EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into this 31st day of
January, 2008 ("Effective Date") between Xxxxxxx X. Xxxx ("Employee") and ARC
Wireless Solutions, Inc., a Utah Corporation ("Company"). For purposes of this
Agreement, each of the Employee and Company is individually referred to as a
"Party", and Employee and Company are referred to collectively as the "Parties".
RECITAL
Company desires to retain the services of Employee, and Employee has
offered to provide services to Company pursuant to the terms of this Agreement.
AGREEMENT
In consideration of the premises and of the mutual covenants included in
this Agreement, the Parties agree as follows:
1. Services. Company retains Employee and Employee shall perform services
for Company as set forth in this Agreement on behalf of Company for the period
and under the terms and conditions set forth in this Agreement.
2. Term. This Agreement shall be for a period commencing on the Effective
Date and terminating on December 31, 2009 ("Term"). Whenever the word, Term, is
used herein, it shall include the extension periods described below in this
Section 2, subject to review and earlier termination as provided herein. The
Term may be extended for up to three successive one year periods as follows:
2.1 If this Agreement has not been terminated, and Employee desires to
extend the Term for one additional year, then on or before September 30, 2009,
Employee shall so notify the Company's Board of Directors (the "Board"). If the
Company also desires to extend the Term, the Company shall so notify Employee no
later than October 31, 2009, and the Term will be extended to December 31, 2010.
If the Term is so extended, the Employee's annual salary in 2010 shall be 5%
higher than Employee's annual salary on the date of Employee's notice, and for
each Net Income category for 2009 set forth in Exhibit "A," the Bonus amount
shall be 5% higher. The Board may, in its discretion, increase these amounts. By
way of example: (a) if the annual salary of the Employee at the beginning of
2009 was $300,000 and the Board subsequently increased his annual salary to
$320,000, which was Employee's salary on the date of Employee's notice, then his
annual salary for 2010 would be $336,000; and (b) if the Net Income in 2010 was
$1,999,999, then Employee's bonus for 2010 would be $105,000.
2.2 If this Agreement has not been terminated, and Employee desires to
extend the Term for one additional year after December 31, 2010, then on or
before September 30, 2010, Employee shall so notify the Board. If the Company
also desires to extend the Term, the Company shall so notify Employee no later
than October 31, 2010, and the Term will be extended to December 31, 2011. If
the Term is so extended, the Employee's annual salary in 2011 shall be 5% higher
than Employee's annual salary on the date of Employee's notice, and for each Net
Income category for 2009 set forth in Exhibit "A," the Bonus amount shall be 5%
higher than the Bonus amounts for 2010. The Board may, in its discretion,
increase these amounts.
2.3 If this Agreement has not been terminated, and Employee desires to
extend the Term for one additional year after December 31, 2011, then on or
before September 30, 2011, Employee shall so notify the Board. If the Company
also desires to extend the Term, the Company shall so notify Employee no later
than October 31, 2011, and the Term will be extended to December 31, 2012. If
the Term is so extended, the Employee's annual salary in 2012 shall be 5% higher
than Employee's annual salary on the date of Employee's notice, and for each Net
Income category for 2009 set forth in Exhibit "A," the Bonus amounts shall be 5%
higher than the Bonus amounts for 2011. The Board may, in its discretion,
increase these amounts.
2.4 On December 31, 2009, if this Agreement has not been earlier
terminated or extended pursuant to Section 2.1, then Company shall pay to
Employee an amount equal to one year's salary (based on Employee's salary on
that date) and shall pay to Employee the bonus for 2009 upon completion of the
audit for 2009.
3. Duties. Employee shall perform the following services for Company:
3.1 Employee shall serve as Chief Executive Officer of the Company, or
in such other position, with duties and responsibilities of the nature generally
afforded to executive officers, as determined by the Board, subject to the
direction of the Board, and in that capacity shall work with the Company to
pursue the Company's plans as directed by the Board.
3.2 Other than through a change-in-control, acquisition,
consolidation, reorganization or merger, in the event the Board directs Employee
to act in a capacity different than as the Chief Executive Officer or President
of the Company, the employee will have thirty days from the effective date of
such directed new capacity to effect a non-cause termination of this Agreement.
If Employee elects to effect a non-cause termination of this Agreement pursuant
to the terms hereof, Employee shall be entitled to receive Severance (as defined
in Section 7.3.1 below).
3.3 During the Term, Employee shall devote all of Employee's business
time to the performance of Employee's duties under this Agreement. Employee may,
however, (i) serve as a director, trustee or otherwise participate in
not-for-profit educational, welfare, social, religious and civic organizations,
and (ii) service as a director of no more than two (2) for-profit businesses.
