your ability to perform your duties under this Agreement.

(4)    Company Policies and Procedures. Your employment relationship with the Company also shall be governed by the general employment policies and procedures of the Company (including the Company’s Code of Conduct) (as may be changed from time to time in the discretion of the Company), and you agree to comply with these polices and procedures, except that if the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or procedures, this Agreement will control.

II.    BASE SALARY AND BONUS.

(1) Base Salary. You will be paid an initial annual salary of $260,000 per year (or $10,833.34 semi-monthly), less standard deductions and withholdings. Your cash compensation will next be reviewed by the Board for potential adjustment beginning in calendar year 2017, and will be reviewed annually thereafter in conjunction with the annual Board review of executive compensation, and will be based upon the Board’s assessment of both your performance and the Company’s performance.

(2)    Annual Bonus. You also will be eligible to earn an annual bonus for each calendar year beginning with calendar year 2015 during your employment if the performance goals established each year as part of the management incentive plan are achieved. The initial annual bonus target amount will be $325,000, less standard deductions and withholdings and the 2015 Bonus Target will be pro-rated for the percentage of the year since your Start Date. The Board, in consultation with you, will set the performance goals for each year. The Board will have the sole discretion to determine whether the goals have been achieved and to determine the amount of any bonus.

III.    EQUITY AWARDS.

(1)    Stock Option Grant. Subject to the approval of the Board, you will be granted an option to purchase 1,750,000 shares of Company common stock (the “Options”), with an exercise price equal to the fair market value of the Company’s common stock as of the date of grant, pursuant to the Company’s 2003 Equity Incentive Plan (the “Plan”). The Option will vest with respect to 25% of the shares subject to the Option on the first anniversary of the Start Date, and thereafter in a series of thirty-six (36) successive equal monthly installments over the three-year period measured from the first anniversary of the Start Date, so long as you remain in continuous service with the Company on each applicable vesting date. The Option shall be governed by the terms and conditions set forth in the Plan, and in the applicable stock option agreement and grant document.

(2)    Performance Shares. Subject to the approval of the Board, you will be granted performance shares covering 1,000,000 shares of the Company’s common stock (the “Performance Shares”). The Performance Shares shall be governed by the terms and conditions set forth in the Plan, and the applicable performance shares award agreement and grant document. The Performance Shares shall be subject to a right of repurchase in favor of the Company unless earned and vested.

IV.    EMPLOYEE BENEFITS.

You will be entitled to participate in the Company’s standard employee benefit plans pursuant to the terms and conditions of the benefit plans. The Company currently offers its employees health, dental, vision, life, AD&D, short term and long term disability insurance, and 401(k) plan participation. The Company may modify benefits from time to time in its discretion.

V.    CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT.

As a condition of employment, you are required to sign and abide by the Company’s standard Employee Confidentiality and Inventions Assignment Agreement (the “Confidentiality Agreement”), a copy of which has been provided to you and which is incorporated herein by reference.

VI. AT-WILL EMPLOYMENT STATUS, SEVERANCE AND CORPORATE TRANSACTION BENEFITS.

(1)    At-Will Employment Status. Your employment with the Company is at the will of each party, is not for a specific term and can be terminated by you or by the Company at any time, with or without Cause, and with or without advance notice.

(2)    Severance. If: (i) the Company terminates your employment without Cause, you resign for Good Reason, and provided such termination or resignation, as applicable, qualifies as a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h) (each, a “Covered Termination”); and (ii) you sign, date, return to the Company within forty-five (45) days following the Covered Termination and allow to become effective a general release of all known and unknown claims in the form as shall be provided to you by the Company (which may, at the Company’s election, be contained in a separation agreement) (the “Release”); and (iii) if requested by the Board, you promptly tender your resignation as a director of the Board and your resignation from any director or officer of any Company subsidiary; then you will be eligible to receive, as your sole severance benefits (the “Severance Benefits”):

(a)    Base Salary Severance. You will receive cash severance equal to twelve (12) months of your base salary in effect as of the date of the Covered Termination (the “Termination Date”), subject to required payroll deductions and withholdings, paid in a lump sum within ten (10) business days after the effective date of the Release.

(b)    Additional Lump Sum Severance Bonus Payment. You will receive an additional lump sum cash severance payment, with the amount of such additional lump sum severance payment to be (i) the pro rata portion of the annual bonus for the year served to the Termination Date, less any amounts already paid for that year, such pro rata portion to be paid will be calculated by using the average percentage of your target bonus with respect to your quarterly bonus payments in that year (or if first quarter bonus has not yet been determined, the percentage target bonus paid for the prior year); plus (ii) target bonus for that year multiplied by the percentage equal to the actual bonus paid over the prior four quarters divided by target bonus for the prior four quarters (collectively, the “Additional Severance Payment”). If paid, the Additional Severance Payment will be subject to required payroll deductions and withholdings and paid in a lump sum within ten (10) business days after the effective date of the Release.

(c)    Health Insurance. If you timely elect continued group health insurance coverage pursuant to federal COBRA law or comparable state insurance laws (collectively, “COBRA”), the Company will 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 Termination Date, through the earlier of either (i) eighteen (18) months after the Termination Date, or (ii) the date that you become eligible for group health insurance coverage through another employer.  In the event you receive the Severance Benefits, you must promptly notify the Company in writing if you become eligible for group health insurance coverage through another employer within eighteen (18) months after the Termination Date.

(d)    Equity Award Acceleration and Extended Exercisability.   Subject to Section VI(3) below, you will receive accelerated vesting of the time-based component of any equity awards which are not fully vested (excluding any performance-related stock options or Performance Shares that have not been earned) as of the Termination Date (collectively, the “Equity Awards”), in the amount of twelve (12) months of vesting acceleration, effective as of the Termination Date, and with respect to Equity Awards that are stock options, each vested stock option shall remain exercisable for the lesser of (i) the maximum term provided in the option grant or (ii) the period ending nine (9) months following the Termination Date.

(3)    Corporate Transaction Benefits.

(a)    Accelerated Vesting. Immediately upon the closing of a Corporate Transaction, any specified performance target or other vesting condition, whether determined by passage of time or by reference to performance targets or operations of the Company or an Affiliate (as defined below), in any Equity Awards issued to you pursuant to any equity incentive plan of the Company shall immediately be deemed satisfied.

(b)    Severance In the Event of a Covered Termination Within Eighteen (18) Months After the Consummation of a Corporate Transaction. If: (i) within eighteen (18) months after the consummation of a Corporate Transaction, the Company terminates your employment without Cause or you resign for Good Reason (each, a “Covered Termination”), and provided such termination or resignation, as applicable, qualifies as a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h); and (ii) you sign, date, return to the Company within forty-five days following the Covered Termination and allow to become effective a general release of all known and unknown claims in the form as shall be provided to you by the Company (which may, at the Company’s election, be contained in a separation agreement) (the “Release”); and (iii) you promptly tender your resignation as a director on the Board and your resignation from any director or officer positions of any Company subsidiary; then, in lieu of the Severance Benefits set forth in Section VI(2) herein, you will be eligible to receive, as your sole severance benefits:

(A)    Base Salary Severance. You will receive cash severance equal to twelve (12) months of your base salary in effect as of the date of the Covered Termination (the “Termination Date”), subject to required payroll deductions and withholdings, paid in a lump sum within ten (10) business days after the effective date of the Release.

(B)    Additional Lump Sum Severance Bonus Payment. You will receive an additional lump sum cash severance payment in an amount equal to twelve (12) months of your then-current annual target bonus (the “Additional Severance Payment”). If paid, the Additional Severance Payment will be subject to required payroll deductions and withholdings and paid in a lump sum within ten (10) business days after the effective date of the Release.

(C)    Health Insurance. If you timely elect continued group health insurance coverage pursuant to federal COBRA law or comparable state insurance laws (collectively, “COBRA”), the Company will 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 Termination Date, through the earlier of either: (i) eighteen (18) months after the Termination Date; or (ii) the date that you become eligible for group health insurance through another employer. In the event you receive the Severance Benefits, you must promptly notify the Company in writing if you become eligible for group health insurance coverage through another employer within eighteen (18) months after the Termination Date.

(D)    Accounting and Tax Expenses. You will be reimbursed for amounts reasonably incurred by you for personal accounting and tax services in connection with a Corporate Transaction (even if such services are provided prior to the closing of the Corporate Transaction), up to a maximum of $15,000.

(4)    Definitions. For purposes of this Agreement, the following definitions will apply:

(a)    Definition of Affiliate. “Affiliate” means a “parent corporation” of the Company or a “subsidiary corporation” of the Company (whether now or hereafter existing), as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended (the “Code”).

(b)    Definition of Cause. “Cause” shall mean the occurrence of any of the following (and only the following): (i) your conviction of any felony involving fraud or act of dishonesty against the Company or its Affiliates; (ii) conduct by you 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 you of any contractual, statutory or fiduciary duty owed by you to the Company or its Affiliates.

(c)    Definition of Good Reason. “Good Reason” shall mean any of the following actions or events: (i) the Company requires you to relocate to a worksite that is more than sixty (60) miles from its principal executive office as of the Start Date; (ii) the Company materially reduces your base salary and bonus potential below its then-existing gross rate; or (iii) following a Corporate Transaction, you are not the Chief Executive Officer of the surviving entity (unless you agree in writing not to be the Chief Executive Officer of the surviving entity), or otherwise have your duties/responsibilities materially reduced as a result of the Corporate Transaction. A Corporate Transaction which results in the Company being private in which you remain as Chief Executive Officer does not constitute a material reduction in responsibilities. Notwithstanding the foregoing, in order to qualify as “Good Reason,” you must submit to the Company or its successor (as applicable) a written notice, within ninety (90) days after the initial occurrence of any of the actions or events described in the preceding sentence, describing the applicable actions or events, and provide the Company or its successor with at least thirty (30) days from its receipt of your written notice in which to cure such actions or events prior to termination of your employment, and provided that, your employment must terminate no later than twelve (12) months after the applicable actions or events described in (i), (ii) and (iii) above.

(d)     Definition of Corporate Transaction. “Corporate Transaction” shall mean the occurrence of either of the following events: (i) the sale of all or substantially all of the assets of the Company; or (ii) a merger of the Company with or into another entity in which the stockholders of the Company immediately prior to the closing of the transaction own less than a majority of the ownership interest of the Company immediately following such closing; provided, however, for purposes of determining whether the stockholders of the Company 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.

VII.    PARACHUTE PAYMENTS AND DEFERRED COMPENSATION.

(1)    Parachute Payments. If any payment or benefit you would receive from the Company pursuant to a Corporate Transaction or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in a manner necessary to provide you with the greatest economic benefit. If more than one manner of reduction of payments or benefits necessary to arrive at the Reduced Amount yields the greatest economic benefit, the payments and benefits shall be reduced pro rata. The independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the event described in Section 280G(b)(2)(A)(i) of the Code shall perform the foregoing calculations. The Company shall bear all expenses with respect to the determinations by such independent registered public accounting firm required to be made hereunder, and any good faith determinations of the independent registered public accounting firm made hereunder shall be final, binding and conclusive upon the Company and you.

(2)    Deferred Compensation. All payments provided under this Agreement are intended to constitute separate payments for purposes of Treasury Regulation Section 1.409A-2(b)(2). The cash severance payment provided under Section VII(2) shall be paid no later than the later of: (i) December 31st of the calendar year in which the Covered Termination occurs, or (ii) the fifteenth (15th) day of the third calendar month following the date of the Covered Termination. It is the intention of the preceding sentence to apply the “short-term deferral rule” set forth in Treasury Regulation Section 1.409A-1(b)(4) to such payments.

VIII.    MISCELLANEOUS.

(1)    Attorneys’ Fees. The Company will reimburse your reasonable attorneys’ fees and costs associated with review of this Agreement, up to a maximum total reimbursement of $3,000 (in the aggregate). These expenses must be fully documented (including receipts) on a properly completed expense reimbursement report, and will be reimbursed within thirty (30) days after the Start Date.

(2)    Legal Right to Work. Your employment pursuant to this offer is contingent on you providing the Company with the legally required proof of your identity and authorization to work in the United States.

(3)    General Terms. This Agreement, including the attached Confidentiality Agreement, 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. Changes in your employment terms, other than those expressly reserved herein to the Company’s or the Board’s discretion herein, can only be made in a writing approved by the Board and signed by a duly-authorized member of the Board and you. 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 document, and facsimile signatures or those transmitted by PDF shall be equivalent to original signatures.

[Remainder of the Page Intentionally Left Blank]

Gary, we all look forward to working with you. Please signify your acceptance by signing and dating below and signing the Confidentiality Agreement, and returning both fully signed agreements to Mike Badgis within five (5) business days. If we do not receive these fully signed agreements from you within this timeframe, the Company’s offer contained herein will expire.

Sincerely,

IPASS INC.

By:

John Beletic

Chairman of the Board of Directors

Understood and Accepted By:

Gary Griffiths

__________________________________________

Date

EX-10.29

EXHIBIT 10.29

February 16, 2015

Patricia Hume

Re:    Employment Offer Letter Agreement

Dear Patricia,

iPass Inc. (the “Company”) is pleased to offer you the position of Chief Commercial Officer of the Company, reporting to the Chief Executive Officer. The following letter agreement (the “Agreement”) provides the terms of our offer of employment.

I.    GENERAL TERMS OF EMPLOYMENT.

(1)    Duties and Position. You will be employed in the position of Chief Commercial Officer of the Company (“CCO”), reporting to the CEO. You shall perform the duties of CCO with responsibilities for sales, marketing, business development and customer success, and other responsibilities that may be assigned by the CEO.

(2)    Start Date. Your first date of employment will be February 23, 2015 (“Start Date”).

(3)    Work Location and Other Activities. You will work from the Company’s corporate headquarters, which are currently located in Redwood Shores, California. The Company will not reimburse you for any relocation expenses that you may incur. Also, the nature of the job will require necessary business travel, including international travel. During your employment with the Company, you will devote your best efforts and substantially all of your business time and attention (except for vacation periods and reasonable periods of illness or other incapacity permitted by the Company’s general employment policies) to the business of the Company. You may also spend time on charitable and other such activities, so long as they do not materially impact your ability to perform your duties under this Agreement.

(4)    Company Policies and Procedures. Your employment relationship with the Company also shall be governed by the general employment policies and procedures of the Company (including the Company’s Code of Conduct) (as may be changed from time to time in the discretion of the Company),and you agree to comply with these polices and procedures, except that if the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or procedures, this Agreement will control.

II.    BASE SALARY AND BONUS.

(1) Base Salary. You will be paid an initial annual salary of $260,000 per year (or $10,833.34 semi-monthly), less standard deductions and withholdings. Your cash compensation will next be reviewed by the Board for potential adjustment beginning in calendar year 2017, and will be reviewed annually thereafter in conjunction with the annual Board review of executive compensation, and will be based upon the Board’s assessment of both your performance and the Company’s performance.

(2)    Annual Bonus. You also will be eligible to earn an annual bonus for each calendar year beginning with calendar year 2015 during your employment if the performance goals established each year as part of the management incentive plan are achieved. The initial annual bonus target amount will be $325,000, less standard deductions and withholdings and the 2015 Bonus Target will be pro-rated for the percentage of the year since your Start Date. The Board, in consultation with the CEO, will set the performance goals for each year. The Board will have the sole discretion to determine whether the goals have been achieved and to determine the amount of any bonus.