4. Compensation. Company shall pay Employee for the performance of services
pursuant to this Agreement as follows:
4.1 Company shall pay Employee a base salary at the annual rate in
2007 (effective as of January 1, 2007) of $250,000, in 2008 of $275,000, and in
2009 of $300,000, payable in installments in accordance with the Company's
customary payroll practices. If Employee has not been receiving Base Salary at
an annual rate of $250,000 in 2007 prior to the Effective Date, then in the
bi-weekly installment immediately following the Effective Date, the deficiency
shall be cured by making an additional payment to Employee in January 2008.
4.2 The Company shall pay the Employee a bonus of $25,000 for the
transition of its manufacturing operations to China and for the annual fiscal
period commencing January 1, 2007. The Company also shall pay the Employee
bonuses for the annual fiscal periods of 2008 and 2009, (each, a "Bonus") in
accordance with the criteria set forth in Exhibit A attached hereto. The amount
of each Bonus shall be as set forth in Exhibit A for each set of criteria set
forth in Exhibit A. The Bonus for fiscal year 2007 will be paid in January of
2008. The Bonus for fiscal years 2008 and 2009 shall be paid on May 1 following
the close of the corresponding fiscal year. If the annual audit of the Company's
annual financial statements by the auditors appointed by the Board is not
completed by the date necessary to determine the amount of the Bonus payment,
the Board shall make a reasonable estimate of the amount of the Bonus and a
payment shall be made promptly to the Employee, which amount shall be subject to
adjustment upon completion of the audit. No adjustment shall be made after the
close of the calendar year during which the Bonus payment is made.
4.3 Any payments that Company is required to make to Employee pursuant
to this Agreement shall be reduced by such amounts as are required to be
withheld with respect to those amounts under and for the purposes of any of the
applicable taxes, and other laws or regulations.
4.4 Employee shall be eligible for participation in any present or
future, health, incentive, pension or retirement plan of Company of which other
employees of Company are generally eligible. It is understood, however, that
entitlements that may accrue to Employee pursuant to such arrangements may
differ from those that accrue to other employees, such differences being based
on the discretion of the Board.
5. Reimbursement of Expenses. Employee shall be reimbursed for reasonable
expenses incurred on behalf of Company in the performance of Employee's duties
and services pursuant to this Agreement. Employee shall provide Company with an
expense report containing a detailed description of expenses incurred by the
60th day following the calendar month in which the expenses were incurred on
behalf of Company. The description of expenses shall contain such information as
may be required in order to permit such reimbursements as proper deductions to
Company under the Internal Revenue Code, as amended, and the rules and
regulations adopted pursuant thereto and in effect at that time. Company shall
promptly reimburse Employee.
6. Additional Benefits.
6.1 Employee shall be entitled to take reasonable amounts of paid time
off for vacation and other personal reasons.
6.2 Employee and his family, if any, shall be entitled to receive such
benefits under medical insurance plans, life and disability insurance, and,
otherwise, as are offered to all other officers of Company.
7. Termination of Employment and Severance Benefits. The employment of the
Employee hereunder shall terminate prior to the expiration of the Term of this
Agreement under the following circumstances.
7.1 In the event of the death of the Employee during the Term hereof,
the employment of the Employee hereunder shall immediately and automatically
terminate. In such event, the Company shall pay to the estate of the Employee
any earned unpaid salary, expense reimbursement and accrued vacation, any bonus
based on the completed immediately preceding fiscal year, whether or not then
calculated or payable and including without limitation the amount set forth in
Section 7.6, and the Employee shall be entitled to no severance or other
termination benefits under this Agreement.
7.2 The Company may terminate the Employee's employment hereunder "for
Cause" at any time during the Term of this Agreement. Termination of the
Employee's employment by the Company shall constitute a termination "for Cause"
under this Section if such termination is for one or more of the following
causes:
7.2.1 The commission by the Employee of an act of fraud or
embezzlement related to the Company; or
7.2.2 A conviction by the Employee of, or a plea of nolo
contendre, for any felony.
7.2.3 A material breach of this Agreement; or, as a result of a
determination by the Board, acting reasonably, that the Employee, through gross
negligence, caused a significant loss to the Company.
In the event of a termination "for Cause" pursuant to any of the
provisions of this Section 7.2, the Employee shall be entitled to his earned
unpaid salary, expense reimbursement and accrued vacation, any bonus based on
the completed immediately preceding fiscal year, whether or not then calculated
or payable and including without limitation the amount set forth in Section 7.6
but shall not be entitled to any severance or other termination benefits under
this Agreement.
7.3 The Company may terminate the Employee's employment under this
Agreement at any time without Cause upon thirty (30) days' written notice to the
Employee or payment in lieu thereof if the Company elects to accelerate
Employee's departure date. Payment of any amounts to Employee upon termination
pursuant to this Agreement shall be conditioned upon Employee signing a standard
separation agreement including an agreement not to xxx the Company for other
amounts. If the Employee is terminated by the Company other than for Cause, the
Company shall pay the following:
7.3.1 Pay to Employee upon termination severance equal to 20
months of salary (at the rate of salary then in effect), and Employee shall also
receive, if earned, a pro-rated (through the date of termination) bonus
(collectively, the "Severance"). Except as specified in Section 4.2, the
Severance shall be paid within 30 days of the date of termination.