III.    EQUITY AWARDS.

(1)    Stock Option Grant. Subject to the approval of the Board, you will be granted an option to purchase 400,000 shares of the Company common stock (the “Options”), with an exercise price equal to the fair market value of the Company’s common stock as of the date of grant, pursuant to the Company’s 2003 Equity Incentive Plan (the “Plan”). If granted, the Option will vest with respect to 25% of the shares subject to the Option on the first anniversary of the Start Date, and thereafter in a series of thirty-six (36) successive equal monthly installments over the three-year period measured from the first anniversary of the Start Date, so long as you remain in continuous service with the Company on each applicable vesting date. The Option shall be governed by the terms and conditions set forth in the Plan, and in the applicable stock option agreement and grant document.

(2)    Performance Shares. Subject to the approval of the Board, you will be granted performance shares covering 200,000 shares of the Company’s common stock (the “Performance Shares”). The Performance Shares shall be governed by the terms and conditions set forth in the Plan and the applicable performance shares award agreement and grant document. The Performance Shares shall be subject to a right of repurchase in favor of the Company unless earned and vested.

IV.    EMPLOYEE BENEFITS.

You will be entitled to participate in the Company’s standard employee benefit plans pursuant to the terms and conditions of the benefit plans. The Company currently offers its employees health, dental, vision, life, AD&D, short term and long term disability insurance, and 401(k) plan participation. The Company may modify benefits from time to time in its discretion.

V.    CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT.

As a condition of employment, you are required to sign and abide by the Company’s standard Employee Confidentiality and Inventions Assignment Agreement (the “Confidentiality Agreement”), a copy of which has been provided to you and which is incorporated herein by reference.

VI. AT-WILL EMPLOYMENT STATUS AND SEVERANCE.

(1)    At-Will Employment Status. Your employment with the Company is at the will of each party, is not for a specific term and can be terminated by you or by the Company at any time, with or without Cause, and with or without advance notice.

(2)    Severance. In the position of CCO, you will be eligible to become a “Tier 1 Participant” under the Company’s Amended and Restated Executive Corporate Transaction and Severance Benefit Plan (the “Executive Severance Plan”), which provides specified severance benefits to certain eligible executive employees of the Company in the event of qualifying employment terminations, pursuant to the terms and conditions of the Executive Severance Plan.

VII.    MISCELLANEOUS.

(1)    Attorneys’ Fees. The Company will reimburse your reasonable attorneys’ fees and costs associated with review of this Agreement, up to a maximum total reimbursement of $3,000 (in the aggregate). These expenses must be fully documented (including receipts) on a properly completed expense reimbursement report, and will be reimbursed within thirty (30) days after the Start Date.

(2)    Legal Right to Work. Your employment pursuant to this offer is contingent on you providing the Company with the legally required proof of your identity and authorization to work in the United States.

(3)    General Terms. This Agreement, including the Confidentiality Agreement, 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. Changes in your employment terms, other than those expressly reserved herein to the Company’s or the Board’s discretion herein, can only be made in a writing approved by the Board and signed by a duly-authorized member of the Board and you. 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 document, and facsimile signatures or those transmitted by PDF shall be equivalent to original signatures.

Patricia, I look forward to working with you. Please signify your acceptance by signing and dating below and signing the Confidentiality Agreement, and returning both fully signed agreements to me within five (5) business days. If we do not receive these fully signed agreements from you within this timeframe, the Company’s offer contained herein will expire.

Sincerely,

IPASS INC.

By:

J. Michael Badgis

Vice President, Worldwide Human Resources &

Administration

Understood and Accepted By:

Patricia Hume

__________________________________________

Date

EX-21.1

EXHIBIT 21.1

Subsidiaries of Registrant

Name	Jurisdiction
iPass (U.K.) Limited	United Kingdom
iPass France SAS	France
iPass Deutschland GmbH	Germany
iPass Holdings Pty Ltd.	Australia
iPass Asia Pte Ltd.	Singapore
iPass Japan, Inc.	Japan
iPass India Private Limited	India
iPass Ltd.	Israel
GoRemote Internet Communications, Inc.	Delaware
GoRemote International Corporation	Delaware
Axcelerant, Inc.	Delaware
Worldwide Axcelerant Group	California
Mobile Automation, Inc.	Delaware
Safe3W, Inc.	Delaware

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

iPass Inc.:

We consent to the incorporation by reference in the registration statements (Nos. 333-107315, 333-118295, 333-130064, 333-131879, 333-165683, 333-172603, 333-179972, 333-187312, and 333-194487) on Form S-8 of iPass Inc. of our report dated March 13, 2015, with respect to the consolidated balance sheets of iPass Inc. and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows, for each of the years in the three-year period ended December 31, 2014, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2014, which report appears in the December 31, 2014 annual report on Form 10‑K of iPass Inc.

/s/ KPMG LLP

Santa Clara, California

March 13, 2015

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Evan L. Kaplan, certify that:

1. I have reviewed this Form 10-K of iPass Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 13, 2015	By:	/S/    EVAN L. KAPLAN
			Evan L. Kaplan President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Karen Willem certify that:

1. I have reviewed this Form 10-K of iPass Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 13, 2015	By:	/S/    KAREN WILLEM
			Karen Willem Senior Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002, 18 U.S.C SECTION 1350

In connection with the Annual Report of iPass Inc. (the “Company”) on Form 10-K for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Evan L. Kaplan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 13, 2015	By:	/S/    EVAN L. KAPLAN
			Evan L. Kaplan President and Chief Executive Officer (Principal Executive Officer)

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of iPass Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002, 18 U.S.C SECTION 1350

In connection with the Annual Report of iPass Inc. (the “Company”) on Form 10-K for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Karen Willem, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 13, 2015	By:	/S/    KAREN WILLEM
			Karen Willem Senior Vice President and Chief Financial Officer (Principal Financial Officer)

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of iPass Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

XML

Property and Equipment - Components of Property and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Components of property and equipment, net
Equipment	$ 10,242	$ 15,134
Furniture and fixtures	1,923	2,110
Computer software	9,356	12,279
Construction in progress	306	749
Leasehold improvements	912	1,252
Property plant and equipment, gross	22,739	31,524
Less: Accumulated depreciation and amortization	(16,526)	(23,082)
Property and equipment, net	$ 6,213	$ 8,442

XML

Stockholders' Equity - Stock Options Outstanding, Vested, and Exercisable (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Summary of company's stock option activity
Options outstanding, Shares	6,820,892	7,606,580	8,288,528	9,535,000
Weighted-average exercise price of options	$ 1.64	$ 1.89	$ 1.85	$ 1.82
Weighted-Average Remaining Contractual Life (in Years), option outstanding	5 years 9 months 18 days
Aggregate Intrinsic Value, Option Outstanding	$ 869
Options vested and expected to vest, Shares	6,518,107
Weighted Average Exercise Price Per share, options vested and expected to vest	$ 1.64
Weighted-Average Remaining Contractual Life (in Years), Options vested and expected to vest	5 years 7 months 24 days
Aggregate Intrinsic Value, Options vested and expected to vest	869
Options exercisable, Shares	5,110,550
Weighted Average Exercise Price Per share, Options exercisable	$ 1.61
Weighted-Average Remaining Contractual Life (in Years), Options Exercisable	4 years 9 months 22 days
Aggregate Intrinsic Value, Options exercisable	$ 857

XML

Income Taxes - Deferred Income Taxes Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred tax assets:
Net operating loss carry forwards	$ 23,526	$ 46,364
Reserves and accruals	1,517	2,728
Research and other tax credits	5,880	6,328
Share based compensation	3,133	3,780
Property and equipment	3,224	43
Total deferred tax assets	37,280	59,243
Valuation allowance	(35,348)	(58,218)
Net deferred tax assets	1,932	1,025
Deferred tax liabilities:
Property and equipment	(1,606)	(751)
Total net deferred tax assets	$ 326	$ 274

XML

Schedule II - Valuation and Qualifying Accounts Receivable (Details) (Allowance for doubtful accounts, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Allowance for doubtful accounts
VALUATION AND QUALIFYING ACCOUNTS RECEIVABLE
Balance at Beginning of Year	$ 1,010	$ 1,173	$ 1,605
Additions Charged to (recovered from) Costs and Expenses	(169)	134	(66)
Deductions	669	297	366
Balance at End of Year	$ 172	$ 1,010	$ 1,173

XML

Stockholders' Equity - Total Stock Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock-based compensation expense in consolidated statements of operations
Total	$ 1,996	$ 3,061	$ 2,346
Network Operations
Stock-based compensation expense in consolidated statements of operations
Total	202	332	200
Research and development
Stock-based compensation expense in consolidated statements of operations
Total	266	350	257
Sales and marketing
Stock-based compensation expense in consolidated statements of operations
Total	452	677	441
General and administrative
Stock-based compensation expense in consolidated statements of operations
Total	$ 1,076	$ 1,702	$ 1,448

XML

Income Taxes - Schedule of Income Before Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
U.S Source	$ (20,306)	$ (16,819)	$ (6,894)
Non-U.S. Source	1,000	1,332	634
Loss from continuing operations before income taxes	$ (19,306)	$ (15,487)	$ (6,260)

XML

Net Loss Per Common Share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted net loss per share

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except per share amounts)
Numerator:
Net loss from continuing operations	$	(12,205	)	$	(14,705	)	$	(5,991	)
Net income from discontinued operations	19,179			2,393			1,613
Net income (loss)	6,974			(12,312		)	(4,378		)
Denominator:
Weighted average shares outstanding - basic and diluted	62,613,671			63,411,162			60,711,317
Total income (loss) per share - basic and diluted:
Loss from continuing operations	$	(0.19	)	$	(0.23	)	$	(0.10	)
Income from discontinued operations	$	0.30		$	0.04		$	0.03
Total net income (loss) per share	$	0.11		$	(0.19	)	$	(0.07	)

Schedule of anti-dilutive shares excluded from computation of diluted net loss per share

The following weighted average potential shares of common stock have been excluded from the computation of diluted net income (loss) per share because the effect of including these shares would have been anti-dilutive:

	Year Ended December 31,
	2014	2013	2012
Options to purchase common stock	4,703,978	3,329,281	2,473,024
Restricted stock awards, including participating securities	2,195,750	2,615,705	1,819,261
Total	6,899,728	5,944,986	4,292,285

XML

Stockholders' Equity - Stock Base Compensation Assumptions (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock options
Weighted-average assumptions used in calculating fair value
Risk-free rate	1.07%	0.89%	0.35%
Expected dividend yield	0.00%	0.00%	0.00%
Expected volatility	53.00%	50.00%	52.00%
Expected term	3 years 6 months	3 years 9 months 18 days	3 years 1 month 6 days
Stock options
Weighted-average assumptions used in calculating fair value
Risk-free rate	0.10%	0.09%	0.09%
Expected dividend yield	0.00%	0.00%	0.00%
Expected volatility	63.00%	51.00%	55.00%
Stock options | Minimum
Weighted-average assumptions used in calculating fair value
Expected term	6 months	6 months	6 months
Stock options | Maximum
Weighted-average assumptions used in calculating fair value
Expected term	1 year	1 year	1 year

XML

Financial Instruments and Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair values of assets (excluding cash) and financial liabilities

The recurring fair values of these financial assets (excluding cash) were determined using the following inputs at December 31, 2014 and December 31, 2013, respectively:

	As of December 31, 2014								As of December 31, 2013
	Fair Value Measured Using						Total Balance		Fair Value Measured Using						Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Money market funds(1)	$	29,306	$	—	$	—	$	29,306	$	18,304	$	—	$	—	$	18,304
Total financial assets	$	29,306	$	—	$	—	$	29,306	$	18,304	$	—	$	—	$	18,304

(1) Held in cash and cash equivalents on the Company’s consolidated balance sheets.

XML

Income Taxes - Summary of Changes to Unrecognized Tax Benefits (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Reconciliation of the beginning and ending amounts of unrecognized tax benefits
Unrecognized Tax Benefits, Beginning Balance	$ 6,567	$ 5,773
Increases for positions taken in prior years	5	282
Increases for positions related to the current year	186	832
Decreases for positions taken in prior years	(18)
Decreases for statutes lapsing	(66)
Settlements with taxing authorities	0	(320)
Unrecognized Tax Benefits, Ending Balance	$ 6,674	$ 6,567

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Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2009
Schedule of accrued liabilities
Tax liabilities	$ 1,300		$ 1,044		$ 5,000
Accrued restructuring liabilities—current(1)	160	[1]	200	[1]
Accrued bonus, commissions and other employee benefits	2,043		2,395
Accrued for vendor financed property and equipment	832		746
Amounts due to customers	1,016		1,059
Other accrued liabilities	1,837		3,656
Accrued liabilities	$ 7,188		$ 9,100

[1] See Note 7. Accrued Restructuring

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Financial Instruments and Fair Value (Details Table) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	$ 29,306		$ 18,304
Fair Value Measured Using Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	29,306		18,304
Fair Value Measured Using Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0		0
Fair Value Measured Using Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0		0
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	29,306	[1]	18,304	[1]
Money Market Funds | Fair Value Measured Using Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	29,306	[1]	18,304	[1]
Money Market Funds | Fair Value Measured Using Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0	[1]	0	[1]
Money Market Funds | Fair Value Measured Using Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	$ 0	[1]	$ 0	[1]

[1] Held in cash and cash equivalents on the Company’s consolidated balance sheets.

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Stockholders' Equity - Summary of Stock Option and Restricted Stock Activity (Details) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation arrangement by share based payment award restricted stock units included as shares outstanding	378,250		558,083		229,832
Shares available for future grant
Shares available for future grant beginning balance	21,452,678		20,221,637		18,011,756
Shares available for future grant Authorized	3,472,551		3,326,811		3,206,969
Shares available for future grant	(1,505,000)	[1]	(3,070,000)	[2]	(1,993,000)	[3]
Shares available for future grant Terminated/cancelled/forfeited	2,106,526		974,230		995,912
Shares available for future grant ending balance	25,526,755		21,452,678		20,221,637
Number of options Outstanding
Stock Number of Outstanding Options, Beginning Balance	7,606,580		8,288,528		9,535,000
Number of Options Granted	(1,025,000)	[1]	(1,085,000)	[2]	(945,500)	[3]
Number of options Outstanding exercised	(135,499)		(1,138,718)		(1,247,776)
Number of options Outstanding terminated/cancelled/forfeited	(1,675,189)		(628,230)		(944,196)
Stock Number of Outstanding Options, Ending Balance	6,820,892		7,606,580		8,288,528
Weighted Average Exercise Price Per share, options
Weighted Average Exercise Price Per share, Beginning Balance	$ 1.89		$ 1.85		$ 1.82
Weighted Average Exercise Price Per share, Granted	$ 1.56	[1]	$ 1.81	[2]	$ 2.31	[3]
Weighted Average Exercise Price Per share, Exercised	$ (1.03)		$ (1.12)		$ (1.10)
Weighted Average Exercise Price Per share, Terminated/cancelled/forfeited	$ 2.76		$ 2.70		$ 3.04
Weighted Average Grant Date Fair Value, Options	$ 0.60	[1]	$ 0.70	[2]	$ 0.81	[3]
Weighted Average Exercise Price Per share, Ending Balance	$ 1.64		$ 1.89		$ 1.85
Weighted Average Grant Date Fair Value Per Share, Restricted Stock Awards and Units
Share Based Compensation Arrangement by Share Based Payment Award Shares with Held to Satisfy Tax with Holding Obligations	41,337				51,716
Restricted stock
Number of Restricted Stock Awards and Units Outstanding
Number of Restricted Stock Awards and Units Outstanding, Beginning Balance	2,949,675		1,868,758		1,051,090
Number of Restricted Stock Awards and Units Outstanding, Granted	480,000	[1]	1,985,000	[2]	1,047,500	[3]
Number of Restricted Stock Awards and Units Outstanding, Vested	(336,913)	[1]	(558,083)	[2]	(178,116)	[3]
Number of Restricted Stock Awards and Units Outstanding, Terminated/cancelled/forfeited	(431,337)		(346,000)		(51,716)
Number of Restricted Stock Awards and Units Outstanding, Ending Balance	2,661,425		2,949,675		1,868,758
Weighted Average Grant Date Fair Value Per Share, Restricted Stock Awards and Units
Weighted Average Grant Date Fair Value, Beginning Balance	$ 1.81		$ 1.85		$ 1.52
Weighted Average Grant Date Fair Value, Granted	$ 1.18	[1]	$ 1.86	[2]	$ 2.16	[3]
Weighted Average Grant Date Fair Value, Vested	$ 2.01	[1]	$ 2.06	[2]	$ 1.77	[3]
Weighted Average Grant Date Fair Value, Terminated/cancelled/forfeited	$ 1.98		$ 1.88		$ 1.80
Weighted Average Grant Date Fair Value, Ending Balance	$ 1.65		$ 1.81		$ 1.85

[1] Restricted stock granted during 2014 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2014 represent 378,250 restricted stock awards released (net of 41,337 shares withheld for taxes).

[2] Restricted stock granted during 2013 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2013 represent 558,083 restricted stock awards released.

[3] Restricted stock granted during 2012 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2012 represent 229,832 restricted stock awards released (net of 51,716 shares withheld for taxes).

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Segment and Geographical Information - Additional Information (Details) (USD $)	12 Months Ended
	Dec. 31, 2014 Segment Customer Country	Dec. 31, 2013 Customer Country Segment	Dec. 31, 2012 Segment Country Customer
Segment and Geographical Information (Textual) [Abstract]
Percentage of total revenue by individual customer	10.00%	10.00%	10.00%
Segment and Geographical Information (Additional Textual) [Abstract]
Number of reportable operating Segments	2	2	2
Number of individual customer	0	0	0
Number of individual country customer	0	0	0
Inter-Segment sale or transfer		$ 0	$ 0
United States
Segment and Geographical Information (Textual) [Abstract]
Percentage of total revenue by individual customer	10.00%	10.00%	10.00%
United Kingdom
Segment and Geographical Information (Textual) [Abstract]
Percentage of total revenue by individual customer		9.00%	9.00%
Revenue | GERMANY
Segment and Geographical Information (Textual) [Abstract]
Percentage of total revenue by individual customer	15.00%	11.00%	9.00%
Revenue | United Kingdom
Segment and Geographical Information (Textual) [Abstract]
Percentage of total revenue by individual customer	11.00%	13.00%	12.00%

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Commitments and Contingencies (Details Textual) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2009
Other Commitments [Line Items]
Hardware Purchase Obligation	$ 6,649,000
Annual Service Fee, 2015	700,000
Annual Service Fee, 2016	700,000
Commitments and Contingencies (Textual) [Abstract]
Lease expiration date	Jun. 30, 2017
Facility lease obligations	100,000
Rent expenses for operating leases excluding leases accounted for under the company 's restructuring plan	2,300,000	2,300,000	2,400,000
Incremental sales tax liability	1,300,000	1,044,000		5,000,000
Interest and penalties				1,500,000
Liability for Uncertain Tax Positions, Current	900,000	800,000	800,000
Computer Equipment
Other Commitments [Line Items]
Accrued Vendor Payable, Due Year Two	800,000
Accrued Vendor Payable, Due Year Three	900,000
Hardware Purchase Obligation	$ 400,000

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Income Taxes - Income Tax Provision (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Current:
U.S. federal	$ 0	$ 0
State	(3)	32
Foreign	278	334
Total	275	366
Deferred:
U.S. federal	(7,107)	(1,351)
State	(219)	0
Foreign	(50)	203
Total	(7,376)	(1,148)
Provision for (benefit from) income taxes	(7,101)	(782)	(269)
Scenario, Previously Reported
Current:
U.S. federal			0
State			30
Foreign			495
Total			525
Deferred:
U.S. federal			(911)
State			0
Foreign			117
Total			(794)
Provision for (benefit from) income taxes			$ (269)

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Financial Instruments and Fair Value

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value

Financial Instruments and Fair Value

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction in the principal or most advantageous market between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The three levels of inputs that may be used to measure fair value are as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities;

• Level 2—Inputs other than Level 1 either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The recurring fair values of these financial assets (excluding cash) were determined using the following inputs at December 31, 2014 and December 31, 2013, respectively:

	As of December 31, 2014								As of December 31, 2013
	Fair Value Measured Using						Total Balance		Fair Value Measured Using						Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Money market funds(1)	$	29,306	$	—	$	—	$	29,306	$	18,304	$	—	$	—	$	18,304
Total financial assets	$	29,306	$	—	$	—	$	29,306	$	18,304	$	—	$	—	$	18,304

(1) Held in cash and cash equivalents on the Company’s consolidated balance sheets.

There were no transfers between Level 1, 2, and 3 between December 31, 2014, and December 31, 2013. As of December 31, 2014, and December 31, 2013, the carrying amount of accounts receivable, accounts payable, and accrued liabilities, approximates fair value due to their short maturities. (Refer to Note 7 and 8 for discussion related to Accrued Restructuring and Vendor Financed Property and Equipment).

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Employee 401 Plan (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Employee 401(k) Plan (Textual) [Abstract]
Employer contributions under 401(k) plan	$ 0	$ 0	$ 0

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Accrued Restructuring - Schedule of Accrued Restructuring (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Summary of accrued restructuring
Beginning balance	$ 317	$ 483	$ 736
Restructuring charges and related adjustments	733	653	26
Payments	(890)	(819)	(279)
Ending Balance	$ 160	$ 317	$ 483

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Accrued Restructuring (Tables)

12 Months Ended

Dec. 31, 2014

Restructuring and Related Activities [Abstract]

Schedule of accrued restructuring

The following is a rollforward of restructuring liability for the Q3 2014, Q1 2013, and 2009 Plans:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Beginning balance	$	317		$	483		$	736
Restructuring charges and related adjustments	733			653			26
Payments and adjustments	(890		)	(819		)	(279		)
Ending balance	$	160		$	317		$	483

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accrued Liabilities, Current [Abstract]

Schedule of accrued liabilities

Accrued liabilities consisted of the following:

	Year Ended December 31,
	2014		2013
	(In thousands)
Tax liabilities	$	1,300	$	1,044
Accrued restructuring liabilities—current(1)	160		200
Accrued bonus, commissions and other employee benefits	2,043		2,395
Accrued for vendor financed property and equipment	832		746
Amounts due to customers	1,016		1,059
Other accrued liabilities	1,837		3,656
	$	7,188	$	9,100

(1) See Note 7. Accrued Restructuring

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Stockholders' Equity - Stock Based Compensation by Award Type (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock-based compensation expense by award-type
Total	$ 1,996	$ 3,061	$ 2,346
Employee Stock Purchase Plans
Stock-based compensation expense by award-type
Total	76	66	96
Stock options
Stock-based compensation expense by award-type
Total	815	838	1,122
Restricted stock
Stock-based compensation expense by award-type
Total	$ 1,105	$ 2,157	$ 1,128

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Accrued Restructuring (Details Textual) (USD $)	12 Months Ended					3 Months Ended	12 Months Ended	3 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012	Sep. 30, 2014 Employees	Dec. 31, 2009 Employees	Mar. 31, 2013 Employees	Dec. 31, 2011
Accrued Restructuring (Textual) [Abstract]
Accrued restructuring liabilities- current	$ 160,000	[1]	$ 200,000	[1]
Restructuring Charges	733,000		653,000		26,000
Accrued Restructuring (Additional Textual) [Abstract]
Restructuring Reserve	160,000		317,000		483,000				736,000
Employee Severance [Member]
Accrued Restructuring (Additional Textual) [Abstract]
Restructuring Reserve	100,000
Facility Closing [Member]
Accrued Restructuring (Additional Textual) [Abstract]
Restructuring Reserve	100,000
Two Thousand Fourteen Q3 Restructuring Plan [Member]
Accrued Restructuring (Textual) [Abstract]
Restructuring Charges	100,000					700,000
Accrued Restructuring (Additional Textual) [Abstract]
Restructuring plan, number of positions						20
Two Thousand Nine Plan [Member]
Accrued Restructuring (Additional Textual) [Abstract]
Restructuring plan, number of positions							146
Restructuring Reserve	100,000
Two Thousand Thirteen Plan [Member]
Accrued Restructuring (Additional Textual) [Abstract]
Restructuring plan, number of positions								16
Accrued Liabilities [Member]
Accrued Restructuring (Textual) [Abstract]
Accrued restructuring liabilities- current	200,000		200,000
Noncurrent Liability [Member]
Accrued Restructuring (Textual) [Abstract]
Restructuring liability expected to be paid for the abandoned facilities, Noncurrent	$ 100,000

[1] See Note 7. Accrued Restructuring

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
U.S Source	$	(20,306	)	$	(16,819	)	$	(6,894	)
Non-U.S. Source	1,000			1,332			634
Loss before income taxes	$	(19,306	)	$	(15,487	)	$	(6,260	)

Provision for (benefit from) income taxes

The provision for income taxes for continuing operations consisted of the following:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Current:
U.S. federal	$	—		$	—		$	—
State	(3		)	32			30
Foreign	278			334			495
	$	275		$	366		$	525
Deferred:
U.S. federal	$	(7,107	)	$	(1,351	)	$	(911	)
State	(219		)	—			—
Foreign	(50		)	203			117
	$	(7,376	)	$	(1,148	)	$	(794	)
Benefit from income taxes	$	(7,101	)	$	(782	)	$	(269	)

Components of deferred tax assets (liabilities)

	Year Ended December 31,
	2014			2013
	(In thousands)
Deferred tax assets:
Net operating loss carry forwards	$	23,526		$	46,364
Reserves and accruals	1,517			2,728
Research and other tax credits	5,880			6,328
Share based compensation	3,133			3,780
Property and equipment	3,224			43
Total deferred tax assets	$	37,280		$	59,243
Valuation allowance	(35,348		)	(58,218		)
Net deferred tax assets	$	1,932		$	1,025
Deferred tax liabilities:
Property and equipment	(1,606		)	(751		)
Total net deferred tax assets	$	326		$	274

Provision for (benefit from) income taxes differed from the amounts computed by applying the U.S. federal income tax rate to pretax loss before income taxes

The provision for income taxes for continuing operations differed from the amounts computed by applying the U.S. federal income tax rate to pretax loss before income taxes as a result of the following:

	Year Ended December 31,
	2014		2013		2012
Federal statutory rate	(35	)%	(35	)%	(35	)%
State taxes, net of federal benefit	(1	)	(7	)	(4	)
Foreign tax rate differential	(1	)	1		6
Amortization of stock-based compensation	2		1		1
Research and development benefit	(2	)	(9	)	(2	)
Deemed repatriated foreign earnings	2		2		61
Other	—		—		1
Valuation Allowance	(1	)	42		(32	)
Provision for income taxes	(36	)%	(5	)%	(4	)%

Reconciliation of the beginning and ending amounts of unrecognized tax benefits

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits (in thousands):

Balance at January 1, 2013	$	5,773
Increases for positions taken in prior years	282
Increases for positions related to the current year	832
Settlements with taxing authorities	(320		)
Balance at December 31, 2013	$	6,567
Increases for positions taken in prior years	5
Increases for positions related to the current year	186
Decreases for positions taken in prior years	(18		)
Decreases for statutes lapsing	(66		)
Settlements with taxing authorities	—
Balance at December 31, 2014	$	6,674

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Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note [Abstract]

Summary of the stock option and restricted stock activity

The following table summarizes the stock option and restricted stock activity under the Plans for the indicated periods:

	Shares Available for Future Grant		Number of Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Number of Restricted Stock Awards and Units Outstanding		Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2011	18,011,756		9,535,000		$	1.82			1,051,090		$	1.52
Authorized	3,206,969
Granted(1)	(1,993,000	)	945,500		$	2.31	$	0.81	1,047,500		$	2.16
Options Exercised			(1,247,776	)	$	1.10
Restricted Stock Vested(1)									(178,116	)	$	1.77
Terminated/cancelled/forfeited	995,912		(944,196	)	$	3.04			(51,716	)	$	1.80
Balance at December 31, 2012	20,221,637		8,288,528		$	1.85			1,868,758		$	1.85
Authorized	3,326,811
Granted(2)	(3,070,000	)	1,085,000		$	1.81	$	0.70	1,985,000		$	1.86
Options Exercised			(1,138,718	)	$	1.12
Restricted Stock Vested(2)									(558,083	)	$	2.06
Terminated/cancelled/forfeited	974,230		(628,230	)	$	2.70			(346,000	)	$	1.88
Balance at December 31, 2013	21,452,678		7,606,580		$	1.89			2,949,675		$	1.81
Authorized	3,472,551
Granted(3)	(1,505,000	)	1,025,000		$	1.56	$	0.60	480,000		$	1.18
Options Exercised	—		(135,499	)	$	1.03
Restricted Stock Vested(3)	—								(336,913	)	$	2.01
Terminated/cancelled/forfeited	2,106,526		(1,675,189	)	$	2.76			(431,337	)	$	1.98
Balance at December 31, 2014	25,526,755		6,820,892		$	1.64			2,661,425		$	1.65

(1) Restricted stock granted during 2012 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2012 represent 229,832 restricted stock awards released (net of 51,716 shares withheld for taxes).

(2) Restricted stock granted during 2013 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2013 represent 558,083 restricted stock awards released.

(3) Restricted stock granted during 2014 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2014 represent 378,250 restricted stock awards released (net of 41,337 shares withheld for taxes).

Summary of stock options outstanding and exercisable by range of exercise prices

The following table summarizes the stock options outstanding and exercisable by range of exercise prices as of December 31, 2014:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (in Years)	Weighted- Average Exercise Price per Share		Number Exercisable	Weighted-Average Exercise Price per Share
$0.71—  1.05	1,674,308	4.68	$	0.96	1,674,308	$	0.96
1.06 —  1.48	1,472,255	4.32	1.26		1,372,255	1.26
1.49 —  1.62	1,442,113	7.70	1.58		716,927	1.55
1.63 —  2.32	1,595,000	7.99	1.93		713,011	1.98
2.33 —5.74	637,216	2.36	3.73		634,049	3.73
Total	6,820,892	5.80	1.64		5,110,550	1.61

	Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2014	6,820,892	$	1.64	5.80	$	869
Options vested and expected to vest at December 31, 2014	6,518,107	$	1.64	5.65	$	869
Options exercisable at December 31, 2014	5,110,550	$	1.61	4.81	$	857

Summary of company's stock option activity

The following table sets forth the total stock-based compensation expense from continuing operations included in the Company’s Consolidated Statements of Comprehensive Loss:

	Year Ended December 31,
	2014		2013		2012
			(In thousands)
Network operations	$	202	$	332	$	200
Research and development	266		350		257
Sales and marketing	452		677		441
General and administrative	1,076		1,702		1,448
Total	$	1,996	$	3,061	$	2,346

Stock-based compensation expense in consolidated statements of operations

The following table sets forth the total stock-based compensation expense by award-type:

	Year Ended December 31,
	2014		2013		2012
	(In thousands)
Stock options	$	815	$	838	$	1,122
Restricted stock	1,105		2,157		1,128
Employee stock purchase plan	76		66		96
Total	$	1,996	$	3,061	$	2,346

Stock-based compensation expense by award-type

The weighted average estimated fair value of stock options granted during the years ended December 31, 2014, 2013, and 2012 were calculated under the Black-Scholes option-pricing model, using the following weighted-average assumptions:

	Year Ended December 31,
	2014		2013		2012
Risk-free rate	1.07	%	0.89	%	0.35	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	53	%	50	%	52	%
Expected term	3.5 years		3.8 years		3.1 years

Weighted-average assumptions used in calculating fair value

Compensation cost related to the Company’s employee stock purchase plan is calculated using the fair value of the employees’ purchase rights granted. The estimated fair value of employee purchase rights granted during the years ended December 31, 2014, 2013, and 2012 was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Year Ended December 31,
	2014		2013		2012
Risk-free rate	0.10	%	0.09	%	0.09	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	63	%	51	%	55	%
Expected term	0.5 to 1 year		0.5 to 1 year		0.5 to 1 year

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Significant Accounting Policies (Notes)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Use of Estimates

The preparation of the consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to the valuation of accounts receivables, other long-lived assets, stock-based compensation, legal contingencies, network access costs, income taxes, and sales tax liabilities. These estimates and assumptions are based on management’s best estimates and judgment. Actual results could differ from the estimates made by management with respect to these and other items.