Notwithstanding this Section 7.3, if the Employee is a Specified Employee (as
defined in Section 7.8 herein) on the date of termination and, as a result
thereof, Section 409A of the Internal Revenue Code (the "Code") and the rules
promulgated thereunder would so require a delay to avoid adverse tax
consequences to Employee, the Severance payment shall be made on the first day
following the six month anniversary of the date of termination.
7.3.2 If the Employee is eligible for, and chooses to elect
health insurance continuation in accordance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), pay the premium payments of the Employee
(for Employee and his dependents) under COBRA for a period of eighteen (18)
months, subject to any Employee contribution percentage applicable to the
Employee on the date of termination.
7.3.3 The amounts due pursuant to Section 7.6.
7.4 The Employee may terminate his employment hereunder for "Good
Reason." The following constitute Good Reason for termination by the Employee
provided that the Employee provides notice to the Company of the condition
giving rise to the termination no more than 90 days after the condition first
exists and allows the Company 30 days to remedy the condition:
7.4.1 Material diminution in the nature or scope of the
Employee's responsibilities, duties or authority;
7.4.2 Material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Employee reports, including a
requirement to report to an officer or other employee, rather than directly to
the Board;
7.4.3 Material breach by the Company in its obligations under
this Agreement;
7.4.4 Material breach in base compensation;
7.4.5 A material change in the location of Employee's place of
work to a location more than seventy five (75) miles from Employer's then
current headquarters office location.
In the event of the termination by the Employee for Good Reason, the
Company agrees to: (i) pay the Employee the Severance; (ii) earned unpaid
salary, expense reimbursement and accrued vacation, including without
limitation, the amount set forth in Section 7.6 and; (iii) if the Employee is
eligible for, and chooses to elect, health insurance continuation in accordance
with COBRA, pay the premium payments for the Employee and his dependents under
COBRA for a period of eighteen (18) months, subject to any Employee contribution
applicable to the Employee on the date of termination. Except as specified in
Section 4.2, the Severance shall be paid within 30 days of the date of
termination. Notwithstanding this Section 7.4, if the Employee is a Specified
Employee (as defined in Section 7.8 herein) on the date of termination and, as a
result thereof, Section 409A of the Code and the rules promulgated thereunder
would so require a delay to avoid adverse tax consequences to Employee, the
Severance payment shall be made on the first day following the six month
anniversary of the date of termination.
7.5 The Employee may terminate his employment hereunder at any time on
thirty (30) days' written notice (such 30th day being referred to as the "notice
date") to the Company. In the event of termination by the Employee other than
for Good Reason, the Company may accelerate the Employee's departure date and,
if so, will pay Employee through his notice date. In the event of termination by
the Employee other than for Good Reason, the Company shall pay to the Employee
any earned unpaid salary, expense reimbursement and accrued vacation, including
without limitation, the amount set forth in Section 7.6. Employee shall be
entitled to no severance or other termination benefits.
7.6 In the event this Agreement is terminated pursuant to Section 7 of
this Agreement, or this Agreement is not renewed upon expiration of any Term,
Employee will be entitled to a payment of $75,000. Such payment shall be made in
a lump sum within 30 days of termination. Notwithstanding the preceding
sentence, if the Employee is a Specified Employee (as defined in Section 7.8
herein) on the date of termination and, as a result thereof, Section 409A of the
Code and the rules promulgated thereunder would so require a delay to avoid
adverse tax consequences to Employee, such payment shall be made on the first
day following the six month anniversary of the date of termination.
7.7 Notwithstanding anything herein to the contrary, if any payment
permitted or required under this Agreement is reasonably determined by the
Employer or Employee to be subject for any reason to a material risk of
additional tax under Section 409A(a)(1)(B) of the Code, then the Employer and
the Employee shall promptly agree in good faith prior to December 31, 2008 on
appropriate provisions to avoid such risk without materially changing the
economic value of this Agreement to either party.
7.8 A Specified Employee shall mean a key employee (as defined in
Section 416(i) of the Code without regard to pargraph 5 thereof) of the Company,
pursuant to Section 409A of the Code.
7.9 Employee or his estate has the right to waive protection under
Section 409A of the Code and opt to receive payments immediately. In the event
Employee exercises this right, Employee would be responsible for any personal
tax consequences.