Foreign Currency Accounting

The U.S. Dollar is the functional currency for the Company and all of its subsidiaries; therefore, the Company does not have a translation adjustment recorded through accumulated other comprehensive income (loss). While the Company’s revenue contracts are denominated in United States (“U.S.”) dollars, the Company has foreign operations that incur expenses in various foreign currencies. Monetary assets and liabilities are remeasured using the current exchange rate at the balance sheet date. Non-monetary assets and liabilities and capital accounts are remeasured using historical exchange rates. Foreign currency expenses are remeasured using the average exchange rates in effect during the year. Foreign currency exchange gains and losses are presented separately in the Consolidated Statements of Comprehensive Loss.

Cash Equivalents

The Company considers all highly-liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds.

Restricted Cash

The Company’s restricted cash consists of cash deposited with a national financial institution in connection with irrevocable letters of credit issued to a network service provider. The total amount of restricted cash included in other assets (non-current) on the Consolidated Balance Sheets was $0.2 million and $0.3 million at December 31, 2014 and 2013, respectively. In addition $1.4 million of restricted cash was included in other current assets in the Consolidated Balance Sheet as of December 31, 2014, which was placed into an escrow account associated with the sale of its Unity business segment.

Concentrations of Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. Substantially all of the Company’s cash and cash equivalents are held by two financial institutions. The Company is exposed to risk in the event of default by these financial institutions or the issuers of these securities to the extent the balances are in excess of amounts that are insured by the FDIC.

The Company’s receivables are derived from revenue earned from customers located primarily in the United States and Europe. The Company provides credit to its customers in the normal course of business and requires no collateral to secure accounts receivable. The Company maintains an allowance for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. The allowance for doubtful accounts is based on customer-specific identification, which encompasses various factors, including; the Company’s review of credit profiles of its customers, age of the accounts receivable balances, contractual terms and conditions, current economic conditions that may affect a customer’s ability to pay and historical payment experience. As of December 31, 2014, accounts receivables from European customers represented 51% of total accounts receivable of which 82% were due within the Company’s standard credit term of 30 days and 97% were aged less than 90 days past due.

As of December 31, 2014, one individual customer accounted for 12% of total accounts receivable. As of December 31, 2013, no individual customer represented 10% or more of total accounts receivable. For the years ended December 31, 2014, 2013, and 2012, no individual customer represented more than 10% of total revenues.

For the year ended December 31, 2014, two suppliers represented 14% and 13% of total network access costs, respectively. For the year ended December 31, 2013, one individual supplier represented 13% of total network access costs. For the year ended December 31, 2012 two suppliers accounted for 16% and 14% of total network access costs, respectively. No other individual supplier represented more than 10% of total network access costs in 2014, 2013 and 2012.

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation or amortization. Depreciation of property and equipment and amortization of leasehold improvements are computed using the straight-line method over the estimated useful lives of the respective assets as follows:

• Equipment: 3 to 5 years

• Furniture and fixtures: 5 years

• Computer software: 3 to 5 years

• Leasehold improvements: the shorter of the useful life of the leasehold improvements or the term of the underlying lease

• Construction in progress: various depending on the underlying asset being developed

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to the statement of comprehensive loss. Expenditures for maintenance and repairs are charged to expense as incurred.

Construction in progress is related to the construction or development of property and equipment that has not yet been placed in service. Depreciation for equipment and computer software begins once it is placed in service and depreciation for leasehold improvements commences once they are ready for intended use.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, along with net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. The Company records net deferred tax assets to the extent management believe these assets would more likely than not be realized. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event management was to determine that the Company would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company’s policy with respect to its undistributed foreign subsidiaries’ earnings is to consider those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S. federal, state or foreign income taxes has been provided. As of December 31 2014, approximately $8.9 million of foreign earnings have been deemed repatriated under the US tax law. Only the US federal and state income tax consequences have been provided on those earnings, however, they will not be deemed to be repatriated under foreign laws. The major foreign jurisdictions where the Company has operations includes India and the U.K. Upon distribution of earnings from India and the U.K. in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes in the various foreign countries. At December 31, 2014 and 2013, the cumulative undistributed earnings of the Company’s foreign subsidiaries approximated $12.9 million and $11.5 million, respectively. The amount of cash and cash equivalents held by the Company’s foreign subsidiaries as of December 31, 2014 and 2013 was $0.9 million and $0.9 million, respectively. The Company currently does not intend to distribute any of its remaining unrepatriated earnings by its foreign subsidiaries to the parent company in the U.S. If the income is to be distributed, the net of $4.0 million will be subject to US tax.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Actual results could differ materially from these estimates and could significantly affect the effective tax rate and cash flows in future years.

The Company recognizes estimated interest and penalties relating to income tax uncertainties as a component of the provision for income taxes.

Stock-Based Compensation

Stock-based compensation expense is estimated at the grant date based on the award’s fair value and is recognized as expense over the award’s requisite service period. Awards that vest based on service criteria are expensed on a straight-line basis. Awards having accelerated vesting based on achieving certain performance criteria are expensed on graded vesting basis over the vesting period, after assessing the probability of achieving the requisite performance criteria. The Company’s stock-based payment awards to employees and directors include stock options, restricted stock units and awards, and employee purchase rights granted in connection with the Employee Stock Purchase Plan. Certain restricted stock awards have performance-based goals based on the achievement of targeted quarterly revenue of Open Mobile, targeted EBITA or targeted number of active Open Mobile monetized users, which require an assessment of the probability and timing of vesting. The Company estimates the fair value of restricted stock based on the day prior to the date of grant. The Company estimates the fair value of stock options and employee purchase rights on the date of grant using the Black-Scholes option-pricing model that requires the use of assumptions such as expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The expected stock price volatility is based on historical volatility and the expected term is based on the historical average expected term. Because stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The expected forfeiture rate is based upon the historical experience of employee turnover and certain other factors. To the extent the actual forfeiture rate is different from the expected rate, stock-based compensation expense is adjusted accordingly.

Revenue Recognition

Revenue is recognized when all four revenue recognition criteria have been met; persuasive evidence of an arrangement exists, service has been provided to the customer, the fee is fixed or determinable, and collection is reasonably assured. When the above criteria are not met, revenue is deferred and recognized upon cash collection, upon acceptance of a completion certificate from the customer or when the product is shipped, depending on the type of fee or service arrangement.

Network Fees

The Company recognizes network fees during the period the services are rendered to the end-users based on usage or a flat fee. The Company has two types of flat fee arrangements for its network services. The first is a recurring flat fee that is billed at the same dollar amount each month. The second is a recurring fee calculated based on a flat fee per user per month, of which the dollar amount billed would differ month-to-month depending on the number of users using the Company’s services during a given month. The Company frequently requires customers to commit to minimum network fees associated with monthly, quarterly or annual minimum network usage or over the term of the arrangement. For customers that have agreed to a Minimum Monthly Commitment (MMC), the customer’s monthly invoice reflects the greater of the customer’s actual usage for the month or the MMC for that month. If the MMC exceeds actual usage (a “Shortfall”), the Company determines whether the Shortfall is fixed or determinable. If the Company concludes that the Shortfall is fixed or determinable, based upon customer specific billing history, and other revenue recognition criteria have been met, the Company recognizes as revenue the amount of Shortfall which is invoiced. If the Company concludes that the Shortfall is not fixed or determinable, the Company recognizes revenue when the Shortfall amount is collected. The Company also bills certain network fees upfront and recognizes such fees ratably over the term as services are provided.

Platform Services and Other Fees

Platform services are any services that allow a user to connect to a network using the iPass application. Fees for this service are typically based upon a monthly rate, and revenue is recognized during the month the services are provided. Revenue related to iPassConnect (“iPC”) fees, including extended support fees as the iPC product reached end-of-life in 2012, and Open Mobile Platform fees are typically based upon a monthly rate (per user rate or a flat fee) and are recognized during the month the services are provided. Start-up support service fees representing charges to new customers, customization services and standard training may be billed up-front in advance and recognized as revenue over the term of the contract or service delivery.

Deferred Revenue

The Company defers revenue for services that are billed in advance or prepaid as required per customer agreements. Revenue is recognized as the services are being delivered, or ratably over the contract term, depending on the nature of the service. Amounts expected to be recognized as revenue within one year are classified as short-term.

Network Access Costs

Network access costs represent the amounts paid to network access providers monthly for the usage of their networks. The Company has minimum purchase commitments with some network service providers for access that it expects to utilize during the term of the contracts. Costs of minimum purchase contracts are recognized as network access costs at the greater of the minimum commitment or actual usage.

Advertising Expenses

Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2014, 2013, and 2012 were approximately $0.1 million each year.

Internal Use Software Development Costs

The Company follows the guidance set forth in ASC 350-40, Internal Use Software, (“ASC 350-40”), in accounting for the development of its application service and other internal use applications. ASC 350-40 requires companies to capitalize qualifying computer software costs, which are incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. The Company capitalized $0.3 million, $0.3 million, and $2.6 million in 2014, 2013, and 2012 respectively. $2.6 million of capitalized software cost in 2012 related to the development of a replacement enterprise resource planning (ERP) system.

Depreciation expense related to the purchase of the ERP system was approximately $0.7 million, and $0.7 million in 2014 and 2013, respectively. $0.2 million of amortization expense was recorded in 2014, 2013, and 2012 related to internal use software capitalized in 2011. Management evaluates the useful lives of the Company’s assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments to long lived assets during the years ended December 31, 2014, 2013 and 2012.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments

Future minimum lease payments under these operating leases, including approximately $0.1 million of future payments on leases accounted for under the Company’s restructuring plans, as of December 31, 2014, are as follows:

	Operating Leases
	(In thousands)
Year ending December 31:
2015	$	1,806
2016	1,310
2017	1,171
2018	1,050
2019 and thereafter	$	2,099
	$	7,436

Schedule of future minimum purchase commitments

The Company has contracts with certain network service providers which have minimum purchase commitments that expire on various dates through 2017. Future minimum purchase commitments under all agreements are as follows:

Year ending December 31:	Minimum Purchase Commitments
	(In thousands)
2015	$	5,946
2016	659
2017	$	44
	$	6,649

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Property and Equipment (Details Textual) (USD $)	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 30, 2014	Oct. 31, 2013
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 3,200,000	$ 2,400,000	$ 2,000,000
Disposal Group, Including Discontinued Operation, Depreciation and Amortization	200,000	400,000	100,000
Property and equipment, wrote-off	8,500,000
Gain (Loss) on Sale of Properties	100,000
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment	2,000,000
Capitalized Computer Software, Additions	501,000	2,597,000	0
Capitalized Computer Software, Gross	9,356,000	12,279,000
Construction in Progress, Gross	306,000	749,000
ERP System
Property, Plant and Equipment [Line Items]
Capitalized Computer Software, Additions	300,000	300,000	2,600,000
Computer Equipment
Property, Plant and Equipment [Line Items]
Capitalized Computer Software, Additions	3,100,000			500,000	2,600,000
Capitalized Computer Software, Gross	$ 2,000,000

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Stockholders' Equity - Stock Options Outstanding by Exercise Price (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Summary of stock options outstanding and exercisable by range of exercise prices
Number Outstanding	6,820,892
Weighted-Average Remaining Contractual Life (in Years)	5 years 9 months 18 days
Weighted-Average Exercise Price per Share	$ 1.64
Number Exercisable	5,110,550
Weighted-Average Exercise Price per Share	$ 1.61
Range One
Summary of stock options outstanding and exercisable by range of exercise prices
Range of Exercise Prices, Lower Limit	$ 0.71
Range of Exercise Prices, Upper Limit	$ 1.02
Number Outstanding	1,674,308
Weighted-Average Remaining Contractual Life (in Years)	4 years 8 months 5 days
Weighted-Average Exercise Price per Share	$ 0.96
Number Exercisable	1,674,308
Weighted-Average Exercise Price per Share	$ 0.96
Range Two
Summary of stock options outstanding and exercisable by range of exercise prices
Range of Exercise Prices, Lower Limit	$ 1.02
Range of Exercise Prices, Upper Limit	$ 1.05
Number Outstanding	1,472,255
Weighted-Average Remaining Contractual Life (in Years)	4 years 3 months 26 days
Weighted-Average Exercise Price per Share	$ 1.26
Number Exercisable	1,372,255
Weighted-Average Exercise Price per Share	$ 1.26
Range Three
Summary of stock options outstanding and exercisable by range of exercise prices
Range of Exercise Prices, Lower Limit	$ 1.05
Range of Exercise Prices, Upper Limit	$ 1.27
Number Outstanding	1,442,113
Weighted-Average Remaining Contractual Life (in Years)	7 years 8 months 12 days
Weighted-Average Exercise Price per Share	$ 1.58
Number Exercisable	716,927
Weighted-Average Exercise Price per Share	$ 1.55
Range Four
Summary of stock options outstanding and exercisable by range of exercise prices
Range of Exercise Prices, Lower Limit	$ 1.27
Range of Exercise Prices, Upper Limit	$ 1.72
Number Outstanding	1,595,000
Weighted-Average Remaining Contractual Life (in Years)	7 years 11 months 27 days
Weighted-Average Exercise Price per Share	$ 1.93
Number Exercisable	713,011
Weighted-Average Exercise Price per Share	$ 1.98
Range Five
Summary of stock options outstanding and exercisable by range of exercise prices
Range of Exercise Prices, Lower Limit	$ 1.72
Range of Exercise Prices, Upper Limit	$ 17.56
Number Outstanding	637,216
Weighted-Average Remaining Contractual Life (in Years)	2 years 4 months 10 days
Weighted-Average Exercise Price per Share	$ 3.73
Number Exercisable	634,049
Weighted-Average Exercise Price per Share	$ 3.73

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 33,814	$ 24,017
Accounts receivable, net of allowance for doubtful accounts of $172 and $1,010, respectively	10,063	15,297
Prepaid expenses and other current assets	4,318	4,329
Total current assets	48,195	43,643
Property and equipment, net	6,213	8,442
Other assets	847	2,831
Total assets	55,255	54,916
Current liabilities:
Accounts payable	7,301	9,334
Accrued liabilities	7,188	9,100
Deferred revenue, short-term	437	3,212
Total current liabilities	14,926	21,646
Deferred revenue, long-term	115	2,191
Vendor financed property and equipment	854	1,586
Other long-term liabilities	879	251
Total liabilities	16,774	25,674
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.001 par value (250,000,000 shares authorized; 64,753,694 and 64,451,031 shares issued and outstanding, respectively)	65	65
Additional paid-in capital	220,368	218,103
Accumulated deficit	(181,952)	(188,926)
Total stockholders’ equity	38,481	29,242
Total liabilities and stockholders’ equity	$ 55,255	$ 54,916