8. Indemnification. The Company agrees that if, during or after his
employment, Employee is made a party, or is threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he is or was a
director, officer or employee of the Company, or is or was serving at the at the
request of the Company as a director, officer, member, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is Executive's alleged action in a official capacity
while serving as a director, officer, member, employee or agent, Employee shall
be indemnified and held harmless by the Company to the fullest extent legally
permitted or authorized by the Company's certificate of incorporation or bylaws,
or resolutions of the Company's Board of Directors or, if more expansive, by the
laws of the State of Utah, against all cost, expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes, or other liabilities or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by Employee in connection therewith,
and such indemnification shall continue as to Employee even if he has ceased to
be a director, member, employee or agent of the Company or other entity with
respect to acts or omissions which occurred prior to his cessation of employment
with the Company and shall inure to the benefit of Employee's heirs, executors
and administrators. The Company shall advance to Employee all reasonable costs
and expenses incurred by him in connection with a Proceeding within 20 calendar
days after receipt by the Company of a written request for such advance. Such
request shall include: (i) an undertaking by Employee to repay the amount of
such advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses; and (ii) a declaration by Employee
that Employee acted in good faith and in a manner that he reasonably believed to
be in or not opposed to the best interests of the Company.
9. Proprietary Information and Inventions Agreement. Employee agrees that
his employment with Company is contingent upon his signing the separate
Proprietary Information and Inventions Agreement on the same date that he signs
this Agreement, a copy of which is attached hereto as Exhibit B.
10. Alternative Dispute Resolution. Employee agrees that any and all
disputes that Employee has with Company or any of Company's employees, which
arise out of Employee's employment or under the terms of this Agreement shall be
resolved through final and binding arbitration, as specified herein. This shall
include, without limitation, disputes relating to this Agreement, Employee's
employment with Company or the termination thereof, claims for breach of
contract or breach of the covenant of good faith and fair dealing, and any
claims of discrimination or other claims under any federal, state or local law
or regulation now in existence or hereinafter enacted and as amended from time
to time concerning in any way the subject of Employee's employment with Company
or its termination. The only claims not covered by this Section 10 are wage
claims, claims for benefits under the workers' compensation laws or claims for
unemployment insurance benefits, which will be resolved pursuant to those laws.
Employee specifically acknowledges the Company's right to seek injunctive relief
for breach of Section 11 of this Agreement and the Proprietary Information and
Inventions Agreement. Employee agrees that prior to commencement of arbitration,
the Employee and Company will submit the dispute to a mediator for non-binding
mediation in Denver, Colorado. If complete agreement cannot be reached within 30
days of submission to mediation, either the Employee or the Company may commence
binding arbitration that will be conducted in Denver County, Colorado in
accordance with the rules and regulations of the American Arbitration
Association Employment Dispute Resolution Rules. Each Party will split the cost
of the arbitration filing and hearing fees, and the cost of the arbitrator. The
arbitrator also will determine whether each Party will pay its own attorneys'
fees or whether one Party will pay all or part of the other Party's attorneys'
fees. Employee understands and agrees that the arbitration shall be instead of
any civil litigation and that the arbitrator's decision shall be final and
binding to the fullest extent permitted by law and enforceable by any court
having jurisdiction thereof. Employee further represents that he is making a
voluntary and knowing waiver of his right to pursue any and all
employment-related claims in court.
11. Non-Compete. Employee acknowledges and recognizes the highly
competitive nature of the Company's business and that Employee's duties
hereunder justify restricting Employee's further employment. Employee agrees
that so long as the Employee is employed by the Company, and for a period of one
year following termination of this Agreement, except when acting at the request
of the Company on behalf of or for the benefit of the Company, Employee (i) will
not induce customers, agents or other sources of distribution of the Company's
business under contract, doing business with the Company, or in negotiations to
do business with the Company to terminate, reduce, alter or divert business with
or from the Company, (ii) will not, directly or indirectly, solicit or induce,
or enter into any discussions that would have the effect of soliciting or
inducing, any individual that is, or was, within 90 days prior to the
termination of this Agreement, an employee of the Company or any of the
Company's affiliates, to leave the Company or such affiliate of the Company,
(iii) will not, directly or indirectly, employ any individual that is, or was,
within 90 days prior to the termination of the Agreement, an employee of either
the Company or an affiliate of the Company; and (iv) shall not, directly or
indirectly, either as a principal, agent, employee, employer, consultant,
partner, member or manager of a limited liability company, or a shareholder in
excess of 1% of a publicly-held company, corporate officer or director, or in
any other individual or representative capacity, engage or otherwise participate
in any manner or fashion in any business in the United States or in any other
part of the world in which the Company is conducting business at the time of
termination of this Agreement, that is in competition with the business
activities of the Company. Employee further covenants and agrees that the
restrictive covenant set forth in this Section 11 is reasonable as to duration,
terms, and geographical area, and that this protects legitimate interests of the
Company, imposes no undue hardship on the Employee, and is not injurious to the
public. It is the desire and intent of the Parties that the provisions of this
Section 11 be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this Section 11 shall be adjudicated
to be invalid or unenforceable, this Section 11 shall be deemed amended to apply
in the broadest allowable manner and to delete therefrom the portion adjudicated
to be invalid or unenforceable. Such amendment and deletion shall apply only
with respect to the operation of this Section 11 in the particular jurisdiction
in which that adjudication is made.
12. Representations and Warranties.
12.1 Company represents and warrants to Employee as follows: (i)
Company has been duly formed as a corporation under the laws of the State of
Utah; and (ii) the execution of this Agreement has been duly authorized by
Company and does not require the consent of or notice to any party not
previously obtained or given.
12.2 Employee represents and warrants to Company that the execution of
this Agreement and the performance of Employee's obligations hereunder, does not
require the consent of or notice to any party not previously obtained or given,
and there is nothing that prohibits or restricts the execution by Employee of
this Agreement or his performance of the obligations hereunder.
13. Diligence. Each of Employee and Company covenants to diligently and
skillfully do and perform the acts and duties required herein.
14. Miscellaneous.
14.1 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter of this Agreement and
supersedes all prior and contemporaneous agreements between the Parties with
respect to the subject matter of this Agreement.
14.2 Notice. All notices, requests, demands, directions and other
communications ("Notices") concerning this Agreement shall be in writing, and
shall be mailed or delivered personally or sent by telecopier or facsimile to
the applicable Party at the address of such Party set forth below in this
Section. When mailed, each such Notice shall be sent by first class, certified
mail, return receipt requested, enclosed in a postage prepaid wrapper, and shall
be effective on the fifth business day after it has been deposited in the mail.
When delivered personally, each such Notice shall be effective when delivered to
the address for the respective Party set forth in this Section. When sent by
telecopier or facsimile, each such Notice shall be effective on the day on which
it was sent provided that it is sent on a business day and further provided that
it is sent prior to 5:00 p.m., local time of the Party to whom the Notice is
being sent, on that business day; otherwise, each such Notice shall be effective
on the first business day occurring after the Notice is sent. Each such Notice
shall be addressed to the Party to be notified as shown below:
To Company: ARC Wireless Solutions, Inc.
00000 X. 00xx Xxx.
Xxxxx Xxxxx, Xxxxxxxx 00000-0000
Attn: CFO
To Employee: Xxxxxxx X. Xxxx
5091 Kipling Xxxx 000, #000
Xxxxx Xxxxx, XX 00000
Either Party may change its address for purposes of this Section 14.2
by giving the other Party written Notice of the new address in the manner set
forth above.
14.3 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, and if any provision of this Agreement shall be or become
prohibited or invalid in whole or in part for any reason whatsoever, that
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remaining portion of that provision or the
remaining provisions of this Agreement.
14.4 Non-waiver. The waiver of either Party of a breach or violation
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach or violation of any provision of this Agreement.
14.5 Amendment. No amendment or modification of this Agreement shall
be deemed effective unless and until it has been executed in writing by the
Parties to this Agreement. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provision of this Agreement, except by a written instrument that has been
executed by the Party charged with such waiver or estoppel.
14.6 Inurement. This Agreement shall be binding upon and inure to the
benefit of Employee and Company, and their respective heirs, successors and
assigns. Notwithstanding the foregoing, this Agreement shall not be assignable
by the Employee.
14.7 Governing Law. Except as specifically provided to the contrary in
this Agreement, this Agreement will be governed by and construed according to
the laws of the State of Colorado, excluding conflicts of law principles.
Employee consents to the personal jurisdiction of the state and federal courts
located in Denver, Colorado.
14.8 Headings. The headings in this Agreement are for convenience
only; they form no part of this Agreement and shall not affect its
interpretation.
IN WITNESS WHEREOF, this Agreement is executed on the date(s) set forth
below to be effective as of the Effective Date
EMPLOYEE:
---------
/s/ Xxxxxxx X. Xxxx
-------------------
Xxxxxxx X. Xxxx
COMPANY:
--------
ARC Wireless Solutions, Inc.
By: /S/ Xxxxxx X. Xxxx
---------------------------
Xxxxxx X. Xxxx, Chairman
Compensation Committee
Exhibit "A"
Bonus Criteria
2008
Net Income Bonus
---------------------------------------- --------------------------------------
$ 500,000-$999,999 $50,000
---------------------------------------- --------------------------------------
$1,000,000-$1,999,999 $100,000
---------------------------------------- --------------------------------------
$2,000,000 and higher $200,000
---------------------------------------- --------------------------------------
2009
Net Income Bonus
---------------------------------------- --------------------------------------
$1,000,000-$1,999,999 $100,000
---------------------------------------- --------------------------------------
$2,000,000-2,499,999 $200,000
---------------------------------------- --------------------------------------
$2,500,000-$2,999,999 $250,000
---------------------------------------- --------------------------------------
$3,000,000 and higher $300,000
---------------------------------------- --------------------------------------
Net Income is defined as the Net Income of all of the divisions/subsidiaries of
ARC Wireless Solutions, Inc. on a consolidated basis, without giving effect to
any extraordinary items reflected on the Statements of Operations in the
Company's reports filed with the SEC.