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Vendor Financed Property and Equipment - Additional Information (Details) (USD $)	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 30, 2014	Oct. 31, 2013
Property, Plant and Equipment [Line Items]
Vendor Financed Property and Equipment Repayment Period	2 years
Capitalized Computer Software, Additions	$ 501,000	$ 2,597,000	$ 0
Accrued for vendor financed property and equipment	832,000	746,000
Accrued Vendor Payable, Noncurrent	854,000	1,586,000
Computer Equipment
Property, Plant and Equipment [Line Items]
Capitalized Computer Software, Additions	3,100,000			500,000	2,600,000
Repayments of Long-term Loans from Vendors	1,400,000
Accrued for vendor financed property and equipment	800,000
Accrued Vendor Payable, Due Year Two	800,000
Accrued Vendor Payable, Noncurrent	900,000
Accrued Vendor Payable, Due Year Three	900,000
Accrued Vendor Payable, Noncurrent, Fair Value	$ 900,000

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net income (loss)	$ 6,974	$ (12,312)	$ (4,378)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Gain on sale of discontinued operations	(25,014)	0	0
Stock-based compensation	2,017	3,163	2,418
Amortization of intangible assets	0	0	169
Depreciation, amortization and accretion	3,330	2,776	2,110
Loss on disposal of property and equipment	54	22	3
Deferred income taxes	(53)	203	117
(Recovery of) provision for doubtful accounts	(169)	134	(66)
Changes in operating assets and liabilities:
Accounts receivable	2,816	1,828	4,113
Prepaid expenses and other current assets	(404)	625	878
Other assets	232	785	718
Accounts payable	(1,637)	2,063	(1,138)
Accrued liabilities	(3,406)	(277)	(821)
Deferred revenue	(329)	(1,218)	(365)
Other liabilities	753	(224)	(295)
Net cash (used in) provided by operating activities	(14,836)	(2,432)	3,463
Cash flows from investing activities:
Purchases of property and equipment	(1,318)	(2,318)	(4,465)
Proceeds from sale of discontinued operations	26,750	0	0
Change in restricted cash	100	720	971
Net cash provided by (used in) investing activities	25,532	(1,598)	(3,494)
Cash flows from financing activities:
Net proceeds from issuance of common stock	248	1,490	1,414
Principal payments for vendor financed property and equipment	(1,147)	(265)	0
Net cash (used in) provided by financing activities	(899)	1,225	1,414
Net increase (decrease) in cash and cash equivalents	9,797	(2,805)	1,383
Cash and cash equivalents at beginning of year	24,017	26,822	25,439
Cash and cash equivalents at end of year	33,814	24,017	26,822
Supplemental disclosures of cash flow information:
Net cash paid for taxes	259	261	375
Accrued amounts for acquisition of property and equipment	73	98	321
Vendor financing of property and equipment	$ 501	$ 2,597	$ 0

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Commitments and Contingencies - Future Minimum Lease Payments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Schedule of future minimum lease payments
2015	$ 1,806
2016	1,310
2017	1,171
2018	1,050
2019 and thereafter	2,099
Operating leases, future minimum payments	$ 7,436

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Divestiture of Business Segment (Tables)

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations, Income Statement

The following table presents the revenues and components of discontinued operations, net of tax.

	Six Months  ended June 30,			Year Ended  December 31,
	2014			2013			2012
Revenue	15,458			33,386			33,548
Income from discontinued operations before income taxes	1,506			3,744			2,524
Gain on sale of discontinued operations before income taxes	25,014			—			—
Provision for income taxes	(7,341		)	(1,351		)	(911		)
Income from discontinued operations, net of tax	$	19,179		$	2,393		$	1,613

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Net Loss Per Common Share (Details Textual) (USD $)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net Loss Per Common Share (Textual) [Abstract]
Weighted-average exercise price of options	$ 1.64	$ 1.89	$ 1.85	$ 1.82
Options to purchase common stock
Net Loss Per Common Share (Textual) [Abstract]
Weighted-average exercise price of options	$ 2.20	$ 2.84	$ 3.59

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Subsequent Event

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On February 16, 2015, it was determined that Evan Kaplan, Chief Executive Officer and President of iPass Inc., would cease to be an officer and employee of iPass effective at a date in early March 2015, immediately following the filing of the iPass Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

On February 16, 2015, the Board of Directors of iPass appointed Gary Griffiths as Chief Executive Officer and President of iPass Inc., effective at such time as Mr. Kaplan ceases to operate in that role.

On February 22, 2015, the Board of Directors appointed Michael Chang as a director of iPass, to serve in such capacity until the next annual meeting or until his earlier death, resignation or removal. In connection with his appointment, Mr. Chang was appointed to the Audit Committee and the Compensation Committee of the Board of Directors, replacing Gary Griffiths on those committees.

On February 18, 2015, the Company announced it had concluded the strategic alternatives review process that was initiated in September of 2014.

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Significant Accounting Policies (Details Textual) (USD $)	12 Months Ended
	Dec. 31, 2014 Supplier Arrangement Financial_Institution Customer	Dec. 31, 2013 Supplier Customer	Dec. 31, 2012 Supplier Customer	Dec. 31, 2011
Significant Accounting Policies (Textual) [Abstract]
Maturity period of highly liquid investment	3 months
Cash And Cash equivalents held by companies foreign subsidiary	$ 33,814,000	$ 24,017,000	$ 26,822,000	$ 25,439,000
Undistributed Earnings of Foreign Subsidiaries, Net of Earnings Repatriated	4,000,000
Significant Accounting Policies (Additional Textual) [Abstract]
Number of financial institutions	2
Percentage of accounts receivable from European customers	51.00%
Standard credit terms for accounts receivable under condition one	30 days
Percentage of accounts receivable aged within company under condition one	82.00%
Standard credit terms for accounts receivable under condition two	90 days
Percentage of accounts receivable aged within company under condition two	97.00%
Entity wide revenue major customer percentage	10.00%	10.00%	10.00%
Number of customer represent 10% or more of accounts receivable	1	0
Number of customer represent 10% or more of total revenues	0	0	0
Number of supplier accounted for a specific percentage of total network access costs		1	2
Number of Individual supplier represented more than 10% of total network access costs	0	0	0
Cumulative undistributed earnings of the company's foreign subsidiary	12,900,000	11,500,000
Types of flat fee arrangements for network services	2
Advertising expenses	100,000	100,000	100,000
Amortization expense	700,000	700,000	200,000
Impairment to internal use of software	0	0
Federal
Significant Accounting Policies (Textual) [Abstract]
Deemed repatriated foreign earnings amount	8,900,000
Foreign Subsidiaries
Significant Accounting Policies (Textual) [Abstract]
Cash And Cash equivalents held by companies foreign subsidiary	900,000	900,000
Minimum
Significant Accounting Policies (Textual) [Abstract]
Percentage of tax benefit likely of being realized upon settlement	50.00%
Computer software
Significant Accounting Policies (Textual) [Abstract]
Estimated useful lives of the Assets	5 years
Computer software | Maximum
Significant Accounting Policies (Textual) [Abstract]
Estimated useful lives of the Assets	5 years
Computer software | Minimum
Significant Accounting Policies (Textual) [Abstract]
Estimated useful lives of the Assets	3 years
Equipment | Maximum
Significant Accounting Policies (Textual) [Abstract]
Estimated useful lives of the Assets	5 years
Equipment | Minimum
Significant Accounting Policies (Textual) [Abstract]
Estimated useful lives of the Assets	3 years
Furniture and fixtures
Significant Accounting Policies (Textual) [Abstract]
Estimated useful lives of the Assets	5 years
ERP System
Significant Accounting Policies (Textual) [Abstract]
Software Development Costs	300,000	300,000	2,600,000
Accounts Receivable
Significant Accounting Policies (Additional Textual) [Abstract]
Entity wide revenue major customer percentage	12.00%	10.00%
Sales
Significant Accounting Policies (Additional Textual) [Abstract]
Entity wide revenue major customer percentage	10.00%	10.00%	10.00%
Cost of Sales
Significant Accounting Policies (Additional Textual) [Abstract]
Entity wide revenue major customer percentage	10.00%	10.00%	10.00%
Supplier Concentration Risk
Significant Accounting Policies (Additional Textual) [Abstract]
Entity wide revenue major customer percentage		13.00%
Number of Individual supplier represented more than 10% of total network access costs	2
Other Noncurrent Assets [Member]
Significant Accounting Policies (Additional Textual) [Abstract]
Total Amount of restricted cash	200,000	300,000
Other Current Assets [Member]
Significant Accounting Policies (Additional Textual) [Abstract]
Total Amount of restricted cash	$ 1,400,000
Supplier One [Member] | Supplier Concentration Risk
Significant Accounting Policies (Additional Textual) [Abstract]
Entity wide revenue major customer percentage	14.00%		16.00%
Supplier Two [Member] | Supplier Concentration Risk
Significant Accounting Policies (Additional Textual) [Abstract]
Entity wide revenue major customer percentage	13.00%		14.00%

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Estimates are used for, but not limited to the valuation of accounts receivables, other long-lived assets, stock-based compensation, legal contingencies, network access costs, income taxes, and sales tax liabilities. These estimates and assumptions are based on management’s best estimates and judgment. Actual results could differ from the estimates made by management with respect to these and other items.

Foreign Currency Accounting

Foreign Currency Accounting

The U.S. Dollar is the functional currency for the Company and all of its subsidiaries; therefore, the Company does not have a translation adjustment recorded through accumulated other comprehensive income (loss). While the Company’s revenue contracts are denominated in United States (“U.S.”) dollars, the Company has foreign operations that incur expenses in various foreign currencies. Monetary assets and liabilities are remeasured using the current exchange rate at the balance sheet date. Non-monetary assets and liabilities and capital accounts are remeasured using historical exchange rates. Foreign currency expenses are remeasured using the average exchange rates in effect during the year. Foreign currency exchange gains and losses are presented separately in the Consolidated Statements of Comprehensive Loss.

Cash Equivalents

Cash Equivalents

The Company considers all highly-liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds.

Restricted Cash

Restricted Cash

The Company’s restricted cash consists of cash deposited with a national financial institution in connection with irrevocable letters of credit issued to a network service provider. The total amount of restricted cash included in other assets (non-current) on the Consolidated Balance Sheets was $0.2 million and $0.3 million at December 31, 2014 and 2013, respectively.

Concentrations of Risk

Concentrations of Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. Substantially all of the Company’s cash and cash equivalents are held by two financial institutions. The Company is exposed to risk in the event of default by these financial institutions or the issuers of these securities to the extent the balances are in excess of amounts that are insured by the FDIC.

The Company’s receivables are derived from revenue earned from customers located primarily in the United States and Europe. The Company provides credit to its customers in the normal course of business and requires no collateral to secure accounts receivable. The Company maintains an allowance for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. The allowance for doubtful accounts is based on customer-specific identification, which encompasses various factors, including; the Company’s review of credit profiles of its customers, age of the accounts receivable balances, contractual terms and conditions, current economic conditions that may affect a customer’s ability to pay and historical payment experience. As of December 31, 2014, accounts receivables from European customers represented 51% of total accounts receivable of which 82% were due within the Company’s standard credit term of 30 days and 97% were aged less than 90 days past due.

As of December 31, 2014, one individual customer accounted for 12% of total accounts receivable. As of December 31, 2013, no individual customer represented 10% or more of total accounts receivable. For the years ended December 31, 2014, 2013, and 2012, no individual customer represented more than 10% of total revenues.

For the year ended December 31, 2014, two suppliers represented 14% and 13% of total network access costs, respectively. For the year ended December 31, 2013, one individual supplier represented 13% of total network access costs. For the year ended December 31, 2012 two suppliers accounted for 16% and 14% of total network access costs, respectively. No other individual supplier represented more than 10% of total network access costs in 2014, 2013 and 2012.

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation or amortization. Depreciation of property and equipment and amortization of leasehold improvements are computed using the straight-line method over the estimated useful lives of the respective assets as follows:

• Equipment: 3 to 5 years

• Furniture and fixtures: 5 years

• Computer software: 3 to 5 years

• Leasehold improvements: the shorter of the useful life of the leasehold improvements or the term of the underlying lease

• Construction in progress: various depending on the underlying asset being developed

Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to the statement of comprehensive loss. Expenditures for maintenance and repairs are charged to expense as incurred.

Construction in progress is related to the construction or development of property and equipment that has not yet been placed in service. Depreciation for equipment and computer software begins once it is placed in service and depreciation for leasehold improvements commences once they are ready for intended use.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, along with net operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. The Company records net deferred tax assets to the extent management believe these assets would more likely than not be realized. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event management was to determine that the Company would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company’s policy with respect to its undistributed foreign subsidiaries’ earnings is to consider those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S. federal, state or foreign income taxes has been provided. As of December 31 2014, approximately $8.9 million of foreign earnings have been deemed repatriated under the US tax law. Only the US federal and state income tax consequences have been provided on those earnings, however, they will not be deemed to be repatriated under foreign laws. The major foreign jurisdictions where the Company has operations includes India and the U.K. Upon distribution of earnings from India and the U.K. in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes in the various foreign countries. At December 31, 2014 and 2013, the cumulative undistributed earnings of the Company’s foreign subsidiaries approximated $12.9 million and $11.5 million, respectively. The amount of cash and cash equivalents held by the Company’s foreign subsidiaries as of December 31, 2014 and 2013 was $0.9 million and $0.9 million, respectively. The Company currently does not intend to distribute any of its remaining unrepatriated earnings by its foreign subsidiaries to the parent company in the U.S. If the income is to be distributed, the net of $4.0 million will be subject to US tax.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Actual results could differ materially from these estimates and could significantly affect the effective tax rate and cash flows in future years.

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation expense is estimated at the grant date based on the award’s fair value and is recognized as expense over the award’s requisite service period. Awards that vest based on service criteria are expensed on a straight-line basis. Awards having accelerated vesting based on achieving certain performance criteria are expensed on graded vesting basis over the vesting period, after assessing the probability of achieving the requisite performance criteria. The Company’s stock-based payment awards to employees and directors include stock options, restricted stock units and awards, and employee purchase rights granted in connection with the Employee Stock Purchase Plan. Certain restricted stock awards have performance-based goals based on the achievement of targeted quarterly revenue of Open Mobile, targeted EBITA or targeted number of active Open Mobile monetized users, which require an assessment of the probability and timing of vesting. The Company estimates the fair value of restricted stock based on the day prior to the date of grant. The Company estimates the fair value of stock options and employee purchase rights on the date of grant using the Black-Scholes option-pricing model that requires the use of assumptions such as expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The expected stock price volatility is based on historical volatility and the expected term is based on the historical average expected term. Because stock-based compensation expense is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The expected forfeiture rate is based upon the historical experience of employee turnover and certain other factors. To the extent the actual forfeiture rate is different from the expected rate, stock-based compensation expense is adjusted accordingly.

Revenue Recognition

Revenue Recognition

Revenue is recognized when all four revenue recognition criteria have been met; persuasive evidence of an arrangement exists, service has been provided to the customer, the fee is fixed or determinable, and collection is reasonably assured. When the above criteria are not met, revenue is deferred and recognized upon cash collection, upon acceptance of a completion certificate from the customer or when the product is shipped, depending on the type of fee or service arrangement.

Network Fees

The Company recognizes network fees during the period the services are rendered to the end-users based on usage or a flat fee. The Company has two types of flat fee arrangements for its network services. The first is a recurring flat fee that is billed at the same dollar amount each month. The second is a recurring fee calculated based on a flat fee per user per month, of which the dollar amount billed would differ month-to-month depending on the number of users using the Company’s services during a given month. The Company frequently requires customers to commit to minimum network fees associated with monthly, quarterly or annual minimum network usage or over the term of the arrangement. For customers that have agreed to a Minimum Monthly Commitment (MMC), the customer’s monthly invoice reflects the greater of the customer’s actual usage for the month or the MMC for that month. If the MMC exceeds actual usage (a “Shortfall”), the Company determines whether the Shortfall is fixed or determinable. If the Company concludes that the Shortfall is fixed or determinable, based upon customer specific billing history, and other revenue recognition criteria have been met, the Company recognizes as revenue the amount of Shortfall which is invoiced. If the Company concludes that the Shortfall is not fixed or determinable, the Company recognizes revenue when the Shortfall amount is collected. The Company also bills certain network fees upfront and recognizes such fees ratably over the term as services are provided.