Exhibit "B"
ARC WIRELESS SOLUTIONS, INC.
PROPRIETARY INFORMATION AND INVENTION AGREEMENT
This Agreement is made between ARC Wireless Solutions, Inc., a Utah
corporation (the "Company"), and Xxxxxxx X. Xxxx.
In consideration of my employment or my continued employment by the
Company, I agree as follows:
I. PROPRIETARY INFORMATION
A. Company Information.
1. I agree at all times during the term of my employment and thereafter to
hold in strictest confidence, and not to use, except for the benefit of the
Company, or to disclose to any person, firm or corporation, without the written
authorization of the Board of Directors of the Company, any trade secrets,
confidential knowledge, data or other proprietary information of the Company. By
way of illustration and not limitation, this shall include information relating
to services, products, processes, know-how, designs, formulae, source code,
methods, samples, developmental or experimental work, improvements, discoveries,
plans for research and new products, plans for marketing and selling, business
plans, budgets and unpublished financial statements, licenses, prices and costs,
suppliers and customers, and information regarding the skills and compensation
of other employees of the Company. Notwithstanding the foregoing, it is
understood that, at all such times, I am free to use information which is
generally known in the trade or industry, which is not gained as a result of a
breach of this Agreement, and my own skill, knowledge, know-how and experience
to whatever extent and in whichever way I wish.
2. I agree that all files, letters, memoranda, reports, records, data,
sketches, drawings, laboratory notebooks, program listings, or other written,
electronic, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into my
custody or possession, shall be and are the exclusive property of the Company to
be used by me only in the performance of my duties for the Company. All such
materials or copies thereof and all tangible property of the Company in my
custody or possession shall be delivered to the Company, upon the earlier of (i)
a request by the Company or (ii) the termination of my employment. After such
delivery, I shall not retain any such materials or copies thereof or any such
tangible property.
B. Former Employer Information. I agree that I will not, during my
employment with the Company, improperly use or disclose any proprietary
information or trade secrets of my former or concurrent employers or companies,
if any, and that I will not bring onto the premises of the Company any
unpublished documents or any property belonging to my former or concurrent
employers or companies unless previously and specifically consented to in
writing by the particular employer or company.
C. Third Party Information. I recognize that the Company has received and
in the future will receive confidential or proprietary information from third
parties subject to a duty on the Company's part to maintain the confidentiality
of such information and, in some cases, to use it only for certain limited
purposes. I agree that I owe the Company and such third parties, both during the
term of my employment and thereafter, a duty to hold all such confidential or
proprietary information in the strictest confidence and not to, except as is
consistent with the Company's agreement with the third party, disclose it to any
person, firm or corporation or use it for the benefit of anyone other than the
Company or such third party, unless expressly authorized to act otherwise by an
officer of the Company.
II. ASSIGNMENT OF INVENTIONS AND ORIGINAL WORKS
A. Retained Inventions and Original Works. I have attached hereto as
Exhibit A a complete disclosure of all inventions, original works of authorship,
developments, improvements, and trade secrets that I have, alone or jointly with
others, conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of my employment with
the Company, that I consider to be my property or the property of third parties
and that I wish to have excluded from the scope of this Agreement (collectively
referred to as "Prior Inventions"). If disclosure of an item on Exhibit A would
cause me to violate any prior confidentiality agreement, I understand that I am
not to list such Prior Inventions on Exhibit A, but am only to disclose a
cursory name for each such invention, a listing of all parties to whom it
belongs and the fact that full disclosure as to such inventions has not been
made for that reason. A space is provided on Exhibit A for such purpose. If, no
disclosure is attached, I represent that there are no Prior Inventions. If, in
the course of my employment with the Company, I incorporate a Prior Invention
into a Company product, process or machine, the Company is hereby granted and
shall have a non-exclusive, royalty-free irrevocable, perpetual, worldwide
license (with rights to sublicense through multiple tiers of licensees) to make,
have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated, a
Prior Invention in any inventions of the Company without the Company's prior
written consent.
B. Inventions and Original Works Assigned to the Company. I agree that I
will make prompt written disclosure to the Company, will hold in trust for the
sole right and benefit of the Company, and hereby assign to the Company all my
right, title and interest in and to any ideas, inventions, original works of
authorship, developments, improvements or trade secrets (i) which I may solely
or jointly conceive or reduce to practice, or cause to be conceived or reduced
to practice, during the period of my employment with the Company, (ii) which I
previously solely or jointly conceived or reduced to practice as a result of any
work performed by me as an employee of or consultant to the Company, (iii) or
which I previously developed at any time after I first served as an employee of
or consultant to the Company, using the Company's, supplies, facilities, trade
secrets or inventions. I recognize that, in the event of a specifically
applicable state law, regulation, rule or public policy ("Specific Inventions
Law"), this Agreement will not be deemed to require assignment of any invention
which qualifies fully for protection under a Specific Inventions Law by virtue
of the fact that any such invention was, for example, developed entirely on my
own time without using the Company's equipment, supplies, facilities or trade
secrets and neither related to the Company's actual or anticipated business,
research or development, nor resulted from work performed by me for the Company.
In the absence of a Specific Inventions Law, the preceding sentence will not
apply. This Agreement does not require me to assign or offer to assign to the
Company any invention that I developed entirely on my own time without using the
Company's equipment, supplies, facilities or trade secret information except for
those inventions that either: (i) relate at the time of conception or reduction
to practice of the invention to the Company's business, or actual or
demonstrably anticipated research or development of the Company; or (ii) result
from any work performed by me for the Company ("Excepted Information").
C. Works Made for Hire. I acknowledge that all original works of authorship
which are or were made by me (solely or jointly with others) within the scope of
my employment or my consulting arrangements with the Company and which are
protectable by copyright are "works made for hire," as that term is defined in
the United States Copyright Act (17 U.S.C., Section 101).
D. Inventions and Original Works Assigned to the United States. I hereby
assign to the United States government all my right, title and interest in and
to any and all inventions, original works of authorship, developments,
improvements or trade secrets whenever full title to same is required to be in
the United States by a contract between the Company and the United States or any
of its agencies.
E. Obtaining Letters Patent, Copyright Registrations and Other Protections.
1. I will assist the Company in every proper way to obtain and enforce
United States and foreign proprietary rights relating to any and all inventions,
original works of authorship, developments, improvements or trade secrets of the
Company in any and all countries. To that end I will execute, verify and deliver
(A) such documents and perform such other acts (including appearing as a
witness) as the Company may reasonably request for use in applying for,
obtaining, perfecting, evidencing, sustaining and enforcing such proprietary
rights and the assignment thereof and (B) assignments of such proprietary rights
to the Company or its designee.
2. My obligation to assist the Company with respect to proprietary rights
in any and all countries shall continue beyond the termination of my employment,
but the Company shall compensate me at a reasonable rate after my termination
for the time actually spent by me at the Company's request on such assistance.
3. In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney-in-fact, to act for and on my behalf to execute, verify and file any
such documents and to do all other lawfully permitted acts to further the
purposes of the preceding paragraph with the same legal force and effect as if
executed by me. Such appointment is coupled with an interest. I hereby waive and
quitclaim to the Company any and all claims of any nature whatsoever which I now
or may hereafter have for infringement of any proprietary rights assigned to the
Company.
F. Obligation to Keep the Company Informed. In addition to my obligations
under paragraph 2(b) above, during the period of my employment and for one (1)
year after termination of my employment for any reason, I will promptly disclose
to the Company fully and in writing all patent applications filed by me or on my
behalf. At the time of each such disclosure, I will advise the Company in
writing of any inventions that I believe fully qualify for protection under a
Specific Inventions Law, if any, or that I believe qualify as Excepted
Information. I will at that time provide to the Company in writing all evidence
necessary to substantiate that belief. I understand that the Company will keep
in confidence, will not disclose to third parties and will not use for any
unauthorized purpose without my consent any proprietary information disclosed in
writing to the Company pursuant to this Agreement relating to Excepted
Information or inventions that qualify fully for protection under the provisions
of a Specific Inventions Law, if any, and were created or developed by me after
termination of my employment. I will preserve the confidentiality of any such
invention that does not qualify fully for protection under a Specific Inventions
Law, if any, or that does not qualify as Excepted Information. I agree to keep
and maintain adequate and current records (in the form of notes, sketches,
drawings and in any other form that may be required by the Company) of all
proprietary information developed by me and all inventions made by me during the
period of my employment at the Company, which records shall be available to and
remain the sole property of the Company at all times.
III. NO CONFLICTING OBLIGATIONS
I represent that my performance of all the terms of this Agreement and as
an employee of the Company does not and will not breach any agreement or
obligation of mine relating to any time prior to my employment by the Company. I
have not entered into, and I agree I will not enter into, any agreement either
written or oral in conflict with this Agreement or my employment.
IV. RETURN OF COMPANY DOCUMENTS
When I leave the employ of the Company, I will deliver to the Company (and
will not keep in my possession, recreate or deliver to anyone else) any and all
devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, together with all copies thereof (in whatever medium
recorded) belonging to the Company, its successors or assigns whether kept at
the Company, home or elsewhere. I further agree that any property situated on
the Company's premises and owned by the Company, including disks and other
storage media, filing cabinets or other work areas, is subject to inspection by
Company personnel at any time with or without notice. Prior to leaving, I will
cooperate with the Company in completing and signing the Company's termination
statement for technical and management personnel confirming the above and my
obligations under this Agreement.