Platform Services and Other Fees

Platform services are any services that allow a user to connect to a network using the iPass application. Fees for this service are typically based upon a monthly rate, and revenue is recognized during the month the services are provided. Revenue related to iPassConnect (“iPC”) fees, including extended support fees as the iPC product reached end-of-life in 2012, and Open Mobile Platform fees are typically based upon a monthly rate (per user rate or a flat fee) and are recognized during the month the services are provided. Start-up support service fees representing charges to new customers, customization services and standard training may be billed up-front in advance and recognized as revenue over the term of the contract or service delivery.

Deferred Revenue

The Company defers revenue for services that are billed in advance or prepaid as required per customer agreements. Revenue is recognized as the services are being delivered, or ratably over the contract term, depending on the nature of the service. Amounts expected to be recognized as revenue within one year are classified as short-term.

Network Access Costs

Network Access Costs

Network access costs represent the amounts paid to network access providers monthly for the usage of their networks. The Company has minimum purchase commitments with some network service providers for access that it expects to utilize during the term of the contracts. Costs of minimum purchase contracts are recognized as network access costs at the greater of the minimum commitment or actual usage.

Advertising Expenses

Advertising Expenses

Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2014, 2013, and 2012 were approximately $0.1 million each year.

Software Development Costs

Software Development Costs

The Company follows the guidance set forth in ASC 350-40, Internal Use Software, (“ASC 350-40”), in accounting for the development of its application service and other internal use applications. ASC 350-40 requires companies to capitalize qualifying computer software costs, which are incurred during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. The Company capitalized $0.3 million, $0.3 million, and $2.6 million in 2014, 2013, and 2012 respectively. $2.6 million of capitalized software cost in 2012 related to the development of a replacement enterprise resource planning (ERP) system.

Depreciation expense related to the purchase of the ERP system was approximately $0.7 million, and $0.7 million in 2014 and 2013, respectively. $0.2 million of amortization expense was recorded in 2014, 2013, and 2012 related to internal use software capitalized in 2011. Management evaluates the useful lives of the Company’s assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. There were no impairments to long lived assets during the years ended December 31, 2014, 2013 and 2012.

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Divestiture of Business Segment - Schedule of Discontinued Income (Details) (iPass Unity, USD $) In Thousands, unless otherwise specified	1 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
iPass Unity
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue		$ 15,458		$ 33,386	$ 33,548
Income (loss) from discontinued operations before income taxes		1,506		3,744	2,524
Gain on sale of discontinued operations before income taxes	25,000	25,014		0	0
Provision for income taxes		(7,341)	(7,300)	(1,351)	(911)
Income from discontinued operations, net of tax		$ 19,179		$ 2,393	$ 1,613

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Basis of Presentation

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of iPass Inc. (the “Company”) and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated.

The Company reports comprehensive income (loss) in a single continuous financial statement within the Consolidated Statements of Comprehensive Income (Loss). The Company’s comprehensive income (loss) is equivalent to its net income (loss) because the Company does not have any transactions that are recorded through other comprehensive income (loss).

The Consolidated Statements of Comprehensive Income (Loss) have been reclassified for all periods presented to reflect discontinued operations treatment. (Refer to Note 15 for discussion related to Divestiture of Business Segment).

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 172	$ 1,010
Common stock, par value	$ 0.001	$ 0.001
Common stock shares authorized	250,000,000	250,000,000
Common stock shares issued	64,753,694	64,451,031
Common stock shares outstanding	64,753,694	64,451,031

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 11. Commitments and Contingencies

Leases and Purchase Commitments

The Company leases facilities under operating leases that expire at various dates through October 2020. Certain leases are cancellable prior to lease expiration dates. The terms of certain operating leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the respective lease periods and has accrued for rent expense incurred but not paid. Future minimum lease payments under these operating leases, including approximately $0.1 million of future payments on leases accounted for under the Company’s restructuring plans, as of December 31, 2014, are as follows:

	Operating Leases
	(In thousands)
Year ending December 31:
2015	$	1,806
2016	1,310
2017	1,171
2018	1,050
2019 and thereafter	$	2,099
	$	7,436

Rent expense for operating leases, excluding leases accounted for under the Company’s restructuring plan for the years ended December 31, 2014, 2013, and 2012 was $2.3 million, $2.3 million, and $2.4 million, respectively.

The Company has contracts with certain network service providers which have minimum purchase commitments that expire on various dates through 2017. Future minimum purchase commitments under all agreements are as follows:

Year ending December 31:	Minimum Purchase Commitments
	(In thousands)
2015	$	5,946
2016	659
2017	$	44
	$	6,649

Included above, the Company has a future minimum purchase commitment of approximately $0.4 million related to an annual support fee for acquired enterprise infrastructure hardware to be paid in the next two years. In addition, the Company expects to pay principal payments related to vendor financed property and equipment of $0.8 million, and $0.9 million in fiscal year 2015 and fiscal year 2016, respectively.

Sales Tax Liabilities

The Company’s sales and use tax filings are subject to customary audits by authorities in the jurisdictions where it conducts business in the United States, which may result in assessments of additional taxes. During fiscal year 2009, the Company determined that additional sales taxes were probable of being assessed for multiple states as a result of the preliminary findings specific to a sales and use tax audit that had been initiated in the same year. As a result, in the third quarter of 2009, the Company estimated an incremental sales tax liability of approximately $5.0 million, including interest and penalties of approximately $1.5 million. During subsequent years, this liability was reduced through sales tax payments, settlements with certain state tax authorities and revised estimates of the sales tax liability to $0.9 million in 2014, $0.8 million in 2013 and $0.8 million in 2012, which is included in other long-term liabilities.

Legal Proceedings

The Company is involved in legal proceedings and claims arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any such pending legal proceeding or claim will result in a judgment or settlement that would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third-parties. Certain indemnification agreements may not be subject to maximum loss clauses. If the potential loss from any indemnification claim is considered probable and the amount or the range of the loss can be estimated, the Company accrues a liability for the estimated loss. To date, claims under such indemnification provisions have not been significant.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Feb. 27, 2015	Jun. 28, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	IPASS INC
Entity Central Index Key	0001053374
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		65,958,694
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 66,416,138

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Employee 401 Plan (Notes)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Employee 401(k) Plan

Employee 401(k) Plan

The Company sponsors a 401(k) plan covering all employees. Matching contributions to the plan are at the discretion of the Company. During the years ended December 31, 2014, 2013 and 2012, there have been no employer contributions under this plan.

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Consolidated Statements of Operations and Comprehensive Loss (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
Revenues	$ 69,804	$ 77,729	$ 92,530
Cost of revenues and operating expenses:
Network access costs	29,608	29,253	32,766
Network operations	13,159	12,701	13,525
Research and development	11,921	13,317	13,733
Sales and marketing	15,759	16,396	17,872
General and administrative	18,073	20,353	20,442
Restructuring charges and related adjustments	733	653	26
Amortization of intangible assets	0	0	169
Total cost of revenues and operating expenses	89,253	92,673	98,533
Operating loss	(19,449)	(14,944)	(6,003)
Interest (expense) income, net	(119)	(18)	19
Foreign exchange losses	(67)	(507)	(288)
Other income (expenses), net	329	(18)	12
Loss from continuing operations before income taxes	(19,306)	(15,487)	(6,260)
Benefit from income taxes	7,101	782	269
Net loss from continuing operations	(12,205)	(14,705)	(5,991)
Net income from discontinued operations	19,179	2,393	1,613
Total net income (loss)	6,974	(12,312)	(4,378)
Total comprehensive net income (loss)	$ 6,974	$ (12,312)	$ (4,378)
Loss from continuing operations	$ (0.19)	$ (0.23)	$ (0.10)
Income from discontinued operations	$ 0.30	$ 0.04	$ 0.03
Total net income (loss) per share	$ 0.11	$ (0.19)	$ (0.07)
Weighted average shares outstanding - basic and diluted	62,613,671	63,411,162	60,711,317

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Accrued Liabilities

12 Months Ended

Dec. 31, 2014

Accrued Liabilities, Current [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities consisted of the following:

	Year Ended December 31,
	2014		2013
	(In thousands)
Tax liabilities	$	1,300	$	1,044
Accrued restructuring liabilities—current(1)	160		200
Accrued bonus, commissions and other employee benefits	2,043		2,395
Accrued for vendor financed property and equipment	832		746
Amounts due to customers	1,016		1,059
Other accrued liabilities	1,837		3,656
	$	7,188	$	9,100

(1) See Note 7. Accrued Restructuring

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Other Assets

12 Months Ended

Dec. 31, 2014

Other Assets [Abstract]

Other Assets

Other Assets

Other assets (non-current) consisted of the following:

	Year Ended December 31,
	2014		2013
	(In thousands)
Deferred installation costs and other long-term assets	$	—	$	1,677
Deposits	563		808
Long-term deferred tax asset, net	134		96
Restricted cash	150		250
	$	847	$	2,831

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Schedule II - Valuation and Qualifying Accounts Receivable

12 Months Ended

Dec. 31, 2014

Valuation and Qualifying Accounts [Abstract]

VALUATION AND QUALIFYING ACCOUNTS RECEIVABLE

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS RECEIVABLE

Classification	Balance at Beginning of Year		Additions Charged to (recovered from) Costs and Expenses			Deductions		Balance at End of Year
	(In thousands)
Allowance for doubtful accounts:
Year ended December 31
2014	$	1,010	$	(169	)	$	669	$	172
2013	1,173		134			297		1,010
2012	1,605		(66		)	366		1,173

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Net Loss Per Common Share

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Net Loss Per Common Share

Note 13. Net Loss Per Common Share

Basic net income (loss) per share is computed by dividing net income (loss) available to shareholders by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) available to shareholders by the weighted average number of diluted shares outstanding. Unvested participating securities that vest based on service are included in the weighted daily average number of shares outstanding used in the calculation of basic net income per share and excluded in the calculation of basic net loss per share.

When an entity has a loss from continuing operations, including potential shares in the denominator of diluted per-share computations for continuing operations will generally be antidilutive, even if the entity has net income after adjusting for discontinued operations. That is, including potential shares in the denominator of the earnings per share calculation for a loss-making entity will generally decrease the loss per share and, therefore those shares should be excluded from calculations of diluted earnings per share. Accordingly, for all periods presented, basic weighted-average shares outstanding were used in calculating the diluted net income (loss) per share.

The following table sets forth the computation of basic and diluted net income (loss) per share:

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except per share amounts)
Numerator:
Net loss from continuing operations	$	(12,205	)	$	(14,705	)	$	(5,991	)
Net income from discontinued operations	19,179			2,393			1,613
Net income (loss)	6,974			(12,312		)	(4,378		)
Denominator:
Weighted average shares outstanding - basic and diluted	62,613,671			63,411,162			60,711,317
Total income (loss) per share - basic and diluted:
Loss from continuing operations	$	(0.19	)	$	(0.23	)	$	(0.10	)
Income from discontinued operations	$	0.30		$	0.04		$	0.03
Total net income (loss) per share	$	0.11		$	(0.19	)	$	(0.07	)

The following weighted average potential shares of common stock have been excluded from the computation of diluted net income (loss) per share because the effect of including these shares would have been anti-dilutive:

	Year Ended December 31,
	2014	2013	2012
Options to purchase common stock	4,703,978	3,329,281	2,473,024
Restricted stock awards, including participating securities	2,195,750	2,615,705	1,819,261
Total	6,899,728	5,944,986	4,292,285

The weighted-average exercise price of options to purchase common stock excluded from the computation was $2.20, $2.84, and $3.59, for the years ended December 31, 2014, 2013, and 2012, respectively.

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Income Taxes (Notes)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes is based on continuing operations income (loss) for 2014, 2013 and 2012 before taxes as follows:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
U.S Source	$	(20,306	)	$	(16,819	)	$	(6,894	)
Non-U.S. Source	1,000			1,332			634
Loss before income taxes	$	(19,306	)	$	(15,487	)	$	(6,260	)

The provision for income taxes for continuing operations consisted of the following:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Current:
U.S. federal	$	—		$	—		$	—
State	(3		)	32			30
Foreign	278			334			495
	$	275		$	366		$	525
Deferred:
U.S. federal	$	(7,107	)	$	(1,351	)	$	(911	)
State	(219		)	—			—
Foreign	(50		)	203			117
	$	(7,376	)	$	(1,148	)	$	(794	)
Benefit from income taxes	$	(7,101	)	$	(782	)	$	(269	)

Income tax expenses were recorded in discontinued operations for the year ended December 31, 2014, 2013, and 2012 of approximately $7.3 million, $1.4 million, and $0.9 million, respectively. This primarily reflects tax expense on discontinued operations offsetting benefit in continuing operations of $7.1 million, $0.8 million, and $0.3 million for the years ended December 31, 2014, 2013, and 2012 respectively. The offsetting tax benefits in 2014 represent the Company’s ability to utilize net operating losses to offset tax associated with the gain on the sale of the Unity business. The offsetting tax benefits in 2012 and 2013 represent the Company’s ability to utilize net operating losses to offset tax associated with the discontinued operation’s income.

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss and tax credit carry forwards. As of December 31, 2014 and 2013, the Company provided a full valuation allowance on its net deferred tax assets in the United States, Israel, Australia and Japan. The components of deferred tax assets consisted of the following:

	Year Ended December 31,
	2014			2013
	(In thousands)
Deferred tax assets:
Net operating loss carry forwards	$	23,526		$	46,364
Reserves and accruals	1,517			2,728
Research and other tax credits	5,880			6,328
Share based compensation	3,133			3,780
Property and equipment	3,224			43
Total deferred tax assets	$	37,280		$	59,243
Valuation allowance	(35,348		)	(58,218		)
Net deferred tax assets	$	1,932		$	1,025
Deferred tax liabilities:
Property and equipment	(1,606		)	(751		)
Total net deferred tax assets	$	326		$	274

The provision for income taxes for continuing operations differed from the amounts computed by applying the U.S. federal income tax rate to pretax loss before income taxes as a result of the following:

	Year Ended December 31,
	2014		2013		2012
Federal statutory rate	(35	)%	(35	)%	(35	)%
State taxes, net of federal benefit	(1	)	(7	)	(4	)
Foreign tax rate differential	(1	)	1		6
Amortization of stock-based compensation	2		1		1
Research and development benefit	(2	)	(9	)	(2	)
Deemed repatriated foreign earnings	2		2		61
Other	—		—		1
Valuation Allowance	(1	)	42		(32	)
Provision for income taxes	(36	)%	(5	)%	(4	)%

As of December 31, 2014, the Company had gross cumulative net operating loss carry forwards for federal and state tax reporting purposes of approximately $67.2 million and $48.1 million, respectively, which expire in various periods between 2015 and 2034. In addition, $7.6 million and $3.9 million for federal and state respectively, are related to stock compensation deductions in excess of book deductions, the tax effect of which would be to credit accumulated paid-in capital if realized. Utilization of the net operating loss and tax credit carryforwards are subject to annual limitations due to certain ownership change rules provided by the Internal Revenue Service Code of 1986, as amended and similar state provisions. Also included in the valuation allowance as of December 31, 2014 is approximately $2.2 million related to net operating loss carry forwards in Israel.