V. NOTIFICATION OF NEW EMPLOYER
In the event that I leave the employ of the Company, I hereby consent to
the notification of my new employer of my rights and obligations under this
Agreement.
VI. LEGAL AND EQUITABLE REMEDIES
Because my services are personal and unique and because I may have access
to and become acquainted with the proprietary information of the Company, the
Company shall have the right to enforce this Agreement and any of its provisions
by injunction, specific performance or other equitable relief, without bond and
without prejudice to any other rights and remedies that the Company may have for
a breach of this Agreement.
VII. GENERAL PROVISIONS
A. Not an Employment Contract. I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of my employment
by the Company, nor shall it interfere in any way with my right or the Company's
right to terminate my employment at any time, with or without cause.
B. Governing Law; Consent to Personal Jurisdiction. This Agreement will be
governed by and construed according to the laws of the State of Colorado,
excluding conflicts of laws principles. I hereby expressly consent to the
personal jurisdiction of the state courts located in Wheat Ridge, Colorado and
the federal courts located in Denver, Colorado for any lawsuit filed there
against me by the Company arising from or relating to this Agreement.
C. Entire Agreement. This Agreement, and Exhibit A attached hereto and
hereby incorporated herein, sets forth the final, complete and exclusive
agreement and understanding between the Company and me relating to the subject
matter hereof and supersedes all prior and contemporaneous understandings and
agreements relating to its subject matter. No modification of or amendment to
this Agreement, nor any waiver of any rights under this Agreement, will be
effective unless in writing with a specific reference to this Agreement and
signed by both the Company and me. Any subsequent change or changes in my
duties, salary or compensation will not affect the validity or scope of this
Agreement.
D. Severability. If one or more of the provisions in this Agreement are
deemed unenforceable by law, then the remaining provisions will continue in full
force and effect.
E. Successors and Assigns. This Agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors and its assigns.
G. Survival. The provisions of this Agreement shall survive the termination
of my employment and the assignment of this Agreement by the Company to any
successor in interest or other assignee.
H. Waiver. No waiver by the Company of any breach of this Agreement shall
be a waiver of any preceding or succeeding breach. No waiver by the Company of
any right under this Agreement shall be construed as a waiver of any other
right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Agreement.
I. Notice. All notices required or permitted hereunder shall be given to
the appropriate party at the address specified below or at such other address as
the party shall specify in writing. Such notice shall be deemed given upon
personal delivery or, if sent by certified or registered mail, postage prepaid,
five (5) days after the date of mailing.
This Agreement shall be effective as of the first day of my employment with
the Company, namely: ____________________, .
I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE DURING
MY EMPLOYMENT WITH THE COMPANY, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE
COMPANY'S PROPRIETARY INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT WITH THE
COMPANY.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.
Date: January 31, 2008 /s/ Xxxxxxx X. Xxxx
-----------------------------------
Signature
Xxxxxxx X. Xxxx
-----------------------------------
[Printed Name]
-----------------------------------
Address
ACCEPTED AND AGREED TO:
ARC WIRELESS SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------
Title Chairman, Compensation Committee
---------------------------------
00000 X. 00xx Xxx.
Xxxxx Xxxxx, XX 00000-0000
EXHIBIT A
ARC Wireless Solutions, Inc.
00000 X. 00xx Xxx.
Xxxxx Xxxxx, XX 00000-0000
Ladies and Gentlemen:
1. Except as listed in Section 2 below the following is a complete disclosure
of all inventions or improvements relevant to the subject matter of my
employment by ARC Wireless Solutions, Inc., a Colorado corporation (the
"Company"), that have been made or conceived or first reduced to practice
by me alone or jointly with others prior to my engagement by the Company:
|_| No inventions or improvements.
|_| See below.
------------------------------------------------------------
|_| Additional sheets attached.
2. Due to a prior confidentiality agreement, I cannot complete the disclosure
under Section 1 above with respect to inventions or improvements generally
listed below, the proprietary rights and duty of confidentiality with
respect to which I owe to the following parties:
Invention or Improvement Party Relationship
1.
------------------------------ ------------- ---------------
2.
------------------------------ ------------- ---------------
3.
------------------------------ ------------- ---------------
|_| Additional sheets attached.
3. I propose to bring to my employment the following devices, materials and
documents of a former employer or other person to whom I have an obligation
of confidentiality that are not generally available to the public, which
materials and documents may be used in my employment pursuant to the
express written authorization of my former employer or such other person (a
copy of which is attached hereto):
|_| No inventions or improvements.
|_| See below.
-----------------------------------------------------------------
|_| Additional sheets attached.
Very truly yours,
Date: _______,__
---------------------------------