As of December 31, 2014, the Company also has research and development tax credit carry forwards of approximately $4.4 million and $6.7 million for federal and state income tax purposes, respectively. If not utilized, the federal carry forwards will expire in various amounts through 2034.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits (in thousands):

Balance at January 1, 2013	$	5,773
Increases for positions taken in prior years	282
Increases for positions related to the current year	832
Settlements with taxing authorities	(320		)
Balance at December 31, 2013	$	6,567
Increases for positions taken in prior years	5
Increases for positions related to the current year	186
Decreases for positions taken in prior years	(18		)
Decreases for statutes lapsing	(66		)
Settlements with taxing authorities	—
Balance at December 31, 2014	$	6,674

The increase in unrecognized tax benefits primarily relates to certain research and development tax credits and the establishment of reserve on transfer pricing.

As of December 31, 2014 and 2013 , the company had $0.8 million and $0.8 million, respectively, of unrecognized tax benefits that if recognized will have an impact on the company's effective tax rate.

It is reasonably possible that the total amount of unrecognized tax benefits will change in 2015. Decreases in the unrecognized tax benefits will result from the lapsing of statutes of limitations and the possible completion of tax audits in various jurisdictions. Increases will primarily result from tax positions expected to be taken on tax returns for 2015.

In accordance with its accounting policy, the Company recognizes interest and penalties related to income tax matters in the provision for income taxes; which were not considered material during 2014, 2013 and 2012.

Given the uncertainty as to settlement terms, the timing of payments and the impact of such settlements on other uncertain tax positions, the range of estimated potential changes in underlying uncertain tax positions is between a decrease of $0.8 million and an increase of $0.3 million.

The Company’s major taxing jurisdictions are U.S. Federal, California, the U.K. and India. In the normal course of the Company’s business, the Company is subject to income tax audits in various jurisdictions. Years 2007 to 2014 remain open to examination by certain of these major taxing jurisdictions.

The Company currently has income tax audits in progress in India and has accrued approximately $0.8 million in connection with these audits.

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Commitments and Contingencies - Purchase Commitments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Schedule of future minimum purchase commitments
2015	$ 5,946
2016	659
2017	44
Future minimum purchase commitments	$ 6,649

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Accrued Restructuring (Notes)

12 Months Ended

Dec. 31, 2014

Restructuring and Related Activities [Abstract]

Accrued Restructuring

Accrued Restructuring

During the year ended December 31, 2009, the Company announced restructuring plans (the “2009 Plans”) to reduce operating costs and focus resources on key strategic priorities, which resulted in a workforce reduction of 146 positions across all functional areas and abandonment of certain facilities and termination of a contract obligation. As of December 31, 2014, the Company had remaining lease payments of approximately $0.1 million, which were recorded at fair value at the time of restructuring plan was announced. Management made assumptions in determining the fair value of the lease liabilities. The discounted cash flow valuation technique used to determine the Level 3 fair value included inputs, such as the future rent payment schedule, the discount rate and sublease income based on the executed sublease agreement through the end of the lease terms.

During the first quarter of 2013, the Company announced a restructuring plan (the “Q1 2013 Plan”) to re-align its cost structure to focus investments, resources and operating expenses on the Company’s growing Open Mobile business, which resulted in a workforce reduction of 16 positions across all functional areas and termination of a lease contract. As of December 31, 2014, the Company completed all of the related payments associated with this restructuring plan.

During the third quarter of 2014, the Company announced a restructuring plan (the "Q3 2014 Plan") to re-align its cost structure as a result of the divestiture of its Unity business, which resulted in a workforce reduction of approximately 20 employees worldwide and the termination of lease contracts for certain leased facilities. The Company recorded approximately $0.7 million of restructuring charges during the current fiscal year, and had less than $0.1 million of payments remaining as of December 31, 2014.

The following is a rollforward of restructuring liability for the Q3 2014, Q1 2013, and 2009 Plans:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Beginning balance	$	317		$	483		$	736
Restructuring charges and related adjustments	733			653			26
Payments and adjustments	(890		)	(819		)	(279		)
Ending balance	$	160		$	317		$	483

As of December 31, 2014, less than $0.1 million of the balance represents employee termination costs and remaining $0.1 million mainly relates to exit cost of certain leased facilities.

As of December 31, 2014 and 2013, approximately $0.2 million and $0.2 million of the restructuring liability are included in accrued liabilities, respectively. The remaining restructuring liability of approximately $0.1 million is included in long-term liabilities at December 31, 2013.

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Vendor Financed Property and Equipment (Notes)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Vendor Financed Property and Equipment

Vendor Financed Property and Equipment

In October, 2013, the Company acquired enterprise database software and infrastructure hardware. This purchase was financed through a vendor and is to be paid over three years. In April 2014, the Company acquired additional enterprise infrastructure hardware which was financed through the vendor and is to be paid over two years. The total purchase financed by a vendor was approximately $3.1 million. Since October 2013, the Company made approximately $1.4 million of principal payments, and as of December 31, 2014, approximately $0.8 million and $0.9 million were recorded to accrued liabilities and vendor financed property and equipment, respectively based on the payment terms. The Company expects to pay principal payments of $0.8 million and $0.9 million in fiscal year 2015 and fiscal year 2016, respectively.

As of December 31, 2014, $0.9 million of vendor financed property and equipment is recorded at cost, which approximates a Level 3 fair value liability. The discounted cash flow valuation technique used to determine the Level 3 fair value, included inputs such as the future payment schedule based on the executed purchase agreement and a discount rate.

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Stockholders' Equity (Notes)

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Equity Incentive Plans

The Company has two stock plans that permit it to grant stock options, restricted stock awards and restricted stock units to employees (“Employee Plan”) and to directors (“Director Plan”). Stock options granted to employees generally vest 25% on the first anniversary of the grant date with the remainder vesting ratably over the following 36 months; stock options generally expire 10 years after the date of grant. Restricted stock awards give the recipient the right to receive shares upon the lapse of the instruments’ time and/or performance based restrictions. The restricted stock awards with time-based restrictions are considered outstanding at the time of grant, as the holders are entitled to dividends and voting rights. Employees may surrender a portion of their award shares to satisfy minimum statutory tax withholding obligations with respect to the vesting of restricted stock awards. Restricted stock awards with only performance-based restrictions are not considered outstanding until the performance criteria have been met and therefore are not entitled to dividends or voting rights at the time of grant. The performance-based restricted stock awards vest upon the achievement of pre-defined performance goals, including targeted earnings before interest, taxes and amortization (“EBITA”), targeted number of Open Mobile platform active users, and targeted quarterly revenue of Open Mobile.

During 2014 and 2013, the Company had granted a total of 420,000 and 1,935,000 shares of performance-based restricted stock awards, respectively, that vest based on targeted quarterly revenue of Open Mobile which carry a service-condition to vest in full if performance has not been met at December 31, 2017, however, vesting will be accelerated upon the achievement of performance goals; none of which had vested at December 31, 2014 as the performance goals had not been met.

The Company has a total of 753,925 outstanding shares of performance-based restricted stock awards related to targeted EBITA, none of which had vested as of December 31, 2014. No performance-based restricted stock awards were granted during the year ended December 31, 2012. During 2011, the Company had granted a total of 280,000 shares of performance-based restricted stock awards related to targeted number of Open Mobile platform active users which carry a service condition to vest four years from the grant date, however, vesting will be accelerated upon the achievement of performance goals; all of which had vested at December 31, 2014 based on achievement of the targeted number of Open Mobile platform active users. Vesting of all performance-based restricted stock awards is considered probable.

The number of shares authorized for issuance is automatically increased by 5% annually under the Employee Plan. Upon exercise, new shares are issued. As of December 31, 2014, 25,526,755 shares were available for grant under all plans.

The following table summarizes the stock option and restricted stock activity under the Plans for the indicated periods:

	Shares Available for Future Grant		Number of Options Outstanding		Weighted Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Number of Restricted Stock Awards and Units Outstanding		Weighted Average Grant Date Fair Value per Share
Balance at December 31, 2011	18,011,756		9,535,000		$	1.82			1,051,090		$	1.52
Authorized	3,206,969
Granted(1)	(1,993,000	)	945,500		$	2.31	$	0.81	1,047,500		$	2.16
Options Exercised			(1,247,776	)	$	1.10
Restricted Stock Vested(1)									(178,116	)	$	1.77
Terminated/cancelled/forfeited	995,912		(944,196	)	$	3.04			(51,716	)	$	1.80
Balance at December 31, 2012	20,221,637		8,288,528		$	1.85			1,868,758		$	1.85
Authorized	3,326,811
Granted(2)	(3,070,000	)	1,085,000		$	1.81	$	0.70	1,985,000		$	1.86
Options Exercised			(1,138,718	)	$	1.12
Restricted Stock Vested(2)									(558,083	)	$	2.06
Terminated/cancelled/forfeited	974,230		(628,230	)	$	2.70			(346,000	)	$	1.88
Balance at December 31, 2013	21,452,678		7,606,580		$	1.89			2,949,675		$	1.81
Authorized	3,472,551
Granted(3)	(1,505,000	)	1,025,000		$	1.56	$	0.60	480,000		$	1.18
Options Exercised	—		(135,499	)	$	1.03
Restricted Stock Vested(3)	—								(336,913	)	$	2.01
Terminated/cancelled/forfeited	2,106,526		(1,675,189	)	$	2.76			(431,337	)	$	1.98
Balance at December 31, 2014	25,526,755		6,820,892		$	1.64			2,661,425		$	1.65

(1) Restricted stock granted during 2012 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2012 represent 229,832 restricted stock awards released (net of 51,716 shares withheld for taxes).

(2) Restricted stock granted during 2013 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2013 represent 558,083 restricted stock awards released.

(3) Restricted stock granted during 2014 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2014 represent 378,250 restricted stock awards released (net of 41,337 shares withheld for taxes).

The aggregate intrinsic value of options exercised was less than $0.1 million, $1.0 million, and $1.1 million for the years ended December 31, 2014, 2013, and 2012, respectively.

The following table summarizes the stock options outstanding and exercisable by range of exercise prices as of December 31, 2014:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life (in Years)	Weighted- Average Exercise Price per Share		Number Exercisable	Weighted-Average Exercise Price per Share
$0.71—  1.05	1,674,308	4.68	$	0.96	1,674,308	$	0.96
1.06 —  1.48	1,472,255	4.32	1.26		1,372,255	1.26
1.49 —  1.62	1,442,113	7.70	1.58		716,927	1.55
1.63 —  2.32	1,595,000	7.99	1.93		713,011	1.98
2.33 —5.74	637,216	2.36	3.73		634,049	3.73
Total	6,820,892	5.80	1.64		5,110,550	1.61

	Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2014	6,820,892	$	1.64	5.80	$	869
Options vested and expected to vest at December 31, 2014	6,518,107	$	1.64	5.65	$	869
Options exercisable at December 31, 2014	5,110,550	$	1.61	4.81	$	857

Stock-Based Compensation

The following table sets forth the total stock-based compensation expense from continuing operations included in the Company’s Consolidated Statements of Comprehensive Loss:

	Year Ended December 31,
	2014		2013		2012
			(In thousands)
Network operations	$	202	$	332	$	200
Research and development	266		350		257
Sales and marketing	452		677		441
General and administrative	1,076		1,702		1,448
Total	$	1,996	$	3,061	$	2,346

The following table sets forth the total stock-based compensation expense by award-type:

	Year Ended December 31,
	2014		2013		2012
	(In thousands)
Stock options	$	815	$	838	$	1,122
Restricted stock	1,105		2,157		1,128
Employee stock purchase plan	76		66		96
Total	$	1,996	$	3,061	$	2,346

Above tables are different from the stock-based compensation expenses disclosed in the consolidated statements of cash flows, which includes stock-based compensation expenses related to discontinued operations.

As of December 31, 2014, there was $0.8 million of total unrecognized stock-based compensation expense related to stock options, net of expected forfeitures that will be recognized over the weighted average period of 2.5 years. As of December 31, 2014, there was $1.3 million of total unrecognized compensation cost related to the unvested restricted stock awards granted, net of expected forfeitures which is expected to be recognized over the remaining weighted average vesting period of 2.4 years.

Valuation Assumptions

The weighted average estimated fair value of stock options granted during the years ended December 31, 2014, 2013, and 2012 were calculated under the Black-Scholes option-pricing model, using the following weighted-average assumptions:

	Year Ended December 31,
	2014		2013		2012
Risk-free rate	1.07	%	0.89	%	0.35	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	53	%	50	%	52	%
Expected term	3.5 years		3.8 years		3.1 years

Expected volatility is based on the historical volatility of the Company’s common stock. The expected term of stock options granted is based on the historical average expected term. The risk-free rate for periods within the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. During the year ended December 31, 2014, 2013 and 2012, the Company did not pay any cash dividends on its common stock and does not expect to pay cash dividends in the future. 

The total grant date fair value of the restricted awards stock granted during the years ended December 31, 2014, 2013, and 2012 was approximately $0.6 million, $3.7 million, and $2.3 million, respectively, which will be recognized over the requisite service periods.

Employee Stock Purchase Plan

Under the Company’s Employee Stock Purchase Plan (“ESPP”), the Company can grant stock purchase rights to all eligible employees during a one-year offering period with purchase dates at the end of each six-month purchase period (each April and October). As of December 31, 2014, the Company reserved 7.5 million shares of common stock for issuance under the ESPP plan and approximately 4.7 million shares remain available for future issuance. The ESPP plan permits employees to purchase common stock through payroll deductions of up to 15% on an employee’s compensation, including commissions, overtime, bonuses and other incentive compensation. The purchase price per share is equal to the lower of 85% of the fair market value per share at the beginning of the offering period, or 85% of the fair market value per share on the semi-annual purchase date. No participant may purchase more than 2,500 shares per offering or $25,000 worth of common stock in any one calendar year. During the years ended December 31, 2014, 2013 and 2012, 118,501, 137,091, and 186,275 shares were purchased at average per share prices of $1.27, $1.60, and $1.09, respectively.

Compensation cost related to the Company’s employee stock purchase plan is calculated using the fair value of the employees’ purchase rights granted. The estimated fair value of employee purchase rights granted during the years ended December 31, 2014, 2013, and 2012 was calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Year Ended December 31,
	2014		2013		2012
Risk-free rate	0.10	%	0.09	%	0.09	%
Expected dividend yield	—	%	—	%	—	%
Expected volatility	63	%	51	%	55	%
Expected term	0.5 to 1 year		0.5 to 1 year		0.5 to 1 year

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Net Loss Per Common Share - Average Weighted Shares (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of anti-dilutive shares excluded from computation of diluted net loss per share
Total	6,899,728.000	5,944,986.000	4,292,285.000
Options to purchase common stock
Schedule of anti-dilutive shares excluded from computation of diluted net loss per share
Total	4,703,978	3,329,281	2,473,024
Restricted stock awards, considered participating securities [Member]
Schedule of anti-dilutive shares excluded from computation of diluted net loss per share
Total	2,195,750	2,615,705	1,819,261

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Segment and Geographical Information - Summary of Revenue by Geographical Region (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
United States
Summary of revenue by geographical region
Percentage of revenue by geographical region	35.00%	37.00%	41.00%
EMEA
Summary of revenue by geographical region
Percentage of revenue by geographical region	48.00%	49.00%	44.00%
Asia Pacific
Summary of revenue by geographical region
Percentage of revenue by geographical region	15.00%	13.00%	14.00%
Rest of the world
Summary of revenue by geographical region
Percentage of revenue by geographical region	2.00%	1.00%	1.00%

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Net Loss Per Common Share - Basic and Diltuted Net Loss Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Numerator:
Net loss from continuing operations	$ (12,205)	$ (14,705)	$ (5,991)
Net income from discontinued operations	19,179	2,393	1,613
Total net income (loss)	$ 6,974	$ (12,312)	$ (4,378)
Denominator:
Denominator for basic and diluted net loss per common share - weighted average shares outstanding	62,613,671	63,411,162	60,711,317
Loss from continuing operations	$ (0.19)	$ (0.23)	$ (0.10)
Income from discontinued operations	$ 0.30	$ 0.04	$ 0.03
Total net income (loss) per share	$ 0.11	$ (0.19)	$ (0.07)

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Segment and Geographical Information (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Summary of revenue by geographical region

he following table summarizes total Company revenue from continuing operations by country or by geographical region:

	For the Year Ended December 31,
	2014		2013		2012
United States	35	%	37	%	41	%
EMEA	48	%	49	%	44	%
Asia Pacific	15	%	13	%	14	%
Rest of the world	2	%	1	%	1	%

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Income Taxes (Details Textual) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Loss Carryforwards [Line Items]
Recognizable tax benefits		$ 800,000	$ 800,000
Unrecognized tax benefits, decreases resulting from settlements with taxing authorities		0	320,000
Amount accrued in connection with income tax audit		800,000
Maximum
Operating Loss Carryforwards [Line Items]
Unrecognized tax benefits, decreases resulting from settlements with taxing authorities		800,000
Unrecognized tax benefits, increase resulting from settlements with taxing authorities		300,000
Years remain open to examination		2014
Minimum
Operating Loss Carryforwards [Line Items]
Years remain open to examination		2007
Federal
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards		67,200,000
Federal | Research
Operating Loss Carryforwards [Line Items]
Research and development tax credit carry forwards		4,400,000
State
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards		48,100,000
State | Research
Operating Loss Carryforwards [Line Items]
Research and development tax credit carry forwards		6,700,000
ISRAEL
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards valuation allowance		2,200,000
Stock Based Compensation | Federal
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards		7,600,000	3,900,000
iPass Unity
Operating Loss Carryforwards [Line Items]
Discontinued Operation, Tax Effect of Income (Loss) from Disposal of Discontinued Operation	7,341,000	7,300,000	1,351,000	911,000
Discontinued Operation, Tax Effect of Recognition of Operating Loss Carryforward from Disposal of Discontinued Operation		$ 7,100,000	$ 800,000	$ 300,000

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Divestiture of Business Segment (Notes)

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Divestiture of Business Segment

Divestiture of Business Segment

On June 30, 2014 the Company entered into an agreement and completed the sale of its Unity business segment for gross cash proceeds of approximately $28.1 million, and accrued approximately $2.2 million of transaction costs which were fully paid as of December 31, 2014. The Company recorded a gain on sale of approximately $25.0 million. The gross cash proceeds included $1.4 million that was placed into an escrow account to cover any contingent claims made by the buyer against iPass through June 30, 2015 and is recorded in Prepaid Expenses and Other Current Assets on the Consolidated Balance Sheets. As of December 31, 2014, no claims have been made against the escrow account. In accordance with ASC 205-20, the results of operations for the Unity business segment are reported as discontinued operations.  The Company did not have any assets held for sale as of December 31, 2013 or prior to the sale in the second quarter of 2014.

Concurrent with the sale of its Unity business segment, iPass and the buyer entered into a transition services agreement pursuant to which each of the parties will provide certain transitional, administrative, and support services to the other party for a period up to six months, which may be extended upon mutual agreement. Such services provided to the buyer by iPass were recorded as contra-expense since the Company was reimbursed for the service cost incurred. Activity associated with transitional service is not considered significant relative to the consolidated financial statements of the Company and substantially concluded as of December 31, 2014.

Income tax expense was recorded in discontinued operations for the year ended December 31, 2014, 2013, and 2012 of approximately $7.3 million, $1.4 million, and $0.9 million, respectively. This primarily reflects tax expense on income or gains from discontinued operations with an offsetting benefit in continuing operations of $7.1 million, $0.8 million, and $0.3 million for the year ended December 31, 2014, 2013, and 2012 respectively. The offsetting tax benefits in 2014 represent the Company’s ability to utilize net operating losses to offset tax associated with the gain on the sale of the Unity business.

The following table presents the revenues and components of discontinued operations, net of tax.

	Six Months  ended June 30,			Year Ended  December 31,
	2014			2013			2012
Revenue	15,458			33,386			33,548
Income from discontinued operations before income taxes	1,506			3,744			2,524
Gain on sale of discontinued operations before income taxes	25,014			—			—
Provision for income taxes	(7,341		)	(1,351		)	(911		)
Income from discontinued operations, net of tax	$	19,179		$	2,393		$	1,613

The table above excludes certain shared overhead costs and transfer pricing adjustments that were previously allocated to the Unity business segment in the historical iPass consolidated financial statements that were filed with the Securities and Exchange Commission ("SEC") as ASC 205-20 prohibits the allocation of general overhead costs to the discontinued operation. The provisions for income taxes primarily reflect tax expense on discontinued operations including the gain on sale, which is mostly offset by benefit in continuing operations.

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Components of property and equipment, net

Property and equipment, net consisted of the following:

	Year Ended December 31,
	2014			2013
	(In thousands)
Equipment	$	10,242		$	15,134
Furniture and fixtures	1,923			2,110
Computer software	9,356			12,279
Construction in progress	306			749
Leasehold improvements	912			1,252
	22,739			31,524
Less: Accumulated depreciation and amortization	(16,526		)	(23,082		)
Property and equipment, net	$	6,213		$	8,442

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Income Taxes - Reconciliation to Effective Income Tax Rate (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Provision for (benefit from) income taxes differed from the amounts computed by applying the U.S. federal income tax rate to pretax loss before income taxes
Federal statutory rate	(35.00%)	(35.00%)	(35.00%)
State taxes, net of federal benefit	(1.00%)	(7.00%)	(4.00%)
Foreign taxes	(1.00%)	1.00%	6.00%
Amortization of stock-based compensation	2.00%	1.00%	1.00%
Research and development benefit	(2.00%)	(9.00%)	(2.00%)
Deemed repatriated foreign earnings	2.00%	2.00%	61.00%
Other	0.00%	0.00%	1.00%
Valuation Allowance	(1.00%)	42.00%	(32.00%)
Provision for (benefit from) income taxes	(36.00%)	(5.00%)	(4.00%)

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Other Assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Components of other assets
Deferred installation costs and other long-term assets	$ 0	$ 1,677
Deposits	563	808
Long-term deferred tax assets, net	134	96
Restricted cash	150	250
Other Assets	$ 847	$ 2,831

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-In Capital	Accumulated Comprehensive Income (Loss)	Accumulated Deficit
Beginning Balance at Dec. 31, 2011	$ 37,447	$ 59	$ 209,624	$ 0	$ (172,236)
Beginning Balance, Shares at Dec. 31, 2011		59,139,000
Exercise of stock options-common stock issued, Shares	1,247,776	1,248,000
Exercise of stock options-common stock issued	1,369	2	1,367
Restricted stock granted, Shares		1,048,000
Employee stock purchase plan-common stock issued, Shares	186,275	186,000
Employee stock purchase plan-common stock issued	203		203
Repurchased common stock, Shares		(85,000)
Repurchased common stock	(158)		(158)
Stock-based compensation	2,418		2,418
Net income (loss)	(4,378)		0		(4,378)
Ending Balance at Dec. 31, 2012	36,901	61	213,454	0	(176,614)
Ending Balance, shares at Dec. 31, 2012		61,536,000
Exercise of stock options-common stock issued, Shares	1,138,718	1,139,000
Exercise of stock options-common stock issued		4	1,270
Restricted stock granted, Shares		1,985,000
Restricted stock cancelled, Shares		(346,000)
Employee stock purchase plan-common stock issued, Shares	137,091	137,000
Employee stock purchase plan-common stock issued	216		216
Stock-based compensation	3,163		3,163
Net income (loss)	(12,312)				(12,312)
Ending Balance at Dec. 31, 2013	29,242	65	218,103	0	(188,926)
Ending Balance, shares at Dec. 31, 2013	64,451,031	64,451,000
Exercise of stock options-common stock issued, Shares	135,499	135,000
Exercise of stock options-common stock issued	139	0	139
Restricted stock granted, Shares		480,000
Restricted stock cancelled, Shares		(390,000)
Employee stock purchase plan-common stock issued, Shares	118,501	119,000
Employee stock purchase plan-common stock issued	158		158
Repurchased common stock, Shares		(41,000)
Repurchased common stock	(49)
Stock-based compensation	2,017		2,017
Net income (loss)	6,974				6,974
Ending Balance at Dec. 31, 2014	$ 38,481	$ 65	$ 220,368	$ 0	$ (181,952)
Ending Balance, shares at Dec. 31, 2014	64,753,694	64,754,000

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Property and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment, net consisted of the following:

	Year Ended December 31,
	2014			2013
	(In thousands)
Equipment	$	10,242		$	15,134
Furniture and fixtures	1,923			2,110
Computer software	9,356			12,279
Construction in progress	306			749
Leasehold improvements	912			1,252
	22,739			31,524
Less: Accumulated depreciation and amortization	(16,526		)	(23,082		)
Property and equipment, net	$	6,213		$	8,442

Depreciation expense for continuing operations was approximately $3.2 million, $2.4 million, and $2.0 million for the years ended December 31, 2014, 2013, and 2012, respectively. Depreciation expense for discontinued operations was approximately $0.2 million, $0.4 million, and $0.1 million for the same periods.

During the year ended December 31, 2014, the Company retired approximately $8.5 million of gross property and equipment related to continuing operations, and recorded a loss on disposal of approximately $0.1 million. As part of completing the sale of its Unity business segment on June 30, 2014, the Company included approximately $2.0 million of gross property and equipment related to the discontinued operations in the gain on sale calculation.

During 2013, the Company acquired approximately $2.6 million of enterprise database software and infrastructure hardware. During April 2014, the Company acquired approximately $0.5 million of additional enterprise infrastructure hardware. As of December 31, 2014, the Company held approximately $2.0 million of this enterprise database software and infrastructure hardware in computer software and equipment.

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Stockholders' Equity (Details Textual) (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Stockholders' Equity (Textual) [Abstract]
Period over which remaining stock options are vested	36 months
Weighted average vesting period over which the compensation cost is expected to be recognized	2 years 6 months 4 days
Shares of common stock reserved for issuance under the ESPP	25,526,755		21,452,678		20,221,637		18,011,756
Stockholders' Equity (Additional Textual) [Abstract]
Number of stock plans that permit to grant stock options	2
Percentage of stock options granted to employees generally vest on first anniversary of grant date	25.00%
Share based compensation arrangement by share based payment award expiration period	10 years
Percentage increase in number of shares authorized for issuance under employee plan	5.00%
Share based compensation arrangement by share based payment award restricted stock with time based vesting criteria	229,832
Share based compensation arrangement by share based payment award restricted stock units included as shares outstanding	378,250		558,083		229,832
Shares withheld for taxes	41,337				51,716
Aggregate intrinsic value of options exercised	100,000		1,000,000		1,100,000
Unrecognized stock-based compensation expense related to stock options	800,000
Percentage of employee's compensation up to which employees permit to purchase common stock through payroll deductions	15.00%
Purchase price per share as a percentage of fair market value	85.00%
Maximum number of shares that can be purchased by participant per offering	2,500
Share based compensation arrangement by share based payment award maximum amount per employee	25,000
Shares purchased	118,501		137,091		186,275
Weighted average per share prices	1.27		1.60		1.09
Employee Stock Purchase Plans
Stockholders' Equity (Textual) [Abstract]
Shares of common stock reserved for issuance under the ESPP	7,500,000.0
Shares under common stock available for issuance	4,700,000
Performance Based Restricted Stock Awards, Revenue Benchmark
Stockholders' Equity (Textual) [Abstract]
Number of Restricted Stock Outstanding, Granted	420,000		1,935,000		0		280,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	0
Performance Based Restricted Stock Awards, EBITDA Benchmark
Stockholders' Equity (Textual) [Abstract]
Number of Restricted Stock Outstanding, Granted	753,925
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	0
Restricted stock
Stockholders' Equity (Textual) [Abstract]
Number of Restricted Stock Outstanding, Granted	480,000	[1]	1,985,000	[2]	1,047,500	[3]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	336,913	[1]	558,083	[2]	178,116	[3]
Weighted average vesting period over which the compensation cost is expected to be recognized	2 years 4 months 24 days
Grant date fair value of the restricted awards granted	600,000		3,700,000		2,300,000
Stockholders' Equity (Additional Textual) [Abstract]
Unrecognized compensation cost related to the unvested restricted stock awards granted	1,300,000

[1] Restricted stock granted during 2014 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2014 represent 378,250 restricted stock awards released (net of 41,337 shares withheld for taxes).

[2] Restricted stock granted during 2013 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2013 represent 558,083 restricted stock awards released.

[3] Restricted stock granted during 2012 represent awards with time-based vesting criteria which have been included as shares outstanding on the consolidated statement of stockholders’ equity. Restricted stock vested during 2012 represent 229,832 restricted stock awards released (net of 51,716 shares withheld for taxes).

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Divestiture of Business Segment - Narrative (Details) (iPass Unity, USD $)	1 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2014
iPass Unity
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration for sale of business						$ 28,100,000
Accrued Transaction Costs for Disposition of Business						2,200,000
Gain on sale of business	25,000,000	25,014,000		0	0
Contingent liability on sale of business						1,400,000
Discontinued Operation, Tax Effect of Income (Loss) from Disposal of Discontinued Operation		7,341,000	7,300,000	1,351,000	911,000
Discontinued Operation, Tax Effect of Recognition of Operating Loss Carryforward from Disposal of Discontinued Operation			$ 7,100,000	$ 800,000	$ 300,000

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2014

Other Assets [Abstract]

Components of other assets

Other assets (non-current) consisted of the following:

	Year Ended December 31,
	2014		2013
	(In thousands)
Deferred installation costs and other long-term assets	$	—	$	1,677
Deposits	563		808
Long-term deferred tax asset, net	134		96
Restricted cash	150		250
	$	847	$	2,831

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Uncategorized Items	1/1/2013 - 3/31/2013 USD ($)
[us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised]	1,274,000

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Financial Instruments and Fair Value (Details Textual) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Financial Instruments and Fair Value (Textual) [Abstract]
Transfers between Levels 1, 2, and 3	$ 0	$ 0

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Segment and Geographical Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment and Geographical Information

Note 14. Segment and Geographic Information

Prior to 2014, the Company had two reportable operating segments, Mobility Services and iPass Unity Network Services (“Unity”). The Mobility Services segment includes services that help enterprises manage the networks, connections and devices used by their mobile workforce. The iPass Unity segment provided customers with Wi-Fi and Wide Area Network solutions.

On June 30, 2014, the Company entered into an agreement and completed the sale of its Unity business segment, which is reported in this filing as discontinued operations. Therefore, the Company currently has a single reportable operating segment, Mobility Services.

The following table summarizes total Company revenue from continuing operations by country or by geographical region:

	For the Year Ended December 31,
	2014		2013		2012
United States	35	%	37	%	41	%
EMEA	48	%	49	%	44	%
Asia Pacific	15	%	13	%	14	%
Rest of the world	2	%	1	%	1	%

No individual country, except for the United States, Germany, and the United Kingdom, accounted for 10% or more of total revenues for the years ended December 31, 2014, 2013, and 2012. Revenues in Germany accounted for 15%, 11%, and 9% of total revenues in 2014, 2013, and 2012, respectively. Revenues in the United Kingdom accounted for 11%, 13%, and 12% of total revenues in 2014, 2013, and 2012, respectively. One customer accounted for 10% of total revenues for the years ended December 31, 2014. No individual customer accounted for 10% or more of total revenues for the years ended December 31, 2013, and 2012. International revenues are determined by the location of the customer’s headquarters.